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Media Competitionand Coexistence

The Theory of the Niche

LEA' s Communication SeriesJennings Bryant / Dolf Zillmann, General Editors

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Alexander/Owers/Carveth Media Economics: Theory and Practice,Second Edition

Bryant/Bryan t Television and the American Family, Second Edition

Bunker Critiquing Free Speech: First Amendment Theoryand the Challenge of Interdisciplinarity

Compaine/Gomery Who Owns the Media? Competitionand Concentration in the Mass Media Industry, Third Edition

Dimmick Media Competition and Coexistence: The Theory of the Niche

Harri s A Cognitive Psychology of Mass Communication, Third Edition

Moore Mass Communication Law and Ethics, Second Edition

Perse Media Effects and Society

Price The V-Chip Debate: Content Filtering From Televisionto the Internet

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Media Competitio nand Coexistenc e

The Theory of the Niche

John W. Dimmick

LAWRENC E ERLBAUM ASSOCIATES, PUBLISHERS2003 Mahwah, New Jersey London

Copyright © 2003 by Lawrence Erlbaum Associates, Inc.Al l rights reserved. No part of this book may be reproduced in any form,by photostat, microform, retrieval system, or any other means, withoutprior written permission of the publisher.

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Librar y of Congress Cataloging-in-Publication Data

Dimmick, John W.Media competition and coexistence : the theory of the niche / John W.

Dimmick.Includes bibliographical references and index.ISBN-8058-3787-6 (cloth : alk. paper)1. Mass media—Economic aspects. I. Title.P96.E25D56 2003338.4'730223—dc21 2002069349

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This book is dedicated to thosewho made my career possible,

Clara and Arthur Dimmick,Gertrude and Curtis Newton,

Rod and Irene Dimmick

Content s

Table and Figure Index vii i

Preface ix

Acknowledgments xi

1 Competition Within Industries: Sociocultural Evolution 1

2 The Theory of the Niche 23

3 Competition for Advertising 43

4 The Niche and the Strategic Group: The Niche-Breadth Strategy 64

5 The Gratification-Utility Niche 77

6 Further Aspects of Competition and Coexistence 105

7 The Community Level: Niche Difference, Coexistence, 118and Complexity

References 127

Author Index 139

Subject Index 143

vii

Table and Figur e Index

Table 1.1 Type of Ownership of Radio Stations: 1922-1930Table 1.2 Characteristics of r and K SelectionTable 1.3 Growth Rate (ra) and Proportional Change in Average (Mean) Organization

Size for Movie Theaters and NewspapersTable 1.4 Daily Newspapers 1912-1980 in Eight Circulation-Size CategoriesTable 1.5 Number of Small Dailies (Less Than 5,000 Circulation) in Competitive

and Noncompetitive Cities of Differing Size: 1920-1950Table 3.1 Measures of Niche-Breadth, Overlap, and Superiority for Radio

and TelevisionTable 3.2 Measures of Niche-Breadth, Overlap, and Superiority for Television

and CableTable 4.1 Means and Standard Deviations of Normalized D-Measures 1987-1999Table 5.1 Factor Analysis of Gratifications ObtainedTable 5.2 Niche-Breadth and Overlap MeasuresTable 5.3 Pair-Wise Comparisons of Media SuperiorityTable 5.4 Percent Correct Classification or "Fit" Between Choice ModelsTable 5.5 Entertainment GratificationsTable 5.6 Niche-Breadth: Gratification OpportunitiesTable 5.7 Telephone and E-mail Gratification QuestionsTable 5.8 Factor Analysis for Gratifications Sought From News Media (N = 415)Table 5.9 Time Spent With Five News Media "Yesterday"Table 5.10 Gratification Opportunity Questions for Daily News MediaTable 6.1 Breadth and Overlap Measures for Three TV StationsTable 7.1 Pricing Practices of Media Industries

Figure 1.1 Types of SelectionFigure 2.1 Relationships Among Niche DimensionsFigure 3.1 Advertising Shares for Three MediaFigure 6.1 Overlap for NBC and CBS Radio NetworksFigure 6.2 Effect of Serial Competition on NewspapersFigure 7.1 Dominance Index, 1935-2000

VIM

Prefac e

This book is about twin phenomena which represent two sides of the same coin,competition and coexistence within and among media organizations and industries.As such, the book is a work situated in the relatively new field of media economicsand management.

The central question underlying the theory and data presented in the followingchapters is: how is it that media firms as well as entire industries exist and persistover time despite what often seems to be intense competition for resources such asaudiences and advertisers? The question is answered in this volume using abioecological theory—the theory of the niche—to explain competitive processes.

Despite the focus on niche theory, the book does not eschew traditional econom-ics. Indeed, every chapter incorporates relevant economic constructs into the ana-lytic framework. This framework ranges from the use of the notion of economies ofscale in chapter 1 to explain selection and firm mortality in newspapers and movietheaters, to the use of the concept of transaction costs to explicate the rise of adver-tising agencies in chapter 3, to employing the concept of strategic group in analyz-ing the niche breadth strategy in chapter 4, to the measurement of gratifications-utilities in chapter 5.

The central reason for the use of the theory of the niche is that received eco-nomic theory such as the theory of the firm conceptualizes competition as oc-curring within industries. Media competition however, has often been seen as amatter of competition between industries (McCombs, 1972). Niche theory pro-vides a way to address the competition between industries. It does not replacereceived economic theory but, instead, provides a means to analyze a phenome-non on which traditional economic theory has been relatively silent. Hence, thetheory of the niche should be viewed as a complement to existing economic and

IX

X PREFACE

management theory which can provide insight into competition within and be-tween media industries.

The book is organized largely around levels of analysis of competition. Chapter 1treats competition as a within-industry phenomenon, whereas chapters 2,3, and 5 fo-cus on between-industry competition. The strategic group level of competition, alevel of analysis lying between the firm and the industry, is the subject of chapter 4.Finally, competition and coexistence at the community level forms a large part ofchapters 6 and 7. This organization of the volume by levels of analysis foreshadows aconclusion drawn in the final chapter: that media competition and coexistence arecomplex multilayered processes whose explication requires analysis at many levels.

Acknowledgment s

First and foremost, I am deeply indebted to several generations of ecologists whohave collectively produced the theory of the niche and whose cumulative contribu-tions I have tried to render in chapter 2. This chapter, although not a long one, repre-sents nearly twenty years of reading bioecological work and attempting to apply itin my own field. Chapter 2 distills what I believe to be the essence of niche theory, orat least my application of it to media competition. I am profoundly grateful to themany ecologists, both cited and uncited in this book, who have created what I re-gard as a powerful and useful theory.

Over the years several people who have been my co-authors on articles, confer-ence papers and book chapters have contributed to the theory and data containedwithin the covers of this book. Two former graduate students, who are now estab-lished academicians—Eric Rothenbuhler and Alan Albarran—helped mold andshape the early niche work and I am truly grateful to them. In addition, I owe Ericanother debt for reading and critiquing an earlier version of this manuscript.

Although much of the work in this book appears in print for the first time, someof the theory and data have appeared in journal articles and convention papers.Chapter 1 is based on an article published in an issue of Communication Researchposthumously honoring F. Gerald Kline, the founding editor of that journal and theauthor's dissertation advisor at the University of Michigan. Some of the data inchapter 3 are drawn from a Journal of Communication article and a convention pa-per co-authored with Eric Rothenbuhler. The seeds of chapter 4 were sown in aBE A paper co-authored with Alan Albarran. The discussion of the impact of indus-try structure on the gratification opportunities, and their subsequent role in the suc-cess of cable and the VCR, in chapter 4 is drawn from an article which appeared inthe Journal of Media Economics. Chapter 5 also had its precursors in IC A and

XI

XII ACKNOWLEDGMENTS

AEJMC conference papers written in conjunction with Jean Dobos and Charles Linand in papers written with Carmin Gade and Caroline Rankin.

This book would probably not have been written were it not for the sabbaticalleave procured for me by Carroll Glynn. I owe her many thanks for both the gener-ous leave and her constant encouragement and support.

As the book was being written, I was fortunate enough to be able to avail myselfof my friend and colleague Daniel McDonald's considerable methodological ex-pertise. I thank Dan for the many unremunerated consultations.

Finally, I owe my wife Karen more gratitude than I can properly express inwords for her support during the time the book was being written. Despite largelyforegoing a social life, movies, concerts, and most of the other appurtenances ofcivilized lif e for more than one year, she was always willin g to listen with enthusi-asm to my latest littl e "discovery" or to applaud (literally) when yet another chapterwas completed. I owe her, big time.

That this book was produced in a timely fashion is due in part to the efforts ofGrace Rees and Ting-Ting Lu. Grace deciphered my prose and used her consider-able word-processing and editing skills to turn my barely legible drafts into a read-able manuscript. Ting-Ting, my wizard of the APA style manual, assured that thecitations and references were in proper form. I thank them both for their hard work.

—John W. Dimmick

Competitio n Withi n Industries :Sociocultura l Evolutio n

The theoretical framework used in this chapter to conceptualize competition withincommunications industries is sociocultural evolution which, like its biological pre-decessor and counterpart, does not easily yield long-term predictions. Although ifone can delineate the selective forces operating in the contemporary world, shorterterm prediction may be possible.

Like the biologist, the researcher interested in the economics and manage-ment of the media cannot appeal to universal laws like those of chemistry orclassical physics to supply explanation for phenomena. Like the biologist, whoalso studies complex living systems, the social scientist inhabits a world whereprediction is difficult , at best, and explanation must be won without recourse tocausal laws.

The economic and social development of each medium of communication isunique. Although one can represent the diffusion of all media by the familiarS-curve, the pattern of influences producing the curve representing eachmedium wil l be quite different. Hence, in explaining the development of eachmedium and its competitive interactions we are dealing with a unique set of cir-cumstances. Biologists are often faced with the same sort of problem, explana-tion of unique events. The biologist's solution to the problem is to constructwhat Ernst Mayr (1997, p. 64) calls an historical narrative, "... a scenario thatwould explain the observed facts of the case, such as in what area of the worldhumans originated." As Mayr pointed out, classical philosophers from logic andmathematics or the physical sciences considered historical narrative invalid.However, as Mayr also pointed out, this view has been exploded by recent workin the philosophy of science. Historical narratives, Mayr (1997, p. 64) wrote,

1

1

2 CHAPTER 1

may be the only scientifically and philosophically valid way of explaining theunique in nature. He continued,

It is, of course, never possible to prove categorically that a historical narrative is'true.' The more complex a system is within which a given science works, the moreinteractions there are within the system, and these interactions very often cannotbe determined by observation but can only be inferred. The nature of such infer-ence is likely to depend on the background and previous experience of the inter-preter; and therefore, not surprisingly, controversies over the best explanationfrequently occur. Yet every narrative is open to falsification and can be testedagain and again.

In this chapter and in some sections of the following chapters, the author hasconstructed such historical narratives to explain the patterns of competition andcoexistence within and among media industries.

The word evolution is seen infrequently in the communication literature, andwhen it does occur, it is used in its most general sense to describe a cumulativechange process such as the "evolution" of the television medium. An exception isDeFleur and Ball-Rokeach's (1972, p. 17-18) use of the term to refer to evolution asa theoretical paradigm. In their brief discussion, these authors refer to two very dif-ferent models as evolutionary. The first model, identified with Herbert Spencer, isbased on the idea that society develops like an individual embryo, increasing overtime in complexity and differentiation. The second model posits that social selec-tion processes are the basis for the changes in society and the communication indus-tries. In this chapter, only the latter wil l be considered a true evolutionary model.

Spencer's concept of evolution as the unfolding of the individual organism wasfounded on an embryological metaphor based on the work of the biologist VonBaer (see Blute, 1979). The path of embryological change is, of course, pro-grammed and predetermined, and the change process unfolds independent of theenvironment. Models based on embryological metaphors are, however implicitly,deterministic. The inherent determinism probably accounts for the opposition inthe early twentieth century of the American proponents of this viewpoint, such asW. C. Sumner and A. G. Keller, to any attempts by the state to ameliorate the con-ditions of lif e for the poor by means of social legislation (see Campbell, 1969).Given this line of reasoning—if the path of change is truly predetermined—inac-tion is the obvious solution to the social problems. Justification for the moreunpleasant consequences of such a laissez-faire social policy was found, unfortu-nately, in Darwin's notion of natural selection. At this point, an issue of eponymyturns substantive. The name of the nondeterministic theory of change wasattached to a school of thought founded on a deterministic model. Sumner, Keller,and their ilk became known as Social Darwinists.

Zachariah (1971) recounted the major arguments in the ensuing debate betweenwhat he calls the Conservative Darwinists (the so-called Social Darwinists) andwhat he calls the Reform Darwinists, who strongly disputed the attempts by Sum-ner and others to justify their social beliefs by appeal to Darwin's theories of

COMPETITION WITHIN INDUSTRIES: SOCIOCULTURAL EVOLUTION 3

organic evolution. The Reform Darwinists had the forces of logic and commonhumanity on their side, and they may, as Zachariah implied, have ultimately won animportant intellectual skirmish. Unfortunately, the struggle to establish a socialevolutionary theory was lost. As Campbell (1969) points out, the rejection of socialevolutionary theory stems from its association with the so-called Social Darwin-ists. A more fitting eponym for this discredited tradition in social theory would beSpencerism, Sumnerism, or Kellerism.

The Spencerian tradition in social theory is founded on a biological metaphorbut it is not evolutionary. As Blute (1979, p. 50) stated, models of change foundedon embryologic metaphors are more properly called "developmentalism." Theembryological model of change is antithetical to Darwin's original work and to thepost-Darwinian synthetic theory of evolution by virtue of its inherent determinismand its assumption that change occurs independently of the environment.

Unfortunately, the previous paragraphs are not merely intellectual historydevoid of relevance to the present or the future of the communication industries.The Spencerian legacy in contemporary communication is represented by thosewho insist that any and all governmental intrusion is antithetical to the "natural"functioning of the marketplace. It should be emphasized that such policy posi-tions are based on a Spencerian version of evolution that is not the view of evolu-tionary theory adopted in this chapter. Indeed, the view of evolution espoused infollowing pages is a nonnormative one and cannot, by itself, be adduced to sup-port any particular policy position. Rather, the consequences of policy are onefactor, among others, in explaining or predicting change in communication indus-tries (see the discussion of radio and Table 1.1).

The word evolution as used in this volume acquires its meaning from Camp-bell's (1969) use of the term to denote social change independent of genetic alter-ation. In other words, sociocultural evolution is concerned withmacro-evolutionary change in observable attributes of social organization arisingfrom the interaction with the environment. In Campbell's view, socioculturalchange proceeds from two processes—variation and selection retention—and hehas shown how these processes operate in such diverse areas as cultural change(1969,1975), learning and thought (1974a), and scientific discovery (1974b). Simi-larly, Blute (1979) argued that linguistic change follows a pattern of variation andselective retention. The concepts of variation and selective retention are so generalthat Ulrich and Barney (1984) regarded the evolutionary approach as a meta-theory.

Sociocultura l Evolutio n in Organizationa l Population s

Variation and selective retention are the two core elements of Campbell's evolu-tionary epistemology around which this chapter synthesizes evidence of evolutionin the communications industries. A third concept essential to evolutionary theoryand to the analysis presented here is the concept of population. A population is a setof organizations that resemble each other more than they resemble members ofother populations. For the purposes of this chapter, a population is the equivalent to

TABL E 1.1

Type of Ownership of Radio Stations: 1922-1930

Commercial

Stations

EducationalInstitutions Churches

Newspapersand Publishers

Electric and RadioStores and ServiceCompanies % (N) Total %

4.2(10)

1.9(7)

5.1(15)

6.9(21)

11.4(31)

30.1 (101)

31.1 (120)

44.1 (152)

59.0 (223)

19.1 (45)

25.1 (90)

29.2 (86)

36.1 (110)

32.9 (89)

27.1 (91)

22.7 (82)

19.1 (66)

13.8(52)

2.6 (6)

6.1 (22)

10.5(31)

16.4(50)

15.1 (41)

12.5(42)

13.3 (48)

11.0(38)

7.9 (30)

20.5 (48)

16.7 (60)

12.9(38)

10.8(33)

14.0(38)

11.3(38)

11.3(41)

9.9 (34)

9.5 (36)

53.6(126)

50.2(180)

42.3 (125)

29.8 (91)

26.6 (72)

19.0(64)

19.6(71)

15.9(55)

9.8 (37)

100

100

100

100

100

100

100

100

100

1922

1923

1924

1925

1926

1927

1928

1929

1930

Source: Adapted from Willey and Rice (1933, p. 196, Table 54). Excludes their miscellaneous category because it does not represent a single, definable population.

% (n) % (n) %(n) % (n)sTATIONS


a communication industry such as the set of TV stations or cable systems in theUnited States (Dimmick & Rothenbuhler, 1984a, 1984b). Competition is definedas ecological similarity, the use of the same or similar resources. Organizationswho are members of the same population or industry are ecologically similar andmay compete strongly. More extensive definitions of both the concept of popula-tion and the concept of competition will be given in chapter 2. The concept of popu-lation and the processes of variation and selective retention form the basicconceptual systems necessary to describe sociocultural evolution. Briefly, varia-tion within a population or industry provides one precondition for evolution tooccur. If sufficient variation is present, environmental conditions such as regula-tion or competitive effects of the industries for example, may operate differentiallyto favor or select organizations possessing certain attributes. The organizationsfavored by the environment survive and prosper, whereas organizations that do notpossess attributes favored by the environment may attempt to survive by adaptingto an altered environment or may succumb to the pressure of environmental selec-tion. In other words, sociocultural evolution operates to increase the "fit " between apopulation of organizations and the environment.

Darwinia n and Lamarckia n Evolutio n

There are two major forms of evolution or ways in which the "fit " between organiza-tional populations and environment may be accomplished. Hannan and Freeman(1977), reacting against the prevailing concepts of organizational change that empha-size adaptation to the environment, stressed the inertia and rigidity of organizationsand the limitations on adaptiveness. These authors proposed that change occurslargely through selection or organizational originality (Hannan & Freeman, 1984).

Following Boesiger (1974), the idea that populations adapt to specific ecologi-cal conditions may be styled Lamarckian evolution, and change in populationsthrough selection is appropriately called Darwinian selection. There is littl e doubtthat both forms have occurred in the communication industries. As data presentedlater in this chapter shows, change through selection processes has occurred in thepopulation of movie theaters as well as in the newspaper industries. On the otherhand, the radio industry's adaptation to an altered environment (see chap. 3) in thepost-television era provides a prominent example of Lamarckian evolution.Clearly, both forms of population change occur; the theoretical task is to identifythe conditions that produce these forms of evolution.

Variatio n

The first requirement for sociocultural evolution is the existence of variation.Industries are polythetic groups of organizations (Blute, 1979; McKelvey,1980). The set of organizations or firms within an industry are more like eachother than they are like firms or organizations in other industries. For example,TV stations resemble each other more than they resemble newspapers, although

6 CHAPTER 1

TV stations are by no means identical. The concept of a polythetic group impliesthat members of a population may vary with respect to any given attribute or setof attributes (see McKelvey, 1980, for the process of variations arising withinpopulations) and that variation between industries is greater than variationwithin industries.

Variation among members of an organizational population or industry is not,however, constant across time. It is useful to contrast two points in an industry'sevolution that bear on the kind and amount of existing variation. These two points inan industry's development over time are termed the "nascent" industry and the"mature" industry. These terms are not intended to denote neatly discrete stages,but rather indicate broad phases of industry history. It is also useful to distinguishtwo different components of variation—innovation and diversity. Innovation refersto the emergence of new or unique attributes possessed by one or a few organiza-tions in an industry at a particular point in time, and diversity refers to the differencein the values of attributes common across many organizations in a population. Theprocess of innovation has been studied under the rubric of the social construction oftechnology (see Bijker, Hughes, & Pinch, 1987).

As Hawley (1978, p. 792) pointed out, technological innovation generally pre-cedes development of organizations. "In many instances it seems that the tool appearsbefore an effective organization has been devised." The nascent industry emerges outof technological innovation; technological advances prompt entrepreneurs, engi-neers and innovators to attempt to create a viable organizational form. In the case ofcommunication industries, a viable organizational form is some combination of tech-nology, audience needs and content, financial support, and organizational structurethat allows an organization to sustain itself. As this implies, technology is theprecipitator in the formation of nascent industries but the creation of a new industryemerges out of attempts to create a viable organizational form that endows the tech-nology with a social purpose. For example, Sarnoff's vision of a "radio music box"was one attempt to give sound transmission technology a social purpose. Althoughhistorians celebrate the creator of a viable organizational form, the nascent industry isusually the result of a number of individuals and organizations experimenting withvarious social uses of technology to find out "what works." Although advances inpaper-making and printing technology made the mass newspaper technically feasi-ble, the technology alone was not sufficient. There were failed attempts to foundinexpensive mass newspapers (see Emery, 1962) before Benjamin Day's New YorkSun successfully combined technology, content, financial support, and a means ofdistribution into a viable mass newspaper.

The nascent industry is likely to be characterized by both a high degree of inno-vation and a high degree of diversity. The innovation typically involves divergentnotions of how the technology can be successfully used. In the nascent radio indus-try, this divergence was reflected in the differences between the radio group and thetelephone group. Currently in the cable industry there are national channels thatattempt to segment the audience following a narrowcast philosophy, whereas othersattempt to appeal to a wider audience by adhering to a "broadcast" philosophy. The


nascent industry may also be more diverse. In such new industries, all organiza-tional attributes—structure, personnel roles, and operating routines—must eitherbe borrowed or created and, as a result, one would expect a highly diverse set oforganizations. This is especially true where the industry is unique and has no mod-els. For example, TV was modeled on the radio industry, but there were no prece-dents for radio and the motion picture.

The nascent industry, precisely because of its trial-and-error character, is oftenchaotic and fast-changing, and in the beginning, may not seem to be an industry atall but a set of organizations with littl e in common save technology. As Roehrich(1984, p. 66) observes, "the fledgling industry is usually characterized by a vola-tile set of conflicting, growing industry trends—often as many simultaneousdirections as there are pockets of entrepreneurs in the field. For the early partici-pants, there are no rules of the game. The competitors define the rules and shapethe eventual industry structure." For example, Brittain and Freeman's (1980)analysis of the births and deaths in the semi-conductor industry shows that theorganizations within the industries displayed the same volatility as the technolo-gies. The recent demise or down-sizing of many so-called dot.com companies onthe World Wide Web may indicate that this industry is beginning to move from itsnascent period into an era of maturity.

If viable organizational forms emerge from the nascent phase, they become thebasis of a mature industry (the process by which forms emerge wil l be treated in thefollowing section). These viable forms are characterized by relative stability and aslower pace of innovations. The innovation component still exists as firms try outtechnological improvements or management techniques for greater operating effi-ciency or competitive advantage, or for adjustment to a changing environment. Thefree-for-all, trial-and-error innovation of the nascent period has, however, damp-ened as "what works" has become clear through the operation of selection pro-cesses. In the mature industry the predominant form of variation is diversity fromfirm to firm within the population.

Although a complete classification of the dimensions along which organiza-tions in mature industries manifest their diversity is beyond the scope of thiswork, it is possible to discuss briefly some dimensions of the diversity that areintended as suggestive rather than exhaustive. First, organizations within anindustry can be expected to be diverse on demographic attributes such as age,size, geographic location. Second, firms wil l vary on economic attributes thatinclude debt levels, return on investment, and the productivity of their person-nel. A third dimension of diversity concerns what is called organizational cul-ture or "corporate personality." Here, important attributes include receptivity toinnovation, organizational climate, risk-taking, and management style. Anotherdimension likely to be important is organizational structure, which includesdepartmentalization, reporting relationships, reward systems, and degree ofcentralization of authority.

The existence of variation of both kinds—innovation and diversity—is crucial ifsociocultural evolution is to occur, because selection processes require variation.

8 CHAPTER 1

Selectiv e Retentio n

A second requirement for evolution is the operation of consistent selection pro-cesses. As Campbell (1969, p. 73) pointed out, given variation and selectiveretention, "evolution in the direction of a better fi t to the selective systembecomes inevitable." Some writers (e.g., McKelvey & Aldrich, 1983) used theterm natural selection from biological usage to refer to selection processes.However, when applied to selection in the realm of human organizations, theword "natural" is potentially misleading and redolent of Spencerism. A moreappropriate and accurate term is Zachariah's (1971, p. 73) use of psycho-socialto denote selection processes by humans and human agencies. Darwin, whocoined the term natural selection, used it to denote selection in nature asopposed to the artificial selection practiced by animal and plant breeders ondomesticated populations (Evans, 1984). Given the origin and the meaning ofthe term natural selection, it seems inappropriate to apply it to the realm of orga-nizational populations. In the communication industries, selection is the resultof such human forces as consumer choice, advertising allocation decisions, andpolicy or regulatory action. Therefore, selection in sociocultural evolution isnot natural in Darwin's sense, but psychosocial.

Of the various psychosocial selection processes reviewed by Campbell (1969),two are pertinent to sociocultural evolution in communication industries. The firstselection process is differential diffusion: organizational forms or attributes that areperceived to be successful are likely to be imitated. When organizational forms areimitated, the result is the birth of new organizations and the growth of populationsor subpopulations. In the cable industry for example, the apparent success ofHBO's concept of satellite delivery of movies to cable systems resulted in a numberof similar channels that relied in whole or in part on feature films. Similarly, the firstsuccessful penny newspaper, the New York Sun, spurred the establishment of newpenny papers in other cities (Emery, 1962). In addition, diffusion of the new formalso resulted from imitation by existing papers. As the biographers of The Balti-more Sun (Johnson et al., 1937, p. 33) wrote:

As soon as it became apparent that at least four penny newspapers were highly suc-cessful financially, their competitors began to study their methods with assiduity andrespect; but not only to study, but to copy them, if possible.

As these examples suggest, differential diffusion may be most important in thenascent phase of an industry, although this selection process also occurs in matureindustries as successful innovations appear.

The second type of selection is differential mortality. Evolutionary change in apopulation occurs not only as a result of differential diffusion but also by differen-tial failure or death of organizations. Figure 1.1, based on Mayr's (1982) discus-sion, illustrates the major types of selection by differential mortality. In the figure,the values of hypothetical organizational attributes represent the variation in the

FIG. 1.1. Types of selection.

9

1 0 CHAPTER 1

population on which selective processes operate. Figure 1.1 illustrates stabilizingselection that occurs in a stable environment. Here, at the tails of the distribution,mortality occurs among those organizations with extreme values on the attribute,values out of the range of fitness suitable for the environment. Figures 1.1b andl.l c represent mortality in changing environments. In diversifing selection, thetwo extremes of the distributions are favored and the organizations at the middleof the distribution are subject to mortality—resulting in a bimodal distribution.The book publishing industry provides an example of diversifying selection. Inthis industry, the large publishers as well as the small houses have survived,whereas mortality has disproportionately fallen on the middle-sized firms(Powell, 1982). Directional selection, represented by Figure l.lc, occurs whenone tail of the curve of variation is subject to mortality, shifting the mean value ofthe attribute of the population up or down. The effect of the rise of TV on the mag-azine industry illustrates directional selection. Outcompeted for national adver-tising by television (see chap. 3), the large mass-circulation magazine such asLife, Look, and the Saturday Evening Post were afflicted with a high mortalityrate. On the other hand, the smaller, more specialized magazines were relativelyunscathed by television; the net result was a downward shift in the organizationsize, as indexed by average circulation in the magazine industry.

The two major forms of selection—differential diffusion and differential mor-tality—may be illustrated by data from the nascent phase of the radio industry.(This example does not fi t neatly into the major types of differential mortality illus-trated in Table 1.1 because the data in the radio example are discrete whereas theexamples in Table 1.1 are based on continuous distributions.) Table 1.1 shows thetypes of ownership of radio stations for the years 1922-1930. In this period, as thecolumn headings demonstrate, there are a number of types of ownership. In short,there is variation. In early radio (Barnouw, 1966), stations were often founded onvague promise of indirect benefits or revenues. Vendors of radio sets hoped to stim-ulate sales, colleges and universities saw opportunities to extend their offeringsbeyond the campus, and religious organizations saw radio as an opportunity torecruit members and solicit contributions. The spectrum was quickly saturated, andcosts escalated rapidly. Commercial stations had a selective advantage in two ways(Barnouw, 1966). First, the clear-cut goal of producing revenue directly gave themthe means both to justify and to meet increasing costs. Second, in 1923, in anattempt to alleviate the confusion created by a crowded spectrum, the regulatoryauthority assigned many noncommercial stations less desirable locations on thedial. The combination of directly producing and regulatory action favoring recep-tion of their signals gave the commercial stations a powerful competitive advan-tage.

As a result, both differential diffusion and differential mortality are apparent inTable 1.1. The differences between the number of stations in a category in any twoyears is equal to the number of stations at a time plus the number of stationsfounded in the category, minus the number of failures or dissolutions. Hence, anincrease within a category suggests that a successful form is being imitated

COMPETITION WITHIN INDUSTRIES: SOCIOCULTURAL EVOLUTION 1 1

(foundings exceed failures), whereas a decrease indicates net mortality (failuresexceed foundings). Differential diffusion is reflected in the increase in the num-ber of commercial stations in 1923 through 1930, whereas the decrease in thenumber of stations in other ownership categories after the period 1923-1925 isdue to differential mortality. In summary, the selective advantages seem to haveoperated to enhance the viability of the commercial form and this success isreflected in the number of organizations founded in this category. The other own-ership forms become more rare both through higher mortality and a lower rate oforganizational founding. It should be noted here that selection is operating onownership types, not on other aspects of organization. Apparently there was aready market for stations despite the numerous failures and the relatively highcost of the necessary broadcast equipment (Archer, 1971).

As concluding notes to the discussion of selection processes, several caveats are inorder. First, selection is not an all-or-none process, it is probabilistic in nature. Within apopulation, organizations that possess attributes that fit the selection criteria are morelikely to survive, and organizations that lack these attributes are less likely to survive.

Second, populations evolve only if selection criteria operate consistently acrosstime. As Campbell (1969, p. 75) stated, "If survival or nonsurvival is a purely ran-dom matter, no evolution wil l take place." Although chance or "luck" may play arole in the survival of individual organizations, evolution of an entire populationrequires a consistent, nonrandom selection process.

The third caveat is that selection processes do not necessarily yield an opti-mal or maximal fi t of a population to the selection criteria. Survival or successrequires only a satisfactory fi t rather than perfect or nearly perfect fit . Althoughsome theorists in the population ecology of organizations (e.g., Hannan & Free-man, 1977) have speculated that the environment optimizes fitness, empiricaldata on the organizational population that bear on this question are virtuallynonexistent. The current position in biology (Mayr, 1982, p. 589) is one thatviews fitness as satisfactory rather than optimal. Even biologists who have usedoptimizing models to study evolution (Oster & Wilson, 1978, p. 292-315) con-clude that fitness represents a compromise. In any given case, there is neverenough time or enough variability to optimize all attributes to the environment.As a result, existing organizations are likely to possess some attributes that havebeen positively selected, some attributes that are selectively neutral, and yetother attributes that may be a palpable liability. Hence, fitness is likely to be anonoptimal compromise among the attributes constituting organizations. As acorollary, one should not assume that selection inevitably leads to "progress" inany sense other than fi t of population to environment.

r-K Selectio n

The most explicit theory of selection processes is called r and K selection. Theobjective of this selection and the following sections of this chapter is to ascertain ifr-K selection has operated in the communication industries. The term was origi-

1 2 CHAPTER 1

nally coined by Mac Arthur & Wilson (1967) and the letters r and K refer to two ofthe parameters of the logistic equation for population growth. The logistic equationgives the instantaneous rate of change (d) in population size (N) at time (t):

where N is the population size and K is the carrying capacity or the ability of theenvironment to support the population. In bioecology, r can denote either r max, themaximal rate of increase under ideal conditions, or ra, the actual rate of growth.Because r max is dictated by the genetic structure of the population, ra is the param-eter's only relevant meaning in studies of sociocultural evolution.

The curve produced by the equation is a S-shaped one with time on the horizon-tal axis and population size on the vertical axis. Growth is slow at first and thenaccelerates but slows as the population nears K and finally turns negative as thepopulation exceeds K.

As a model of population dynamics, the logistic, like other deterministic growthmodels, has been the subject of debate and criticism. Although the model fits a fewlaboratory and natural populations (see Ricklefs & Miller, 1999, and Pianka, 1983,for discussions), the logistic is unrealistically simple. For example, both r and K areassumed constant—invariant across time—and this is rather unlikely to be the case.As Pianka (1988) pointed out, these and other assumptions can be replaced by morerealistic ones but the mathematics quickly become intractable.

Although the logistic itself is not a useful model, Pianka (1970,1972) devel-oped an explicit theory of selection based on Mac Arthur and Wilson's distinc-tion between r and K selection. Table 1.2 displays the major elements of r and Kselection. As Pianka emphasizes, r and K selection are relative terms and popu-lations can be arrayed on a continuum anchored by pure r selection at oneextreme and pure K selection at the other. For example, in the realm of annualplants in temperate climates, these populations are subject to r selection in theearly spring and to K selection later in the season. Pianka's conceptualizationimplies a continuum which runs from r-selection at one end of the scale toK-selection at the other.

Populations that are r selected arise out of what Pianka (1970) called an ecologi-cal vacuum corresponding to the early nascent phase of an industry. As technologi-cal innovation makes new organizational forms possible and one or moreorganizations establish viability, there is a demand for the product or service. Byimitation or differential diffusion, the successful organizational form's numbersmay multiply. At this point the long-term nature of the demand is not established; itis uncertain whether the resources required to sustain the organizational form wil lbe available in the long term. For example, such dominant industries as radio andmotion pictures in the early stages of development were believed by some to bemere fads. In this uncertain environment, selection favors small organizations thatare relatively inexpensive and that can be set up quickly to capitalize on demand.


TABLE 1.2

Characteristics of r and K Selection

r Selection K Selection

Environmental Resources: Uncertain More constant orpredictable

Population Size:

Mortality:

Competition:

Selection Favors:

Leads to

Below carrying capacity

Non-directive, densityindependent

Less intense

Smaller size

Fast growth rate

Near carrying capacity

Directive, densitydependent

More intense

Larger size

Competitive ability

Source: Adapted from Pianka (1970), Table 1, p. 593.

This is the core meaning of r-selection. In the 1980s, the video arcade exemplifiedthis sort of rapid growth of a population composed of small organizations. A morerecent example is the explosion of small dot-corn companies doing business on theWorld Wide Web.

The nascent industry, lacking evidence of long-term demand for its products orservices, is unlikely to attract large firms with capital and expertise in similar indus-tries quickly. For example, IBM moved slowly and ponderously into personal com-puters, and before it could establish a presence, the industry structure was formedby smaller and newer firms such as Apple (Roehrich, 1984). In short, r selectionfavors proliferation of small, lightly capitalized organizations that can be set upquickly to exploit newly discovered demand.

