BA 491.

33

Marketing and Technology

Professor John M. McCann

Overview

This course is about technology s impact on marketing, how firms have and should use technology to support their marketing and related functions, and how a Fuqua grad could take advantage of the new opportunities that flow from the new situations that will continue to emerge as the technologies evolve. The primary technology is the Internet because it is having the biggest impact of any technology on the practice of marketing. Thus a major aspect of this course is the study of the Internet, its implications and its uses. But because the Internet is alive and being continually fed by underlying technologies, we need an understanding of the more fundamental computer and communications technologies that have enabled the emergence of the Internet. We will start our study with a focus on those digital technologies, move to the Internet itself, and then on to the next incarnations that are coming our way via these same technologies. At all times, we will focus more on the implications and uses of the technologies than on the technologies themselves.

Goals

The goal of this course is to prepare the student to be a leader in a corporation (small or large) that is being impacted by the emerging digital technologies. Such leadership ability requires an understanding of: Today s underlying digital technologies,

The current implementation of those technologies: the Internet, The ways that the Internet has enabled new business opportunities, The evolving digital media that will be enabling the creation of second-generation Internet environments, digital television, and other enabling platforms, The business models of the entities that are converging to create these new platforms, The opportunities that arise as new technologies obsolete the existing business models.

It is amazing that, for all practical purposes, the Internet is only a few years old and that its uses and impacts are becoming well-known. One of those impacts is the increase in speed at which modern businesses have to operate in order to compete on a national or global basis. The Internet is changing the rules in industries such as publishing, education, automotive and consulting, and as it evolves it touches more and more industries. To be a business leader today, one has to understand this evolution and its likely impacts. Thus we cannot restrict our study to today s Internet; we must understand the underlying technologies so that we can make reasoned predictions of the coming impacts of digital computing and communication technologies.

The next big leap is likely to involve the related emergence of 1) digital television transmission (DTV), 2) the broadband Internet, 3) broadband intranets, and 4) teleputers. All of these technologies are becoming available in 1998 in one several forms and formats.

Project

The study of technologies and their impacts can be exciting for some and sterile for others. It is only when one delves into the implications of those technologies for a meaningful organization that the topic becomes alive. In the past, I have required students to write a paper about the implications of these technologies for an organization of their choice. Here are some titles of those papers: Marketing Industrial Products on the Internet: A Case Study of Allied Signal Aerospace The New Age Realtors The Digital Revolution and Hollywood: What Will Happen to Entertainment? The Concept of Cyber Care The Anachronism of Travel Agencies Marketing at the Kimberly Clark Corporation in the Year 2015 The Future of Pharmaceutical Sales The Future of McNeil Consumer Products Company

Some students became sufficiently engaged in their project to get significant value out of the exercise; others seemed to just go through the motions as a means of completing the course. This year, I want to provide an option in which we collectively design a new entity for the Fuqua School of Business the Fuqua Channel.

HBS enjoyed that #1 ranking for a very long time, and its large publishing operation was one of the primary reasons. It gave the school a renewable source of income, its professors contact with many leading business executives, and its students exposure the current business practices and problems. HBS is very busy making the transition to a multimedia publishing business. It is clear that the HBS deans sees the Harvard Business School Press (HBSP) as a publishing business, one that is evolving from a print publisher to a multimedia publisher of text, interactive books on CD-ROM, and videos.

Rather than start with a print publishing model, we will see ourselves as a broadcaster, one that is not evolving from a traditional broadcaster but one that is starting as a digital broadcaster. The last couple of years of the 20th century are a conception period, a period of time where digital television is being conceived. The early part of the 21st century will be a transition period in which the television industry undergoes several transitions: From To

Analog television Digital television

One standard (NTSC in U.S.) Multiple, higher definition standards

Broadcasting Narrowcasting

Channel & Time model Content Model

On-schedule transmission On-demand transmission

Few producers Many producers

Expensive broadcast stations Cheap narrowcasting stations

Stand-alone TV Internet-supported TV

During all conception and transition periods, new entities enter established industries such as broadcasting and it is common for some of those new entities to grow to very large firms and some of the established firms to disappear. Microsoft and Intel entered the computer business during the transition period associated with the microprocessor, and they now control a large part of this industry, and the role of established companies such as Honeywell, UNIVAC, Burroughs, Data General have been severely diminished. The same phenomenon is likely to occur in the broadcasting industry.

