Oh come on, Apple

Successful launches of two major products and your stock declines. Don't ask me if you want trading advice.

Activision did the "best," with a less than 2% gain.

SYMBOL               PRICE NOW        PRICE PAID         GAIN/LOSS         GAIN %               

AAPL                     586.74                   664                        -$386.30               -11.64%              

ATVI                      11.31                     11.12                     $45.79                 1.71%   

GCI                         18.06                    18.03                     $6.66                   0.17%   

Total                                                                                   -$333.85              -3.34%

10 years

When Zach is 10, "newspapers" will be known as "news services" which still have a team of professionals dedicated to gathering and evaluating the day's intelligence and distributing it via a number of platforms. The number of people required to do this will be fewer than the number employed today. This is because revenue will be less, but there will be less duplication of effort.

The tablet presentation

Don't miss it!

TABLETS

Are traditional media and online media different? Let's do a research!

Here's the cite:

Michael A. Cacciatore,  Ashley A. Anderson,  Doo-Hun Choi,  Dominique Brossard,  Dietram A. Scheufele,  Xuan Liang, Peter J. Ladwig,  Michael Xenos,  and Anthony Dudo
Coverage of emerging technologies: A comparison between print and online media
New Media & Society September 2012 14: 1039-1059, first published on March 21, 2012 doi:10.1177/1461444812439061

And a link to it.

First of all, how do I get on the ninth author train? Seems like a good way to get around. How many ninth authorships does it take to equal one solo authorship? And what do you do as ninth author? Write the subheads and table captions?

Second of all, a summary of findings:

• U.S. print media cover less nanotechnology news than blogs in general do (using google blogs search)
• Blogs in general use more varied themes in their coverage of nanotechnology (think frames: environment and nanotechnology, health and nanotechnology, etc.) than U.S. print media do.

Third, stuff like this should be caught by a reviewer:

This suggests that print news media and Google News share similar issue-attention cycles for emerging technologies, perhaps because Google News aggregates online news articles from print news outlets.

Perhaps? More like, precisely because of that fact. Sometimes I wonder if people really treat Google News like the aggregator it is.

Also:

These contradictory findings imply that it is not the type of media – either the internet or traditional news media – that matters for the establishment of a public sphere. 

Then why is that what you're studying?

So my main problem is how the research is framed. They have set up the main question of the paper to be whether there's a difference between print and online media sources. And the answer to that is a resounding, "DUH." This would only be significant if there were NO difference between the two, I think. I mean, you can look at them and see that they're different, you don't need research to tell you precisely how. In my opinion it would be more useful in the long run to study what attributes of each medium contribute to the differences in the way they cover things and in their subject selection, or to study actual effects on readers (knowledge, importance and range of topics, etc.) rather than projecting these effects in the discussion section.

Do we really want news on our fridge?

Here's an example of how sometimes "we can" doesn't have to mean "we should" or "we do."

This is the fridge in the graduate student lounge. It has the capability to get news, tweets and more once you connect it to the internet. Mercifully, nobody has taken the time to set it up.

On a slow day, I might spend 20 seconds at my fridge, but I'm looking at its contents, not its front. Is there really a crowd of people out there going, "Man, the front of my fridge is so boring. What it needs is a touch screen so I can read news on my fridge. That's right, a news fridge." (On the other hand, a fridge that plays music from Pandora is potentially useful because you don't have to stare at the tiny, elbow-height (on me) screen to enjoy it.)

When I was at my newspaper, I felt like new media initiatives were sometimes approached in this same way. Hey, could we have a live chat along with that news event? Even if it's not the sort of thing that people watch live and participate in? If the answer is "yes, we can," then the answer immediately became, "yes, we should." Flood the site with anything we can think of, and maybe something will work. Throw all the spaghetti against the wall, and see what sticks.

This was partly because it's the editorial department in charge of all our content. Any sort of marketing or audience research was directed at attracting advertisers, not readers. We were left on our own, and without time to conduct our own research, we were left to make guesses. And our guesses weren't that good. If we made those judgments based on what phone calls we got at the office, then everything would be about the TV listings and the Junior Miss Salem Rodeo Queen pageant.

All this to say, if we're going to try something new, perhaps existing newsrooms aren't the best incubator for it. If we leave it to the overworked journalists who are very married to their routines, we might get news fridges. It's new, it's news, but it's stupid.

