Apple's Problem In European Market

Article 6: Now It’s Europe vs. Apple

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This article discusses the many difficulties that Apple is having with spreading its technology overseas, particularly with the compatibility of its iTunes files with MP3 players that are not iPods. Apparently, European consumers are not happy with the fact that the music they download from iTunes must be played on an iPod. In certain countries, such as Norway, this fact violates the countries’ laws. In addition, Norway is forcing Apple to make changes to End User License Agreements or the company will face fines.

Some things that this article demonstrates are the market offer and customer demand for a company. Both of these are topics discussed in the textbook. The market offer has to do with what the firm is marketing. Entertainment can be more difficult to market abroad because of differences in culture. This is definitely the case because the people in Europe are having a much more difficult time with the fact that iTunes songs must be played on iPods. In the U.S. that is definitely not an issue. I know that there are some other portable MP3 players out there, but not many are in use. Everyone that I know of that has an MP3 player has a type of iPod. If Apple had realized that this may not be the case in other countries, they may have been able to reconfigure the compatibility of their online music and have a much more attractive market offer.

As far as customer demand goes, the demand for the iTunes songs is obviously higher than the demand for the iPod in foreign countries. The fact that the two are only compatible with each other and this violates certain laws shows just how little Apple researched the clients in other countries. It also shows that they were not aware of the different governmental issues in countries that they provide a service to. It is always important to know these things because it is not safe to assume that every country will react like your own.

This also really shows how the internet can truly create a global market for a company. Apple admits that they aren’t too worried about Norway as the country is not a very large market for them. However, they are worried that the same concern will spread to a larger European market such as Britain and that would have huge ramifications.

Hopefully Apple can sort out the different issues that European countries have with its iTunes product so that they can continue to provide music throughout the world.

Headaches for US Internet Giants in China

Article 5: The Web and China: Not so Simple

Government intervention when it comes to the internet has always been an issue. However, when international internet companies get involved, the problem becomes quite a bit more complicated. This article discusses the strict government policies in China regarding the internet, and the U.S. companies that have gotten themselves wrapped up in the mess.

Although Google, Yahoo and Microsoft are all U.S. companies, they have been under scrutiny when it comes to their operations in China. The problem stems from the fact that the Chinese internet market is the second largest in the world, after that of the U.S. Thus, companies are forced to make a choice, submit to the demands of the Chinese government, or lose out on the country’s internet population altogether?

This was Google’s problem when the company decided to move servers into the country and was then subject to censoring websites that could be seen by Chinese citizens. The problem is not just that Google has given into the government, but also the fact that they were operating quite well with a Chinese language site on servers outside of the country’s borders. With these servers, they had managed to captivate 33% of the Chinese market. While having servers inside the country would optimize running time for the site, there becomes a question of the benefits. Is it better to have a search engine that runs faster, or have one that allows more websites to be seen? While this has been an ongoing discussion, Google has to be praised for housing its e-mail and blog servers outside of the country so the information located there is not prone to government demands.

Yahoo was not as fortunate. They moved their e-mail servers into China about two years after they first penetrated the market. Since then, Yahoo has had no choice but to hand over e-mail information to the Chinese government. Among the many criticisms of this choice is the fact that some Chinese citizens have actually been incarcerated based on information from their e-mail that was handed over to the government by Yahoo.

Microsoft has had similar issues when, upon Chinese governmental request, it blocked a blog site from not only the citizens of China, but the rest of the world as well. In addition, the site was actually housed on a U.S. server, but Microsoft said they base decisions not on where the server is located, but how a user sets the profile. This begs the question then, if China has the power to ban a blog on a U.S. server, how far will their power reach?

The issues in the article range from “Global Squabbles Over Internet Governance” to “Government Intervention”, both topics in our textbook, Internet Marketing: Foundations and Applications. In addition, one has to look at the effects for companies attempting to reach the Chinese market. If your website has any data on it deemed unacceptable by the Chinese government, having all major search engine servers located within the country’s borders poses a large problem. With Google’s servers located outside of the country, at least the Chinese market could browse your site. Now, they won’t even know it exists because it won’t show up in a search.

