This document summarizes key topics in the economics of mass media. It discusses how a small number of large companies dominate many media industries through monopoly or oligopoly structures. It also examines how the internet has affected media revenue models and distribution. The document outlines how advertising, particularly from companies like Google, generates most online revenue. It also analyzes globalization trends and how media companies tailor content for international markets.

1. Mass Media and Society
Chapter 13: Economics
of Mass Media
April 7, 2014

2. Chapter 13:
Economics
• Characteristics of media
industries
• Internet’s effects
• The information economy
• Globalization
• Culture and economics

3. Industry
characteristics
• Monopoly: When one
entity controls a product
or service
• Oligopoly: A few
companies control a
product or service
• Monopolistic competition

4. Revenue
• Companies make money
either from consumers or
from advertising
• Book publishers on one
end, TV networks on the
other
• Print newspapers: high
first copy costs, lower
marginal costs

5. Revenue
• Large media
conglomerates own most
TV networks
• One company usually
dominates local cable
provider market
• Radio is heavily
consolidated

6. Revenue
• Big four music companies
dominate that industry;
closely linked with radio
• Ticketmaster and Live
Nation merged; performed
same service
• Large companies
dominate movie market

7. Internet’s effects
• Online space is much
more inexpensive than
print or broadcast media
• Most newspapers now
allow free online access;
many use
paywalls, charging for
some content or after a
certain number of
pageviews

8. Online synergy
• Combination of media
outlets across platforms,
such as newspapers
producing video or TV
networks producing text
stories for the web
• Advertising targeting and
models changing

9. Advertising
• Google: text ads next to
search results, on web
pages, targeting specific
web visitors
• Cost barrier to advertising
lowered
• Bulk of Google’s revenue
comes from advertising

10. Digital delivery
• Google News and other
aggregators provide
categories to links to
news stories online: news
sources are critics
• File sharing, streaming of
music and video affects
sales in those categories

11. DMCA
• Digital Millennium
Copyright Act: 1998 law is
effort to stop illegal
copying and distribution of
copyrighted material
• Copyright holders can
send notices over use of
material (such as on
YouTube)

12. Digital Divide
• Can be a barrier for
workers, particularly older
ones, in job market
• “Bottom billion”: of 6.8
billion people in the world,
only 1.6 billion are
connected to the Internet
• One Laptop Per Child

13. Legislation
• Federal Communications
Commission regulates the
information economy
• Antitrust legislation is
used by the government
to encourage competition
• Telecommunications Act
(1996) solidified trend of
deregulation

14. Vertical integration
• Media companies
produce and distribute
content
• Disney: manages theme
parks, movie studios,
ESPN, ABC; synergy
creates opportunities and
potential ethical concerns

15. Digital files
• Digital Rights
Management protection
limits use of files or
controls copying
• Piracy remains an issue
• Digital music sales
advance greatly ($187
million in 2004 to $1.8
billion in 2008)

16. Globalization
• Media are a cultural
product
• Spread of culture across
borders can lead to
homogenization
• Media companies now
tailor content to global
markets (“Titanic”)

17. Culture
• Cultural imperialism:
describes U.S. role as an
influential cultural
superpower
• McDonaldization:
efficiency, calculability,
predictability, and control
• Making money from
whatever cultural
elements it can