As the population grows upward toward K—the maximum number the envi-ronment can support—mortality occurs but failure results from many factorsand selection at this point is nondirectional. In the case of newspapers, Park(1923, p. 286) stated the notion of K or carrying capacity succinctly when hewrote, "There were more newspapers than either the public or the advertiserswere willin g to support." As growth approaches, K competition becomes keeneras a result of population density. As competition increases in intensity due to theincreasing number of organizations, selection wil l begin to favor the larger,more efficient and hence competitively superior organizations. K selection isselection for competitive superiority which entails large size and economic effi-ciencies. As Pianka (1970, p. 593) wrote, "as an ecologic vacuum is filled, selec-tion wil l shift a population from the r toward the K endpoint" of the continuum.

1 4 CHAPTER 1

It should be noted here that Pianka' s linking of size, efficiency, and competitiveability is similar to the notion of economies of scale, in which the average cost ofa production declines as the number of units produced increases.

The theory of r-K selection implies a clear pattern that should be observableover time in the course of an industry's development. Hannan and Carroll (1992)developed math models that show that organizational founding rates increase andthen decline as the population density of organizations rises, and that mortalityamong organizations drops with low population density and increases with highdensity. In the population ecology literature this is called a density dependentinteraction (Ricklefs & Miller, 1999). First, one should observe the growth innumber of relatively small organizations as the organizational form proliferatesin space and over time. As growth reaches the upper limi t (K), the competitionprecipitated by population density results in mortality among the smaller organi-zations as they are outcompeted by the larger. Concomitantly, mortality amongthe smaller organizations should be reflected in an increase in the average size oforganizations in the industry.

If r-K selection occurs in communication industries, one indication is mor-tality, a decrease in the number of organizations. As a starting point in the searchfor r-K selection, the number of organizations in the major industries of masscommunication were plotted across time (magazines were not included becausethe nondirectional selection pattern noted earlier precludes r-K selection).These plots show that the initial precondition for r-K selection, organizationalmortality, occurred in two populations—movie theaters and newspapers. Theevidence for r-K selection in these industries are examined in the following sec-tions of this chapter.

In other industries besides newspapers and movie houses, population sizeis growing or stable, indicating that foundings have equaled or exceeded fail-ures. In TV and radio, spectrum scarcity has limited the number of radio andTV stations, and in the cable industry the public utilit y conception of theindustry has restricted the number of systems and until recently, guaranteedeach system monopoly status within its designated service area. These limita-tions on population size have no doubt restricted the severity of intrapopu-lation competition, and this is one major reason for the pattern of growth orstability in numbers of organizations within these industries, which makethem unlikely candidates for r-K selection.

r-K Selection : Movie Theater s

According to Ramsaye (1926), the first nickelodeon was founded in Pittsburgh fiveyears after the turn of the century in a vacant store room that had a capacity of lessthan 200 patrons. Within one year there were perhaps a hundred nickelodeons inthat city and the form was diffusing to other major urban centers like New York andChicago. There were roughly 9,000 nickelodeons by 1910, and a decade later theform had reached its peak. As Allen (1980) pointed out, the number of small "store


shows" that could be financed with minimal capital escalated so quickly that theirexact numbers are difficul t to ascertain.

If r-K selection is occurring among the population of movie theaters, one shouldobserve a period of strong initial growth that peaks as the environment is saturated.As this plateau is reached, the growth should turn negative and the decrease in thenumber of theaters should be accompanied by an increase in organizational size.Table 1.3 shows the actual rate of growth (ra) and the proportional change in aver-age size of movie theaters for the decades for which data could be located. Theatersize is computed as the average weekly attendance per year divided by the numberof theaters. Attendance per theater is used as the measure of size for two reasons:these data are available, and more important, in the population ecology perspective(Dimmick & Rothenbuhler, 1984a, 1984b) patronage is the resource theatersdepend on for survival.

As Table 1.3 shows, the strong initial growth is evidenced in the magnitudes ofthe ra's from 1910 through 1930; at the same time, there is littl e increase in the aver-age theater size. Between 1930 and 1940, growth becomes negative and this isaccompanied by a large increase in average theater size indicating the closing of anumber of theaters and the absorption of their audiences by the remaining organiza-tions. The mortality among theaters is not simply the result of economic depres-sion. As a Department of Commerce study (summarized by Odium, 1947) reported,demand for movies declined, but the decrease was less than the drop in demand forshoes or food for home consumption. Following their decline in the 1930s, a num-ber of theaters resurged in the 1940s accompanied by a relatively small downturn insize. In the 1950-1970 period, both ras and changes in size are negative, reflectingthe impact of TV. In general, then, the data in Table 1.3 for the period 1910-1940are consistent with the pattern one would expect from r-K selection.

However, r-K selection implies specifically that mortality occurs among thesmaller organizations in a population. Unfortunately, no quantitative data are avail-able bearing on the number of theaters in various size classes for the first decades ofthe industry. Although quantitative data do not exist, several contemporary writersnote the decline in numbers of smaller theaters. Ramsaye (1947, p. 7), a closeobserver of the early industry and author of one of the first histories of motion pic-tures, observed that as the industry matured, the number of theaters decreased asseating capacity increased. Johnston (1926, p. 26) comments on the demise of thesmall theaters in smaller cities, and Barry and Sargent (1927, p. 10) note the samepattern in the metropolis. "At this writing, in the big cities, a sweeping change isunderway. Several thousand smaller theaters are being replaced by great neighbor-hood houses of the latest type." Similarly, Willey and Rice (1933, p. 178) statedthat, "In recent years, many small houses have been discontinued because of com-petition from larger theaters." As these observations suggest, the trend towardsreplacement of smaller by larger theaters began in the 1920s but net mortality(births minus deaths) is most apparent in the 1930s.

Although a number of factors contributed to the demise of the small theaters—for example, proliferation of the automobile, which widened movie-goers' choice

TABLE 1.3

Growth Rate (ra) and Proportional Change in Average (Mean) OrganizationSize for Movie Theaters and Newspapers

Year

Movie Theaters

Proportionalra Size Change

Newspapers

ProportionalSize Change

1850-1860

1860-1870

1870-1880

1880-1890

1890-1900

1900-1910

1910-1920

1920-1930

1930-1940

1940-1950

1950-1960

1960-1970

1970-1980

.666

.151

-.335

.223

-.121

-.145

*

(Not Available)

.035

.836

-.131

-.529

-.380

*

.524

.483

.692

.658

.383

.168

-.082

-.135

.010

-.092

-.021

-.009

-.051

.280

.187

-.190

.419

.302

.373

.502

.442

.021

.380

.117

.064

.055

Sources: Number of theaters—1910 estimate; Willey and Rice, 1933, p. 178; 1920; Seabury, 1926, p.277; 1930; Willey and Rice, 1933, p. 178; 1930-1970, Historical Statistics. Weekly Attendance—1920;Willey and Rice, 1933, p. 179; 1930; Willey and Rice, 1933, p. 178; 1930-1970, Historical Statistics.Newspaper numbers and circulation are from Historical Statistics and Statistical Abstract of the U.S.

Note: Newspaper numbers and circulation exhibit smooth growth and decline and, hence, the figure foreach decade year (e.g., 1930) is representative of the trend in the previous decade. Movie attendance,however, varies greatly from year to year and the attendance in any decade year may not berepresentative of the trend. Therefore, means were calculated for the available years in each decadeand these averages were used to calculate size changes for theaters.

*A s noted in Figure 2, the movie industry in 1975 began to report number of screens rather than thenumber of theaters.

16

r


of theaters (Johnston, 1926), and the expense of equipping theaters for "talk-ies"—the major reason was probably the economic advantage of the larger the-ater. As early as 1919, a study of the motion picture industry by Connick (quotedin Seaburry, 1926, p. 277-278) concluded that economies of scale existed inmovie exhibition.

There is no doubt as to the financial advantage of the theater with a large seating ca-pacity over a small one. An examination of the cost of operating theaters shows thatwith the same standard of exhibition, the only increase in operating cost in the case ofthe large houses occurs in the comparatively low-priced items, such as ushers andcleaners. The big items—management, film rental, and orchestra, stay the same.

In addition to the intrinsic economic efficiency of the larger theaters, many ofwhich were owned by the large firms that dominated the industry (see Huettig,1944; Whitney, 1982), the evidence indicates that by the late 1920s theater manage-ment, especially in the larger chain-owned houses, was highly developed and effi-cient (Katz, 1927). Over the history of the motion picture, movie theaters havechanged radically from the small "store show" to the downtown movie palaces ofthe 30s and 40s to the post-W.W. II drive-in theater to the contemporarymulti-screen theaters which first appeared in the 1960s. Although the movie experi-ence has changed from watching major Hollywood films in the dark and cavernousrecesses of a rococo cathedral in a central city to viewing a contemporary fil m onone of perhaps a dozen screens in a suburban multiplex, the K selection in the formof economics of scale is still evident. Stones (1993, p. 233) wrote,

The centerpiece of a successful multiplex is its focus on economies of scale. Multipleauditoriums that share a common parking lot, box office, restrooms and concessionarea reduce overhead expenses and generate more profit per square foot.

r-K Selection : Daily Newspaper s

The decline in the number of daily newspapers is a well-established theme in theresearch literature (e.g., Nixon & Ward, 1961; Rosse, 1980). A number of studieshave examined mortality in the industry but with the exception of those by econo-mists (e.g., Rosse, 1967,1980) the research is largely descriptive and atheoretical.The purpose of this section is to examine the evidence for r-K selection in the dailynewspaper industry. At first, r-K selection may seem an implausible explanation forthe death of daily papers. Given the widespread attention in the trade press and thegeneral media when a metropolitan paper closes its doors, one might gather theimpression that it is large metropolitan dailies that are especially prone to mortality.This impression seems to contradict r-K selection, which implies mortality of thesmaller organizations. An examination of the evidence, however, indicates thisimpression is probably incorrect.

Table 3.3 shows the growth rates (ras) and changes in average organization sizefrom 1950 to the beginning of the 1980s. In Table 3.3, organization size is computed

18 CHAPTER 1

by dividing average daily circulation by the number of papers, because circulationis a critical resource for daily papers. In general, the growth of dailies is slower thanthe explosive growth of movie theaters. Newspapers, of course, are an urban phe-nomenon—so much so that Park (1929) determined that one could define an urbanarea on the basis of the pattern of newspaper circulation. The slower growth ofnewspapers reflects the fact that a large increase in numbers had to await concentra-tion of the population in cities. Newspaper growth, as the table shows, is quitestrong from 1850 to 1890, but slows markedly in the two decades spanning the turnof the century as the environment becomes saturated. Their-values, except for slightpositive growth in the 1930s, then turn negative for the remainder of the time series,with the largest negative changes in the period 1910-1930. The small positivegrowth in the size of the newspaper population was also noted by Ray (1952), whoobserved that the increase could be due to the political ferment of the 1930s or tocost decreases in middecade. Given Delacroix and Carroll's (1983) finding thatnewspaper births occur in periods of intense political activity, the former explana-tion seems the more probable. Although the number of papers is growing rapidly in1850-1890, the size changes show a corresponding increase. As growth in popula-tion reaches asymptote and turns negative, however, the largest changes in averageorganization size occur in 1910-1930, the period in which the largest negativegrowth also occurs. This suggests widespread mortality among dailies and absorp-tion of most of their circulation by the remaining papers. In the following decades,the size changes were positive but relatively small.

The crucial question is whether the mortality occurs primarily among smallerorganizations. Scattered evidence from previous research does suggest mortalityamong dailies in smaller communities. Ray (1952, note 1923) reported that themajority of dailies suspending publication in 1910-1919 were in small cities. Simi-larly, data published by Neurath (1944, Table 1) for 1930-1941 show that thedecline of two-paper cities is most evident among the smaller communities. Nixonand Ward's (1961) data also show the sharpest decline among papers in smaller cit-ies in the period 1945-1961.

The data in Table 1.4 were compiled to locate more precisely the size classesin which mortality is apparently occurring. In Table 1.4, decreases in a categorydo not necessarily indicate mortality because it is possible for papers to appearin different size classes from decade to decade due, for example, to circulationgrowth or decline. As Table 1.4 shows, in all size classes except one there is anincrease in the relative frequency of dailies. The exception to this pattern is inthe size class of papers of less than 5,000 in circulation. Although almosttwo-thirds of all dailies were in this size class in 1912, by 1980, this categoryaccounted for less than 15% of all papers. Such a large difference is unlikely tobe entirely due to growth of papers out of the size class.

The largest decline in the small dailies (less than 5,000 circulation) occurs in thedecades 1920-1950. Table 1.5 was constructed to concentrate analysis on smalldailies within these decades. The theory of r-K selection implies that large firmsoutcompete the smaller. Because competition occurs within cities, it is relevant to

TABL E 1.4Daily Newspapers 1912-1980 in Eight Circulation-Size Categories

More Than 500,000

250,001-500,000

100,001-250,000

50,001-100,000

25,001-50,000

10,001-25,000

5,000-10,000

Less than 5,000

Total

**7972(N = 1823)

.05

.38

1.26

3.40

4.94

10.75

15.85

63.37

100%

7920(N = 1993)

.10

.55

1.71

3.41

5.12

13.10

15.35

60.66

100%

7930(N = 1925)

.26

.83

2.75

4.21

7.22

16.00

19.64

49.09

100%

1940(N = 7967)

.25

.82

3.21

3.67

6.99

16.03

23.15

45.88

100%

1950(N = 1816)

.55

1.32

4.68

5.45

10.02

22.74

24.39

30.85

100%

I960(N=1787)

.45

2.07

4.59

6.16

12.31

25.46

25.57

23.39

100%

7970(N=1758)

.63

1.59

5.18

6.77

14.16

26.84

26.62

18.21

100%

1980(N = 1763)

.62

1.36

4.99

8.05

15.66

29.84

25.24

14.24

100%

Source: N.W. Ayer Directories 1912-1960 and Editor and Publisher International Yearbooks for 1970 and 1980.

Note: Defined as English language dailies in the United States, including Alaska and Hawaii but excluding territories and possessions. The unit of analysis is theorganization and, hence, papers with more than a single edition were tabulated as a single organization. For the same reasons, papers selling advertising space jointlywere tabulated as separate organizations.

**Th e total number of papers for 1912 is smaller than the 1920 total, due to the fact that a significant number of papers, especially in smaller towns, did not reportcirculation and could not be tabulated. This problem persists, with less severity, through later decades. The total number of papers reported will vary slightly fromother published figures due to definitional differences.

20 CHAPTER 1

TABL E 1.5

Number of Small Dailies (less than 5,000 in circulation) in Competitiveand Noncompetitive Cities of Differin g Size: 1920-1950

1 Daily 2 or More Dailies

1920 1950 % decrease- 1920 1950 % decreaseN N 1920-1950 N N 1920-1950

25,001-50,000

10,001-25,000

10,000and

below

Total

8

107

474

589

3

66

403

472

62.50

38.32

14.98

19.86

28

158

174

360

3

24

21

48

89.28

84.81

87.93

86.67

Source: N.W. Ayer, American Newspaper Annual, 1920, and N.W. Ayer and Sons, Directoryof Newspapers and Periodicals, 1950.

compare rates of decline in the small dailies in communities that vary in theirdegree of newspaper competition. Table 1.5 compares the number of cities withsmall dailies in 1920 and 1950 in competitive (two or more dailies) and noncompet-itive communities where the daily is the only paper. The comparison is accom-plished within categories of city population size. In Table 1.5, comparison isrestricted to three population categories of cities of 50,000 and below because therewere few small dailies in the larger population categories and no large sin-gle-newspaper towns served exclusively by small dailies.

As the probabilistic nature of selection processes addressed earlier in the chap-ter implies, not all mortality of smaller dailies wil l be due to K selection. Forexample, Carroll (1987) found that a "liabilit y of newness" predisposes newernewspapers to failure. A decrease in cities with small dailies in a size class couldalso occur as a result of poor management, growth or decline of the paper or cityout of size class, or a number of other factors. There is no reason to believe how-ever, that these other factors would occur with unequal frequency in competitiveand noncompetitive cities. Given this certeri sparibus assumption, the operationof factors besides competition should result in a baseline decrease in noncompeti-tive cities against which decreases in the number of cities with small dailies, inboth competitive and noncompetitive communities, can be assessed. However,the decrease in the competitive cities is substantially larger in all three sizeclasses. Across the three categories of size, the number of cities with small dailiesdecreases by a bit less than 20% where there is no competition. In competitive cit-


ies, this decrease exceeds 85%. Such a disparity is so large that it is unlikely to beentirely due to factors other than competition.

The apparent mortality of smaller dailies in competitive cities suggests ofcourse, that the operation of economies of scale that gave a selective advantageto the larger papers. In newspapers, economies of scale mean that as circulationincreases the per-paper cost falls. Ray (1952) seems to have been the first to notethe existence of scale economies in daily newspapers. In examining data onemployee productivity, Ray found that employees on larger papers were moreproductive—as measured by value added per employee—than employees ofsmaller papers. He quickly added, however (Ray, 1952, p. 36), that this results"in part, because of the economies of large-scale production. Large newspapers,for example, afford fuller employment of special purpose equipment such aspresses and stereotype facilities." Later studies designed explicitly to investi-gate this question such as Ferguson (1963) and Rosse (1967) found positive evi-dence of economies of scale in the US newspaper industry. In addition,Reddaway (1963) provides evidence of scale economies in the British dailypress. Such scale economies evidently resulted in the long-term trend for adver-tisers to buy space in the larger paper (Bagdikian, 1971, p. 79; Emery, 1962, p.518-519), which because of scale economies could offer a lowercost-per-thousand readers than the smaller papers. Picard (1993) has explainedthat a so-called "circulation spiral" occurs. If two competitive papers reach a sit-uation where the larger paper has 60% of the circulation it also attracts moreadvertising—due to the tendency of advertisers to buy the larger paper—so thatthe smaller paper wil l be progressively less viable economically.

The emphasis on the smallest class of daily papers in the earlier analysis is notmeant to imply that they were uniquely vulnerable. Examination of papers andtheir circulations in large cities such as New York or Chicago for the years1920-1950 also show a pattern of selection favoring the larger papers. In 1920,Chicago supported ten English language dailies but by 1950 there were only sixpapers; those still publishing had been among the largest dailies in 1920. Themortality of smaller dailies in New York was even more pronounced. In 1920,there were 22 dailies, but by 1960 there were only 7. As in Chicago, the survivorsof 1960 were the larger papers, some of which represented mergers of formerlyindependent firms. However, precisely because the smaller papers in smallercommunities were present historically in greater numbers, they also represent theclass most strongly affected by r-K selection.

Rosse (1980) wrote that the reason daily newspapers have failed is their failureto segment the market, to adapt by finding a less-than-mass-audience readershipor a more specialized audience. Picard (1993), on the other hand, argued that asegmentation strategy involving changing to a tabloid format, serving audiencesless attractive to advertisers and serving areas smaller than an entire metro area isnot an acceptable alternative to papers' owners and that there is littl e evidence thatsuch a strategy would succeed. This underscores Hannan and Freeman's (1984)position, noted earlier, that organizational adaptation may be difficult .

22 CHAPTER 1

However, although newspapers have not, with few exceptions, segmented theiraudiences, segmentation of a spatial sort seems to have occurred. In addition to themetropolitan daily, in most urban areas there also may exist suburban dailies orweeklies as well as dailies or weeklies in satellite cities. Rosse's umbrella competi-tion model (see Picard, 1989, and Lacy & Simon, 1995) might be interpreted tomean that newspapers have effectively segmented space—the metropolitan land-scape—so that each newspaper has an area of habitat or coverage that overlaps littl ewith other papers' spaces and effectively insulates it from strong competition. Thisspatial segmentation is effective since urban space is the container for theresources—advertisers and subscribers—on which newspapers depend for sur-vival. For example, Niebauer, Lacy, Bernstein, and Lau (1988) in a national study ofnewspaper competition, found that market structure in the central city—competingdailies, dailies under a Joint Operating Agreement or monopoly dailies—had littl eeffect on either the existence of suburban papers or their circulation levels. Theseauthors also found that the larger the population of a suburb (i.e., potential subscrib-ers) the more likely the suburb was to have a daily newspaper. Using the countyrather than the city as the unit of analysis in a study of national scope, Lacy and Dav-enport (1994) found that an index of concentration was higher than the level used bythe Justice Department to indicate high concentration. Such concentration levelsgenerally denote an absence of competition. These studies indicated that there is anabsence of direct competition in U.S. metropolitan areas and, in that respect, thesestudies are consistent with an interpretation of the umbrella model of competitionto the effect that American newspapers have effectively spatially segmented metro-politan areas. One salient consequence of this segmentation is the contemporaryabsence of strong intra-population competition in the wake of daily newspapermortality due to r-K selection. The result of such umbrella competition is that news-papers representing several layers of umbrella competition such as national dailies,metropolitan dailies, suburban dailies and weeklies may coexist within a metropol-itan area, although as Lacy and Simon (1995) pointed out, not all layers of theumbrella are represented in any particular metro area. The author wil l return to theimplications of the umbrella model as spatial segmentation in chapter 4 and chapter6 where spatial segmentation is given a clear interpretation in terms of the theory ofthe niche.

The Theor y of the Nich e

The relationship between ecology and economics has existed from the beginning.According to Mayr (1997, p. 207), the term ecology was coined in the 1860s byHaeckel, who defined the word as that corpus of knowledge concerning "the econ-omy of nature." Economic thought has been so thoroughly intertwined with thedevelopment of ecology that Worster (1994) entitled his intellectual history of thefield of ecology as Nature's Economy. Several decades ago, Ehrlich and Holm (1962)pointed out the potential for merging ecological thought with the social science disci-plines, including economics. The reason underlying their suggestions is straightfor-ward. Albeit in different spheres of activity, economists and ecologists study the useof resources and the competition for those resources. For example, a chapter titled"Economics of Consumer Choice" (Mac Arthur, 1972) appeared not in an economicstext, but in a book on ecology. These two disciplines sometimes employ similar theo-retical constructs—a similarity often obscured by difference in labels. Althoughspace limitations preclude extensive discussion of the parallels between economics,business and ecological thought, it can be pointed out for example, that the termsbreadth and overlap in the ecological theory of the niche have their counterparts inportfolio analysis and in the concept of substitutable commodities.

The work presented in this chapter is part of the second wave of applicationof ecological thought to the human social order. The first wave occurred in thefirst half of the 20th century, when ecological concepts were applied in severalfields including sociology, economics, and geography (Hawley, 1944). The sec-ond wave seems to date from Hannan and Freeman's (1977) seminal applicationof concepts from population ecology to the study of organizations. In this sec-ond wave of research and theorizing, various concepts have been borrowed frompopulation and evolutionary ecology to describe and explain organizationalphenomena. Although this line of research and theory has been fruitful in many

23

2

24 CHAPTER 2

ways, the author's position is that the full benefit of ecological thought can onlybe derived from applying ecological theory—such as the theory of theniche—as a whole theoretical system, not as isolated constructs.

In applying the theory of the niche to media organizations and industries, it isnot being suggested that populations of organizations and populations of biologi-cal species have anything in common except that insofar as organizations or spe-cies constitute populations that subsist on the same resources, they came withinthe purview of the theory. Just as it was clear in chapter 1 that evolutionary con-cepts such as variation and selection are general enough to cross the boundary ofthe human and nonhuman, so it wil l be made clear in this chapter that the theory ofthe niche is an abstraction that can bridge the nonhuman and the human socialworlds. The theory of the niche is abstract and general; its substance is a set ofconcepts and propositions concerning competition and coexistence. As such, it isnot exclusively a biological theory, but a theory formulated to describe andexplain competition and coexistence among populations. The data reported insubsequent chapters can be considered an illustration of the generality of the the-ory because concepts and measures are applied not in analogic fashion, but as atheory of competition and coexistence per se.

At the most abstract and general, a unit's (population or individual) niche is itsrelationship to its environment. The original meaning of the word "niche" wasarchitectural (from the Latin nidus or "nest") meaning an opening or recess in a wallwhich was intended to hold a statue or some other object. Although the term wasused by naturalists such as Grinnell (see Pianka, 1988, for a brief history), it wasalso present in the work of social scientists such as human ecologist Robert Park.The concept has gained a certain currency in contemporary business usage asreflected in such phrases as "niche market," which seems to denote a specialistcompany or industry. This latter usage is not an accurate reflection of its ecologicalmeaning because, as is described later, there are generalist niches as well as special-ized niches. "Niche" has also been used in various ways in the organizational sci-ence literature. In this volume, the concept is based on its meaning in ecologicaltheory. Ecologists have tested and refined the term over the past 40 years, and wecan profit from the theoretical debates and empirical studies which have contrib-uted to the contemporary meaning of niche.

Although the term niche was first used by Grinnell in the 19th century, the nicheconcept began to acquire theoretical lif e with Hutchinson's (1958) definition as ann-dimensional hypervolume. Although as Pianka (1988) pointed out, this concep-tualization was too abstract for practical use, Hutchinson's work is a theoreticalmilestone in the development of the theory. Ricklefs and Miller's (1999) definitionreflected the Hutchinsonian conception.

The niche ... occupies a part of the n-dimensional volume that represents the totalresource space, or niche space, available to the community. We think of the total nichespace of a community as a volume into which the niches of all species fit, as do balls ofvarious sizes packed in a box.

THE THEORY OF THE NICHE 25

This spatial conception of the niche is reflected in such key theoretical terms asniche dimensions, niche-breadth, and niche overlap, which are defined later in thechapter. First, however, it is necessary to define such key terms as population,industry, and the concept of competition.

The spatial concept of the niche has led some analysts to speak of "empty"niches. However, if one keeps in mind that the niche is fundamentally a relation-ship, then it is clear that there are no empty niches. Although it is possible that someresources may be underutilized or not utilized at all, the concept of the niche as arelationship between population or individual and the environment precludes call-ing it an empty niche.

Competitio n

Media economics generally follows a definition of competition drawn from indus-trial organization economics in which competition is viewed as being defined bythe number of firms in an industry (e.g., Owen & Wildman, 1992). Both Picard(1989) and Albarran (1996) presented competition as stemming from the catego-ries of industries defined by the theory of the firm—pure competition, oligopoly,monopolistic competition and monopoly. Carlton and Perloff (1994) pointed toother definitions of competition. In one characterization of competition, the attrib-utes of price-taking, a large number of firms, and ease of entry and exit are used tojudge the competitiveness of an industry. These authors also noted that in policydiscussions a competitive industry is viewed as one where no intervention isrequired to improve performance. As Scherer's (1980, p. 10) definition made clear,the purpose of defining competition in this way is to explain such "dependent vari-ables" as price and output levels.

In modern economic theory an industry is said to be competitive (or more precisely,purely competitive), only when the number of firms selling a homogeneous product isso large, and each individual firm's share of the market is so small, that no individualfirm finds itself able to influence the commodity's price by varying the quantity ofoutput it sells.

Whereas defining competition in this way allows us to answer questions con-cerning firm's pricing behavior and output levels, it is less useful in answering thecentral questions of this volume concerning how media organizations survive andprosper or fail in the face of rivalry from other organizations and industries.

The definition of competition in this book, as described in chapter 1, was ecolog-ical similarity or, use of the same or similar resources by organizations or indus-tries. Although somewhat abstract, this is a definition that applies to bothcompetition within and between populations. In addition, this definition can begiven a clear operational meaning in this and subsequent chapters. Competitionoccurs when ecological similarity exists and resources are limited. Competition isthus indirect in the sense that resource consumption by an ecological unit (individ-

26 CHAPTER 2

ual firm or industry) lowers the availability of resources common to the competi-tors. This particular form of competition has been called exploitative competition.The ecological definition of competition is closer to the definition of what Scherer(1980, p. 10) called "rivalry" ("... a conscious striving against other business firmsfor patronage ...") than it is to the industrial organization economists' definition ofcompetition.

Population , Community , and the Notio n of Industr y

Competition occurs among populations within communities. Communities consistof populations within a specific geographic boundary. In the realm of media organi-zations, we can conceptualize communities as existing at different levels of analy-sis—the international, the national, the regional, and the local levels. Within acommunity a group of populations that use common resources is termed a guild(Root, 1967). For example in chapter 3, the media industries which use advertisingresources within the United States (the community boundary) constitute a guild.Within the community, the unit of analysis is the population or the individual unitsuch as a firm or organization.

A population is a set of organizations within which the variance in the popu-lation of the defining attributes is less than the variance between populations(Hannan & Freeman, 1977). Defining populations is a crucial task. Hawley(1944) was the first to insist that an adequate taxonomy was crucial if competi-tion is to be accurately assessed as only populations with similar resource useactually compete. Within the field of organizational science, McKelvey madeconsiderable efforts in that direction. As he pointed out (McKelvey, 1975), acore element in scientific knowledge is the development of a system of classifi-cation. In biology, this task is performed by the field of taxonomy which deter-mines which populations are species and which are not. McKelvey (1982) beganto develop the theory and the methods requisite to performing taxonomical stud-ies in the realm of organizations. To date however, no such universal classifica-tion exists. McKelvey and Aldrich (1983, p. 112) proposed that populationscould be defined as competence elements or "comps." Comps are defined as theelement of knowledge and skill that, in total, constitute the dominant compe-tence of an organization. "... and each population has a population wide set ofcomps that are held as knowledge and skill by employees of the organizations inthe population." Although this conception seems promising in its generality, theprocess of defining the competence elements of a population or industry wouldseem to require a great deal of detailed study of the attributes of individual popu-lations, which in most cases, probably does not yet exist.

In industrial organization economics where the "industry" can be under-stood as a population of similar organizations, there seems to be no clear andgeneral definition of the concept. For example, the difficult y economists havehad in defining the industry concept is reflected in the discussions by Porter(1980) and Pearce (1992).


In the field of mass communication and media economics, the problem ofdefining the industry or population has simply not arisen. In industrial organiza-tion economics the domain of study is all industries while in organizational sci-ence the domain is all organizations. In economics and organizational science,the heterogeneity of the domain has no doubt led to problems in defining a gen-eral and a workable unit of analysis. In mass communication and media eco-nomics, by contrast, because the investigators were members of schools ordepartments of communication, journalism, or telecommunication, they havechosen populations and organizations such as newspapers, cable systems, radiostations, or book publishing firms as the units of analysis. The more restrictedrange of industries studied has meant that the problems of classification havebeen less severe than in industrial organization economics or organizational sci-ence. Implicitly at least researchers have used technology or technical appara-tus to define the organizations and organizational populations which they havestudied. It should be noted that "technical apparatus" as used here is a part of,but not synonymous with, the more abstract notion of "core technology" inorganizational science (see McKelvey, 1978). In McKelvey's (1982, p. 171)view, defining technology as technical apparatus is a "clanking hardware ori-ented view of technology." Although the definition of technology used in mediaeconomics and communication is less abstract and theoretical than McKelvey'snotion of competence elements, it has the virtues of at least being clear and sim-ple. Any minimally knowledgeable observer can quickly distinguish a newspa-per printing press from a cable head-end, a radio studio, or a transmitter.However, until organizational taxonomies are available, McKelvey and Aldrich(1983) advised organizational researchers, in the absence of a comprehensiveorganizational taxonomy, to at least be clear about the populations they studyand to use a "common sense" definition of organizational populations. In defin-ing their units of study on the basis of technology, this is what media researchershave clearly done, and that is the practice followed in this and the followingchapters. It should be noted, however, that as technological convergence in thecommunication industries becomes increasingly a reality the simple definitionof industries used in the past may become obsolete and the need for a taxonomyof media organizations and industries may become acutely apparent.

NICHE DIMENSIONS

Space: Market and Communit y

In the natural world space can be a critical resource. For example, certain bird spe-cies have such highly specific requirements for nesting sites that these spaces are anessential resource for the population's survival. The interpretation of Rosse'sumbrella competition model in the previous chapter effectively raises the questionsof whether space itself is a resource and of the relationship of the spatial distributionof media organizations to competition.

28 CHAPTER 2

The usual way of denoting the business of media organizations is to use the termmarket. Like the ecological definition of community, the market concept entails aspatial element. As Albarran (1996) pointed out, a media market is defined by twoelements: media products and geography. According to Carlton and Perloff (1994),the spatial boundary of a market is ascertained by asking whether an increase in pricein one location affects the price in another location. If the answer is affirmative, thetwo locations are in the same market. Whereas this definition may hold for homoge-neous products such as oranges, it may not hold for such products as the commercialavailabilities on television stations. For example, a television station in a certain citymay raise the price of its availabilities in a particular day—part due to higher ratingsand yet not affect the pricing of commercials by other stations in the same city.

Markets may be defined at the global, national, or local level of analysis. Somemedia organizations (like those portrayed in chap. 4) compete at the internationallevel. Others, like the broadcast networks and most cable networks operate at thenational level and radio and television stations and most daily newspapers competeat the local level. It is perhaps at the local market level where the role of space inmedia competition can be most clearly illustrated.

The local geographic market can be defined in various ways, but perhaps themost rigorous and clear way is to use the Consolidated Metropolitan StatisticalArea as defined by the US Office of Management and Budget. The CSMA isused for some purposes by the broadcast rating services (see Wimmer &Dominick, 1997), and by the Audit Bureau of Circulation, which certifies news-paper circulation as the area within which media audiences are measured,although some metropolitan dailies may draw readers from beyond this area(see Guthrie, Ludwin, & Jacob, 1988).

Absent from the economic definition of market but present in the ecologicalconcept of community is the notion of community structure which includes itsrichness in terms of the number of populations represented and the resource userelationships among them. Considered as ecological communities, local geo-graphic markets vary in their organizational populations from market to marketand across time. For example, the relative resource richness affects the number ofmedia organizations that can survive in a given market at any given time. In astudy of the effects of the growth of radio on newspapers in local markets with andwithout newspaper competition, Lacy (1987) found that population, retail salesand number of radio stations showed a larger increase in competitive cities than innon-competitive cities. The implied conclusion is that the competitive cities, per-haps an index of the resource richness, were richer in consumers and advertisersand, as a result, could support a larger population of radio stations. Local marketsalso change over time in ways that affect resources and media populations.Stamm (1985) concluded his analysis of the growth and decline in newspaper cir-culation by stating that historically, changes in the cities themselves coincide withchanges in newspaper circulation.

One way of highlighting the spatial aspect of competition is to envision ahypothetical local market of substantial size. This metropolitan area is com-


posed of a central city core, a ring of suburbs, and satellite cities. Packed intothis sprawling landscape are the spatial "territories" of many media organiza-tions representing various industries. Radio and television signals define recep-tion areas and newspapers (both daily and weekly) have their circulation zones.Other media territories include cable franchise areas while the multiplex the-aters and bookstores in the shopping malls each have their areas of greatestpatronage, as do the video rental stores. To this complex mosaic of spatial pat-terns superimpose the adoption patterns of personal computers and DBS pene-tration. Clearly this urban landscape, although it provides a high degree ofchoice for media patrons and advertisers, also displays a high potential for com-petition between organizations within the same industry and organizations rep-resenting different industries.

However, it should be clear from this discussion that space is not a resource formedia organizations beyond the minimal requirements of land for buildings, print-ing presses, transmitters, and head-ends. Space is not a resource but simply the areadefining the geographic limits of resources such as audiences, patrons, or advertis-ers. The boundary defined by a broadcast station's signal acts in this way, as anenvelope or container of the resources, such as audiences and advertisers, requisiteto survival. Although space is not a resource, it is the stage on which the drama ofcompetition and coexistence is played out.

