How will "free" affect the Middle Man

We live in a day and age where we want things now and we want them to cost us as little as possible - and even better if we can get it for free. Anderson talks about the beginning of this trend with his Gillette razor example. Gillette positioned their disposable razor blades within a cross-subsidy model, which we now see becoming more popular with other industries - particularly with technology sales. This trend of "free" is becoming the new normal, however, and I agree with Anderson that this notion of "free" is going to change everything.

The millennial generation has grown up with a free web, which is becoming the backbone of the future of technology. Although services online like Google and social media may be "free," someone has got to cover the costs. This is where advertisers come in. I believe that we are going to see an internet that is embedded with digital ads and digital marketing more intense than it is currently. Anderson's article was written in 2008 - just look at how things are being operated now; in 2016 Google makes $67 billion in ad revenue alone. Big tech hubs like Googe, Facebook, and Apple are recognizing the fact that technology consumers want "free" and, thus, there must be a middle man daddy warbucks to cover those costs. But, from an industry's perspective, are these tech gods like Google and Facebook taking advantage of this fact and charging companies too much for advertising? This video explains how Google charges a company for search ads - starting with bids from $4 per click to $1 per click. Companies must devote a lot of time and effort to perfect their quality of ads in order to be competitive within the digital market. What does this mean for consumers? Are we going to have to cover these costs when buying the physical products just so the company can keep up with the digital advertising demands? 

As an Advertising major, I am interested to see how the digital "free" world evolves and continues to play a role with consumers and advertisements. 

Good enough is getting better

I found Robert Capp's article very interesting, particularly due to the date the article was published. In 2009, the iPhone 3G was the newest model and FaceTime wasn't a thing. Now, seven years later, it's interesting to note how some of his points still remain yet technology advancements has also allowed for speed and convenience to upgrade the quality of the things we use every day. For example, Capps notes that net-based phone calls like Skype can be lag and have poor sound quality, but users don't let the lack in quality deter them from using the internet to make international calls. He reports that 8% of international calls are made through Skype with 38 million users. Today, Skype has over 300 million users and is used 3 billion minutes per day. Furthermore, Skype was bought out by Microsoft which amped up their software, enabling the calls to be smoother and mobile friendly.

I agree with Capps that consumers sacrifice quality for cheapness and convenience.  We don't buy digital cameras anymore because we have our phones. We don't buy music records because we can buy a song for $0.99 or download it for free off the internet. Cheap and fast tools are everywhere and available at our fingertips. We can read the news, for free, in 140 characters instead of buying a full newspaper. Capps mentions how all of this is "good enough" for the consumer, however I believe that companies and brands have advanced in making this trend of cheap and convenient knowledge, that what was once good enough, is now better. Companies have been able to see what consumers want and have altered their ways of getting it to us with higher quality - because good enough wouldn't last forever.  

Printed books are here to stay

Every night before going to bed, my mom or dad would lay in bed with me and read me a bedtime story or two. It was a ritual we both looked forward to and something I hope to do with my own children one day. As a Millennial and growing up in the digital age, I fear that this routine will become a digitalized commodity. Although I argued in my post last week that newspapers are dying and digital media will reign - I don't believe this to be true when it comes to books. Fifteen years ago, Jack Romanos, the Simon & Schuster president, stated "the e-book revolution will have an impact on the book industry as great as the paperback revolution in the 60's." I do not disagree fully with Romanos - yes, the e-book revolution did change the book industry, however its effects have not overcome the power of the printed book just yet.

According to this Huffington Post article, research has shown how print book is preferred among readers over digital. One study that caught my eye in particular was that "students don't connect emotionally with on-screen texts." The stories are not as immersive and intimate when read off a screen. This hit a cord with me because I agree that reading something physical, particularly a novel that can create such an emotional experience, has greater value than when reading it off a screen. It reminded me of the days when I would read stories with my parents before bed - there were connections, non-verbal communications, interpersonal moments that go along with picking out the book from the shelf, holding it up, flipping the page, and so on.  