There are many segments of any industry, and the broadcasting industry has its established segments, such as terrestrial television, cable television, radio, etc. One of the key words that characterizes most of those segments is scarce: Scarce bandwidth, scarce talent, scarce executive talent, etc. Another key word used in this industry is expensive: Expensive talent, expensive equipment, etc. Digital technologies in the form of new computing and communications equipment are reducing the relevance of scarce and expensive as drivers of the new television era. Plentiful and cheap will replace scarce and expensive as drivers of new business models of the 21st century digital television world.

Details of the project will evolve during the first two weeks of the course.

Daily Assignments and Class Sessions

The document Course Schedule contains a list of reading for each course, along with questions for each reading. Each student must read each assigned article and be prepared to discuss the questions in class (and any others posed during class by students or the professor).

Class Sessions

Class time will be devoted to discussing the reading, visiting corporate WWW pages and discussing corporate uses of the Internet, watching and discussing videos and lectures, and interacting with visitors.

Grading

Grades will be based upon three activities:

Class participation 25%

Examination 25%

Project 50%

Course Schedule

T January 20 Course Overview, Digital Technologies "Into the Telecosm, "Harvard Business Review, March-April 1991 "Fiber Keeps Its Promise," Forbes ASAP, April 7, 1997 "Communications: The Next Wave," Forbes, October 6, 1997 "Digital Warriors Want Baby Bell's Blood," Wall Street Journal, December 8, 1997

"The Law of the Photon," Forbes, October 6, 1997

F January 23 Internet "Networks" Scientific American, Special Issue: The Computer in the 21st Century "The Economics of the Internet," The Economist, October 19, 1996 "The Silicon Age? It's Just Dawning," Business Week, December 9, 1996

T January 27 Changing an Industry from Place to Space "Managing in the Marketspace," Harvard Business Review, Nov-Dec 1994 "The Airline of the Internet," Wired, December 1996

F January 30 Digital Media Technologies "ADSL: Another Pipe Dream," Computer Shopper May 1996 "Craig McCaw Sees an Internet in the Sky," Fortune, May 27, 1996 "Going Digital Means Sharper Boob Tubes," USA Today, Jan. 8, 1997 "Intercast Brings the Web to TV," PC Magazine, Jan. 21, 1997 "Technology and the Future of Broadcasting," Web-Star (Internet web site) "Streaming Media," Boardwatch, December 1997 "Real Revolution," Wired, October 1997

T February 3 Digital Television "Bit by Bit, PCs Are Becoming TVs," Wired, August 1995 "Broadcasting is Finished," Forbes, October 6, 1997 "George Gilder's Telecosm: Life After Television, Updated," Forbes ASAP, February 23, 1994 "HDTV: What's Wrong with this Picture," Wired, Premiere Issue, 1993 "Object-Oriented Television," Wired July 1996 "The End of TV As We Know It," Fortune, Dec. 23, 1996

F February 6 Intranet and Knowledge Management Ford Motor Company: Maximizing the Business Value of Web Technologies (HBS Case 9-198-006) KPMG Peat Marwick U.S.: One Giant Brain (HBS Case 9-397-108)

T February 10 Content "A Community for Couch Potatoes," Internet World, November 1997 "Newsmaker Q&A: James Murdock," Internet World, October 1997 "Products and Services for Computer Networks," Scientific American, September 1991 "Savvy Sassa," Wired, March 1995 "The City Built on Free Rent," Internet World, January 1998 "The Content is King," Internet World, November 1997 "The Last Broadcast is a First: The Making of a Digital Feature," Videomaker, November 1997

F February 13 Examination & Changing Nature of Work "Computers, Networks, and the Corporation," Scientific American, Special Issue: The Computer in the 21st Century

T February 17 Advertising and Electronic Commerce "Advertising Webonomics 101," Wired, February, 1996 "Reclaim the Deadzone," Wired, December, 1996 "The Birth of Digital Commerce," Fortune, December 9, 1996 "It's! Not! Retail!" Wired, November 1997

F February 20 Projects

T February 24 Projects

F February 27 Projects

Questions

The following questions should be answered as you read each article. Be prepared to discuss these questions in class. The examination will be composed of a subset of these questions.

