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Media Economics and the Global Marketplace

Media Economics and the Global Marketplace. Chapter 15.

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Media Economics and the Global Marketplace

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  1. Media Economics and the Global Marketplace Chapter 15

  2. “(W)e currently find ourselves enmeshed and implicated in an immense media economy characterized by consolidation of power and corporate ownership in just a few hands. This phenomenon, combined with the advent of the Internet, has made our modern media world markedly distinct from that of earlier generations—at least in economic terms.”

  3. Transition to an Information Economy • U.S. economy built on mass production in first half of 20th century • Manufacturing plants • Rivalries with foreign companies • U.S. transitions to information economy in second half of 20th century • Offices displace factories • Global expansion • Deregulation allows media powerhouses

  4. Structures in the Media Industry • Monopoly • A single firm dominates production and distribution in a particular industry, either nationally or locally • Microsoft • Oligopoly • A few firms dominate an industry • Time Warner (U.S.), Sony (Japan), and Universal (France) control music industry

  5. Structures in the Media Industry (cont.) • Limited competition • A media market with many producers and sellers but only a few products within a particular category • Commercial radio has hundreds of independent radio stations, but few formats • Deregulation trumps regulation • Jimmy Carter begins deregulation,1970s • Telecommunications Act of 1996 reduces ownership restrictions • FCC rules loosened 2000s

  6. Media Operations • Direct payment • Consumer buys media products. • Indirect payment • Products are supported by advertisers. • Direct and Indirect • Sell subscription fees and commercial space to advertisers • Economies of scale • Increase production levels to reduce overall cost per unit

  7. How the Internet Is Changing Media Companies • Offers a portal to view or read older media forms • Requires virtually all older media companies to establish an online presence • Offers new revenue sources • Example: public radio and TV can post ads on their Web sites • Causes loss of revenues • Content posted online lowers direct-payment revenue stream

  8. Trends in Media Industries • Flexible markets • Focus on niche products for specialized markets • Companies seek cheap labor overseas • Member in labor unions declines • Downsizing • U.S. workers lose jobs, economic security

  9. The Age of Hegemony • Hegemony • Society’s least powerful accept values of most powerful • “Engineering of Consent” • Companies convince citizens that company interests are common sense • Other views are shut out • Media narratives reinforce hegemony

  10. Global Markets • Specialization • Magazine, radio, and cable industries sought specialized markets in U.S. and overseas • TV embraced niche marketing, targeting affluent eighteen- to thirty-four-year-old viewers • Synergy • The promotion and sale of different versions of a media product across the various subsidiaries of a media conglomerate

  11. The Disney Example • 1920s: Disney elevates the film cartoon. • 1950s–60s: Moves into TV and non-cartoon movies • Diversifies • 1984: Dominates video sales • 2006: Merges with Pixar • 2011: Expansion • Cruise ships, Disney channel in Russia, resort in China

  12. Social Issues in Media Economics • The limits of antitrust laws • Companies avoid by diversifying holdings • Diversification promotes oligopolies • Only applicable at national level; does not deter local monopolies

  13. Social Issues in Media Economics (cont.) • Americans equate capitalism with democracy • Consider attack on free market an attack on free speech • Consumer choice vs. consumer control • Consumer can choose what to purchase • Consumers have no control over what is sold

  14. Cultural Imperialism • American products and images dominate the global market • Includes fashion, food, movies, all media • Even Internet has distinctively American orientation • Defenders say it creates global village, fosters communication • Questions cultural imperialism raises: • What small country can justify building a competing media system if American programming is cheap? • How do people feel when they are bombarded with products they can’t afford to buy?

  15. Media Marketplace in a Democratic Society • Multinational giants control more and more of media • Shape regulatory environment • Journalism subsidiaries are not completely independent • Grassroots organizations challenge big media • Internet helps groups unite globally • Consumers might start watching media more closely

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