Furthermore, this made me think of Prof. Chyi's theory on digital media being an inferior good in relation to print media. Although I stand by my argument from last week, in regards to story books and novels I think an actual print/hard copy is more of a luxury good and experience than reading it digitally. Reading something off your ipad/kindle does have its perks but in the long run, I hope books continue to be printed and are here to stay. 

Ramen Noodles are Relative

The Newspaper Association of America's article discussing Professor Chyi's theory that online news is considered an "inferior good" in comparison to print newspaper is extremely interesting. As explained, an inferior good is something that people consume less when their income increases - thus using the analogy of ramen noodles. However, I believe this analogy is relative to the generation Professor Chyi belongs in. The generation of our professors and parents grew up with print newspaper. It is what they are used to, it is what many prefer. They like the feel of the paper, they like the layout, their brains even respond to it better (in comparison to digital, according to a study using fMRI scans). As a Millennial, however, and growing up with millennial siblings and friends, I can't help but think that this argument will shift come the next 5-10 years.

I have four younger siblings - all of them consume their news (if any) online. Furthermore, I was the president of my sorority - a chapter of 255 women (ages 18-22). We got the Daily Texan delivered to our house every morning, along with a few other local papers. The stack of papers would sit, untouched, and pile up on the front hall table of our house until someone recycled them. At first, I thought our generation didn't care about the world around them...but this isn't true at all. We just have different ways of consuming the news - in our eyes, a more convenient/accessible way of consuming it, which is online. Now this raises the question: do we consume the news online because we're college students and we don't have the income for paper subscriptions? Once we graduate and are in the "real world" will we change our ways to print newspapers? (One might raise the same question on why college students eat ramen noodles and easy mac). I honestly think that we won't convert to paper and we will continue to consume our media online - because it is what we're used to, it's what we grew up with, it's what we prefer...and in our eyes it won't be considered the same caliber as ramen noodles. We'll be reading our online news while eating our stake too.

Furthermore, I believe this topic is slightly skewed when discussed by a bunch of communication majors. I feel that our sample size is bias towards media - because we wish to devote our lives and careers to this particular field. It would be interesting to survey students who don't have a connection to the communication school and see how they consume their media and what they prefer. My hypothesis is that students would consume media online vs. offline.

Social Network Limits of Scale?

According to the Business Models of Social Networking Sites article, a social media site must have four components in their business model framework. They are: Value Creation, Target Market, Sources of Competencies, and Revenue. When reading this article I thought of two social networks I use daily and compared the two in regards to this framework.

The first is Facebook - the king of social media. Facebook has a net worth of over $100 billion, according to Forbes Magazine, and has 1.19 billion active users. Facebook is continually advancing their technology in order to stay relevant and keep their membership base. I believe their value of creation is unique and that they dominate the field when it comes to social media sites. However, I feel that they are entering a future where they may not be the top dog anymore. Their target model has changed - the largest user group are middle aged adults (in its creation, Facebook targeted college students) and due to the threat of new entrants (i.e. Snapchat) Facebook is looking towards a future without the next generation. Thus, what does this mean for its business model. Should investors start looking for a way out or will their sources of competencies rise again draw in new consumers?

The second is Snapchat. Snapchat is interesting because it is still so new and, in my opinion, at it's peak. It has1.55 billion users, according to Fortune, which exceeds Facebook's count and is valued at $16 billion. I believe Snapchat's success is due to its business model as well as the app's positioning amongst other social media sites. It's technology is unique and the continuous innovations with filters, lenses, and discovery page, keep users continually entertain and excited. Furthermore, Snapchat's largest users are younger millennials which gives them an advantage over snapchat because they are more likely to grow with the app (similar to how Facebook's first users grew with it). However, with shorter attention spans and the constant need for new, snapchat does face the reality - and challenge -of the younger millennials moving to something else once their bored with the app.

Both networks, regardless, face the question if the digital media world is sustainable. We see now that it is profitable - but it that true in the long term? Honestly, I think the question is unanswerable. We are still in the beginning ages of the digital media world and have cannot make true assumptions on if they are are sustainable or not.