T January 20 Course Overview, Digital Technologies "Into the Telecosm, "Harvard Business Review, March-April 1991 "Fiber Keeps Its Promise," Forbes ASAP, April 7, 1997 "Communications: The Next Wave," Forbes, October 6, 1997 "Digital Warriors Want Baby Bell's Blood," Wall Street Journal, December 8, 1997 "The Law of the Photon," Forbes, October 6, 1997

F January 23 Internet

"Networks" Scientific American, Special Issue: The Computer in the 21st Century What is a computer communications protocol? What is distributed computing? What is a knowbot? What role are they expected to play? What is circuit switching? What is packet switching? What are the pros and cons of circuit switching and packet switching? How does Ethernet work? How does Token Ring work? What is Asynchronous Transfer Mode (ATM)? Why is current cellular technology (not wireless, but cellular wireless) not well suited for the Internet?

"The Economics of the Internet," The Economist, October 19, 1996

Why is the Internet swamped today? Has it always been so? What is the financial model used by the Internet? What is an intranet? An extranet? Why are they becoming popular? What does the phrase "too cheap to meter" mean? What is the relationship between fixed and variable costs in a telecommunications network? What is expected to "bring prices closer to real costs?" Why do some economists argue to use-based pricing of the Internet? In the early days of the Internet (e.g., 1990) delays meant that different parts of a file would be sent through different routes and thus might arrive at the receiving computing with various delays. Why are such delays more bothersome today? What is a settlement mechanism? What has been the common mechanism among telephone companies, and where are telephone companies going? What has been the Internet's settlement model? Why has this model led to a major disagreement among small Internet Service Providers (ISPs) and the large Internet backbone providers? Why is this settlement model so bad for non-US ISPs? What schemes are being proposed to overcome the settlement and congestion problems? (Where are the bottlenecks; in the wires/cables/fibers or in the electronics?)

"The Silicon Age? It's Just Dawning," Business Week, December 9, 1996 Why is the chip so important? What did Andy Grove mean when he said, "we are only at the beginning of this revolution-inprogress? What metric do we commonly use to measure the speed of chips? If you bought a new PC today, what would be the likely speed of the chip? What will it be in 15 years? (How is a chip's speed related to the number of transistors in the chip?) What is the size of a transistor on today's chip? What problems do such sizes cause? What is a Net Computer? How does it differ from the ones we use at Fuqua? What is the meaning and implication of the closing sentence: "After the turn of the century, everything you touch will have a chip in it."

T January 27 Changing an Industry from Place to Space

"Managing in the Marketspace," Harvard Business Review, Nov-Dec 1994 Explain what the authors mean when they say "the AUCNET system has made the physical location of inventory and the actual site of buying and selling irrelevant." Describe other situations (not in the article) where this is true. A marketspace transaction differs from a marketplace transaction in terms of content, context, and infrastructure. You are getting your MBA in a "place" and are thus part of a marketplace. Apply the content, context, and infrastructure concepts to this MBA program. What is the content? Context? Infrastructure? On page 145, the authors describe how a newspaper adds value in the marketplace by controlling content, context, and infrastructure. They then describe the AOL model in which its value proposition centers only on its context. Use this same logic to breakdown a television example. For instance, consider a TV network such as CBS in the U.S. or BBC in England. Is a network an aggregate collection of content, context, and infrastructure? Why or why not? How about a local TV station? A cable television channel such as the Discovery Channel or the Weather Channel? A particular TV show such as Seinfeld (which is produced by an independent company)? What is the Fuqua School might it evolve? s value proposition in terms of content, context, and infrastructure? How

Is Fuqua s value proposition similar to the traditional newspaper s value proposition? How could we change our strategy to focus only on content? Only on context? Only on infrastructure?