Resourc e Dimension s

The resource dimensions which allow populations to survive form one of the defin-ing features of the niche. In nature, populations' niches may be defined by a fairlylarge number of dimensions (Pianka, 1988). However, in actual empirical studies ofcompetition and coexistence, ecologists use one to three dimensions to gauge com-petitive interactions. For media organizations and industries the relevant dimen-sions are the resource axes which allow media organizations and industries to existand perpetuate themselves in time and space.

Following Slobodchikoff and Schulz (1980) the term macrodimension isused to denote the resource dimension whereas the term microdimensiondenotes subdivisions of the resource dimension. There are six major macro-dimensions—gratifications obtained, gratification opportunities, consumerspending, time spent by consumers on the media, and advertising spending aswell as media content. Gratifications and gratification opportunities are aresource for all media organizations and industries because they represent theneeds served by media and are the basis on which media are selected by theirpatrons. In other words, the demand for media products and services dependscrucially on the gratifications and gratification opportunities. The time spentwith media as well as consumer spending on media are a consequence of gratifi-cations and gratification opportunities derived from the media. Gratificationsand gratification opportunities require further explanation and this is providedin the next sections of this chapter.

30 CHAPTER 2

Gratification s

Judging from current patterns of language use, the word "gratification" seemssomewhat archaic today although it seems to have been common in 19th centurywriting, as in the following excerpt from Taylor's (1850, p. 54) comments about anincident during the California Gold Rush.

The officers were eager for news from home, having been two months without mail,and I was glad that my habit of carrying newspapers in my pockets enabled me to fur-nish them with a substantial gratification.

Gratification became part of the research literature on mass communicationwhen Herzog (1940) used it to describe the satisfaction derived from listening to aradio game show called "Professor Quiz." The contemporary development of thisresearch tradition however, can be traced to Elihu Katz and his colleagues (Katz,Blumler, & Gurevitch, 1974, and Katz, Gurevitch, & Haas, 1973). In a seminal vol-ume on uses and gratifications research, Katz, Blumler, and Gurevitch (1974, p. 20)wrote that gratification studies "... are concerned with 1) the social and psychologi-cal origins of 2) needs, which generate 3) expectations of 4) the mass media or othersources, which lead to 5) differential patterns of media exposure (or engagement inother activities) resulting in 6) need gratification and 7) other consequences, per-haps unintended ones."

A critical distinction between gratifications sought (the "expectations" in #3,listed previously) and gratifications obtained (see #6) was made by Palmgreen,Wenner, and Rayburn (1980). The "expectations" in Katz et al.'s outline are thegratifications sought while gratifications obtained are the satisfactions actuallyderived from media use.

Despite conceptual difficulties and theoretical debates, the uses and gratificationsapproach has generated a large number of studies, far too large to enumerate here. AsLin (1996) pointed out in her brief review of this research tradition, concepts such as"need," "motivations," and "gratification" have not been clearly distinguished. How-ever, uses and gratifications research, despite its many difficulties, remains the com-munication field's major conceptual and empirical tool for studying media choice.

Gratifications occur within what are called "domains," that cut across mediaindustries. Domains are aspects of media content or forms of media use whichdefine the substitutes available to satisfy the relevant set of gratification utilities. Todate, several domains such as news, video entertainment, business and economicnews, and interactive media have been identified by the author and are the subject ofresearch reported in a later chapter. Other possible domains are such media activi-ties as sports and shopping.

The gratification concept is similar in many ways to the economic concept of util-ity. Georgescu-Roegen (1994) provided a conceptual and mathematical history of theconcept of utility in economics. The core meaning of both concepts is satisfaction andboth concepts bear on the problem of human choice. Picard (1989) considered that


gratification studies "indirectly" address the concept of utility. As used by gratifica-tion researchers, the concept appears to be closest to the indifference approach tomeasuring utility (see Picard, 1989). In the future, theoretically integrating the grati-fications construct and the concept of utility would make a strong contribution to thestudy of media choice. Such a task however, is beyond the scope of this volume.

Gratificatio n Opportunitie s

The conceptual basis of gratification opportunities is drawn from Carlstein's (1982)work on time geography, that is rooted in the work of the Swedish geographer TorstenHagerstrand. Time geography is based on the simple yet central fact that peo-ple—individuals and groups—change locations over time. Hagerstrand (seeCarlstein, 1982) has developed a time-geographic notion that traces changes of loca-tion as paths in time-space. The activities of a human population form a web of pathsin time-space and individual paths come together in bundles that might representhouseholds, factories, or universities. An example of a bundle that pertains to mediause would be a freeway during the morning commute on which commuters confinedto their cars use radios, CD players, or tapes to gratify their needs for information andentertainment. Carlstein (1982) observed that human time was a resource because allactivities require it. All activities cannot be performed at once but, instead, must beenacted sequentially. The notion of time as a limited resource results in the concept ofa. population time budget. The aggregate time supply or budget is obtained simply bymultiplying population size by the length of the observation period. As the term bud-get is meant to emphasize, only a limited number of activities can be performedwithin a given period. Carlstein conceptualized the time budget at the level of thepopulation. However, for explicating the idea of gratification opportunities, it is moreuseful to think of household or individual time budgets because of media use, as anaspect of leisure time, actually occurs at these levels of analysis.

The opportunities for satisfying media-related needs depend a good deal onwhere or when individuals or populations are located in time and space. For exam-ple, television is normally watched in the home, and its highest use is during eve-ning hours. Radio and recorded music players, on the other hand, are more portableand better suited to mobile uses like exercising or driving to work. The current trendtoward wireless communication devices such as cellular phones multiplies thenumber of time-space opportunities for communication. The individual's scheduleor time-space locations throughout the day strongly influences the number ofmedia available and the amount of time available for media use or, in other words,the gratification opportunities.

Although the notion of time as a resource that must be allocated or budgeted isstraightforward, Carlstein noted that social scientists are often not aware that timeis a resource. As he pointed out, time is a resource but is not—like money—amedium of exchange. However, each activity can be assigned a time cost. Despitethe grain of truth in the old saw that "time is money," time is not exchangeable,storable, or transportable.

32 CHAPTER 2

The connection between gratifications and time use can be seen most clearly inthe contrast between the newer and the older media of communication. The tradi-tional media—newspapers, radio, and television—have rigid and limited timeschedules to which people must conform to a greater or lesser degree in allocatingor budgeting leisure time. "In contrast," as Dimmick and Wallschlaeger (1986)observed, "the new media offer greater choice, more control over time of consump-tion, or both" (p. 9). In short, the new media may supply a greater number of gratifi-cation opportunities. The gratification opportunities that a medium affords its usersresult from the interaction of individual and household time budgets and the charac-teristics of the medium. Given relatively fixed time budgets, a medium that offersmore of a given type of content or interaction at a greater number of times offersaudiences in a particular time-space location a higher probability of obtaining thegratifications they seek.

Recent trends in how Americans use and perceive time suggest that gratificationopportunities may be important elements in media choice. Schor (1991) claimedthat Americans are working longer hours and have less leisure time. In response toSchor's assertion, Robinson and Godbey's (1997) analysis, based on time diaries,showed that this is not the case. However, Robinson and Godbey's work alsoshowed that Americans believe their time is scarce and precious whereas compari-son of time diaries across the years shows an actual increase in free time for somepeople; more Americans also report feeling pressed for time. In this context, mediathat offers more gratification opportunities should be attractive to consumers.Research reviewed in chapter 5 shows that gratification opportunities are indeedimportant in explaining media choice.

Time Spent and Advertisin g Expenditure s

Although the time spent by consumers on media use has not been of central concernto media economists, it has long been recognized as a key resource. For example,Kline (1977, p. 9) remarked,

In the realm of media economics the obvious resource that concerns the analyst is theamount of money a person is willing to spend for a particular product. In manyinstances, though, the cost of the media product is less of a reason for not purchasing itthan the lack of time to devote to using it.

A similar point is made by Block (1979, p. 32) who wrote that,

Consumption involves both the time necessary to consume the good as well as thegoods themselves. Consumption should not be viewed as an instantaneous process,since the time at a consumer's disposal must also be considered.

This economic conception of time as a resource consumed along with mediaproducts is necessary to an understanding of media competition. To the casual


observer perhaps, the U.S. TV viewer or radio listener who pays no license fee forthe privilege of viewing and listening, as is the case in Britain and other countries, isnot involved in an economic transaction. As Nieto (2000) pointed out, time is animmaterial asset and is not generally thought of as one of the currencies of eco-nomic exchange. The viewer may be of the same opinion as the economist. AsNieto (2000, p. 149) observed,

The communication media, both traditional and new, can make him erroneously thinkthat he is managing his time when he uses it to zap from one television channel toanother, from one radio station to another, when accepting a gift of informative orentertainment contents that he is actually paying for at least with his time.

The measurements of audience size in the media—ratings in broadcasting,circulation in the print media or hits on websites—are surrogate measures foraudience time, the time that the audience hopefully (from the point of view ofthe advertisers) spends paying attention to advertising messages; advertising isof course, sold on the basis of such measures. In this way, time spent by mediapatrons acquires economic value. There is a clear economic exchange occurringbut it is not the simple and straightforward one where the consumer directlypays the producer a monetary price for a product or service. I return to this pointin chapter 7.

Macrodimension s and Microdimension s

Subdivisions of the macrodimensions are, as was noted earlier, termedmicrodimensions. The gratifications sought and obtained are first divided intodomains, as noted earlier. The gratification-utility macrodimensions within eachdomain are defined by factor analysis. For example, cognitive and affective macro-dimensions have been defined for video entertainment and for news media while asociability factor or macrodimension has been defined for interactive media (seechap. 5). The microdimensions are individual gratifications questions. Time spentas a macrodimension is not really subdivided into microdimensions. Rather, thereare different possible measures of time spent, such as hours, minutes, frequency ofuse, days per week, or relative frequency such as "more," "less," or "about thesame," and time spent measured in minutes or hours. The consumer spendingdimension is subdivided into categories such as dollars spent on cable, computersor magazines. The advertising spending subdivisions or microdimensions are rep-resented by such categories as spot, local and national or network for TV ornational, local and classified for newspapers, while for the Internet there is as yet asingle dimension.

While the gratification-utilities macrodimension and the advertisingmacrodimension can be readily subdivided into microdimensions (see chaps. 3 & 4),consumer spending and time spent cannot be so subdivided. Subdividing these lattertwo dimensions further does not yield qualitatively different units or categories.

34 CHAPTER 2

Resourc e Availability : Relation s Amon g Niche-Macrodimension s

To summarize the exposition in the preceding section, the niche macrodimensionsare: (a) gratifications sought, (b) gratifications obtained, (c) media content, (d) timespent, (e) consumer spending, and (f) advertising spending. Taken together, theseresource dimensions provide a comprehensive portrayal of the space which formsthe arenas for competition and coexistence. The niche measures of breadth, over-lap, and competitive superiority, defined conceptually later in this chapter, are per-formed on these resource axes separately. However, it is important to point out thatthese resource dimensions are not independent entities, they are related bytranslation processes.

Figure 2.1 visually portrays the relationships among the niche dimension. Thearrows in Figure 2.1, although the figure resembles a path diagram, do not denotesimple causation. Instead, the arrows are indicative of translation processes. At anabstract and conceptual level, the term means a change from one form to another.Some brief examples are used later to illustrate concretely what is meant by "trans-lation."

For example, the gratifications sought by media audiences are estimated throughresearch techniques such as surveys or focus groups or by observing what mediacontent has proven popular in the immediate past or by exercising professionaljudgment (or indeed, by relying on intuitions); and these perceptions of audienceneeds or wants are translated, however imperfectly, into media content such as pop-ular songs or TV series. Media patrons and audiences seek content they believe wil lbe gratifying and translate media content into gratifications—utilities obtainedwhich may or may not meet their expectations. Media patrons, in the case of mediathat carries a monetary price, translate their expected satisfactions not only intosome level of gratification, but into consumer spending as well. In the case ofbroadcasting, that carries no monetary price on its content, audience viewing istranslated into measures of time spent such as ratings by audience research firmsand the estimates of audience size are, in turn, translated by advertising agenciesinto advertising placement in the various media.

From these brief examples, it is clear that translations may vary from individualor household purchase decisions to more complex organizational decisions such asthe fall line-up for a TV network. Translations may also involve the enactment ofcomplex organizational routines such as measuring TV or cable audiences or news-paper or magazine subscribership. At an even greater level of complexity, transla-tion processes may be conducted by an entire set of organizations such as thecollective decisions by advertising agencies which determine how many advertis-ing dollars wil l be allocated to each medium.

It should be clear at this point that whether simple or complex, the translationprocesses determine the level of resources on each niche dimension, and thus,address the problem of resource availability. Niche theory deals with competitionand coexistence given a certain level of resources and only includes the question ofresource availability by stating what should happen if resources are increased or

FIG. 2.1. Relationships among niche dimensions.

36 CHAPTER 2

decreased, a subject covered later in this chapter. However, in the long-term it isimportant, as an adjunct to competition theory, to map the translation processes onFigure 2.1 to explain variation in resource levels on the various niche dimensions.

Limit s on Resource s

One final point needs to be made explicit about the resources used by the mediaand that is that they are limited. The expenditure of both time and money on themedia by consumers depends on the satisfaction derived from media use (seeFig. 2.1) or the magnitude of the gratification utilities. This satisfaction is sub-ject to psychological satiation or, in economic terms, the principle of decliningmarginal utilit y which applies as much to media as to other goods and services(see Picard, 1989). Theoretically, marginal utilit y is the change in total gratifi-cation-utilities divided by the change in media units consumed. As the mediapatron spends more time and money on media satisfaction wil l decline with theonset of satiation.

Advertising spending is also limited. The rational firm only spends money onadvertising to procure profits. As Carlton and Perloff (1994, p. 604) wrote,

The profit-maximizing firm sets its advertising expenditures so that the last dollarspent on advertising increases its profits, excluding advertising costs by exactly onedollar. That is, the firm maximizes its profits by setting the marginal cost of advertis-ing equal to the marginal benefit...

Even if one does not accept the profit-maximizing assumption of conventionaleconomic theory (see, e.g., Cyert & March, 1963), such factors as pressures fromstockholders on the firm for efficiency and the rivalrous behavior of the media orga-nizations and industries and ad agencies vying for the advertisers dollars is likely toset limits on advertising expenditures.

Media Conten t as a Niche Dimensio n

Before leaving the topic of niche dimensions, it should be noted that media contentis also an important niche dimension. In Figure 2.1, media content is placed in acentral position among the niche dimensions. Content is obviously a crucialresource to the media patron and the organizations and industries that spend billionsof dollars each year to produce and distribute TV shows, recorded music, newspa-pers, and magazines as well as websites, books, and cable networks. However,media content has not been conceptualized and studied as a niche resource axis. Todate only one study, Hellman and Soramaki (1994), used niche measures and con-structs to study media content. As a result, littl e is known about this resourcedimension. In addition, there are special problems in conceptualizing and measur-ing content as a niche dimension. For these reasons, discussion of this resource axisis reserved for chapter 6.


Niche-Breadt h and Nich e Overla p

In spatial terms, niche-breadth is a measure of the area of a niche along a particularresource dimension or axis, such as gratifications, gratification opportunities, timeand consumer spending or advertising. Specialist populations have relatively nar-row niches, whereas generalist populations have rather broad niches. In nature, thekoala, which feeds solely on eucalyptus leaves is a specialist, whereas the Ameri-can brown bear that utilizes many sources of food is a relative generalist. In therealm of industries, the movie industry, which is dependent on consumer spendingis more specialized than the broader-niched cable industry, which draws resourcesboth from consumer spending and from advertising.

Niche overlap refers to ecological similarity between two populations. Overlapmeasures the relationship between populations in terms of the similarity or differ-ence in their resource utilization patterns. In the spatial model of the niche, overlapis the area of niche space shared by adjacent niches. If resources are limited, overlapindicates competition, and the greater the magnitude of the overlap measure thestronger the competition. Populations with highly similar ecologies are strongcompetitors whereas those more dissimilar in resource utilization display less eco-logical similarity, and as a result, display lower overlap and less intense competi-tion. Similarity in niches leads to strong competition, whereas niche differentiationleads to coexistence.

The consequences of strong competition or ecological similarity can be illus-trated by a series of simple experiments conducted by biologists early in the 20thcentury. Ricklefs and Miller (1999, p. 405-406) provided a synopsis of all theseexperiments. Here, one of the set of experiments is used for illustration. In the lab-oratory Cause (1934) placed two populations (species) of paramecia in a growthmedium—a single resource—in a closed environment and observed the result.Over time, one population drove the other into extinction before the growthmedium or resource was exhausted. The result of the experiments by Cause andothers was termed the principle of competitive exclusion by Hardin (1960)because they demonstrated that populations which have highly similar ecologies,whose niches overlap strongly cannot coexist. Although many of these "bottleexperiments," as Mac Arthur (1972) called them, were conducted in highly sim-plified environments which allowed for no other outcome than competitive exclu-sion, they effectively demonstrated the extreme outcome of strong competition orniche overlap. Among media industries, the single case of exclusion seems to bethat of the organizational form of vaudeville excluded by the appearance of mov-ies and radio, although elements of vaudeville performances and some perform-ers survived in the competing media.

According to Pianka (1988), the competitive exclusion principle is usefulbecause it points to the necessity of there being some ecological difference—a dif-ference in niche—that allows populations to coexist in environments that are satu-rated by competitive populations. The question is how similar in niche canpopulations be and still coexist. This is termed limiting similarity (Ricklefs &

38 CHAPTER 2

Miller , 1999). To avoid the detrimental effects of intense competition, there mustbe some critical difference in the niche of populations—some difference that low-ers overlap—that allows them to coexist.

A rather dramatic example of such coexistence occurs on the plains of Africa,where vast herds of herbivores of several species live together without mutual harm,and apparently all eating grass. Colin Fletcher (1973, p. 227) provides a summaryof the ecological studies (e.g., Gwynne & Bell, 1968) bearing on the question ofhow these populations coexist.

How come there are so many different grazing mammals—wildebeest, zebras, topi,kongoni, and Tommy for a start—that all seem to make a living in the same place andin large numbers by eating the same food? Why has not one of them proved so effi-cient at its job that, as normally happens in the end when different species competedirectly, it has come to outnumber the others—or even to drive them elsewhere or intoextinction. The answer to both these questions is that, contrary to appearances, theanimals do not eat the same food. Often they prefer different kinds of grass. Almostalways they tend to eat grass at slightly different stages of growth. Zebras, for exam-ple, attack the long, course vegetation. Topi tend to eat dried-up stalks. Tommy restrictthemselves to short, tough, not necessarily new grass.

In short, these populations have evolved differences in niche that limit theinter-population competition for resources and allow them to coexist. Although theniches of these populations do overlap, there are critical differences which preventstrong and detrimental competition.

Some populations which compete too strongly to exist on a single resource axisare substantially different on another. This is termed niche complementarity(Ricklefs & Miller, 1999). For example, hawks and owls often inhabit the samegeographic territory preying on the same populations of small animals. On thisdimension they overlap strongly. However, although they are ecologically similarin their food sources, they are radically different in time of utilization; hawks huntby day and owls by night.

Measures of niche overlap or ecological similarity are defined in chapter 4 forthe advertising dimension, and in chapter 5 for the gratifications and gratificationopportunities dimensions. The niche measures for categorical data used for adver-tising in chapter 5 also are used to measure breadth and overlap for the content nichein chapter 6. Niche overlap, however, is a symmetric measure. Such measures cantell us the strength of the competition between two competitors but not which of thetwo is superior.

Competitiv e Superiorit y

In the Gause (1934) experiment and similar studies, the populations that survivedwere those which were competitively superior. An idea that is strikingly similar hasbeen current in mass communication research for decades under the label "func-tional alternative."


DeFleur and Ball-Rokeach (1975, and earlier editions) use the term functionalalternative to explain the effect of movies, TV, and radio on newspapers. Merton(1957) coined the term in sociology but it appears to have first been applied tomedia by these authors. They characterize the extent to which media are functionalalternatives or competitors to the extent that they serve similar audience gratifica-tions or needs. For example, they noted that to some extent, each of the newer mediahas eroded the per-household circulation of daily newspapers. A similar view, aclear expression of the concept of functional alternative, was advanced byMcCombs (1972, p. 33) following his economic analysis of media competition:

If one conceives of a mass medium as serving some social or psychological need ofeach individual in its audience, then the appearance of another medium that servesthat need better (according to some criterion of communication performance) wil lresult in shifts among the audiences. Over time, for example, radio, movies and televi-sion successively took over portions of the news, information and entertainment func-tions of the newspaper.

The first sentence of McCombs' quote clearly points to what, in the next sectionof this chapter, is called a displacement effect, due to the competitive superiority ofone medium. The second sentence of the quote, which hypothesizes displacementdue to the combined effects of several mediums on a single population, is termeddiffuse or serial competition, and this phenomenon is discussed in chapter 6.

It should be noted however, as Robinson and Jeffries (1979) pointed out, that theidea of functional alternatives has been used as an ex post facto explanation at themicro-level for the macro-level outcome of media competition. Some of the infer-ences concerning the impact of one medium on another have not been made on thebasis of gratification-utilities actually measured in audience surveys and this isobviously necessary for explanations based on functional alternatives to acquireempirical cogency. McCombs' conceptual argument indicates that audienceschoose—or fail to choose—a new medium over older forms on the basis of the rela-tive efficacy of new and older media in gratifying needs.

The idea of competitive superiority is also part of the diffusion of innovation per-spective (Rogers, 1983). Rogers listed five attributes of innovations which can beused to predict their rate of adoption, one of which is relative advantage. "Relativeadvantage is the degree that an innovation is perceived as being better than the ideait supersedes" (Rogers, 1983, p. 213). Relative advantage has been found to be oneof the best predictions of the rate of adoption of an innovation. The components ofrelative advantage are such things as profitability, low cost, time and effort saving aswell as immediacy of reward. These components are all in a broad sense economic;all of them pertain to the efficient use of resources.

In summary, both the literature on media competition and the diffusion of inno-vation literature contain ideas quite similar to the ecologists' notion of competitivesuperiority. How the idea of competitive superiority pertains to the theory of theniche is made apparent in the following section of this chapter.

40 CHAPTER 2

Competitiv e Displacemen t

When a new population—an invader—arises in a community, one possibility, asoutlined earlier, is competitive exclusion. However, another possibility is competi-tive displacement. If the invading population uses the same resources as the currentmembers of the community then competition occurs and this should be reflected inniche overlap measure. However, overlap is a symmetric measure. Overlap assessesthe strength of competition between two populations but yields no information con-cerning which population is the superior competition. As a result of competition,one population may appropriate a portion of another's niche space or displace thepopulation from a portion of its niche resulting in changes, often a decrease inniche-breadth, on the part of the outcompeted population (Colwell & Futuyma,1971). Another possibility is that resources increase to accommodate the popula-tions' requirements. If resources do not increase, however, displacement or exclu-sion may occur. Another possibility is that both populations alter their resourceutilizations to reduce overlap. The population which is responsible for the displace-ment is the superior competitor.

Clearly, a measure of competitive superiority would be quite useful in inferringthe impact of one population on another. In longitudinal studies, some evidence ofcompetitive superiority is provided by measures of niche-breadth and niche over-lap. If we observe that two populations (A and B) overlap strongly at the beginningof a time period and then in a later time period observe a decrease in niche-breadthof population B while A's breadth remains constant or increases, this is at least indi-rect evidence that A is competitively superior. However, the most direct evidenceeven in longitudinal studies would be a measure of competitive superiority. Incross-sectional studies such a measure is necessary (because one cannot observeniche changes over time in conjunction with overlap) to make inferences about thepossible impact of one population on another population's niche. Measures of com-petitive superiority wil l be defined for the advertising dimension in chapter 4 andfor gratifications and gratification opportunities in chapter 5.

Level s of Nich e Analysi s

Analysis of the niche may be conducted at four distinct levels defined by the macro-and microdimensions: between macrodimensions, within macrodimensions,between microdimensions, and within microdimensions.

At the between-macrodimensions level the analysis is a simple one, simply not-ing use or nonuse of a resource axis, but this is nonetheless an important distinction.Some critical niche differentiation and overlaps occur at this level. For example,some media industries use a particular macrodimension and some do not. Themovie industry is specialized on consumer spending, using no advertising, whereasnewspapers and cable utilize both advertising and consumer spending.

Niche analysis within macrodimensions can be exemplified by the advertisingresource axis. For example, shares of total advertising consumed by the various


media can be calculated and compared cross-sectionally or longitudinally. An anal-ysis of this kind occurs in chapter 6, where an explanation of serial competitioninvolving the impact of various media on the newspapers' share of all advertisingfrom 1935 onward is presented.

The between-microdimension mode of niche analysis is perhaps the most cen-tral and the most commonly occurring form in this volume. This level of analysis isthe one at which the traditional niche measures of breadth, overlap, and superiorityare calculated. Such measures dominate the analysis of the competition for adver-tising in chapter 3 and the presentation of the results of the analysis of the gratifica-tion niches in chapter 5.

At the within-microdimension level two sorts of analyses may be performed.First, similar to analyses on the within macrodimensional level, shares of amicrodimension such as national or local advertising accruing to various media canbe calculated and compared cross-sectionally or longitudinally. Within gratifica-tion domains, it is also possible to assess differences between two mediums inrespondent ratings on a microdimension or gratification question to index their rel-ative superiority. Similarly, one can compute shares of the various media for a sin-gle advertising microdimension such as national advertising. One such analysis ispresented in chapter 3.

Questions concerning competition and niche differentiation can be assessed atthe four different levels. It is important to emphasize that analyses at the differentlevels of the niche may yield answers to different questions and, as such, enrich anddeepen understanding of niche relationships. For example, as is apparent in chapter3, displacement may be evident at one level and not apparent at other levels of nicheanalysis.

The Nich e and Media Competitio n

Based on the concepts defined earlier in this chapter, it is now possible to give a suc-cinct account of the role of the theory of the niche in conceptualizing and measuringcompetition between media industries.

Industries are populations of organizations, and competition is defined as theextent of ecological similarity between industries or firms. Competition may occuralong several resource dimensions. These resources are limited.

At an abstract level, the niche of an industry is its position in the spacedefined by the resource dimensions. Niche-breadth is the distance through aniche along a resource axis. Competition is measured operationally by the over-lap between the industries' niches on a particular dimension. The theory of theniche implies that successful coexistence of competitors requires a difference inniche or limiting similarity.

In this resource-limited environment already populated by media industries,new media enter and compete with their predecessors. If overlap between the newindustry and the older forms is high, then there are three possibilities. First,resources may increase to enable coexistence of more media forms. Second, the

42 CHAPTER 2

competitively superior population may appropriate all or part of other populations'niches. Partial appropriation is termed displacement and is measured by a narrow-ing of the outcompeted population's niche. Third, the competitively superior formmay appropriate all of a competitor's niche. This is termed competitive exclusionand appears to be rare among communication industries. In the case of some indus-tries such as cable, the medium's success may involve a combination of increasingresources, displacement, and niche differentiation.

Competitio n fo r Advertisin g

This chapter concerns the patterns of competition and coexistence that haveoccurred since the early in the 20th century, on the advertising macrodimension andits attendant microdimensions. In the case of advertising, quantitative data existfrom the early 20th century to the present. This affords the opportunity of construct-ing a chronological historical narrative to provide an overview of the successiverounds of competition as new media arise to compete for advertising dollars andultimately coexist with older media.

Newspaper s and Advertisin g Agencie s

In the beginning there was only the newspaper, and the medium had no competitionfrom other industries. As trade grew in the mercantile communities along theAtlantic seaboard in colonial America in the period before the revolution, mer-chants discovered that simply placing a notice in the newspaper announcing thatgoods were available for purchase resulted in increased sales (Emery, 1962). Theimportance of advertising in the colonial press, as Emery (1962) noted, was indi-cated by the fact that the word "advertiser" often appeared at the papers' mastheads.

The earliest newspapers however, were rudimentary in content, being mere"newsletters" (such as the Boston Newsletter), which printed or reprinted corre-spondence. These were superseded, according to Park (1923), at the beginningof the 18th century by the journal of opinion, often economically supported bypolitical parties. This political press was, in niche terms, differentiated by con-tent and sources of economic support and as a result, competition among papersmust have been rather weak. The rise of the information press was probablystrongly related to its support by advertisers' dollars. Using a game theorymodel, Gabszewicz, Laussel, and Sonnac (2000) showed that editors are likely

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44 CHAPTER 3

to eschew strong political views in their papers to attract advertisers. Thus, pur-suit of advertising as a major source of economic support with its corollary of"objectivity" was likely to have the effect of reducing niche differences whichhad obtained among the politically supported papers and, by enhancing newspa-per similarity in content and source of economic support, placed them in a posi-tion of stronger overlap in content and economic dependence and hence, instronger competition.

As advertising grew to be a major source of newspapers' revenue, most advertis-ing was for local goods and services produced in the communities served by thepapers. According to Beniger (1986), until the 1870s, only such goods as books andpatent medicines were advertised nationally. These were the slender beginnings inthe growth of the national advertising microdimension that would grow to be ofmajor importance in the niches of several media.

Placing ads in newspapers to achieve national or regional circulation would havebeen difficul t and cumbersome for early advertisers and would have entailed rela-tively high transaction costs. (Transaction costs are expenses incurred in negotiat-ing and enforcing agreements or contracts over and above the price of the product orservice.) Because advertisers were forced to place ads in newspapers one at a time,the transaction costs would have been quite high. It would appear that one majorreason for the founding of the advertising agency as an economic institution was tosolve the problem of transaction costs associated with national and regional adver-tising in newspapers.

Although Beniger (1986) dated the founding of the first advertising agency to1841, Presbrey (1929) said that the first agency began in 1865 when George Rowelland his partner, Horace Dodd, opened shop in Boston. Their plan was to buy spacein newspapers on a yearly contract and then retail it to advertisers. Presbrey (1929,p. 266) described their innovative financial arrangements as follows:

Rowell and Dodd made up a list of one hundred papers. A few of the papers held moreor less strictly to their "publisher's rate," but by diligent correspondence the otherswere induced to cut quite radically on a promise of continued patronage. There weresome who were obdurate. To these the young advertising agents paid 75 per cent, ofthe card rate, less 3 per cent, discount for cash in thirty days. Most of the papers, how-ever, got something like 25 per cent. Rowell and Dodd keeping the remainder. Thecash discount in addition to the commission was a Rowell idea which the papersreadily accepted and which later became common practice.

Why would advertisers and newspapers concede to the agencies such asRowell and Dodd's organization this role of space broker? The answer seems tolie in the transaction costs associated with regional or national advertising. Aslong as advertising remained local the problem of transaction costs was mini-mal. However, when the necessity of advertising in a larger geographic marketemerges and it becomes necessary to buy ads in many papers, the transactioncosts become considerable. Although the agency commission is a transactioncost, the cost of the commission was surely less to the advertisers than the costs

COMPETITION FOR ADVERTISING

of forging agreements with a great many newspapers. Thus, the market with itshigh transaction costs was supplanted by contracting organizations, the adagencies. According to Presbrey (1929), Rowell's first "list" consisted of NewEngland papers and Presbery also noted that it is patent medicines (one of thefirst nationally distributed products) that was the mainstay. Later the "list" sys-tem was applied to other regions and states by Rowell and Dodd and their imita-tors. The modern full-service agency has, of course, moved well beyond thisearly role as space broker. However, the agencies still perform a necessary rolein mitigating transaction costs. Consider, for example, the plight of the TV net-works who, if ad agencies did not exist, would have to contract individuallywith several hundred TV stations.

The Substitutabilit y of Media in Advertisin g

Eventually, the hegemony of the newspaper as the only purveyor of mass advertis-ing would come to an end. In economic terms, the question is whether the newermedia—magazines, radio, TV, and cable—would be viewed as viable alternativesor substitutes by advertisers and their agencies. Picard's (1989) assessment was thatthere is indeed substitutability in the market for advertising.

Evidence of substitutability may also be drawn from a natural experiment whichtook place during World War II. During the war years of the 1940s, newsprint, likemany other products, was in short supply due to rationing (J. McKerns, personalcommunication, July 12, 2001). Figure 3.1 shows the shares of all advertising fornewspapers, radio and magazines before, during, and after WWII. The graph showsa pronounced dip in newspapers' share during the war years. Simultaneously, thereis a corresponding upward rise in the shares for magazines and radio. Apparently,the effect of newsprint rationing on newspapers' share was negative during the timethat the alternative advertising media show a corresponding increase in share dur-ing WWII, thus demonstrating substitutability.

A more contemporary example is provided by a study by Reid and King (2000),where advertising managers were surveyed concerning their perceptions of mediainterchangeability for national advertising. These authors found, contrary to theirhypothesis, that advertising managers viewed the media as substitutes. One majorimplication of media substitutability is that it endows ad agencies with some abilityto control prices. For example, one ad executive (Priemer, 1967, pp. 26-27) made itclear that the existence of substitutes kept the price of TV availabilities withinbounds. "We manipulate buying pressure, presumably by knowing alternativemedia paths at times when prices go beyond the realistic horizon, and in this way weaffect price loads."

Although quantitative data on advertising for the period do not exist, accord-ing to Emery (1962), magazines enjoyed a burst of circulation growth in the1890s which made them a competitor for advertising revenue. As Emery (1962,p. 401) noted, "Newspapermen grumbled in the late 1890s that the magazineswere getting too much of the new products of American business." At the same

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46 CHAPTER 3

FIG. 3.1. Advertising shares for three media.

time, the agencies acquired perhaps their most important role in media competi-tion—selecting the medium in which the advertising is placed (Presbery, 1929).Hence, the advertising agency became a key economic institution in controllinga major resource macrodimension along which media industries compete anddefine their niches.

The Rise of Radio

When radio emerged in the United States in the early 20th century, it entered a soci-ety that was exuberantly affluent, the "Roaring Twenties." The sale of radio sets andthe founding of broadcasting stations presaged a new and vigorous industry. How-ever, radio was new and everything had to be invented; there were no models or pre-cedents to guide its development. As a nascent industry (see chap. 1), radio was thefocal point of the visions of engineers, entrepreneurs, legislators, educators, and

COMPETITION FOR ADVERTISING 47

government officials. Out of their inventions—technical, organizational, and eco-nomic—a new industry would be created.

The first radio networks were founded in the late 1920s, and the first attempts togauge the size of radio's audience were launched roughly the same time (see Buzzard,1990). Coincident with the foundings of the radio networks national advertisers werebeginning to move into network radio. However, network radio was expensive. Martin(1932) estimated the yearly cost for a network evening program at between $257,400 to$295,200 in Depression-era currency. These costs include network time costs and tal-ent costs but do not encompass the additional costs of program promotion.

However, despite its high costs, economies of scale due to the very large networkaudiences made radio a very cost-effective medium for national advertisers. Wolfe(1949) quoted National Association of Broadcasters estimates that stated ahalf-hour evening network program had a cost-per-thousand households of $5.30.The comparable cost for newspapers was $8.28, whereas a full-page advertisementin national magazines cost about $8.75 per thousand households.

Radio's major competitors, of course, were newspapers and magazines thatrelied on the printed word along with illustrations for their persuasive impact.Harvard University conducted a series of apparently unpublished studies in themiddle 1930s comparing the efficacy of print and auditory presentation thatwere summarized by Midgley (1948). These studies found that recall of variousforms of information, particularly advertising trade names, was better for thespoken word than the printed word. Midgley (1948, p. 27) wrote that the com-petitive superiority of radio as an advertising medium lay in the power of thehuman voice.

