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Media, Money, and the Future

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As we learned in our research, Americans are undoubtedly aware of the current economic struggles. And large companies aren’t oblivious to this either. The reminders pervade media forms of all kinds: newspaper headlines, popular rap song lyrics, credit card commercials, etc.

Although we focused on different American industries, we have all seen how companies of every kind are riding out the recession and applying new technologies. During these tough economic times, these new media features are especially critical tools in getting American consumers excited about spending money. Businesses in every industry – travel, food, music, sports, and movies – are aware that Americans are surfing the web, and they are more than willing to take advantage of this trend: from P2P music sharing to Burger King video contests via their official website and everywhere in between.

mass media

We are in the digital age, and the truth is, companies and organizations need to realize this if they want to survive in this suffering economy. As technology rapidly evolves and changes, so too do trends in mass media. The shift to an increase in digital media means a shift to a digital economy. Most of us can take care of our bills and banking online – now it merely seems like numbers on a computer screen rather than your life savings. But companies are relying on this in an attempt to survive. They use digital technology to advertise how easy-to-use their products are, making them more appealing to a mass audience.

As you have read, the different industries all play a vital role in the economy. While each one is individualized, it has its own niche. This example of demassification shows the fragmentation of American society and how there are varied interests among citizens. Some are music lovers, some love to travel, and some Americans just love to eat. Even though there is demassification, there are also new conceptions of community. Our separate interests allow us to join new groups where we can interact with those who share our same values and interests. Blogs allow for followers and others to share their ideas and experiences. Music lovers can use sites to talk about the newest music releases, and food lovers can write about cheap new finds. These new communities allow for convergence of media sources. YouTube has been a huge success for advertising for all industries, along with social media sites for the younger generations.

Social Media Bandwagon

Despite the distinctive qualities that separate our industries of focus, they are all united and affected by the economy and media. No matter how creative or scientific a company might be, they can never predict just where technology and economics will lead society next.

As shown in our study of media in the American economy, all of these industries seem to be hovering toward a complete switch to digital media, be it for advertising, accepting consumer response, for convenience and accessibility, or even security. Even though we cannot predict in what direction society will go next, it is clear that most industries are banking on a digital market to bring (or keep) them out of the hole.

The Future of Entertainment: YouTube and Hulu?

imagesThe 2009-2010 economic downturn has without a doubt impacted virtually every sector of the entertainment marketplace, it has also accelerated and intensified the digital migration among both providers and consumers of content. Direct digital distribution is beginning to surface as a major way of providing movies to audiences online. According to the Houston Chronicle:

“a survey conducted by consumer electronics shopping site Retrevo, 64 percent of Americans watch at least some of their television online. Twenty-three percent of respondents under 25 said they watch most of their TV online.”

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Online video viewing is more ubiquitous than ever. Consider the results from Nielsen’s Three Screen Report:

“138 million people watching video Internet spent on average three hours, 22 minutes during the month doing so”

As prices for devices like the iPhone or the new iPad drop, as online video quality improves, and more premium content becomes available on the internet, both broadband and mobile video will continue to grow.

But what about the number of consumers who actually paid for the online video content? The convergence of the television and the computer makes sense, but will online-viewers be willing to pay for content that they originally watched for free?

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As the computer-using and wireless hand-held segment of the entertainment consuming population continues to increase, as digital cable lines, DSL, wireless, satellite, and other systems continue to converge, and as delivery technology continues to improve, one can expect that delivery of motion pictures online or wirelessly will rapidly expand over the next few years.

The digital vs. TV discourse will continue to accelerate. While the economy will have (hopefully) recovered by 2011, the broadcast networks will soon be fighting for every dollar side by side YouTube, Hulu, the digital video networks, and the rest of the video providers out there knocking on the door.

CDs vs. Digital: The Future of the Music Industry

We’ve already seen that most music is advertised through a digital platform, such as commercials for smart-phones, MP3 players, or online subscription services. Yet you hardly see an ad for CDs anymore. Has the shift finally occurred from compact to digital?

According to the New York Times, the movement has already started with Atlantic Records:

…more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones.

And because digital music sales cannot compensate for CD sales, the industry is now looking for other means of income, like concert ticket and merchandise sales (although you wouldn’t know it by the amount of ads you see for those either).

John Seabrook for The New Yorker confirms the same thing:

With the collapse of the record business, as a result of piracy […] , the business of selling live music has become the main source of revenue for the popular-music industry.

(Here is the abstract of the article, since it is a subscription service).