Mobile and advertising

It could be that things are changing. Here is Mark Zuckerberg saying he's going to make tons of money from mobile ads. Could be a pipe dream, could be a fact, but nobody knows because Facebook is the one figuring out right now what mobile ads should look like. It's a brand new space that we can guess about, or say how it is working now compared to other media, but none of that means that it won't improve or change as the industry adapts.

I got the sense from yesterday's class that mobile is this cast-off, dysfunctional, unprofitable space. All that may be true, but if it is, it is only because media and advertising companies haven't learned what to do with it yet. But as they start to figure it out, look what happens. This report shows that the two most common uses of smartphones and tablets are news and social media. In fact, the report says that mobile users read, on average, more news than desktop web users. If this is true, maybe mobile apps and sites are not inferior products. Actually, the report suggests that they may be complementary, having an "additive" effect on media consumption rather than displacing consumption of other media.

In short, I'm not giving up on mobile yet. I still think it will turn out to be one of the most important arenas for both news and advertising in the coming years.

Logan's Stocks

Apple: Expected to announce a new iPad
http://finance.yahoo.com/q?s=AAPL

Gannett: Redesigned USA Today
http://finance.yahoo.com/q?s=GCI

Activitions Blizzard: Pioneering video game business models
http://finance.yahoo.com/q?s=ATVI

How to define news, economically -- Part III

If news doesn't fit perfectly into a market for either goods or services, where does it belong? So far the only thing I've thought of is that it belongs in the same place as government.

Think of the police. What do we expect from them? Do we expect a good, as in a number of arrests or tickets? If so, that's faulty because then we're essentially creating crime by requiring a quota. Do we expect a service, as in protecting us from the bad guys? If so, we're going to be disappointed because it is impossible to predict when a crime will occur, and police cannot be omnipresent. And even when a crime is discovered, and sometimes even when the bad guy is identified, the criminal escapes or is never caught, and he gets away with his crime. And yet, despite not ever completely doing what we might expect them to do, nobody would say that we don't need police. And this is why police services are not bought and sold on the open market. We are charged taxes to pay for having police, and someone we elect makes decisions on how many police to have and how to deploy them. Public safety is a publicly funded, publicly run institution. A similar line of thinking goes for many other aspects of government.

Conclusion
So, IF we believe that timely information about current events is of value (perhaps the subject of debate for another three-part essay), then where does it belong, economically? Considering the ground I've covered so far, I see three options.

1. Leave it as is. The market for news will continue toward adverse selection, quantity over quality, with a few firms making guarantees to signal quality to the buyer. News organizations will continue to be trusted about as much as used car salesmen. But even then, profits aren't dependent on swindling people (as they are in used car sales) but on whether advertisers see any value in the dispersed, highly variable, fickle,  mistrusting, ad hoc audience that news tends to assemble. Prospects: Consumers aren't asked for much, so they're relatively happy, but the situation is not promising for news organizations.

2. Organize stronger public subsidies, but leave the news business in private hands. Similar to agriculture in the U.S. We want our news, so we'll subsidize you through the slow times on the understanding that you'll be a watchdog for us and kick into high gear when something big goes down. News organizations have quite a mixed track record in this regard. Prospects: News producers are much happier, but consumers aren't likely to think they're getting a good deal.

3. Make news public. Elect the editor in chief the way we elect the county sheriff. The news organization is owned by the government, yet expected to report on it, the way Congress appoints a portion of itself to investigate itself when it makes a mistake. Taxes pay journalists' salary, the budget it public just like for the city council or whatever. Prospects: News producers are most secure in this model, though they are likely to feel restrained. Consumers are now taxpayers, who have never quite been satisfied by how their tax dollars are spent, right?

There, finished. Anything I'm missing?

How to define news, economically -- Part II

What is news, in economic terms?

Is it a service?
"Man, it has been a while since I had my news done. Rhonda, I'll be back in an hour."
Maybe the collection of news is a service that is performed for others. You don't have time to go talk to all the lawmakers in the world about the health care bill, so we'll organize a team of specialists to do that for you, then write up an executive summary. The fact that the greatest majority of people are unwilling to pay for this service has until now been handled by selling whatever people use the service to advertisers. This is similar for many other services that are provided for free, like email, search engines, Facebook, Skype, and so on. So that's a fine idea: offer a free service to people, then sell whatever users you have to advertisers.

