media economics are the economic policies and practices of media companies and disciplines including journalism and the news industry, film production, entertainment programs, print, broadcast, mobile communications, Internet, advertising and public relations.

1. B Y : C H E L D Y S . E L U M B A -
P A B L E O , M P A , L L B
MEDIA ECONOMICS
BY: CHELDY S. ELUMBA-PABLEO,MPA,LLB

2. MEDIA ENTERPRENUERSHIP
 Media entrepreneurship is based on
an idea that is based on recognized
opportunity.
 Innovation is an integral part of
media entrepreneurship, but in many
cases an imitative innovation and
implementation of a successfully
tested innovation uses for a new
market or application.

3. WHAT IS MEDIA ECONOMICS?
RICHARD PICARD defines
media economics as a field of
study that is concerned with
“how media operators meet the
informational and entertainment
wants and needs of audiences,
advertisers and society with
available resources”(2002)

4. WHAT IS MEDIA ECONOMICS?
DOWNING, MCQUAIL, et al.
define media economics as a
field that applies “economic
theories, concepts, and principles
to study the macroeconomic and
microeconomic aspects of mass
media companies and industries”
(2004).

5. WHAT IS MEDIA ECONOMICS?
ALBARRAN provides a rationale
for the study of media economics,
as the “context within which one
can better understand the behavior
of media firms, media markets, and
consumers” (2002) when answering
questions such as why did one
company merge with another.

6. WHAT IS ITS FOCUS?
MEDIA ECONOMICS
focuses on the wider
ecosystem of markets
and consumers around
the companies. Media
management on the other
hand focuses on issues
within the companies
themselves.

7. ROLE OF MEDIA ECONOMICS

8. SPECIAL CHARACTERISTICS OF MEDIA
PRODUCTS
Media products are characterized
by a high front-investment, with
high risk of failure from lack of
interest, as consumer traction is
difficult to test for before the actual
release, distribution and marketing
of the product. Attention scarcity is
a challenge for business in general
but especially so for media
businesses.

9. MEDIA ECONOMICS
Mainstream media economics
literature considers media products to
have high fixed costs, however
Bourreau, Gensollen and Perani
argue media products costs to be
variable, with a positive correlation
between increased production cost
and audience traction (2002), pointing
to large-budget Hollywood
productions.

10. WINDOWING
Movies in particular make use of
what is known as WINDOWING –
each release with a certain
timeframe set for each successive
channel, accompanied with a
marketing push for each window
in order to hedge against failure in
a high-risk environment, with
multiple tries to sell the product
becoming an insurance policy.

11. WINDOWING SAMPLE

12. WINDOWING SAMPLE

13. STAGGERING
STAGGERING of distribution is used
to create exclusive windows where 3rd
party actors (not necessarily the
original content producer but license-
buyers) act to market the content; the
release of the same product in distinct
distribution channels at different times
aims to maximize profit from each
channel and increase positive word of
mouth with each release.

14. UNDERSTANDING MEDIA ECONOMY

15. FILM FRANCHISE
Because word of mouth can also turn
negative, an established FILM
FRANCHISE with a new tent pole
release is a safer investment than an
entirely new movie.
EXAMPLES: Cinemas, international
cinemas, DVDs and Blu-ray, television,
and online streaming and download
platforms such as Amazon and YouTube,
each have their own window of release.

16. WHEN CONSUMER MISSES THE
RELEASE
 there’s still a chance to capture
their attention in the following
windows, with free television
licensing fees and long-tail DVD
sales as the final opportunity. Some
argue though, that windowing is a
thing of the past and movies should
be released on the same day and
date across channels to maximize
profits (Wilson, 2012).

17. ANALYTIC TOOL
 to navigate the changing media
markets with confidence, media
managers make use of a number of
analytical tools to inform their
strategic thinking and communicate in
a systematic, clear and actionable
manner that’s applicable in
managerial decision-making and
corporate processes of planning and
assessment of the company’s
competitive advantages in the
marketplace.

18. SWOT
 Is the most common tool IN BUSINESS: an
analysis of strengths and weaknesses,
referring to the internal characteristics of the
company; and opportunities and threats, referring
to the phenomena outside of the company – the
marketplace, the consumers, the other
companies, the regulatory frameworks in the
country – and increasingly outside of the home
country as media products are subject to cultural
preferences, which must be taken into account as
understanding cultural biases towards a product
may affect managerial decisions.

