December 8, 2008 Intro to Mass Comm. The Economics of Media—Chapter 13 Monopoly The media is a business. It provides news and entertainment for a profit. It has a bottom line, shareholders, and bills to pay. Monopoly = one single firm dominates the industry Microsoft Oligopoly A few firms dominate the industry. Remember early television networks? ABC NBC PBS Early movie studios? MGM Collecting Revenues Direct payments: consumers pay directly to the firm Buying a CD, subscribing to a magazine Indirect payment: advertising revenue generated when companies pay for ads to run on the outlet The client is the advertiser, not the viewer, reader, listener, surfer. Making More Money Economy of scale Organizations reduce costs when they have convergent staffs, content, advertising, hardware. The more they making something (like iPods, computers, CDs) lower the costs. Deregulation Lowers Costs ATT broke up and competition made long distance, international calls cheaper. Consolidation and Mergers As FCC deregulated, media outlets could merge and thus enact economy of scales (bigger makes more money). Smaller outlets get bought and become a part of the empire (Clear Channel). Creates synergy (p. 472).* Typically refers to the promotion and sale of different version of a media product across the various subsidiaries of a media conglomerate. It also refers to global companies like Sony buying up popular culture—movie studios and record labels—to play on its various electronic products Economy of Scale = Downsizing One of the ways that media firms save money is to reduce their workforce. Convergent content means fewer reporters. Convergent ads running on all of the firm’s outlets mean fewer ad people. Wage Gap The CEOs of media firms make so much money. They sometimes make 1000 times more than the average worker (when you calculate bonuses, stock option, and perks). The Disney Story Disney is an excellent example of how synergy, consolidation, and economies of scale work. Movies (Disney, Touchtone), theme parks, ABC, ESPN, Disney channel, Pixar, priced to own videos, Disney stores in malls, licensed products. Know the Others P. 477 The big 10 media companies Time Warner Comcast Corp. Walt Disney Co. News Corp. DirecTV Group NBC Universal CBS Corp. Cox Enterprises EchoStar Communications Corp. Viacom The Ugly Side Cultural Imperialism Exporting American cultural values across the world through our movies, TV, music, and magazines.