Introduction/Ownership

1.1 Introduction

Media companies are profit-making businesses. Those who commission and plan programmes or decide newspaper or magazine content, usually play safe by excluding anything that might offend or upset readers or viewers. No media company would like to lose revenue and profit by losing readers, or viewers, because they were offended by ‘extreme’ views.

1.2 The Pluralist Theory of Media Ownership

Pluralists argue that media owners are responsible for their ways of handling information because media content is mainly shaped by consumer demand in the marketplace. They therefore only give the buying public what they want. Moreover, editors, journalists and broadcasters have a strong sense of professional ethics which act as a system of checks and controls on potential owner abuse of the media.

They feel mass media are an essential part of the democratic process because the electorate today get most of their knowledge of the political process from newspapers and television. They are also of the opinion that owners, editors and journalists are trustworthy managers and protectors of this process.

Furthermore, pluralists argue that media audiences are the real power holders because they can exercise the right to buy or not to buy. If they did not like the choices that media owners are making available to them, or if they suspected that the media product was biased, such audiences would respond by not buying the product. The media, therefore, supply what the audience wants rather than what the owner decides. If some viewpoints have a greater range of media representing them, this is not necessarily biased. It merely reflects what the audience wants or views as important.

Pluralists also argue that concentration of ownership is a product of economic rationality rather than political or sinister motives. It is driven by the need to keep costs low and to maximise profits. Globalisation too results from the need to find new audiences rather than from cultural imperialism. Power of media owners is also restricted by state, or government, controls, e.g. in some societies, owners are not allowed to own too much media or different types of media. Many countries also have cross ownership rules preventing people from owning more than one type of media. Furthermore, newspapers, television and radio in Britain are subject to legal controls and rules imposed on them by The Press Council and the Office for Communications.

1.3 Theories of Media Ownership and Control

Doyle (2002) suggests that examination of ownership and control pattern is important for two reasons. It helps to understand all points of view need to be heard if society is to be truly democratic. And free media will thrive as it will keep the abuses of power and influence by elites under check.

1.4 Factors that affect the Nature of Media Ownership

To acknowledge the factors that affect the nature of media ownership, let us first understand about the normative theories of mass media (1956). Each theory is connected with the kind of political system in which the society has to conduct its socio-economic political affairs. In 1980s, Denis McQuail added two more theories to the existing set of four theories by Siebert et al.

  1. a) Authoritarian Theory
  2. b) Free press theory
  3. c) Social responsibility theory
  4. d) Communist media theory
  5. e) Development communication theory
  6. f) Democratic participant media theory

Now, we will understand the theories in details, these will help us understand what affects the ownership patterns of media conglomerates in different countries in a better way.

  1. a) Authoritarian Theory: Here the press is under the state power or ruling class. The chief function is to propagate what the owner wants to establish and sustain his rule. The message disseminated to the audience is suitable according to the owner; other opinions can barely reach the people at large.
  2. b) Free press theory: Otherwise known as the “Libertarian theory,” here the press is owned by both private and public organisation. The major function is to let many voices and views find their ways for public consumption. The fundamental rights of each and every citizen are safeguarded.
  3. c) Social responsibility theory: Social Responsibility theory of mass media is relatively a new concept. It started around the mid-20th century and is used mostly by developing and least developed countries. The theory started from Europe and took a shape with the Commission on the Freedom of Press that happened in United States in 1949. The model was designed formally by Siebert, Peterson and Schramm in 1956 in their book. It encourages total freedom to press and no censorship, but it should be regulated according to social responsibilities and external controls. Content is also filtered through public interference.

Press is supposed to be owned privately. The government does not own the press. The private owners should publish within the ethical guidelines and in a responsible way.

It helps democracy prosper as this media helps in maintaining democracy and does not encourage authoritarianism or communism. The chief function is to be pluralist and all national voices, views and interests find ways for accurate expression. People find out alternative views and thus society as a whole benefits.

  1. d) The Communist media theory: This is also known as Soviet media theory. Russian media was reorganised around this theory. This theory is derived from the basic tenets of Marx and Engels. The media as per this theory are not subject to arbitrary interferences as in case of authoritarian theory. The chief functions are to safeguard and propagate the interests of the working class. The society moves in one direction to achieve certain set of values.
  2. e) Development communication theory: Here the state is usually the owner of the press. Major functions are to support the policies of development by the government. The limited resources are better utilised for nation building. The freedom of press and the journalists is curbed to an extent.
  3. f) Democratic participant media theory: Here, press is owned by state and private organisation. There is multiplicity of media communication at all levels. It encourages small scale operation of media. People may have a better chance to interact more or local and relevant issues. And theorist can substantiate how this theory may weaken the national fabric.

