CHAPTER 9: MEDIA ECONOMICS AND GOVERNANCE
- The key to the unusual character of the media is that its activities
are inextricably both economic and political as well as being very
dependent on continually changing technologies
- Activities involve production of goods and services for both private
and public domain
- There is no agreed objective description of the media institution that
can be separated from the varying national and social
circumstances. Instead, there are different theoretical perspectives
which can be applied:
1. Economical/industrial perspective (Tunstall, 1991): media as
economic enterprises with different characteristics and
contexts
2. Critical political-economic theory: critique on capitalism with
reference to processing of commercialization and
concentration.
3. Analysis of media according to specific public interest or
policy: normative criteria of conduct and performance
4. Internal or media professional point of view: ???
Main Questions for theory to answer (on economics and
governance)
- How do particular media differ in economic and political terms?
- How and why do national media systems differ in structure and
control?
- How and why are the economics of media different to those of other
industries?
- What are the causes and consequences of internationalization?
- What is the relative weight of technology convergence as a force for
media change?
- How is the performance of media affected by the source of finance?
There is also relevant theory concerning the current dynamics of
media industries (especially the trend towards expansion,
diversification and convergence mainly on basis of new technologies
and economic opportunities
THE BASICS OF MEDIA STRUCTURE AND LEVELS OF ANALYSIS
- “Media system” = actual set of mass media in a given national
society. Most are result of historical growth and adaption to always
newer forms of technology many countries have mixed media
systems with private and public elements which might be organized
according to a set of national policies. Occasionally, there might be
a single ministry of communications or communications regulatory
body
- Within the media system, specific different types are based on
different medium technologies (print, radio, tv, music, Internet…),
which are often subdivided into different “media forms” (print media
= newspaper, magazine, book) those groups might be described
as “media sectors” (especially in policy discourse) unity of those
sectors is often illusionary and arbitrary because there are still
, different forms of distribution, businesses and organizations so we
need to distinguish another unit of analysis = “firm” or “enterprise”
(which may constitute a significant part of a sector or have holdings
across boundaries of media type and location)
- Levels of analysis:
o international media
o Media system (all national media)
o Multimedia firm (major holdings in several media)
o Media sector
o Circulation/distribution area (nation, region, city)
o Unit medium channel (newspaper title, tv station)
o Particular genre
o Unit media product (book, song)
o Internet portal
Some economic principles of media structure
- Different media markets and sources of income
- Markets can be defined according to place, people, type of revenue
(=income) and nature of product or service
- The mainstream media (newspapers, tv, radio) can be classified
according to a fundamental line of economic division between a)
consumer market (=media products and services) and b) advertising
market (=service in form of access to audience is sold)
- The Internet has added new sources of revenue and makes most
content available without charge and therefore open for piracy also
the share of all advertising taken by online media continues to grow
within several categories (e.g. display and search advertising) this
has created the pressure to create a measure of value for “audience
use” to charge advertisers accordingly concepts of “visit” and
“click” as indicators for frequency
- Assumption from critical or public interest and professional
perspectives: the higher the dependence on advertising as source of
revenue, the less independent the content from the interests of
advertisers and business generally might imply less credibility as
an information source and less creative autonomy
- Advertising-based media are assessed according to the number and
type of consumers (who & where) reached by the particular message
(circulation, readership, ratings/reach) tendency to favor less
diversity because of lower costs
Media Market reach and diversity
- Internet has the potential to reach small niche markets (=premium
on diversity) and overall a great variety of audiences with a great
variety of contents nevertheless, the economic model of online
media is still in experimental stage
Competition for revenue
- One of the benefits argues for a public sector in European TV = it
avoids competition for the same source of revenue
, - The competition of different media for the same advertising sources
can encourage diversity = reliance on advertising doesn’t
necessarily lead to uniformity of provision
Media cost structure
- Potential imbalance between a) “fixed costs” (land, physical plant,
equipment and distribution network) and b) “variable costs”
(materials, software, labor) of production
- The higher the ratio between a) and b), the more vulnerable a
business is to changing market environments (fluctuations in
demand and advertising revenue) traditional mass media usually
have a high ratio and heavy capital investments that need to be
recouped by sales and advertising revenue
Summary: Economic Principles of media markets
- Media still differ according to whether they have fixed or variable
costs structures
- Media markets have an increasingly multiple income character,
especially on the internet
- Media based on advertising revenue are more vulnerable to
unwanted external influence on content
- Media based on consumer revenue are vulnerable to shortage of
finance
- Different sources of revenue require different measures of market
performance
- Where a multiple market applies, performance in one can affect
performance in another
- Advertising in specialist media can promote diversity of supply
- Certain kinds of advertising benefit from concentration of the
audience market
- Competition for the same revenue sources generally leads to
uniformity
Ownership & Control = the belief that ownership ultimately determines the
nature of media is not only a Marxist theory but a common-sense axiom
summed up in Altschull’s (1984) “second law of journalism”
- “The contents of the media always reflect the interests of those who
finance them” It is not just ownership but a wider context of who
pays for media product (e.g. private investors, advertisers,
consumers, various public or private subsidy givers and
governments)
- Most media belong to one of three categories of ownership: a)
commercial companies, b) private non-profit bodies, c) public sector
- Freedom of the press supports the rights of owners to decide on
content
- Form of ownership inevitably has an influence on content
- Multiplicity of ownership and free competition are the best defense
against misuse of powers of ownership
- There are usually checks and balances in the system to limit
undesirable owner influence
- The key to the unusual character of the media is that its activities
are inextricably both economic and political as well as being very
dependent on continually changing technologies
- Activities involve production of goods and services for both private
and public domain
- There is no agreed objective description of the media institution that
can be separated from the varying national and social
circumstances. Instead, there are different theoretical perspectives
which can be applied:
1. Economical/industrial perspective (Tunstall, 1991): media as
economic enterprises with different characteristics and
contexts
2. Critical political-economic theory: critique on capitalism with
reference to processing of commercialization and
concentration.
