Soc. 118 Media, Culture & Society
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Transcript of Soc. 118 Media, Culture & Society
Soc. 118Soc. 118Media, Culture & SocietyMedia, Culture & Society
Chapter Two:Chapter Two:The Economics The Economics
of the of the Media IndustryMedia Industry
OVERVIEWOVERVIEW
The Economics of the Media The Economics of the Media IndustryIndustry Changing Patterns of OwnershipChanging Patterns of Ownership Consequences and Effects Consequences and Effects
Mass Media for ProfitMass Media for Profit Prime Time TVPrime Time TV News MediaNews Media
The Impact of AdvertisingThe Impact of Advertising
The Economics of the Media The Economics of the Media IndustryIndustry
Media products as the result of Media products as the result of social processes of productionsocial processes of production The The production perspectiveproduction perspective
Broad structural constraints on Broad structural constraints on media media How economic factors: How economic factors:
shape decision making shape decision making influence media content influence media content
Most critical fact about the media:Most critical fact about the media: Most are a for-profit businessMost are a for-profit business
Underlying goal of organizationsUnderlying goal of organizations
Changing Patterns of Changing Patterns of OwnershipOwnership
Who owns the media?Who owns the media? What is the connection between What is the connection between
ownership and media products?ownership and media products? Three interrelated trendsThree interrelated trends
ConglomerationConglomeration ConcentrationConcentration IntegrationIntegration
Effects and ConsequencesEffects and Consequences
ConglomerationConglomeration
Media companies have become part of larger Media companies have become part of larger corporationscorporations They may have other diverse businessesThey may have other diverse businesses
Because it is profitable for big businessBecause it is profitable for big business Attractive properties for investors and buyersAttractive properties for investors and buyers
Media has become key segment of U.S. economyMedia has become key segment of U.S. economy Move from manufacturing to service economies Move from manufacturing to service economies Media products also major exportMedia products also major export
ExamplesExamples General ElectricGeneral Electric
Owns NBCOwns NBC SonySony
From hardware to softwareFrom hardware to software SeagramsSeagrams
Owns UniversalOwns Universal
Concentration of OwnershipConcentration of Ownership Fewer and fewer corporations own the Fewer and fewer corporations own the
mediamedia Monopolies, mergers and takeoversMonopolies, mergers and takeovers
Media companies own vast portfolios of Media companies own vast portfolios of productsproducts Range of media formats and delivery Range of media formats and delivery
systemssystems Many media outlets with different namesMany media outlets with different names
Owned by same parent companyOwned by same parent company Small independents bought up by larger Small independents bought up by larger
companiescompanies
A small number of multinational companies dominate A small number of multinational companies dominate the industrythe industry Within each sector, a few companies tower above competitorsWithin each sector, a few companies tower above competitors
BooksBooks Bertlesmann (Random House), Pearson (Penguin), Bertlesmann (Random House), Pearson (Penguin),
News Corp (HarperCollins)News Corp (HarperCollins) MagazinesMagazines
AOL Time WarnerAOL Time Warner Motion picturesMotion pictures
Universal, Paramount, 20Universal, Paramount, 20thth Century Fox, Disney, Century Fox, Disney, Warner Bros., SonyWarner Bros., Sony
MusicMusic Universal (Vivendi), Sony, Bertlesmann (now merged Universal (Vivendi), Sony, Bertlesmann (now merged
as Sony BMG), AOL Time Warner, EMI (now Terra as Sony BMG), AOL Time Warner, EMI (now Terra Firma)Firma)
Television (less concentrated)Television (less concentrated) Networks: ABC, CBS, NBC, Fox, WB, other cable Networks: ABC, CBS, NBC, Fox, WB, other cable
channels?channels? RadioRadio
Clear ChannelClear Channel NewspapersNewspapers
Gannett, Knight RidderGannett, Knight Ridder
Concentration of Concentration of OwnershipOwnership
Video Clip:Video Clip:
AOL Time/WarnerAOL Time/Warner
MergerMerger
IntegrationIntegration Two types of media concentrationTwo types of media concentration
Owners perceive these arrangements as Owners perceive these arrangements as efficient and profitableefficient and profitable
Vertical integrationVertical integration One owner acquires all aspects of One owner acquires all aspects of
production and distribution of a single production and distribution of a single media product media product
Concentrating ownershipConcentrating ownership within within one one industryindustry
Horizontal integrationHorizontal integration One owner acquires different kinds of mediaOne owner acquires different kinds of media Concentrating ownership Concentrating ownership across across different different
types of industries types of industries
