Consumers Sending "Price" Signals to Apple?

Economists are fairly unanimous about one element of human behavior. When prices of any product are raised, demand tends to drop. The salient exception is "luxury" goods, where higher prices sometimes stimulate demand. But early evidence suggests that consumers believe 99 cents is the "right" price for a single song.

Last week was the first week of iTunes’s new, steeper pricing on some tracks, and consumers voted with their wallets, according to Billboard. Sales figures from iTunes show that tracks that now sell for $1.29, up from $0.99, sold 12.5 percent fewer units than during the previous week, while tracks whose prices were unchanged sold 10 percent more than the week before.

Overall revenue was up three percent during the week, so it might not be possible to blame the "economy" for the changes. It appears that unit sales for the top-100 songs were up for the week.

http://www.paidcontent.org/entry/419-is-the-price-right-itunes-price-hikes-impact-first-weeks-sales/

YouTube As Monetizable as a Newspaper?

"User-generated content" is proving to be a financial albatross, says Farhad Manjoo, Slate's technology columnist.

YouTube, for example, sells ads on fewer than 10 percent of its videos, according to analysts at Credit Suisse. But the costs of storing and serving up 75 billion video clips a year costs Google $360 million a year, the analysts estimate. Add in all other expenses, and the cost of running YouTube for one year exceeds $700 million. But YouTube will make about $240 million in revenues for 2009.

Oddly enough, YouTube loses more money on its content than a daily newspaper.

http://slate.com/id/2216162

You Tube Sensation Will Grab You

If this does not make you tear up just a little in joy, I'm not sure you have a heart.

http://www.youtube.com/watch?v=lBTVdnWj1hM&feature=bz301

Tweet Shows IP Impact

"The terrible phone connection I was blaming on our VoIP line turns out to be the cordless phone clashing with WiFi," says Matthew Weinberg. "May need to go corded."

That's as good an example of any about the changes IP technology has wrought for service providers, who no longer can simply sell a connection, terminate at a network interface and hand off the premises network and devices to an end user. That generally worked when interface specifications were stringent and the total number of devices and applications were limited.

These days the application and device environment is much more complex. But users will call their service provider when applications or devices don't work properly. One way or the other, greater involvement in premises networks and configuration are required.

Skype Proves Stand-Alone Long Distance is a Business

Now that it appears Skype will become a stand-alone company, we have to note the irony. Telcos and cable companies have concluded that long distance no longer is a viable stand-alone business. That's essentially why AT&T and MCI Worldcom do not exist as independent companies.

But it is worth keeping in mind that when an executive says something cannot be done, what that really means is that "I cannot, with my cost structure, personnel or technology holdings, do that." Skype will be able to compete as a stand-alone long distance provider. To greater or lesser degrees, much the same can be said for calling card providers.

As true as it may be that a service provider cannot make a viable business selling long distance alone, that isn't true for all market contestants. One simply needs a different cost structure and channel.

The issue now is what Skype actually is worth. Merill Lynch analyst Justin Post says Skype is worth $2.2 billion, and that could grow to $3 billion by the time it either goes public in 2010 or is sold.

Jeffries & Company analyst Youssef Squali values Skype at $1 billion.

Thomas Wiesel analyst Christa Quarles thinks Skype is worth $1.7 billion. Credit Suisse analyst Spencer Wang, meanwhile, values Skype at $1.85 billlion.

http://www.google.com/reader/view/#stream/user%2F05579064408535224496%2Fstate%2Fcom.google%2Freading-list

Skype and eBay: Cautionary Tale for Communications-Enabled Business Processes

As useful as communications-enabled business apps might be, eBay's inability to wring any significant advantages out of voice-enabling eBay. Perhaps messaging of other sorts is valuable, but voice integration does not seem to have added much of anything to the eBay shopping experience.