Radio offers certain techniques not available in any other medium for "steppingup" the sales message; and the most outstanding one is the use of the human voice,with its impact, inflections, conviction and warmth. There are numerous ways ofusing the human voice to achieve effective selling. Some of the most successful ofthese have been:

1. Flesh and blood dramatizations which make an indelible impression on the listen-ing audience.

2. Authoritative statements made in person by the quoted authority directly into themicrophone.

3. Testimonials delivered directly by persons who have used the product.

4. The sales message delivered by the star, with all the impact of his personality.

Today, radio as well as TV advertising falls into three categories: national or net-work, local, and spot or national spot. For national advertisers, the radio networksof the 1920s, 1930s, and 1940s routinely delivered large national audiences thatsimultaneously heard advertising messages. In addition, radio advertising becameimportant to local businesses in markets around the country. However, for regionaladvertisers or other businesses whose products were not suitable for national net-

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works, there was no alternative to traveling from local market to local market buy-ing ads that would attain the required coverage. As Buzzard (1990, p. 7) wrote,"...someone had to get on a train and physically canvass the territory to place the ads."This problem—transaction costs due to the time and money required for travel—issimilar to the problem posed by national advertising in newspapers prior to the useof advertising agencies. The solution to the problem was once again the founding ofan organizational form, the "station rep" firm that sells the local station's commer-cial availabilities at the national level to advertisers who desire more geographiccoverage than a local station can provide but for whom a network buy would beinefficient. As is pointed out in a later chapter, the use of the "spot" microdimensionby radio and then TV provides niche separation from other media industries.

What impact did radio have on its competitors, the print media? Data on all threeforms of advertising—spot, local, and national—are not available for the period ofearly radio. However, data reported by Lazarsfeld (1940) are available from the late1920s through the 1930s on the national advertising microdimension and are usedto assess radio's effects on print advertising. Because only one microdimension—national advertising—is available, the niche metrics of breadth, overlap and superi-ority, presented later in this chapter, could not be calculated. Instead, using the rawdollars in Lazarsfeld (1940, Table 50, p. 273), each medium's share of nationaladvertising was calculated for the years 1928 through 1939.

The graph (not shown) of these shares over the period showed newspapersdeclining, radio's share increasing, and the shares of the other media as relativelyflat. Hence, the preliminary indication is that radio has displaced newspapers.

To test this hypothesis, a form of time series regression was performed. In thisanalysis, the question is not whether there is some dependence among the shares.Rather, the question in this analysis and the analyses of shares presented in this andsubsequent chapters, is whether the pattern of relations among the shares can beinterpreted as displacement of an older by a newer medium. Shares are the appro-priate measures of displacement as they are direct reflections of the competitiveabilities of media industries.

One caveat however, that is important concerns the regression analyses per-formed in this chapter and in later chapters. The number of years for which dataexist for assessing displacement do not constitute a sufficiently large number ofcases to detect anything other than large effect sizes (see Green, 1991). Medium andsmall effect sizes cannot be detected with the number of cases that exist and thereader should be aware of this limitation.

Regression analysis, of course, requires the researcher to satisfy a number ofassumptions. If assumptions are violated, as is almost always the case, the results ofthe regression may be misleading. When assumptions are violated, the usual rec-ommendation is to transform the variables. However, this practice results in diffi -culties in interpretation. It would be useful in such cases to be able to employ anonparametric statistic which does not require such stringent assumptions. Hence,all the regression analyses were duplicated using Kendall's partial tau (see Gib-bons, 1993, for the formula of the partial tau) correlation to account for the effect of


the mediums' shares other than those involved in the displacement. While the tausand the partial taus are affected by serial correlation, the magnitudes are so strongthat it is unlikely that they are entirely the product of the positive serial correlationpresent in the data. In all cases where maximum likelihood regression is reported inthis book, parallel analyses using Kendall's partial tau corroborate the substantiveconclusions drawn from the regression analyses.

In addition, in the analysis of the impact of radio as well as subsequent analy-ses involving advertising shares, only media which purvey content wereincluded in the analyses. Direct mail and outdoor advertising were omitted fromthe analyses because they do not purvey content in addition to advertising mes-sages. This is consistent with the portrayal of the niche dimensions in Fig. 2.1, inwhich gratifications obtained from media content are related to time spentwhich in turn, is related to advertising allocations. However, the shares of thecommunication media such as TV or cable were computed using all advertisingdollars as the denominator so that the values of the independent and dependentvariables in the regression analyses do not sum to one. Furthermore, becausepreliminary analysis indicated multicolinearity among some of the shares, asingle variable representing the shares of the other media besides the independ-ent variable (the new medium) and the dependent variable (the older medium)were computed and entered as another independent variable in the analyses,thus serving as a potential alternative explanation or control variable. Finally,preliminary analyses of the share data revealed that positive serial correlationwas present in all the analyses of advertising shares. Hence, time series regres-sion utilizing the exact maximum likelihood method was used to remove theautocorrelation.

In the case of the radio data, the maximum likelihood regression yielded a signif-icant effect of radio on newspapers' share of advertising for the 1928-1939 period(B = -.716, t = 4.55, p = -.0019) while the effect of the combined share of the othermedia was not significant.

The available evidence then, appears to indicate displacement of newspapers byradio. The statistically significant negative association between the shares ofnational advertising of the two mediums would appear to be a rather clear indica-tion of displacement on the national advertising microdimension.

According to Buzzard (1990), network radio had three advantages over othermedia. First, through the practice of sole sponsorship (one advertiser sponsored anentire program), the advertiser could create sponsor identification in which listen-ers favorably identified the program with the sponsoring product or company. Sec-ond, radio's ability to deliver large audiences on a national level was congruent withthe marketing objectives of large manufacturers who produced national brands ofsuch undifferentiated products such as soap and toothpaste. Third, the family orhousehold was viewed by these advertisers as the unit that purchased these undif-ferentiated products and the nuclear family or household that gathered nightlyaround the radio set matched the unit presumed to purchase and consume theseproducts. As Midgley (1948, p. 29) phrased the prevailing belief,

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When entire families listen to radio programs together, millions of conversations arestarted by the program, which go on and on until the product advertised is purchased.Radio gets the advertiser to the entire purchasing-board of the family at one time.

Given these advantages along with those isolated by the Harvard studies and therole the national advertisers played in creating and programming network radio, itis hardly surprising that radio was able to displace newspapers from a portion of itsniche on the national advertising microdimension.

Radio' s Displacemen t by Televisio n

Although TV made its debut at the 1939 World's Fair, its development was delayedby the cataclysm of World War II. Unlike radio, for which there were no models orprecedents, there was a model for TV and that model was radio. The industry struc-ture, economics and regulatory apparatus were simply extrapolated from the olderelectronic medium to the new industry. In the 1950s when TV began to diffuse, itwas instantly and massively popular in the large urban areas where the first stationsappeared. The effects of the new medium on the older forms of entertainment andinformation were immediately apparent. Baraouw (1970, p. 5) wrote, "Citieswhere television was in operation were experiencing a local chain explosion. Assets entered homes, theater attendance, night-club revenue, and taxi receiptsdropped. So did radio listening." As more stations were built and as television wasadopted nationally by consumers, the effects noted in the large cities would becomenational trends (see Bogart, 1972).

In this section, I assess the effect of television on radio on the advertisingresource dimension. The source for the raw data is McCann-Erickson's figures onthe advertising revenues for the media.

The first step in the analysis was to compute measures of niche-breadth, nicheoverlap and competitive superiority for radio and television. The breadth and over-lap formulas are drawn from Levins (1968). Recall from chapter 2 thatniche-breadth refers to the range of resources used by a population or industry.Operationally, it is measured as the proportional utilization of resources acrossresource types. The measure (B) is defined as follows:

In research presented later in this chapter, p.i represents the proportion of a givenpopulation's (TV or radio or cable) revenue derived from a particular micro-dimension (national, local, or spot). The measure B ranges from a low of one whenonly one resource microdimension is utilized to an upper limit equal to the numberof resource microdimensions used by the population. B approaches its maximumwhen resource utilization is distributed rectangularly or evenly across resource cat-


egories. Industries with low breadth measures are specialists and those with highbreadth measures are generalists.

Whereas breadth relates populations to their environment, overlap measures therelation between two populations in terms of the similarity of their resource utiliza-tion patterns. Niche overlap measures the degree of ecological similarity or differ-ence. Populations with highly similar ecologies or resource utilization patternsoverlap strongly, although those that are dissimilar in resource utilization displayless ecological similarity and as a result, lower overlap. If the resources are notsuperabundant, overlap may be construed as an indication of the likelihood of com-petition between two populations. The overlap between two populations i and j isgiven by the geometric distance shown as follows:

The term di,j denotes the distance between populations i and j, pi is the propor-tion of population i's resource use in a microdimension, and h represents theresource microdimensions used by the populations. To compute the overlap oftelevision and radio, pi represents the proportion of all of TV's advertising reve-nue for a given year obtained from each h (national, spot, and local) whereas P.represents the same data for radio. Calculated in this way, overlap is a measurein which high overlap is denoted by values near zero and larger values indicatelower overlap.

It should be noted at this point that some readers of the earlier niche studiessuch as Dimmick and Rothenbuhler (1984a, 1984b) expressed discomfort withthe overlap measure because of what they view as its "inverse" nature wherehigh overlap is denoted by low values. Conversion of the measure to one inwhich high values denote high overlap would be mathematically simple andstraightforward. However, I believe the measure in its original form is appropri-ate given the spatial conceptualization of the niche and niche overlap. Whenoverlap values are high this denotes that the niches of two ecological units arenot occupying the same resource space, that there is some distance between theniches. Alternatively, an overlap near zero indicates that the two niches are atnearly identical positions in the resource space, and use the same combinationof resources in nearly the same proportions. Such "crowding" of the two units inthe resource space usually is indicative of strong competition and the theory ofthe niche states that such a condition cannot persist for very long. Therefore, theniche overlap measure has been retained in its original form because its meaningis consistent with both the construct it is measuring and with the over-archingtheory. Once the theoretical meaning of the niche overlap construct is clearlyunderstood, it is readily apparent that the niche overlap formula is not, in fact, an"inverse" measure but one which is consistent with both the construct it isdesigned to measure as well as the broader theory.

51

52 CHAPTER 3

To determine which population is the superior competitor, Schoener (1974) pro-posed a measure he called "alpha" for use in ecological field studies. Unlike theoverlap measure, a symmetric measure of competition, alpha is an asymmetricmeasure of competition. This asymmetry differentiates this measure from the ear-lier overlap measure and allows the researcher to draw conclusions about whichpopulation in a pairwise comparison is the superior competitor. An analysis ofalpha over time yields insight into changes in this superiority and therefore the pos-sibility of competitive displacement or exclusion. Although Schoener's notation ispreserved for the metric "alpha," it should be pointed out that the measure is notequivalent to the alpha-parameters of the Lotka-Volterra equations that denote theeffect of one population on the size of a competing population. In strict terms, thealpha parameters of these equations can be measured only by some means such asremoval experiments (Hairston, 1980) and not by availability or resource use ofdata alone. Rather, Schoener's metric is interpreted as a measure of the competitivesuperiority of one population over another.

The formula for alphaj (read as the competitive superiority over population i ofpopulation j) is shown next. The complementary formula alpha t follows straight-forwardly from the equation.

Where:

T./Tj = The ratio of the number of resource items consumed by an individual of popu-lation j to that consumed by an individual of population i computed for each popula-tion by dividing the total resources utilized by the population size.

d; k and d( k = The frequency of utilization of resource k by populations i and j, where kequals a resource microdimension such as network or local.

/k = The frequency of resource k in the environment, or the total amount of advertisinggained in a particular resource microdimension by all mediums using this resource.

Schoener's alpha differed in two respects from the measures of breadth andoverlap equations. First, the metric takes into account, in the left hand term, the rela-tive sizes of the populations and the total amount of resources each population con-sumes. Second, the numerator and the denominator of the right-hand term utilizethe amount of a resource consumed by the population in relation to the total amountof the resource that is available. Schoener gave the following rationale for theright-hand term of the equation. The more similar the resource utilization of twopopulations, the more intense the competition. To the extent that resources are


abundant, they do not contribute much to the intensity of the competition. Thenumerator of this right-hand term is much like earlier asymmetric overlaps or"alphas" such as that formulated by Levins (1968), whereas the denominator mightbe interpreted as the populations' (squared) market share in each of the resourcemicrodimensions in which it competes.

Table 3.1 shows the values of the three-niche metrics from 1949 through 1980.In addition, to establish a baseline for comparison, radio's niche-breadth values areshown beginning in 1935.

Radio's niche-breadth increases throughout the 1930s and 1940s. In 1935 it was2.35 and by 1948 it had increased to 2.82, close to its maximum value. Underlyingthe changes in breadth is a decrease in the medium's dependence on national or net-work advertising (55% of its total in 1935) and an increase in the proportions of its

Table 3.1

Measures of Niche Breadth, Overlap, and Superiority for TV and Cable

Breadth Overlap Superiority

TV Cable TV over Cable Cable over TV

1980 2.82 1.34 .25 108,176 5.3E-06

1985 2.93 1.42 .27 2201.77 .00025

1990 3.19 1.58 .24 172.7 .005

1995 3.32 1.74 .196 192.3 .005

1998 3.37 1.72 .207 118.84 .006

53

54 CHAPTER 3

advertising revenues from spot and local. In 1948, prior to the advent of televisionas a national medium, radio's niche was a broad one and this factor played animportant role in its adaptation to the impact of television.

In 1949, the first year for which data are available for television, Table 3.2 showsan extremely high overlap (.036) between radio and television. The table alsoshows that TV's niche-breadth value is rather large in 1949, although not as large asthe value for radio. At this point, TV was not yet a truly national medium either in itscoverage of the country by signals from existing stations or in the diffusion ofreceiving sets. However, it is striking that even at this early period, about half itsadvertising revenues are from national or network advertising, far exceeding its rev-enues from local advertising. The superiority measures show radio superior to TVin 1949, but one year later in 1950, TV has become superior to radio and this superi-ority continues to increase through 1980.

What would account for this early superiority of TV while still in its infancy? Theanswer seems to be that the same class of national advertisers who had played an impor-tant role in early network radio perceived that TV was the superior advertising medium.These decisions were apparently reached during the period of the "freeze" between 1948and 1952 when the Federal Communications Commission had suspended the process ofgranting licenses for new TV stations. By the end of the freeze, a little over one-third ofU.S. households would have TV sets (Sterling & Kittross, 1978) and TV would notbecome universal in diffusion until about 1960. Despite the paucity of TV equippedhouseholds and stations to serve them, it appears that manufacturers of nationally distrib-uted mass consumer products, the mainstay of network radio, became major advertisersin early television. In 1956, about 60% of TV network revenues were concentrated in fourcategories—food, toiletries, soaps, and automobiles (Bogart, 1972, Table 73, p. 195).This emphasis on mass produced consumer products is also reflected in the list of the topten companies advertising on network television in 1956. Among the top ten are the threeauto companies (Ford, GM, and Chrysler) as well as Lever Brothers, Procter and Gam-ble, Colgate-Palmolive, General Foods Corporation, and American Home Products. Thegiants of mass consumption bet early and heavily on the success of television.

Clearly, the producers of the products of mass consumption were behaving asif TV were the superior medium to radio very early in television history. Thisraises the question, why was TV considered superior? One reason TV was con-sidered superior was the existence of research evidence showing very early onthat TV was a more effective advertising medium than radio. This research, con-ducted by Thomas Coffin of Hofstra College, was reported not only in an aca-demic journal (Coffin, 1948) but was prominently featured in the trade presssuch as Broadcasting, Telecasting (Telestatus, 1948). Coffin's study found thatTV was having a strong impact on other leisure activities, notably radio listen-ing. In a paragraph that was probably salient to advertisers, the trade magazinearticle reported that 91 % of respondents in a May survey preferred video com-mercials to radio commercials, whereas in a survey five months later none of therespondents preferred radio spots to their video counterparts. Such dramaticevidence was probably not lost on advertisers.


The answer to the question of TV's competitive advantage also probably lies inTV's visual nature and the possibilities it held for advertising. TV could actuallyshow the product as it appeared on the store shelf or in the showroom and radio couldnot. TV could even demonstrate the product while the best radio could do was to singits praises. Television could show the box of Tide® and even, in shades of gray andwhite, display its effectiveness over "ordinary" detergent. The now-classic form ofthe 1955 Chevrolet could be introduced to the family as they sat in the living roomaround the TV set, and Dad and Mom could vicariously experience driving the car asit sped down the highway in the commercials. The best radio could do would be todramatize the verbal excitement generated by the new model automobiles.

The theory of the niche (see chap. 2) states that if high overlap or ecological sim-ilarity is apparent, and if one medium is superior to the other, then displacement wil loccur if resources are not superabundant. The displacement should be apparent inthe niche-breadth of the outcompeted medium. As Table 3.2 shows, radio'sniche-breadth begins to decline almost immediately after the onset of its high over-lap value with television. In 1949, radio's niche-breadth is 2.8 but the values declineto 1.66 by 1980. Behind the changes in breadth are profound changes at the micro-dimensional level. In 1949, more than one-third of radio's advertising revenueswere from network, but by 1980 this had declined to less than 5%. Concomitantly,local advertising increases in the 1949 through 1980 period from approximately43% to nearly 75%.

The story of the radio industry's adaptation is well known (see Sterling &Kittross, 1978). Network radio dwindled to a news service and the local stationsadopted formats based on recorded music. Today, radio is a specialist on the adver-tising resource dimension drawing most of its sustenance from advertisers in thelocal markets. It is television that has replaced radio as the generalist orbroad-niched medium. However, it was radio's broad niche developed in its earlyhistory that allowed its contemporary survival. When it was outcompeted for net-work advertising, it could compensate by utilizing other microdimensions moreintensively. Contrast radio's adaptation with a specialist industry—the movies—which were also affected adversely by television. Because movies were a specialiston the consumer spending dimension, because their only source of revenues werebox office receipts, the movie industry had "nowhere to move" in the resourcespace when outcompeted by television and, as a result, their revenues dropped pre-cipitously. As the theory of the niche implies, the generalist population or industryis better equipped by its broad niche to weather an adversely changing environmentthan the specialist.

The Impac t of TV on Magazine s

It is widely believed in the field of mass communication and the subfield of mediaeconomics that the mass circulation general interest magazines such as Life, Look,and the Saturday Evening Post owed their demise in the 1970s to competition fromTV for advertising dollars. This belief is reflected in introductory mass communi-

55

TABLE 3.2

Measures of Niche Breadth, Overlap, and Superiorityfor Radio and Television

BREADTH OVERLAP SUPERIORITY

Year Television Radio Radio TV TV Radio

1935

1936

1937

1938

1939

1940

1941

1942

1943

1944

1945

1946

1947

1948

1949

1950

1951

1952

1953

1954

1955

1956

2.359

2.198

2.478

2.528

2.513

2.548

2.652

2.674

2.662

2.699

2.735

2.790

2.808

2.820

2.534 2.803

2.604 2.789

2.497 2.731

2.415 2.605

2.563 2.551

2.579 2.457

2.563 2.256

2.587 2.160

.036

.049

.115

.176

.178

.210

.283

.329

.404 2.426

1.896 .518

7.646 .127

13.417 .071

22.832 .042

19.038 .050

26.303 .035

29.586 .031

26.025 .03556

i j i j


Year Television Radioi 1

Radio TV

L j-

TV Radio

1957

1958

1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1980

2.557

2.539

2.604

2.614

2.598

2.533

2.548

2.574

2.582

2.587

2.556

2.657

2.669

2.679

2.821

2.203

2.168

2.072

2.049

2.045

2.026

2.046

2.022

1.993

1.993

2.001

1.958

1.904

1.860

1.660

.332

.357

.374

.380

.387

.419

.407

.403

.414

.411

.420

.394

.411

.422

.406

30.413

36.617

36.896

40.154

52.880

57.083

66.755

72.472

74.964

72.867

69.973

78.055

62.333

49.947

89.781

.030

.024

.024

.022

.016

.015

.012

.011

.011

.011

.011

.010

.013

.016

.008

cation texts such as those by Becker and Roberts (1992), De Fleur and Dennis(1994), and Folkerts and Lacy (2001). More advanced works such as Bogart (1995)also seem to accept the competition hypothesis. However, this hypothesis appearsnot to have been actually tested.

In contrast to the field's belief in the competition hypothesis, work in admin-istrative science has offered an alternative hypothesis. Hall (1976), on the basisof an extensive case analysis of the Saturday Evening Post, argued that the masscirculation magazines succumbed not to competition, but on the contrary, werethe victims of their own internal financial and management dynamics. A morecomplex analysis by van Zuilen (1977) pointed to a number of factors involvedin the mortality of the mass circulation magazines. Van Zuilen attributed mass

58 CHAPTER 3

circulation magazine mortality to external factors such as postal rate increasesand to internal factors like financial management problems and editorial weak-nesses. His analysis appears to view competition from TV for advertising as oneof many problems faced by magazines such as Life. Van Zuilen's (1977, Table3.11) showed a decline in magazines' share of total advertising from1946-1956 and a concomitant increase in TV's share. However, Van Zuilen didnot explicitly test the competition hypothesis.

To test the competition hypothesis the advertising shares of magazines andnewspapers were analyzed for the period 1949 through 1976, the era in whichthe competition would have occurred. Although the McCann Erickson data donot record advertising revenues for the mass circulation publications separatelyfrom the other magazines, magazines such as Look and its counterparts weresuch important vehicles for national advertising that it is likely that a displace-ment effect would be measurable even in the aggregate magazine data.

The procedure for testing the association between the TV and magazineshares uses time series regression analysis employing, like the earlier shareanalyses, an alternative or control variable representing the shares of the othercommunication media was computed. However, in this case the variable wasstrongly correllated (.82) with the other independent variable—TV's share ofadvertising. Hence, the analysis was performed in two stages, or steps. In thefirst step, the variable representing the other communication media was enteredas the sole independent variable in a regression analysis with magazines' shareas the dependent variable. The residuals from this first exact maximum likeli -hood analysis were used in a second analysis with TV's share as the independentvariable again, using the exact maximum likelihood method. The analysisshowed that TV and magazine shares are negatively related (B = -.027, p < .004)indicating some displacement of magazines by television. A regression analysisanalyzing TV and magazine shares from 1976 to the present shows no statisti-cally significant association, positive or negative.

Hence, there is evidence in the share data for the field's long-standing belief thatcompetition between magazines and TV led to a displacement effect. It should benoted that these findings do not refute Hall's (1976) hypothesis that the demise ofLife, Look, and the Saturday Evening Post was due to their own internal financialdynamics or van Zuilen's (1977) analysis that the magazines died of a number ofexternal and internal problems. However, the findings presented in the precedingparagraphs are consistent with a displacement effect of TV on magazines, indicat-ing that competition was also an important factor in the deaths of the mass circula-tion magazines. The lack of a negative relation between newspaper and magazineshares after 1976 is also consistent with an observation made by several research-ers, including van Zuilen (1977), that these magazines that have flourished after thedemise of the generalist publications were specialist magazines which are visibletoday on any newsstand. The specialist magazines which survived and thrived inthe post-TV era are differentiated from the electronic medium in content and audi-ences, and as a result, no longer compete strongly with TV.


The Adven t of Cable

On the first day of August, 1981, Warner Communications premiered its stereorock-music channel, Music Television (MTV). Significantly, the inaugural videowas titled "Video Killed the Radio Star" by a group called the Buggies. The lyrics ofthis first MTV video, although couched in the past tense, represented the Buggies'(and presumably MTV's) vision of the future impact of video music. Following isan excerpt:

Video killed the radio star

Video killed the radio star

We can't rewind we've gone too far

Put the blame on VTR.

(Buggles/The Age of Plastic/Island Records)

It seems appropriate that the opening chords of the new satellite-deliveredcable channel sounded themes of competition and obsolescence because MTVrepresented the new medium of cable television, which some observers confi-dently expected would replace some of the older forms of communication. In fact,video did not kil l the radio star. MTV, along with its sister network VH-1 became,like radio, a form of promotion for the recording industry, and cable has not yetreplaced broadcast TV.

Cable television began unobtrusively enough during the freeze on TV stationlicenses as a way to bring TV signals to towns without stations. It survived afterthe freeze was lifted as a means of disseminating TV signals in towns located inmountainous or hilly terrain. In the late 1970s and early 1980s however, cablechannels began to be distributed by satellite and the first truly national serviceswere born—HBO, MTV, ESPN, C-SPAN, and Nickelodeon as well as theWeather Channel and the Disney Channel (Barnouw, 1990). With the inception ofthe satellite-delivered channels, cable gained a national audience and nationaladvertising. In addition, cable systems sell availabilities in the national channelsin their local communities.

A study by Dimmick, Patterson, and Albarran (1992) found that cable did notcompete strongly with the broadcast media although its most likely competitor wasbroadcast television. This latter assertion seems justified on the basis that cable andthe VCR have displaced TV on the time-spent dimension. During the 1980s and1990s, the TV shares of audience have dropped but cable's have risen (Carroll &Howard, 1998). The niche metrics for cable and broadcast television for the yearsbetween 1980 and 1998 are shown in five-year intervals.

TV's niche-breadth is quite high in 1980, and by 1985, it is near its maximumof three indicating that it is utilizing nearly equal proportions of its revenuesfrom national or network, local and spot. By 1990, TV had acquired a new

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60 CHAPTER 3

advertising microdimension—syndication—that places its new upper limi t atfour. Cable's breadth in 1980 reflects its dependence on national advertisingwhile the increase in breadth in succeeding years reflects its success in garner-ing more local advertising. The overlap measures, while showing a slightincrease after 1985, do not indicate strong competition. It is the superiority mea-sures however, that show the most dramatic changes. Cable's superiority overTV in 1980 is so small it must be expressed in scientific notation. Whereas TV isstill superior to cable in 1998, the discrepancy in the pairs of superiority mea-sures for each year has markedly narrowed. Although the data indicate no dis-placement at the between-microdimension level, analysis at themacrodimensional level was also performed to ascertain whether displacementhad occurred at this level of analysis.

Examination of a graph of TV and cable's advertising shares from 1982 to thepresent appears to show a small displacement. TV's share drops almost exactlyfour percentage points and cable's share increases by almost exactly the sameimpression. Once again, exact maximum likelihood regression was employed toascertain whether this graphical impression could be corroborated. The resultsseem to confirm the visual impression. The impact of cable on TV's share is nega-tive (B = -.555) and statistically significant (t = -2.76, p = .016), although therewas no statistically significant effect of the variable representing the shares of theother media. Whereas the displacement effect of cable on TV is clearly evident, itis also less severe than for example, the effect of radio on newspapers. The ques-tion that might well be raised is why cable's impact is so small compared to that ofTV's impact on radio.

There are two reasons why cable's displacement of TV was rather small. First,as the theory of the niche states (see chap. 2), if resources are increased the addi-tional resources cushion existing media from competition by an invader. Twostudies (Demers, 1994, and Glascock, 1993) found that contrary to McCombs'(1972) constancy hypothesis, advertising expenditures actually increased overtime. Demers' study covered the time period 1850 through 1990, whenGlascock's study spanned the years 1978 through 1990. The pertinent questionhere is whether advertising revenues for all the media were higher in the cableperiod than in previous decades.

To answer this question, the percentage which advertising represents of theGross Domestic Product were examined in two time periods, 1949 to 1978 and1979 to 1998. The first period was dominated by television while 1979 representsthe year cable began to make inroads into broadcast TV audiences. The mean forthe TV period is 2.05 (sd = .214), and the mean for the cable era was 2.19 (sd =.144). Whereas the difference between these means is small, even a small percent-age of the GDP is economically significant. A t-test shows that the two means aresignificantly different (t = 2.57, df = 48, p = .013) indicating a greater share of theGDP was expended on advertising in the cable era.

Although an increase in advertising resources may have cushioned competitionbetween cable and older media such as television, it is not the only reason for the


small negative impact on television by cable. The second reason is that the majorityof firms or channels in the cable industry are following a strategy that differentiatesthem from their potential competitors and this strategy has consequences for adver-tising revenues. This difference in strategy is most clearly seen in an analysis of theniche microdimensions and macrodimensions.

The Advertisin g Guild : Coexistenc e Amon g Specialis tand Generalist s

A guild was defined in Chapter 2 as a group of populations or industries thatexist on the same resource such as advertising. Because of their use of a com-mon resource, the potential for strong competition within a guild is high. Sincethe 1930s, three industries—radio, television and cable—have invaded theguild resulting in the three cases of displacement discussed earlier. However,the theory of the niche does not explain only the dramatic events like competi-tion and displacement, it also explains the quiet lif e of coexistence. The theoryof the niche explains coexistence by the concept of ecological differentiation orniche difference. Although on the surface the members of the advertising guildmay seem ecologically similar, the theory directs us to look for the limiting sim-ilarities which enable coexistence.

In the case of TV and cable, niche differences can be isolated at three levels ofanalysis: between macrodimensions, between microdimensions, and withinmicrodimensions. As noted earlier, at the macrodimensional level there is strongcompetition between TV and cable on the time-spent dimension and, as also notedearlier, cable has displaced some of the time spent with broadcast television. It isoften the case that strong competition on one resource axis is accompanied by anabsence of competition on other resource dimensions. This seems to be the casewith cable and TV. On another macrodimension—consumer spending—cablederives revenue from subscriptions while TV does not.

Of course, both mediums use advertising resources, and it is on thismacrodimension that one would expect coexisting mediums to have evolved differ-ences in niche. At the between-microdimension level, cable is a relative specialistwhile TV is a relative generalist. Cable has a narrow niche and TV has a ratherbroad niche. One major reason for these niche differences lies in the number ofmicrodimensions utilized. Cable and TV share the use of two microdimensions—network or national and local—although they are differentiated by TV's use of twomicrodimensions—spot and syndication—unshared by cable. The relevance ofthese differences limits overlap between the two mediums and it is almost guaran-tees that their niche-breadths wil l be somewhat different. These factors help explainwhy the conditions for displacement were not apparent at the between- micro-dimension level in the measures of overlap and superiority.

Furthermore, there is niche differentiation at the within-microdimension level.Both TV and cable use large proportions of national or network advertising and thiscould potentially mean strong competition for this resource. As pointed out earlier,

61

62 CHAPTER 3

cable has increased its use of local advertising. In 1998, however, it was still ratherspecialized with 70.2% of its advertising revenues drawn from the national cate-gory. Despite the surface appearances of strong competition for national advertis-ing, a closer examination suggests that there are differences in competitive strategybetween cable and broadcast television that result in niche differences in their useof this microdimension.

The broadcast networks aim at attracting the widest possible mass audience.Whereas some of the national cable channels seem to follow a "broadcast" strat-egy and attempt to attract a broad audience, most seem to follow a specialist strat-egy by appealing to narrower audiences such as golfers, history buffs, food andwine aficionados, or sports fans. These differences in programming strategiesresult in differences in audience sizes, the attendant ratings, and differences indemographic profiles of the audiences. These differences in audiences are in turnreflected in the roles that cable and broadcast TV enact for national advertisers.Advertisers in network TV are buying "tonnage," or sheer audience size, andcommercials are sold on the basis of the absolute ratings. In cable, on the contrary,advertisers are usually buying the demographics, such as gender or incomegroups or the psychographic groups, that watch particular channels (Eastman &Ferguson, 1997). The importance of specialized audiences for selling cable toadvertisers was documented in a study by Waterman and Yan (1999) whichattempted to account for differences in cable and TV CPMS: "... the advantage ofattracting special interest audiences tends to outweigh the advantages of audiencesize per se with respect to advertising prices—at least for the more popular cablenetworks in our sample." Hence, it is the niche separation within a singlemicrodimension (national advertising) and niche separation between the macroand microdimensions discussed earlier which allows cable and broadcast televi-sion to coexist despite strong competition for audience time and attention. Inaddition, cable and television exhibit price differentiation; cable advertising isgenerally less costly than TV availabilities.

These considerations raise an important question at the heart of competitionfor advertising by the media—what explains advertising expenditures on themedia? To answer this question, it is necessary to study the gatekeepers of adver-tising, the advertisers and their agencies (see Fig. 2.1). Although the niche metricsand niche levels capture the industry level dynamics of competition, to answer thequestion of what explains advertising allocation to the media one must descend inlevels of analysis (see Dimmick & Coit, 1982, for a taxonomy of levels of analy-sis) to the level of the organizations which actually make these decisions.Although there is no tradition in mass communication research or media econom-ics of studying the decision-making of advertisers and their agencies, such studiesare necessary. For example, the trade press and others, such as Warner andBuchman (1991), suggested that as broadcast TV audiences have eroded, moneyformerly spent by advertisers on TV has gone to cable and cable is used as a sup-plementary medium to compensate for audience declines in network television.One could also ask whether Web advertising dollars represent "new money" allo-


cated by advertisers and agencies above and beyond the normal budgets, or if theWeb represents a substitute for other media. These questions can only be assessedby actual studies of the decision-making of advertisers who set the advertisingbudgets and media buyers in advertising agencies who allocate the dollars to eachmedium. It is these decisions that ultimately shape a medium's niche and deter-mine the outcome of media competition for advertising.

This chapter chronicles the competition for advertising from the colonial pressthrough the cable era. Currently, another new medium—the World WideWeb—has begun to compete with the existing media for advertising dollars.However, it wil l be several years before sufficient data has accumulated to allowassessment of the Web's impact. It is too early to evaluate the question of whetherthe Web wil l have a profound impact, as has TV, on the advertising niches of othermediums or if, like cable, the Web wil l evolve into a medium differentiated fromits competitors, and thus, have a smaller competitive effect on its potential rivalsfor the advertisers' dollars.

63

The Nich eand the Strategi c Group :

The Niche-Breadt h Strateg y

Few entities are more maligned in communication literature than the large mediacorporation, often under the rubric of a "conglomerate." As Demers (1999) pointedout, this criticism has two major sources. The first is predictably Marxist in origin;the second stems from present and former media professionals that view a relativelysmall number of owners of large media firms as resulting in a concentration ofpower, and in the homogenization of media content and an unwillingness toespouse controversy. However, cogent and effective criticism requires a theoreticaland empirical understanding of the communication firm and its environment. Theconcept of strategic group aids such understanding.

The Nich e and Strategi c Group s

Since the 1970s, the concept of strategic groups has evolved out of the industrialorganization economics and strategic management research literatures. A strategicgroup is a set of firms within an industry that is pursuing the same or similar strate-gies (an extended treatment of the concept of strategy wil l be given later in the chap-ter). According to Porter (1980), the strategic group concept is a level of analysisthat lies between the level of the firm and the level of the industry. To take a simple,hypothetical example, an industry manufacturing razor blades might consist of twogroups of firms. One group might specialize in high quality and more costly bladesand the other strategic group might be composed of firms operating at the lower endof price and quality dimensions.

64

4

THE NICHE AND THE STRATEGIC GROUP 65

The origin of the strategic group concept is attributed to the work of Hunt (1972)and Porter's (1980) elaboration of the concept. A growing research trend throughthe 1980s and 1990s resulted in numerous studies. Barney and Hoskisson's (1990,Table 1) survey lists 27 studies conducted up to 1987 and Reger and Huff's (1993,Table 1) reviewed 24 studies published between 1987 and 1992.

