Never do that, never

When I firstly heard the last week news that Facebook will charge some amounts of money monthly (even though I found out that news was fake), I was really surprised. Ten years ago, I experienced the demise of one of the top online communities (Freechal) after the converting their free service into paid service. The reason that I really surprised is that Mr. Zuckerberg would make such a silly decision. I felt relieved after finding out that news was ‘fake.’ If it really happens, (even though Facebook would enjoy the increase of the net income in a short run, they might loose money and reputation together and finally go out of the market and our memory in a long run, like Freechal.

Facebook is free and has very lower barrier to access. That means many people have chances to connect to Facebook. Facebook already posts a lot of advertisements on the web. Also, I felt nervous that advertisements on Facebook really showed the things that I wanted. Facebook is using tracking system, by the aid of big data (Data shadow). Besides ethical concerns, Facebook is a forefront of the online marking. If Facebook started their paid service, they might experience serial disaster; loose people, loose advertisements, and finally will be gone out.

As Trent mentioned, ‘the potential it has for acquiring an individual's attention is worth more than the space it occupies on a company website or server.’ More attention would result from more connection. Also, they are doing really well in the mobile. They strategically differentiated web and mobile advertisements. Due to the smaller screen on the mobile, Facebook only show necessary ads on the mobile for connectors. Paid service means the loose of audiences (But I am supporting NYT’s paywall, because SNS and news sites are really different on the purpose of connection.) I wish they would never make a silly decision to pursue short-term benefits.

That free lunch tastes so good!

In Andersen's article about the evolution of a free market, I was once again struck by the concept that not only money, but attention and reputation are forms of currency because of their connection to providing audiences to advertisers. The idea that anything that, eventually, leads to dollars can be sold, is something that may be difficult for some people to grasp, especially investors, but it should be something that everyone interested in the future of their economy should look into.

However, this shift from the mind-set of "scarcity" to a mindset of "abundance" should not cause us to give up on the concepts of quality and judgment that have helped to build the reputations that we now enjoy. If one of the scarcities that Andersen still recognizes is that of reputation, it is even more vitally important that information providers ensure the quality of the information they provide so as to improve their reputation and capture more audience attention.  It is true that with the sheer amount of information available, it is impossible to prevent things of a low-quality nature from being published and consumed. And many times people understand the restrictions to creating high-quality material in certain circumstances. It's presence does not mean that it will be consumed, the the potential it has for acquiring an individual's attention is worth more than the space it occupies on a company website or server. In this way I agree with Andersen and the argument he makes. However, where possible, the quality of information should still be high on the priority list for business and content providers.

Week 5 Reflections

As Paul mentioned regarding the Cha (2013) reading, I agree it is really interesting to think about how these different social networking entities generate revenues. A decent portion of the revenue stream for these companies comes from syndicating peoples' data and also creating ad platforms that tailor themselves to your Facebook profile. I find it intriguing that even though Facebook has had so much backlash b/c of how they handle privacy and peoples' data (here, here, here), the company is financially doing really well, by focusing on mobile. Given there aren't any real threats to Facebook (we'll see if Ello makes a dent) it appears that it can continue to operate like a monopoly.

I think Napoli brings up a number of interesting points. First, I think it is really important to think about digital divide issues especially when we talk about who can engage and who has access to engage with media. Secondly, within the pool of people who can engage only a small fraction are producing media while the rest are "lurkers." However, Napoli's analysis focuses on how the media industry can better capitalize on a bevy of open data in the form of user generated conversation and content. I'd be interested to know how media makers within the audience are using this data as well to optimize ad revenues and as a result profits. As we discussed last week there are several free tools at the disposal of "the audience" such as Google Analytics.

Social Networks’ Contradiction: Between a Rock and a Huge Audience

Social Networks such as MySpace are great cases of study as they provide evidence of something that our readings highlight: Great success gathering users and web traffic doesn’t necessarily mean economic revenue and business sustainability in the long run.

Social networks face a contradiction here. In order to be successful and became powerful networks they need to facilitate online access to a vast mass of people. Connecting users and facilitating interpersonal communication is the core of their networks. However, users are not willing to pay for Internet services and take for granted the benefits online networks provide.

As Napoli (2011) points out technology innovators “frequently take advantage of the interactivity inherent in the new media environment to produce audience information systems that move beyond the traditional exposure metrics that have long held the dominant position in the audience market.” (p. 88)

I believe this is the case of social networks. They provide a new audience information system that allows them to dominate public conversation. However, the challenges consist on transforming that network power into a sustainable business model without affecting people’s privacy and independence within the network.

Long Tail Economy

The concern about whether consumers are willing to pay for online content or not has been a hot topic in media economic research. Unlike traditional media, the nature of online media provides another way to make a profit rather than asking readers to pay. Cha mentioned the long tail economy to explain this phenomenon.

Three forces of the long tail economy are “more producers/content”, which extends the tail to the right, “the low cost of distribution”, and “more access to niches.” (Anderson, 2006). Those three characteristics of online media are very different from traditional media, and they provide a way for online media to make a profit.

Social Network Sites (SNS) collect users’ content, and they can monetize this content. That is, syndication is a major source of revenue for SNS.  When more content generated by users brings in more revenue, then the SNS can provide better service. This will attract more users which in turn can the site attract more advertisers. In this sense, users are not using a free service. They produce content that SNS uses to make a profit.

Another way that online media make money is due to low cost of distribution. Users distribute their messages without spending a penny. Compared to traditional media, it probably cost SNS less to reach target customers for advertisers.  The lower the cost, the larger the profit. Once SNS can reach a more precise target market than traditional media, why can SNS not make a more profit than traditional media?

The third force of long tail economy is “more access to niche.”  It is easier for online media to target a niche market than traditional media. What I think interesting is not about how much niche market can online media have. What amazing is no matter how small that market is can support the survival of online media. Like Cha mentioned in the article, Facebook derives more revenue from niche markets than from hit markets. What I am thinking is that can traditional media rely on small market, just like SNS do?

Anderson, C. (2006). The long tail: Why the future of business is selling less of more. New York, NY: Hyperion.

  

Rethinking Social Media

It’s interesting how restating something you essentially already know in a novel form can really reshape your understanding of that original something. That’s how I would qualify my reading of Cha’s article, which covered business models of social media. Case in point, I know that Facebook, LinkedIn, MySpace and Twitter all do different things, for different consumer bases, but I hadn’t really considered the fact that they have to do something different to essentially survive (hence MySpace changes its business plan after Facebook takes over the social network market [something of which newspapers could take note]).

Because they are receptacles of human data, more often than not carelessly volunteered, it is unsurprising that social network sites rely on advertising for a substantial portion of their revenue. Facebook, in fact, has just (re)launched an advertising service, Atlas, that will allow ads to track users across multiple platforms. Ultimately, this will be a test for consumers – whether they mind Facebook’s increasing infringements on privacy more than they love being able to share pictures of cats with their online friends. If the social network’s brief history is any indication, its consumer base will grow, privacy protection will shrink, and pictures of cats will win.

What I anticipate will happen to social media is sort of what happened to the search engine market – it will become an oligopolistic competition (if you can really call Bing vs. Google or Facebook vs. MySpace competition). It also seems likely that these social network giants will increasingly diversify, to secure other revenue streams. While Google builds self-driving (self-crashing?) cars, Facebook shops for apps, but it will likely experiment with expansion into some other area soon enough.