Info Systems Chapter 4

Front 1

Disruptive Technology

Back 1

New technology that unexpectedly displaces an established technology. ex. Streaming reduced number of dvd consumers

Front 2

Digital Goods

Back 2

Goods that can be delivered over a digital network (ex. music tracks, software, video)

Front 3

What makes digital goods different from manufactured goods like cars?

Back 3

The cost of producing the first unit is almost the entire cost of product. As a result, the marginal cost of producing the 2nd unit is zero

Front 4

Properties of digital goods

Back 4

Easy to reproduce, easy to distribute

Front 5

Production Costs

Back 5

Costly to produce but cheap to reproduce, variable costs are small, no capacity constraints, leads to economies of scale (marginal cost less than average cost)

Front 6

Long-Tail Phenomenon

Back 6

Whereby firms can make money by offering a near limitless selection

Front 7

Advantages of long tail

Back 7

Cost of production and distribution drop, gives firm a selection advantage that traditional stores cant match, geographic constraints go away and untapped markets open up ex. Netflix

Front 8

Collaborative Filtering

Back 8

Classification of software that monitors trends among customers and uses this data to personalize an individual customer's experience

Front 9

Cinematch

Back 9

Netflix uses a proprietary recommendation system. Each time a DVD is returned, Cinematch asks the customer to rate it.

Front 10

Switching Costs

Back 10

Exist when consumers incur an expense to move from one product or service to another

Front 11

Atoms to Bits Model

Back 11

All media products are created as bits (digital files of zeros in coding) and evolve into atoms (music, movies, books)

Front 12

Advantages of atoms to bits model

Back 12

Netflix will eliminate a huge chunk of its shipping and handling costs, Bandwidth costs are minimal

Front 13

Disadvantages of atoms to bits model

Back 13

Wrangling licensing costs is a challenge, switch to Blu-Ray dvds means that Netflix has to carry two sets of dvds, bandwidth caps

Front 14

Streaming

Back 14

Method of transmitting or receiving data over a computer network as a steady, continuous flow, allowing playback to proceed while subsequent data is being received

Front 15

Net Neutrality

Back 15

Principle that internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular websites

Front 16

Windowing

Back 16

Use of windows for the simultaneous display of more than one item on a screen. Netflix restricts number of titles available

Front 17

First Sale Doctrine

Back 17

Ruling that allows a firm to loan out physical copies of purchased products, so if studios sell their dvd retail, they can't prevent netflix from buying at full price and sending purchased disks to subscribers

Front 18

Disintermediation

Back 18

Reduction or elimination of intermediaries between producer and buyer. Enabled through digital markets