One of the most common methodological approaches to delineating strategicgroups has been to cluster-analyze financial or accounting data to define the strate-gic groups and attempt to relate group membership to measures of performance,such as profitability. Other methods include Porter's (1980) a priori method thatinvolves specifying the strategic dimensions and then locating firms along theseaxes to define the groups. This method is used to identify the firms pursuing theniche-breadth strategy later in this chapter. The use of cluster analysis has been crit-icized on ontological grounds (see Barney & Hoskisson, 1990). Because clusteranalysis always produces a set of clusters, the question then becomes whether theclusters are real entities or artifacts of method. This is not an insoluble problem astechniques for cluster validation have been developed. However, another problemwith many of the early studies is that the search for performance differences acrossgroups or clusters proved elusive and disappointing.

A newer approach to the identification of strategic groups—called the cognitiveapproach—relies on the reports of industry participants or informants (see Reger &Huff, 1993; Fiegenbaum & Thomas, 1995; Peteraf & Shanley, 1997). According toPeteraf and Shanley (1997, p. 166), "Studies of managerial cognition show thatexecutives tend to view their industries in terms of groups of firms." These authorsdeveloped a theory of strategic group identity intended to elucidate how strategicgroups evolve within an industry and how groups affect the actions of firms withinthe industry.

Although no studies of strategic groups were undertaken in the communicationindustries, Chan-Olmsted (1997) proposed such analyses. In her article,Chan-Olmsted (1997) supplied a single insightful sentence to connect the notion ofstrategic groups to the theory of the niche. She wrote, "By selecting differentniches, these strategic groups avoid any unnecessary competitive behavior andprosper together by sharing the environment."

What Chan-Olmsted suggests is a new level of analysis for research on theniche. First, as outlined in chapter 1, no individual firm is probably ever identi-cal to any other firm in an industry although they share many important similari-ties. In chapter 2, it was pointed out that McKelvey and Aldrich (1983) oncecharacterized the two major approaches to the study of organizations as "allorganizations are alike" and "all organizations are different." The strategicgroup construct focuses on both firms' similarities and differences, reconcilingthese two polar approaches. Therefore, the strategic group concept, in allowingfor likeness or similarity within groups and differences between groups, holdsthe potential for capturing some essential features of an industry important tothe study of competition and coexistence.

66 CHAPTER 4

The microlevel niche resides at the level of the firm. Whereas the most macro-scopic niche level is conceptualized at the level of the industry. Between thesemicroscopic and macroscopic levels the concept of strategic group provides animportant bridging construct as a way to conceptualize variation within an industryat a level higher than that of the individual firm. The potential of the strategic groupconcept can be illustrated using an example familiar from earlier chapters of thisvolume, the newspaper industry.

First, it should be made clear that the "common sense" (McKelvey &Aldrich, 1983) classification of newspapers as a single distinct industry is prob-ably an accurate one. Al l newspapers are recognizable as being members of asame population. They all rely on the same resource categories; advertising orsubscription sales or a combination of both resources. Furthermore, newspapersuse the same, or quite similar, technologies and often hire workers from thesame pool of personnel. Although newspapers, as members of the same indus-try, are similar, the strategic group concept prompts us to ask if there are groupswithin the industry.

Each umbrella layer, or geographic segment, portrayed previously in chap-ters 1 and 2 may represent strategic groups. Recall that Rosse's umbrella lay-ers as updated by Lacy and Simon (1993) included national newspapers,metropolitan dailies, suburban papers, and satellite city dailies and weeklies.Representatives of these layers may exist within some definable metropolitanarea such as a Consolidated Metropolitan Statistical Area. Each CMSA is apatch of habitat containing exemplars of firms adapted to local ecological con-ditions within the metro area. However, as the umbrella hypothesis implies,these adaptations are not simply unique to each CMSA but recur in differentCMSAs across the country.

For example, a suburban daily serves advertisers and readers within that sub-urb with coverage of the local area. Its strategy and niche are different from themetro daily that has a larger circulation area and more broadly based news cov-erage that attract readers and advertisers that differ to some extent from themetro daily. Clearly, the strategies are different with the result that there areclear differences in resource use and niche. Within a specified region of thecountry or national level, the suburban dailies might be said to form one strate-gic group whereas the metro dailies constitute another group. The same couldobviously be said of the weeklies and the national papers.

The niche differences reflected in the strategic groups within the newspaperindustry may serve to keep competition within limits and thus serve to foster coex-istence. Beyond this however, there may be another effect of strategic groups; theymay serve to engender prosperity as Chan-Olmsted suggested for the industry as awhole. Although there may be no discernible differences in performance measureslike profitability between groups at a single time point, one could advance thehypothesis that across time, differentiations of firms' niches into strategic groups,because such differentiation reduces direct competition, performance measureswould show increases across the industry's history as a consequence of the emer-

THE NICHE AND THE STRATEGIC CROUP 67

gence of strategic groups. A research design to test whether the newspaper industryis indeed divided into strategic groups is proposed in chapter 6 as part of this discus-sion of media content as a niche dimension.


In the critical literature, the word "conglomerate" is often used to describe a largecommunication firm. A recent book highly critical of large media firms (Barnouw,1997) prominently featured this word in the title. In economic terms, a conglomer-ate is a holding company generally comprised of firms that operate in unrelatedmarkets. Barnouw (1997) and his co-authors subdivided their topic into singlemedia industries or genres such as TV news, newspapers, book publishing, chil-dren's programming, and Hollywood firms producing film and TV. However, thefirms which the critics are probably most concerned about do not think of them-selves as operating in separate and disjoint markets but rather, as attempting toexploit their simultaneous operation in several media industries.

To understand the contemporary multidivisional media firm that operates in sev-eral industries it is necessary to understand its purposes and goals in relation to itsbehavior. It is necessary, in a word, to understand its strategy. Competition in thecommunication industries has become too complex to understand in its entirety interms of single industries.

Scholars of management and journalists who cover the communication indus-tries have observed that there are a relatively small group of large corporationswhich loom large in communication landscape. It is no secret that some of the larg-est firms have positioned themselves as dominant competitors for the 21st centurythrough merger and acquisition as well as their own start-up enterprises. Quinn(1996), for example, referred to these companies as "information-entertainment"firms and Maney (1995) characterized them in a more popular fashion as"megamedia." The hallmark of these firms is that each operates in a number of com-munication industries.

In the merger frenzy of the 1980s, the buzzword was "synergy." As Bogart(1995, p. 51) defined it, "The underlying principle is that the transfer of symbolicmessages across media boundaries permits a "synergy" that makes the whole largerand more profitable than the sum of its separate parts," although some media CEOsinterviewed by Bogart (1995) expressed their doubts about actually realizing syn-ergy. In many ways the niche-breadth strategy outlined next attempts to give someprecision to the rather abstract and often amorphous concept of synergy. However,in pointing out that some large communication companies seem to be followingsuch a strategy, I do not claim they are all pursuing it successfully.

The purpose of this section of the chapter is to propose a new form of K-selectionoperating in the communication industries. Recall (see Table 1.2) that K-selectionis characterized by among other factors intense competition, a population of orga-nizations near the carrying capacity of the environment and selection that favorslarge size, competitive ability, and higher resource use per unit. This section of the

68 CHAPTER 4

chapter focuses on a strategy—the niche-breadth strategy—common to some ofthe largest media corporations. The environmental factors favoring organizationsemploying this strategy are: the fractionalizations of media consumers across agrowing array of media channels as well as the attendant uncertainty over the via-bilit y of the current media distribution systems; and the environment of deregula-tion in the U.S. economy as well as abroad which has had the effect of encouragingmerger and acquisition (see Ozanich & Wirth, 1998, for an overview of merger andacquisition activity in the communications industries).

According to Porter (1980, p. xvi), a firm's "... competitive strategy is a com-bination of the ends (goals) for which the firm is striving and the means (policies)by which it is seeking to get there." The corporations employing the niche-breadthstrategy are, first of all, diversified companies. Hence, the strategy they follow isnot confined to the level of a single industry but developed at the level of the par-ent company or supraorganization. For diversified corporations, strategy is for-mulated at two levels (Porter, 1996). The first level, strategy, is how to compete ineach of the markets or industries in which the firm operates. The second level iscorporate strategy, which determines the industries in which the firm enter oroperate and how the corporate office should manage the divisions representingthe firm's choice of industries.

The niche-breadth strategy takes its name from the theory of the niche, the sub-ject of chapter 2. Normally a niche is defined at the level of a population or indus-try. It is possible, however, to conceptualize the niche at the level of an individualorganization (e.g., Baum and Singh, 1994). In chapter 2, the term niche-breadth isused at the level of the industry to refer to the relative number of resources used byan industry. Recall that a relative specialist uses one or a small number ofresources while a relative generalist utilizes a large number. (Disney, e.g., is ageneralist firm that operates in several different industries and draws revenuesfrom a variety of different markets, whereas a firm like Reuters is an informationspecialist.) The term niche breadth strategy is applied to a single firm; insofar as astrategic group is pursuing a similar strategy it becomes meaningful to speak of aniche at the level of the group.

The essence of the niche-width strategy is the attempt to create a wide corporateniche to exploit a variety of resources as fully as possible. The strategy is composedof four elements: scale or size as defined by revenues; diversification; multinationaloperation; and exploitation of economies of scope. In the following section, each ofthe elements of the niche-width strategy is considered and wil l be illustrated by theoperations of a group of firms currently employing elements of the strategy. Itshould be noted at this point that more traditional strategic methods such as verticalintegration (e.g., by Time-Warner) also form part of the strategies of these firms.However, as these are well known and easily recognizable, and because the focushere is on the niche-breadth strategy, these elements of strategy are omitted fromthe discussion.

The corporations were selected on the scale criterion by using the ranking ofcommunications companies by revenues published by Veronis, Suhler and Associ-


ates' annual Communication Industry Report (1995) and considered only thoseranked in the top ten. On the second criterion—diversification—firms wereselected which had diversionalized structures in which the divisions representeddifferent media businesses. Only publicly traded U.S. corporations were consid-ered. The third and fourth criteria were assessed by examining the corporate annualreports for the years 1987 through 1999. The result of this process yielded fourfirms: Time-Warner (rank # 1), Disney (rank #2), Viacom (rank #4), and News Cor-poration (rank #7).

Scale

K-selection, as noted previously, requires a focus on organizations of large size.Scale is a means to competitive advantage because it usually entails the firm'saccess to greater capital either through its own resources or its ability to procurefunds in the capital markets. For example, access to capital enables the organizationto successfully compete for expensive media talent at the microlevel or at themacrolevel to engage in acquisitions or joint ventures. Because of the capitalrequirements of these large firms, scale also becomes a barrier to entry. It should benoted here that large size does not mandate that a firm follow the niche-width strat-egy. There are large firms such as Reuters, which pursue a specialist strategy (seeWhite, 1999) and even their diversification into new media such as the Internet ispredicated on continuing to be a specialist.

Diversificatio n

Time-Warner encompasses over 160 different subsidiaries, clustered into fourdivisions: cable systems, cable networks, entertainment, and publishing. Cablesystems consist of Time-Warner Cable, the country's second largest multiplesystem operator. Cable networks include premium services HBO and Cinemax,and the Turner Entertainment Group (e.g., CNN, CNNFN, CNN HeadlineNews, TBS, TNT, The Cartoon Network, and TCM). Entertainment includes theWarner Brothers and Castle Rock Studios, and WEA Record Group. Publishingincludes a number of magazines (e.g., Time, Life, Fortune, Sports Illustrated,and so on) and book publishing companies (e.g., Time-Life, Brown, Sunset,Warner). The recent megamerger of Time-Warner and America Online addedsignificantly to the new company's repertoire of businesses.

The Walt Disney Company also clusters its business interests into three divi-sions: Broadcasting, creative content, and theme parks. Its broadcasting divisionincludes the ABC television network and its owned and operated stations, theESPN family of cable channels, the Disney Channel, and all ABC radio holdings.Creative content includes Disney's fil m and television production companies(e.g., Buena Vista, Disney, Miramax, Hollywood, and Touchstone Pictures). Dis-ney's theme parks include Disneyland, Walt Disney World, and EuroDisney.

70 CHAPTER 4

Viacom operates four business divisions—networks and broadcasting,entertainment, video and theme parks, and publishing. Networks and broad-casting includes its group of cable channels (MTV, VH1, Nickelodeon, Nick atNight, Showtime, The Movie Channel, Comedy Channel, and Sundance).Entertainment consists of Paramount Studios, Viacom's interest in the UnitedParamount Network (UPN), Spelling Entertainment, Paramount DomesticTelevision, and the Paramount stations group (TV). Video and theme parksinclude Blockbuster Entertainment, Kidzville, and Kings Island theme parks.Publishing includes a number of book publishers. Recently, Viacom alsoacquired the television network CBS.

News Corporation also operates four divisions labeled as broadcasting,entertainment production, publishing, and other. The broadcasting unit is com-posed of the Fox television network and its owned and operated television sta-tions. Entertainment production includes the Fox studios for both fil m andtelevision and its cable services (FX, Fox Sports, Fox News). Publishingincludes a number of newspapers, magazines, and book publishers. The othercategory represents the company's non-media interests.

The most elementary definition of diversification is a firm that operates in differ-ent businesses or industries. Being in different businesses insulates the parent firmfrom the vicissitudes of the performance of any single business and from the upsand downs of the business cycle. For example, Picard and Rimmer (1999) foundthat newspaper firms that were more diversified were better able to weather a reces-sion. In addition, through cross-subsidies that enable a well-performing division tobankroll a division that is temporarily not performing well, financial assistance canbe provided from within the corporation.

However, it is possible for a firm to engage in several businesses and still bedependent on a single industry. For example during the 1980s, CBS was diversifiedbut dependent for most of its revenues on network television (Dimmick &Wallschlaeger, 1986). Dimmick and Wallschlaeger proposed a measure of diversi-fication to assess the degree to which a diversified corporation is dependent on asingle business, or conversely, has revenues or profits or spread rather evenly acrossits corporate divisions. (As the catalog of media business in which the four firmsengage implies, a division consists of closely related businesses.) The measure (D)is defined as where pi is the proportion of the firm's operating income (income aris-ing from the normal operation of the firm) contributed by the ith division and d is thenumber of divisions or media operations as follows.

The above version is the normalized version of the formula whose upper boundis one and is attained when operating income is evenly spread across divisions. TheD measure has also been used in analyzing diversification strategies of companiesoperating premium cable channels (Albarran & Proco, 1990).


Firms with large D measures are more robust in the sense of being able to sustaintheir viability in the face of a poorly performing or even declining business. Corpo-rations seem to be aware of this value of diversification. For example, NewsCorp'sannual report (1992, p. 5) noted that "By industry, operating profit is broadlyspread, but newspapers contribute the largest portion of our earnings." Similarly,Disney's annual report (1994, p. 3) stated that"... we are not dependent on any sin-gle segment of our business."

D measures were calculated for the members of the four-firm supra-group for theyears 1987 through 1999 and the means and standard deviations are shown in Table 4.1.As the table shows, all four corporations are diversified to some extent but that the firmsvary substantially. Examination of the yearly D measures (not shown) over the 13 yearperiod shows that Disney has shown a relatively steady increase in its D-measure, witha decline since 1997. Viacom also ends the period with a marked increase in D, but thevalues of the measure do not exhibit the relatively smooth increase evident in the trendin the Disney measures. In general, the Time-Warner D measures show a substantialdecline toward the end of the period in the years 1992 through 1999. The recent mergerwith AOL should result in an increase in the D measures for the new company in thecoming years. NewsCorp shows an increase over the period but the magnitude of D atthe end of the 13-year span is not as great as at Disney or Viacom.

Table 4.1, which shows the means of the four firms for the 13 year period, dem-onstrates that Disney has the highest mean diversification index for the period fol-lowed by NewsCorp and Time-Warner at much lower levels. Viacom has the lowestaverage D-measure for the period. Disney also has one of the lowest standard devia-tions of the four firms, indicating relatively low fluctuation from year to yearwhereas Viacom, which also exhibits the lowest average D measures, displays thegreatest fluctuation from year to year. Clearly, Disney is the most diversified firmand is also one of the most stable in its diversification.

Diversified firms differ in their organizational patterns (Williamson, 1975).On one end of the continuum is a class of firms called holding companies inwhich the corporate office exercises some financial control over a group ofunrelated businesses. This sort of firm, as noted earlier, is often called a con-

TABLE4.1

Means and Standard Deviations of Normalized D-Measures1987-1999

Disney

Viacom

Time-Warner

Newscorp

Mean

.80

.63

.67

.68

Standard Deviation

.14

.24

.18

.13

72 CHAPTER 4

glomerate. At the other end of the continuum are corporations that, in additionto financial controls, exercise a strong degree of control and coordination over agroup of related businesses. Williamson (1975) calls this the multidivisional orm-form type of corporate structure.

One example of the m-form organization is a firm engaged in related diversi-fication. Galbraith (1996) has summarized studies conducted by the HarvardBusiness School of Fortune 500 Companies. These studies have examined therelationship between performance (usually return on equity) and diversifica-tion. In these studies, the corporations that performed well were pursuing astrategy of related diversification. As Porter (1996) explains, simply being adiversified firm such as a holding company does not deliver stockholder valuesince individual investors can diversify their own portfolios. A mere holdingcompany also does not attain the competitive capabilities such as cost reductionwhich accrue to related diversification.

The four firms in the analysis are all pursuing a strategy of related diversifica-tion. It is apparent from the business in which the four firms engage that they arepursuing a common strategy of related diversification in that each captures in itsenterprises media which are to some extent entertainment and information substi-tutes. This can be seen more clearly in a more minute examination of one majorconsequence of the related diversification strategy, economies of scope.

Economie s of Scop e

Related diversification makes it possible to achieve economies of scope and it is aconsciously chosen aspect of corporate strategy. As Disney (Annual Report, 1993, p.5) put it,"... we believe an acquisition must be in a related or complementary field."

Economies of scope reside in what are called joint products (see Pearce, 1992).An example of a joint product in agriculture would be wool and mutton. A firm thatproduces one product in a set of joint products must necessarily be able to producethe other products. In the media industries, a firm that holds the copyright on a fil mshould be able to produce a videocassette of the same film.

Economies of scope occur when it is cheaper to produce joint products together(Carlton & Perloff, 1994). Picard (1989, p. 63) defines scope economies as occur-ring when "... the production of one product lowers the production costs of anotherproduct because they share inputs and spread the cost between them." The firstaspect of economies of scope is the lowering of costs. The firm engaged in relateddiversification has the ability to "... amortize costs across as many distribution out-lets as possible." (Time-Warner Annual Report, 1988, p. 2). The ability to spreaddevelopmental costs across several media resolves some of the uncertainty aboutrecouping R and D expenses. As Time-Warner (Annual Report, 1996, p. 6)observed, "only when a company feels confident about recouping its costs byspreading them across several forms of distribution wil l it invest in developingcostly programming on a regular long-term basis."


The second aspect of economies of scope is deriving revenues from severalsources, all based on the same input or idea. As Carlton and Perloff (1994, p. 71)wrote, "Many factors contribute to economies of scope, and one of the most impor-tant is common inputs." For example, the Disney movie Aladdin was first a boxoffice success in its theatrical run and the video sold some 24 million units. Themovie script and characters were also the basis for a restaurant and stage show atWalt Disney World. In addition, Aladdin was used to create a Sega videogame, amusic album and two TV specials (Maney, 1995). In a similar vein, NewsCorp(Annual Report, 1993, p. 4) stated "... we are harvesting the data from all our com-munication sources to re-distribute in a variety of electronic retrieval systems." At amore abstract level, the notion of economies of scope providing multiple revenuestreams was summed up by Time-Warner (Annual Report, 1992, p. 3) whose reportnoted the importance of copyright in protecting sole proprietary rights to content.

Part of what makes the business of ideas so powerful is copyright ownership. Once anidea takes definitive shape as a book, article, CD, album, film, videocassette, or TVshow—creative software whose copyrights Time-Warner owns—it can be sold,licensed and used over and over again, in different formats and languages, through dif-ferent technologies, to different audiences. The more a company controls not only thecreation of these software copyrights but the various forms of their distribution, thegreater its potential profits.

A final advantage of economies of scope is that the knowledge from producingone media product is likely to be relevant to producing a related media product(Carlton & Perloff, 1994). NewsCorp (Annual Report, 1992, p. 7) asserted, "Ourunderlying philosophy is that all media are one. The principles and skills involvedin discovering and fostering creative talent—no matter the format, be it newspaper,television, magazines, films or books—are transferable."

Interdivisiona l Cooperatio n

However, simply engaging in what appears to be related diversification is not suffi-cient to guarantee that the benefits of economies of scope are realized. It is also nec-essary to couple related diversification with tactics designed to coordinate thebehavior of the various divisions of the firm to realize scope economies.

Four such tactics have been developed by Disney (Eisner, 1999) to foster coordi-nation and synergy among its divisions. The first tactic pertains to executive compen-sation. Rather than simply pay executives high salaries they are instead rewarded inpart with stock options. The worth of the stock, of course, depends on corporate per-formance. For example, compensation for division executives is dependent not juston division performance but on overall corporate performance as a whole. The sec-ond tactic or practice involves encouraging collegiality and communication acrossdivisions. Foremost among these is a weekly lunch meeting of top executives and

74 CHAPTER 4

division heads with the objective of promoting interdivisional cooperation amongdivision managers who might otherwise act competitively and opportunistically. Inaddition, there are various programs designed to inform all employees—hourly, mid-dle managers, and executives—about the activities of each of the corporate divisions.Third, there is a mechanism for settling interdivisional conflicts (over cost allocation,for example) which might otherwise disrupt cooperation between divisions. Finally,the Disney Company created the post of what might be called a "synergy czar" so thatideas originated in one division could be cross-promoted or expanded on by otherdivisions. The idea is that the role of synergy czar is to mobilize the relevant divisionsto make contributions to a project so that"... the cumulative effort on a given projectexeeds the sum of its parts (Eisner, 1999, p. 238).

These four factors—the model of executive compensation, interdivisional coopera-tion and communication, resolution of conflict between divisions and employment of asynergy czar—probably help explain the rather equal distribution of revenues for Dis-ney across its divisions. In turn, this pattern of revenue distribution is reflected in thevery high D measures for this company, as shown previously in Table 4.1. It is unlikelythat a firm could attain D measures of this magnitude without securing the close coop-eration of its constituent divisions. Such interdivisional cooperation mitigates againstinterdivisional rivalry and opportunistic behavior that may enhance the success of somedivisions but would almost certainly result in impaired performance of the firm as awhole. For example, Okrent (2000) attributed the failure of Time-Warner's Internetventure to the competitiveness and lack of cooperation among the company's divisionsthat were expected, by corporate level executives, to supply content for the venture.

Al l four of the companies which form part of this analysis are transnationalmedia corporations in that they have significant foreign direct investment (FDI) inother nations of the globe (Gershon, 1997). These investments allow the companiesto gain access to a wider base of patrons and advertisers. The companies themselvesacknowledge that having an identity that stretches beyond domestic borders is criti-cal to company strategy and development. Consider the following quotes fromselected company annual reports: NewsCorp (1995, p. 7) asserts that "... we havebecome a media company unmatched in global reach." Time-Warner (1992, p. 4) isbilled as "... the world's leading media and entertainment company." Disney (1995,p. 7) viewed its operations as "... operating the Disney brand all over the world."Viacom (1998) stated that it follows a dictum to "think globally and to act locally."

Clearly, the four companies reviewed in this case analysis continue to competeon a global level with one another and with other transitional media corporationslike Bertelsmann A.G., Sony, and Hachette.


The evidence presented in this part of the chapter shows that all four companiesexhibit some of the elements of the niche-breadth strategy: scale, diversifica-tion, economies of scope, and multinational operation. First, the four firms arelarge in scale as shown by their membership in the top ten group of revenue pro-

THE NICHE AND THE STRATEGIC GROUP

ducers. Scale guarantees access to resources and acts as a barrier to entry. Sec-ond, all of the firms are diversified as shown by the D measures, andfurthermore, all are engaged to some extent in related diversification. Third,there is evidence from their public policy statements that three of the firms con-sider economies of scope to be important. The competitive advantage gainedthrough scope is readily apparent. In an age of multiplying distribution s, con-tent that is attractive to consumers is the critical commodity. Hence, ownershipor control of marketable content is the first requisite for corporate survival. Asaudiences continue to fractionalize across distribution channels producingunique content becomes less feasible. Producing (or reproducing) the same orsimilar content in two or more media disperses costs across a large number ofconsumers, provides a broader revenue base, and leads to an efficient operation.Fourth, all the corporations analyzed here are multinational in operation.Although the four corporations all display some of elements of the strategy,they probably vary in their implementation. For example, one industry analyst(quoted in Schmidt, 2001, p. 78) said that synergy has never been on of NewsCorp's strengths: "... when you talk about multimedia companies, you wouldlike to say that the whole is greater than the sum of the parts. In the case of NewsCorp., I think the whole is equal to the sum of the parts." If one had to pick thebest current exemplar of the strategy, it would have to be Disney.

As noted earlier, the environmental trends of audience fractionalizations andde-regulation of American industry seem to favor corporate strategies such as theniche-breadth strategy and the characteristics of K-selected organizations whichare manifest in Disney, Time-Warner, Viacom, and News Corporation. The conse-quence of K-selection is efficient use of resources. Implementing the niche-breadthstrategy successfully confers survivability as well as efficiency.

The notion of niche-breadth strategy and its role in K-selection in the communica-tion industry provided concrete and detailed support for Williamson's (1983) conten-tion that multidivisional firms may be, under some conditions, superior competitorswith high survival potential. Williamson's remarks on this aspect of diversified firmspertained to firms that are divisionalized and have strategic planning capability andinternal control mechanisms. In the long run, Williamson (1983, pp. 157-158) wrote:

... the superior viability properties should manifest themselves in terms of differentialsurvival. On the other hand, conglomerate structures that lack financial and structuralrationality and want for sound management will.. . decline relatively. If the selectionmechanism is working well, they wil l be required to adapt appropriately, shrink rela-tively, or face extinction.

Although it seems to be clear that the companies analyzed in this section of thechapter are following elements of the niche-breadth strategy, it is not possible(with publicly available data) to assess in detail the relative success of these firmsin actually implementing the strategy although the D-measures do provide somelimited evidence.

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76 CHAPTER 4

Across-lndustr y Concentratio n

This chapter discusses the potential economic efficiencies pertaining to theniche-breadth strategy. Whereas these efficiencies are important to the survival ofthe large multidivisional firms such as Disney, there may well be negative publicwelfare consequences of the niche-breadth strategy. Specifically, the efficienciesachieved by large multidivisional firms pursuing the strategy may lead to a highlevel of what Albarran and Dimmick (1996) called across-industry concentration.

These authors proposed that there are actually two forms of concentration in thecommunication industries. The most familiar form—within-industry concentra-tion—refers to concentration within a particular industry such as cable or newspa-pers and is often measured using indexes like the concentration ratio orHirschman-Heifindahl index.

Albarran and Dimmick (1996) however, proposed that a new form of concentra-tion—across-industry concentration—was becoming increasingly important in thecommunication industries. They found that in 1995 the four-firm concentrationratio computed using total communication industries revenues was .25 whereas theeight-firm was .40. In other words, the top four companies accounted for about onequarter of the revenues of all communication industries while the largest eight firmscontrolled more than one-third. These authors pointed out that these levels do notqualify as high concentration but they also noted that the various levels of concen-tration (high, medium, and low) were defined based on experience withwithin-industry concentration. Clearly, there may be cause for concern when thetop eight firms control 40% of all communication revenues.

The recent merger of America Online and Time-Warner points to the potentialpublic welfare consequences of the niche-breadth strategy in increasingwithin-industry concentration. This merger appears to have been created for many ofthe reasons outlined previously in this chapter. The merger gives AOL access toTime-Warner's broadband capacity and at the same time gives AOL access toTime-Warner's many consumer brands in their publishing segment and the contentprovided by the many other Time-Warner divisions. Alternately, Time-Warner hasaccess to the Internet. The merger positions the new firm to be able to exploit manyelements of the niche-breadth strategy. The net result of the merger is abroader-niched firm and what is surely an increase in across-industry concentration.

Significantly, the Federal Trade Commission's greatest concern in approvingthe merger was to insure competition among Internet providers, to preventwithin-industry concentration. The most important effect of the merger however,may be its impact on across-industry concentration. Previously, across-industryconcentration has been an invisible form of concentration in that it has not beenconsidered by the regulatory bodies who have the responsibility of insuring the sur-vival of competition in media industries. The AOL-Time-Warner merger, the resultof firms pursuing a niche-breadth strategy, is an indication that across-industry con-centration should be considered in deliberation to allow further mergers or acquisi-tion in the communication industries.

The Gratification-Utilit y Nich e

Every minute of every day millions of people express their media preferences byrenting or buying a movie on videocassette or DVD or by attending a movie at atheater. Media preferences are also expressed by sending an e-mail message to afriend, shopping online for a CD, watching a vintage situation comedy on a cablechannel, reading a magazine or newspaper, or buying a book to read on vacation.These decisions by consumers or media patrons represent demand for mediaproducts and services. Underlying the media choices and hence, also underlyingdemand are the gratification-utilities that explain why people allocate money andtime to the media (see Fig. 2.1, p. XXX, this volume). The media can be conceptu-alized as competing to satisfy the expectations or gratifications sought that audi-ences or patrons bring to their media use. Because the gratification-utilities arefundamental to media choice they are also fundamental to questions of competi-tion and coexistence. This chapter is concerned with these fundamental questionsas they are illuminated by studies of the gratification-utilities.

The Environmen t and the Nich e

In his overview of the development of the niche concept, Pianka (1988) pointedout that ecologists expended a great deal of effort over several decades in differ-entiating population from environment. The niche concept was first introducedin the early 20th century and some definitions emphasize the environmentalaspect of the niche at the expense of population characteristics, whereas othersgive prominence to population attributes and neglect the environmental aspect.Definitions of niche with an environmental bias have focused on the popula-tion's habitat. Alternately, definitions with a population bias have emphasizedbehavioral or structural adaptations.

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5

78 CHAPTER 5

However, contemporary ecologists recognize that the niche concept impliesa relation between population and environment. For example, Ricklefs (1979)defined the niche as "all the components of the environment with which the pop-ulation interacts" (p. 875). The niche concept therefore denotes a relationbetween attributes of the environment and attributes of the population. Hence, ifthe conceptual confusion that surrounded earlier bioecological definitions is tobe avoided, any translation of the concept into uses and gratifications researchmust retain the relational quality of the niche and preserve the distinctionbetween population and environment.

As defined in chapter 2, the populations are media organizations and industries.A major part of the environment of a media organization or industry is composed ofmedia audiences and media patrons who attempt to satisfy some of their needsthrough use of the available media. The gratification-utility niche of a medium isdefined in terms of the dimensions that compose the gratifications obtained (GO)from the communication medium. These dimensions, from the point of view of theorganization or industry, are environmental dimensions. Hence, the populations—organizations or industries—are distinct from the environmental dimensions alongwhich their niches are defined.

The Gratification-Utilit y Niche : Breadth ,Overlap , and Superiorit y Measure s

The gratification-utility niche of a medium is defined by the breadth of gratifica-tions obtained, the degree of overlapping GOs with other media, and its relativesuperiority in gratifications obtained compared to other media. The formal defini-tions of niche-breadth, niche overlap, and competitive superiority described nextwere developed by Dimmick (1985) as interval level counterparts of the tradi-tional bioecological measures used in previous studies of media competition foradvertising resources (Dimmick & Rothenbuhler, 1983, 1984a, 1984b). Becausethe traditional measures are appropriate only for categorical or nominal data, newformulae were necessary to take into account the interval level data typical ofgratifications measures. The definitions further assume that the underlying needdimensions of gratifications obtained were identified using factor analysis. Eachof the measures—niche-breadth, overlap, and superiority—is computed sepa-rately for each dimension yielded by the factor analysis.

The index formulated for niche-breadth measures the degree to which amedium is capable of gratifying a relatively broad or relatively narrow spec-trum of need statements on a gratification-utility dimension. Niche-breadthindicates specialist or generalist resource utilization. A specialist is a mediumfrom which audience members obtain a narrow range of gratifications,whereas a generalist is a medium that fulfill s a broader range of gratificationson each dimension.

THE GRATIFICATION-UTILITY NICHE 79

Where:

u, 1 = the upper and lower bounds of a scale (e.g., 4 and 1)

GO = a gratification obtained rating on a scale

N = the number of respondents using a medium

n - the first respondent

K = the number of scales on a dimension

k - the first gratification scale

The upper bound of B equals unity and is attained when all respondents rate amedium at the upper bound on all need or gratification statements on a dimension.The lower bound is zero and indicates that respondents are rating a medium at thelower bound of all gratifications scales. The upper bound of the measure indicatesmaximal generalism, and lower values represent decreasing generalism. For thisreason, the measure is best conceived as a "departure-from-generalism index."

The perceived similarity or overlap in gratifications obtained from two media (iand j) is computed by the formula as follows:

Where:

i, j = medium i and medium j

GO - a gratification obtained rating on a scale for i and j

N = the number of respondents who use both i and j


80 CHAPTER 5

Low overlap values indicate high similarity in gratifications obtained from the twomedia whereas high values denote dissimilarity. The lower limit of the overlap mea-sure is zero and indicates that the gratification niches of media i and j overlap com-pletely (i.e., the niches of the two media are identical). The lower limit is attainedwhen all respondents assign the same rating to the two mediums across all scales on agratification utility dimension. The upper limit is u minus 1 and is reached when re-spondents rate one medium at the upper bound on all scales and the other medium atthe lower bound of all scales. Because low overlap values may occur because respon-dents' ratings are either at the low or the high end of the scales, it is necessary to in-spect the GO means and to consider the substantive meaning of the positions on thescale when interpreting the overlap measures.

Niche overlap can be considered an index of the substitutability or complement-arity of two competitive media. High overlap values indicate that two media are lesssubstitu table.

Although the overlap index measures the similarity in gratification levels providedby two communication media, the measure of competitive superiority is designed toanswer whether one or the other of a pair of media provides greater gratification util-ity. A medium that obtains a significantly higher superiority score than another me-dium is superior in providing gratifications to the audience members or patrons.Media that do not significantly differ on the superiority index do not differ in theirability to provide gratifications.

Where:

i,j = medium i and j

m i>j = the value of a respondent's rating for those scale items on whichi is rated greater than j (the sum of the actual values)

mj>i = the value of a respondent's rating for those scale items on whichj is rated greater than I (the sum of the actual values)

K = the number of scales on a dimension

k = the first gratification scale

N - the number of respondents who use both i and j


*Measures of competitive superiority for communication media, products and services.Copyright ©1985 by John W. Dimmick.


The indices of superiority are defined as arithmetic means. As a result, the differ-ences in superiority between two means on a gratification utility dimension may betested for significance using a t test for correlated groups. If the test yields a signifi-cant result, this is interpreted as superiority of one medium over another on that di-mension. Conversely, the absence of a significant difference indicates that neithermedium is superior on that gratification utility dimension.