And the digital movement just keeps growing. According to a report from IFPI (the International Federation of the Phonographic Industry) in January 2010:

  • Global digital music trade revenues reach US$4.2 billion, up 12% in 2009
  • 400 services licensed worldwide by music companies with ISPs, mobile and other partners

So what does this mean for the American music industry? And how does this all tie into the economic recession?

Because of the digital age, many Americans now get their music online rather than in hard format because it is a cheaper alternative. To make matters worse for the industry, many of these Americans also get a fair share of their music through illegal means, causing the industry to lose a lot more money. This reduces the amount of jobs allowed by the big players in the music industry.

And the United States isn’t the only victim. In the UK,

…if current online piracy trends continue, by 2015, losses due to piracy across the EU could reach as much as 1.2 million jobs and €240 (£212) billion in retail revenue in the sectors most affected: film, TV, recorded music and software. Losses in the UK alone are projected to be over 250,000 jobs and €7.8 billion in retail revenue if tough measures are not adopted.

(via Telegraph)

Hence the proposed Digital Economy Bill, currently being considered by the House of Commons – its goal being to counter online copyright infringement. Perhaps the United states needs to step up its game? It may not be what everyone wants, but it may just be what the music industry in America has to do to survive…

Economic Times Will Change…Sports Will Always Endure

The recession proved to be a devastating event for any business, individual, and conglomerate alike. We all had to cut back and monitor our spending in some way, shape or form. Sports however, depending on the team and its ownership, varied in terms of spending cuts and whether or not they were truly affected by the recession. Most if not all sports fans were aware of the New York Yankees spending $423.5 million on only three players! Obviously the economy has not affected the Big Apple’s most storied sports franchise.

New York Sports Fall 2009

With the growth in technology, we have seen organizations due all that is possible to provide their fans with the ultimate experience. Teams such as the New York Yankees, New York Mets, New York Giants/Jets, Minnesota Twins, and Dallas Cowboys have just completed construction on new stadiums, none of which seemed to be too ill-affected by the economic recession. American sports have been able to endure much of the turmoil so far and do not seem to be in danger of receiving any catastrophic blows in the near future in terms of player salaries, marketing and overall advertising of their respective teams. Internationally, soccer teams may see different results from the recession. Every club soccer team in the world has one primary sponsor that has its symbol/logo on the front of its jerseys. AIG is the primary sponsor for perhaps the most famous and lucrative sports team in the world: Manchester United of Barclays English Premiership. They are currently in the midst of a four-year deal that is expected to pay the team $100 million. Strength to be there is a slogan of AIG and seems to be ironic in this sense seeing that they are run by the state now…

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The world of sports will continue to evolve exponentially and we will see the rise in performance of the individual as well as the teams who own the rights to their services. Advertising will grow and enable fans from not only our country but all over the world to view their favorite teams. American sports will become fully integrated in the global marketplace sooner rather than later and with that will come an increase in wages and overall revenue for each and ever sport franchise on the planet.

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In the end, the market for sports and the organizations involved will transform and take on a different persona, however the intrinsic ideals that every sport is built upon will endure for eternity. The hard work and sacrifice for the team will be alive as long as sports are in existence.

Travel’s Future

200506311-001As we all know, the travel industry was hit hard by economic downturn. Jobs were lost, airlines filed for bankruptcy, and families stopped going on vacations. All of these aspects have changed the travel industry for the time being. These startling numbers seems drastic at first, but when you consider the travel industry it is an expansive industry that also effects other industries. Here is a look at some if its current impacts:

Impact on the Job Industry and Tourism:

  • Global travel and tourism economy GDP declined by 4.8% in 2009
  • Almost 5 million jobs were lost in 2009
  • Business travel decreased by 8.0% and travel & tourism investment declined by over 12%
  • Tourism provide the US with $142.1 billion from international visitors and $29.7 billion is generated from travel trade surplus in the US

(Information courtesy of World Travel and Tourism Council)

Future Growth?

  • Emerging economic countries are expected to be a new source of growth, increasing  international travel; China alone set to provide almost 95 million visitors  by 2020
  • Innovation by the travel and tourism industry will create new products and markets increasing the appeal to travel
  • Travel and tourism is forecast to grow 4% per year between 2010 and 2020
  • This growth will support over 300 million jobs by 2020

(Information courtesy of World Travel and Tourism Council)

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There is hope for the industry! This is good news for an industry that employs so many people and contributes to almost all aspects of the economy. According to the US Travel Association direct spending by resident and international travelers in the U.S averages $2.1 billion a day, $88 million an hour, and $1.5 million every second. The travel industry is huge, and we are ready to see it it prosper again!

