comm 180 exam 2 study guide

information as an intangible product

information is an experience good, no physical form

nonrivalrous

can be used simultaneously and cannot be "used up"

nonexcludible

very difficult to control distribution

Perishable and timeless information

How can we keep information valuable

intellectual property rights

rights to which creators are entitled for their work (copyright/ trademark)

advertising

Many content producers give away their content for free and make their money by charging advertisers to reach their audience

information as an experience good

we don't know if we will like the information until we consume it

first copy of contents

this is the fixed cost

First copy as the fixed cost

the first copy is the fixed cost because the cost remains the same no matter how many copies are produced

economies of scale

spending our fixed cost over more people
media ex- being able to distribute your show to more people

economies of scope

instead of spreading out the cost over more customers, spreading out the cost over more products
media ex- a cable company's cost for infrastructure is spread out over multiple products

Why do live events cost more than recorded content

Live events cost more than recorded content because live events have a limited audience meaning there is a limited economic sale

What is the long tail?

all the collection of less popular content that is available now that never used to be available

long tail and consumers

you now have a much larger selection of content than ever before

long tail and producers

internet now makes it possible to decide what products to stock
A store can now offer everything to their customers
Can have customers from all over the world
Limitless customers and limited inventory- big advantage over local markets

Financial barriers to entry

-Large capital requirements (need lots of money to launch business)
-Large economies of scale/scope (incumbents already have market share and cost advantage)
-Specialized resources: raw materials, suppliers, transportation, etc.

regulatory barriers to entry

Government restrictions on entry

technological barriers to entry

Whenever conditions make it hard for a new competitor to enter an industry, those conditions are barriers to entry
new technology known to be better.

switching costs

This issue refers to the time, effort, and expense required to adopt a new technology

sunk costs

refers to the time, effort, and expense you have already spent learning the old technology

uncertainity

how do we know to trust new technology
we usually wait until technology has come out so we don't risk buying technology that does not succeed

complementary goods

products that depend on the success of other products sold by different companies. Demand for the first product is correlated with demand for the second product

network externalities

external benefits of being part of a large network
Network increases in value when it increases in size
Existing users benefit when new users join
Gives largest network a competitive advantage (barrier to entry)

economic barriers

When the cost of starting or operating a business is very high, it creates a barrier to new firms entering that industry

backward compatibility

a piece of technology is able to be used with an older piece of hardware
ex: if you get a new phone, can your favorite app work on the new phone

Blu-ray

A disk that enables the recording, rewriting and play back of high-definition video and the storing of large amounts of data

HD-DVD

The high-definition optical disc formatting standard, promoted by Toshiba

Network externalities advantages

more connections
more choices
more support

Network externalities disadvantages

network congestion
security
privacy

Are all audiences equal

No, some audiences are more valuable
producers target specific audiences (certain age groups, ethic groups, etc)

Impact on internet on advertising

Resulted in new competition for both advertisers and audiences

Freemium model

free but the app makes money from ads

purchase model

pay for the app

subscription model

pay for the subscription

Vertical integration advantages

economies of scale and scope
Guaranteed distribution
Profits at each level
Reduced transaction costs

vertical integration anticompetitive concerns

can discriminate against other suppliers or customers

horizontal integration advantages

economies of scale and scope
Increased market share= increased market power
Upstream program suppliers, downstream distributors
advertisers

relationship between TV and box film

work together in advertising

spectrum scarcity

When there are not enough frequencies available for everyone who wants their own station

public trustee

government deciding who gets a license to a station

public interest

The FCC giving a station a license because they feel as if the station will benefit public interest

convience/necessity stations

stations that need to serve the local community

commercial broadcasting

advertisements in long, aggressive, attention-grabbing blocks with shorter blocks of music tucked in

non-commercial broadcasting

do not run advertisements at all

Distribution of stations across the country

The country is divided into 210 geographic television markets ranked by geographic size

expansions of channels

As more channels became available, stations had to reduce their audience to a more local, specific audience (narrowcasting) in order to keep up with other channels

Broadcasting

using radio waves to send signals through the air

cable

uses wires to send its signals

Network model and economies of scale

the more stations in a network the better economy of scale
ex- more people to use the same DJ, equipment, can all share an area, less costs

Why do larger markets have better quality local programming

Larger markets have better quality local programming because the program sells the content to a national audience and then local stations can produce the content for free

cable networks and cable system relationships

Cable networks sell advertising just like broadcast networks. However, cable networks developed a second source of revenue. Whereas broadcast networks used to give their programming to local affiliates for free, cable networks charge the local cable system for the right to carry the network.