Since China poses the same great qualities that these internet companies saw, such as a huge market potential, other international companies will have problems as well. Not having your information seen is a fast way to lose your business, and Google, Yahoo and Microsoft are not helping the situation at all.

Who Owns the Internet? Do ICANN Operations Depend on Government Control?

Article 4: ICANN to Cut U.S. Apron Strings?

As we have learned in class, there has been much debate over ICANN, the organization that sets internet standards, and it’s location in the world. Though a not-for profit corporation, ICANN is overseen by the U.S. Commerce Department. There has been talk of completely privatizing the organization, or moving it to a more neutral area such as Switzerland. As this article mentions, there is also talk of placing it under the control of an International Organization such as the United Nations (UN).

This entire argument begs the ongoing question of “who owns the internet?” It is still maintained that the internet is not owned by anyone. However, control over ICANN would certainly involve control over certain aspects of the internet. For example, ICANN is in charge of the Domain Name assignments and IP addresses. The American Government’s more liberal view of what is allowed on the internet can be contrasted with many other countries. One must ask whether a move to another country would change the way ICANN operates.

For example, many are aware of Chinese regulation of the internet for their citizens. The Chinese government bans online advertising unless approved by the SAIC, according to our textbook. What would happen if ICANN were moved to China, or another country with similar restrictions? It is not likely that China would restrict online advertising completely, all over the world. However, isn’t it possible that they might try? In the U.S. almost anything can be found online. While the open web atmosphere lets in the bad (i.e. child pornography), it also lets through a myriad of good.

I’m not one to think that the U.S. is supreme and should retain influence of ICANN until the end of time. Indeed there are many good things that could come of moving. According to the textbook, places in Europe are extremely strict about privacy, e-mail advertisements and spamming. The EU even has a Telecommunications Anti-Spamming Act. While restrictions imposed on different types of online advertising would cause marketers great stress, they would greatly reduce the annoying spam that nobody can deny hating.

However, this article makes a good point. The internet has flourished under ICANN and U.S. guidance. Arguments have come up such as the .xxx case in which a pornography site was denied a .xxx domain, and is suing the U.S. government because they believe that the Commerce Department pressured ICANN to reject the domain. Yet the company should realize that with ICANN’s location elsewhere, it is far less likely to be allowed to even operate a pornography site period, forget the domain name issue.

This being said, the U.S. agreement with ICANN is supposed to expire September 30, 2006. With this date rapidly approaching, it will be interesting to see whether the U.S. does in fact “renew the arrangement or step back from its role.”

MySpace Expanding Internationally?

Article 3: MySpace: No Free Ride in Europe

(Picture from: www.myspace.com)

Internet users worldwide beware, MySpace is coming to a country near you…or so they hope. The popular online networking website is trying to expand out of the saturated U.S. market into Europe and beyond. However, they seem to be meeting with a few barriers along the way. Like any company marketing internationally, MySpace is having a few problems with the language barrier. While Europe may have created the European Union (EU) to economically integrate its countries, the languages of each country are still quite different. Thus, taking the generic website and offering it to Europe is not possible. MySpace faces the challenge of developing it’s website into the native language of each country it wants to enter, no easy task considering that pretty much every country in Europe speaks an entirely different language.

This is interesting because every company that wants to expand to an international market has to deal with the same issue. How do you promote the same product to a large number of very different countries and cultures? If MySpace can answer this question, they may be answering it for many companies in addition to their own. Since companies already have the ability to advertise on MySpace, think of the opportunities that would arise for others if the company went international. If you wanted to target the teens of Germany and France, but not Spain, you could advertise on the MySpace in the countries you wanted to reach but leave out those you did not. Where to promote is always a huge question and the internet is so vast it can be problematic to reach the consumers you want to target. By having a website like MySpace in another country, it’s an automatic marketplace for the consumer you want to reach, especially if you are targeting a younger demographic.

However, the international competition for MySpace is vast. Sites such as Bebo.com and Ringo.com that are already operating abroad are giving MySpace a run for its money. The problem is the consumer loyalty that these smaller sites have. Bebo limits the amount of people that can view your profile to those in your “community.” Much like facebook, it doesn’t allow everyone who has an account to view your information which is not only more secure, but seems in increase online time since you can get to know people better vs. MySpace users who have to “divide their time among a much larger number of contacts.”

