Features of media products, risks and constraints
- Volatile creative products—they depend on creative content. Media’s content is, in essence, creativity.
- Advertising revenue and consumer revenue create constraints
- High risk production, high rate of failure
- E.g. Harry Potter—first book was high risk because there are too many children’s books. Few novels succeed.
- High initial costs of production, low reproduction costs
- E.g. the first copy of the book has the highest cost, reproduction costs (i.e. economies of scale) are very low
Semi-public goods or ‘joint consumption’
- Do people buy just one and pass them along (e.g. a DVD) or are they novelty products. Products can be infinitely recycled.
- Creative, symbolic or information media content
What is it about them that make them unique?
- Media products are ‘experience’ goods not valued until consumed (reading the book vs. weightlifting). You don’t know if you’re going to like it until it’s consumed (e.g. until the book is read by you)
- You don’t know if Harry Potter’s 700 pages are going to be pleasurable.
- How much do you have to know in advance about Harry Potter to know if you’ll enjoy it?
- Separate content of media product from its means of delivery or channel
- Harry potter—narrative, characters, setting in novels and film
- Media creativity is a scarce resource, ‘talent’ goods (JK Rowlings’ skill as a writer is rare)
- Media information content is time sensitive
- If I see something about Iraq on television the night before, I probably won’t buy the paper the next day for that particular story.
Consumer vs. advertising revenue — Low vs. high constraint
Media products have dual markets, content for audiences and time for advertisers. We buy media products (a television show) but advertisers also buy them (they buy commercial time)
- Advertising revenue is related to the number of media consumers/size of the audience
- Advertisers require different things from media products (market demographic, location, income, age, gender, etc.). For instance, advertisers who buy time for Harry Potter likely won’t buy time for Family Guy. Just out of my curiosity, how about embedded advertising?
- Advertisers who buy time during a CBC broadcast of the Harry Potter film would know the demographic of viewers and would gear their ads towards them.
- Need to satisfy advertiser demands adds extra constraints—avoid controversial, offensive or unpopular content. As a result, television tends to be more conservative than actual reality.