3. Analysis of media according to specific public interest or
policy: normative criteria of conduct and performance
4. Internal or media professional point of view: ???
Main Questions for theory to answer (on economics and
governance)
- How do particular media differ in economic and political terms?
- How and why do national media systems differ in structure and
control?
- How and why are the economics of media different to those of other
industries?
- What are the causes and consequences of internationalization?
- What is the relative weight of technology convergence as a force for
media change?
- How is the performance of media affected by the source of finance?
There is also relevant theory concerning the current dynamics of
media industries (especially the trend towards expansion,
diversification and convergence mainly on basis of new technologies
and economic opportunities
THE BASICS OF MEDIA STRUCTURE AND LEVELS OF ANALYSIS
- “Media system” = actual set of mass media in a given national
society. Most are result of historical growth and adaption to always
newer forms of technology many countries have mixed media
systems with private and public elements which might be organized
according to a set of national policies. Occasionally, there might be
a single ministry of communications or communications regulatory
body
- Within the media system, specific different types are based on
different medium technologies (print, radio, tv, music, Internet…),
which are often subdivided into different “media forms” (print media
= newspaper, magazine, book) those groups might be described
as “media sectors” (especially in policy discourse) unity of those
sectors is often illusionary and arbitrary because there are still
, different forms of distribution, businesses and organizations so we
need to distinguish another unit of analysis = “firm” or “enterprise”
(which may constitute a significant part of a sector or have holdings
across boundaries of media type and location)
- Levels of analysis:
o international media
o Media system (all national media)
o Multimedia firm (major holdings in several media)
o Media sector
o Circulation/distribution area (nation, region, city)
o Unit medium channel (newspaper title, tv station)
o Particular genre
o Unit media product (book, song)
o Internet portal
Some economic principles of media structure
- Different media markets and sources of income
- Markets can be defined according to place, people, type of revenue
(=income) and nature of product or service
- The mainstream media (newspapers, tv, radio) can be classified
according to a fundamental line of economic division between a)
consumer market (=media products and services) and b) advertising
market (=service in form of access to audience is sold)
- The Internet has added new sources of revenue and makes most
content available without charge and therefore open for piracy also
the share of all advertising taken by online media continues to grow
within several categories (e.g. display and search advertising) this
has created the pressure to create a measure of value for “audience
use” to charge advertisers accordingly concepts of “visit” and
“click” as indicators for frequency
- Assumption from critical or public interest and professional
perspectives: the higher the dependence on advertising as source of
revenue, the less independent the content from the interests of
advertisers and business generally might imply less credibility as
an information source and less creative autonomy
- Advertising-based media are assessed according to the number and
type of consumers (who & where) reached by the particular message
(circulation, readership, ratings/reach) tendency to favor less
diversity because of lower costs
Media Market reach and diversity
- Internet has the potential to reach small niche markets (=premium
on diversity) and overall a great variety of audiences with a great
variety of contents nevertheless, the economic model of online
media is still in experimental stage
Competition for revenue
- One of the benefits argues for a public sector in European TV = it
avoids competition for the same source of revenue
, - The competition of different media for the same advertising sources
can encourage diversity = reliance on advertising doesn’t
necessarily lead to uniformity of provision
Media cost structure
- Potential imbalance between a) “fixed costs” (land, physical plant,
equipment and distribution network) and b) “variable costs”
(materials, software, labor) of production
- The higher the ratio between a) and b), the more vulnerable a
business is to changing market environments (fluctuations in
demand and advertising revenue) traditional mass media usually
have a high ratio and heavy capital investments that need to be
recouped by sales and advertising revenue
Summary: Economic Principles of media markets
- Media still differ according to whether they have fixed or variable
costs structures
- Media markets have an increasingly multiple income character,
especially on the internet
- Media based on advertising revenue are more vulnerable to
unwanted external influence on content
- Media based on consumer revenue are vulnerable to shortage of
finance
- Different sources of revenue require different measures of market
performance
- Where a multiple market applies, performance in one can affect
performance in another
- Advertising in specialist media can promote diversity of supply
- Certain kinds of advertising benefit from concentration of the
audience market
- Competition for the same revenue sources generally leads to
uniformity
Ownership & Control = the belief that ownership ultimately determines the
nature of media is not only a Marxist theory but a common-sense axiom
summed up in Altschull’s (1984) “second law of journalism”
- “The contents of the media always reflect the interests of those who
finance them” It is not just ownership but a wider context of who
pays for media product (e.g. private investors, advertisers,
consumers, various public or private subsidy givers and
governments)
- Most media belong to one of three categories of ownership: a)
commercial companies, b) private non-profit bodies, c) public sector
- Freedom of the press supports the rights of owners to decide on
content
- Form of ownership inevitably has an influence on content
- Multiplicity of ownership and free competition are the best defense
against misuse of powers of ownership
- There are usually checks and balances in the system to limit
undesirable owner influence
