Education
Hello, COMM122 Podcast listeners! This week, we will talk about the economic conditions of media production, with a focus on the transformative role of digitalization.First, let’s refresh a point I made earlier in the semester, which is that the media business is a high-risk one. It is expensive to produce content and there is great uncertainty over what is gonna sell. In this week’s classes, Professor Wayne breaks down four types of costs associated with media production.The first cost, Development costs, which are the costs of the creative phase of media goods, such as songwriting, script-writing, and composing music. In the development stage, media organizations make advance payments to creative talents as an incentive for creative talents to complete the commissioned work. We discussed in class why some songwriters and script-writers went on strike. The main reason is often about these creative talents feeling that they are not getting a fair share of the profits from media products.The second cost is production cost, that is the cost of actually “making the media good.” In some ways, digital technologies have greatly reduced the production cost, as global outsourcing platforms such as Upwork.com makes it easier for a local media organization to scout creative talents around the world at a more affordable rate. The free open-source software movement, also known as FOSS, has produced numerous free computer programs for media content creation and editing, allowing amateurs and less resourceful organizations to produce content professionally.The third cost is distribution and marketing. For traditional media, content is often delivered through a physical medium, be it a CD/DVD disk or cassette tape. These physical media tend to cost more to create, store and ship. So digitalization can significantly cut the cost of distribution because nowadays content is stored in the cloud and distributed over the internet. One thing about cloud storage and delivery is that there is no cap on how many media products that can be stored. Unlike in brick-and-mortar stores, where the number of media products to be displayed and sold is constrained by physical space. Due to the freed-up storage and delivery capacity, the so-called long-tail effect comes into play. Previously, in the brick-and-mortar era, media organizations and retailers would prioritize selling blockbusters, top albums, and bestsellers. Because their inventory is limited by physical space, so they have to reserve the scarce physical space for the items that have the most potential for creating profits. Those top and most selling products are only a few, but contribute the most to revenue. The rest of the products, that is, the majority of products available in the market, are not as sellable as the top ones, and they tend to be dropped off store shelves due to limited storefront and screen time. Because as said that online platforms are not constrained by the scarcity in storage and delivery, the majority of the less-popular products can be stored and made available online, without costing extra for the media business. In fact, these less-popular products would find their niche audience online. That is why according to Chris Anderson, products in low demand or that have a low sales volume can collectively make up a large market share, exceeding the relatively small share of bestsellers and blockbusters. If you want to learn more about the long-tail theory, head to YouTube and search Chris Anderson, long tail, and TedTalk.The last cost is Overhead, that is, expenses required to maintain media institutions, such as the infrastructure and operations of studios; salaries of studio and label staff.Ok, that's all for this episode. Please stay tuned for the next episode on the funding model and structure of the US broadcast network.