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Entertainment and Media: Markets and Economics

Entertainment and Media: Markets and Economics. Books, Magazines, Newspapers. Magazine Market. Segments Entertainment General Interest Home and Leisure Firms Very unconcentrated Advance Publications: 6.7%, Time Warner: 6.4%, Hearst: 3.6%, Meredith: 1% plus dozens of smaller players

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Entertainment and Media: Markets and Economics

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  1. Entertainment and Media: Markets and Economics Books, Magazines, Newspapers

  2. Magazine Market • Segments • Entertainment • General Interest • Home and Leisure • Firms • Very unconcentrated • Advance Publications: 6.7%, Time Warner: 6.4%, Hearst: 3.6%, Meredith: 1% plus dozens of smaller players • Each firm publishes many titles: Broad such as People, Narrow niche such as Art Doll Quarterly

  3. Subscription model Consumers purchase content and the services of providers:

  4. Advertising model Advertisers purchase the attention of consumers and the services of providers who bundle the advertisements with content that consumers want to consume (and are willing to tolerate the ads to do so).

  5. The Market for Advertising Vogel, table 7.1, p. 294

  6. Composition of the Advertising Market

  7. YouTube advertising has evolved (Ketchup ads are not very effective on YouTube)

  8. Targeted Advertising

  9. The distinction between print and online publishing of magazines and news sources becomes less clear. E.g., Apple Newsstand on your tablet or smart phone In 2014, nearly 100% of magazine publishers format their content for mobile distribution.

  10. These are not different. How does a website that receives revenue only from ads differ from traditional print media?From the seller’s point of view, it doesn’t.

  11. Newspaper Market • Largest names • News Corp/Wall Street Journal • New York Times Corp. • Gannett, USA Today • Consolidation • Large Failures: Cleveland Plain Dealer, Boston Globe, Minneapolis Star Tribune, San Francisco Chronicle • Near Failure: Washington Post • Why? • Diminished value of the main revenue source, advertising in print • Competition from now closer competitors, digital and online.

  12. 1997 Technological change at the Gray Lady. Automated setup and color printing.

  13. Revenue Model • Traditional: 80% advertising, 20% circulation (newsstand and subscription) • New Media: 70% advertising, 30% N&S, headed downward.

  14. Price Discrimination: Technological aspects of delivery allows segmentation by attributes.

  15. Vertical Structure in Publishing

  16. Sramana Mitra: Tech Author Enabled by: (1) Electronic Distribution (2) Amazon’s Marketing – Recommendation System.Author’s royalty is 3-4 times the traditional arrangement.Certain specific genre’s lend themselves to this new format. http://www.sramanamitra.com/2008/10/01/will-entrepreneur-journeys-kindle-vertical-integration/print/

  17. Some genres do not lend themselves well to integrated production and distribution by Amazon/kindle

  18. Still Room for Technological Improvement in e-Books

  19. What Model Applies? Agency Model: Publisher sets the price; Apple gets 30%. E-Book publishers. What is Amazon’s best market strategy? Is there market power in any segments in this market? Is there an incentive for 5 publishers to conspire with Apple to raise prices? (Hachette, Harper Collins, Macmillan, Penguin, Simon&Schuster Amazon’s Model: Amazon pays ½ cover price, determines its own price. Courts ruled Apple Agency Model constituted illegal price collusion . February, 2016. ($450M settlement)

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