"The Airline of the Internet," Wired, December 1996 Why is logistics the next phase of the digital revolution? What is the meaning of the phrase "bits, not atoms, will be the bedrock of economic activity in the Information Age"? Since 1980, more and more goods are moving via jet airplanes, which is the most expensive way to move items from one point to another. Why, then, has the expenditure on logistics in the U.S. dropped from 17.2% of GDP to 10.8% in 1995? What business was FedEx in, and what business is it in today? FedEx rose to a large company by "riding the leading edge of two trends that have revolutionized the shipping business since the late 1970s: the deregulation airline and trucking industries in the US, and the rise of information technology." Why do you think it took a new firm, one outside both the technology and the airline & trucking industries, to ride the leading edge of these two trends? The telecommunications industries are just now undergoing a deregulation, and their new information technologies are rising. Do you think that a new firm will come along and take over large portions of this industry, just as FedEx did in the shipping industry?

"It's a core tenet of the FedEx gospel that the data about each shipment is just as valuable as the shipment itself." Is that really true? Why? Why is the Internet an answer to their prayers? What are FedEx's plans for the Internet? Smith says, "The way to substitute information for mass is to make a distribution system that's as good as a warehouse." What does he mean? Smith says "The Internet is going to make it very difficult for anybody in a middleman position to stay in business." Reflect on this statement. IS it true? Identify five middlemen who are exposed to such elimination. Will the Internet (and FedEx's vision of its impact) increase or decrease the role of marketing in the future operation of most firms?

F January 30 Digital Media Technologies

"ADSL: Another Pipe Dream," Computer Shopper May 1996 What is ADSL? ADSL is a form of a DSL ... a digital subscriber line. What are the other forms and how does ADSL differ from them? Why is it important to know the unique feature of ADSL? Why might ADSL service grow rapidly? What is it about the technology that could allow telephone companies to quickly roll it out in a city such as Durham? This article uses a lot of jargon (4khz DC region, frequency division multiplexing, etc.) that we will ignore. But it does mention MPEG and MPEG-2. A search of the web using the phrase "mpeg definition" led me to the Interleave site (http://www.interleave.co.uk:80/video.htm) where I found the material shown below. What are the implications of being able to move multiple MPEG streams into the home via existing telephone wires? "MPEG (Moving Pictures Expert Group) is the new world standard for digital video, the momentum of which is impacting industries from Hollywood to Telecommunications. MPEG is taking off like wildfire in areas such as marketing, sales, training, and home entertainment. MPEG-1 is primarily targeted at the computer platform, playing 30 frames per second at 352x240 resolution MPEG-2 is designed for High-Definition Television (HDTV) and home entertainment, also playing at 30 fps, but with 752x480 resolution (better than VHS videotape) delivering broadcast-quality video "

"Craig McCaw Sees an Internet in the Sky," Fortune, May 27, 1996

What is Teledesic and what makes it "so breathtakingly audacious"? Visit the Teledesic web site (http://www.teledesic.com/) and gain an understanding of "why the Teledesic Network represents an inherently egalitarian technology." Some people say this is a silly project, one that will never be successfully completed and implemented. What are the foundations of their arguments? What is your position ... will it be successful? McCaw says, "you arrive at moments in time when an entrepreneur, a technology, and the needs of people coincide." That seems to describe what happened when he formed McCaw Cellular: microprocessor technology had evolved to the point where small cell phones and transmitters made it economically possible to serve the communication needs of mobile people. Is the Teledesic project at a similar stage? What are the technologies and what are the needs of people that will be met? Explain how the Teledesic satellites will differ in operation from most of today's existing satellites. McCaw conceived Teledesic "as a rural cellular telephony project that would extend the reach of wireless phone networks." What is his current conceptualization of it? Why did he switch? Do you think his current model or his original one would have a better chance of success? Why? The Teledesic homepage indicates that the following opportunities: Building the Teledesic Network will require a Team of dedicated individuals. We are constantly seeking exceptional candidates with many different skill sets. Although some opportunities exist in business development, marketing, finance, legal, and administrative, the bulk of our hiring needs are in technical areas. Would you go to work for them? This article, as well as more recent articles about Teledesic, indicates that the senior managers at Teledesic have a vision of solving the world's urban congestion problems. This argument is presented in the last few paragraphs of page 70, where McCaw describes a Guatemala village without communications in which people must migrate to cities. He says: "Whenever you add urban infrastructure, you ultimately destroy everything that came before. It's like dragging the plague around behind you. The beauty of electronic technology, unlike cars and freeways, is that we can resolve problems that are completely intractable when you move people physically. Moving electrons gives us flexibility." Will this Teledesic project really have an impact on such situations?