Consequences of Consequences of IntegrationIntegration
Ownership patterns likely to affect kind of Ownership patterns likely to affect kind of media products are createdmedia products are created
Owners likely to prefer products that can Owners likely to prefer products that can create "create "synergy”synergy” Products that can be exploited by other Products that can be exploited by other
components of the conglomeratecomponents of the conglomerate Vertical integrationVertical integration
Controls all aspects of production and Controls all aspects of production and distribution distribution
Limits competitionLimits competition Horizontal integrationHorizontal integration
Cross-promotionCross-promotion is driving force behind growth is driving force behind growth of this ownership trendof this ownership trend
Recent examples Recent examples
Consequences of ConglomerationConsequences of Conglomeration The media are seen as necessarily profit-makingThe media are seen as necessarily profit-making
Increased bottom-line pressureIncreased bottom-line pressure Greatest concern is in the area of newsGreatest concern is in the area of news
Traditionally sheltered from such pressureTraditionally sheltered from such pressure News divisions had a public service commitmentNews divisions had a public service commitment Not expected to turn a profitNot expected to turn a profit
Takeover of news operations by conglomeratesTakeover of news operations by conglomerates MBAs have replaced seasoned journalists as company MBAs have replaced seasoned journalists as company
executivesexecutives Clashes between news divisions and corporate ownersClashes between news divisions and corporate owners
NBC and the “boundary-less” companyNBC and the “boundary-less” company No division between news, entertainment, salesNo division between news, entertainment, sales
News programs facing stiff competition for viewersNews programs facing stiff competition for viewers Results in increased emphasis on entertainment and celebrity Results in increased emphasis on entertainment and celebrity The “Hollywoodization” of news The “Hollywoodization” of news
Print journalism has also been affectedPrint journalism has also been affected Emphasis on attracting consumers rather than informing Emphasis on attracting consumers rather than informing
citizenscitizens Increasingly colorful, sensationalistic and dramaticIncreasingly colorful, sensationalistic and dramatic
Consequences of ConcentrationConsequences of Concentration Media Control and Political PowerMedia Control and Political Power
Can ownership be translated into political influence?Can ownership be translated into political influence? First Amendment protects freedom of the press and protects First Amendment protects freedom of the press and protects
against government censorshipagainst government censorship Corporations (rather than gov’t) own “private Corporations (rather than gov’t) own “private
ministry of information”ministry of information” Small number of firms with similar interestsSmall number of firms with similar interests
Can owners use media outlets to promote political Can owners use media outlets to promote political agendas?agendas?
Examples of Bloomberg (Mayor NYC) and Murdoch (News Examples of Bloomberg (Mayor NYC) and Murdoch (News Corp)Corp)
Owners can also control information by excluding Owners can also control information by excluding certain ideas and imagescertain ideas and images
The “corporate voice” has become the normThe “corporate voice” has become the norm Media generated discourse about the American economyMedia generated discourse about the American economy
Control and influence cannot be totalControl and influence cannot be total But freedom of the press only for those who can But freedom of the press only for those who can
afford to own oneafford to own one Marx: “The ruling ideas are the ideas of the ruling class”Marx: “The ruling ideas are the ideas of the ruling class” More difficult for alternative voices to emergeMore difficult for alternative voices to emerge
Gerald Levine—CEO Gerald Levine—CEO Time/Warner Time/Warner
CNN interview January 2, 2000CNN interview January 2, 2000
““Global media will be and is fast Global media will be and is fast becoming the predominant business of becoming the predominant business of the 21st century. So predominant, in the 21st century. So predominant, in fact, that the media business is now fact, that the media business is now
more important than government. It’s more important than government. It’s more important than education more important than education
institutions and non-profit institutions and non-profit organizations. We’re going to need to organizations. We’re going to need to have these corporations redefined as have these corporations redefined as
instruments of public service, and that instruments of public service, and that may be a more efficient way to deal may be a more efficient way to deal
with society’s problems than with society’s problems than bureaucratic governments.”bureaucratic governments.”