All of which raises the question of where and when voice communications, perhaps as opposed to text-based communications, adds value to another application, or adds enough value that people even care very much.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aCWYwCYVyHx4&refer=home

Social Media Campaign Generates 28% Sales Lift

Packaged-goods firms are cautious about social media, as the return on investment is tough to measure. But MySpace recently hosted a $1 million campaign for a personal care product that achieved exposure to 76.9 million people, about 40 percent of the U.S. Internet user base, creating 1.1 billion impressions and generating $1.28 million in incremental sales, Advertising Age says.

Of 76.9 million people exposed to the campaign in four months, 765,000, or fewer than one percent, visited an advertiser page on MySpace.

But the campaign produced $1.28 million in offline sales, as measured by loyalty program provider Dunnhumby, which compared purchases among shoppers not exposed to the campaign with purchases among those who were.

That amounted to a 28 percent return on investment, not counting returns from repeat sales among consumers the brand won via the campaign. About 17 percent of the sales were of products advertised in the campaign; the rest of the sales lift went to the parent brand, in a "halo effect."

One question: whether that level of return will hold up for larger campaigns.

http://adage.com/digital/article?article_id=135940

Kraft Foods Tweets

Kraft Foods is using Twitter to spread word about where its Oscar Mayer Wienermobile drivers will be next. Kraft also launched the "DiGiorno Crispy Flatbread Pizza" by delivering pizza to "tweet-ups," or in-person, social-media gatherings.

AT&T Seeks to Extend iPhone Exclusive

AT&T is now in discussions with Apple Inc. to get an extension of AT&T's exclusive on the iPhone until 2011, the Wall Street Journal reports. AT&T also is seeking to overhaul AT&T's marketing to make wireless the priority. Ultimately, that likely will mean that customers can qualify for AT&T discounts on IPTV or broadband access if they are a wireless customer, where tradtionally AT&T has tied discounts to being a wireline voice customer.

AT&T has 77 million wireless customers and 30 million consumer voice lines.

The intensified focus on wireless shows just how much is changing in the world of former wired telephone companies. Where once most telcos were very similar in terms of services offered, customer base and strategy, firms are becoming quite differentiated. Verizon and AT&T have options, footprints and business segments quite distinct from those of virtually all other U.S. carriers.

The big challenge is what wired network providers without the scale and wireless assets of those two firms will fashion their business strategies.

http://online.wsj.com/article/SB123973238611017715.html

Mobile Broadband: 2nd or 3rd Mass Market Mobile Data App

By the end of 2014 more than two billion users globally will be accessing the Internet using a mobile broadband connection, analysts at Ovum now project. By that point, mobile broadband will have proven to be the first mass market data application since text messaging (short message service). Some of us might argue that mobile email was the second mass market data application, but a success on this level would be quite noteworthy, in any event. 

Total mobile broadband users will grow by 1024 percent by 2014, while total mobile broadband revenues grow at a 33-percent cumulative average growth rate over the forecast period.

Total mobile broadband revenues will not only stem the decline in text messaging revenue Ovum expects will happen, but also will grow operator overall revenues. Though handset access to mobile broadband services will exceed laptop access in terms of number of users, laptop ARPU is six times greater than handset ARPU.

Bluetooth at Fiesta Fiesta: Proximity Marketing in Action

Attendees at the “Fiesta Fiesta” event in Alamo Plaza on April 16 might see a pop-up message might appear on their Bluetooth-equipped mobile phones offering a 15 percent off coupon for a Fiesta pin.

The message comes from Blue Zone Mobile Media, which employs Bluetooth technology to send coupons, images, ring tones and video clips to cell phones within a 300-foot radius of its broadcasting device.

The San Antonio-based advertising company partnered with the Fiesta San Antonio Commission for the event. Blue Zone also is working with Pocket Communications Inc., Toyota Motor Co. and Anheuser-Busch InBev to send out Bluetooth ads to cell phones during Fiesta.