19. STATEGIC APPROACH
 While such strategic
approaches are valuable in
decision-making, CHAN-
OLMSTED also argues that
strategy should leave room for
opportunism (2009) in cases
where a higher degree of
flexibility in management may
be the more prudent approach.

20. MEDIA BUSINESS
 exists to make money for its owners in a
private company or shareholders in a
public company. Increased net profits
come either from increased
1) license sales while costs remain
steady,
2) increased efficiency within the
company that decreases costs or
3) from increased market power through
corporate expansion.

21. MEDIA STRATEGY
Convergence of media companies into
larger conglomerates is a global trend;
media companies’ strategies for
expansion include international,
multinational, shared-language-based,
and multilingual global expansion through
vertical integration of service providers
(downstream expansion), distributors
(upstream expansion) or both (balanced
expansion).

22. MEDIA STRATEGY
Moreover, through a strategy of
horizontal expansion by buyout of –
or merger with –companies in the
same market and with the same
functionality; an example would be a
children’s books publisher buying a
competing children’s book publisher
in order to grasp a larger product
portfolio of books at lowered costs
and possibilities for creative
synergies between story worlds.

23. MEDIA STRATEGY
Companies expand through a diagonal
strategy that incorporates aspects of
both vertical and horizontal expansion in
a comprehensive approach.
 media companies engage in talent
acquisitions that involve buying out a
company for their skilled workforce
and discontinuing the company’s
former functions.

24. MEDIA STRATEGY
The key thinker in this area, Chan-
Olmsted, focuses on competition
between media firms and
competitive strategies in a changing
media environment (Competitive
Strategy for Media Firms: Strategic
and Brand Management in
Changing Media Markets, 2009).

25. IN PRODUCTION
As business becomes larger, economies of
scale are achieved when distributing the
product to more markets with the average
costs of distribution decreased and the
average cost of production also decreased.
 In production an in-front investments
into high quality camera equipment can
be amortized over a number of years
while it adds value in the production
number of media products.

26. IN DISTRIBUTION
 an established brand name can
reduce the cumulative marketing
cost associated with each media
product released by the company as
the brand has earned a degree of
consumer trust through previous
products.

27. DIGITAL ECONOMY
 the marginal cost of reproduction of a digital
media is close to zero, which means copies
are easily made and distributed.
 While copyright is protected, licenses for
content provide theoretically an easy
revenue stream.
 However, with markets saturated by media
products where a substitute product is easily
found, attention becomes the highest
scarcity, as there is too much content for
anyone to watch available.

28. DOUBLE SIDED REVENUE
MODEL
Media companies have a double-sided
revenue-model, with consumers and
advertisers bringing in revenue, in
businesses where the consumer pays for
content, copyright and piracy become
issues for lost revenue. However, in
models where advertisers pay no such
problems exist as increased viewership is
to the benefit of the advertisers (and
usually here the content is released for
free).

29. ECONOMIES OF SCOPE
 are achieved through the repackaging of
content for new media products, achieved by
companies large enough to have accumulated
an archive of assets that can be incorporated
into new products, thus saving costs.
 This applies also to repackaging content for a
foreign market or repurposing content for a
different use, such as a television show on
traffic safety created for distribution on national
free television but later repurposed as content
for showing inside an educational game used in
primary education.

30. ECONOMIES OF SCOPE
Another example is the practice or
remaking old Hollywood movies with
modern technology. With the studio
already holding rights to the screenplay
and an existing awareness of the story
bringing a built-in audience, economies
of scope can be achieved. By
diversification into similar products,
economies of scope save from the
higher costs of original production.

31. AREAS OF INTEREST
Media system has become global and
interconnected, key scholars now have a
large scope of analysis, taking a
systematic and planet-wide view of the
media economy. Because new areas of
the world are becoming part of the media
market, scholars increasingly focus on
emergent media in the African, Asian, and
Latin American markets.

32. AREAS OF INTEREST
GLOBAL INTERCONNECTEDNESS
ALBARRAN focuses on Spanish-language
media in the US as a way to reach people in
and of Latin American origin. This highlights a
crucial point, as even in the age of global
interconnectedness, language plays a role in
identification, community, and in how, what
types of, and whom messages reach. “Thus
Hispanic/Latino-oriented media have received
increased attention and advertising revenues
for their ability to reach a sizeable portion of the
electorate” (The Handbook of Spanish
Language Media, 2009).