"Going Digital Means Sharper Boob Tubes," USA Today, Jan. 8, 1997 What are the main differences between digital TV and analog TV? What is the difference between High Definition TV (HDTV) and digital TV (DTV)? Broadcasters have been given new spectrum and the freedom to use it as they wish. This article says they could use it to "broadcast a fantastically sharp, wide-screen picture with six-channel surround sound" or the same station could "choose to split its signal into five to 15 digital channels that would look better than current analog channels." Which of the two do you think they will do? If they do the latter, what does it mean for broadcasters, advertisers, producers of TV video, and for consumers?

The article says that cable operators will probably go digital and thus be able to start offering 700 channels. What is about "going digital" that allows them to move from today's 50 or so channels to 700 channels? Is all of this just a dramatic increase in the number of TV channels that the current television broadcast industry will fight over? Or, will it lead to fundamental changes? If so, changes in what?

"Intercast Brings the Web to TV," PC Magazine, Jan. 21, 1997 What is Intercast? Is Intercast really going to "change the way we watch television"?

"Technology and the Future of Broadcasting," Web-Star (Internet web site)

"Streaming Media," Boardwatch, December 1997 This article has a good and a bad side. On the good side, it provides a good practical source of information on the resources needed to set-up and operate an Internet broadcast channel. On the bad side, it is full of technical jargon. Rather than my asking you questions, you formulate several questions about topics in the article that need to be clearer in order for you to fully understand the article.

"Real Revolution," Wired, October 1997 What is a multicasting backbone? On page 126, the paragraph that begins with "All this could wreak havoc scenarios. Which one do you think is most likely to occur? " describes two future

At the beginning of page 176, Glaser is quoted saying "Anyone who underestimates the depth of the transformation already underway will be out of business - or, at the very least, underserving the assets they are associated with." What is he talking about?

What business is Glaser in? Content, context, and/or infrastructure? Glaser s vision depends upon the growth of bandwidth. When we do get all of the bandwidth needed to bring out his vision (to send broadcast quality video on the Net), what role will Progressive Networks play?

In the middle of page 176, Glaser says that aggregators will be the winners and that the underlying consumer mechanism for delivering choice will be IP-based. Explain what he means by these two conjectures. Could Fuqua be an aggregator? If so, what content would it be natural for us to aggregate? What does Glaser mean when he says (in the middle of page 186) "after the turn of the century, every new TV that is sold will be an IP device"? Why does he believe that will be the case? What is a "branded nonchannel"?

T February 3 Digital Television

"Bit by Bit, PCs Are Becoming TVs," Wired, August 1995 What does Negroponte mean when he says "don t confuse television with television sets"?

People watch TV side by side in a room, and people use computer networks to interact with others round the globe. Which is more social? What is the basic difference between today s TVs and PCs? What is TV s economic model today?

Why does Negroponte say, "it will look strange tour great-great grandchildren"?

"Broadcasting is Finished," Forbes, October 6, 1997 Why does Hundt believe that "communication is king, and content is only a prince"? What does Hundt mean when he says "the whole idea of TV is not that you are a couch potato but that you re as dumb as a potato"? Why does Hundt believe that "broadcasting is finished"?

"George Gilder's Telecosm: Life After Television, Updated," Forbes ASAP, February 23, 1994 What does Gilder say is driving the "telefuture"? Why? What is the "law of the microcosm"? What is the "law of the telecosm"? What is the Negroponte switch?

In the sections titled "The Avalanche of Bits" and "Like Feeding Vitamins to a Horse", Gilder describes the repeated failures of many firms to make money on broadband systems. What reason does he give for these failures? What does Gilder mean when he says (on page 100) "In the computer industry, all the surprises tend to come on the upside"? Why is this important? Why does Gilder believe that "the new technologies are targeted at Hollywood"? Gilder says that the video business will increasingly resemble not the current film business but the book business. What does he mean and why does he believe it? What does Gilder mean when he says "Computer networks give every hacker the creative potential of a factory tycoon of the industrial era and the communications power of a TV magnate of the broadcasting era"? Do you agree? On the bottom of the first column of page 103, Gilder lists 10 key advances needed for the teleputer. This article was published in February 1994 and thus written in late 1993. In the 4 years since then, how many of these 10 advances have been made?