Levi's, Bacardi and Pepsi all have dabbled with Bluetooth ad campaigns on mobile phones, offering incentives at festivals, train stations, bus stops and shopping malls. Last month, the Bluetooth Special Interest Group used Bluetooth wireless technology to send songs and wallpaper from various artists to the mobile phones of people attending the South by Southwest Festival in Austin.

When the consumer comes within range of Blue Zone's hardware, they receive a message from one of its advertisers, McWright said. From there, the user can accept or decline the invitation, he said. If they accept, Blue Zone can transmit a video clip, ring tone or coupon to them.

“We make sure our campaigns are 100 percent opt-in,'' said Vincent Hearn Jr., Blue Zone's founder.

http://www.mysanantonio.com/business/Bluetooth_messages_to_pop_up_for_Fiesta.html

Social Marketing Generates Qualified Sales Leads, Business Owners Say

Some small business users of social networking for marketing purposes are relying heavily on tools such as Twitter, blogs, LinkedIn and Facebook, a survey of some 700 early adopters finds.

About half the respondents to the survey were sole proprietor operations, typically in service businesses. The study was conducted by Michael A. Stelzner, indicates that users gain not only by increased awareness, as you might expect, but also served as a lead generation tool.

About 48 percent of respondents say social marketing created qualified sales leads.

Small Businesses Say Social Marketing Really Works

Mobility and social networking increasingly are seen as fundamental underpinnings of tomorrow's marketing environment. And though it is tough to quantify, some very-small business early adopters do believe social marketing has really worked for them. And while social media takes time, as much as 20 hours a week, respondents say it saves them money.

According to ABI Research, mobile marketing revenues will increase to more than $24 billion worldwide in 2013. CCS Insight believes that by the end of 2009 annual mobile advertising revenue in Western Europe alone will amount to €236 million.

Mobile is crucial for small businesses trying to reach their local consumers, it often is noted, in part because most small businesses sell locally. It also might be true that, though use of social media is not yet mainstream, small businesses--especially those run by sole proprietors--can rely on social media for marketing.

Some 88 percent of respondents to a recent survey of business professionals recruited using Twitter, blogs or Facebook use social media to market their businesses. About half the respondents are sole proprietors.

Twiter was used by 86 percent of respondents while blogs were used by 79 percent of users. LinkedIn was used by 78 percent of respondents and 77 percent said they used Facebook.

Business owners were more likely to use social media marketing (more than 90 percent) than employees working for a business (81 percent). People aged 30 to 39 years were most likely to use social media marketing (92.8 percent), says vMichael A. Stelzner, founder of WhitePaperSource.com.

A significant 61 percent of those investing more than 20 hours per weeks are using social bookmarking sites.

The largest group just getting underway with social media marketing was sole proprietors (30.2 percent reported just getting started) while owners of small businesses with two to 100 employees were the most experienced (29.3 percent reporting doing social media marketing for years).

A significant 81 percent of all marketers indicated that their social media efforts have generated exposure for their businesses. Improving traffic and growing lists was the second major benefit, followed by building new partnerships.

An unexpected benefit was a rise in search engine rankings reported by more than half of participants. As the search engine rankings improve, so will business exposure, lead generation efforts and a reduction in overall marketing expenses. About one in two marketers found social media generated qualified leads.

Social marketing takes time. But it also substitutes for paid media buys.

Rural Broadband, Green Energy and Externalities

The reason people ought to study economics more carefully is because good intentions do not always translate into "good results." In the broadband access and "green energy" businesses, though the assumption is that more broadband, and more green energy are purely positive, each could destroy some jobs, some economists note. As always is the case in real life and the real economy, choices have consequences not intended. 

The general notion about broadband spending mandated as part of the national economic “stimulus” plan is that it will create jobs. To be sure, construction of the access networks will drive some direct employment.

