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PRINCIPLES OF MEDIA ECONOMICS

PRINCIPLES OF MEDIA ECONOMICS. Buyers and sellers = Producers and consumers (for media). “ECONOMIC PROBLEM”. How much (which goods) to produce How to produce them Who will consume them Labor. Types of economies. Command Market Mixed Which is US? Laissez-fair

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PRINCIPLES OF MEDIA ECONOMICS

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  1. PRINCIPLES OF MEDIA ECONOMICS

  2. Buyers and sellers = • Producers and consumers (for media)

  3. “ECONOMIC PROBLEM” • How much (which goods) to produce • How to produce them • Who will consume them • Labor

  4. Types of economies • Command • Market • Mixed • Which is US? • Laissez-fair • Non-interference by gov. (“invisible hand”)

  5. 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

  6. Demand Curve • Changes that supply and price cause on consumer demand

  7. Demand for Media Products • Demand for media content • Demand by advertisers for access to consumers • Demand for media outlets

  8. Equilibrium • Balance point at which supply = demand • Goal of the market economy

  9. Economic concepts • Maximize profits/minimize costs • Production costs: • fixed (plant, staff) • variable (raw materials, line personnel) • Larger volume usually generates “economies of scale”

  10. Economies of Scale • Decline in average cost of product as additional units are produced

  11. 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.

  12. 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

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

  14. Sources of media revenue • Advertising (display, classified) • Client subscriptions • Government subsidies • Sponsorship • “Hit” fees, Transaction fees, • Product sales

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