"HDTV: What's Wrong with this Picture," Wired, Premiere Issue, 1993 Why does Negroponte believe that the US "blew it" by "rooting our thinking in high definition"? What reasons does he give for our being optimistic?

"Object-Oriented Television," Wired July 1996 What is object-oriented television? What is "real virtuality"? Why is he a proponent of object-oriented television?

"The End of TV As We Know It," Fortune, Dec. 23, 1996 How did Bill Gates ruin everything for the people who had worked for years on HDTV? Near the end of page 60, the author says: "Even now the networks continue to hemorrhage viewers: NBC came in first last season with a Nielsen rating of 11.7 -- a 40% drop from the numbers CBS enjoyed when it was on top 20 years ago." What has caused this drop? How much longer will we use the word "broadcasting" and what will replace it. Do you think it is true that people really want their TV to act like a PC? Isn't this silly? Don't most people, at least in America, want to flop down in front of one of their 3.4 TV sets, select a channel to

watch, and be entertained? Haven't all the trials of interactive TV shown that people just do not want to interact with a television? When this article was published, WebTV was just coming onto the market. What has happened to it, and what is its likely future? On page 68, Harry Motoro, CNN's vice president, says, "We're actually better off in a 5,000-channel universe. Even more will people want someone who's accurate and timely." Do you believe CNN will be better off in that 5,000-channel universe, or in today's 50-channel universe?

F February 6 Intranet and Knowledge Management

Ford Motor Company: Maximizing the Business Value of Web Technologies (HBS Case 9-198-006) What was the role of Ford 2000 in the rapid growth of the Ford Web? What is the difference between Ford s intranet and the Ford Web?

Why were the Web applications so successful so soon at Ford? What were the challenges and hurdles involved in connecting suppliers? What was done to overcome these hurdles? Why was it so important to connect suppliers to the Ford Web? What is Ford doing to manage Web content? Which aspects of their efforts do you think are good and which ones are bad? Ford is considering a move to Network Computers (NC). What do you think of this approach to desktop computing in a corporation such as Ford? The case closes with Derwa observing that although the Ford Web has grown exponentially in content and access, it has to be managed well. What do you think of his observations and conclusions?

KPMG Peat Marwick U.S.: One Giant Brain (HBS Case 9-397-108) Page 5 of the case tells us that 1) the objective is this new initiative is to "give KPMG professionals ubiquitous access to the firm s brain trust", 2) "KPMG s real asset was the knowledge that resided with each of the firm s professionals", and 3) "it was imperative that the firm effectively manage and share knowledge in order to provide the best possible service to its clients." Consider one of the organizations you have worked in. What would have been the impediments to such a knowledge sharing initiative in that organization?

Exhibit 4 shows us the components of the technical architecture that underlies KWeb. We can see that materials are available in numerical form (in the Data Warehouse), multimedia format, HTML web pages, and Pointcast documents for "pushing" onto the client computers. An obvious question concerns the on-going processes for feeding and updating this "giant brain." Who do you believe will be the people in KPMG who will actually do this work? The role of a "knowledge master" is defined on page 11. Such a person had to have a high level of expertise in subject matter and domain. We can see that this person is going to have to put his/her knowledge into the knowledge management system. Do you think experts will be reluctant to give up their knowledge in this manner? Answer the question in the next the last sentence on page 11. Answer the questions in the paragraph on page 12 that starts with "To effectively manage knowledge "

T February 10 Content

"A Community for Couch Potatoes," Internet World, November 1997 What is ChatTV? Do you think it will be a big success?

"Newsmaker Q&A: James Murdock," Internet World, October 1997 Each communication medium (TV, radio, magazines, etc.) has its own well-known business model. But the author says, "the business model is not yet formed" for the Internet. Do you believe there will be one business model evolve, as has been the case for the other media? What does Murdock mean when he says "It s the first time in a while in the new-media industry that you really do have an almost open playing field"?

