Political Economy of Mass Communication

please read the instructions  and the powerpoint carefully.First, I want to look at 2 entries first, each entry contains 2 pages.please read the instructionsfor each entry,the first 100 words should be a summary of the article,n the rest should be discussing how the article relates to the economy or political or media, and those concept from the book ( trends, business model, market model, public sphere)Thank you

Media Corporation / Product Portfolio:

This is a portfolio, developed over the course of the semester, of any media corporation or series of media products, whether programs, movies, newspapers, magazines, video-games, receiver devices (e.g. iPod, Blackberry, Notebook), artists (musical groups) that exemplify aspects of corporate practice and the political-economy of mass communication. The completed portfolio could address the following questions, among others:
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Topic: iPad
Instruction:
* There are total of 12 entries, each entry includes an article and 2 pages analysis.
* For each entry, we need to summarize the article in about 100 words, then analysis the article on the remaining session.
* The analysis has to show how this article related of political-economy of mass communication.
* The component examples of your portfolio may focus on the relationship between your chosen products and their wider corporate and
political parentage, and/or on the economics of media operations in the market.
* Your analysis should be driven by your discovery of particular news items or other sources of information about your products and you
should aim to add at least one example or discovery AND your corresponding analysis for each week of the course.
* You are strongly advised not to just enter the first items that you encounter in your searches, but to think carefully about the value of each
entry in terms of its weight and potential for insight into key aspects of the political economy of mass communication.
* please also related it to our class material if it’s possible. We learned about business model, major trends in communication industries, rise of
global media system.
*****PLEASE READ THE POWERPOINT I UPLOADED, it’s based on my textbook (market model, business model and trends*****
* REMEMBER, the article has to deal with the relationship between iPad and political-economy of mass communication

Here are some of the questions that you can discuss in the analysis:

1) Which is the principal corporation(s) involved in the production and distribution of these products? How do the products relate to and exemplify the business strategies of the parent corporation(s)?

2) In the case of a corporation: what are the key features of its history; what kind of ownership structure does it have and what other companies does it own? What are its main activities and how important are these to the entity’s overall revenues?

3) How do these corporations and/or their products exemplify strategic alliances and partnerships between different corporations?

4) What evidence is there of market success or failure, on the basis of what criteria, at national and international levels?

5) To what market(s) are these corporations/products directed; how are these markets defined?

6) To what extent do these corporations/products exemplify the impact of regulatory structures?

7) What evidence is there that these corporations/products serve a general public good, whether local, national,
international, global; do they also perform notably harms to the public good, and why?

8) Define the labor conditions and dimensions of these products: what categories of labor do they involve, at what
rates of expropriate and remuneration?

9) To what extent do these products articulate ideological positions?

Market Model, Public Sphere Model
Two approaches to the analysis of media

MARKET MODEL
Basic principles:
Society’s needs best met through unregulated supply and demand
Media like all goods and services
Private, unregulated ownership is best
Consumers, not regulators, call the tune

Advantages of markets
Promote:
efficiency
responsiveness
flexibility
Innovation
Markets can deliver media like any other product

Market structures
Market structure encompasses:
Level of ownership concentration
Number of firms supplying a product
Amount of product differentiation
Types of entry barriers facing new competitors
Extent of vertical and horizontal integration

Four Kinds of Market
1. Homogenized monopolies:
Uncompetitive, least choice of product
2. Diverse monopolies:
One/two corporations; wide variety product
3. Homogenized competition:
Many corporations, similar product
4. Diverse competition:
Many competitions, wide variety of product

Public Sphere Model
Basic principles:
Society’s needs not met entirely through market system;
Consumer power is not democracy;
Media are not like other products;
Profitability not sole determinant of health
Government has necessary role.

Vision of public sphere model
Media as primary information sources and storytellers;
Media are forums for social dialogue;
Need open mass media system that is fully accessible;
Ownership/control should be diverse;
People citizens first, then consumers.