Some 128,000 jobs (or 32,000 jobs per year) could be generated from network construction over a four year period, and each job would cost $50,000, according to Dr. Raul Katz, adjunct professor at the Columbia Business School.

Beyond that, such new broadband facilities are supposed to spur economic development as well. But will it?

Unfortunately, says Katz, research on the productivity impact of broadband indicates the potential for capital-labor substitution and consequently, the likelihood of job destruction resulting from broadband deployment, as well as some incremental job creation. So the issue is whether net job creation exceeds net job destruction, and by how much.

You might think bringing broadband access to any community can only be a plus. As it turns, out broadband creates jobs and destroys them as well.

Since broadband tends to enable the outsourcing of jobs, a potential displacement of employment in the service sector from the area targeted for deployment might also occur, says Katz.

Also, some job creation in the targeted areas could be the result of relocation of functions from other areas of the country, and therefore, should not be considered as creating incremental employment, he adds.

Still, Katz says, the study results indicate that some job creation aside from the actual construction jobs is feasible. “Our estimates indicate that over four years the network effects could range from zero to 270,000 jobs over four years (approximately 67,500 jobs per year), although anecdotal evidence would point to the lower end of this range,” says Katz.

Separately, a new study by an economics professor Gabriel Calzada of  Juan Carlos University in Madrid says Spanish government spending on green energy to boost job creation kills 2.2 jobs for every green-collar job it creates. The damage could be even worse, the study says, if job destruction from companies fleeing Spain’s higher energy prices were included, he argues. 

What the study says is that government spending on renewable energy is less than half as efficient at job creation as private-sector spending. Specifically, each green job required on average 571,000 euros, compared with 259,000 euros in “average capital per worker” in the rest of the economy. In other words, more jobs could have been created had the money been spent in other ways. 

Some people might not consider "opportunity cost" (spending on one thing means money can't be spent on an alternative good) to be a real cost. One has to make a judgment cost about whether twice as many new jobs, were money invested another way, a better outcome. 

One can always quibble, perhaps even vehemently disagree, about economic studies. But all actions in economic life do represent choices: spending one way precludes spending another way. Businesses that can't make money die. I doubt it is possible to find many, if any, people who argue we should not extend broadband to every household and business, even if doing so will cost some jobs, as well as create some others. 

Few people, if any, will argue the United States should not achieve energy independence. But every positive step in that direction will have implications in other areas. Some forms of alternative energy consume vast quantities of water, a key issue in the western United States. Plants grown for energy raise food prices, globally. As there are no free lunches, there are no positive steps we can take that do not involve some negative consequences as well. Those consequences always should be part of the decision making process.

http://blogs.wsj.com/environmentalcapital/2009/03/30/green-jobs-ole-is-the-spanish-clean-energy-push-a-cautionary-tale/

Cord Cutting Growing, But Landlines Relatively Stable: Why?

Switched access lines provided by telcos in the United States have decreased by 17 million lines from 2005 to 2008 and telcos will lose another 10 million by 2011, says Patrick Monaghan, Yankee Group senior analyst.

You might think that is caused by users dumping their landlines in favor of mobile-only service.
But Monaghan doesn't think wireless substitution explains much of the incumbent line loss. In fact, he says, residential home phone service has only experienced a two-percent year-over-year loss from 2005 to 2008.

That's something on the order of five million subscribers. His conclusion: Most consumers are not cutting the cord. They simply are choosing cable or other providers.

There's one other important data point. Business lines in service have grown slightly over that same time period. Paradoxically, cord cutting has increased at the same time that fixed voice lines have held about level.

All of that is hard to square with estimates that 13 to 16 percent of U.S. homes already are wireless-only.  The logical inference is that higher numbers of households headed by younger people are wireless only, at the same time that business use of fixed voice is up a bit and consumer use is down a bit.

An impressionistic example: as my four children headed off to college, my own household dropped one landline and added one mobile account, but now there are four more wireless-only "households" out there.