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Saturday, 31 December 2011

The future of media

Happy New Year!

Check out this great summary of the status of online and offline media at the end of 2011 from the Business Insider. I am not sure how accurate the data is but it gives a sense of proportion on different types of spending.

I think this picture is particularly useful:


Thursday, 22 December 2011

Credit Rating Agencies

There is a pretty good update about the status of credit rating agencies (CRAs) in the November 28 issue of Bloomberg Businessweek, p. 51. Parenthesis: what does this have to do with media? Well, CRAs are media: B2B media. Anyway, I find this industry fascinating with complex incentives, eclectic, legacy regulation and - of course - a lot of impact for only a handful of firms. I devoted an entire section in my book to this topic.

Of course after the crisis (in fact, after each crisis) remedies were proposed by the government, part of the famous Dodd-Frank act. The basic intention was to remedy the problem of conflict of interest whereby the agency is paid by the issuer of bonds and rates these bonds in return. Note that only the traditional (the big 3) agencies revenue model is such. The article shows that not much progress has been achieved to mitigate this problem. With the recent miss of MF Global by agencies it is clear that the industry still functions badly.

The article also mentions a new firm paid by investors rather than issuers. This of course takes care of the conflict of interest problem. However, it creates a freeriding problem from customers. Not surprisingly, despite encouragement for newer firms to enter the industry the big 3 still massively dominate. But this is a dangerous game for financial markets.

Here, it is important to get regulation right on two dimensions. First, w.r.t. the conflict of interest. I believe that this cannot be totally eliminated but it could be controlled (by for example randomly assigning some initial ratings - a similar idea was introduced for accounting firms). But more importantly, it would be crucial to make sure that the oligopoly of credit rating become larger with at least a dozen or so firms not just in the US but also from Europe and Asia. Healthy competition would go a long way solving the current issues.

Saturday, 10 December 2011

The first mass medium: language

I find this data fascinating because for me it highlights the huge role 'media' (broadly defined) plays in the development of our civilization. For its largest part human evolution was closely associated with an increase in brain size (left figure). This tendency pretty much stopped after about 50,000 years ago, roughly at the time when the emergence of proper language occurs (right figure). The appearance of language is closely associated with what archeologists call 'cultural revolution' because this is the first time that 'culture' (worked stone tools) appear in archeological data. After this point human development (not evolution) progresses exponentially (agriculture, trade, etc.). There is no doubt that language has played a crucial role in launching the rapid development of human civilizations.

Language is a mass medium, and this insight should make us think: what has been the impact of other mass media (printing, broadcasting) to the development of our civilization? Truly new mass media are not born frequently in human history. By definition, mass media are networked innovations (no-one wants to be the first using them). It happens to be the case that, as we speak, a new mass medium is becoming mainstream: the internet. What will be the impact of the rapidly emerging new internet medium on the future? If history is of any guide, the answer is: quite significant.

Friday, 9 December 2011

Social media page vs. traditional website

Some (consumer goods) companies have tremendous success driving traffic to their social media pages. Coca Cola for example has over 30 million visitors per months on its Facebook page. Many of these visitors like the site and interact with it. Starbucks and some other consumer brands have similar success on their Facebook pages. In contrast, the activity on these sites' classic homepages is relatively low (in the case of Coke it is around a million visitors a months). Should brands move their representation entirely on social networks (Facebook essentially or maybe LinkedIn for B2B brands)? This would be quite a change for marketing practice. Yet, increasingly this makes sense.

Thursday, 1 December 2011

Good day!


I have decided to open this blog to generate discussion about my research on new media. I hope that you will find it useful and interesting. To start, let me first put here a link to my forthcoming book advertised on INSEAD's website. Let me know what you think?