New Episode 5: Types of Goods (hosted by Maxwell Gilles)

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COMM122 Introduction to Media Industries & Institutions (UMass-Amherst)

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Hello and welcome to the comm 122 podcast.  In this episode, we will discuss four categories of goods, and what categories do media products fall under. Why should we care about this? This is because business strategies and business models, as well as some of the challenges facing the media industry, all have something to do with the unique characteristics of media products.  Let us begin. How is a movie different from a bucket of popcorn? Well, that’s a silly question, is it? Other than the fact that they both can be consumed in a movie theater. These two are categorically different things. See, the word, consume, is interesting. Can we really consume a media product? I can eat up a bucket of popcorn. It is gone. But, can I use up a movie. Is the movie somehow gone after my consumption? We all know that information and intellectual properties do not get used up when you consume them. This is what we call “Rivalry.” It is a term in economics. We can describe a good or product as either rivalrous or non-rivalrous. It is rivalrous if its consumption by one user prevents simultaneous consumption by other users, or if consumption by one party reduces the ability of another party to consume it. For simplicity, let’s just call it Shareability, that is, whether good can be shared or not. Do I want to share a bucket of popcorn with you? Probably not, but I can certainly share a movie with you.  Second question. How is YouTube different from Netflix. Both are video streaming sites but there is a marked difference: YouTube is free, mostly. But Netflix requires a paid subscription. To use a term in economics. Netflix is excludable because it prevents people who have not paid for it from having access to it. Simply put, excludability, or as we call openness in this class, is about whether something is effectively free or not. Rivalry, or shareability, and excludability, or openness. These are the two dimensions along which different products can be categorized. If a product is rivalrous and excludable, meaning it can be used up and is not free of charge, we can call such product, private goods.  Some of your most precious possessions are private goods. Your car, your jewelry, and your home.Hey, what about a product that is non-rivalrous and non-excludable, meaning, something that is free and does not get used up? We call it public goods. In a few weeks, we will talk about public media and community-supported media. This kind of media is a prime example of public goods. Think about your local PBS station and NPR station. Unlike channels such as HBO and AMC, public television and radio stations are freely available, and like nearly all media products, they do not get used up. There are also plenty of public goods on the internet. Your favorite website, Wikipedia is one. And there is a large community of people that embrace the open-source and open-access culture. For example, Professor Wayne finished the script of this episode on a laptop that runs open-source software, and myself, your lovely podcast host recorded this podcast using the open-source software audacity. Professor Wayne made this podcast series free to download. So, technically, our podcast is a public good as well. What about the products that are in-between? Can you name something that does get used up, but is free? I would say, lobsters. There are lots of lobsters in the world, but the supply of lobsters is limited, and they could be consumed up if we over-fish. That is why different countries have fisheries policies to regulate how much that can be fished in their territory.   However, fishermen do not have to pay for the lobsters they have caught, because these are creatures from the mother nature. We call this sort of goods, commons, or common pool of resources. Lastly, let’s talk about HBO. The HBO channel is NOT free. It does not get used up