Media Economics Study Guide

MEDIA ECONOMICS
Theory
    • Set of guiding principles
    • Explains behavior
    • Help us understand why things happen
    • Predicts behavior
    • Help us anticipate future actions, events
    • Two theories to understand media economics
    • Classic economic theory
    • Media Economics
    • Critical/cultural theory
    • Political economy
Media Economics
    • Media Economics
        o Focus on economic forces

        o How they shape media institutions
        o Production
        o Distribution
Media Economics
  • Assumption …
  • Media companies strive for efficiency
  • Maximize profits
  • “Economies of scale”
  • As production increases
        o Costs decrease
        o profits increase
Media Economics
    • Economies of scale
    • Electronic media
    • “Marginal costs”

    • Initial production cost of first copy
        o High
    • Incremental cost of each additional copy
        o Low
Media Economics
    • Monopoly
Market dominated by one company

    • Oligopoly
Market dominated by few companies

    • Duopoly
  Market dominated by two companies
Media Economics
“Limited competition”
Monopolistic competition
Market with many producers, sellers

Quantity
Limited differentiation of products within a category
Quality
“Barriers to entry”
      • Methods
        o Lower production/ distribution costs
      • Economies of scale
• Force competition out of market
    o Slash price
• Buy out competition
    o Purchase or mergers
Types of revenues (profits)
Direct payment
    • Products directly supported by customers

Indirect payment
    • Products supported primarily by advertisers

Combination
    • Direct and indirect payments

Media Theory
    • Classical economic theory
        o Media Economics
    • Critical/cultural
        o Political economy
Political Economy
    • Forces of class domination
    • How elites maintain power relations & dominance over...