Cheers to Some Economic Bright Spots

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Without a crystal ball, it’s impossible to know just when the food industry will recover from economic stress.  As of right now, there are a few promising signs of a turnaround.  According to the Foodservice Equipment & Supplies website, in December 2009, “the National Restaurant Association’s comprehensive index of restaurant activity rose to its highest level in 22 months”.

But according to various news reports, there are a few industries that have done pretty well despite the general economic stress.  Some of them just make sense:

Food Processing

  • Includes companies such as General Mills and Hershey
  • Provides jobs for 14 million workers
  • Adds over $1 trillion to US economy
  • More people are eating and cooking at home,
  • Companies are making their products more affordable to appeal to consumers

(Information courtesy of article by Mark Crawford for AreaDevelopment.com)

Agriculture

  • Trade surplus for the past 47 years
  • “Shores up food supply while ensuring a safe, plentiful food supply”
  • “There will always be a demand for food grown and packaged here in America”

(Information courtesy of article by Lynn Finnerty for NaturalResourceReport.com)

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…But others might surprise you:

Beer Industry

  • Provides “95,000 quality jobs with solid wages and great benefits in every state and congressional district across the country”
  • Transparent and accountable industry, promote safe and responsible policies
  • Contributes approximately $200 billion to US economy
  • Generates “more than $25 billion in economic activity in agricultures and manufacturing sectors

(Information courtesy of Flex-News-Food.com)

Pet Food and Grooming

  • Pet spas and bakeries experiencing growth
  • “The shift in people’s values about pets has created a market that is relatively recession-proof” (Rottersman, Florida Weekly)
  • Loyal pet owners want to give their furry friends the food to which they’ve become accustomed
  • According to Deb Dempsey, owner of Mouthfuls dog treats and toy shop in Denver, “”We have so many customers who say they’d eat macaroni and cheese before they’d cut back on their dogs” (Migoya, Denver Post)

I guess with man’s best friend by your side and an ice-cold brew in your hand, the American dream is that much more real, and the recession is that much easier to bear.

From Ray-Ban Glasses to Reese’s Pieces: Product Placement on the Big Screen

Could it be the end of the long held relationship between marketers and entertainment producers? Advertisers are shifting from television to digital media. An increasing number of marketers are using social and digital media to reach certain demographics and raise brand awareness.

“Many media and entertainment subsectors have been hurt by the fall in spending for advertising, which has been driven by advertisers’ financial distress as well as viewership declines in traditional distribution channels.” – Plus Media Solutions

The Financial Times reported that online advertising spending in the US “rose sharply in the 4th quarter of 2009” and “the strong uptick from the third to fourth quarters points to the increasing prominence of online advertising.” But this isn’t the end of the long business relationship between marketers/branders and entertainment producers.

Though social media, tighter budgets, and new technological tools have influenced the shift in advertising, one advertising trend remains the same among brands and entertainment producers: product placement.
Product placement has been an integral source of revenue and business for the entertainment industry for a long time:

  • 1982 Ray-Ban signed a contract with a product placement company for $50 thousand a year to put Ray-Ban in movies and television, a year later Tom Cruise wore a pair of Ray-Bans in Risky Business and Ray-Ban sales skyrocketed
  • 1982 Hershey agreed to spend $1 million promoting E.T. in the exchange for the right to use E.T. in it’s adds
  • 1995 BMW paid $3 million for Agent 007 to drive a BMW Z3 Roadster in Golden Eye
  • 1996 Reebok provided more than $1.5 million in merchandise, ads and promotional materials to be featured in the movie Jerry Maguire

Yet, just the other day I came across an article in the New York Times that called product placement a new shift in advertising. The reporter, Stephanie Clifford, wrote: “For the moviegoer, the shift will mean that advertising will become more integral to the movie. The change may not be obvious at first, but the devil is going to wear a lot more Prada.” I found it odd that Clifford would refer to product placement as a new shift for moviegoers, seeing as how product placement has been an advertising tactic moviegoers have dealt with for the past 28 years.

It will be interesting to see how product placement companies react to brands’ growing interests in the new opportunities and low-cost options provided by digital media. As Randall Rothenberg, president of the Interacting Advertising Bureau (IAB.) explained: “Today, faced with myriad new opportunities, cheap tools, a global distribution medium with lowcost scale…marketers find themselves forced to find new processes or organization constructs to help.”  Using digital media seems to be a lot more financially feasible than paying over $1.5 million to be in a movie (whose box office success can never be certain) considering the current economy.