Consequences of Consequences of ConcentrationConcentration
Media Ownership and Content DiversityMedia Ownership and Content Diversity Theory that competition leads to Theory that competition leads to
diversitydiversity Concentration and horizontal integration Concentration and horizontal integration
can lead to homogenizationcan lead to homogenization Absence of competitionAbsence of competition
Research on relationship between Research on relationship between competition and diversity shows competition and diversity shows conflicting evidenceconflicting evidence Case studies of newspapers and popular Case studies of newspapers and popular
musicmusic
Case Study in Content Diversity:Case Study in Content Diversity:The Local Newspaper MonopolyThe Local Newspaper Monopoly
Fewer cities with 2 or more daily newspapersFewer cities with 2 or more daily newspapers Fear that monopoly (or joint-ownership/quasi-Fear that monopoly (or joint-ownership/quasi-
monopoly) papers will be less diverse than monopoly) papers will be less diverse than competing paperscompeting papers
Competition should lead to greater diversityCompetition should lead to greater diversity Vertical diversity: range of actors mentioned and Vertical diversity: range of actors mentioned and
degree of disagreement degree of disagreement withinwithin a single paper a single paper Horizontal diversity: differences in content Horizontal diversity: differences in content betweenbetween
two paperstwo papers All newspapers lack in diversityAll newspapers lack in diversity
Competitive papers must attract same advertisers Competitive papers must attract same advertisers and audiencesand audiences
Papers minimize costs and produce lowest-common-Papers minimize costs and produce lowest-common-denominator product with broadest appealdenominator product with broadest appeal
Case Study in Content Diversity:Case Study in Content Diversity:The Music IndustryThe Music Industry
Competition leads to innovation and diversity in Competition leads to innovation and diversity in musicmusic Measured by: Measured by:
# of different songs# of different songs # of new and established artists in top 10 than competing # of new and established artists in top 10 than competing
paperspapers Diversity increases when concentration decreasesDiversity increases when concentration decreases
Dramatic shift occurred between 1940-50s and 1960sDramatic shift occurred between 1940-50s and 1960s Opening of market through shift from national to local radioOpening of market through shift from national to local radio
Increased oligopoly in 1990sIncreased oligopoly in 1990s Diversity did not decreaseDiversity did not decrease
Change in system of production within industryChange in system of production within industry Shift from “closed” to “open” systemShift from “closed” to “open” system
Record companies control manufacturing, distribution, Record companies control manufacturing, distribution, promotionpromotion
But use independent producers to maintain vitality of musicBut use independent producers to maintain vitality of music Higher ratio of record Higher ratio of record labelslabels to record to record firmsfirms
MASS MEDIA FOR PROFIT:MASS MEDIA FOR PROFIT:The Case of Prime-Time TVThe Case of Prime-Time TV
Programming decisions made with profits Programming decisions made with profits in mindin mind Need to have hit shows to attract large audiencesNeed to have hit shows to attract large audiences
To charge premium rates for advertising time on To charge premium rates for advertising time on those showsthose shows
Failure is the norm in network TVFailure is the norm in network TV Only small # of shows are a successOnly small # of shows are a success
Hit shows provide large profits to make up for Hit shows provide large profits to make up for failuresfailures
May represent only 10% of programmingMay represent only 10% of programming Search for the formula for successSearch for the formula for success
Programming strategies:Programming strategies: ““The Logic of Safety”The Logic of Safety” ““Nothing Succeeds Like Success”Nothing Succeeds Like Success” ““Newsmagazine” and “Reality TV” programsNewsmagazine” and “Reality TV” programs
Programming Strategies:Programming Strategies:“The Logic of Safety”“The Logic of Safety”
Executives are never sure what Executives are never sure what audiences will watchaudiences will watch Or why some shows succeed and others Or why some shows succeed and others
don’tdon’t Efforts to minimize the risk of losing Efforts to minimize the risk of losing
money on programsmoney on programs ““Risky” programsRisky” programs
Those that seem unlikely to attract mass Those that seem unlikely to attract mass audience or major advertiseraudience or major advertiser
General tendency to avoid controversyGeneral tendency to avoid controversy Even when it might bring high ratingsEven when it might bring high ratings
Programming StrategiesProgramming Strategies ““Nothing Succeeds Like Success”Nothing Succeeds Like Success”
Spin-offsSpin-offs Examples: (See link) Examples: (See link)
Copy-catsCopy-cats Examples:Examples:
Newsmagazine ProgramsNewsmagazine Programs Audience size and ratings are down from Audience size and ratings are down from
