Final Exam

Question 1

Are U.S. consumers willing to pay for news?

Answer 1

There is a low willingness to pay for news today because social media has provided consumers with fast access to free information, and because U.S consumers have a right to free information.

Question 2

What is the primary source of news for Gen Z?

Answer 2

social media

Question 3

What are the revenue models for newspapers? Know the advantages and disadvantages of each model.

Answer 3

Advertising, subscription, donation/not-for-profit, paywalls

Question 4

Does the paywall model work?

Answer 4

can increase revenue for some news organizations, but it can also have negative effects on audience engagement and website traffic. Some researchers recommend a flexible and anti-cyclical attitude, which means putting a lower share of articles behind the paywall if the demand is high.

Question 5

Discuss the main pros and cons of a TikTok ban

Answer 5

pros: U.S. national security, content censorship, algorithm manipulation, data collection or data privacy concerns, regulators believe that ByteDance or the Chinese government could spread influential content on the app to serve the interest of the Chinese government

cons: popular entertainment, freedom of expression, difficulty replicating the TikTok algorithm, creators can monetize content

Question 6

What are the three main arguments against divestiture in TokTok’s petition? Do you agree or disagree with these arguments? Explain why so or not.

Answer 6

Divestiture is the action or process of selling off subsidiary business interest or investments. The three main arguments are: (1) A new U.S type of TikTok platform would not be commercially viable; (2) Code -> TikTok argues it’s impossible to move the code to a new platform; (3) Chinese government has no intention to sell.

Agree with the arguments because ByteDance has stated it would be extremely difficult to replicate TikTok’s algorithm and collect all the data that TikTok engineers have collected from American users for many years.

Question 7

Explain the distinction between social media and social networking sites.

Answer 7

Social media refer to forms of electronic communication (as websites for social networking and microblogging) through which users create online communities to share information ideas, personal messages, and other content (as videos). Social networking sites refers to the creation and maintenance of personal and business relationships online.

Question 8

Define network effects

Answer 8

a business principle that illustrates the idea that when more people use a product or service, its value increases.

Question 9

Define switching costs

Answer 9

the burden incurred by customers from switching providers, which can reduce churn and act as a barrier to new entrants

Question 10

Define continuous innovation

Answer 10

Normal upgrading of products that does not require a change in consumer behavior.

Question 11

Define creative distribution

Answer 11

the practice of using innovative and non-traditional methods to deliver media content to an audience, going beyond standard distribution channels to reach new demographics and maximize engagement by utilizing unique strategies and platforms. Schumpeter (1950) argued that the positive economic profit that a monopolist may enjoy in the long run motivates outsiders to invent and innovate to obtain access to these profits.

Question 12

What is the market structure of the social networks? Why? Explain the five characteristics of this model for the social networks.

Answer 12

One could argue they are an oligopoly because only a few firms dominate the market, even though the content is different is different in each platform. Most of the firms are also owned by larger firms like Facebook, Instagram, WhatsApp, Messenger, and Threads are all own by Meta.

Question 13

What is Section 230 of the Communications Decency Act? Should we rewrite it? If so, how?

Answer 13

Protects online service providers like social media companies from lawsuits based on their decisions to transmit or take down user-generated content. Examples include defamation on social media apps, users sharing inappropriate or explicit content (deepfakes), etc. Allows online platforms to moderate content without being sued for everything they leave up. Basically, revolves around the principle that we should all be responsible for our actions and statements online.

Question 14

What is “glocal”?

Answer 14

Mixture of local and global considerations

Question 15

Define streaming

Answer 15

a method of transmitting data from the internet directly to a user’s computer or phone screen without the need to download it.

Question 16

Define Over-the-top (OTT)

Answer 16

refers to the delivery of video content over the internet, bypassing traditional television platforms, allowing viewers to access video content directly through the internet using mobile devices.

Question 17

What is Subscription Video On Demand (SVOD):?

Answer 17

services offering on-demand streaming content [for] which users pay a subscription fee. (Examples include Netflix and Hulu)

Question 18

What is Advertising-based video on demand (AVOD)?

Answer 18

Streaming offering free on-demand streaming content that includes advertisements. Examples include: Tubi, Freevee

Question 19

What is Transactional Video On Demand (TVOD)?