Vision ctd.
Citizens need from media:
information about personal rights
about public political choices
to voice criticism, register alternatives
to recognize themselves in media representations

The Limits of Markets
Markets:
are undemocratic: one dollar one vote
reproduce inequality
are amoral
do not meet all social needs
do not meet all democratic needs

“Toasters with pictures?”
Market OK for media consumers, not for media citizens;
Advertising inserts itself between product and consumer;
Media are resources for citizenship;
Media have unique role in democracy, recognized in US legal protections

Business Models
In Media Industries

Definitions (1)
A business model is an action methodology for the systematic and routine generation of money or equivalent resource

Definitions (2)
“Business models are created and understood by stepping back from the business activity itself to look at its bases and the underlying characteristics that make commerce in the product or service possible”
(Picard, 2002, pp. 25-26)

Definitions (3)
“A business model…is the mechanism by which a business intends to generate revenue and profits
“It’s what a company does and how it makes money doing it” (Malone, MIT)

Components of a Business Model (1)
How the business will select customers
How it defines and differentiates its product offerings
How it creates utility for its customers

Components (2)
How it acquires and keeps customers
How it goes to the market (promotion strategy and distribution strategy)
How it defines the tasks to be performed
How it configures its resources
How it captures profit

MAJOR BUSINESS INCENTIVES
The attraction of money
The fear of losing money
The attraction of risk-free money
The attraction of continuous risk-money

Leading to…
A process of constant process of adaptation and change to protect and to grow business in the face of challenges that are internal to the business or external to it.

Internal Challenges Include
Insufficient or aging plant
Insufficiency of human resource relating to numbers, skills, turnover, demographics
Insufficiency of capital

External Challenges Include
Changes in regulatory structure
Changes in client demand
Changes in available technologies of production, distribution or reception
Changes in industry structure relating to competition, conglomeration etc

Tracking Media Change
Technology
Production
Distribution
Reception
Audience
Regulation

In the Case of Recording
Technology
From Telephone and Radio, through Vinyl to Cassette and Compact Disc to Digital Downloads
Symbiotic relationship with (1) Radio technology, from being a means of promoting the sale of radio sets, through to being a means of attracting audiences to radio stations, to being a means of promotion the sale of music and records, of attracting payola revenue from the industry, and attracting advertising (2) Movies, Music Video, Cable and Satellite Television

Tracking Change in Recording (2)
Production
Conglomeration of labels down to four majors (Sony/BMG, EMI, Universal and Warner), accounting for 75% of worldwide sales and 85% of US sales by mid-decade.
Changing relationships between independents and the majors

Tracking Change in Recording (3)
Distribution
(from Label to Wholesale and Retail Outlet)
Symbiotic relationship with (1) Radio broadcasting first to promote sale of radio sets, then to attract audiences, to promote sale of sheet music and records, attract payola, and advertising (2) Movies, Music Video, Cable and Satellite Television
Symbiotic relationship with (1) Retailers (owned by labels, independent), and sales tracking methodologies (2) Music clubs, dependent on mail and digital download (3) Peer-to-peer digital file swapping (4) Digital music store, with exclusive relationships to reception technologies (such as iPod)

Tracking Change in Recording (4)
Reception
From gramophone to cassette player, walkman, computer, iPod and mobile phone
Symbiotic relationship between changes in hardware of reception technology and physical character of the product, so that each major change of reception technology (e.g. cassette player) required users to repurchase their music portfolios

Tracking Change in Recording (5)
Audience
– Audience behavior changes towards:
Great mobility of listening opportunity
Greater access to available music
Greater control over what to listen to, and when to listen to it
Greater opportunity to produce and distribute as well as to listen
Greater choice over spending strategies (e.g. reflecting rise of the vinyl single, displaced by rise of the album, in turn displaced by rise of the digital single)

Tracking Change in Recording (6)
Regulation
Controls over payola
1996 Telecommunications Act, and increased concentration in radio

Example: The Changing Business Models of Online Content Services
(1) The Videotext Model
Used TV screens to convey text (1970s)
Allowed publishers to easily update
Used existing content, and existing distribution infrastructure
Gave added value to high end TV sets
Content download fairly slow
Limited words per page; limited readability
Customers insufficiently impressed

Online Content Services (2)
(2) Paid Internet Model (1980s)
Used pre-existing Internet infrastructure
Involved charging a fee for web access
Complicated processes to get access
Customers didn’t like to pay

Online Content Services (3)
Free Web Model (1990s)
Enabled by widespread distribution of browsers in standard software packages on new computers
Content generally free, serving as promotional tool or special interest service
Traditional media could re-use existing material
But insufficient revenue possibilities

Online Content Services (4)
The Internet/Web Ad Push Model
Used lists of subscribers and subscriber details to attract adverts
Or found adverts related to the content
Similar to direct mail
Audiences did not like intrusiveness of ads

