Key Concepts in Media Economics

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Key Concepts in Media Economics
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Macro and Micro

• Macroeconomics
• aggregates in the economy (e.g. GDP)
• how the economy works as a system.
• Microeconomics
• how individual economic units (households and
  firms) decide their economic activity.

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Key concepts in macroeconomics

• Gross domestic product (GDP) consumptioninvestm
  entgovernment expenditures(exports imports).
• Consumption measured by level and growth in
  income, savings, expectations
• Discretionary/disposable income (after taxes)
  consumption and savings
• Investment acquisition of capital goods
• Government expenditures, related to fiscal (tax)
  and monetary (interest rate) policies.

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Key concepts in microeconomics (1) Households

• Utility refers to satisfaction and enjoyment from
  consumption of a particular good or service
• Consumer choice, related to purchasing power
  (based on value and income of assets - salaries,
  financial, real estate, business)
• Marginal utility utility declines as consumption
  increases prices fall.

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Key concepts in microeconomics (2) Firms

• Maximize profits/minimize costs
• Production costs fixed (e.g. plant,
  staff),variable (e.g.raw materials, line
  personnel), step (costs that increase with
  changes of scale).
• Larger volume usually generates economies of scale

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Key concepts in microeconomics (3) Market

• Market equilibrium supply of given quantity of
  goods at a given price (the marketing clearing
  price) exactly matches the demand for those goods
  at that price
• Elasticity relative responsiveness of demand to
  changes in price
• Perfect market supply increases as prices rise
• Market imperfections (relate to consumer
  knowledge competition govt intervention).

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The functional dimensions of media firms

• 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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Dynamics of organizational economics

• Incremental changes
• Cost efficiencies
• Personnel lay-offs
• Additional revenue streams
• Deferred investments
• Niche marketing
• Restructuring
• Sell-offs - exchange of specific subunits for
  cash or securities
• Spin-off - separating out some operations as
  newly separate corporation, and distributing
  shares as special dividends
• Liquidations, whole or partial

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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
• 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, share of telcom
  charges
• Product sales
• Mixture of above or other

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Advertising

• (print media) display or classified
• Cost per thousand (CTP) increases with audience
  size
• CTP varies according to audience wealth, and
  demographic characteristics
• CTP varies according to whether audience is
  non-segmented or highly segmented
• CTP varies with narrowcast media, depending on
  size of audience, and exclusivity of audience.