1.5 Types OF Media Ownership

There are four major types of ownership of mass media. Chain, cross media, conglomerate and vertical integration. These types of media ownership can be described as follows:

1.5.1 Chain Ownership

In chain ownership, the same media company owns numerous outlets in a single medium, a chain of newspaper, a series of radio stations, a string of television stations or several book publishing companies. Chain ownership in India applies mostly to newspapers. There are many publishing groups in India which have chain ownership, such as the group headed by the Times of India, Hindustan Times, Indian Express, Statesman, Ananda Bazar Patrika, Hindu, Telegraph and living media foundations.

1.5.2 Cross Media Ownership

When an organization owns more than one type of Media Company, for example a newspaper, a magazine and a television station it is called Cross Media Ownership. Three types of cross media ownership are often found: cross-media ownership across the various carriers such as television, radio or print; consolidation, including vertical integration among media operations of content, carrier and distributor within a media segment such as television or radio; and market share dominance in a given geography within each media segment. Example of Cross Media Ownership in India includes Times Group, Network 18 Group, India Today Group, ABP Group etc.

1.5.3 Conglomerate Ownership

Conglomerate ownership means the ownership of several business operations, one of which is a media business. For example when a publishing company owns a newspaper along with chemical, fertilizer, cement rubber, plastics factories, a liquor brewery, distillery or a major corporation has controlling shares in a number of media related business, this pattern is conglomerate. In a conglomerate, there will be interlocking of directorships, which means the same persons will be director of a media company as well as of manufacturing industries or financial corporations. Several transport or lorry company directors are directing the destiny of newspaper, television or film production companies. Their main business will be a high profit industry, but they tend to run a media company for prestige or to exercise social and political influence on decision makers in the private or public sector and in the government of the day. Such a conglomeration may not always support an unbiased or dispassionate presentation of events, issues and personalities. However, there are already at least six states where a single media house has a clear and growing dominance. These are media groups that are emerging as national conglomerates. They are all in the news business as well as in entertainment, media distribution and network business. They own newspapers, magazines, radio, cable TV and television channels, to name their key businesses.

1.5.4 Horizontal and Vertical Integration

Horizontal Integration refers to a Media Company having a presence across different media segments (print, TV, FM radio). A Media Company can own a Magazine, Radio, Newspaper, Television and Books. Almost all Media companies have horizontal integration. It generates more money and makes the company more popular among readers.

Vertical integration indicates that a media company has absolute monopoly in the production of the matter that go into the making of media products. For example a newspaper publisher may own several hundred areas of forests where the major components of a newspaper namely wood for newsprints cultivated. Some other newspaper company may own a factory that produces the bulk of the printing ink or processed used in the industry. Some media companies have focused on increasing economic control over all aspects of the production process in order to maximise profits, e.g. film corporations not only make movies, but distribute them to their own cinema chains. This is referred to as vertical integration. These companies may own studios or industrial units producing film stocks or even a chain of theatres where the films are exhibited.

These trends of ownership, i.e. cross media, conglomerate and vertical integration are what seems to be unhealthy for a developing society. As this promotes the practice of monopoly and thus result in the phenomenon of suppression. Not only the freedom of media is compromised, it sheds doubts on unbiased representation of various points of view. Ownership and control of the mass media is a complex business. Let us understand this through some examples. Some companies are characterised by horizontal integration or cross media ownership – this illustrates that global media corporations often cross media boundaries and invest in a wide range of media products. For example, NewsCorp, owns newspapers, magazines, book publishers, terrestrial and satellite television channels and film studios in several countries. Most media companies in India and abroad are integrating vertically to sell cross-media, often acquiring or building multimedia platforms. News Corp’s Star TV India and Sun TV Network Ltd already own DTH and cable distribution platforms. Star’s cross-media India operations include television channels, Internet offerings, radio, mobile entertainment and home video (incidentally, 11 cable distribution companies provide some 400 television channels in India). Sun Network has 14 TV channels in four states, cable assets, four magazines, radio stations and two newspapers. In Tamil Nadu, the dominance of Sun in cable and satellite TV (channels and distribution network) and now in the DTH market is quite visible. Sun TV and its cable company are known to simply blackout political telecasts by rival Jaya TV.