past decadespast decades Cost of production for dramas and sitcoms is Cost of production for dramas and sitcoms is
upup Incentive to produce programs in-houseIncentive to produce programs in-house Less expensive to use existing news resources Less expensive to use existing news resources
and “found footage” and “found footage” Reality TVReality TV
Modest production budgetsModest production budgets ““Unscripted” and no star salariesUnscripted” and no star salaries
Hits, Stars and Decision-MakingHits, Stars and Decision-Making Fame and stardom are key resources in media Fame and stardom are key resources in media
industryindustry The business of celebrityThe business of celebrity
The “hit-system” or “star principle”The “hit-system” or “star principle” If hits are the goal, then producers want to find new If hits are the goal, then producers want to find new
or existing stars who can attract a large audienceor existing stars who can attract a large audience Producers decide which products and people Producers decide which products and people
have best chance for successhave best chance for success Stars are an agreed upon currency for assessing Stars are an agreed upon currency for assessing
projectsprojects Heavy promotion and favorable scheduling of showsHeavy promotion and favorable scheduling of shows
Commitment to stars and their reputationsCommitment to stars and their reputations ““Brought to you by” the writers, producers, directors Brought to you by” the writers, producers, directors
of …of … To reduce risk and uncertainty about what succeedsTo reduce risk and uncertainty about what succeeds
Profit and the News MediaProfit and the News Media News outlets now need to increase profitsNews outlets now need to increase profits
Lowering the cost of gathering and Lowering the cost of gathering and producing the newsproducing the news
Decrease # of journalists (especially investigative Decrease # of journalists (especially investigative reporting)reporting)
Use larger % of wire service reports (Associated Use larger % of wire service reports (Associated Press, Reuters)Press, Reuters)
Use video PR segments and press releasesUse video PR segments and press releases Focus on preplanned eventsFocus on preplanned events Rely on a small # of elites and institutionsRely on a small # of elites and institutions Close foreign bureausClose foreign bureaus
Increasing revenuesIncreasing revenues Create light, entertaining programsCreate light, entertaining programs Avoid controversy and present news in upbeat, Avoid controversy and present news in upbeat,
reassuring mannerreassuring manner Focus on personality-oriented journalismFocus on personality-oriented journalism Highlight intrigue, titillation and scandalHighlight intrigue, titillation and scandal
The Impact of AdvertisingThe Impact of Advertising Media rely on advertising baseMedia rely on advertising base
Television, radio, magazines, newspapersTelevision, radio, magazines, newspapers Companies pay to place ads for their productsCompanies pay to place ads for their products
Media are in the business of “delivering Media are in the business of “delivering audiences to advertisers”audiences to advertisers” How ratings are tied to advertising ratesHow ratings are tied to advertising rates
Neilsen and other audience researchNeilsen and other audience research Advertisers are buying audiences Advertisers are buying audiences
Indifferent to content or programmingIndifferent to content or programming Something to hang ads onSomething to hang ads on
Growth in advertising in new realmsGrowth in advertising in new realms Movie previewsMovie previews Product placementProduct placement Captive audiencesCaptive audiences
Waiting roomsWaiting rooms Channel One in classrooms Channel One in classrooms
The Impact of AdvertisingThe Impact of Advertising Advertising and the News MediaAdvertising and the News Media
News usually depict advertisers’ products and interests News usually depict advertisers’ products and interests in favorable lightin favorable light
Unconscious self-censorship on the part of journalistsUnconscious self-censorship on the part of journalists ““Lifestyle” sections focus on consumptionLifestyle” sections focus on consumption
News should maintain a tone that keeps a “buying mood”News should maintain a tone that keeps a “buying mood” Financial incentive to produce news that appeals to Financial incentive to produce news that appeals to
upscale audienceupscale audience Advertising and MTVAdvertising and MTV
Music videos are themselves advertisingMusic videos are themselves advertising Cable TV allowed for new programmingCable TV allowed for new programming Music industry provided videos to MTV at no chargeMusic industry provided videos to MTV at no charge
Music videos are determined by promotional demandsMusic videos are determined by promotional demands Result of marketing rather than artistic decisionsResult of marketing rather than artistic decisions
Advertising and “New” MediaAdvertising and “New” Media Internet advertisingInternet advertising
Focus on search engines and other high traffic sitesFocus on search engines and other high traffic sites Cable TV and “narrowcasting”Cable TV and “narrowcasting”
Niche markets fragment audiencesNiche markets fragment audiences