chapter 13

chapter 13 - The rash of media mergers over the last two...

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1 z The rash of media mergers over the last two decades has made our world very distinct from that of earlier generations—at least in economic terms z “Unlike American automobiles, television sets, and machine tools, American cultural products—movies, TV programs, videos, records, cassettes, and CDs—are sweeping the globe.” z –Richard J. Barnet and John Cavanagh, Global Dreams, 1994 Analyzing the Media Economy z Does the government need to play a stronger role in determining who owns what mass media and what kinds of media products should be manufactured? z Should the government step back and let competition and market forces dictate what happens to mass media industries? z Should citizen groups play a larger part in demanding that media organizations help maintain the quality of social and cultural life? z Does the rapid spread of American culture worldwide smother or encourage the growth of democracy and local cultures? z Does the increasing concentration of economic power in the hands of several international corporations too severely restrict the number of players and voices in media markets?
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2 The Structure of the Media Industry z In economic terms, three common structures characterize the media business: monopoly, oligopoly, and limited competition. z monopoly: in media economics, an organizational structure that occurs when a single firm dominates production and distribution in a particular industry, either nationally or locally. z oligopoly: in media economics, an organizational structure in which a few firms control most of an industry’s production and distribution resources. z limited competition , sometimes called monopolistic competition, characterizes a media market with many producers and sellers but only a few differentiable products within a particular category. z Although the 1996 Telecommunications Act encouraged consolidation by lifting ownership restrictions on radio, hundreds of independently owned stations still operate in the United States. Most of these commercial stations, however, feature a limited number of formats—such as country, classic rock, and contemporary hits—from which listeners may choose. The Performance of Media Organizations z Economists pay particular attention to the two ways the media collect revenues: through direct and indirect methods. z direct payment: in media economics, the payment of money, primarily by consumers, for a book, a music CD, a movie, an online computer service, or a cable TV subscription. z indirect payment: in media economics, the financial support of media products by advertisers, who pay for the quantity or quality of audience members that a particular medium attracts.
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3 z In reviewing other behaviors of the media, economists look at many elements of the commercial process, including program or product costs, price setting, marketing strategies, and regulatory practices. For instance, marketers and media
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This note was uploaded on 12/31/2011 for the course MMC 3303 taught by Professor Surisc during the Fall '10 term at FIU.

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chapter 13 - The rash of media mergers over the last two...

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