The Economics of Online Annoyance

You’ve just accessed a Web page and begun searching for the information you want to retrieve. Suddenly the page is plastered from top to bottom with banner ads. Some pop up, some float across the screen, and in some, animated figures dance and prance to inane music. As a user of the Internet, feel free to be annoyed. As a student of business, however, you should stop and ask yourself a few questions: Where do banner ads come from? Who stands to profit from them?

So Many Choices

A “Late Fee” by Any Other Name

Why is there always time to get a DVD from Blockbuster and watch it, but never enough time to return it within the specified number of days? Are you fed up with late fees? Maybe you should get your movies through a mail-order service, such as Netflix, which lets you hold onto the DVDs for as long as you want in exchange for a monthly fee. But wait: Blockbuster has solved your dilemma by announcing “the end of late fees.” Maybe so and maybe not. The end of late fees isn’t really the end of late fees. As in so many deals that sound too good to be true, there’s some fine print. Here’s how it really works: The bad news is that eight days after the return date of your movie, your credit card is charged for the selling price of the DVD. The good news is that you can get the “sale” removed from your credit card if you return the DVD within thirty days. The bad news is that you’re charged a “restocking fee” to cover the cost to Blockbuster of processing the “temporary” sale. You did avoid a “late fee.” (By the way, not all Blockbuster outlets offer this value-added service; some still keep it simple by charging the time-honored late fee.)

As a business student, you should be wondering whether Blockbuster’s end-of-late-fees campaign makes business sense. You should wonder whether it’s ethical. You may already know that the New Jersey Attorney General has charged Blockbuster with deceptive advertising and filed suit. But even if you know the opinion of one high-ranking legal official, you should (as always) be prepared to form your own. Answer the following questions (being sure to justify your answers):

Build a Better iPod and They Will Listen

Right now, Apple is leading the pack of consumer-electronics manufacturers with its extremely successful iPod. But that doesn’t mean that Apple’s lead in the market can’t be surmounted. Perhaps some enterprising college students will come up with an idea for a better iPod and put together a plan for bringing it to market. After all, Apple founders Steve Jobs and Stephen Wozniak were college students (actually, college dropouts) who found entrepreneurship more rewarding than scholarship. Here’s your team assignment for this exercise:

Made in China—Why Not Sell in China?