Taken together, overlap and superiority define two conditions that must be satis-fied for a new medium to displace an older form. First, the new medium must grat-ify much the same needs as the older medium—overlap must be relatively high.Second, the newer form must be superior to the older form. Recall that the notion ofcomplete replacement of one population by another is termed exclusion, whereas apartial replacement of one form by another is competitive displacement.

The Daily News Media: Newspapers , Broadcastin g and Cable

The study reported in this section of the chapter pertains to the niches of four dailynews media: newspapers, radio, television, and cable. This research was conductedbefore the advent of the Internet but after cable had become a mature news medium.Two studies of Internet news are reported later in this chapter.

The research presented here was undertaken to map the niches of coexistingmedia. In a guild of coexisting media one should not find intense or severe compe-tition. Instead, one should observe niche differentiation among the media thatkeeps competition at a tolerable level and allows the competitors to coexist. Al-though niche theory does not make precise predictions about levels of breadth,overlap, and superiority, it is possible to state what pattern of findings would fal-sify the theory. In a guild of long-established competitors such as these news me-diums, if the niche measures were to show a pattern of superiority of one mediumover the other media on all the existing gratification-utility dimensions, thiswould falsify the theory because such a pattern in the data would belie the fact ofcoexistence by implying the subordinate media have no reason to exist. Rather,the niche measures should provide an explanation concerning why the membersof the guild do in fact coexist.

The study was conducted in Columbus (Franklin County) Ohio, and althoughthis market is not completely representative of the U.S., it is sufficiently representa-tive to be utilized as a test market for a number of products and services.

The 18 gratification-utility items used in the study were developed from previousnews gratification studies (see Dobos & Dimmick, 1988) and on the basis of open-ended interviews with a sample of news media users. The questionnaire containingthe gratification-utility items were administered to a probability sample (N = 254) ofrespondents who used more than one news medium on a daily basis. These require-ments were necessary as the overlap and superiority measures cannot be computed ifa respondent uses only one news medium. Respondents were asked by trained inter-viewers in telephone interviews whether each of the media they actually used were"very," "somewhat," "only a little," or "not at all" helpful in obtaining the 18 gratifica-tion utilities. These scale positions were scored from 4 through 1. A cognitive- affec-

82 CHAPTER 5

tive factor structure was hypothesized (see Dobos & Dimmick, 1988) to underlie thegratification-utility items for all four news mediums.

Due to the number of previous studies on news gratifications, confirmatory factoranalysis was performed with LISREL to test the structural relations among thehypothesized cognitive and affective factors and gratification-utility items. The con-firmatory model was specified to obtain parameter estimates for the interfactor corre-lations and item loadings on their respective factors. Loadings were fixed to zero onthe opposite factors. Thus, a surveillance item was free to load on the cognitive factor,but not on the affective factor. Loadings less than .30 were not considered significant.

Because the chi-square test of goodness of fit is sensitive to sample size and oftenresults in rejection of an otherwise adequate model, rho provided a descriptive indexof model fitting (Rentier & Bonett, 1980). Rho gives a measure of the improvement inmodel chi-square over the null model chi-square. Ideally, rho should approach .90.

Table 5.1 shows the results of the confirmatory factor analysis of gratificationssought (GS) from "news in general," and gratifications obtained from newspaper(NPGO), cable television (CAGO), broadcast television (TVGO), and radio(RAGO). Rho values indicate that the cognitive-affective model is an adequate tonearly ideal depiction of the structure underlying gratifications sought andobtained. The best fi t occurs for gratifications obtained from newspapers (rho =.87), and rho is lowest for cable (.76).

As hypothesized, the gratification-utility items loaded on their respectivecognitive and affective factors and t-values were above 2.0. The only exceptionwas the "local" item, that failed to load above .30 as a cognitive gratificationobtained from cable television, and its t-value was below 2.0. Substantively, thisindicates a niche difference between cable and the other news media. It is onlyrecently that a substantial local and regional news service is available to somecable subscribers on a special service tier but no such local service was accessi-ble at the time of the study.

The cognitive and affective dimensions were used to compute values for theniche-breadth and overlap on the two dimensions. The niche-breadth values shownin Table 5.2 provide a picture of the relative generalism/specialism of the dailynews media in gratifying a broader or narrower spectrum of audience needs. On theaffective dimension, whereas the television niche is slightly broader, the breadthvalues display littl e variability, indicating only small difference in the range ofaffective needs served. On the cognitive dimension, the breadth values are gener-ally higher than on the affective dimension. Radio's niche-breadth is substantiallylower than the other mediums, and cable's niche-breadth is slightly higher than thatof either television or newspapers. In summary, TV is slightly more generalizedthan the other media on the affective dimension, although cable displays greaterniche-breadth on the cognitive dimension. The largest differences in breadth areapparent on the cognitive dimension where radio shows much less ability to gratifya wide range of need categories, probably due to the brevity of most radio news.Except for radio, the other media show more generalism on the cognitive dimensionthan on the affective dimension.

TABL E 5.1

Factor Analysis of Gratification s Obtained

Cognitive

to feel in touch with local issuesand events in the community

to feel in touch with what's happening in theU.S.

to feel in touch with international events

to get detailed analysis of complicated issuesand events

to get detailed information about importantissues and events

to get in-depth information aboutgovernment and government officials

to give me facts to back up my opinions

to give me information I need to make up mmind about important issues and events

to find out what other people think aboutimportant issues and events

Affective

to give me relief from boredom

to give me something to think aboutbesides my own problems

to be a pleasant way to fil l time

to often be dramatic

to often be entertaining

to often be exciting

to make me feel good about the worldand the people in it

to expect the reporters or writers to belike people I know

to give me things to talk about with myfamily and friends

Coefficient alpha

Inter-factor correlation

Rho

Newspaper

.38

.71

.75

.81

.83

.83

.75

.74

.56

.61

.58

.61

.63

.67

.71

.63

.46

.51

.79

.67

.87

Cable

.17

.75

.79

.77

.66

.78

.74

.74

.63

.74

.69

.59

.59

.75

.70

.71

.47

58

.83

.54

.76

TV

.33

.66

.58

.81

.75

.76

.71

.74

.47

.55

.60

.46

.43

.65

.63

.61

.52

.52

.86

.53

.82

Radio

.60

.72

.82

.73

.78

.83

.78

.83

.72

.68

.70

.69

.69

.54

.81

.59

.58

.58

.85

.65

.78

83

84 CHAPTER 5

TABL E 5.2

Niche Breadth and Overlap Measures

Niche-Breadth

Niche Overlap for Media Pairs

Cognitive Affective

NP

CA

TV

RA

N

199

90

206

78

NB

.75

.78

.75

.58

.58

.58

.62

.57

NP— RA

TV— RA

CA— RA

CA— NP

CA— TV

NP— TV

49

66

26

58

69

158

1.20

.91

1.73

1.66

1.61

.73

1.06

.91

.99

.94

.84

.81

Although the breadth measures index the degree of generalism or specialism, theoverlap indices portray the similarity in cognitive and affective gratifications pro-vided by the news media. As Table 5.2 shows, there is greater variation in the over-lap values on the cognitive dimension than on the affective. The generally lowervalues on the affective dimension indicate greater similarity among the media pairsin serving these needs. The largest overlaps on the affective dimension occur be-tween television and newspapers, followed by TV/cable, TV/radio, cable/newspa-per, and cable/radio. Newspapers and radio show the smallest overlap or similarityin affective needs served. On the cognitive dimension, the strongest overlap is be-tween newspapers and television, followed by radio/TV. Cable, the newest of theseolder media, exhibits the lowest overlaps or similarity with radio, newspaper, andTV. The greatest similarity across both dimensions occurs between newspaper/TVand to some extent between TV/radio. For the other media pairs, less similarity onthe cognitive dimension is coupled with more similarity on the affective dimension.In general, the overlap measures—like the breadth measures—show greater disper-


sion on the cognitive than on the affective dimension. Across both dimensions, thestrongest overlaps or similarity occurs between newspapers and broadcast televi-sion.

Table 5.3 shows the superiority values for the cognitive and affective dimensionswhich were computed for respondents who used both mediums in each pair-wisecomparison. As the table shows, there is greater superiority on the cognitive dimen-sion and statistically significant differences occur for four of the six media pairs.Newspapers, television, and cable were all superior to radio on the cognitive dimen-sion, whereas cable is superior to newspapers. At this level of niche differentiation,it is clear that there is less superiority evident on the affective dimension where onlytwo of the six superiority comparisons are statistically significant and show thatboth newspapers and TV news are superior to radio news. This pattern, taken to-gether with the similar pattern in the breadth measures, suggests that it may makelittl e difference to news patrons which of the media are used to satisfy the affectivegratifications. In other words, for the affective gratifications, the news media maybe fairly close substitutes.

Within microdimension niche differences on the cognitive dimension are alsoapparent in the data. Examination of niche differences at this level showed that re-spondents rated radio more helpful for local news than cable or broadcast televi-sion, but radio was superior to newspapers by only a slight margin. Cable was ratedsuperior to newspapers for all items on the cognitive dimension except news aboutlocal and national events. On the affective dimension, radio was superior to news-papers only for the "reporters" item, and radio was superior to TV news only for the"relief from boredom" item, probably due to radio's role as a companion when driv-ing or other noninvolving activities. Newspapers and TV news were superior to ra-dio for all other items on the affective dimension.

Whereas the examination of the between microdimension niche differences andthe within microdimension niche differences show substantial niche differentia-tion, these data probably underestimate the actual degree of niche separation be-tween the news media. In this study the gratification opportunities provided by thenews media were not measured, and as a result, some niche separation that probablyexists is not apparent in the data. The missing niche separation is probably most ap-parent for the broadcast media.

For example, newspaper and TV news are the most frequently used pair of medi-ums. Their overlap is high and newspapers are perceived as superior. These medi-ums would probably overlap much less on a gratification opportunities dimensionand TV would probably be superior on items such as "getting the news when I wantit." What probably accounts for this pairing is that although newspapers may be themost cognitively satisfying, TV may supply greater gratification opportunities be-cause newscasts in many markets are scheduled several times a day. Similarly, theposition of radio as the least superior news medium is probably due to the absenceof measures of gratification opportunities. Radio is available in times and placeswhere it is difficul t or impossible to use other media, such as driving to work, doingchores around the house, exercising, or performing some types of jobs. Measures of

86 CHAPTER 5

TABL E 5.3Pair-Wise Comparisons of Media Superiority

Cognitive Affective

NP>RA

TV>RA

CA>RA

CA>NP

TV>CA

NP>TV

N

49

66

26

58

69

158

S

9.781.87

6.23.59

8.401.72

7.483.27

2.822.72

2.691.81

t

2.51 *

5.25 ** *

3.65 **

2.69 **

.12

1.62

S

4.451.06

4.172.09

6.072.54

3.952.22

3.203.16

2.191.84

t

2 QQ **

2.61 *

1.89

1.57

1.05

1.03

Note. *p < .05, ** p < .01, *** p < .001.

gratification opportunities would probably reveal that affording such gratificationopportunities accounts in large part for radio's survival as a news medium. In sub-sequent studies, measures of gratification opportunities were included to avoid po-tential underestimation of niche separation.

The final objective of this study was to provide evidence concerning the valid-ity of the decision model underlying the superiority measures. A decision modelis a procedure that specifies how information—in this case, the values of therespondent's ratings of news media on gratification scales—is used to make thechoice of a medium. Although a number of choice models have been identified,two broad classes of decision models—compensatory and noncompens-atory—were shown by Lin (1985) to operate in media-choice decisions. A com-pensatory model allows high levels of one attribute—a gratification dimension—to compensate for low levels on another attribute or dimension. In such models,each attribute of an alternative—a news medium, in this case—in a choice-set isgiven a value and attribute values are combined additively to arrive at an overallvalue for each alternative. The alternative with the highest value in the choice setis the alternative that is actually chosen. The expectancy value model employedby Palmgreen and Rayburn (1982) and others is one example of the family of


compensatory models. On the other hand, the noncompensatory models do notassume that choice is governed by an additive linear process. Instead, choiceamong alternatives may be made, for example, on the basis of the attribute mostimportant to the decision-maker. Thus, the validation of the superiority measuresexamined both compensatory and non-compensatory choice models to determineif different choice models were associated with differences in the validity of thesuperiority measures.

As Nunnally and Bernstein (1994) pointed out, the researcher does not vali-date a measure but rather validates the use of a measure for a particular purpose.In this case, one major purpose of the superiority measures is to play a role inassessing the probability of displacement or exclusion of one medium byanother. Thus, respondents were asked: "Tomorrow, if for some reason youcould only use one source for news, which medium would you select?" The cor-respondence between the respondent's answer to this question and their individ-ual sums for mi>j components of the superiority measures constituted thecriterion validity assessment.

The assessment of the criterion validity of the superiority measures was con-ducted in the following way. The "fit " of the compensatory model was computed atthe individual level by taking each respondent's sum of mi>j . for both cognitive andaffective dimensions and ascertaining whether this sum was higher for the chosenmedium than for the other news media used by the respondent. The respondent wasconsidered correctly classified—in other words, the model "fits" the data—if thesum of the cognitive and affective dimensions was higher for the chosen mediumthan for the others. For the noncompensatory model fit was assessed by determin-ing if either the cognitive or affective sums of mi>j. for each respondent were higherfor the chosen medium than for the other mediums used.

Table 5.4 shows the results of this classification. It is apparent from the data inthis table that the noncompensatory model provides a better fit for the medium cho-sen than does the compensatory model. The noncompensatory model is the best fitin more than 77% of the cases for TV and it fits slightly over 70% of the cases for therespondents who chose radio. Whereas the noncompensatory model provides thebest fit , the number of cases where it does not fit suggests that research on addi-tional decision models might prove fruitful .

The Video Entertainmen t Media

In the 1980s and 1990s, the diffusion of cable TV and the VCR offered new choicesin video entertainment to consumers. This section of the chapter chronicles theeffects of these newer media on the older medium of television and explains the"video revolution," in terms of gratification utilities, and their relation to the dis-placement of time spent with TV. In addition, this section offers an explication ofconsumers' willingness to spend additional money on a VCR and cable using thefindings of gratification utility studies and the structure of the TV industry asexplanatory constructs.

88 CHAPTER 5

TABL E 5.4

Percent Correct Classification or "Fit " Between Choice Models

Medium Choice N Compensatory (%) Noncom-pensatory (%)

TV

Cable

Radio

Newspaper

98

36

17

97

74.5

66.7

35.3

59.2

77.6

72.2

70.6

71.5

The research findings used to accomplish these tasks include a study byAlbarran and Dimmick (1993) and two studies by Dimmick (1993), that are des-ignated as study 1 and study 2, respectively. Al l three studies were conducted inColumbus (Franklin County) OH, based on probability samples of 464 respon-dents (Albarran & Dimmick) and 393 and 394 respondents, respectively, instudies 1 and 2 (Dimmick).

The 22 to 24 gratification and gratification opportunity questions were admin-istered to respondents during phone interviews and each question was askedabout all the entertainment media the respondent reported using. The gratificationand gratification opportunity items were derived from a pilot study usingopen-ended questions.

Table 5.5 shows the most recent version of the questionnaire items and thefactors on which they loaded—cognitive, affective, and gratification opportuni-ties. Except for minor differences in loadings and items, all three factorsappeared in the gratifications obtained for the media studied—TV, cable, andthe VCR. In all the factor solutions the affective factor emerged first andexplained the most variance of the two gratification factors. In the Albarran andDimmick (1993) study, the alpha reliabilities ranged from .77 to .87 whereas inthe two studies reported by Dimmick (1993), the alpha's ranged .84 to .90. Tofacilitate the synthesis of the study findings, results are reported by niche mea-sure rather than study-by-study.

Rather than review all the breadth measures from all three studies, only thebreadth measures for the gratification opportunities dimension wil l be reviewedsince they are the most important in telling the story of the video entertainmentmedia. Table 5.6 shows the values of the gratification opportunities breadth mea-sures for TV, cable, and the VCR. As the table shows, the rank order of the breadthmeasures is the same across all three studies. The VCR exhibits the greatestbreadth followed, in order, by cable and broadcast television. The fact that theVCR and cable supply greater gratification opportunities than TV is important inunderstanding what Wood and O'Hare (1991) called the "video revolution," therise of cable and the VCR.

TABL E 5.5

Entertainment Gratification s

Affective Factor

To help you forget everyday cares

To help put your mind at ease

To help you relax from daily pressures

To help occupy your time

To help you relieve stress

To help you unwind

Cognitive Factor

To give you the opportunity to figure out plots and stories

To help you understand new or different people

To test your ability to answer questions or solve puzzles

To let you get to know characters or personalities as if they were your friends

To let you understand why people act the way they do

To learn more about things that interest you personally

To make you feel as if you are participating in the competitive struggle of peopleplaying sports or games

To give you the opportunity to relive past events and feelings

To help you learn how to improve your lif e

Gratification Opportunities

To offer entertainment you want at times that are convenient for you

To give you a variety of entertainment choices

To supply entertainment you want that is available every day

To give you entertainment that fits in with your free time

To help you plan your daily activities

To give you entertainment that fits into your busy schedule

To give you different entertainment choices

To give you an opportunity to spend time with family members

89

90 CHAPTER 5

TABL E 5.6

Niche Breadth Gratificatio n Opportunities

Albarran & Dimmick Dimmick Studv 1 Dimmick Study 2

TV

Cable

VCR

.56

.65

.78

.55

.64

.69

.49

.65

.71

Niche overlap is the degree to which two mediums serve the same gratifications.Recall from chapter 2 that overlap is conceived as a measure of competition or eco-logical similarity or, in economic terms, as substitutability. In the Albarran andDimmick (1993) study, the strongest overlaps are between TV and cable. This mea-sure indicates that on all three microdimensions—cognitive, affective, and gratifi-cation opportunities—TV and cable exhibit the strongest ecological similarity.Similarly, in both studies reported by Dimmick (1993), the highest overlaps on allthree microdimensions are those for TV and cable. Clearly, in the sense of servingthe same needs, TV and cable evince the strongest competition or substitutability.

The superiority measures for the three studies show some betweenmicrodimension niche differentiations. In the Albarran and Dimmick (1993) study,the VCR is superior on the affective and gratification opportunitiesmicrodimension and TV is superior on the cognitive factor. Cable is superior to theVCR on the cognitive factor whereas the VCR displays a superior ability in provid-ing gratification opportunities. Similarly, in study 1 cable is superior to the VCR onthe cognitive factor although VCR is superior to cable on the gratification opportu-nities factor. Identical results for cable and VCR were found in study 2. Such nichedifferentiation helps explain the coexistence in many households of both cable andthe VCR.

Although the studies show consistent superiority for cable and the VCR, thesame consistency is not apparent for TV and the VCR. in the Albarran andDimmick (1993) study, the VCR is superior on the affective and gratificationopportunities factors and TV is superior on the cognitive microdimension. In study1, TV is superior on both the gratification factors but the VCR is rated as providinggreater gratification opportunities. On the other hand, study 2 shows the VCR assuperior on all three factors. The results of the three studies are inconsistent, butthey agree in their findings of VCR superiority on the gratification opportunitiesfactor because they do not show one medium as superior on all dimensions, theseresults provide some evidence of differentiation.

The superiority measures for cable and broadcast TV however, are quite consis-tent across the three studies. In the Albarran and Dimmick studies, cable is superiorto TV on the affective factor and on the gratification opportunities dimension. Instudies 1 and 2 cable is superior to TV on all three microdimensions.

Study 2Study 1


As noted in chapter 2 and earlier in this chapter, the conditions for displace-ment or exclusion of one medium by another are high overlap and the competi-tive superiority of one medium. The results of these three studies indicate thatthe conditions were present for the displacement of broadcast television bycable. As is widely known, the prime-time TV network audience shares havebeen dropping steadily since the late 1970s, due it is believed, to competitionfrom cable and the VCR. Although the studies reviewed here were conducted ina single market, the evidence they provide concerning the conditions for dis-placement make it plausible that the erosion of time spent with broadcast TV atthe national level is due to a pattern of gratification utilities like the one thatemerged from studies of the Columbus market.

The "Vide o Revolution, " the PRC, Gratificatio n Utilities , and theStructur e of the TV Industr y

The role of the gratification utilities in the "video revolution" can perhaps be bestexplicated in the context of research on the Principle of Relative Constancy (PRC)which aimed to explain spending on the media. As Figure 2.1 makes clear, gratifica-tion utilities have clear monetary implications in that they lead directly to consumerspending and indirectly to advertising expenditures. As originally formulated byMcCombs (1972) and McCombs and Eyal (1980), the PRC stated that: "The levelof spending on mass media by consumers and advertisers is determined by the gen-eral state of the economy. Any change in the level of the economy causes a parallelchange in spending on mass media" (McCombs, 1972, p. 10). McCombs (1972)found support for the time-lagged influence of the gross national product on bothconsumer and advertiser spending on the media, although the evidence for the rela-tion between the economy and advertiser spending was weaker than the evidencefor constancy in consumer spending.

Over a decade after McCombs' (1972) original monograph was published,Wood (1986) questioned the descriptive accuracy of the consumer spending aspectof the PRC, noting in particular that McCombs' correlation coefficients wereafflicted by serial correlation. A few years later, Wood and O' Hare (1991) producedevidence that consumers spent more on cable and the VCR than would have beenpredicted by the PRC. Wood and O'Hare also found however, that despite the lackof predictive accuracy of the PRC during what they call the "video revolution," thePRC did hold as a long-term historical generalization. This finding was replicatedby Son and McCombs (1993). Hence, the failure of the PRC in predicting consumerspending during the diffusion of cable and the VCR stands as an anomaly in theresearch literature on media economics.

In McCombs' (1972) original proposal of the PRC, he asserted that one implica-tion of constancy was that spending by consumers and advertisers on the media wasa zero-sum game—new media would succeed only by diverting money from theolder media. However, the research did not support the proposition that cable andthe VCR succeeded at the expense of the older media. This lack of predictive or

92 CHAPTER 5

explanatory power offers an occasion for building a more complex theory of spend-ing on the media.

One of the keys to understanding spending on the "video revolution" by con-sumers is to broaden the inquiry beyond the PRC itself and to examine the competi-tive environment into which cable and the VCR were born. Specifically, it isnecessary to take into account that aspect of the industrial organization modelknown as market structure or the theory of the firm (Albarran, 1996).

The dominant force in the television market when the VCR and the nationalcable channels emerged was the three-broadcast network oligopoly consisting ofCBS, NBC, and ABC. A study by Dominick and Pearce (1976) clearly demon-strated that the network oligopoly led to outcomes associated with this marketstructure in some of the other media industries. Specifically, Dominick and Pearcefound that over the first two decades of television history, program diversitydeclined whereas the homogeneity of network schedules rose substantially. A laterstudy by Wakshlag and Adams (1985), using somewhat different measures, docu-mented the same trend toward lower program diversity. A study by McDonald andSchechter (1988) suggested that the decision process that produced this homogene-ity of products was one based on rivalrous imitation of success. McDonald andSchechter found strong relations between ratings of programs of a given type (e.g.,sitcoms) and the number of programs of that type aired in later time periods. As aresult of the oligopolistic market structure, the networks provided fewer choices inprogramming which can be interpreted as indicating a decreasing number of grati-fication opportunities to consumers.

The importance of lead-in effects or audience duplication during the periodof dominance by the network oligopoly gave rise to the image of the televisionviewer as a largely inert mass of consumers. As a result, the popular image of theTV viewer was that of a beer-drinking, undershirted male who watched what-ever images chased each other across the screen. There is evidence however,that it was not perhaps so much the viewers who were simple as the viewingenvironment provided by the network oligopoly. A study by Tiedge andKsobiech (1986) of lead-in or inheritance effects indicated that even within thenarrow range of options offered by the networks, a substantial portion of theaudience changed channels when alternatives were available. Tiedge andKsobiech computed correlations between the share of the lead-in program andthe following program on the same network. Lead-in effects were at their stron-gest when a program had no competition beginning at the same time and at theirweakest when a network program had two competing programs beginning at thesame time. As Tiedge and Ksobiech summarized their findings, "The feweroptions an audience has to choose from, the greater the relation between itsshare and the share of the lead-in program" (p. 61). Furthermore, whereaslead-in or inheritance effects have not disappeared (Cooper, 1996), there is evi-dence that as cable and the VCR were diffusing, lead-in effects were declining(Walker, 1988). These studies strongly suggest that there may have been greater


demand for choice and variety (i.e., gratification opportunities) than the net-work oligopoly provided.

The likely consequence of the restricted number of choices offered by thenetwork oligopoly was a phenomenon that Peterson and Berger (1975) termedunsated demand. Their analysis of the recording industry shows that the sale ofpopular music declined during periods of high concentration that were alsocharacterized by low content diversity in the music being marketed. Conversely,both content diversity and sales rose again as industry concentration declined.Peterson and Berger's notion of unsated demand implies that consumers mayrespond to the products offered by a concentrated or oligopolistic market struc-ture by simply buying less.

An analogous situation probably developed in the television market due tothe restricted choice offered consumers by the network oligopoly. The differ-ence in the two situations is that consumers did not stop watching television.The TV receiver is after all a one-time expense and in addition, watching televi-sion is a deeply ingrained cultural pattern in most households. As a result, net-work executives may have had few clues that audiences weren't satisfied. This isnot to say that unsated demand is measurable only at the aggregate level of view-ing or sales. Indeed, if national surveys employing gratification or utility mea-sures (such as those in Table 5.5) had been conducted, the data would probablyhave shown that gratifications sought from television were higher than the grati-fication and gratification opportunities actually obtained; an indication ofunsated demand.

To review the theoretical argument developed thus far: the network oligopolyprior to the advent of cable and the VCR produced products in the form of programsthat were highly similar, and as a result of a concentrated market structure andhighly similar products, there probably existed a state of unsated demand amongconsumers that was susceptible to measurement by gratification scales. In otherwords, the structure of the industry probably had a direct effect on the niche dimen-sions of gratifications and gratification opportunities, the utilities underlying con-sumer choice. The next step in the theoretical argument is to show how the marketstructure and its probable effect on gratification utilities resulted in consumerspending on cable and the VCR as well as continued spending on broadcast TV.

The theoretical argument developed in the previous pages provides an explana-tion of why many consumers adopted cable and the VCR. The condition of unsateddemand—the probable low levels of gratifications and gratification opportunitiesderived from network television—created a situation in which consumers werewillin g to spend additional money on cable subscriptions and VCRs to satisfy theirdesires for video entertainment. Although longitudinal studies that span the timeperiod both before and after the inception of these new media are lacking, the stud-ies reviewed earlier which were conducted during the period of their diffusion pro-vide some support for the contention that cable and the VCR provided higher utilityor greater gratification than broadcast television.

94 CHAPTER 5

Whereas indirect evidence suggests that there may have been consumer dissatis-faction with the fare offered by broadcast television, there are no studies known to theauthor which document declining gratification utilities. However, the studiesreviewed previously suggest the superiority of the VCR and cable over broadcast TV.The evidence reviewed earlier concerning the low diversity or choice offered by thetelevision networks suggest specifically that TV schedules failed to provide sufficientgratification opportunities for consumers. In addition to limited choice in programs,network program schedules are rigid and do not provide flexibilit y in time of use forthe consumer. In contrast, VCR and cable offer a greater number of choices in contentand flexibilit y in time of use. This is clearly demonstrated by the breadth measures inTable 5.6 that show cable and the VCR as having greater breadth on the gratificationopportunities factor than broadcast TV. In addition, all three studies reviewed at thebeginning of this section of the chapter clearly show that both cable and the VCRwere perceived as providing more gratification opportunities than TV. Hence, theargument that consumers spent more money on the newer video media because of thegreater choice and flexibilit y in time-use that they offered is a plausible one. Thenewer video entertainment media were able to successfully compete with broadcastTV because they offered precisely what TV lacked; in other words, their niche differ-entiation from television was largely responsible for their success.

THE INTERNET

The Internet is an omnibus medium. It does not consist of a single domain such asnews or entertainment. It includes these traditional gratification domains, but alsoincludes many others such as recorded music and on-line shopping as well. As aresult, the Internet is likely to overlap and compete with the gratification domains ofthe established media. For example, Dimmick and McDonald (2000) found, in ananalysis of 36 consecutive monthly cross-sectional surveys of Ohioans, that boththe diffusion of the computer and the Internet have contributed to a displacement oftime spent viewing television. Figure 2.1 suggests, perhaps the best way of explain-ing such displacements is to conduct gratificaion studies.

Uses and gratifications research on the Internet has been suggested by, amongothers, Morris and Ogan (1996). Similarly, at the conclusion of a recent book onthe Internet, Goff and Albarran (2000, p. 268) observed that "We need to know agreat deal more about what motivations and expectations determine both whenand how people choose to participate in the on-line realm."

The next section of the chapter reports studies of gratification utilities in twodomains, interactive or e-mail and news and information.

The Interactiv e Domain : E-Mail

The use of e-mail, not only for business correspondence but for personal use, hasrecently grown astronomically. Although several descriptive surveys have docu-mented its extensive use and growth, littl e has been done to explain e-mail's popu-


larity for personal use. This section of the chapter reviews findings from a study byDimmick, Kline, and Stafford (2000) and presents additional data analysis toexplain e-mail's displacement of long-distance telephone service.

The study was conducted via a telephone survey with a probability sample (N =309) of residents of Columbus (Franklin County), OH. Respondents were screenedto assure that they used e-mail (excluding chat rooms, bulletin boards, andlist-serves) for personal e-mail, messages to friends, family and acquaintances. Theparticipants in the survey were asked whether they used local telephone service"more," "about the same," or "less" since adopting e-mail. An identical questionwas also asked about long-distance usage. Respondents were then asked 19 gratifi-cation utilities questions about their use of e-mail and the telephone. These gratifi-cations items were derived from a pilot study that used open-ended questions(Stafford, Kline, & Dimmick, 1999).

The gratification utility items were factor analyzed resulting in two dimensions,one of which was designated "sociability" and the other was composed of gratifica-tion opportunity items. The sociability factor is nearly identical to a factor of thesame name which emerged from an analysis of phone gratifications (Dimmick,Sikand and Patterson, 1994). The sociability factor seems to be composed largelyof items pertaining to relation maintenance (Dimmick & Stafford, 1997). The grati-fication questions are shown in Table 5.7 along with key word descriptions whichwil l identify the items when they are referenced later in this section. Only one ques-tion failed to load on one of the two factors.

Using the two gratification dimensions, niche-breadth, overlap, and superioritymeasures were calculated for e-mail and the telephone. The most important resultfrom the breadth measures was that the telephone had the broadest niche on thesociability dimension whereas e-mail had the broadest niche on the gratificationopportunities factor. The overlap measures indicated moderately strong overlap orsubstitutability. The superiority measures clearly indicate niche differentiation atthe between microdimension level. The telephone is superior on the sociability fac-tor while e-mail is superior on the gratification-opportunities dimension. The supe-riority of the telephone on the sociability dimension is no doubt due to the ability ofthe human voice to better serve these highly affective interpersonal gratificationsthan e-mail's printed text.

In order to assess niche differentiation on the within microdimension level,paired Mests were calculated for each gratification and gratification opportunityquestion. The results of these tests (see Table 5.8) show e-mail had higher ratings on"Time," "Far," "Fit," and "Zone," all of which deal with the problems of keeping intouch with those far away or those people the respondents didn't have time to see inperson when time zones or differing schedules pose obstacles to communication.The telephone is rated higher than e-mail on "Close," "Care," "Companionship,"and "Advice." These are all sociability items and are highly affective gratificationspertaining to interpersonal relationships.

Nearly half of the respondents in this study (48%) reported usinglong-distance service less since they adopted e-mail. Of course, this finding

96 CHAPTER 5

TABL E 5.7Telephone and E-Mail Gratificatio n Questions

Sociability Gratifications

to share ideas and opinions (Share)

to send or receive personal messages (Person)

to give or receive advice on personal matters or issues (Advice)

keep in touch with people (Touch)

keep in contact with people who are away (Far)

fun or pleasure of communicating (Fun)

feel or express caring (Care)

give or receive information with people you know (Info)

feeling of companionship with people you know (Comp)

send or receive personal messages with those closest to you (Close)

keep in contact with people you don't have time to see (Time)

Gratification Opportunities

to get the most for your money (Econ)

fits within work schedules (Fit)

simple or easy (Simple)

ease in getting hold of someone (Hold)

communication that is quick or fast (Fast)

communication that is convenient (Conven)

communication with people in different time zones (Zone)

qualifies as a displacement on the time spent macrodimension. The authors ofthe study used the gratification opportunities dimension—the factor on whiche-mail was superior to the telephone—to explain the displacement. Superiorityscores on this factor were calculated for each respondent and the number of"matches" were calculated. A match occurred when a respondent's superiorityscore was higher for the telephone and the respondent had also indicated that his


TABL E 5.8

Factor Analysis for Gratification s Sought From News Media (N = 415)

Cognitive Factor

The news media help me keep in touch with international events

The news media fi t into my busy schedule

The news media keep me in touch with local issues

The news media provide an explanation and analysis ofcomplex issues

The news media provide the latest updates on stories

The news media keep me in touch with events in the U.S.

The news media provide stories on a variety of topics

The news media give me in-depth information aboutgovernment officials

The news media give me information as quickly as possible

The news media give me accurate, objective information

The news media carry detailed information about current issuesand events .69720

alpha = .78

Affective Factor

The news media give me relief from boredom

The news media make me feel good about the worldand people in it

The news media give me things to talk about with family and friends

The news media provide a pleasant way to fil l my time

The news media are exciting

The news media help me plan my daily activities

The news media give me something to think about other thanmy own problems

Writers and reporters in the news media are like people Iknow.48488

alpha = .72 Interfactor correlation -.397

.32346

.32018

.62089

.30971,25148

.67107

.67661

.54212

.58907

.42614

.59178

.49525

.59821

.46738

.57838

.57309

.44614

.35646

.48488

97

98 CHAPTER 5

other long-distance usage was "about the same." Conversely, a match occurredwhen a respondent's superiority score was higher for e-mail and the respondentsaid that he or she used the phone less since adopting e-mail. Matches wererecorded for 58.4% of respondents who used long-distance less and in 61.8% ofthe respondents whose long-distance usage was unchanged.

Further analysis of the data in Dimmick, Kline, and Stafford (2000) was under-taken at the within-microdimension level. The first step was to conduct Mests usingthe 19 microdimensions as independent variables and groups defined by using thetelephone "less" and "about the same" as independent variables. At this unvariatelevel, ten of the variables showed significant differences.

The second step in the analysis was to enter the ten variables displaying signifi-cant differents at the univariate level into binary logistic regression analyses. Bothforward and backward step-wise methods were used to isolate the best predictors ofbeing in the "less" or "about the same" group. The -2 Log Likelihood statistic andthe Goodness of Fit statistic suggested that the fit of the final model was adequate.The model was able to correctly classify correctly 61.5% of the cases.

The results of the niche microdimension analysis show clear differencesbetween those respondents for whom e-mail has displaced some long-distance tele-phone use and those respondents who reported not altering their phone use sinceadopting e-mail. The variables associated with the displacement were two e-mailmicrodimensions, EECON ("to get the most for your money") and EINFO ("tokeep in contact with people who live far away"). EECON is a gratification opportu-nities item while EINFO and TFAR scaled on the sociability factor.