It will be interesting to see how the popular American website fares internationally.

Online Gambling

Article 2: Arrest adds pressure on Internet gaming

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Online gambling has long been a topic of debate. While U.S. laws prohibits it, according to this article, “millions of Americans are betting online.” This is possible due to the fact that most online gambling sites and web casinos operate on offshore servers. However, this article proves that while the U.S. may not be able to do anything about the offshore gaming sites, once an online gaming official enters the country, it’s a different story. Sportingbet PLC is a British gaming business, yet its executive was arrested in the U.S. It seems odd that this man is considered a criminal when his sites operate legally in England and are even traded on the London Stock Exchange.

This leads to a question of whether the U.S. should be able to restrict online gaming over the internet. Since the web enables data to travel the globe with servers all over the world, what right does the U.S. have to regulate what goes on in another country’s web? A British executive was arrested in July on similar charges, based on the 1961 Wire Act. This law prohibits sports betting over the phone, even if the business is in another country. Yet it seems that a person should not be arrested based on a 45 year old law involving telephone betting when the Internet has opened up and connected the world so greatly.

One of the reasons this should be a concern for marketers is that the U.S. laws make it difficult to advertise on these websites. According to our textbook, Internet Marketing: Foundations and Applications, “the U.S. government began seizing cash from television and media companies that sold advertising to online casinos for ‘aiding and abetting’ the casinos’ online operations.” Since these online sites would be a great way to market overseas, it seems unfair that the U.S. would prohibit such advertising. If online gaming is legal in the country where the server the site operates on is located, the U.S. should have no right to prohibit advertising on that site, and have no right to seize funds from those companies that do. This will most likely remain a heated debate for years to come as online gambling is only increasing in popularity around the world.

Intro Post: Online Shopping Worldwide

Hello. My name is Lindsay Dubil and I am a Senior marketing major at the University of Delaware. The purpose of this blog is to help understand the different ways that technology can affect marketing. It is part of a project for a class of mine, IT Applications in Marketing. The theme for my blog is "Taking Internet Marketing International" which is a chapter topic in our textbook Internet Marketing: Foundations and Applications by Carolyn F. Siegel. The project is to read different articles related to my topic and discuss these articles so that others can comment as well.

Article 1: 10% of Population Has Shopped on Web Studies Show

This article relates to my topic because it has to do with the online shopping craze and the internet shopping population worldwide. The fact is that online shopping sites are a fairly untapped resource as far as marketing is concerned. Perhaps the best quote to demonstrate this is when Bhawani Singh, the managing director of consumer research at ACNielsen Europe states "...it is clear to us that many retailers and marketers are not using it to its full potential."

Most would probably agree that online shopping in America is a huge phenomenon and growing bigger, yet according to this article, online shopping in other parts of the world is even larger. Ever since the inception of online companies such as ebay, the ease with which one can purchase anything from anywhere has greatly increased.

Online shopping however is nowhere near limited to auction sites as most companies these days have websites where customers can purchase their goods online. Purely online companies such as Amazon.com and iTunes are two companies that also do well as they are both international and books and downloadable music are two of the most paid for items on the internet according to this article.

The fact that such large populations of internet users are shopping online, 95% in some European countries, shows just how important online marketing can be. Imagine the amount of international consumers a company could reach by advertising on one of the websites mentioned above. Targeting a specific market would be very simple since many websites are geared toward a specific demographic to begin with. Just as companies can reach their target consumers by advertising on certain channels (Spike TV, TNT, TBS for example) advertising on specific websites could be just as effective and reach a wider consumer base since the internet crosses international borders.

Even doing something such as offering products online, as well as in retail or wholesale could greatly increase a company's consumer base as well as increase sales. As Singh states in the article, "a small shop online can beat out a High Street retailer by providing a similar or better shopping experience online." The internet has become such an integral part of the lives of people around the globe, and it is surprising that marketers have not yet realized the potential that this fact brings. Online shopping seems like it is here to stay, and the companies that realize this and market according stand to fair far better than those that don't.