Presentation on theme: "Media Criticism. The Economic Model In the United States, media institutions and the products they create can be analyzed from the perspective of Capitalism."— Presentation transcript:
The Economic Model In the United States, media institutions and the products they create can be analyzed from the perspective of Capitalism. –Capitalism: An economic system wherein the motive of profit governs all economic activity.
The Economic Model The central concern of a capitalist approach to media is how to maximize profits. In very simple terms, this is done in two ways: –Reducing the cost of production (overhead). –Increasing the market value of products.
The Economic Model The most efficient way for costs of production to be reduced is through Economies of Scale, wherein producers generate their products on a mass scale, reducing the cost of materials through sheer volume of purchase. –Economies of Scale: As production quantity increases, cost of production decreases.
The Economic Model The value of products is determined by two opposing market forces: –Supply: The amount of product available. –Demand: The popularity of the product. As supply increases, demand tends to decrease as the market becomes saturated.
The Economic Model In theory, the capitalist economic system is supposed to by guided by competition in which the best products and services are adopted by consumers and are constantly being challenged by rivals. This is often referred to as the “invisible hand of the marketplace” (Adam Smith – The Wealth of Nations).
The Economic Model In practice, capitalism often results in various forms of monopoly because the economies of scale developed through horizontal and vertical integration create barriers to entry for aspiring competitors.
The Economic Model Terms: –Monopoly: Market domination by a single company. –Horizontal Integration: Consolidated ownership at a single level of business. –Vertical Integration: Consolidated ownership at multiple levels of business so that every aspect of production, distribution, and exhibition can be performed “in-house.”
The Economic Model Terms: –Barriers to Entry: Obstacles that a new company must overcome in order to begin to do business in a market.
The Economic Model In media industries, monopoly is a particularly likely outcome because media products tend to be high in initial investment and low in subsequent marginal costs, creating a more pronounced barrier to entry for new competitors.
The Economic Model Terms: –Initial Investment: The upfront cost of starting a business. –Marginal Costs: The cost a company pays for each additional unit of merchandise (e.g. the cost to produce a copy of a film on DVD).
The Economic Model Media industry monopolies are of special concern because of the control they exercise over the information available to the public. Insofar as a diversity in the marketplace of ideas is necessary to a healthy democracy, a monopolized press is a hindrance to it.
The Economic Model The trend in media ownership has been toward consolidation. Although the FCC (Federal Communications Commission) has traditionally sought to preserve diversity in programming, the Telecommunications Act of 1996, has reduced the number of owners through changes in media ownership limits.
The Economic Model Terms: –The Telecommunications Act of 1996: A set of federal laws that deregulated media ownership limits, permitting major media companies to gain more holdings and dominate markets.
The Economic Model Sources of Media Revenue: –Direct Sales –Rentals –Subscriptions –Usage Fees –Advertising –Syndication –License Fees –Subsidies
The Economic Model New media have revolutionized the old economic model through narrowcasting, personalization, and disintermediation. –Narrowcasting: Programs that are intended for smaller segments of the public. –Personalized Marketing: Targeting individual consumers with advertisements based on personal information. –Disintermediation: Customers purchasing products directly from the manufacturer.
The Economic Model Most drastically, the internet may reduce the marginal costs of distribution to almost nothing, forcing a serious change in the economic model.
Media Criticism Media Criticism may be guided by a number of perspectives including: –Marxist Criticism –Psychoanalytic Criticism –Feminist Criticism –Ethnic Criticism We will focus on Marxist Criticism.
Media Criticism Marxist Criticism: –Karl Marx ( ) is the author of Das Kapital and The Communist Manifesto. –Marx pointed out the existence of economic class conflict between those who owned the means of production (capitalists) and those who were employed by them (proletariat).
Media Criticism Marxist Criticism: –Marxist criticism (also called political economy criticism) suggests that media products exist to reinforce the existing power structure that privileges the interests of capitalist society. –According to political economy criticism, the imbalance of wealth and power is maintained through hegemony, which is reinforced by social institutions, especially the media.
Media Criticism Terms: –Hegemony: Underlying consensus of ideology that serves the dominant groups in society.