PRINCIPLES OF MEDIA ECONOMICS

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PRINCIPLES OF MEDIA ECONOMICS
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• Buyers and sellers
• Producers and consumers (for media)

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ECONOMIC PROBLEM

• How much (which goods) to produce
• How to produce them
• Who will consume them
• Labor

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Types of economies

• Command
• Market
• Mixed
• Which is US?
• Laissez-fair
• Non-interference by gov. (invisible hand)

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Supply Demand

• Supply
• Amount of product a producer will offer at a
  certain price
• Demand
• Quantity of product or service consumers will
  purchase at given price

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Demand Curve

• Changes that supply and price cause on consumer
  demand

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Demand for Media Products

• Demand for media content
• Demand by advertisers for access to consumers
• Demand for media outlets

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Equilibrium

• Balance point at which supply demand
• Goal of the market economy

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Economic concepts

• Maximize profits/minimize costs
• Production costs
• fixed (plant, staff)
• variable (raw materials, line personnel)
• Larger volume usually generates economies of
  scale

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Economies of Scale

• Decline in average cost of product as additional
  units are produced

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Elements of Media Businesses

• Organization
• Production
• Distribution
• Marketing/promotion
• Accounting and information systems
• Financial decisions (e.g. rate of return
  calculations primary and secondary markets.

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Media a growth market

• Share of consumer media expenditure tending to
  increase
• Growth economy stimulates media consumption
• More time available to consume media
• Media can be consumed while doing other things

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• New media delivery systems encourage consumption
• Media attract investments from large corps.
• Deregulation leads to increased investment

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Sources of media revenue

• Advertising (display, classified)
• Client subscriptions
• Government subsidies
• Sponsorship
• Hit fees, Transaction fees,
• Product sales