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.