Online Content Services (5)
The Portal and Personal Portal Model
Users of web browsers are brought to an organizing interface and to adverts
Readers are brought into contact with click-through ads (often only one a page) while making other uses of the page. Lowers reader resistance to ads
Portal organizes content in a way that is attractive/useful for readers; acquires brand image.
Still not producing profits for most portal operators

Online Content Services (6)
The Digital Portal Model
Development of multipurpose digital portals, allowing combination of current content portals with streaming video and audio, including pay-per-view services, and chat facilities
Revenue from ads, from pay-per-view, premium service subscriptions

TRENDS IN COMMUNICATIONS
An Introductory Overview
Sources various; include Croteau and Hoynes (2006) The Business of Media. Thousand Oaks, CA.: Pine Forge Press; and various contributions to Alexander, Owers, Carveth et al. (Eds) (2003) Media Economics. New York: Routledge.

14 Trends: What Storyline?

1. Digitization 8. Convergence
2. Deregulation 9. Branding
3. Privatization 10. Synergy
4. Globalization 11. Mergers & Acq
5. Commercialization 12. Concentration
6. Specialization 13. Innovation and Competitivization
7. Growth 14. Connectivity

(1) Growth in Media
Variety of consumption technologies: Proliferation of technologies: cd’s, computers, vcrs, dvds, MP3s, mobiles, 3G/4G mobiles

Growing portable, on-demand consumption opportunities
Financial growth: media advertising up $733m to $3.63bn to $150bn (1919-1950-2007), constant prices
(As % of GDP: 2.5% – 1.9% – 2.0%)

Media Growth (2)
Time Spent
Time spent with media: 7hrs 35mins a day in 2009 for 3-18 years old (10hrs 45mins incl. multi-task time)
http://news.cnet.com/8301-1023_3-10297935-93.html
http://www.mediainfocenter.org/television/competitive/time_reach.asp
http://www.kff.org/entmedia/upload/8010

Share of Time Spent Per Day with Major Media

Growth (ctd): Print (
WAN, 2009)
1.9 billion people choose to read a newspaper every day, or 34 percent of the world population, while 24 percent use the internet.
Biggest newspaper market is India, with 107 million daily sales. India, China and Japan account for more than 60 percent of the world’s newspaper sales, with the USA taking 14 percent.
In sales per 1,000 adult population, Japan leads the world with 612, Norway with 576, Finland with 482. 91 percent of Japanese continue to read a newspaper daily

Growth (ctd): TV
9% of 43m US HH had TV, 1950, rising to 98.9% of 114.5m HH in 2009.
Globally, 1964-2004 TV HH increase six-fold to 1.2 billion (world pop : 6 billion)
In 2006, 59% HH had cable; 25% had satellite
Internet is accessed by two billion people worldwide

Growth (ctd) Internet:
http://www.internetworldstats.com/stats.htm
Global: 361m Internet users 2000, rising to 1.7b users* in 2009, or 25.6% of 6.77bn total pop
(User = anyone currently in capacity to use the Internet, on basis of access and knowledge)
NorthAm: 108m users 2000, rising to 253m in 2009 or 74% of 341 total pop
Asia: 114m users in 2000, rising to 738m in 2009 or 19% of total pop of 3.8bn

2. Mergers and Acquisitions (M&A)
Bagdikian (2000): Depending on measures, major U.S. media are owned by between 6 and 23 media conglomerates
For biggest 6 traditional media companies, 2009

http://www.freepress.net/ownership/chart/main

How does M&A take place?
Occurs in 3 major ways:
vertically (company buys company that supplied it, or that it supplies: e.g. TV network buys Hollywood studio)
horizontally (company acquires second
company in same business; e.g. theater chain buys another theater chain)
by conglomeration (a company building a portfolio of different kinds of businesses): may be intra-media (media only) or extra-media (media plus non-media)

What Motivates M&A?
Economic gain
Market control and predictability
Synergy
Cash flow
Economies of scale
Cross-subsidization, cross-promotion,
Global market activity
Convergence,
Create barriers to new competition
Tax benefits
Greed and vanity.

