What are the basic economics of the industry? How do companies make money? What are their costs?
When it comes to media, revenue and costs come about in many different ways. In the constant quest for view counts, different media companies are constantly competing with each other to see who can attract the most viewers. Danny Brown, co-founder of Bonsai Marketing, explains it best in his article, "The Real Cost of Social Media." Companies in the media industry tend to make their revenue in several different ways. One method is through the application of user fees and subscriptions. Usually if you want access to the media, you will have to offer up some sort of payment. From newspapers, to magazines, to cable, to the Internet, viewers will have to pay an access fee. Another way companies involved in the media make money is through advertisements and sponsorships. Companies want people to know about their product/service and are willing to pay media outlets in order to achieve this. Now when it comes to costs, media companies are constantly going through high production costs. For companies involved in television, a major cost is paying for airtime. If they want to receive revenue, they need viewers, and it promotions can cost a hefty sum.
I liked your article a lot. Also, you talked about paying for airtime. That is so super expensive. I know a friend's dad who designed a commercial to be aired during the Super Bowl, and that is some of the most expensive airtime ever.
ReplyDeleteAnd the thing is that companies in the media industry have to compete with one another for airtime as well, to promote themselves- as well as compete with other companies in other industries who also want to advertise.
I really like the article. It gives a good warning that social media isn't just a big easy button for businesses. It's good that there is someone to highlight the hidden costs.
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