lesson 5-media economics
DESCRIPTION
Introduction to Mass Communication. For educational purposes only.TRANSCRIPT
Media EconomicsThe way media companies have always done business
doesn’t work as well in the digital age
• Why discuss money?• Because nearly every
change in the mass communication system has come from a drive for profit.
• Profit is also what is driving huge changes in the way media do business today.
• Take newspapers, for instance.
• In the 18th century, newspapers were for the wealthy and well-educated.
• Money was made through subscription rates that were high for the time.
• Benjamin Day changed that.
• He started the New York Sun and charged only a penny for it.
• Instead, he made his money through advertising. Since so many readers picked up the cheap copy, advertisers came in droves, making Day rich.
• That formula worked for media for 150 years:
• Cheap product = Large audience = More advertising dollars
• That money helped to:– Hire more reporters for
newsrooms– Hire disc jockeys on
radio– Fund various programs
on television
• That formula also made media companies profitable.
• Over the last 30 years, media companies started consolidating into a number of conglomerates.
• As a result, fewer companies control more of the media.
• The Internet, though, has changed that formula.
• Newspapers put stories up free on their sites.
• TV shows can be watched for free on YouTube or Hulu.
• Radio? Why not just go to iTunes or Pandora?
• As a result, tens of thousands of employees of so-called “old media” have been laid off in recent years.
• Meanwhile, old media businesses have tried and struggled to come up with new business plans.
• The largest media company in the United States is Comcast, which owns NBC Universal.
• Disney, which owns ABC, is second.
• NewsCorp., which owns Fox, is third.
• A number of new models have come up that are trying to keep media companies afloat.
• One is to make them nonprofit organizations, meaning all profits must go back into the company, not to stockholders or owners.
• The Texas Tribune, which started in 2009, is an example of a nonprofit news media organization.
• The online newspaper takes donations as well as sells advertising to fund reporters who cover state government in Austin.
• ProPublica, which started in 2008, is a nonprofit newsroom that gives its work to other media, like The New York Times and CNN.
• It’s funded primarily through billionaire Herbert Sandler, who wanted more news options.
• ProPublica won the Pulitzer Prize in 2010 and 2011.
• Another idea is micropayments, something Time magazine advocated in a 2009 article.
• The idea is that rather than pay $1 for a newspaper, you’d pay a few cents for a newspaper article.
• Google is currently exploring this option.