The item TFAR (to keep in contact with people far away) associated with sta-ble phone use indicates that, although these respondents have access to e-mail, thephone is still perceived as the best means for communicating with friends, family,or acquaintances who live at a distance. A study conducted at Bellcore andreported in Baldwin, McVoy, and Steinfield (1996) identified four communica-tion problems that emerged from a national survey. One of these problems wassimply staying in touch. For those who did not change their long-distance usage,the phone is apparently a satisfactory medium for staying in touch with relativesand friends at a distance.

Of the two microdimensions related to the displacement EECON, as indicatedby the magnitude of the partial correlation, has the strongest association. Theimportance of this variable suggested that there might well be an income differ-ence between those who use the phone less and those who had not altered theirphone use. Specifically, those who are using the phone less since adopting e-mailmay have lower incomes than those whose phone use was stable. Hence, a t-testwas performed with income as the independent variable and the groups using thephone "less" and "about the same" as the dependent measure. The mean incomefor the displacement group was slightly higher than that for the stable group butthe difference was not statistically significant (t = .879, df = 277, p = .381). Hence,the differences in the two groups' perceptions of the value of e-mail is not associ-ated with differences in income.


If the perception of e-mail as the best value is not rooted in the objective rela-tive incomes of the displacement group and the stable group, where would sucha belief come from? It cannot be the result of explicit cost calculations since,unlike long-distance phone service, e-mail is not a metered service. Due to thecompetition among phone providers, that has been manifest to even the mostcasual observer of broadcast TV or cable commercials, it is relatively easy forthe consumer to ascertain the cost-per-minute of long-distance use. On the otherhand, e-mail users simply pay an Internet Service Provider (ISP) a monthly feethat entitles them to other services in addition to e-mail. As a result, a strict eco-nomic comparison of the two services by consumers on the basis ofprice-per-unit is not feasible. The belief current in the displacement group thate-mail is a better value may simply stem from no more than a general impressionthat their ISP bill is lower than their monthly long-distance phone charges.

The second microdimension related to the displacement was E-info ("to giveor receive information with people you know"). First of all, it is important tonote that this gratification is a question that characterizes the object of commu-nications as the exchange as "information." None of the highly affectivelycharged gratifications questions related to such things as "advice," "compan-ionship," or to "express caring" are related to the displacement, only the ques-tion pertaining to the affectively neutral "information." The absence ofgratification items that are highly affective is probably because these sorts ofitems (what scale on the sociability factor) are best served by the telephone asshown in the analyses by Dimmick, Kline, and Stafford (2000). Thus, the asso-ciation between the displacement of the long-distance phone by e-mail mayindicate that e-mail is perceived by this group as being useful for communica-tive exchanges relatively low in affect and relatively high in factual content or"information." Although Walther (1992,1993) showed that relationships can becarried on through e-mail, this does not mean that people wil l find the phone ande-mail equally efficacious in meeting the goals of all interactions.

The findings in this analysis suggest that choice of the phone or e-mail may inpart be explained by the relative leanness or richness of the two mediums (seeRice 1992, 1993). E-mail is generally considered a lean medium whereas thephone is a richer medium in its communicative possibilities and one step closerto face-to-face interaction than e-mail. For those in the displacement group,e-mail may be preferred when the communicative goals involve relatively lowaffect or emotion and relatively high factual information and content. In such asituation, especially for those who view e-mail as less expensive monetarily, thephone may be viewed as an unnecessarily rich medium and an unnecessarilyexpensive one. Hence, e-mail may be chosen over the telephone for low-affective/high-information activities, such as organizing a family reunionamong far-flung relatives, not only because it is believed to be less expensivebut also because it is a leaner medium appropriate to the communicative task.However, this ex post facto interpretation requires testing in future researchsince other interpretations are possible.

1 00 CHAPTER 5

Interne t News

A preliminary study was first undertaken to assess the gratification utilit y pat-tern associated with using Internet news. Stempel, Hargrove, and Bernt (2000)have suggested that explaining Internet news usage patterns in relation to theuse of established media may require uses and gratifications research.Because this first study was conducted for multiple purposes, that limited theinterview time available for asking gratification questions, only gratificationssought (GS) were measured. Gratifications obtained questions (GO) requireasking each gratifications item about every medium used by a respondentwhile measuring gratifications sought only requires asking each questionabout some domain, in this case the news media. However, since the nichemeasures introduced earlier in this chapter require measurement of GOs,breadth, overlap, and superiority cannot be computed. Nevertheless, theresults of this study may be used to hypothesize some features of the emergingniche of Internet news.

Respondents in the study were 467 residents of the Columbus (FranklinCounty), OH metropolitan area, 121 of whom used the Internet for news.Respondents were located using standard RDD procedures and were inter-viewed by telephone. Respondents were first asked whether they used any offiv e news media—TV or cable, newspapers, magazines, radio, or theInternet—on a regular basis. The interview was terminated if the respondentsused none of these news media regularly. After determining which news mediawere used regularly, the interviewers then asked questions concerning howmuch time was spent with each of the regularly used media. Then each respon-dent was asked 24 gratifications sought items. Finally, the interview concludedwith demographic questions.

A principal axis factor analysis established that two dimensions—cognitiveand affective—could be used to explain respondents' answers to the gratificationsquestions. Table 5.8 shows the factor structure and the items both of which arehighly similar to the factor structures reported in an earlier section of the chapter.Only those items which loaded on the cognitive aaffective factors are reported inthe table. For the purposes of this study, four gratification opportunity items wereasked during the interviews. Contrary to the results obtained in the entertainmentand e-mail studies, these items did not form a separate factor but instead loaded onthe cognitive factor. The gratification opportunity items are "busy schedule," "lat-est updates," "variety," and "information quickly."

Analysis of the demographic and media use data revealed several statisticallysignificant differences. First, men are more likely to be Internet news users thanare women. Furthermore, those who are more educated, those with higherincomes and those who are younger are more likely to use the Internet for news.In addition, those who use the Internet for news also use a greater number ofestablished news media and spend more time with the news media as a wholethan the non-Internet users.

THE GRATIFICATION-UTILITY NICHE 1 01

Comparison of the two gratification sought factors for Internet users andnonusers show that the means (users = 1.43, nonusers = 1.53, where higher val-ues denote lower gratification) are significantly different on the cognitive factor(t = 2.29, p = .023), but not on the affective factor (t = 1.26, p = .209). When theitems on the cognitive factor were compared for users and nonusers, significantdifferences were found for four of the GS items—"international" (t = -3.64, p <.001), "latest updates" (t = -1.88, p = .062), "variety" (t = -2.09, p = .038), and"information quickly" (t = -1.79, p = .074). As Rosnow and Rosenthal (1989)pointed out, there is nothing especially sacred about .05 and in a preliminarystudy such as this the mistake one wants to avoid is ruling out relations that havepotential theoretical significance.

In the absence of measures of gratifications obtained and the calculations ofbreadth, overlap, and superiority, perhaps the best way of interpreting the pattern ofresults is to focus first on time spent by respondents with the various media. Table5.9 shows time spent on the four daily news media by regular users as measured infour categories or intervals. The pattern of time spent shown in the table indicatesthat only TV and cable garner a near majority of respondents reporting use in thehighest category (1 hour or more). By contrast, only 15.8% of newspaper readersspent that much time with the medium. Internet users in the 1 -hour or more categorynumber only 21.3%. Perhaps the most striking finding in the table is that 45.4% ofthose who use the Internet spent 15 minutes or less online the day before they wereinterviewed. However, it is rather surprising that time spent on the Internet, avail-able around the clock, is at such a low level for a large number of its users. On theother hand, it is clear from the findings just presented that Internet users are newsaficionados, intensive consumers of news and information. Hence, one mightexpect them to spend a substantial amount of time on the Internet.

The clues which can perhaps resolve this apparent contradiction are to be foundin the differences between Internet users and nonusers on the GS items. Of all the

TABL E 5.9

Time Spent With Five News Media "Yesterday"

Less than 15minutes

15-29 minutes

30-59 minutes

More than onehour

Newspaper

(N = 321)

22.1

30.2

31.8

15.8

TV/Cable

(N = 412)

12.6

12.4

29.8

45.1

Radio

(N = 215)

39.5

21.4

20.0

19.1

Internet

(N = 108)

45.4

16.7

16.7

21.3

1 02 CHAPTER 5

GS items in Table 5.8 that bear on substantive topics—"national," "local," "inter-national," "events and issues," and "government officials"—only the item on inter-national news is statistically significant. The other three statistically significantitems are gratification opportunities. Two of these items—"updates" and "informa-tion quickly"—suggest logging onto news sites for brief periods of time and alsosuggest that it is the speed of accessing information that is important. Hence, thefact that users value international news more than nonusers and also seem to valuegetting news quickly does not imply expenditure of a great deal of time spent ifthese gratifications sought are predictive of what they actually obtain from newssites on the Internet. On the other hand, the other significant gratifications opportu-nity item ("variety") may be the expectation which influences the 21.3% of Internetusers to spend an hour or more online.

Rather than draw firm conclusions from this preliminary study, it seems moreappropriate to offer hypotheses that can be tested in another study which measuresgratifications obtained and can therefore employ the niche measures of breadth,overlap, and superiority. This study suggests that the Internet wil l likely be per-ceived by its users as superior to the established news media on the gratificationsopportunities dimension.

A follow-up study was performed to test this hypothesis with 211 respon-dents who used Internet news and at least one other daily news medium. Therespondents were chosen using Random Digit Dialing techniques and the "mostrecent birthday" method from Columbus (Franklin County), OH tele-phone-owning households. Respondents were asked the eight gratificationopportunity questions shown in Table 5.10 as well as displacement questionsidentical to those used in the e-mail study as well as demographic questions. Thegratification opportunity questions were asked about each daily news mediumthat the respondent used regularly.

Principal-axis factor analyses established that the gratification opportunityitems formed a unidimensional scale for each of the daily news media—TV news,newspaper, radio, cable, and the Internet. The alpha reliability for the TV news fac-tor was .83 and .81 for the Internet gratification opportunities. The displacementquestions indicated that all the media had suffered some erosion by the Internet butthat the displacement of TV news was by far the largest. Hence, this brief summaryof the study concentrates on the effect of Internet news on TV news. Of the sample,33.8% reported using TV news less after adopting Internet news, whereas 54.9%reported no change and 10.9% reported using the medium more.

The overlap measures show moderate overlap between TV and the Interneton gratification opportunities. The superiority measures show the Internet supe-rior to all the other daily news media; all are statistically significant with theexception of cable news. Thus, the hypothesis which motivated the study—thatthe Internet would be perceived as superior on the gratification opportunitiesreceived almost complete support. At the level of the microdimension Mestsshowed that the Internet was rated significantly higher than TV news on all eightgratifications opportunity items.

THE GRATIFICATION-UTILITY NICHE 1 03

TABLE 5.10

Gratificatio n Opportunit y Questions for Daily News Media

For news that fits into my busy schedule

To get the latest updates on news stories

To obtain news at the times I want it

For stories on a variety of topics

To get information as quickly as possible

To use my time wisely

For a variety of choices in news coverage

For convenient access to news

To assess the impact of the individual microdimension on the displacement,r-tests were conducted between the displacement group and the stable group usingthe eight gratification-opportunity items. The Internet means were significantlyhigher for the displacement group on three gratification-opportunityitems—"schedule," "updates," and "variety"—were also found to be significant inthe study reported previously in this chapter.

Taken together, the two studies of Internet news suggest that the role of Internetnews is as a complement rather than a complete substitute for older daily newsmediums. The first Internet news study clearly shows that the medium is usedlargely for a few minutes at a time and the second study indicates that the Internet issuperior to TV, the most frequently used daily news medium by the sample, on allthe microdimensions. In addition, two of the three significant gratification opportu-nity microdimension "updates" and "schedule" clearly refer to time use. Hence, itappears that the role of Internet news, at least in the Columbus market, is to providequick access at convenient times to the latest news developments.

Conclusion : The Role of Gratificatio n Opportunitie s

One important conclusion which emerges from the studies reported in this chapteris the central role which gratification opportunities play in the use of the media,especially the newer ones.

In the study of the traditional news media, presented at the beginning of thischapter, gratification opportunities were not measured and this is quite likely thereason that radio as a news medium appears to have littl e redeeming value. In thesame study, the fact that TV and newspapers are the most frequently used pair ofmedia might be explained by gratification opportunities. Whereas the newspaperoffers greater depth of coverage and may be superior on this microdimension, tele-

1 04 CHAPTER 5

vision news may be also used by newspaper readers because it is faster, a gratifica-tion opportunity. The first study of Internet news suggested the hypothesis that thisnew medium may be superior, due in large part to the gratification opportunitiesprovided by online news, although the follow-up study clearly shows that Internetnews is perceived as superior to the older daily news mediums on the gratificationopportunities dimension.

Although the role of gratification opportunities in the news media is clearly animportant one, their role in the studies of video entertainment is rather clear andunequivocal. In these studies the newer media—VCR and cable—are clearly supe-rior to broadcast television.

Likewise, in the e-mail study, gratification opportunities played a prominentrole. E-mail was superior to the phone on this microdimension. Furthermore, onegratification opportunity microdimension—pertaining to the economic value ofe-mail—was the variable most strongly related to the displacement of thelong-distance phone by e-mail.

In summary, the studies presented in this chapter suggest that the newer mediaare succeeding not necessarily because of their superior efficacy in satisfyingmedia patrons' needs for information, entertainment or interaction, but ratherbecause they are superior in supplying greater gratification opportunities. Thenewer media are able to supply more choices and greater flexibilit y and conve-nience in the use of patrons' time than the older media, that offer fewer choices andmore rigid time schedules to which users must conform. In short, the newer mediaoffer a greater range of choices and more convenience in times of use and theseattributes may account, in large part, for their success.

Furthe r Aspect s of Competitio nand Coexistenc e

This chapter presents theory and data organized around the major themes of thisvolume, competition and coexistence, and is organized into three major sections.The first section presents a discussion of media content. Discussion of this nichedimension, as noted in chapter 2, has been deferred because there is only one studythat analyzes media content data using the niche measures. Hence, this sectionaddresses problems of inference and method in niche content studies by drawing onthe research literature on media competition which has used content data. A secondsection of the chapter uses the content niche to propose a test of an hypothesisdeveloped in earlier chapters. The third section of the chapter is devoted to the phe-nomenon of serial competition, the analysis of the combined competitive impact ofseveral ecological units on a focal unit. In this case, analysis involves charting thecompetitive impact of magazines, radio, TV, and cable on newspapers and on theadvertising macrodimension.

CONTENT AS A NICHE DIMENSION

As explained in chapter 2, media content is a niche dimension, but because ithas been investigated in only one study (Hellman & Soramaki, 1994), consid-eration of the dimension has been reserved for this chapter. Media content isclearly a resource media organizations and industries depend on for their sur-vival and prosperity, but the study of content poses problems of method andinference unique to this dimension. In the following sections, these problemsare briefly reviewed and several examples are used to illustrate the problemsand their potential solutions. Finally, a study is proposed to test an hypothesisdeveloped in previous chapters, using data derived from content as an example

105

6

1 06 CHAPTER 6

of the sort of studies that could be conducted on the resource dimension ofmedia content.

Nich e Breadt h and Conten t Diversit y

Before embarking on an analysis of the problems of using content to measurecompetition, that involve the overlap measure, it is useful first to offer some com-ments on the breadth measure. The breadth and overlap measures appropriate forcontent studies are those defined in chapter 3 for discrete or nominal categoriesand are used to analyze the advertising data. Recall that the meaning ofniche-breadth resides in the variety of resources used by an ecological unit as wellas the distribution or use across the microdimensions. A broad-niched unit has itsusage distributed evenly across microdimensions whereas a specialist unit usesfewer categories more intensively.

When the concept of niche-breadth is applied to categories of media content, it isapparent that it is identical to the construct of content diversity. Diversity is gener-ally defined as the number of choices available to the media patron whether thechoices involve TV entertainment programs or the variety of news stories available.Clearly, the broader the content niche the greater the diversity of content. A broadniche would reflect a flat distribution of content units across categories and hence,wider choice, whereas a narrow niche would consist of content units concentratedin a few content categories.

Furthermore, the similarity between niche-breadth and diversity is not merelyconceptual. Some of the indices used to measure diversity are computationally verysimilar to the breadth measure. For example, Litman (1992) used theHirschman-Heifindahl Index to measure diversity whereas Grant (1994) used whatin ecology is known as the Simpson Index (Simpson, 1949) to calculate diversity.Al l three measures—niche-breadth, the HHI, and the Simpson Index—have astheir central operation squaring the proportions of units in the categories and thensumming them. Hence, there is a mathematical and a conceptual similarity betweendiversity and breadth.

The importance of this similarity is that diversity, when understood asniche-breadth, acquires meaning within a theoretical context rather thanremaining a relatively isolated construct. For example, Litman (1998) assertedthat in response to competition from cable and the VCR, the TV networks haveconcentrated on content categories where they believe they have an advantage,such as soap operas and prime-time series, and have abandoned other contentforms, such as theatrical movies and some major sporting events. If breadthmeasures of the networks' content across time actually show this narrowing ofthe content niche, the change can be interpreted in niche theory terms as a typi-cal outcome of competition, a narrowing of one medium's niche in the face ofcompetition. Therefore, there are clear advantages in interpreting content diver-sity as niche-breadth because such an interpretation brings theory to bear onwhat has essentially been a descriptive construct.

FURTHER ASPECTS OF COMPETITION AND COEXISTENCE 1 07

Van Cuilenburg (2000) proposed that diversity can be studied at four differentlevels: content units, such as a TV program or newspaper story, content bundles,such as a TV channel or newspaper, at the level of an industry, such as cable or mag-azines, and at the level of the society's media system as a whole. Because the nichecan be defined at the level of the organization or firm or at the level of a medium orindustry, it is at these two levels (levels 2 and 3) that one could meaningfully con-ceptualize and measure diversity as niche breadth.

The following section focuses on the concept of competition and its measure-ment by the overlap measure.

The Overla p Measure as an Index of Competitio n

The first problem one encounters in designing studies of the content dimension isdefining the proper categories. Even a seemingly simple message like a TV com-mercial or a newspaper ad is, in fact, a very complex set of symbols and selectingcontent attributes for encoding into categories is a crucial and problematic mea-surement decision. In studies of media competition and coexistence it is of coursecrucial to select content attributes that are related to competition.

It should be noted that this problem does not arise in the cases of the otherresource dimensions. For example, consumer spending is simply recorded in dol-lars for each medium. Similarly, the categories of advertising spending are thoseused by the industries being studied such as "local," "spot," or "classified" advertis-ing. The validity of gratification-utility measures is assured if the questions ormicrodimensions are drawn from carefully conducted pilot studies.

On the content dimension however, assuring that the content categories are thosewhich actually reflect competition is less straightforward. There are a number ofinfluences that act on media content and competition is only one of many. The bestguide to those content attributes that reflect competition is of course, previous the-ory and research. However, in the absence of such guides, the analyst must choosecarefully those attributes likely to reflect content on the basis of knowledge of theindustry or the organizations being studied and on the concrete competitive situa-tion under analysis.

A problem closely related to that of choosing categories that reflect competitionis the problem of the number of categories. Competition among organizations maylead, in some cases, to purveying similar content, or, conversely, to content differ-entiation. Hence, the number of categories must be large enough to capture contentdifferentiation if, in fact, it exists. A small number of categories may result in cod-ing items of content reflecting actual dissimilarity into the same category, thusobscuring the existing differentiation.

A second potential problem lies in the meaning of the indices used to measurecompetition. The indices most likely to be useful in measuring competition are thebreadth and overlap measures. The overlap measure indexes the ecological similar-ity of two or more organizations or industries. The problem is that the content of twoorganizations may be similar or may overlap strongly, but this similarity may not

1 08 CHAPTER 6

indicate competition, as later analysis shows. Content may be similar for many rea-sons only one of which is that the organizations are in strong competition. There-fore, even if overlap is high, the analyst should seek information outside the contentdata to assure that competition is actually occurring. Probably the best source ofsuch independent evidence is the other niche dimensions. If two organizationsoverlap strongly on the content dimension, one should be able to observe the conse-quences of the competition on other niche dimensions. For example, if the contentoverlap between two television stations in the same market is high, is there a corre-sponding similarity between their audience size and demographics of the productthey are selling to advertisers? Four examples of content research can be used toillustrate the potential difficulties involved in drawing inferences about competi-tion based on media content.

The first example is a study done by Dominick, Wurtzel, and Lometti (1975) ofthe news programming of three New York City television stations. At the time thestudy was conducted, the "Eyewitness News" format was an innovation that hadbeen adopted by one of these stations (WABC), and the goal of the study was toassess news content between the stations to ascertain whether the innovative newsformat had resulted in content differences. The content of the three stations' eve-ning newscasts was analyzed for two composite weeks using a measure of minutesdevoted to the following six categories: (a) hard news, (b) features, (c) human inter-est, (d) violence, (e) humor, and (f) on-camera interactions of news personnel.Dominick et al. reported that although WABC did not spend less time on hard news,the station did use more violent news, more human interest stories, and morehumorous news items.

Using the data in Dominick, Wurtzel, and Lometti (1975, Table 1), breadth andoverlap were calculated for the three stations and these measures are shown in Table6.1. The breadth measures show that WABC was slightly broader in its niche thanthe other two stations that exhibit nearly equal breadth measures. The overlap mea-sures indicate a remarkable similarity in the three stations' coverage. Recall thatthis overlap measure (see chap. 3) is an index where low values indicate strongresemblance and higher values denote less similarity. All the overlap values in thetable are near zero. Hence, the overlap measures could be interpreted as indicatingstrong competition.

Before making this inference however, two strong reservations should beconsidered. First, the number of categories is rather small making it somewhatlikely that differences are being obscured by being encoded into the same cate-gories. This is especially true of the "hard news" category. Calculating the per-centage of time devoted to this category from the data in Table 1 of Dominick etal.'s (1975) study shows that the majority of all minutes in the newscasts for thethree stations were coded into this single category. The percentages are 55.9%for WABC, 61.1% for WNBC, and 63.5% for WCBS. It seems quite likely thatthe "hard news" category contains stories which may have actually shown nichedifferences in the three stations.

FURTHER ASPECTS OF COMPETITION AND COEXISTENCE 1 09

TABL E 6.1

Breadth and Overlap Measures for Three TV Stations

Breadth

WABC .452

WNBC .372

WCBS .370

Overlap

WABC/WNBC. 024

WABC/WCBS .010

WNBC/WCBS .011

Note. Computed from raw data in Dominick, Wurtzel, and Lometti (1975, Table 1).

However, it is possible that high content overlap could exist among TV stationsin one of the country's largest markets. In such a large market, there may well existsufficiently strong demand for advertising that the three stations could coexist com-fortably despite high content similarity. Still, the inference that strong competitionis occurring would be strengthened considerably by independent evidence. Forexample, the demographics of the three stations' newscasts could provide data indi-cating whether the audiences are similar or differentiated. Strong similarity in thedemographic profiles would lend credence to the inference that strong competitionis occurring. Interviews with the three stations' sales personnel could revealwhether they are targeting the same or similar advertisers. If they are, this wouldalso strengthen the inference of strong competition.

In all studies of news content, there are additional reasons aside from the sixcategories, for believing that the overlap measures may not be totally accuratemeasures of competition. This fact is made clear in a study by McCombs (1987)of the content of two metropolitan daily newspapers in Cleveland, the "Press"and the "Plain Dealer." It is clear, given the exposition in chapter 1, that thesetwo papers serving the same geographic area and competing for the same read-ers and advertisers should be in a strong competitive relationship. Hence, itwould not be surprising to find high similarity or overlap in their content.McCombs analyzed the two papers' content using constructed weeks for 1980when both coexisted, and the "Plain Dealer's" content in 1983, after the "Press"had ceased publication. Calculation of overlap from data reported in McCombs'Table 2 yields a very high 1980 overlap of .012. Furthermore, this strong simi-

110 CHAPTER 6

larity is not likely to be an artifact of a small number of categories becauseMcCombs used 14 categories ranging from political news to "accidents" to"agriculture" to "education." In short, everything seemed to indicate strongcompetition between the papers and the inference of strong competition seemedto be validated by the death of one of the papers, probably due to the factorsoutllined in chapter 1.

Yet there are good reasons for supposing that the overlap may overstate thesimilarity of the two papers' content. McCombs (1987) pointed out two separatefactors which could result in content similarity. One is the competition whichundoubtably existed, and the other is the similarity in news judgment of the twoorganizations'journalists resulting from "... the similarity of their professionalvalues, beliefs, and practices" (McCombs, 1987, p. 741). Both factors obvi-ously contribute to the similarity of news content. Therefore, in the realm ofnews content, overlap between organizations reflects some combination of bothinfluences and is not merely an index of competition. In other words, these twoinfluences are conflated in high overlap measures of news content and it isimpossible to separate them. Hence, hypotheses that predict high overlap ofnews content due to competition cannot adequately be tested. In this case, evi-dence from other niche dimensions should certainly be employed and overlapmeasures eschewed entirely.

A third example of using content data to draw inferences about competition isprovided by Hellman and Soramaki's (1994) study of the U.S. video market in the1980s and 1990s. These authors conceptualized the major fil m studios and the inde-pendents as two strategic groups (see chap. 4) within the fil m industry. Theseresearchers expected the majors to be broader niched generalists and the independ-ents to be relatively narrow niched specialists and they expected the overlapbetween the two groups to have increased over time. The hypothesized pattern didnot appear in the video rental market but the expected pattern was manifested in thesell-through market.

In measuring the content of videocassettes, Hellman and Soramaki (1994) clas-sified titles into six main categories and some twenty subcategories. Although theydo not explicitly state that the overlap calculations were made using thesix-category system, this was apparently the case as only one overlap measure isreported for each year. Hellman and Soramaki's Table 3 showed that overlapremained high between the two groups for 1982,1986, and 1990 for the rental mar-ket but declined across the same years in the sell-through market. However, inexamining what they term certain strategic subcategories, they found differencesbetween the two groups in the rental market where the overlaps calculated using thesix-category system were consistently high, indicating strong content similarity. Asa result, they concluded, "that even in rentals there seems to be a kind of division oflabor between the two industry groups which the calculation of content nichescould not distinctly differentiate" (p. 42).

Whereas Hellman and Soramaki (1994) seemed to reach roughly the right con-clusions, their analysis would have been more straightforward and less circuitous if

FURTHER ASPECTS OF COMPETITION AND COEXISTENCE 1 1 1

not for two problems. The first problem lies in the number of categories used to cal-culate overlap and the second is a problem in levels of niche analysis.

The use of only six categories to compute overlap probably results in the consis-tently high overlap found in the rental market. Recall that their hypothesis is one ofdifferentiation, that the majors and independents are two distinct strategic groupspursuing different strategies by purveying differing content. The use of such a smallnumber of categories may not allow such differentiation to actually appear. Theseauthors seem to indicate, as their previous quote suggested, that the niche measurescould not yield such differentiation. The problem, however, does not lie in the over-lap formula but in the categories. The sensitivity of the overlap measures dependson the sensitivity of the category system underlying the overlap calculation and sixcategories do not provide a great deal of discrimination.

The second problem lies in the distinction between levels of niche analysisexplained in chapter 2. Hellman and Soramaki (1994) found differentiation inthe rental market by examining percentages of some of the subcategories afterrejecting their overlap analysis of the six main categories. A clearer notion ofmacro- and microdimensions might have solved the problem. These authors ineffect treated all content as a macrodimension and calculated overlap using thesix categories as microdimensions. An alternative way of conceptualizing theanalysis would have solved both the problem of the small number of categoriesand the confusion of the levels of niche analysis. Each of the six categories couldhave been treated as a macrodimension composed of the subcategories as micro-dimensions. Overlap could then have been calculated on each macro-dimensions. The results of these calculations would have provided a greaterprobability of capturing the existing differentiation, and at the same time, pro-vide clear demarcation of competition in the six dimensions.

A fourth and final example of the use of the overlap measure on content datais drawn from the years 1926-1956 when radio was the major mass entertain-ment medium and the radio networks were the undisputed rulers of theindustry. Figure 6.1 shows the overlap measures for the 30-year periodbetween NBC (the red network) and CBS. The overlaps were calculated usingdata compiled under the supervision of Harrison Summers (Summers, 1958),and represented some 17 program categories (collapsed from 30) aired in the 7p.m. to 11 p.m. time period.

The key question, as in the earlier examples, is the extent to which the overlapmeasures in Figure 6.1 are accurate reflections of competition. Time-trend dataare perhaps the most seductive data displays of all, inviting the analyst intoRohrshach-like interpretations of their meaning. Figure 6.1 indicates that CBSand NBC were competing strongly (airing identical schedules) at the beginningof their history, becoming very differentiated during the middle years of theirdynasty, and relapsing into moderately strong competition toward the end oftheir reign as the monarchs of entertainment. In fact, only the middle years ofthe graph reflect accurately the competitive situation. The appearance of stron-ger overlap at the beginning and ending of the period is in fact, quite misleading.

1 1 2 CHAPTER 6

FIG. 6.1. Overlap for NBC and CBS radio networks.

The apparent strong competition in the late 1920s and early 1930s is an artifactof the evolution of the medium. Radio was still a new form in this period, a nascentindustry (see chap. 1) that was still in the process of developing appropriate formsof programming for a sound medium. In the early years, much of the program-ming was musical in nature and therefore was concentrated in a small number ofcategories on all the networks. As new program types evolved, the networksbecame more differentiated as shown by the larger value of the overlap measure.In fact, as Figure 6.1 shows, overlap decreases until the advent of World War II.There was apparently littl e rivalrous imitation among the networks, unlike thecontemporary TV networks, because programming was largely controlled by theadvertising agencies and sponsors and the networks simply sold available timeslots (Dimmick & McDonald, 2001).

However, overlap increases sharply following W.W. II , but this also is mis-leading and does not denote a period of rivalrous imitation leading to a strongsimilarity in programming. The increase in overlap from the late 1940s to themiddle 1950s actually is due to the impact of television. Elsewhere in this vol-ume (chap. 3) it was demonstrated that TV had an immediate and strong impacton radio. Underlying the pattern of increasing overlap in Figure 6.1 is the defec-tion of advertisers to TV, often taking programs with them, with the result being


a rapid decline in the diversity of radio programming on the networks to a merenews service.

The previous section attempts, through the analysis of examples, to isolate theperils of using content analysis of the media to gauge competition. To brieflyreprise the results of this analysis a simple list follows:

1. It is essential to choose categories which reflect competition and to use asufficiently large number of categories because, as the examples show, asmall number of categories may result in an inflated overlap measure thatunderestimates existing niche differentiation.

2. Overlap measures of news content are always misleading as they are con-flated with other variables. In analyzing competition among news organi-zations the use of other resource dimensions in addition to content isclearly indicated.

3. Even where content overlap measures appear to be appropriate, it is necessaryto validate them using data or information from other resource dimensions.

4. As the radio example indicates, there is no substitute for contextual infor-mation on the organizations and industries being studied. Once again,inferences about competition from content data alone are risky.

5. Finally, in designing studies of content competition it is necessary, as the vid-eocassette study illustrates, to clearly distinguish the relevantmacrodimensions and microdimensions.

Having surveyed the problems of method and inference likely to afflict studiesof content competition, the next section offers a design to test the strategic grouphypothesis developed in chapter 4 through the content analysis of spapers.

Measurin g the Conten t Niche : An Illustrativ e Stud y

This section of the chapter proposes a study to test the hypothesis that the vari-ous levels of "umbrella competition" in the newspaper industry represent strate-gic groups. The hypothesis states that the levels actually represent ageographical partitioning of the urban areas in the U.S. and that this geograph-ical partitioning by metropolitan dailies, suburban dailies, satellite city dailiesand weeklies serves to reduce competition between members of these strategicgroups by cordoning off a sector within which each paper has a pool ofresources—advertisers and potential subscribers—for which it has littl e com-petition. This spatial partitioning has the effect of preserving the industry fromthe strong and often mortal competition between metro dailies which prevailedin the early decades of the 20th century (see chap. 1).

As noted in chapter 4, testing hypotheses regarding the existence of strategicgroups has been problematic. The earliest research in this area often used cluster

114 CHAPTER 6

analysis until it was discovered that there existed strong reasons for questioningthe ontological validity or the "reality" of groups derived from cluster analysis.A more recent methodology—the cognitive approach—uses interviews withindustry executives to isolate strategic groups. However, to date this approachhas been largely qualitative and does not accord well with the traditional meansfor testing hypotheses.

The content niche dimension alternately, provides a rationale for testing the stra-tegic group hypothesis in the newspaper industry. The various levels of umbrellacompetition—the hypothesized strategic groups—are expected to vary systemati-cally in their content. The content specialization has been characterized by Lacy,Coulson, and Cho (2000, p. 1) in this way:

First, metropolitan dailies that provide substantial regional, national and internationalcoverage that is attractive to a wide-geographic area. Although the papers often circu-late across the state, they also provide local coverage for the central city and suburbs inwhich they circulate most heavily.

Second, satellite-city dailies that carry a fair amount of regional, national and interna-tional news but tend to be more locally oriented than the metros. These newspapers arelocated away from major metropolitan areas and do not aim to serve as wide a circula-tion area as metropolitan daily newspapers.

Third, suburban dailies that primarily cover the suburban cities in which they arelocated. They are found in suburbs that have large populations and an active retailbusiness. The content tends to be very heavily oriented toward the city and county inwhich the paper is located, although these papers may carry some national and inter-national coverage from wire services.

Fourth, weekly newspapers that are exclusively local and include paid-circulation andfree-distribution papers. In Rosse's model these were either suburban non-dailies orspecialized weekly publications in the metropolitan area.

It is clear from Lacy et al.'s depiction that there is a content continuum inthe levels with the weeklies being most specialized in content, whereas themetropolitan dailies are the generalists of the industry. Hence it is possible tostate the strategic group hypothesis in terms of the relative niche-breadth ofthe groups. The niche-breadth should increase as one moves from the lowerlevels (weeklies) through the higher levels (metro dailies). The overlap mea-sure should not be used in accordance with the conflation problem describedpreviously in this chapter.

This hypothesis could be tested by taking a sample of urban areas nation-ally or within a region. Content could then be sampled by using the familiarconstructed week technique. The content categories used in the analysis mightbe adapted from those used by McCombs (1987): local, perhaps divided intocity and county, state, national, and international. Although this is a smallnumber of categories, it is certainly large enough to capture the degree of dif-ferentiation which the theoretical rationale for the study leads us to expect.

FURTHER ASPECTS OF COMPETITION AND COEXISTENCE 115

Restated in terms of a regional or national sample, the hypothesis is that themean niche-breadth increases as one ascends the levels from weeklies to met-ropolitan dailies and that there is statistically significant differences betweenbreadth means for the papers at different levels. Support for these hypotheseswould provide evidence that the umbrella layers or levels in the newspaperindustry do represent strategic groups.

As described earlier, content data alone should not be used to infer competi-tion or differentiation. It was suggested that data from other niche dimensionsbe used to corroborate the content data. In the case of the strategic group(hypothesis) data from the advertising dimension could be used in a confirma-tory role. Just as content is partitioned by the levels of umbrella competition, thetheoretical rationale for the study suggests a parallel partitioning of advertising.Specifically, one should find that sources for advertising are less "local" as oneascends the umbrella layers or that the geographic location of advertiserschanges across the layers. Parallel to the content hypothesis one would expectan increasing generalism in advertising as one ascends the umbrella layers.