Answer 19

Streaming offering free on-demand streaming content for purchase [electronic sell-through or EST] or rental on a pay-per-view basis [48 hours]. Examples include: renting or buying movies on Amazon Prime or AppleTV+

Question 20

What is Free Ad-supported Streaming Television (FAST)?

Answer 20

Streaming offering free live linear streaming content that includes advertisements. Examples include: Pluto TV, Roku Channel

Question 21

Is there still a real difference between AVOD and FAST? Why so or not?

Answer 21

No, FAST and AVOD differ in content distribution. FAST provides free linear viewing or programming supported by ads while AVOD offers on-demand libraries with ad-supported plans.

Question 22

What revenue models do streamers use?

Answer 22

Mixed revenue model because they use a combination of monthly subscriptions, advertising revenue, sponsorships, licensing deals, etc.

Question 23

Explain the four suggested strategies to improve streaming profitability.

Answer 23

Bundling, increasing subscription prices, offer an ad-supported tier, reduce the cost of making original content investment (usually done through licensing, international content, sports content)

Question 24

Why is churn a problem?

Answer 24

Churners are users that frequently cancel their subscriptions before the free trial ends. It’s considered a problem because it directly impacts a company’s revenue and growth potential whenever churners cancel their subscriptions after using the free trial. It also means that customers are not satisfied with the content available in the streaming platform.

Question 25

How has television advertising lost its relevance?

Answer 25

Change in consumer viewing behavior and new technologies available like mobile devices and streaming services

Question 26

What is the market structure of the Broadcast TV networks industry?

Answer 26

oligopoly because only small number of large companies likes ABC, CBS, NBC, and Fox dominate the market, creating large barriers to entry for new networks because of the limited available broadcast frequencies, high production costs, and audience loyalty.

Question 27

What is the market structure of the Broadcast TV stations industry?

Answer 27

monopolistic because while there are multiple networks offering similar programming, each station has a degree of market power due to their unique content appeal. There are multiple competitors but differentiated products with some market power.

Question 28

What is the market structure of the Broadcast radio networks industry?

Answer 28

monopolistic because while there are multiple competing networks, each station within a market can differentiate itself slightly through programming choices, targeting specific demographics, and local branding, giving them a degree of market power within their niche, even though they face competition from other stations and networks in the same area

Question 29

What is the market structure of the Broadcast radio stations industry?

Answer 29

monopolistic because while there are many different stations in a given market, each station offers a slightly differentiated product (like a specific format or target audience) which allows them to compete with each other, but not directly like in perfect competition

Question 30

What are the major broadcast TV networks in the United States?

Answer 30

ABC, CBS, NBC, and Fox News

Question 31

What is programmatic advertising?

Answer 31

a technology-driven process that automatically buys and sells digital ad space in real time.

Question 32

what are open exchange marketplaces?

Answer 32

Programmatic advertising that relies on public real-time bidding (RTB) auctions (open to all buyers and sellers).

Question 33

what are private marketplaces?

Answer 33

real-time bidding (RTB) auctions that are open to a selected number of invited buyers (by invitation).

Question 34

what is programmatic direct?

Answer 34

non-auctioned transactions of ads between a publisher and advertisers.

Question 35

What is retransmission consent? Why is it relevant for the U.S. TV station industry revenue?

Answer 35

It allows broadcasters to seek financial compensation from the MVPDs for the carriage of local broadcast TV signals. Cable operators and other multichannel video programming distributors (MVPDs) must obtain from broadcasters before retransmitting their programming. It’s relevant because it allows local broadcast stations to negotiate with cable and satellite companies for payment to carry out their signals, providing a significant source of revenue.

Question 36

advantages of advertising revenue model

Answer 36

Advertisers pay the news organization to display their ads to the website’s visitors, and the website earns revenue based on the number of clicks, impressions, or conversions generated by those ads

Question 37

disadvantages of advertising revenue model

Answer 37

The advertising revenue model has not been able to generate sufficient revenue for most news organization because the advertising domain today is mostly dominated by tech giants like Google (Alphabet) and Meta. The hold these companies have on online advertising has resulted in inadequate returns for traditional ad-financed news platforms. Only a handful of news outlets with a sufficiently large online reach can earn significant revenue. Also, news is a sensitive information good, strongly depending on trust, and solely relying on advertising revenue could be seen as dubious, even risk compromising the journalistic integrity of the organization.

Question 38

advantages of subscription revenue model

Answer 38

Stable and predictable revenue because consumers who are willing to pay for the subscription actually want to use their services