Matakuliah : O0394 – Teknik Reportase dan News Caster
Tahun
: 2010
Commercialization of Media
Pertemuan 03 - 04
Learning Objectives
• This part will discuss how the media makes
economic efforts to gain profits and how it should
transform their organization/ work system in order
to survive and compete.
• This session will discuss the rules and
regulations the media must obey when the media
is making money.
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The Economic Efforts of Media (1/5)
How the media make money?
 Direct sales: the money obtained when consumers
pay lump sums to purchase tangible products and
the money would go to the retailer.
For example: when consumers buy a notebook from
a retail shop.
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The Economic Efforts of Media (2/5)
 Rentals: direct payment that is made when
consumers borrow a tangible product;
 Subscription: payments that are made for a
continuing service.
For example: newspaper, magazines, cable
companies;
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The Economic Efforts of Media (3/5)
 Usage fees: an amount of payment for intangible
products (services)
For example: movies, theatres, or long-distance
call;
 Advertising: the main economic base for most
newspaper, magazines, television, and radio
stations.
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The Economic Efforts of Media (4/5)
 Syndication: the rental or licensing of content to
media outlets, rather than the consumers.
For example: television cartoon or re-run of old
television series;
 Copyright royalty fees: payment as compensation
of media content for the use of an original idea.
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The Economic Efforts of Media (5/5)
For example: songwriters that receive royalty fees
from radio stations, cellular phones providers, and
from retail sales of their recording;
 Subsidies: an amount of money provided for
communication media that society consider
desirable but not of the commercial interests.
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How the Money Goes…
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Media Ownership Patterns (1/6)
The competition among television stations are
becoming more severe. The producers must spend
extra costs to release attractive new products
should the competition exist.
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Media Ownership Patterns (2/6)
There are certain aspects that make the television
production are obliged to make as much profits as
they could:
Taxes
Operating costs (wages, promotion, etc)
Paybacks to investors
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Media Ownership Patterns (3/6)
For that reason, the economics of media industry
may lead to ownership patterns that, in some way,
are not in the interest of consumers.
There are 4 (four) media ownership patterns that
could describe the media economic performance.
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Media Ownership Patterns (4/6)
 Monopoly when a company dominates the
industry;
 Oligopoly is when a few companies dominate
the industry;
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Media Ownership Patterns (5/6)
 Duopoly is when two companies dominate
the industry
 Competition is when few companies may run
their programs and do promotion to gain
profits without any barriers.
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Media Ownership Patterns (6/6)
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Is Money the Only Motive?
 Most privately owned media companies is driven to
make program and regulations that will increase
their profits;
 But public service media (not-for-profit
organization) still carries out valued program to the
community like education, cultural arts or
government information.
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On Becoming competitive (1/7)
The Commercialization of Media
A Broadcasting magazine stated:
“In this country, where production capacity exceeds
consumer demand, advertising has become more
than an economic force - it is an influence on our
quality of life.” (Herbert I Schiller)
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On Becoming competitive (2/7)
The television advertising expenditures of US
companies, 1966
No.
Companies
Costs ($ million)
1
Procter & Gamble
179.2
2
Bristol-Myers
93.6
3
General Foods
93.3
4
Colgate-Palmolive
67.1
5
Lever Brothers
58.0
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On Becoming competitive (3/7)
Other than advertising, the media companies also
try to produce the content/ program that that is
suitable/ fitted with the marketeer’s order.
Due to the mass production and time concern in
production activities, sometimes the programs they
produce are of the low quality which provide such a
low moral values to the community.
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On Becoming competitive (4/7)
An American TV writer stated:
“TV is not an art form or a cultural channel, it is an
advertising medium. … They (television programs)
are not supposed to be any good. They are supposed
to make money… (and) in fact, ‘quality’ may be not
merely irrelevant but a distraction.”
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On Becoming competitive (5/7)
From Mass Markets to Market Segments
Another way of becoming a competitive media
company is to narrowcast the business.
It is to target smaller and more specific audience
segments with more specialized content (Owen &
Wildman, 1992).
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On Becoming competitive (6/7)
Four important aspects that help the media to
narrowcast their business:
The information technology;
The advertisers’ preference that value smaller
audiences;
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On Becoming competitive (7/7)
 Sophisticated research techniques and
databases;
 Audiences & the creative developers that are
more interested in more specialized (segmented)
media and consumer products.
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Closing
The end of this discussion will lead the students to
understand how the stiff competition among media
companies would force the companies to transform
their organization in order to fulfill the demand that
will later on bring more profits to the media
companies.
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