Category: Digital Technologies
From Dellarocas, C., Katona, Z., & Rand, W. (2013). Media, aggregators and the link economy: Strategic hyperlink formation in content networks. Management Science, 59 (10), 2360-2379.
In today’s link economy, whether a blogger paraphrases news articles or a fully automated aggregator harvests content from across the web, the pathways between content producers and audiences have become increasingly complex. So how should content producers respond to competition from aggregators and from each other?
How should content producers respond to competition from aggregators and from each other?
A new study from Boston University School of Management’s Chrysanthos Dellarocas, professor of information systems and director of Boston University’s Digital Learning Initiative, together with Zsolt Katona (University of California at Berkeley) and William Rand (University of Maryland), is the first to model the complex, interrelated implications of strategic hyperlinking and investment in content production. Their analysis, demonstrating scenarios in which such links can boost everyone’s profits, thus yields important implications for professional content producers who have until now been reluctant to link to competitors.
When Linking Increases Profits
Addressing questions relevant to both firms and regulators, Dellarocas et al. identify gaps in existing network economics research around the impact of freely established links and the strategies that motivate their formation. For example, what are the effects of linking to competitors, and when should inbound links be refused?
Dellarocas and his co-authors show that although linking can result in low-quality sites free-riding on high-quality content, “in settings where there are evenly matched competitors, the option of placing links across sites may lead to equilibria where some or all sites are better off relative to a no-link setting.”
Links between peer content sites can increase profits by reducing competition, overproduction, and duplication. The intuition is that, instead of each site expending resources to produce what is essentially duplicate content, everyone can benefit if one site specializes in producing really good content and other sites link to it. Sites that invest in high-quality content benefit from additional referred traffic, while those publishing the links become trusted hubs that attract visitors without having to pay the cost of content production. Different sites might specialize in producing content on different topics, one on politics and another on sports, for example. Thus, all sites produce the type of content they are best at and link to the rest. In this scenario, consumers benefit all-round.
The authors point out that the above scenario can sustain the market entry of inefficient players, allowing them to free-ride on the success of other content sites by linking to them, potentially denting the revenues of target sites. Still, no content site would benefit from unilaterally blocking such links, because then free-riding sites would simply link to their competitors.
The Impact of Aggregators
Acknowledging that aggregators ‘steal’ traffic from content sites, the authors also point out that, “by making it easier for consumers to access good content, aggregators increase the attractiveness of the entire content ecosystem and, thus, also attract traffic away from alternative media.”
While aggregators may direct more traffic to high-quality sites, they also take away a slice of profits from content sites. This happens because some aggregator visitors check article headlines and snippets at the aggregator but never click through to the original articles. Furthermore, aggregators tend to increase competition between content sites. This may boost quality but reduce content producer profits.
See more about “Media, Aggregators and the Link Economy: Strategic Hyperlink Formation in Content Networks,” at Management Science.
One-day conference with leading search engine marketing professionals open to all students
The Search Engine Marketing Professionals Organization (SEMPO) Boston, in partnership with Google, Inc., is holding a free one-day summit at Boston University School of Management to expose students to the search marketing industry on Friday, February 22, 2013.
The SEMPO Student Search Summit will feature educational presentations, workshops, and panels composed of leading and local search engine marketing professionals, and offer students an inside look at the field. Speakers include representatives from Google, Gupta Media, Metropolis Creative, Microsoft, Rimm-Kaufman Group, and Staples.
The day will kick off with a keynote address on why search matters, followed by a career panel discussion with recent college graduates and a networking lunch. The day will conclude with sessions on search engine optimization, search engine marketing, and social. Students will learn about the landscape, business, future, and potential careers that are tied to search and digital marketing.
Event is open to all current undergraduate and graduate students and will take place on the School’s 4th floor from 10 am-4 pm. Admission is free. Visit the undergraduate or graduate CareerLink websites to RSVP.
Marshall Van Alstyne
Authors: Marshall Van Alstyne and Geoffrey Parker
We develop an analytic model to examine the optimal level of openness and the optimal duration of property rights in a platform ecosystem such as that of Apple, Google, Facebook, or Microsoft. The model accounts for two periods of sequential innovation and the subsidies that the platform owner provides to developers in order to increase innovation for that platform. Intuitions are also shaped by dozens of hours with executives at platform firms. This is a working paper.
Authors: Mihai Calin, Chris Dellarocas, Elia Palme, and Juliana Sutanto
News aggregators have emerged as an important component of digital content ecosystems, attracting traffic by hosting collections of links to third party content, but also causing conflict with content producers. Aggregators provide titles and short summaries of articles they link to. Content producers claim that their presence deprives them of traffic that would otherwise flow to their sites. In light of this controversy, we conduct a series of field experiments whose objective is to provide insight with respect to how readers allocate their attention between a news aggregator and the original articles it links to. Our experiments are based on manipulating elements of the user interface of a Swiss mobile news aggregator. We examine how key design parameters, such as the length of the text snippet that an aggregator provides about articles, the presence of associated photos as well as of other related articles on the same story, affect (a) a reader’s propensity to click on an article, (b) the amount of time that the reader spends on that article after clicking, and (c) the amount of time the reader spends on the aggregator. We hope that our results can help aggregators and content creators optimize their relationship for the benefit of both parties.
All Up in Your Facebook: The Legal and Management Implications of Screening Applicants with Social Media
Markets, Public Policy and Law
Author: Kabrina Krebel Chang
You can be fired for off-duty posts to social networking sites. But now you can be hired in just the same way. The new Facebook Score and a Social Networking Report allow employers to use your social networking activity to make hiring decisions. While more than 50% of responding employers in a recent study reported looking at and basing decisions on an applicant’s social networking activity, a newly-devised “Facebook Score” offers employers a five-characteristic checklist for determining suitable employees. Employers can even outsource this task to companies like Social Intelligence, which generate Social Networking Reports similar to traditional credit reports. Are employers crossing a legal line in an attempt to hire the best candidate?
The Hierarchy of Effects (HOE) Meets Paid, Earned, and Owned (POE): How Do Internet Media Work to Drive Brand Sales?
Authors: Shuba Srinivasan, Koen Pauwels, Randy Bucklin, and Oliver Rutz
The Internet offers marketers new ways to talk to consumers and helps create a space for one’s brand that consumers can easily access and interact with. It also enables firms to monitor consumers’ conversations, attitudes and much more towards a brand. Within this context, we follow industry nomenclature of paid (search and display), owned (websites) and earned (social) media or “POE.” POE media is an important complement to previously relied upon survey-based metrics (i.e., mindset metrics). The new activity-based metrics are behavior-based data in terms of what consumers actually do and offers potentially lower tracking costs and an opportunity for earlier warning. A critical question is how the POE media elements interact with each other and with traditional marketing mix actions such as price, distribution and offline advertising. Our study, to the best of our knowledge, is the first to investigate paid, owned and earned media in an integrated framework that accounts for a hierarchy of effects or “HOE” on brand performance for a fast-moving consumer good. We show to what extent these media contribute to explaining sales as compared to the traditional marketing mix actions of price, distribution, and advertising. We also establish causal relations among traditional and new media metrics and quantify the long-term differential impact of each element of POE media on brand performance. We find that POE metrics can be leading indicators of brand sales and can be used as early warning signals to fine-tune marketing messages before actual declines in sales occur. Overall, our study should help strengthen marketers’ case for building share in customers’ hearts and minds, as measured through customer online engagement. We conclude with implications for academics and brand managers.