Chapter 10 Online Content and Media

Chapter 10 Online Content and Media 1) Which of the following is not a current trend in online content? A) Americans continue to spend more on streaming music than downloaded music. B) Readership of newspapers in print form continues to exceed online readership. C) E-book sales growth slows. D) Explosive growth of the mobile platform accelerates the transition to digital content. Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 2) Cord cutters and cord shavers are shrinking the number of pay TV subscribers yearly by approximately: A) 3%. B) 5%. C) 7%. D) 9%. Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 3) Which of the following U.S. media channels generates the most revenue? A) broadcast television/pay TV B) video games C) newspapers D) box office movies Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 4) In 2017, the various entertainment industries together accounted for about __% of total media industry revenues, while the print media industries collectively accounted for about ___%. A) 24%, 76% B) 76%, 24% C) 89%, 11% D) 11%, 89% Answer: B 1 Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 5) Which of the following statements about Millennials is not true? A) Millennials are more likely to have read a book in the past 12 months than older adults. B) Millennials overwhelmingly prefer e-books to printed books. C) Millennials watch 100 to 130 hours of regular cable TV per month, about the same as older adults. D) Millennials are nearly twice as likely as older adults to use streaming services such as Netflix, Hulu, and Amazon. Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 6) In 2018, time spent with digital media accounted for ___ of total media time spent A) 23% B) 33% C) 50% D) 75% Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 7) Which of the following types of online content is consumed by the highest percentage of U.S. Internet users A) digital audio B) video C) digital games D) e-books Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 8) All of the following are examples of technology convergence except: A) the iPad. 2 B) Amazon Books Publishing. C) Apple TV. D) smartphones. Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 9) All of the following are aspects of content convergence except: A) language. B) design. C) production. D) distribution. Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 10) Which of the following occurs first in the process of content convergence related to books? A) media integration B) media migration C) media transformation D) media maturity Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 11) Which of the following is not an example of industry structure convergence? A) Amazon’s creation of Amazon Books Publishing B) Verizon’s acquisition of Yahoo C) AT&T’s acquisition of Time Warner D) Apple’s development of the iPad Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 12) Which of the following types of online content is consumed by the lowest percentage of U.S. Internet users? 3 A) e-books B) magazines C) video D) digital audio Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 13) The merger of media enterprises into powerful, synergistic combinations that can crossmarket content on many different platforms is referred to as: A) aggregation. B) repackaging. C) media transformation. D) industry convergence. Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 14) DRM refers to a combination of ________ for protecting digital content. A) hardware and software methods B) technical and legal means C) user and publisher agreements D) local and remote policies Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 15) ________ convergence describes the development of hybrid devices that can combine the functionality of two or more existing media platforms into a single device. A) Technological B) Content C) Media D) Industry Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 4 16) Content convergence describes convergence in the design, production, and ________ of content. A) sales B) distribution C) marketing D) consumption Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 17) A business model that uses advertising revenue to provide some content for free, combined with an option to obtain additional content for a price is called a(n) ________ model. A) sales B) distribution C) a la carte D) freemium Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 18) Total music consumption in hours of day listening to music has increased even as sales of CDs have drastically declined. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 19) The average American adult spends twice as much time-consuming media than time spent at work. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 20) The proliferation of mobile device has led to a decrease in the total amount of time spent with media. Answer: FALSE 5 Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 21) The video game industry accounts for the second highest amount of U.S. media revenues. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 22) The time spent on desktop computers and mobile devices now exceeds time spent in front of the television. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 23) The a la carte revenue model allows users to pay only for what they use. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 24) Millennials are the first generation to be born into the digital revolution of the 20th century. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 25) Revenue generated by online TV and movies is expected to grow by nearly 30% between 2018 and 2021. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 6 26) Smartphones are an example of technological convergence. Answer: TRUE Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 27) Cannibalization is a major challenge facing book publishers. Answer: FALSE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 28) What is DRM and why is it used? Answer: Digital rights management (DRM) refers to a combination of technical (both hardware and software), and legal means for protecting digital content from unlimited reproduction and distribution without permission. DRM hardware and software encrypt content so it cannot be used without some form of authorization, typically based on a payment. The objective is to control the uses of content after its been sold or rented to consumers. Essentially, DRM can prevent users from purchasing and making copies for widespread distribution over the Internet without compensating the content owners. Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 29) Explain the concept of media convergence. Answer: The term media convergence refers to digitally based changes in technology platform, content, and industry structure. Technological convergence means the integration of previously separate platform functionality into hybrid devices that can combine the functionality of many different existing media platforms such as books, newspapers, television, radio, and stereo equipment. Content convergence has three dimensions: design, production, and distribution. Content design convergence occurs as content created in an older media technology is transferred into a new technology. Historically the initial transference involves little artistic change, but as the artists and producers learn how to use the new tools and how to deliver content more efficiently in the new media, the new capabilities can be fully exploited, and the art becomes measurably different. Content production convergence occurs when content, which is the most significant cost of content, is developed only once using technology that can deliver it to multiple different platforms. Production convergence drives content convergence as new tools are developed for economically producing content for delivery to multiple platforms. For example, the text produced in a word processing program can be easily converted to an HTML or PDF file for online delivery. Distribution convergence occurs when the distributors and ultimate consumers 7 have the devices needed to receive, store, and experience the product. Industry convergence refers to the merger of media enterprises into powerful synergistic combinations that can cross-market content on many different platforms and create new works that use multiple platforms. Traditionally, each type of media — film, text, music, television — had its own separate industry, typically composed of very large players. However, the Internet has created forces that make the merger of traditionally separate firms in separate media industries a plausible — perhaps necessary — business proposition. Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 30) Describe the three basic revenue models for digital content delivery. Answer: There are three revenue models for delivering content on the Internet. The two "pay" models are subscription (usually "all you can eat," meaning the amount of content that you can consume is unlimited), and a la carte (pay only for what you use). The third model uses advertising revenue to provide content for free, often with a "freemium" option, which makes additional content available for a cost. In many cases, all three of the models work in tandem and cooperatively: free content can drive customers to paid content, as streaming services like Pandora and Spotify have discovered. Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 31) Discuss the structure of the U.S. media content industry. Answer: The U.S. media content industry prior to 1990 was composed of many smaller independent corporations specializing in content creation and distribution in the separate industries of film, television, book and magazine publishing, and newspaper publishing. During the 1990s and into this century, after an extensive period of consolidation, huge entertainment and publishing media conglomerates emerged. The U.S. media industry is still organized largely into three separate vertical stovepipes: print, movies, and music. Each segment is dominated by a few key players. Generally, there is very little crossover from one segment to another. Typically, newspapers do not also produce Hollywood films, and publishing firms do not own newspapers or film production studios. The purchase of the Washington Post in 2013 by Jeff Bezos, the founder of Amazon, and an Internet mogul in his own right, was an anomaly. Even within media conglomerates that span several different media segments, separate divisions control each media segment. In the past, delivery content firms, such as Comcast, Altice, AT&T, Verizon, Sprint, and Dish Network were not involved in content creation, but instead just moved content produced by others across cable, satellite, and telephone networks. However, within the last several years, this has begun to change. Comcast led the way with the acquisition of a majority interest in NBC Universal. AT&T's merger with Time Warner and Verizon's purchase of Yahoo, along with its previous acquisition of AOL, are signs that the telecommunications companies are moving into the content and distribution market, as well as the Internet advertising industry, in a major way as revenues from traditional cable Internet and wireless business slow. 8 Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.1: Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence. 32) Which of the following has not been purchased or invested in by a wealthy individual with ties to the technology industry? A) Washington Post B) Time Magazine C) The Atlantic Magazine D) The New Yorker Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 33) Which of the following has the highest share of the e-book market? A) Amazon B) Apple C) Google D) Barnes & Noble Answer: A Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 34) Which of the following happened during the time period when newspapers used a printcentric business model? A) Google launched its search engine. B) Apple introduced the iPhone. C) Facebook opened to the public. D) The adoption of smartphones and tablets has grown rapidly. Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 35) ________ were the most troubled segment of the print publishing industry in 2017. A) Books B) Magazines C) Newspapers D) Periodicals Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 9 36) Which of the following statements about the newspaper industry is not true? A) U.S. newspaper revenues totaled about $27.5 billion in 2017. B) Newspaper websites are the most lucrative way for newspapers to monetize their digital readers. C) Social media sites have become a major source of unique visitors to online newspapers. D) Newspaper circulation revenues have declined dramatically since 2000. Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 37) Which of the following statements about online magazine publishing is not true? A) The total magazine audience size increased from 2015 to 2017, due entirely to the growth of digital magazines. B) Only about 10% of tablet computer owners read magazine content once a week. C) The percentage of adults who read digital edition magazines has more than quadrupled since 2011. D) There an estimated 1,200 magazine apps for mobile readers. Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 38) Magazine digital advertising revenues are expected to _______ for the next few years. A) remain relatively flat B) more than double C) grow over 20% D) significantly decrease Answer: A Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 39) Which of the following is not one of the top three players in e-book publishing? A) Barnes & Noble B) Apple C) Amazon D) Google Answer: D Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 40) Which of the following is not an example of a native digital news site? A) Huffington Post B) Buzzfeed C) Vice D) USA Today 10 Answer: D Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 41) Which of the following magazines underwent a digital remaking following the introduction of a metered paywall in 2014? A) Sports Illustrated B) The New Yorker C) Newsweek D) Time Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 42) Which of the following is the most common model for online newspaper access for U.S. newspapers with circulations over 50,000? A) totally free B) most content free, but subscription fee to access premium content C) paywall D) metered subscription model Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 43) Which of the following statements about the online newspaper audience is not true? A) The online newspaper is one of the most successful of all online media in terms of audience size. B) Online readership of newspapers is growing at more than 30% a year C) Social networks have become a major source of readers for newspaper articles. D) Online newspapers reach over 75% of individuals in households earning more than $100,000 a year. Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 44) Who was the first major fiction writer to create an e-book-only volume of a new work? A) Hugh Howey B) Stephen King C) Dan Brown D) Amanda Hocking Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 11 45) Together Amazon and Apple account for ________ of the e-book market. A) 65% B) 72% C) 87% D) 92% Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 46) Around what percentage of Amazon's top 100 selling e-books are now self-published? A) 14% B) 24% C) 34% D) 44% Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 47) According to Amazon, around how many indie authors have sold more than 1 million copies of their books? A) 10 B) 100 C) 1,000 D) 10,000 Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 48) ________ was sued by the Justice Department for violating antitrust laws in connection with e-books. A) Amazon B) Google C) Apple D) Barnes & Noble Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 49) In 2017, book publishing revenues: A) remained stable. B) increased significantly. C) experienced a sizeable decrease. D) increased slightly. 12 Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 50) When was the future of e-books firmly established? A) in 2000, with the release on Amazon of Stephen King's novella, Riding the Bullet B) in 2007, with the introduction of Amazon's Kindle C) in 2009, when Barnes & Noble introduced its Nook e-reader D) in 2010, when Apple introduced the first iPad Answer: B Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 51) Which of the following statements about the wholesale and agency models for selling books is not true? A) In the wholesale model, the retailer decides at what price to sell a book to the consumer. B) Amazon surprised traditional publishers by selling e-books for below their wholesale cost. C) Amazon supports the agency model. D) A result of the agency model was that Amazon's prices on e-books rose. Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 52) Texture is an example of which of the following? A) interactive book developer B) magazine aggregator C) e-reader platform D) vanity press Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 53) Which of the following is not an advantage that pure digital news sites have over print newspapers? A) They have a lower cost structure. B) They can create new work flows and business processes that are more timely and efficient. C) They offer higher quality journalism. D) They can take advantage of newer technologies for producing the news. Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 54) Which of the following native digital news sites is owned by AOL? 13 A) Vox B) Vice C) Reddit D) Huffington Post Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 55) The ________ model is not one of the three business models employed by newspapers between 1995 and 2018. A) Print-centric B) Integrated Print/Web C) Digital First D) Convergence Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 56) Which of the following native digital news sites has the most unique monthly visitors? A) HuffingtonPost.com B) Vox.com C) Vice.com D) Buzzfeed.com Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 57) Which of the following refers to itself as the front page of the Internet? A) Reddit B) Huffington Post C) Flipboard D) Buzzfeed Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 58) According to Pew Research Center, what percentage of newspaper readers are exclusively print readers? A) 21% B) 31% C) 41% D) 51% Answer: D Difficulty: Moderate 14 AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 59) The majority of Americans who read newspapers online read them exclusively on mobile devices. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 60) In the wholesale model of e-book distribution, pricing power is with the publisher. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 61) Vox is an example of the Digital First business model. Answer: FALSE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 62) Discuss the difference between a wholesale and agency model of e-book distribution and pricing. Why didn't the wholesale model work for e-books, and what happened when publishers tried to implement an agency model? Answer: The wholesale model of distribution and pricing is the same model publishers used with hard cover books. In this model, the retail store pays a wholesale price for the book and then decides at what price to sell it to the consumer. The retailer sets the price with the publisher, and that the book will not be given away for free. In the past, the wholesale price was 50% of the retail price. With e-books, publishers discovered that some online retailers like Amazon and Apple began to sell books below cost to encourage customers to purchase their e-book reader devices, or to sell them other goods. The real value in e-books for Amazon and Apple is selling digital devices. While the publishers were expecting e-books to sell for $14, Amazon began selling them for $5, reducing the publishers' revenue by at least half. Amazon not only sold millions of Kindles but also sold 90% of all e-book titles on the Web in 2011. Amazon had a de facto monopoly on ebooks. In response, the top five publishers, along with Apple, introduced an agency model of distribution in which the distributor is an agent of the publisher, and can be directed to sell ebooks at a price determined by the publisher, around $14.99 and higher for certain titles. In return for a 30% commission, Apple agreed to support this model, as did Google, neither of whom were comfortable watching as Amazon dominated one of the hottest areas of web content sales. Amazon's prices rose to this level, and its market share fell to 60%. However, as a result, the Justice Department sued the five publishers and Apple for price fixing in violation of antitrust laws. The case was settled and Apple paid a fine of $450 million. The settlement created a public relations storm for Amazon as writers, journalists, politicians, and publishers decried Amazon's use of its market power to sell books that would bankrupt the established publishing industry. Today, each publisher (and not an industry consortium) makes an agreement with Amazon about 15 the price of their books (agency model). Today, e-book prices from major publishers are variable, but generally sell for around $15. For instance, John Grisham's latest crime novel published by Doubleday in 2018 sells at $14.95 for a Kindle e-book, $15.99 for a paperback, and $17.99 for a hardcover edition. Amazon is no longer selling e-books below their own cost. Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 63) Why have newspaper revenues declined over the past 15 years? Answer: The 15-year decline in newspaper revenues has resulted from four factors: • The growth of the Web and mobile devices as an alternative medium for news and advertising. The movement of consumers to an online life style has drained billions of ad dollars (including classified ads) from the printed newspaper. • The rise of alternative digital sources for news, commentary, feature stories, and articles. • The difficulty of traditional newspaper firms and their managers to develop suitable business and revenue models that could survive and even prosper on the Internet, and the mobile/social platform. • The rise of social media, and its role in directing traffic to newspaper content, has challenged newspapers to change their business model to accommodate changes in consumer behavior and technology. Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 64) What are the three different online business models that newspapers have employed since 1995? Answer: Newspapers have developed three distinct business models to adapt to the Internet and the mobile and social platform. The three models are Print-centric, Integrated Print/Web and the most current model, Digital First. In the Print-centric business model (1995-2000), newspapers created digital copies of their print editions and posted them online. Readers discovered stories as they did before, by reading the front page online, following links to stories, and clicking on topic areas or sections. Stories were promoted by a business department that sought to enlarge the print audience and to attract advertisers based on readership and online visitors. Digital advertising was very limited, in part because advertisers did not believe it was effective. Readers were not engaged with journalists except insofar as they read the stories and could identify with the subjects of stories. The business process of creating journalism did not change. There was little difference, if any, between the print and online versions. The technology platform for the digital edition was the desktop or laptop, and news was consumed at home and work. In the Integrated Print/Web business model (2000-2010), newspapers adopted multimedia elements such as video, added more interactive elements like crossword puzzles and contests, and provided more reader feedback opportunities, especially on opinion and editorial pages. There were opportunities to personalize the news using RSS feeds and push news to the reader. Nevertheless, news was discovered by the reader visiting the website; promoting content online was limited, primarily to RSS feeds. Readers were somewhat more engaged. The technology platform remained the desktop or laptop platform. 