"Products and Services for Computer Networks," Scientific American, September 1991 According to Negroponte, why are broadband systems inevitable? One key message of this article is stated on page 102: "The real products and services of the future will come from imaginative applications of both channel and computing capacity; not from either alone." Negroponte said, (when this article was written in 1991) "many network products and services being proposed now are contrived." Can you think of any examples?

In the first part of page 104, he says, "The more fascinating developments will come from new services that free you to wander and that crate an electronic surrogate for you on the network with which others can communicate."" He uses the phrase "will come" but it seems that we have such an electronic surrogate that we have all been using for a few years. What is it? On page 106 (in the middle of the right hand column), Negroponte describes an example of combining a videodisc with an online connection for searching for a home. It is interesting to realize how far we have come in the few years since this article was written. Visit the John Scott Real Estate Company (http://www.johnlscott.com/) and do a Home Search; you will see that the system has already been implemented on the net. In the right hand column of page 107, he describes a future personalized newspaper. Go to Microsoft s site (http://home.microsoft.com/) that provides a rudimentary form of such a service and personalize it for you. How far is this site from Negroponte s description of a personalized newspaper?

"Savvy Sassa," Wired, March 1995 The article opens with the following conjecture: "Copyright. Branding. Leverage. These three words pretty much say it all in the wild and woolly new world of digital-age content." It s easy to see why copyright takes on a different status in the digital age, but why is branding and leverage so much more important in the digital age than in the pre-digital age? Sassa says in his business, the value chain starts with the "creation of good copyrights." I have never seen that phrase used in the context of an entertainment business. In a company such as Turner Broadcasting, what does the word "copyright" refer to or mean? What is the W-cubed concept and do you think it will become the dominant model and the networks will go away? Given that networks are losing audiences every year, why are they still a good business? In the right hand column of page 161, Sassa tells the story of his company s success with the Saved By the Bell television show. The show only had a 2.5 rating and thus would not succeed on a network or syndicated to local stations because the rating was so low. But he says that it makes money when the TBS cable channel (which is on almost every cable system in the U.S. and some non-U.S. systems) carries it. Why can it be successful for TBS and not in the other venues? What lessons does this provide for almost all small businesses? At the end of the article, Sassa says, "there are only so many filmmakers who can make a Citizen Kane or a Gone With the Wind and capture the imaginations of tens of millions of people." Can you think of reasons why we could challenge this point? Apply the concepts of copyright, branding, and leverage to the Fuqua School of Business. What are or could be our copyrights? How do or should we brand them? How can we leverage them?

"The City Built on Free Rent," Internet World, January 1998 Using Netscape, go to the geocities web site (http://www.geocities.com) and visit one of their neighborhoods (but not Wall Street); make sure you explore the Community Leaders section of the neighborhood. As you examine this site, assume that the Fuqua School of Business wanted to follow David Bohnett s model and do something similar. What creative insights do examining and thinking about this site (and reading the article) generate about a future venture by the Fuqua School of Business?

"The Content is King," Internet World, November 1997 Why is Michael Bloomberg happy when people tell him "The Internet is going to put you out of business"? Apply the marketspace model to Bloomberg s primary business. What was the model before the Internet and what will it be after Bloomberg migrates to the Internet? Bloomberg says "subscription with us, and a little bit with The Wall Street Journal, but does not seem to for most". Why does it not work for most? At the end of page 76, Bloomberg says "on the net, every single ad is a direct response. And people are scared to death of that, because what do you do if nobody s watching? Lot s of people in the food chain would get badly hurt if we could really measure who was watching what." Explain what he means. Who would get badly hurt? Why? Bloomberg says his company is different from most information providers, and that because of that difference he can charge high prices for their content. What makes them different? What lesson can Fuqua School of Business learn from Bloomberg if we decide to broaden our service beyond paid education?

"The Last Broadcast is a First: The Making of a Digital Feature," Videomaker, November 1997 Visit a web page associated with this movie (http://www.dvlive.com/theater/video.html). If you have a suitable computer and plug-ins, download some of the short videos from or about the movie. This movie was made with low cost equipment, used a lot of volunteers, and had a budget less than $1,000. Obviously, this movie is not of the quality of today s major movies or even the minor movies. So, what is the future of such effort? Is there a viable target market for such efforts? Sassa, in the "Savvy Sassa" article, says that there is major shortage of movie-making talent. If we accept his statement, then it is useless for people like Weiler and Avalos to even try, is it not?