The problem is, journalists have no idea what services people actually want or, for that matter, who will want them, until the entire range of services has already been provided. I just saw an article that called this asymmetrical information, which seems to apply. (More information here.) In the news industry, this works in two ways. First, consumers have no idea what news will be produced on a given day. They must decide whether to buy access to the day's information without knowing whether they will be interested in it or whether it will be of any value to them. In other words, the choice to buy news is a choice to buy information you don't know you don't know (unless your friend on Facebook already told you that bin Laden was killed). And how can you possibly place a value on that? Second, news producers have little idea what will be interesting to people until after it is published, except in a few obvious cases. Journalists make value judgments all the time based solely on past experience, and the best appropriate analogy is stock traders. Past performance may not be a guarantee of future performance, but it is the only indicator one can use in making decisions for the future.

So economists say that, in markets where there is asymmetrical information (such as used cars - only the seller knows the car's quality; or home loans - only the borrower actually knows his ability and/or desire to repay), one of two things is likely to happen. In the worse case (1), the market may collapse. The agent on the side of the transaction that is lacking in information may decide that it's just not worth it, given the high likelihood that he's going to be swindled (sold a lemon, not repaid, or given a newspaper full of fluffy evergreen stories because news was slow that day). If the market doesn't collapse (2), it contracts into a market of adverse selection. This means that, because one side has such an information advantage in the transaction, the market is flooded with low-quality products. I think it would be easy to argue that this is now happening in the media market.

One way to resist this contraction is through signaling. Those on the side of the transaction with more information may choose to signal to those on the other side, either by volunteering some of that information or via guarantees or by building confidence in their brand. This is where media trust and credibility come in -- unfortunately, media are not doing such a hot job there either.

Coming in part III: The only serviceable analogy I can think of, and what it says about news.

How to define news, economically -- Part I

What is news, in an economic sense?

Is it a good?
"Hey Rhonda, we're out of news, could you pick up some more on your way home from work?"
Maybe news is a good, something that can be consumed and held in your hand. But what is the actual good, the information or the product itself? When someone decides to purchase a newspaper, I don't think they're telling themselves, "You know, I could really use a stack of grey, inky papers." I think it's faulty to consider the delivery platform as the only good being bought and sold. It's true, to some extent, that some people prefer reading news in a newspaper and others prefer reading news via a mobile app on their smartphone, and sales of both items are counted as goods. But the platform itself holds no inherent value. In other words, the newspaper is worthless to the buyer if it contains no news. The reverse relationship is not the same, regarding the news content. The news content holds value even without the newspaper or mobile app and can be delivered in any number of ways. (Although, I suppose you could argue that news content NEVER delivered holds no value -- the most worthless kind of story is one nobody reads. But I think it is safe to assume that news would not be produced simply to sit on a shelf ... that's what dissertations are for.)

So if news content is the good being bought and sold, the object that holds value both for media producers and consumers, from what is it produced? In the news industry, producers have very little control over inputs. If you have ever worked in a newsroom during the summer, you know this is true. Schools are out, municipal governments take frequent breaks as people go on vacation, there are no major policy meetings, and news is super slow. And yet, people expect a stack of "news" delivered to their doorstep every morning. So we tell them the animal shelter is overrun and give updates on highway construction, ad nauseam. I've tried to think of a comparable industry, where goods are expected to be produced even when there are no inputs, and I can think of one. If you make cars, and there is a shortage of the chemical needed to make catalytic converters, then the cost for that input goes up. But if the chemical is completely unavailable, there's nothing you can do. You stop making cars. Not so with the news industry. You continue selling your product as if it provided the same value as yesterday's news, which is clearly not the case.

So the question is, how much sense does it make to run a "goods" industry when you have no control over the inputs? If on Monday, someone is assassinated, or someone has sex with the wrong person, business is good. If nothing like that happens on Friday, why are we producing the same number of news stories to fill the same number of pages as on Monday? The only reasonable perspective is that the "good" people are buying isn't only the news, it's also the newspaper (this makes far less sense when you consider a free website or a free mobile app -- there's no consumer expense, and so you simply would spend less time on the site or not even open the mobile app at all on the slow day). Which now makes this post circular and completely nonsensical.

