Monthly Archives: October 2014

10/28/14

#7 YouTube — ad-free services

YouTube is considering building a paid service that would allow customers to skip the ads on videos. This service targets the group who wants to avoid the ads and are willing to pay for this service. The ad-free service is one PoD of YouTube than the general video website. This service could increase the level that consumers satisfaction, increasing the value proposition.

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However, will Youtube be profitable with this service? With this service, I think the value of the advertisement before the video itself would be reduced. If the service came out, fewer people would be willing to wait until the ads end; people who buy the service would definitely skip them. As fewer people would see the ads, why firms would choose to put their ads on YouTube’s video. Hence, I think the profit from advertising would be lower.

 

But volume would win. Since YouTube has a large customer market, the profit from selling the service may cover the loss from reducing advertising investment, or even exceed. As the CBC News reported, the popular online video service has grown to more than one billion users a month with ads paying for the content and the service. This service may be profitable because of its huge market. 

 

On the other hand, I am not familiar with Canadian online video services, so I do not know whether other websites offer this kind of service. But in China, it is common in the Chinese online video market; almost every online video website provides this service. Therefore, compared to the Chinese market, it is not a point of difference for Chinese consumers. However YouTube does not serve the Chinese market.

 

Reference list:

the popular online video service has grown to more than one billion users a month with ads paying for the content and the service. This service may be profitable in its huge market.

http://www.cbc.ca/news/business/youtube-considering-ad-free-subscription-service-1.2815960

10/23/14

#6 Used-Car Auctioneer BCA Marketplace Calls Off London I.P.O.

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LONDON — The British used-car auctioneer and reseller BCA Marketplace said on Tuesday that it had called off its initial public offering in London, the latest European company to delay or withdraw its plans to go public amid uncertain markets. (International New York Times, by Chad Bray, accessed Oct.23)

As the capital market is unstable, BCA put its plan off to raise capital from the public. This reflects one important determinant of the company’s decision-making, risk assessment.

Although the IPO could have helped the firm to raise investment capital earlier if BCA had not delayed its plan. Uncertainty in the equity market would influence the value of BCA’s shares. If the volatile market was just in recession when BCA came in, the demand for its shares would be low, so the total value would be lower than that it could be when the market is growing.

LONDON reported that “About a half-dozen I.P.O.s in Europe were withdrawn or postponed this month as new listings performed poorly in volatile markets.” Many companies continued to trade lower than the initial offering prices. This fact also has delayed BCA’s IPO plan.

 

 

Reference list:

1.  The British used-car auctioneer and reseller BCA Marketplace said on Tuesday that it had called off its initial public offering in London, the latest European company to delay or withdraw its plans to go public amid uncertain markets.

http://dealbook.nytimes.com/2014/10/21/used-car-auctioneer-bca-marketplace-calls-off-london-i-p-o/?ref=international

2. About a half-dozen I.P.O.s in Europe were withdrawn or postponed this month as new listings performed poorly in volatile markets.

http://dealbook.nytimes.com/2014/10/21/used-car-auctioneer-bca-marketplace-calls-off-london-i-p-o/?ref=international

3. picture

crop from http://www.british-car-auctions.co.uk/buy/Useful-information/BCA-Assured/

10/4/14

#5 First nation partner Issue –Indian Act

Basic News:  Background: The Indian Act

 

Q: What is First nation?

A: According to the definition from the Government of Canada, “First Nations people” refers to status and non-status “Indian” people in Canada. (Government of Canada, accessed Oct. 04)

Q: Where is the First Nation?

A: Refer to the map provided by the Government of Canada; the communities’  locations are shown below:

inacmp_1100100021016_eng

 

Q: What is the Indian Act?

A: The Indian Act allows the government to control most aspects of aboriginal life: Indian status, land, resources, wills, education, band administration and so on.(CBC News,  Isabelle Montpetit, May 30, 2011)

Q: How does the Indian Act benefit Indians?

A: One of these is tax exemption for Indians. For example,  “When at least 90% of the duties of an employment are performed on a reserve, all of the income of an Indian from that employment will usually be exempt from income tax.”( Government of Canada, accessed Oct. 04)

This law may encourage the reserve residents to work to some extent. It could be an opportunity for a manufacturing industry on Indian reserves as the manufacturing market is always labour intensive. The tax exemption may lead to an increase in labor population in that the PPF may shift out. And in the meanwhile the manufacturing industry can apply economics of scale more easily by division of labour and specialization, which might help the industry to growth and to develop the reserves’ economy.

They also enjoy other benefits on loans and investment. They are encouraged to expand their markets on reserves and outside their regions. These polices are their opportunities to grow their economy.

The government wants to protect the aboriginal people and reserved land. Aiming for equality, the government has also published a series of policies meeting political and economical needs. But these polices basically benefit the residents. However, some aboriginal people prefer both independence and protection from the Canadian government.“They denounce its paternalism, but are at the same time reluctant to give up its protections(CBC News,  Isabelle Montpetit, May 30, 2011).” It may increase uncertainty at a political level, which may influence the stability of the market environment.

 

Reference list:

1. “First Nations people” refers to Status and non-status “Indian” peoples in Canada.

https://www.aadnc-aandc.gc.ca/eng/1100100013791/1100100013795

2. location map

https://www.aadnc-aandc.gc.ca/eng/1100100021015/1100100021021

3. some aborigines denounce the paternalism, without giving up the protections

https://www.aadnc-aandc.gc.ca/eng/1100100013791/1100100013795

4. The Indian Act allows the government to control most aspects of aboriginal life: Indian status, land, resources, wills, education, band administration and so on.

http://www.cbc.ca/news/canada/background-the-indian-act-1.1056988

5. “When at least 90% of the duties of an employment are performed on a reserve, all of the income of an Indian from that employment will usually be exempt from income tax.”

http://www.cra-arc.gc.ca/brgnls/gdlns-eng.html