Week 5 Commercial Media, Consumer Cultures
The Business of Media -How does media function economically as an industry? -Distinctive features? Ways of cultivating these features for maximum profit?
-What ownership patterns emerge over recent history?
Primer of Economic Terms -commodities: anything produced with purpose to sell -aim of capitalist marketplace? ...to operate for profit: accumulate capital
The Business of Media -Commercial Mandate: the media is operated for a profit, owned mostly by corporations -Central Revenue Models: -Selling media content to users -Selling audiences to advertisers
Distinctive Features of Media Industries 1. Media products= type of public good -economic sense: Consumption by one person doesn't diminish/exclude consumption by others -can't own electromagnetic spectrum: public in this sense. Since no one can "own" radio waves, gov't decided to control use of them: FCC -cultural sense: Deals in symbolic, shapes public sentiment -ex: Hollywood as America's Dream Factory 2. High risk for profit/success -uncertainties: -audience/cultural tastes -labor: costs/ability to work in industry are something that remain uncertain (can you get enough people in one location to make film, will labor cost remain low enough to make profit) 3. High production costs, Low RE-Production costs 4. Compete for limited consumer resources -Income/Entertainment expenses -attention and time 5. Compete for limited advertising revenue 6. Compete for limited pools of labor
How do Media Industries Respond? 1. Try to create value through differentiation -genres -stars
-brands (ex: Disney's version of ---) 2. Utilizing economies of scale -"hits offset the misses" -the more you produce initially, the less you pay for each little part huge factory to produce 50 shirts at once, cheaper & faster than one person -spend $ upfront knowing maybe not everything will succeed, but things that do succeed make enough to cover the flops: "tent pole strategy" -goods like bedroom sets and party favors, etc expand profit on already successful media (like Pirates of Caribbean) 3. Control distribution -artificial scarcity "Disney Vault" -copyright law
Patterns of Ownership 1. Vertical Integration -controlling many/all steps in product's path to market -production, distribution, exhibition -abc owns abc network, abc family, etc 2. Horizontal Integration -consolidated ownership across different formats and/or platforms further distribution and reach eliminate competitors 3. Concentration -Vertical Integration and Horizontal Integration = smaller # of companies owning media -1983: 50 major American media companies controlling most things -2004: 5 4. Conglomeration -merging media companies with larger, multi-national corporations not necessarily in media business -ex: GE bought NBC Universal
***find ex in current media industry of integration: conglomerates, etc
Summary
Media operates under commercial mandate: : 6 distinctive features of media industries Three main ways media industries respond to those features o Differentiation o Control distribution by using artificial scarcity, copyright law o Utilize economies of scale (tent-pole strategy) 4 related patterns of ownership o vertical integration o horizontal integration
o concentration o conglomeration
Function of economic, political, and cultural systems of specific historical moments
Arguments FOR Market-Driven Media : Free market balances out ("invisible hand") o Will provide media content consumers want Deregulati