33. AREAS OF INTEREST
A further branch of interest in media
economics is the consolidation of
ownership. The trend of an increasingly
small number of media increasingly
large media conglomerates owning the
media, also known as the concentration
of media ownership, and the structure
and reach of these companies merits its
of branch of economic analysis.

34. AREAS OF INTEREST
DOYLE focuses on the horizontal, diagonal,
and vertical expansion of European media
companies, especially in the UK (2002).
Downing, McQuail, et al argue that with
“increasing consolidation and concentration
across the media industries, media economics
emerged as an important area of study for
academics, policymakers, and industry
analysts” (2004), highlighting how media
economics can provide quantitative methods
and statistical analysis for guidance in financial
and policy-related decision-making.

35. AREAS OF INTEREST
As a formerly television-focused scholar, Picard has
emerged from a political analysis of the role of media
in democracy (1985) towards incorporating more
economic study into his argument. Picard analyses
companies in detail in Media Firms: Structures,
Operations and Performance, showing how media
companies that have traditionally worked with a
single product (such as a newspaper, a magazine, a
TV channel) now juggle a variety of products that
may number in the hundreds and span mediums in
highly complex portfolios of media products (2009).

36. MEDIA ECONOMICS
will have to accommodate for and expand
upon the emerging trends of:
1) attention economy
2) crossmedia distribution and
3) artists taking a stronger role in their
own economic well-being.
 Albarran and Arrese already focus on
the role of time from a consumer,
producer, and advertiser perspective
(2009), however the latter areas
remain relatively un-explored.

37. NEW FORM OF FUNDING
 While some artists are visibly successful at building
attentive audiences and large follower-bases, the
question remains whether and how these followers
can produce enough economic value for the artist
so the activity is sustainable.
 New forms of funding, such as CROWDFUNDING
and MICROPAYMENTS, while still minimal in total
input of financing, are emerging trends and will
have to be focused on more in future economic
studies. Studies into artists like the Pixies who sell
merchandise and tickets directly through fans,
cutting out middlemen with Amazon and Apple
Books becoming the entire distribution channel will
have to be explored.

38. MEDIA ECONOMICS
Public companies release annual reports,
which list revenue sources, net income,
cost structure, and other financial
information.
Journals provide academic discussion of
media economics. The key journal of the
field is the Journal of Media Economics,
started by the preeminent researcher and
founder of the media economics field,
Robert G. Picard, and the International
Journal on Media Management based in
Switzerland provides another scholarly
source of reference.

39. DIGITALIZATION
Digitalization of content enables online
distribution and changes the options for
international media in a number of ways.
1) the globalization of media with content
accessible from new entrants like South
Africa or Australia on the media market,
increases competition between media
producers in separate parts of the world,
while also increasing global
interdependency through increased
cultural ties.

40. DIGITALIZATION
2) media corporations have more opportunity to
open up and re-package content stored in
siloes to international audiences through
franchising licenses across the planet
Example: a show that is popular in the US may
create demand in Bulgaria without any
targeted marketing as Bulgarians see clips of
the series in YouTube; when a legal way to
see the show is not provided increased piracy
of the content is likely to occur.

41. DIGITALIZATION
3) removal of the middlemen is a threat for
distributors, as when there is no need for a
traditional publisher and Amazon and
Google Books with 1-click-publishers are
the largest global platforms that act as a
single marketplace where consumers :
1) find movies, books, music, and other
types of media in a single platform
through advanced content discovery
engines,
2) can pay with 1-click through an
integrated payment processor and

42. DIGITALIZATION
3) have access to advanced delivery
mechanics that make the content available
independent of consumption device (iPad,
iPhone, iTV), there is little the distributor
can offer as added value. The value chain is
flattened, with media products created by a
single person – a book, written, edited, and
published and marketed through an online
platform, without the help of a professional
team, with lowered barriers of entry with
insignificant initial capital costs, while time
costs remain the same.

43. DIGITALIZATION
4) in a world with more content than time to consume it
(the attention economy), the platforms for content
aggregation, curation and repackaging, such as iTunes
and Amazon but also crowd-powered platforms such
as Pinterest, Quora, Facebook, Twitter and others
become a crucial part of media economics and the
convergence of traditional, single media companies
from publishing, broadcasting, movie producing and
other media backgrounds into transmedia companies
that provide content trough different platforms and
across media making use of transmedia storytelling to
immerse the audience and gain attention will be an
important focus of economic study in media.

44. THANK YOU FOR READING!
CHELDHAYE