F February 13 Examination & Changing Nature of Work

Examination

"Computers, Networks, and the Corporation," Scientific American, Special Issue: The Computer in the 21st Century

T February 17 Advertising and Electronic Commerce

"Advertising Webonomics 101," Wired, February, 1996 What is webonomics? Who are the four main groups setting the digital landscape? What are their motivations? About a year ago I had a late night debate with a marketing professor at another university who said that we could easily understand the Internet by applying stand economic models. For instance, assume the consumer s reason for using the Internet is to acquire information,

assume the value on the information to the consumer and the cost of searching and acquiring that information, Equate marginal cost with marginal revenue and derive the price consumers should be willing to pay for Internet access.

What does webonomics teach us about the applicability of this professor

s argument?

What are the five principles of webonomics and why are they true (or believed to be true by the author)? Do you think micropayments have a big future on the net? We do not see many email links on large corporate web sites. Why? Do you believe "the most important things the web can deliver is a fully qualified lead or customer"? How do you "turn a site into an online focus group"? Is the ultimate goal of marketers to make the web like TV?

"Reclaim the Deadzone," Wired, December, 1996

The net has an "information wants to be free culture" created by a situation of abundant supply of redundant content (at o charge and on nearly every conceivable subject) that outruns demand. Given that situation, why are so many business people claiming that the web is doomed if we don t find a way to pay for all the content? Will all the content providers leave the net if they cannot make money? What are the steps that the author believes advertisers can take to improve their fortunes. Why will today s banner ads not generate the revenue necessary to support a content provider such as Wired or USA Today? What is the purpose of today s banner ad: an invitation to link to the advertiser s web site or a place to create a vivid brand experience? Visit a few banner ads at Pathfinder, Wired, Yahoo, etc. before answering. Advertisers such as P&G only want to pay for the number of people who "click through" a banner ad and not pay for people who only view or are exposed to the ad. If this practice becomes wide spread, what impact will it have on the future of banner ads? The author believes that "infotainment providers can restore the belief that real advertising can be done on their sites." What is his prescription and do you believe it will work? What are brand modules, and how do they differ from today s typical corporate web site? What is cobranding?

"The Birth of Digital Commerce," Fortune, December 9, 1996 What is SET? Do you think that electronic commerce has a limited future because the majority of people are never going to send their credit card number over the Internet? What is a Digital ID? What is a microtransaction and what is its likely future?

"It's! Not! Retail!" Wired, November 1997 Visit the Shoppers Advantage web site (http://www.cuc.com/ctg/cgi-bin/SAShoppers/), where you will find that the company does not have an online catalog. Why do you think they have been so slow to do business on the Internet, as opposed to using online services such as AOL? The company seems to have an online shopping service that is reachable via the web page. Why do you think they have developed yet another online service, one that seems to compete with Shoppers Advantage? On page 221, the author describes 1997 describes HFS practice of buying companies that have franchises (Avis, ERA, ) and then selling most of the real assets. "Wall Street loved the concept:

own computer networks, customer data, and brand names." Apply the marketspace model to this company s business strategy. Page 222 contains a description of the merger of HFS and CUC, along with the business model that underlies the merger. Although the company has 50,000 employees, would it be correct to describe it as a virtual company as opposed to a traditional company? Explain. When we examine the logic behind Cendant Corp. and the FedEx strategy, are we seeing the future of electronic retailing: nothing but brand names, computer networks, consumer databases, and delivery systems? What is the future role of shopping malls and other physical retail outlets? Why will the Internet "not be an entrepreneurs haven"?

On page 287, we are told that CUC is trying to "switch its existing telephone members to switch over to its Web or AOL services. Online shoppers, CUC has found, buy as much as three times more than traditional members." Why do you think this is true? Forbes Magazine recently had a cover story about the glowing future of REIT funds, which are similar to mutual funds, which buy real estate instead of stocks and bonds. If Walter Forbes vision of the future of retailing comes true, what are the implications for REIT funds?