Media Economics Terminology Explained

Built on a diverse range of economic theories and analytical approaches, media economics is dedicated to the study of how economic and financial forces affect media systems and media organizations. Over the past three decades, the study of media economics has grown extensively and rapidly around the world, and its fields of study and related topics are deeper and broader than many people unfamiliar with the discipline could imagine.

In a technical sense, there is no such thing as a specific media economics, as this would imply that economic laws and theories in the media field are distinct from those in other fields. However, from a practical point of view, the specific application of economic laws and theories to media industries and companies is far-reaching. This is because the study of media economics helps to analyze how economic influence guides or restricts media activities and how it has a macro effect on the specific dynamics of the media market.

Media products and services have unique characteristics and attributes that are very different from how other products and services are understood. A fundamental difference is that media products and services are dual in nature, serving both audiences and advertisers. Because audience markets and advertising markets have different needs for media products and services, they often have uneven economic impact. Another feature that distinguishes media products and services from other products is that media products can be reused many times, generating higher and more lasting value than the initial use. Films, sound and video recordings, as well as information, retain their economic value over a longer period of time, based on the protection of intellectual property rights. It is also important to recognize that for media companies and organizations, the process of producing media products is an artistic creative process, which is very different from general industrial production.

Economic forces influence all media, and this influence should vary according to market and social institutions. Media economics analysis is not only useful for understanding free and open markets, but it also provides perspectives and analytical approaches to media activities in many different market conditions, including those that are more closed or characterized by strong regulation and state intervention.

History of Media Economics Research

In the early days of media studies, media scholars were mainly concerned with the role and function of the media, and most of them came from the fields of sociology, psychology, political science, history, and literary criticism.

In the second half of the twentieth century, with the development of the advertising industry, the economic power of the media has increased, with the newspapers and magazines becoming increasingly prosperous, and the commercial radio and television broadcasts making profits, and even the public * * * radio and television broadcasts also started to use advertising as a means of publicizing their products and services. **radio and television also began to use advertising as a means of increasing their revenues. These changes coupled with increased competition in the industry have led to a growing number of business and economic problems.

The study of media economics was first conducted in the 1950s, with early scholars focusing on newspaper competition and the structure and regulation of radio and television. By the 1960s and 1970s, media scholars began to use political economy to explore media issues, focusing mainly on the power structures that affect the media.

Starting in the 1970s, especially after the development of cable television and the emergence of many problems in the newspaper industry, more and more economists and business scholars began to explore the media. Desmoulins in France specifically analyzed the media industry from an economic point of view; Nieto launched an early work on magazine publishing in Spain and in 1985 completed Lopez, a scholarly work on media economics in Spanish. in the United States, the works of Owen, Beebe, and Manning made an important contribution to the study of economics in television ( Ovcen, etal, 1974).

By the 1980s, an increasing number of research works on media economics began to emerge. This new line of research largely changed the original situation of ignoring media enterprises as commercial and economic institutions. Beginning in the 1980s, many studies have informed the organizational operations of media firms, competition among media firms, the consumption of media products, and a range of economic and financial issues, in particular providing a basis for understanding and awareness of topics such as concentration and monopoly. Important results from this period include exploring the economic structure and organization of media industries (Picard, 1989; Albarran, 1996), focusing on the economics of media worldwide (Al-barran and Chan-Olmsted, 1998) and within specific media fields (Owen and Wildman 1992; Picard, etal, 1988; Collins, Garnham and Locksley, 1989; Dunnett, Lacy and Simon, 1993, etc), among others.

While research interest in media economics has been growing since the 1980s, the number of scholars active in the field is still very limited, scattered around the world in a variety of academic programs, including journalism, broadcasting, communication, economics, business and industry, and political science. In the last two to three decades, media economics scholars from around the world have begun to converge. The annual Telecommunications Policy Research Conference, the annual meetings of the Association for Education in Radio and Television, the Association for Education in Journalism and Mass Communication, and the biennial World Congress on Media Economics have made exchanges among scholars more frequent and convenient.

At the same time, the field of academic journals began to create. 1987, in Robert G. Picard (Robert G. Picard) and others, the Journal of MediaEconomics (Journal of Media Economics) was founded in the United States. This journal published its first issue in the spring of 1988 and has since become a core publication in the field of media economics. 1999 saw the launch of the International Journal on M edia Management in St. Gallen, Switzerland, which focused more explicitly on management issues. 2004 saw the launch of the Journal of Media Business Studies (J M BS), which was launched in the United States. In 2004, the field was strengthened again with the launch of the Journal of Media Business Studies in J?nk?ping, Sweden. The research methods, topics and trends covered in these journals provide important indicators for the development of media economics. After the 1980s, works studying media economics tended to focus on introducing basic concepts and methods, such as exploring media expenditures (Wood, 1986), studying the financial performance of the media (Litman&Bridges , 1986), studying forecasted income (Ad-alTIS, 1987), studying welfare economics in relation to the media (Bustema. 1988), measuring centralization (Picard, 1988), measuring quality through media company expenditures (Lacy, 1992), analyzing consumer behavior (McCombs&Nolan, 1992), and parsing the media from a political economy perspective (Gandy, 1992).

By the late 1980s and early 1990s, the issue of structural change in wireless and wired media came into focus. Scholars used the study of industry organization and competition to explain and explore the problems of convergence in the cable industry (Chan-Olrrmted&Litman, 1988), diversification (Albarran&Porto, 1990), the problem of the television syndication market (Chan- Olmsted , 1991) the problem of the broadcasting entry market impact problem of barriers to entry (Berry&Waldfogel, 1999), vertical integration of information distribution (W aterman, 1993), and centralization (Sparks, 1995: barran&Dimmick, 1996), among others.