What factors are favorable/unfavorable to M&A?
Favorable
Low interest rates
Inflation
Company valuation,
Future expectations of growth
Factors affecting rates of return, and availability of finance.
Unfavorable
Convergence slow to happen
Huge debt, as result of overpayment
Organizational conflicts
Falling security prices, falling valuations

(3) Regulation / Deregulation
Regulation mainly affects “scarce resource” media (broadcast frequencies; public rights of way in case of cable) or “natural monopoly” markets (telephony, cable, some newspapers).
1980s-1990s, incl. 1996 Telecommunications Act, a period of “deregulation” or of “re-regulation” away from criteria of public interest to criteria of competition.
Deregulation stimulated by technological advance incl. digitization (increase in broadband), desire for M&A, neoliberal philosophies

(4) Convergence
Eradication of technological differences among distribution networks
Multiple applications over the same network to different platforms
Content flows through increased number of distribution networks
Text+voice+video+still+data packaged/distributed simultaneously

(5) Globalization
International markets prime source of revenue growth following saturation of domestic markets
Economies of scale, but pressure to produce separate/customized content for different markets
Enhanced by policies of deregulation and liberalization in many countries
Motivated by desire for more revenue, leveraging of content, cross-subsidization etc.

(6) Concentration of Media Markets
Local (e.g. largest four radio owners gained 93% of revenues in top 283 markets; one cable provider in most markets, one dominant fixed-wire local telephony provider in most markets)
National (e.g. four major TV networks; two major satellite providers; six largest MSOs provide service to 60% of cable subs; 20 newspaper chains account for 70% of daily circulation; 10 largest film distributors owned by 6 conglomerates account for 90% of revenues)
Special Interest (e.g. two major players, Univision and Telemundo)

Corps controlling over 80%

How is concentration measured?
Evaluation of significance of concentration complicated by:
What constitutes a “market”
Different assessments as to when market is “dominated” by one or few
New technologies may create entirely new markets; even if concentrated, more customer opportunities have been created

(7) Digitization
All forms of communication progressively more available for translation into computer language, and delivery over digital systems. This enhances convergence, and conglomeration.
Digitization creates significant problems of transition and coordination between content, distribution and receiver technologies
Long-term consequence: implosion of traditional business models; creation of entirely new ones

Press Business Model Implodes

Music Bus Model Implodes

Decline of Network TV

Google Ad Revolution
3 billion searches a day
70% of online searches worldwide
90m unique YouTube visitors, March 2009 (66% of all web video traffic)
Over $20bn ad revs 2009 (40% of all advertising online). Matched combined ad revenues of 5 largest TV networks
Google News: aggregates 25,000 news sites

(8) Privatization
Process of removing media from government ownership / control and placing (selling) them into private hands; OR of requiring government owned media to become semi-commercial.
In U.S. privatization has affected broadcasting structure, attitudes to PBS funding, satellite systems, Internet development.
Privatization enhances globalization

(9) Commercialization: Infotainment
The process whereby increasingly, over time, more and more aspects of media activity, including news and information, are determined by “bottom-line” mentality on behalf of owners and shareholders. Examples include “dumbing down” of television news; product placement in Hollywood movies; intensification of sex and violence; reduction in political coverage on television news; increase in number of advertisements per hour of entertainment.

(10) Branding
Strategies to increase extent to which corporate identities acquire household or consumer recognition.
Branding aids marketing, stimulates M&A activity to extend brand name over wider range of products or services.

(11) Synergy
Combining resources, talents, archives etc., in ways that create a “whole that is richer than the sum of individual parts”.
Quest for synergy drives much M&A activity and accounts for many strategic alliances
Examples: iPhone use of AT&T as carrier

(12) Specialization
“Narrowcasting,” “customization,” “localization.”
Targeting small, specialized audiences.
Often based on advertising economics.
Specialist media typically owned by larger conglomerates.
Opportunities facilitated by new technologies (cable channels, websites)

Ad Advantages of Specailization
If advertiser can reach 100 people for $100 and every one of those 100 people buys his $10 product, that is better than spending $100 to reach 10,000 people of whom only 50 end up buying the product. In the first case he earns $900; in the second case he earns $400.
Examples: a cigar manufacturer who advertises in cigar magazine rather than LA Times.

(13) “Competitivazation:”
Process typically triggered by (a) new regulations that reduce restrictions on ownership or (b) new technologies that create entirely new markets (e.g. cell phones).
These attract new entrants into given markets, creating (the appearance of) great competition.
But, almost immediately, competition is followed by M&A activity until one or a small number of companies dominate the market

(14) Connectivity/Compatibility
Growing pressure on media producers to determine proprietary or universality strategies, relating to connectivity between:
(1) distribution and reception technologies
(2) different reception technologies
(3) software formats, content, and reception technologies