Vivian11e_Ch3 Media Economics_spring 2013 11th Edition

8/10/2019 Vivian11e_Ch3 Media Economics_spring 2013 11th Edition

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Media Economics

Chapter 3


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Facebook &Media Economics

Mark Zuckerberg, founder of Facebook, isamong the media giants (Steve Jobs was

another) who have changed the face of mediaand economics

As of September 2012, Facebook had 1 billionusers (not 700 million as reported by youroutdated textbook).

Copyright 2011, 2009, 2008 Pearson Education, Inc.


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Facebooks entrepreneurship in changingmedia advertising models

Facebook has given online media a means tobe profitable, a problem that perplexed thepioneers of online media

Facebooks behavioral targeting uses personalinformation and patterns of user searches andgives info to advertisers to match their

products with consumers


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$$$ and Mass Media

Despite new media economic

models like Facebook, mediaindustry behavior has always beenexplained through economics.



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Financial Foundations

American mass media function within theprofit-driven system of capitalism, consumer-

driven audiences

American mass media businesses, with few

exceptions, are owned privately and operateas private trade businesses, as opposed topublic held or government owned mediapresent in many other countries around the

world. Copyright 2011, 2009, 2008 Pearson Education, Inc.


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Media Economics

A business first exists to make money, then afterprofits are made, to have a social conscience, if they

choose

There is little difference in the business of massmedia and other businesses that operate for profit, as

well, so DONT EXPECT MEDIA TO ACTSOCIALLY RESPONSIBLY MOST OF THE TIME(they need economic incentives to do so)



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Media Economics

The primary revenue streams in mass mediacome from

1) advertising (newspapers, magazines, TV,radio, Internet) and

2) sales to consumers(books, recorded music,

movies)



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Media Economics

3) targeted marketing and behavioral targeting(Internet)

targeted marketingTracking users searches withalgorithms and giving info to advertisers to match

products with consumers (Google)

behavioral targeting Using personal information andpatterns in user searches and giving info to advertisersto match products with consumers (Facebook)

Think profits! Facebook is not just there to be yourfriend!


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US Mass Media Ownership Trends:Conglomeration

Gone are the days of the 20thcentury modelwhen families owned mass media

Only a handful of corporations now ownmedia, and corporate boards decide media

content, distribution



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Conglomeration

This is what is known as

Conglomerationsmaller companies purchasedand owned under a common corporate parent

This is why what we call corporate media


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U.S. media conglomerates

Comcast/NBCUniversal

Disney ABC

News Corp.

Time Warner Viacom

Ox

Clear Channel

Tribune Company Gannet

NYT Company

Google

DirecTV

Yahoo

EchoStar (DISHsatellite)

Facebook


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Why is conglomerationbad forconsumers, democracy?

Because the roles of business(mediaconglomerates) and governmentdiffer

Businesses serve their boards in makingprofits

Government should exist to serve citizens,public interest


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Conglomeration

When media conglomerates back politicians(Comcast donated $5.5 million to politicalcampaigns) to gain favor in policymaking, aquid pro quo(you scratch my back, Ill scratchyours) happens

To return the favor and to bank future favor,

media may squelch content critical ofgovernment (the role of media is to be awatchdog of government)


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Dangers of GovernmentInterference in Mass Media What is the watchdog role of news media?

First Amendment in 1791 acknowledged therole of the press as an independent check

(separate powers) on government, toadvocate on behalf of the people againstabuse of power



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Examples of conglomerateinfluence on media content NBC Today show never

ran an affiliates storyon faulty GeneralElectric jet engines. GE

owns NBC.

Disney, which alsoowns ABC, orderednews outlets not to

report child molestationat Disney theme parks.

Fox News corporatepolicy uses partisanpositions to influencenews coverage (see

Outfoxed)

Comcast/NBC mergerin 2011 was followed byoutspoken Big Business

MSNBC politicalcommentator KeithOlbermann atComcasts urging


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Why is conglomerationbad forconsumers, democracy?

When fewer companies control the pipelinesof information (particularly news media),

Americans have less choice in differing views


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Other US Mass MediaOwnership Structures

Some US media are sponsored by institutions with agreater mission

Institutionally sponsored media

Media owned by organizations that have goals for theirmedia, which may or may not reflect media values

TheMonitorModel

Mary Baker Eddys Christian Science Monitor foundedin Boston in 1908

Mission: Deal with issues and problems on a higherplane to help the world come up with solutions



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Governments Role in Media:Regulation or Control?

US mass media can be linked to governmentpolicies that affect media economics andstructure

This is called government regulation andexists in American media in the followingareas:

Infrastucture

Favored Tax teatment



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Infrastructure and licensing ofbroadcast stations

One form of government regulation is theallowance of the federal government to have

the right to license radio airwaves, as passedin the Federal Radio Act of 1927, laterencompassed in the FCC (FederalCommunication Commission)

The act applied to television when themedium reached the American people in the1940s



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Historic Media-Government Tax Favorthrough Regulatory Links

Postal Subsidies

1845 Postal Act

2ndclass rates

Favored Tax Treatment

Newspaper Preservation Act in 1970s by Congress

voided anti-monopoly laws for newspapers to join tosurvive



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New Types of Media Funding

Classic advertising is diminishing andsubscriptions are decreasing

New Hybrid Mix Micropayments -buy the part you want to

consume, not the entire product

Ex. -iTunes, Google, pay-per-view



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Media Economic Patterns Model

Phase 1 - INVENTION

Each new mass mediumbegins with inventivegenius based on formermedia

Phase 2 -ENTREPRENEURSHIP

After several tries by many,

a few eventually set thestandard for use for themasses

Phase 3 INDUSTRY

Imitators arise in competitionand create an industry ofdomination

Phase 4 MATURATION

Media so big and powerful,innovation becomes difficult

Phase 5- INFRASTRUCTURE DEFENSE

Resist change, ignore newchallenges, faced with radicalreform or death

Documents

Vivian11e_Ch3 Media Economics_spring 2013 11th Edition