In summary, that's what I think of news' business model: it's nonsense. Coming soon in Part II: Is news a service?

EDIT: Just thought of this comparison: the farm industry. That's another case where the production of a good (say, corn) is dependent on inputs that the producer has no control over (the weather, specifically, water). The farmer could buy all the water he needs to produce his crop, but that would drive prices so high that he would not be able to sell it, and people could not afford it. So what happens in this market? The farmer buys insurance, and the government heavily regulates the market with subsidies and other controls. So when a shortage of inputs creates a situation unfavorable for business, the farmer lets his corn die and we buy our corn from some other farmer who is not experiencing a drought. The farmer's insurance and the government pay his bills, so he's happy, and consumers don't experience a dramatic jump in food prices. This works because the nation has an interest in stable food prices, which may not be true for news.

Geometry

Read this the other day, and I tend to enjoy Shirky's thinking about the future of news. Not because he's optimistic, certainly, but because he's sensible rather than emotional about it. In this CJR piece, he visualizes the news media business model as a triangle of producers (the news businesses themselves), audiences and advertisers. Each wants a connection to the other two, and all three legs of the triangle need to stand up in order for the model to work at all. And now that at least two of the legs are weakened, if not failing altogether, he suggests that there are only three paths forward: disappear entirely because the model is broken; shrink significantly to survive on the limited revenues; or restructure using a different business model. I think we all hope for the restructuring option.

But it doesn't appear that many people have good ideas about what a new business model for news should look like. I'm hoping something to discuss in class will help me to think of some suggestions.

Desirability

I liked Page 8. On Page 8, the authors point out that "Public broadcasting is desirable, so therefore we should fund it," is not good argument for funding public broadcasting. In fact, it's not even a valid argument for funding public broadcasting, at least from an economic standpoint.

If every decision is made based on costs, we have to consider all the costs of funding public broadcasting, including opportunity costs. That is, what is not funded by funding public broadcasting. The argument shouldn't be that public broadcasting is good, but that it is more cost effective than any substitute recipient of funding. In other words, we'd have to show what good is produced by it, or what value it creates, then weigh that against the cost of funding it and the opportunity costs of other public endeavors that would not get funding.

This is why arguments about the future of news go nowhere. They always have some element like this: "News is good, so we should have it!" In fact, we are not making a valid argument until we can say something like, "News produces a measurable impact on participation in public life, which has been shown to be an important determinant of the success of a Western democracy." Then we could probably all agree that a stable government is worth having and we can have some sense of the value that news provides. Then we have to asses the costs associated with it, including government information subsidies like PR offices, waste produced by countless newspapers, postal subsidies, and whatever else. Only then could we begin to have a productive discussion of whether news is actually valuable.

Or at least that's what economics says.

This sounds familiar

The economics theories presented in the Kung chapter read as if they were developed by observing the last 20 years of media history. Of course many of the examples used are media-oriented, but at least to me, having worked in the news media for six years now, the applications of these theories were immediately apparent. Property rights? Only one of the most defining struggles of the digital age. Scale, network and bundling economies combined to make newspapers not only viable but intensely profitable -- both no longer true once those same economies can be achieved in other ways. In short, it's easy to see where these concepts apply.

Which made me wonder, why have I not encountered them before in scholarly research? Obviously that's part of the reason I'm taking this course -- to be exposed to applications of economics in media research. But it's something that has surprised me in the last year that I've been studying communications theory (and academics in general): Much academic work exists in silos, separated -- sometimes by circumstance, but often quite on purpose -- from everything surrounding it.

To me, this is where insights like those in the New York Times article are valuable. Of course we must be more open-minded in our research, both in conceiving our own and in evaluating our peers'. In fact, we might be well served to be even more open minded than the authors -- I agree that a strict devotion to the scientific method limits our field, but discarding it entirely throws the baby out with the bathwater. The scientific method brings important discipline to our work, particularly when trying to build on previous research. Rather than following a particular method or system that journals seem to like, we ought to focus on finding understanding and solving problems, then let our thoughts speak for themselves.

Haha, that sounds really hoity toity. But I think my opinion there grows out of a resistance to the "must do it this way" approach many people take to quantitative research. Isn't research supposed to be about figuring it out, even if that means figuring out not only which questions to ask but how to answer them? And I believe our work in both directions becomes better informed the more we include ideas and methods from other disciplines.