1. The Media Business: Consolidation, Globalization, and the Long Tail
Revised for ed6. 7/7/16
Chapter 3

2. Wild Ponies: Making it in the music business without a recording contract
Doug & Telisha Williams perform as the band Wild Ponies.
Indie musicians can make a middle-class living by engaging with listeners.
Kevin Kelly’s Theory of 1,000 True Fans
Digital technology puts creative media power in hands of individuals.

3. Development of Private Ownership
1638: First printing press in North American colonies
1690: First newspaper published in colonies
1830s: Penny Press begins
1840s: Telegraph industry owned privately, not by government
1930s: Growth of national news

4. Big Media
Consumers have many more ways to consume media now than they did 40 years ago.
Old media expanded while new media come into existence.
Limited number of giant media conglomerates, but also new big players.
But today, bigger isn’t always better.

5. Legacy Conglomerates Disney News Corp. & 21st Century Fox Time Warner
Viacom & CBS
Bertelsmann
All are multinational businesses

6. Disney 2015 Revenue: $52.5 billion
Major player in broadcast TV, cable, movies, theme parks
Home of Mickey Mouse, Pixar, Marvel & Lucasfilm
Pioneer in new media distribution and media convergence; among the first to offer content through Apple's iTunes.
Master of merchandising and product tie-ins
But has to deal with declining audiences for money- maker ESPN

7. News Corp. & 21st Century Fox
Fiscal Year 2015 Sales: $8.6 billion
Newspapers, Information services, Books
21st Century Fox
Fiscal Year 2015 Sales: $29 billion
Cable, Broadcast, Film, Satellite properties, includes Fox News

8. News Corp. & 21st Century Fox
Both companies controlled by Rupert Murdoch and family.
Good at handling changing media environment.
Gives consumers what they want.
Big player on global level.

9. Time Warner 2008 Sales: $47 billion, but lost $13.4 billion
2015 Sales: $28.1 billion, but profits of $3.8 billion
Lower Sales but higher profitability – Why?
Improved profitability by selling off AOL and Time Warner Cable.

10. Time Warner
Major player in film, television, cable, publishing, and online content.
Home of Scooby Doo, Harry Potter, Batman.
Most recently made magazine division independent company.
Lessons of company downsizing:
1. Bigger isn’t always better.
2. Concentrate your strengths on what you do best.

11. Viacom & CBS Combined revenues: $27 billion (2015)
Major player in broadcast television, cable, and movies.
Home of MTV Networks (MTV, VH1, Nickelodeon), CBS, CW, and Paramount.
CBS owned Viacom; then Viacom owned CBS; now separate companies for financial reasons.

12. Bertelsmann 2015 Sales: $21 billion
Major player in publishing; also magazines and European broadcasting
Adapting to changing music business
Privately-held German company

13. Big Media: The New Players
New companies for new media
Remember – there are no mainstream media

14. The New Players
Comcast/NBC Universal
Alphabet/Google
Apple

15. Comcast / NBC Universal
Comcast had 2015 Sales of $74.5 billion – 25% bigger than Disney.
Major player in cable services, internet, phone services, cable networks, movies, and broadcast TV
NBC Universal’s biggest value is for cable channels.

16. Alphabet/Google
2015 revenue of $74.9 billion – Bigger than all the legacy media companies.
Big asset is search, major source of revenue is highly targeted online advertising
Automated aggregator of news

17. Apple 2015 Total revenue of $234 billion
$155 billion from mobile phones (iPhone)
$23 billion from iPads
$30 billion from music and video sales
$25 billion from conventional computer product
Apple has redefined how we consume and use media

18. Long Tail Media vs. Big Media (Short Head Media)
Long Tail Portion of a distribution curve where a limited number of people are interested in buying a lot of different products.
Short Head Portion of a distribution curve where a large number of people are interested in buying a limited number of products.

19. Long Tail vs. Short Head

20. Characteristics of the Short Head
Relatively fewer goods and services offered
Large potential market
Place for big, popular media products—hit movies, TV shows, music

21. Characteristics of the Long Tail
High number of goods; more niche goods than hits
Low cost of reaching markets
Ease of finding niche products

22. Characteristics of the Long Tail
Flattening of the demand curve for mainstream hits; choice lowers demand for hits.
Size of collective market; collection of niche products can be as big as hits.
Tailoring to personal tastes; consumers want content that fits their own wants and needs.

23. Consequences of the Long Tail
Democratization of the means of production
Democratization of the means of distribution
Greatly reduced cost of connecting suppliers and consumers
Relatively small number of consumers demanding a large number of goods and services, often tailored specifically to their needs

24. Who Controls the Media? Owners Advertisers Government
Special Interest Groups
News Sources
Audiences