16 In the Digital First business model (2010 to present), startup news sites specifically focused on using new technology and platforms to radically transform their business — or go out of business. The new platform is not based on personal computers using a browser, but on mobile devices and apps, with desktops and laptops now just one pillar of the delivery platform. In this new environment, the news does not stop at 5 PM, but goes on 24×7. Stories start with an initial short article that is updated through the day, followed by thousands of tweets, then millions of shares on multiple social sites and on Google. Often amateurs on scene know more about the news in the first hours of a story than any collection of journalists in their offices. Amateurs provide video feeds, commentary, and opinion. The Digital First business model inverts previous models: the top priority is producing the most engaging, continually updated digital edition, and then producing a print product based on the news developed in the digital edition. In the case of pure digital start-ups, there is no print edition, and the news is just a continuous stream of updates, blogs, tweets, and posts, rather than a fixed article. News articles are timestamped, indicating an update is on the way and the reader should return to follow the story. Instead of waiting for readers to discover the news, or search for the news on a search engine, the news is pushed to readers on any of a variety of venues where they happen to be — social media sites, mobile news feeds, Twitter, or Yahoo or Google News. Journalists remain professionals, but they follow Twitter feeds and social media sites, and promote their stories and personas on social media sites. Their job is no longer simply reporting and writing, but promoting and engaging readers on a personal level through their own efforts. Superior reporting and writing are no longer the sole criterion for hiring and advancement. More emphasis is put on reporters' abilities to attract audiences on their own social media pages and Twitter feeds. The Digital First business model is not yet a reality for traditional newspapers; however, the largest print newspaper organizations, such as the Wall Street Journal, New York Times, Washington Post, and others, have begun the journey towards becoming Digital First news organizations. Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 65) What advantages do pure digital news sites have over print newspapers? What advantages do print newspapers have compared to online news sites? Answer: Pure digital news sites have many advantages over print newspapers. They don't have the cost of printing papers; they can create new work flows and business processes that are more efficient and timely; they have a lower cost structure, often relying on user generated content and minimal payments to reporters and bloggers, with lower pension costs; and they can take advantage of newer technologies for producing the news. While the quality of journalism on these pure digital sites is not as good as traditional print newspapers, this situation is changing rapidly as the pure digital sites hire talented journalists and editors from print newspapers that are experiencing financial difficulties. What online news sites often do not have is credibility and trust. For instance, Buzzfeed has been the subject of many lawsuits accusing it of copying content from competing newspapers and sites without attribution, claiming the content as its own. Without trust and quality, online news sites are simply distractions filled with celebrity 17 photos, and there is significant competition for this kind of content. Difficulty: Moderate AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.2: Understand the key factors affecting the online publishing industry. 66) Which streaming gaming channel was purchased by Amazon in 2015? A) Dailymotion B) YouTube.com C) Twitch.tv D) Shield.nvidia.com Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 67) Which of the following statements about e-sports is not true? A) Colleges are beginning to offer scholarships for players on their video game teams. B) Twitch accounts for over 80% of the online e-sports viewing in the United States. C) E-sports tournaments routinely draw an online audience equal to professional football games. D) The e-sport audience is predominantly composed of females between the ages of 21 and 34. Answer: D Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 68) ________ is the leading online television and movie distributor. A) Netflix B) Hulu C) iTunes D) Google Play Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 69) Which of the following statements about the movie industry is not true? A) iVOD revenues have grown faster than subscription streaming revenues. B) Online movie distribution is not dominated by a single distributor. C) Of all the content industries, thus far, the movie industry has been able to maintain its revenue stream and not be digitally destroyed by new technologies. D) The movie industry's control of the release window of a movie is a form of price discrimination. Answer: A Difficulty: Moderate AACSB: Application of knowledge 18 Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 70) Which of the following statements about piracy in the movie and television industry is not true? A) Piracy still remains a threat to the movie and television industry. B) The most common method of piracy uses bit cyberlockers/file hosting sites. C) The monetary amount the movie industry loses as a result of piracy is unknown. D) Public interest in pirated movies in the United States is declining. Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 71) Which of the following statements about the home entertainment industry is not true? A) Over 50% of the U.S. population uses an OTT subscription service in addition to or instead of cable/satellite TV. B) The current transition to Internet and especially mobile delivery of television is leading to a decline in traditional television viewing. C) Both the television and movie industry share in home entertainment revenues. D) Neither the television nor film industries have built an industry-wide Internet delivery system. Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 72) Which of the following statements about the music industry is not true? A) Music industry revenues have decreased by 50% since 1999. B) Digital revenues accounted for less than half of all U.S. music revenues in 2017. C) It is still unclear if independent streaming music services have a viable business model. D) Streaming music generated over 50% of all digital music sales in 2017. Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 73) In 2017, which of the following was the largest producer of revenues in the U.S. entertainment industry? A) radio B) television C) motion pictures D) video games Answer: B Difficulty: Moderate AACSB: Application of knowledge 19 Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 74) In 2017, which of the following forms of entertainment produced the least amount of revenue? A) radio B) recorded music C) video games D) television Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 75) In 2018, which of the following comprised the largest segment of the online gaming audience? A) tablet gamers B) smartphone gamers C) PC gamers D) console gamers Answer: B Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 76) House of Cards is an online TV series developed by which of the following? A) Amazon Studios B) HBO C) Netflix D) Hulu Answer: C Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 77) All of the following are “live”/on-demand OTT services except: A) Sling TV. B) DirecTV Now. C) Netflix D) YouTube TV Answer: C Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 20 78) Which of the following is not a type of digital gamer? A) casual gamers B) local gamers C) social gamers D) MMO gamers Answer: B Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 79) Which of the following platforms was used by the fewest gamers in 2018? A) consoles B) PCs C) smartphones D) tablets Answer: A Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 80) Hollywood's practice of staggering the distribution of movies in different channels, such as box office and DVDs, is referred to as: A) dynamic pricing. B) content convergence. C) the release windows. D) digital rights management. Answer: C Difficulty: Easy AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 81) Which of the following statements is not true about OTT? A) To use OTT services, consumers must purchase a bundle of channels. B) OTT entertainment services are a threat to cable/satellite television delivery systems. C) OTT services include the ability to download content after purchase or rental, as well as subscription streaming and “live” TV services. D) OTT entertainment services enable binge watching. Answer: A Difficulty: Difficult AACSB: Information technology Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 82) Streaming has replaced downloading as the preferred consumer viewing platform for home 21 entertainment content. Answer: TRUE Difficulty: Moderate AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 83) In 2017, digital games generated more than three times the amount of digital music revenues. Answer: TRUE Difficulty: Difficult AACSB: Application of knowledge Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 84) What are e-sports, how do they make money, and why are advertisers attracted to it? Answer: E-sports involve professional online gaming. Like other professional sports, e-sports is based on competition among teams of players. The competition at the championship level takes place in auditoriums attended by thousands of fans, and is watched by millions more on the Internet, on sites such as Twitch.tv. E-sports tournaments now routinely draw an online audience equal to professional football games. The organization of the tournaments, and the prize money for the players, is provided by the games' publishers and advertisers. The e-sports leagues make money from selling tickets to arena championship games, merchandise sales, corporate sponsorships, and selling ad space during the broadcasts. Advertisers are attracted to e-sports because the audience is predominantly composed of young males between the ages of 21 and 34, who are hard to reach using traditional media. Coca Cola, Nissan, Ford, and Google are among the largest sponsors of e-sports. College teams have sprung up around the country, and some colleges now offer scholarships for students who play on their video game teams. At current rates of growth, e-sports will approach Hollywood in terms of global revenues, and eclipse console game revenue by 2021, transforming online gaming into a popular sport similar to fantasy football. Difficulty: Moderate AACSB: Application of knowledge; Written and oral communication Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 85) Why has the compensation of artists and music labels for content been an issue for streaming music services? Answer: While music labels might receive 32 cents for every iTunes track they sell, they receive only .63 of a penny on a streamed version of the same song. This revenue is split with the artists, who receive .32 of a penny. Rolling Stone calculated that a very popular song selling 1 million streams would produce revenue of $3,166 for the artist and a similar amount for the music label. For artists, ad-supported streaming pays considerably less than subscription streaming. For this reason, many artists and groups refuse to allow free ad-supported streaming of their music. In 2014, Taylor Swift, one of the world’s most popular singers, pulled her music from Spotify’s free service because it paid such a low royalty rate. In 2015, she similarly pulled her album 1989 from Apple’s newly announced Apple Music service because Apple was planning to not charge for the first three months of the service. Many other singers have withdrawn their performances from free streaming services, and there is a growing movement among musicians toward seeking 22 higher compensation from streaming sites. Streaming services have responded by increasing their payouts to musicians for subscription-based streaming and in October 2018, Congress passed the Music Modernization Act (MMA), aimed specifically at these issues. The MMA will enable songwriters and artists to receive royalties on older songs recorded before 1972, create a legal process for music professionals to obtain unclaimed royalties due to them (previously these were held onto by the streaming services), and create a licensing database paid for by the streaming services but overseen by music publishers and songwriters that should streamline how songwriters are paid, all of which should help ensure that artists are paid more and have an easier time collecting royalties they are owed. Difficulty: Difficult AACSB: Analytical thinking; Written and oral communication Learning Objective: 10.3: Understand the key factors affecting the online entertainment industry. 23