Seria l Competitio n

In previous chapters, competition was assessed using measures of niche overlapand superiority which are, of course, always computed pairwise. That is, competi-tion is measured between each pair of populations in a guild or within a gratificationdomain. However, ecologists have conceptualized competition as the total com-bined effect on a focal population by its competitors, called diffuse competition.

Mac Arthur (1972) developed a mathematical theory that shows that even with-out environmental variation a population positioned on a resource dimensionbetween two other populations may be outcompeted if it is too similar ecologicallyto the adjacent competitors. Pianka (1974, p. 239) conducted a field study of lizardpopulations and concluded that, "Low overlap with lots of competitors may be sim-ilar to high overlap with fewer ... competitors." Both Pianka (1988) and Ricklefsand Miller (1999) viewed the potential for diffuse competition as increasing withthe number of resource dimensions used by the populations. In the U.S., vaudevillemay have been the victim of diffuse competition from two other entertainmentmediums, movies and radio.

What is termed serial competition is closely related to diffuse competition andyet is wholly distinct. As the brief overview of diffuse competition suggests, serialcompetition occurs at the level of the community and refers to the simultaneouscontention for resources among the populations in a given time period. Serial com-petition also occurs at the level of the community but represents the combined orcumulative effects of successive invasions on an older focal population or popula-tions. Although he did not use the term serial competition, McCombs (1972, p. 33)defined the process in his discussion of the competitive interactions of the newspa-per with the later-emerging media as follows:

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1 1 6 CHAPTER 6

If one conceives of a mass medium as serving some social or psychological needof each individual in its audience, then the appearance of another medium whichserves that need better (according to some criterion of communication perfor-mance) wil l result in shifts among the audiences. Over time, for example, radio,movies and television took over portions of the news, information and entertain-ment functions of the newspaper.

McCombs' hypothesis is couched in terms of needs or gratifications, and unfor-tunately, time series data on gratifications derived from the newspaper and its com-petitors are unavailable. However, advertising expenditures on the various mediaare available from McCann-Erikson, Inc. since 1935 to the present and these datamay be used to test McCombs' diffuse competition hypothesis. As Figure 2.1 sug-gests however, gratifications are related to advertising expenditures through thetime spent by consumers with the media.

The advertising time-series data compiled by McCann-Erickson, Inc. begins in1935 and continues to the present. During this time period there are sufficient datato test the serial competition hypothesis for radio, TV, and cable.

Figure 6.2 shows the shares of newspaper advertising from 1935 through 2000as well as a combined, cumulative share for radio, TV, and cable. As Figure 6.2shows, newspaper shares exhibit a steady decline and the cumulative three-mediumshares display a sharp increase over time.

As in the analyses of share data reported in chapter 3, time-series regressionanalysis using the exact maximum likelihood method was used to assess the rela-tionship between newspaper shares and the cumulative share for radio, TV, and

FIG. 6.2. Effect of serial competition on newspapers.


cable. As expected there is a significant negative relationship (B = -.809, p <.00001) between the two variables. There is also a significant relation betweennewspapers' share of advertising (B = -.309, p < .003) and a share representing theother media (see chap. 3 for a rationale for this procedure) indicating some dis-placement by other media in addition to the effect of the three "new" media. How-ever, as indicated by the magnitude of the Bs, the effect of radio, TV, and cable ismuch stronger than the effect of the other media.

The results of the analysis show clear support for the serial competition hypothe-sis for radio, TV, and cable. However, these results hold only for the 1935 through2000 time period and there are reasons for believing that both magazines and radiocontributed to serial competition prior to 1935. As noted in chapter 3, newspaperpublishers complained around the turn of the century that competition from maga-zines was lowering their advertising revenues. Although this evidence isnonquantitative and anecdotal, it does suggest the possibility of an effect of maga-zines on newspapers' advertising revenues. Furthermore, the analysis of mediashares of national advertising from the 1920s through the 1930s shown in chapter 3clearly shows a negative relation between radio and newspapers' advertising. As aresult there are reasons for believing that all four mediums—magazines, radio, TV,and cable—may have contributed to the impact of serial competition on newspaperadvertising.

It should be noted that the newspaper industry is not oblivious to the competitiveimpact of TV and cable. Recently, some of the largest newspapers in the countrywere instrumental in forming the Newspaper National Network, an organizationformed for the express purpose of competing for national advertising (on the basisof CPM) with TV. The organization sells advertising in its cooperating papers andtargets the same categories of products such as automobiles that were once theprovince of the visual medium.

This chapter analyzed the problem of researching the resource dimension ofmedia content. The chapter also presented the concept of serial competition andsome analyses to show its historical operation on the newspaper industry. Chapter7 takes as its theme niche differentiation at the national community level, andshows how such differentiation contributes to the coexistence of media indus-tries. In addition, Chapter 7 looks at how the historical process of differentiationof media niches has resulted in a great deal of complexity with which contempo-rary researchers must contend.

The Community-Level :Nich e Difference , Coexistence ,

and Complexit y

The themes of this chapter are niche difference, coexistence, and the complexityof the niches of media industries, especially at the level of the national commu-nity. As pointed out in chapter 2, communities—a set of populations occurringwithin a specific geographic boundary—may be defined at several levels ofanalysis; the international, national, regional, and local levels. Although mostof the analysis in the previous chapters has concentrated on the national level,the analysis of industries has been of single industries or pairs of industries.This chapter continues the community level of analysis begun in the sections onserial competition in chapter 6 by concentrating on the community of mediaindustries as a whole.

The first two sections of this chapter present analyses of the national commu-nity to demonstrate niche differentiation among members of the entire set ofmedia industries. Such differentiation at this level of analysis is importantbecause it demonstrates why so many media industries are able to coexist despitecompetition for resources.

The first section deals with the decline in dominance over time on the adver-tising macrodimension. The second section illustrates niche differentiationamong members of the national media community on the consumer spendingdimension. The final sections of the chapter consider the topic of coexistenceand complexity within the media community and point out opportunities forfuture niche research.

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7

THE COMMUNITY-LEVEL 1 1 9

The Declin e of Dominanc e

A great deal of the space in the earlier chapters was occupied by a portrayal of thecomplexity and intricacy of competitive relations within media industries andbetween pairs of industries. One purpose of this chapter is to ascend levels of analy-sis, to get above many of the intricacies of niche relation as portrayed in the breadthand overlap measures, and to portray over time the effects of repeated and succes-sive invasions of the national media community, and to do so in a fairly simple,straightforward way. What is necessary at this point is a means of summarizing theeffect of these repeated invasions. This objective is accomplished using data onadvertising—the only macrodimension where time-series data are available—andthe construct of dominance.

Whereas the concept of dominance has a long history in bioecology and humanecology and has been defined in varied and somewhat different ways, the meaningof the term in this analysis is a modification of a definition given by McNaughtonand Wolf (1970). The definition used here defines dominance as the niche spacepotentially occupied by other populations or industries.

Perhaps the clearest way of explaining dominance over time is to focus on thehistory of the newspaper. At the beginning of the industrial age in the UnitedStates, the dominant population or industry was the newspaper. As the economyevolved, other industries—first, magazines, then radio, TV, cable, and recently,the Internet—invaded and successfully defined their niches on the advertisingresource dimension. As a result, the advertising guild was probably less and lessdominated by newspapers or any other single industry such as radio or cable.For example, newspapers share of all advertising in 1935 was 44.2%, whereas in2000 it was 20.9%. Decreasing dominance across time accrues to the increasingsubdivision of the advertising macrodimension by the invading industries. As aresult, one should be able to observe a relatively steady decrease in dominanceacross time as new industries are able to define niches on the advertisingresource dimension.

Specifically, the hypothesis is that dominance as measured by the Simpson(1949) index, which is calculated using each medium's share of total advertisingfor each year (1935-2000), wil l decline over time. A rationale for using theSimpson index as a measure of dominance has been given by Pielou (1975). Aspointed out in chapter 6, the Simpson index is nearly identical to theHirschman-Herfindahl index of concentration. It is the sum of the squared adver-tising shares for the media in a single year. The conceptual similarity of "domi-nance" and "concentration" is obvious enough not to require explanation. Largervalues of the Simpson index denote high dominance, that one or a small numberof industries has large shares of total advertising and lower values indicate lesserdominance or a more even sharing of the resource. The Simpson index is a conve-nient way of summarizing the changes wrought in the community as new mediahave entered the arena to compete for advertising.

120 CHAPTER7

FIG. 7.1. Dominance index, 1935-2000.

Figure 7.1 shows the values of the Simpson index, as a measure of dominance,from 1935 through 2000. In 1935, the value of the dominance index is above .20.Despite the usual peaks and valleys routinely seen in time-series data, there is asteep decline in the index across time until it reaches a value below . 10 in 2000, thusconfirming the expectations of a decline in the measure.

The decline in dominance indicates that as the community grows in complexitysuch as the number of populations, resources are more finely subdivided on this sin-gle resource macrodimension. The decline in dominance is a succinct way ofexpressing both the effects of the newer media on the formerly dominant newspaperand expressing the success of the newer industries.

Declining dominance as the number of industries or populations increases couldbe the result of three factors. First, more populations could be accommodated byorganizational mortality among the older media. Second, advertising resourcescould increase somewhat thus "making room" for the newer media on the advertis-ing dimension. Third, niche differentiation could occur as the newer mediacoevolve with the older forms effectively reducing competition. Indeed, all thesefactors to some degree seem to have operated.

THE COMMUNITY-LEVEL h121

First, there has been substantial mortality in the once dominant newspaperindustry (see chap. 1). Probably both within-industry and between-industry com-petition contributed to the net mortality. Within-industry competition is apparent inthe analysis in chapter 1, and latter chapters have documented successive displace-ments of newspapers on the advertising macrodimension by radio, TV, and cable.However, despite widespread net mortality, extinction or exclusion has notoccurred, probably due in part to the newspaper industry's differentiation into stra-tegic groups, as hypothesized in previous chapters.

Concerning the second factor—the possibility that resources might increase toaccommodate new industries—the evidence indicates that this did, in fact, occur insome cases such as the period of cable's diffusion (see chap. 3). However, over theentire time period between 1939 and 2000, there is no evidence of a positive trend inadvertising resources allocated to the media. A time-series regression analysis ofthe percentage of the Gross Domestic Product devoted to advertising using theexact maximum likelihood method shows only a small positive trend (B = .0056),that is not statistically significant (t = 1.06, p = .295). Taken together, the lack of apositive trend in the 1939 through 2000 period and the increase during the cableperiod is consistent with previous research. Wood and O'Hare (1991) found nolong-term increase but did find increases in shorter time periods. Demers (1994)whose analysis encompassed the longest period studied (1870-1990) also did notfind a significant long-term trend but did find increases in some more limited timespans. The absence of a consistent positive trend in the allocation of advertising tothe media over the long term helps account for the number of displacements on theadvertising resource dimension documented in previous chapters. As the theory ofthe niche states, if resources do not increase to accommodate invading populations,alterations in the niches of competitors are the inevitable result.

Finally, there is clear evidence of niche differentiation among the members ofthe national media community which would reduce competition and enhance theprobability of coexistence. Recall (see chap. 3) that the advertising macro-dimension is subdivided into national or network, local, classified, spot and syndi-cation. Differentiation on these microdimensions is manifested in several ways.First, none of the major advertising media—newspapers, radio, TV, cable, andmagazines—use all the microdimensions although TV, as the most extreme genera-list, uses four of the five. Two mediums use microdimensions that are not shared atall with other media. Syndication is exclusive to TV, whereas classified is used onlyby newspapers out of all the major advertising media. Spot advertising is commononly to the two broadcast mediums, radio and TV. Furthermore, as pointed out inchapter 3, there is yet more differentiation at the wimin-microdimension level ofanalysis. In short, there is evidence of considerable niche differentiation.

In summary, the subdivision of the advertising resource dimension over time, asindexed by the decline in dominance, has been the result of the operations of threefactors: newspaper firm mortality, the lack of a consistent increase over time inadvertising resources, and niche differentiation among members of the community.

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Consume r Pric e Differentiatio n Amon g Media Industrie s

Another way of showing differentiation at the community level is by comparing thepricing practices of media industries. It was pointed out in chapter 3 that price dif-ferences in advertising can occur between industries, which in effect, providessome niche differentiation within a microdimension. In mainstream economics, theprice of a good, service or input is usually taken to mean that the price is a monetaryone. However, as Pearce (1992) pointed out, the price of a good or service is essen-tially anything for which it is exchanged. This broader definition of price is essen-tial to understand the pricing practices of the members of the media community andhow these pricing practices result in niche differentiation of industries.

Table 7.1 shows the pricing practices of the major media industries. These indus-tries are divided, in the table, into three categories: industries where products aremonetarily priced, those which are nonmonetarily priced, and those which are par-tially monetarily priced. The industries where pricing is only in monetary terms isthe single largest group comprising such mediums as cable, books, and movies.Dollars spent on these media form a large part of consumer spending on the media.However, there is an important group of industries, including the broadcast media,for which consumers do not pay a monetary price for content. As discussed in chap-ter 2, patrons pay the cost of viewing or listening with their time. Finally, there is agroup of industries comprised of basic cable, newspapers, and magazines which arepartially monetarily priced. Although the consumer pays the subscription cost, it iswell known that this price does not cover the cost of production, let alone even nor-mal profit. In effect, the cost of the basic cable, magazine or newspaper is subsi-dized by advertising.

TABL E 7.1

Pricing Practices of Media Industries

Partially MonetarilyMonetarily Priced Nonmonetarily Priced Priced

Movies TV Newspapers

Premium and Pay-per-view Radio MagazinesCable

Books (some) Websites Basic Cable

VCR Cassettes and DVDs The Community-Level

Telephone

Internet Access

THE COMMUNITY-LEVEL 123

To see the result of these pricing practices, one only has to do a thought experi-ment and imagine what would happen if all media goods and services weremonetarily priced, that the consumer paid the full price for all media products. Onone hand, media patrons would be spending a much larger portion of their dispos-able income for media products and services, or alternatively, purchasing fewermedia products and services. On the other hand, media industries would be in muchstronger competition on the consumer spending resource dimension. The fact thatmedia industries have evolved these differences in pricing practices (shown inTable 7.1) means that there are clear differences in niche on the consumer spendingdimension. The effect of these differences in pricing strategies is to reduce the mon-etary demands on consumers and differentiate the niches of industries in the threecategories so that the intensity of actual competition for consumer dollars is consid-erably below the potential competition.

It should be noted that it is not necessarily the case that media industries haveconsciously chosen to differentiate themselves in their pricing practices. Indeed, aclose examination of the industries' history would probably reveal that historicalaccidents of economics or technology were responsible for the differences. What-ever the origin of the pricing practices however, the result is niche differentiation.

One implication of this brief excursion into pricing practices concerns the mea-surement of demand for the media. Demand is usually conceived as a quantity of aproduct available at a specific price. As Table 7.1 makes clear however, using mon-etary price to calculate demand works only for some media, not for those which areunpriced or partially monetarily priced. Hence, monetary price can be used to cal-culate demand only for those industries in the first column of Table 7.1. To calculatedemand and compare demand for industries in different columns of Table 7.1,another measure must be used. Given the discussion in chapter 2, the obviouschoice for a measure of media demand would be time spent by consumers with eachmedium because the "consumption" of all media products requires time and in thecontemporary world time is a scarce and valuable asset.

Coexistenc e and Complexit y

In his treatise on the intellectual history of the field of ecology, Worster (1994)asserted that Charles Darwin was quite aware that both extinction due to competi-tion and what he called divergence—what modern ecologists call niche differen-tiation—were important forces driving evolution. While Darwin, according toWorster, was quite aware of differentiation or divergence the great biologistemphasized the role of extinction. However, as Worster wrote (p. 161), Darwinknew that"... diversity was nature's way of getting round the fiercely competitivestruggle for limited resources."

The evidence cited in previous chapters of this volume certainly point to the factthat among media organizations and industries, competitive exclusion or extinctionis rare while niche differentiation is common at several levels of analysis. In addi-tion to the examples of differentiation shown in earlier chapters, chapter 6 and this

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chapter have added examples at the community level. Although one can point outonly one possible example of extinction of entire industries or populations (vaude-ville), the foregoing pages of this book have presented numerous examples of"divergence" or niche differentiation. In fact, not only is extinction of entire mediaforms rare, but so is organizational mortality within populations. In only two indus-tries (see chap. 1) has net mortality (births minus deaths) occurred: newspapers andmove theaters. The examples of niche differentiation, alternately, occur in additionto those at the community level portrayed in chapter 6 and in this chapter, withinindustries and between industries.

Within populations of media organizations there may be considerable differ-entiation. For example, if the hypothesis concerning strategic groups in the news-paper industry (developed in previous chapters) is supported, this wouldconstitute a maj or example of differentiation. Other examples may be found in theradio and cable industries. Both populations fall under the economic classifica-tion of monopolistic industries. Firms in this category are generally fairly numer-ous and produce differentiated products (see Albarran, 1996). Within a singlemarket, especially large geographic markets, radio formats are generally com-posed of different genres, styles and periods such as 1980s music, light rock, jazz,or classical music. Similarly, most of the national cable channels are highly dif-ferentiated on the content dimension, offering news, sports, weather, children'sprogramming, or history. Cast in terms of niche theory, these monopolistic indus-tries represent examples of niche differentiation which reduces the severity ofcompetition between the firms within these industries.

There are also numerous examples of between-industry niche differentia-tion. Whereas the newspaper was the first mass medium, the community ofmedia industries has been successively invaded by magazines, radio, television,cable, and most recently by the Internet and the World Wide Web. Each invasionhas altered the niche relations among the earlier mediums. Briefly, there arethree possibilities when an invasion occurs. First, niche overlap and competi-tion may increase with the result that organizational mortality may occur insome industries, or at the extreme an entire industry or industries may perish. Aspointed out earlier, this eventuality is rare. Second, resources may increase sothat competition does not increase substantially despite the presence of a newcompetitor. As pointed out in chapter 3, this appears to be part of the competitivestory that occurred during cable's diffusion. Third, the new competitor may takeover or displace some of the resources formerly used by other populations. Thisthird outcome was demonstrated repeatedly in chapters 3 and 5 as well as by thedecline in dominance demonstrated in this chapter. Alteration in niche seems tobe the most common of the three possibilities.

In earlier chapters, the displacement of newspapers by radio on the nationaladvertising microdimension was documented and further displacements ofnewspapers on the advertising macrodimension by TV and cable. Chapter 3reviewed the displacement of radio by TV on the advertising macrodimensionand the displacement of TV by cable and the displacement and extinction of a

THE COMMUNITY-LEVEL 125

group of magazines by TV. The displacement of long-distance telephone use bye-mail and displacement of some TV news viewing by the Internet was recordedin chapter 5. These displacements are changes in niche, sometimes observableas changes in niche-breadth. In many cases, the result of displacement is a nar-rowing of the niche of the outcompeted medium and the major consequence ofdisplacement is greater specialization. Such specialization makes room for newindustries and at the same time increases the complexity of space sharing on theresource dimensions.

Futur e Researc h

Although the Internet and the World Wide Web are still in their formative period,they have already had an impact on the older media. As noted in the previous para-graph, e-mail and Internet news have had their effects already on the older media.As these new forms mature and grow, there no doubt wil l be other effects on theniches of the traditional media. Internet news sources may displace some uses of theprinted media and other forms, such as Web radio, may displace or alter the niche ofits broadcast counterpart. However, if the past is any guide to the future, changeswil l largely be displacement effects rather than exclusion and extinction and the netresult wil l be even greater complexity of niche relationships. Contrary to some ofthe early grandiose predictions, the Internet and the World Wide Web probably willnot completely replace the older media.

The net effect of successive invasions and changes in the niches of mediaindustries is greater complexity in resource use patterns. This greater complexitymakes it possible for more populations to share or partition the resource dimen-sions. In a word, the complexity of these niche relations makes coexistenceamong industries possible despite a greater number of competitors. To date, thehistory of niche relations among media industries suggests that we should expectwhat Darwin termed divergence, or niche differentiation, to be the consequenceof the invasion by the Internet.

However, the contemporary complexity of niche relationships also poses chal-lenges for the theorist and researcher. The complexity is due in part to the sheernumber of resource dimensions: advertising, consumer spending, gratificationutilities, gratification opportunities, time spent with the media, and media con-tent. The complexity lies not only in these six macrodimensions but also in thatmost of them are subdivided into microdimensions. This volume has presentedresearch on only a small part of this complexity, advertising and gratification util-ities. Consumer spending and the media content dimension largely remain to beexplored. An additional facet of the complexity of niches which remains unex-plored in this volume or elsewhere is the relationships among the niche dimen-sions (see Fig. 2.1). For example, the relationship of time spent to advertisingspending or the gratification utilities' relationship to consumer spending. Thisquestion of what predicts the amount of resources available to the media is animportant one for future research.

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Although the research presented in this volume has largely concentrated on onlytwo resource dimensions, the theory presented in chapter 2 provides a comprehen-sive means of asking questions and formulating hypotheses about relationshipsconcerning all six resource dimensions. Whereas elaboration and modification ofany theory is necessary over time, I believe that the research reported here demon-strates that the theory of the niche is an important tool in studying questions ofmedia competition and coexistence. I also believe that the theory is of sufficientconceptual richness to guide research which analyzes the complexities of mediacompetition and coexistence for the forseeable future.

In fact, if one takes into account all six niche macrodimensions, theirmicrodimensions, and the possible relations between them, it is clear that a greatdeal of research yet remains to be accomplished. It should also be clear that map-ping simultaneously the full multidimensional resource utilization of all contempo-rary industries (or even a single industry) is a daunting task. However, the work inthis volume indicates that the researcher can learn a good deal by studying some-what less than the full complexity of niche relations. I believe that this volume is agood beginning to the study of the complexity of media niches, but it is still only abeginning.

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Autho r Index

A Brittain, J. W., 7Buchman, J., 62

Adams, W., 92 Buzzard, K., 47, 48, 49Albarran, A. B., 25, 28, 59, 70, 76, 88, 90, 92,

94, 124 £Aldrich, H., 8, 26, 27, 65, 66

^rRGCL.!n Campbell, D.T., 2, 3, 8, 11Carlstein, T., 31Carlton, D. W., 28, 36, 72, 73

B Carroll, G.R., 14, 18, 20Carroll, S. L., 59

Bagdikian, B., 21 Chan-Olmsted, S. M., 65Baldwin, T. R, 98 Cho, H., 114Ball-Rokeach, S., 2, 39 Coffm' T- 54

Barney, J. B., 3, 65 Coit' p- 62

Barnouw, E., 10, 50, 59, 67 Colwell, R. K., 40Barry, J. F, 15 Cooper, R., 92Baum, J. A., 68 Coulson, D. C, 114Becker, S., 57 cyert> R- M- 36

Bell, R. H. V., 38Beniger, J. R., 44 pBentler, P. M., 82Berger, D. G., 93 T „„Bernt,J.R, 100 Davenport, L., 22BerStein,I.,87 DeFleur,M.L 2,39,57Berstein,J.M,22 Delacroix, J., 18Bijker,W.E.,6 Demers, D. P., 60, 64, 121Block M 32 Dennis, E., 57Bluml'er J G 30 Dimmick, J., 5, 15, 32, 51, 59, 62, 70, 76, 78,

Blute M 2 3 5 80' 81' 82' 88' 90' 94' 95' 98' "' ] 12

Boesi'ger 'E ' 5 Disney Annual Report, 71,72, 74n~o,o.-t i' <;'n IA IT AT Dobos, J., 81, 82

BoS D. G%2' ' ^"«- ' « « « I* 10»

139

14l

140h AUTHOR INDEX

Eastman, S. T., 62Ehrlich, P., 23Eisner, M., 73, 74Emery, E., 6, 8, 21,43, 45Evans, E. T., 8Eyal, C. H., 91

Hughes, T. P., 6Hunt, M. S., 65Hutchinson, G. E., 24

J

Jacob, S. B., 28Jeffres, L. W., 39Johnson, G. W., 8Johnston, W. A., 15, 17

Ferguson, D. A., 62Ferguson, J. M., 21Fiegenbaum, A., 65Fletcher, C., 38Folkerts, J., 57Freeman, J. H., 5, 7, 11, 21, 23, 26Futuyma, D. J., 40

Gabszewicz, J. J., 43Galbraith, J. R., 72Cause, G. F., 37, 38Gershon, R., 74Georgescu-Roegen, N., 30Gibbons, J. D., 48Glascock, J., 60Godbey, G., 32Goff, D. H., 94Grant, A. E., 106Green, S. B., 48Gurevitch, M., 30Guthrie, T. L., 28Gwynne, M. D., 38

H

Haas, H., 30Hairston, N. G., 52Hall, R., 57, 58Hannan, M. T., 5, 11, 14, 21, 23, 26Hardin, G., 37Hargrove, T., 100Hawley, A. H., 6, 23, 26Hellman, H., 36, 105, 110, 111Herzog, H., 30Holm, H., 23Hoskisson, R. E., 65Howard, H. H., 59Huettig, M., 17Huff, A. S., 65

K

Katz, E., 30Katz, S., 17Kent, F. R., 8King, K. W., 45Kittross, J. M., 54, 55Kline, F., 32Kline, S. L., 95, 98, 99Ksobiech, K., 92

Lacy, S., 22, 28, 57, 66, 114Lau, T. Y., 22Laussel, D., 43Lazarsfeld, P. F, 48Levins, R., 50, 53Lin, C. A., 30Lin, C. T., 86Litman, B., 106Lometti, G., 108, 109Ludwin, W. G., 28

M

MacArthur, R. H., 12, 23, 37, 115Maney, K., 67, 73March, J. G., 36Martin, J. T. W., 47Mayr, E., 1,8, 11,23McCombs, M. E., 39, 60, 91, 109, 110, 114, 115McDonald, D., 92, 94, 112McKelvey, B., 5, 6, 8, 26, 27, 65, 66McNaughton, S., 119McVoy, D. S., 98Mencken, H. L., 8Merton, R., 39Midgley, N., 47, 49Miller , G. L., 12, 14, 24, 37, 38, 115Morris, M., 94

L

E

F

AUTHOR INDEX 141

N

Neurath, P., 18NewsCorp Annual Report, 71, 73, 74Niebauer, W. E., Jr., 22Nieto, A., 33Nixon, R., 17, 18Nunnally, J., 87

Odium, E, 15Ogan, C, 94O'Hare, S., 88, 91, 121Oster, G., 11Owen B. M, 25Owens, H., 8Ozanich, G. W., 68

Palmgreen, P., 30, 86Park, R. E., 13, 18,43Patterson, S., 59, 95Pearce, D., 26, 72, 122Pearce, M. C., 92Perloff, J. M., 25, 28, 36, 72, 73Peteraf, M., 65Peterson, R. A., 93Pianka, E. R., 12, 13, 24, 29, 37, 77, 115Picard, R. G., 21, 22, 25, 30, 31, 36, 45, 70, 72Pielou, E., 119Pinch, T, 6Porter, M. E., 26, 64, 65, 68, 72Powell, W., 10Presbery, F, 44, 45, 46Priemer, A., 45Proco, J., 70

Rice, R. E., 99Rice, S., 4, 15, 16Ricklefs, R. E., 12, 14, 24, 37, 38, 78, 115Rimmer, T, 70Roberts, C., 57Robinson, J. P., 32, 39Roehrich, R., 7, 13Rogers, E. M., 39Root, R. B., 26Rosenthal, R., 101Rosnow, R. L., 101Rosse,J. N., 17,21Rothenbuhler, E., 5, 15, 51, 78

Sargent, E. W., 15Schechter, R., 92Scherer, F. M., 25, 26Schmidt, R., 75Schoener, T. W., 52Schor, J., 32Schulz, W., 29Seaburry, W., 16, 17Shanley, M., 65Sikand, J., 95Simon, T, 22, 66Simpson, E. H., 106, 119Singh, J. V, 68Slobodchikoff, C., 29Son, J., 91Sonnac, N., 43Soramaki, M., 36, 105, 110, 111Stafford, L., 95, 98, 99Stamm, K. R., 28Steinfield, C., 98Stempel, G. H., Ill , 100Sterling, C. H., 54, 55Stones, B., 17Summers, H., 111

Quinn, J. B., 67

Ramsaye, T, 14, 15Ray,R., 18,21Rayburn, J. D., II., 30, 86Reddaway, W., 21Reger, R. K., 65Reid, L. N., 45

Taylor, B., 30Telestatus, 54Thomas, H., 65Tiedge, J., 92Time-Warner Annual Report, 72, 73, 74

u

Ulrich, D., 3

O

S

P

QT

R

142 AUTHOR INDEX

Van Cuilenburg, J. V, 107Van Zuilen, A. J., 57, 58Veronis, Suhler & Associates, 68-69Viacom Annual Report, 74

wWakshlag, J., 92Walker, J., 92Wallschlaeger, M., 32, 70Walther, J. B., 99Ward,!., 17, 18Warner, C, 62Waterman, D., 62Wenner, L., 30White, E., 69Whitney, S., 17Wildman, S. S., 25

Willey, M., 4, 15, 16Williamson, O.E., 71,72, 75Wilson, E.G., 11, 12Wimmer, R. D., 28Wirth, M. O., 68Wolf.J., 119Wolfe, C. H., 47Wood, W., 88, 91, 121Worster, D., 23, 123Wurtzel, A., 108, 109

Y

Van, M. Z., 62

z

Zachariah, M., 2, 8

v

Subjec t Index

Across-industry concentration, 76, see alsoWithin-industry concentration

Advertising guild: coexistence among special-ists and generalists, 61-63

tonnage, 62Affective factor, 82-85, 88-89, 97, 100

Cable, the advent of, 59-61Coexistence and complexity, 123-125

divergence, 123-124niche differentiation, 123-124

Cognitive factor, 81-85, 88-89, 97, 100Community, 26, 118, see also GuildCompetition, 5, 25-26, see also RivalryCompetitive displacement, 40, 55, 58, 60-61,

81,91, 96-99, 102-103, 124-125,seealso

Competitive exclusionCompetitive exclusion, 37, 42, 81,91, see also

Competitive displacementCompetitive superiority, 38-39, 40, 52-54,

56-57,80-81,85-86,90functional alternative, 39displacement effect, 39diffuse or serial competition, 39relative advantage, 39alpha, 52-53

Conservative Darwinists, 2-3Consumer price differentiation among media in-

dustries, 122-123price, 122demand, 123

Daily news media: newspapers, broadcastingand cable, 81-87

Darwinian selection, 5Decision model, 86-87

compensatory, 86-87, 88noncompensatory, 86-87, 88

Developmentalism, 3Displacement, see Competitive displacementDiversification, 69-72

D measure, 70-71conglomerate, 71-72m-form organization, 72related diversification, 72

Dominance, 119Dominance, the decline of, 119-121

Ecology, 23Economies of scope, 72-73

joint products, 72Environment and the niche, 77-78Evolution, 2-3Exclusion, see Competitive exclusion

143

A

C

E

D

144 SUBJECT INDEX

N

Future research, 125-126

Gratification opportunities, 29, 31-32, 88-90,95-96, 102-103

time geography, 31bundles, 31population time budget, 31budget, 31time cost, 31

Gratification opportunities, the role of, 103-104Gratifications, 29, 30-31, see also Utilit y

domains, 30Gratification-utility niche: breath, overlap, and

superiority measures, 78—81gratification-utility niche, 78

Guild, 26, 61, see also Community

H

Hirschman-Heifindahl Index, 76, 106, 119, seealso Simpson Index

Historical narrative, 1-2

I

Impact of TV on magazines, 55-58Industry, 26-27Interactive domain: e-mail, 94—99

sociability, 95-96Interdivisional cooperation, 73-74Internetnews, 100-103

Nature's economy, see EcologyNewspapers and advertising agencies, 43-45

newsletters, 43transaction costs, 44-45list, 45

Niche, 24-25, 77-78Niche analysis, levels of, 40-41

between-macrodimension, 40, 61within-macrodimension, 40between-microdimension, 41, 61, 85, 90within-microdimension, 41, 61-62, 85

Niche and media competition, 4\-42Niche and strategic groups, 64-67

strategic group, 64-67, 113-115cognitive approach, 65, 114

Niche-breath, 37, 50-57, 68, 78-80, 82, 84, 88,90, 106-107, 108-109, 114-115

specialists, 51,55,68, 78generalists, 51,55, 68, 78departure-from-generalism index, 79

Niche breath and content diversity, 106-107typical outcome of competition, 106

Niche-breath strategy, 67-69, 74-75conglomerate, 67information-entertainment, 67megamedia, 67synergy, 67strategy, 68corporate strategy, 68

Niche dimensions, 27-42Niche market, 24Niche overlap, 37-38, 51-54, 56-57, 80-81,

84-85,90, 108-113niche complementarity, 38inverse nature, 51

Niche, the theory of, 24, 55, 68Niche-width strategy, see Niche-breath strategy

Lamarckian evolution, 5Limit s on resources, 36

satisfaction, 36marginal utility , 36

o

Overlap measure as an index of competition,107-113

M

Measuring the content niche: an illustrativestudy, 113-115

Media content, 105-106Media content as a niche dimension, 36

Population, 3-5, 26Population, community and the notion of indus-

try, 26-27technical apparatus, 27core technology, 27

L

F

G

P

SUBJECT INDEX 145

Radio, the rise of, 46-50station rep firm, 48

Radio's displacement by television, 50-55Reform Darwinists, 2-3Resource availability: relations among niche-

macrodimensions, 34—36translation, 34-36

Resource dimensions, 29macrodimension, 29, 33, 34microdimention, 29, 33

r-K selection, 11-14K-selection, 12,67ecological vacuum, 12r-selection, 12-13economies of scale, 14density dependent interaction, 14morality, 14, 15, 17-21

r-K selection: daily newspapers, 17-22liabilit y of newness, 20economies of scale, 21circulation spiral, 21segmentation strategy, 21-22umbrella competition, 22, 113-115spatial segmentation, 22

r-K selection: movie theaters, 14-17Rivalry, 26, see also Competition

Scale, 69Selective retention, 8-11

natural selection, 8psycho-social selection, 8differential diffusion, 8-11differential morality, 8-11

Serial competition, 115-117diffuse competition, 115

Simpson Index, 106, 119-120, see alsoHirschman-Heifindahl Index

Social Darwinists, see Conservative DarwinistsSociocultural evolution, 1, 3

Sociocultural evolution in organizational popu-lations, 3-5

Space: market and community, 27-29market, 28media market, 28Consolidated Metropolitan Statistical Area

(CMSA), 28community structure, 28space, 29

Substitutability of media in advertising, 45 6̂Superiority, see Competitive superiority

Time spent and advertising expenditures, 32-33time, the economic conception of, 32

Utility , 30, see also Gratifications

V

Variation, 5-7polythetic group, 6nascent industry, 6-7, 13mature industry, 6-7innovation, 6diversity, 6, 106-107

Video entertainment media, 87-91video revolution, 87-88

"Video revolution," the PRC, gratification utili -ties, and the structure of the TV industry,91-94

Principle of Relative Constancy (PRC),91-92

lead-in effects, 92-93unsated demand, 93

wWithin-industry concentration, 76, see also

Across-industry concentration

s

T

R

U

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