By the 1990s, the academic focus shifted away from basic market-oriented research, and new concepts and methods were introduced into the field. New topics included strategic analysis (Barett, 1996; Chan-Olmsted, 1997), exploration of the value of media companies (Bat , 1995; Miller, 1997), and pricing issues (Shav-er, 1995). At the same time, the issue of internationalization has become a center of research (Gets-hon, 1993; Holtz-Bacha, 1997). Worldwide analyses of media economics have included productivity issues in the graphic arts industry (Paasio, Picard, & Toivonen, 1994), competition in the changing European television market (Powers, Kristjarksdotti, & Sutton, 1995), magazine globalization ( Hafstrand, 1995) and how public ****service broadcasting is affected by policy and market changes (Boardrnan and Vining, 1996), among others.

In the late 1990s and early 2000s, macroeconomic issues such as the impact of the recession on the media (Picard, 2001) and media constraints in the global economy (Picard & Rimmer, 1999) began to receive attention. Scholars placed more emphasis on analyzing the market environment and behavior of media firms rather than on the market alone, and the period began to see the emergence of studies of media empires (Picard, 1996), corporate succession (Wolfe&Katx~r, 1998), mergers and acquisitions (Chan-Olmsted , 1998), comparative corporate strategy (Shrikhande, 2001), studies of firm selection (Picard, 2002b), and studies of corporate economics and finance (Picard, 2002a). Explorations of interactive television revenue streams and business models (Pagani, 2000), online content (Picard, 2000) and free newspapers (Ba kker, 2002) are also beginning to emerge.

With the development of media economics research came the emergence of media economics education. Curricular education encompassed full-time studies in the 1990s, MBA programs at Northwestern University, Fordham University, Switzerland's St. Gallen University, and the Senior Manager MBA program at Finland's University of Turku, among others. Master's degree programs are also offered at Navarra University in Spain, the University of Southern California and the University of Stirling in Scotland. Doctoral programs in media economics and management are offered at Indiana University, J?nk?ping International Business School, University of Michigan, University of Cologne, University of Dortmund, Navarra University, University of Florida, St. GalIen University, University of Southern California, and others.

Non-English-language textbooks in media economics have grown rapidly in the 1990s, with Picard's books translated into Chinese, Korean, and Spanish; original textbooks have been published in French, German, Polish, Russian, and Hungarian. Many research results and textbooks on media economics have been widely disseminated around the world, and many countries that have not fully liberalized their media markets in the past have introduced the experiences of other countries in the hope of providing references for their own media market reforms and institutional transformations.

Methods in Academic Research on Media Economics

Taking an overview of the development of media economics in the West, there are three kinds of main research paradigms: theoretical paradigms, applied paradigms and critical paradigms (see Table 1). While the theoretical and applied paradigms are often born out of each other in research, the critical paradigm is often separate from the other two. These paradigms are based on different academic foundations and focus on different research topics and research centers.

The theoretical paradigm, first developed by economists, began with studies of consumers of media products and services and their choices. This paradigm is based on neoclassical economics and is used primarily to explore the media forces that govern and drive the media system. It is commonly found in studies that forecast the prospects and impact of media development, in studies of media operators' decision-making, or in studies of optimal policy choices.

The applied paradigm comes mainly from university departments of business economics and management and from communication industry associations. It is currently the most commonly used approach in media economics research. This paradigm often explores the communication industry and its market structure, emphasizing knowledge and understanding of trends and changes. Its research aims are applied and designed to develop strategies and policies for firms or governments to control and respond quickly to changes in the economy and consumer behavior. Using this paradigm, scholars have studied media consumer actors and advertising trends, media companies, and single or overall media industries.

The critical paradigm, which began with political economists and social critics, has been applied in the field of communication studies, focusing on issues such as welfare economics. Scholars applying the critical paradigm generally have a strong cultural and social background, which allows them to focus on issues such as the centralization and monopolization of communication, cultural influences, and the problems posed by the shift from an industrial to an information economy. This paradigm has been influenced by British cultural studies scholars and neo-Marxist scholars.

Both the theoretical and applied paradigms use macroeconomics and microeconomics approaches to explore issues of communication institutions and interactions. Macroeconomics methods are often used to analyze the operation of economic institutions at the national level. However, as the boundaries between nation and state become less distinct in media markets, there is a greater tendency for this approach to explore issues at a regional or global level. The microeconomics approach tends to focus on the market activities of producers and consumers in a given market. It focuses on issues such as purchasing decisions, price behavior, financial processes, cost structures, and financial performance. It is based on the idea that the media is an economic institution and that it cannot be properly understood and appreciated without recognizing this characteristic of the media that must operate in the marketplace. Media companies provide content products and services to consumers as well as platforms for advertisers to communicate with consumers. In contrast, macroeconomics approaches look more at broad industry issues and market structures. They explore competition and monopoly, economic changes, and the impact of government policies on the communications industry.

Scholars of the critical paradigm take a broader view, examining the economic, political, and social underpinnings of the communication system, its overall impact, and its constraints. They explore the end results of institutional or policy constraints, examine the problems that arise from them, and seek ways to overcome inefficiencies through public ****policy.

There is often much debate between advocates and practitioners of these three research paradigms, but conflict is neither necessary nor helpful; in fact, each paradigm contributes important theoretical underpinnings and practical approaches, and the paradigms are complementary, with their ****existence making each other more persuasive and providing each other with more room for development.

Despite the differences in research traditions, a number of general and ****similar research approaches have developed as media economics has evolved. They have been categorized as: industry market research, company research, and impact research. Most of these methods employ theories and techniques commonly used in economic and business research, and provide a basic approach to the analysis of economic behavior in the industry.