local production

A station can produce its own programming, such as a local newscast, talk show, or sporting event, this means that the station gets to keep its own advertising

network

Most stations choose to become a network affiliate meaning the local stations can produce high quality programs but only get to keep a small amount of advertising time

syndication

The station can purchase programming from a syndicator
- this is when the station gets to choose what programs to air and at what time to air each program

O&Os

vertical integration and are the owner of the network producing the show

affiliates

not owned by the network, just have a contract with the network to produce the show

Cable benefits to local stations

Helped reach homes that could not get signal
Could fit additional wires into a cable wire
Could charge a higher price
More viewing choices

Cable threats to local stations

Increase in viewers
Local audience stations shrunk

MSO

Owning cable systems in hundreds of communities
ex- comcast

local stations

don't have to rely on cable
don't generate the same subscriber fee

broadcast networks

provide much programming for local stations and get much advertising in return
ABC, NBC, CBS, FOX

cable networks

Specialized programs such as ESPN, Comedy Central, & Lifetime
these programs sell their advertising which is then distributed by local cable systems

OTT streaming

Viewing television over an Internet connection

TV ratings

percentage of a population watching a program (decline)

TV shares

percentage of viewing population watching a program

Decline in ratings

As we have been given more choices of things to watch the ratings have decreased because there is more variety than just having to watch one show

central office

telephone wires in a town leading to one central place

local loop

the wire from your house to the central office

local exchange carrier

controls the last mile

last mile

the wireless connection between your phone and the cell tower

divestiture

the transfer of total or partial ownership of some of a firm's operations to investors or to another company
ex- AT&T selling their LECs

CPE

refers to the telephones, fax machines, answering machines, and other devices that businesses and residential customers connect to the telephone network

How did AT&T become a monopoly

AT&T became a monopoly because it controlled the telephone equipment and telephone service

Why is the local exchange carrier and the last mile so important to competition

Local exchange carrier and the last mile are so important to competition because you can't switch over to another company during this time

What was the divestiture and how was it supposed to help competition

The divestiture was something that required AT&T to sell all its LECs which in turn allowed for even competition among all services as the LECs could not favor AT&T anymore

Benefits of the Sprint/T-mobile merger

less competition

Concerns of the Sprint/T-mobile merger

higher phone bills resulting in financial burdens on some people

Which operating system has the largest market share in the United States

IOS and Android

Which operating system has the largest market share worldwide

Android

Why are androids cheaper

Androids are much cheaper because they are handmade by Android or Google licenses other facilities such as Samsung, Nokia to make Android products

How have mobile phones impacted access to telephones and the Internet globally?

They have revolutionized telephones. Due to cell towers and wireless connection, it is much cheaper to build cell towers thus allowing internet access to drastically increase

How can Google and Apple use vertical integration to discriminate against other companies

Google and Apple can use vertical integration to discriminate against competitors because they two companies have high market power thus allowing them to control their prices and raise prices for customers

universal service

the principle that everyone should have basic access to telecommunication services

common carrier

provide service to all on an equal basis

what were RBOCs

Regional Bell operating companies -- the local telephone companies that AT&T divested in 1984

Role of FCC

Regulated by the Federal Communications Commission (FCC), Prohibits obscenity, indecency, and profanity,

Telecommunications Act of 1966

allowed for companies to own any amount of services
reduced media regulations which made the industry less competitive

What is the Third screen

mobile phones

Geolocation

locates your smartphones position in the real world

NFC-equipped devices

detect your location in relationship to a product display inside a retail store

government surveillance and privacy

Law officers without a warrant can demand to see records
FBI and CIA can conduct nationwide roving wiretaps
NSA- collects phone records and cell phone location

Why did VHF do better than UHF and how did that impact the number of TV networks?

VHF does better than UHF because VHF has stronger signals, and UHF had a weaker advertising strategy. This impacted the number of TV networks because most people could only have 3 network stations

must carry

A policy that requires cable companies to carry local broadcast signals

MSO

cable companies that operate in more than two communities

DBS

a television or radio satellite service that transmits signals from satellites to compact home receivers

retransmission fees

monthly per-subscriber fees that local broadcasters charge cable companies for the right to carry their programs.

SDTV (Standard Definition Television)

resolution is considered to be not high def

HDTV (high-definition television)

digital television that provides a wider and clearer picture than standard television.

Why are reality shows cheaper than scripted shows

Reality shows are cheaper than scripted shows to produce because reality shows use low tier actors, now scripts but elaborate sets. They also use nonunion labor and pay the production staff cheaper

cabile affiliate fees

are monthly per-subscriber fees that cable programming services charge local cable operators