But with all that said and even though low-cost financial incentives make the internet a safe-haven for marketers during the negative economy, I think product placement will continue to be a powerful marketing tool for a long time….I mean did anyone else notice all the VitaminWater cups, towels, and logos during the March Madness Tournament?

Green Grass to Greener Bank Accounts

Sports evolved over the 2oth century in numerous ways, perhaps the most influential has been the growth of player salaries and how that has transformed players from childhood heroes into superstar celebrities. This is not to say that professional athletes are not the same good ol’ boys fans loved to cheer for because we undoubtedly still do the same. I am simply saying that with money comes a certain arrogance and swagger that goes to the heads of many if not the majority of professional athletes today. Money has changed our pastimes forever, it has created the emergence of free agents and drowned out any real possibility of players staying with teams for their entire careers with few exceptions.

The growth of players salaries has not been a negative though, many professional athletes have charities that benefit the less privileged youth of America today. Money has provided ball clubs with the opportunity to reach out to every demographic and allow all people to enjoy their respective sports. Teams now have the ability to broadcast on different networks as well as provide the everyday fan with a phenomenal viewing experience in a pro stadium.

Money will continue revolutionize sports and will continue to change our professional athletes. We must hope and pray that no matter how much money is funneled into sports and no matter how much technology advances that they never strip our pastimes of their human factor and never compromise the integrity of the games we love.

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Airline Merging Help or Hurt?

As today’s economy has its ups and downs the airline industry if constantly fighting to gain loyalty and support. This is something that is hard to do when flights are constantly delayed, service is bad, and flights have to be re-directed on a daily basis. The industry itself has to juggle increased prices in fuel and costs for maintenance and repair. These increased costs end up being pushed on the customer.delta.logo

In January Delta and Northwest decided to merge to create world’s largest airline. This can be seen as a threat to the airline industry or a helpful start. Many are worried about a monopoly forming resulting in higher ticket prices. The Los Angeles Times states:

“The pact came amid one of the industry’s most tumultuous periods as three airlines collapsed in one week”

so hopefully the companies will look out for the interest of the customer. Dana Hobart, an aviation law expert at the Los Angeles firm of Hennigan Bennett & Dorman says:

“For the two carriers, this merger is a very important step to keep from going out of business,” said . “But for the flying public, it’s not so good because there will be reductions in routes and services.”

Northwest_Airlines_airplane_4c42.JPGAs travelers, we will have to wait to see how the consolidation effects us. Both of these airlines have varied routes meaning lots of consolidation for flights. But maybe there will be good out all of this. US Airways CEO says the airline industry is extremely competitive and its fragmentation causes it to not be profitable. So maybe mergers will help customers during this difficult economy!

[kml_flashembed movie="http://www.youtube.com/watchv=ZjdhG4P8qjk" width="425" height="350" wmode="transparent" /]

This video shows customers mixed opinions with the new merger!

P2P: Past 2 Present

It’s interesting to see how music has evolved to adapt to the changing economy. I mean, let’s be honest – it’s always been a game of money. But it’s also been about quality and convenience. P2P (peer-to-peer) networks understood all of these concepts when it came to music (among other things), which is why they provide users with free software enabling them to share whatever media they so choose.

Napster was the first of these, starting up in 1999. It didn’t start because of an economic recession, but rather to benefit those who loved music but didn’t have the means to obtain it. Napster was convenient, and best of all, free. I guess it comes as no shocker that the music industry wasn’t happy about this – so they sued. Napster argued under section 1008 of the Audio Home Recording Act, which says,

No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.

But it was a no-go. The recording industry won the battle. But the lawsuit was just the beginning of P2P’s popularity, since it attracted millions of users to Napster when they found out about the possibility of free music. Irony?

Now, after closing and opening and being bought and sold several times, Napster is back as a subscription service. But why would this be appealing at all? Going from free to having to pay does not sound like something most people would want…

Because of Napster’s vast music library. According to Music Week, Napster now has 10 million songs, 790,000 artists, and 980,000 albums available to stream online, as much as you want, for one low monthly fee. And not only does it let you stream music, but it also lets you download so many songs per month based on your subscription status. Pretty sweet, right?

And before I’m accused of it, no I am not advertising for Napster. But I think what they are doing is good. They have gone from illegally helping provide the public with copyright music for free to a good model for getting the music you want for a low price – lower than iTunes’ 99 cents per song. You gotta make money somehow in this economy! And regardless of where you download your music, you can still play it on the go.

That’s not to say that P2P doesn’t still exist; in fact, it is probably more popular than ever. But cheap, legal subscriptions are also a good option.

Oh the times, they are a changin’…