Media Econ 2 Flashcards
What are the characteristics of Digital Media?
Numeric Aspect: Programmability
Modularity : modifiable elements
Automation: because of 1+2
Variability: it can take various different shapes and forms
How did the Ad economy evolve?
ICT substituting Media has been going on since 20th century
Substitution did not take place in a constant manner, as people were consuming all kinds of media increasingly.
Internet consumption was reaching TV consumption,
Up until 2014 when mobile phones took over
McCombs noticed that there is a perfect correlation between national GDP and ad spending
Some observations suggest that after digitisation, this correlation can be applicable, but is changing.
The nature of advertising is changing, personalisation, targeting, etc.
Ads are shifting from above-the-line (mass targeting) to below-the-line (personalised targeting, events, conferences, etc.)
With major events like 2008 or 2019. online ads dominate offline ads
With more personalisation, after 2014, programmed ads increased over negotiated ads.
By 2014, more than half of ads are hosted on US companies.
Monitoring how much time ppl spend is an indicator on where the ads market is going
Moore’s Law
Refers to the rapid pace of technological advancement in the media industry, driven by the decrease in the cost of digital media production and distribution, which has led to the development of new technologies and new ways of consuming media.
Number of transistors on a microchip double every 2 years, reducing the cost of transistors, hence decrease in cost of producing and distributing digital media.
Logarithmic increase in processing power of microchips.
$4000 comp in 1987 is $40 in 2007.
Very fast tech process and price reduction: Microchips, processing power, fibre optics, comm protocols, etc.
ICT becomes GPT: spread in most sectors, improve over time, and make making new products easier.
What are the 5 types of costs lowered in digital media?
Search costs (searching for new information, products, etc.)
Transportation costs: virtually non, transferring information costs near zero
Marginal costs: Low costs for reproducing digital goods
Tracking costs: data storage, targetting, ads, etc.
Verification costs: verify info and id - way easier, unexpected, as early lit suggest internet = anonymity
Content is king vs Connectivity is king
Web 1.0 to Web 2.0
From static content, to connectivity
blogs, forums, wiki,
Telecom much larger than content
Metcalfe’s Law
Value network is equal to the square of number of nodes. The more people join the network, the more valuable it is, in an exponential way.
Value of communication network increases semi-quadric way, Value of broadcast network increase in linear way.
Lock-in, between weak and strong:
Some nodes bring negative value (no engagement, malicious content, harm, low-quality, manipulation, fake, etc.)
other networks can still compete with incumbent
What are same-side and cross side network effects?
SS; Metcalfe’s Law: Value and demand for the good are related to number of users in the network (direct through interaction or indirect through reviews)
CS: 2-sided market effect: Value and demand for the good are related to number of supplied complementary products,
What is the base diffusion model in Metcalfe’s law?
Consumers in the network are:
Innovators: adoption not based on others: low latency, low growth
Imitators: adoption because of network effects: low latency, fast growth
the stronger the NE, the more S shaped curve
What are some additions and alternatives to Metcalfe?
Odlyzko: the value increase is logarithmic not exponential, as the increase in value decreases in speed when network increases
Reed: Value grows more depending on number groups the user is in. Value depends on number of connections, meaning diversity
Starnoff: Even in networks with no network effects such as broadcasts, some indirect network effects occur (Change of netflix algorith)
What are some aspects that result lock-in in Digital Media?
- Potential loss of information
- Compatibility
- Positive market reviews
- Training and learning
- spare parts
- Long-term contracts
- Switching costs
- Loyalty programs
