Economics of the Mass Media

Question 1

What are the four media support systems?

Answer 1

1. Audience
2. Advertising
3. Combination of Audience and Ads
4. Subsidized

Question 2

Audience

Answer 2

-money comes directly from users
-money is payed directly in store
Ex: going to a bookstore to buy a book

Question 3

Advertising

Answer 3

-content delivered free to consumers and encourages people to buy the product
-advertisers are buying audiences
Ex: ad on a radio

Question 4

Combination of Audience and Ads

Answer 4

Ex: buying a magazine with ads at a UCLA store
Ex: paying for a movie ticket that will have pre-screening ads

Question 5

Subsidized

Answer 5

-private and public subsidies
-rich individuals may subsidize magazines because they support the opinions that are expressed
-government subsidies are public (Ex: NPR has public subsidies)
-private subsidies ex: corporate journal/magazine paid by the corporation to publish

Question 6

What do advertisers want to know (2)?

Answer 6

1. Size of audience (can be measured by how many units sold)
2. Composition of audience

Question 7

How does TV measure size and composition?

Answer 7

Measured through the Nielsen Company

Question 8

How does the Nielsen Company measure?

Answer 8

-use people meters to develop statistics for (1)ratings and (2)shares
-people meter: a device that records each time you watch tv,by taking note of what you’re watching and minute-by-minute viewing
-draws a random sample of of 42,500 households in the US
-records demographic information

Question 9

Rating

Answer 9

(number of tv households watching a specific show)/(total number of tv households in the US)

-gives you the absolute number of people that are watching a show

Question 10

Share

Answer 10

(number of tv households watching a specific show)/(number of tv households with a tv on at that time)

-tells you how well a show is doing against competition

Question 11

How does viewing impact ad cost?

Answer 11

The more people viewing a show, the more the ad will cost

Question 12

Why will a late night comedy show have low ratings?

Answer 12

Because more people are sleeping
-it may have a high share

Question 13

How frequently are ratings and shared generated?

Answer 13

Everyday

Question 14

How are local markets measured?

Answer 14

Local markets are measured using a sweeps period

-sweeps months are November, February, May, and July

Question 15

Network

Answer 15

a parent company responsible for coming up with shows, and sharing information with affiliated stations

Question 16

How are sweeps measured?

Answer 16

By using a diary in which people record the show and time they watched tv

Question 17

What is a downside of diaries used in sweeps measuring?

Answer 17

Inaccuracy with diaries because self recorded
-people make forget to fill them out, make rounding errors, lie about what they’re watching to seem socially involved, want a show to be more successful

Question 18

How do sweeps months impact shows?

Answer 18

Networks will put on their best programs to generate larger audiences
-larger audience = more money
Ex: finales of reality shows appear in May
Ex: Celebrity appearances in shows

Question 19

Problem with people meters

Answer 19

have to hit the button again when light begins to flash

-more accurate than sweeps so being moved into local markets
-Nielsen trying portable people meter, a clip that measures tv wherever you are

Question 20

Compensation 3 (C3)

Answer 20

measures the viewing within 3 days of the broadcast
-Wednesday has highest rating

Question 21

C7 and DVR Relationship

Answer 21

-with DVR people are delaying their viewing so networks are moving to C7
-C7 is more aggressive measuring because measure people who watched on air date and following 7 days
-ads are still watched with DVR playbacks because it is passive
-DVR is giving ratings a boost
-younger people more likely to record

Question 22

What demographic Information is recorded for composition? (4)

Answer 22

1. Geography: where are buyers/people watching the show
   Ex: more frequent flyer commercials in big cities because more traveling occurs there
2. Age
   Ex: Kellogs sold to children so more ads on kids channels
3. Sex
   Ex: Revlon commercials won’t be shown as much on sports channels
4. Income
   Ex: luxury car commercials common on classical music stations

Question 23

Who mainly controls media?

Answer 23

Big corporations who are concerned with money and profit

Question 24

How does media choose the content they share?

Answer 24

They minimize risk

Question 25

Traditional genre categories

Answer 25

-established genres minimize risks
Ex: company wanting to make a successful teen comedy may refer to past successful films, for example, may be set in suburbs and have a character that feels out of place
Ex: band with unknown genre unlikely to get record deal

-change the packaging (genre) of a show can influence viewing
Ex: Desperate Housewives unsuccessful when framed as comedy, but successful when reframed as a primetime soap opera

Question 26

How do corporations minimize risk? (7)

Answer 26

1. Relying on traditional genre categories
2. Using proven talent
3. Using secondary markets
4. Syndication Market
5. Over production with emphasis on hits/blockbusters
6. Longtail Strategy
7. Exploit synergy of various parts

Question 27

Proven talent

Answer 27

People who have been successful before
-includes proven writers, producers, and directors
-people may watch film with certain actors or directors that they like

Question 28

Secondary Markets

Answer 28

alternative opportunities to generate profit beyond domestic sale in the original format without incurring additional production costs
Ex: secondary market for film could be DVDs, merchandise (primary is box office)
Ex: secondary music could be selling music for a movie
-something may fail in the primary market but succeed in the secondary (e.g. Shawshank Redemption)

Question 29

Syndication Market

Answer 29

-sell a successful show to those who want to buy it
-often re-runs of old shows
-often includes procedural dramas: problems likely to be resolved by end of episode, they are not serialized so you can watch in any order and still understand
E.g. Law and Order, The Simpsons

Question 30

Overproduction with Emphasis on hits/blockbusters

Answer 30

-most tv, books, movies, and music fail so companies may put out surplus offerings hoping that some will become popular and generate enough profit that covers the loses of everything else
-difficult to predict what will be big
Ex: movie studio will release a bunch of movies

Question 31

Longtail Strategy

Answer 31

-making money by selling a lot of a few things or a little of a lot of things

Question 32

Exploiting Synergy of Various Parts

Answer 32

-horizontal integration: companies have their hands in different industries and work in a synergetic way
Ex: promotion of Disney+ hawked on ABC’s Dancing with the Stars, which is owned by Disney

Question 33

Concentration

Answer 33

-more of the media falling into fewer companies’ hands
-five media companies draw 3/4 of primetime audience
-despite concentration, media options have expanded exponentially
Ex: more the 3 billion views on Youtube daily

Question 34

Sweeps Period

Answer 34

4 months in which local size and composition is measured to set local advertising rates