Mass Media and Society

Chapter 13: Economicsof Mass Media

April 7, 2014

Chapter 13: Economics• Characteristics of media

industries• Internet’s effects• The information economy• Globalization• Culture and economics

Industry characteristics• Monopoly: When one

entity controls a product or service

• Oligopoly: A few companies control a product or service

• Monopolistic competition

Revenue• Companies make money

either from consumers or from advertising

• Book publishers on one end, TV networks on the other

• Print newspapers: high first copy costs, lower marginal costs

Revenue• Large media

conglomerates own most TV networks

• One company usually dominates local cable provider market

• Radio is heavily consolidated

Revenue• Big four music companies

dominate that industry; closely linked with radio

• Ticketmaster and Live Nation merged; performed same service

• Large companies dominate movie market

Internet’s effects• Online space is much

more inexpensive than print or broadcast media

• Most newspapers now allow free online access; many use paywalls, charging for some content or after a certain number of pageviews

Online synergy• Combination of media

outlets across platforms, such as newspapers producing video or TV networks producing text stories for the web

• Advertising targeting and models changing

Advertising• Google: text ads next to

search results, on web pages, targeting specific web visitors

• Cost barrier to advertising lowered

• Bulk of Google’s revenue comes from advertising

Digital delivery• Google News and other

aggregators provide categories to links to news stories online: news sources are critics

• File sharing, streaming of music and video affects sales in those categories

DMCA• Digital Millennium

Copyright Act: 1998 law is effort to stop illegal copying and distribution of copyrighted material

• Copyright holders can send notices over use of material (such as on YouTube)

Digital Divide• Can be a barrier for

workers, particularly older ones, in job market

• “Bottom billion”: of 6.8 billion people in the world, only 1.6 billion are connected to the Internet

• One Laptop Per Child

Legislation• Federal Communications

Commission regulates the information economy

• Antitrust legislation is used by the government to encourage competition

• Telecommunications Act (1996) solidified trend of deregulation

Vertical integration• Media companies

produce and distribute content

• Disney: manages theme parks, movie studios, ESPN, ABC; synergy creates opportunities and potential ethical concerns

Digital files• Digital Rights

Management protection limits use of files or controls copying

• Piracy remains an issue• Digital music sales

advance greatly ($187 million in 2004 to $1.8 billion in 2008)

Globalization• Media are a cultural

product• Spread of culture across

borders can lead to homogenization

• Media companies now tailor content to global markets (“Titanic”)

Culture• Cultural imperialism:

describes U.S. role as an influential cultural superpower

• McDonaldization: efficiency, calculability, predictability, and control

• Making money from whatever cultural elements it can