1.6 The Marxist Critique OF Media Ownership and Control

Marxists argue that the economic system of Britain, i.e. capitalism, is characterised by great inequalities in wealth and income which have been brought about by the exploitation of the labour power of the working classes. Marxists believe that in order to legitimate and reproduce this system of inequality, the capitalist class uses its cultural power to dominate institutions like education and the mass media and transmit ruling class ideology. The function of these agencies is to socialise the working class into accepting the legitimacy of the capitalist system and capitalist ideas. Consequently, Marxists argue working class people experience false class-consciousness – they come to accept that capitalism is a just system that benefits all social groups equally. They fail to see the reality of their situation that they are being exploited by a system that only benefits a powerful minority.

1.7 The Media and Ideology

The capitalist system is rarely criticised or challenged. Instead, Marxists suggest that owners shape media content so that only ‘approved’ and conformist views are heard. Miliband (1973) argued that the role of the media is to shape how we think about the world we live in and suggested that audiences are rarely informed about important issues such as inequalities in wealth or why poverty persists.

Tunstall and Palmer (1991) suggest that governments are no longer interested in controlling the activities of media owners because they need their support to either gain power or hang onto it.

1.8 Some Evidence on the Ideological Nature Of Ownership and Control

Marxists are suggesting that media owners, wealth holders and the political elite are united in some sort of ideological conspiracy to brainwash the general population. However, it is almost impossible to scientifically gather empirical evidence that supports this hypothesis. Sociologists generally only have anecdotal evidence to confirm their suspicions that concentration of media ownership is damaging democracy.

However, Curran’s (2003) detailed systematic examination of the social history of the British press does suggest that the evidence for owner interference in and manipulation of British newspaper content is strong. Curran notes that in the period 1920–50 press barons openly boasted that they ran their newspapers for the express purpose of propaganda that reflected their political views. Curran points out that even when engaged in investigative reporting, the majority of newspapers in Britain have supported the Conservative Party.

Curran also notes that the period 1974–92 saw the emergence of Rupert Murdoch. However, Curran rejects the idea that Murdoch is part of unified capitalist elite but acknowledges that Murdoch’s newspapers are conservative in content and strongly supportive of capitalist interests. He argues Murdoch’s motives are economic rather than ideological in that Murdoch believes that right wing economic policies are the key to vast profits.

Curran’s analysis of British newspapers suggests that both pluralist and Marxist theories may be mistaken in the way they look at media ownership. He argues the pluralist view that media owners do not intervene in media content is evidentially false. Curran argues that since 2000 there has been even greater intervention by owners such as Murdoch. However, Curran disagrees with Marxists about the motive for this. He notes that the actions of media owners are not collectivised, rather they pursue their economic goals in a ruthlessly individualised way in an attempt to obtain a bigger share of the market than their capitalist competitors.

1.9 Diversification, Synergy and Technological Convergence

Some media corporations are not just content to focus on media products, but have diversified into other fields. When a company spreads its’ wings or we can say it diversifies by getting into other businesses. ‘Virgin’ which began as a music label and record shop chain, expanded into a wide range of products and services including cola, vodka, banking, insurance, transport, digital television, cinema and wedding dresses. This accounts to diversification.

Media companies often use their very diverse interests to package or synergise their products in several different ways, e.g. a film is often accompanied by a soundtrack album, computer game, mobile ringtone or toy action figures. A company may use its global interests to market one of its own films through its television channels, magazines and newspapers in dozens of countries at the same time

Technological convergence is a recent trend which involves putting several technologies into one media product. Companies that normally work in quite separate media technology fields are joining up or converging in order to give customers access to a greater range of media services across technologies such as interactive television, laptops, MP3 players and mobile phones.

1.10 Global Trends in Ownership and Control

Recent trends in media ownership and control suggest that the number of companies controlling global mass media has significantly shrunk in recent years. Bagdikian (2004) notes that in 1983, 50 corporations controlled the vast majority of all news media in the USA and by 2004 media ownership was concentrated in seven corporations.

Curran (2003) notes that ownership of British newspapers has always been concentrated in the hands of a few powerful ‘press barons’, e.g. in 1937 four men owned nearly one in every two national and local daily newspapers sold in Britain. Today, seven powerful individuals dominate the ownership of British national daily and Sunday newspapers.

The content of commercial terrestrial television is mainly controlled by one company, ITV plc, whilst access to satellite, cable and digital television in Britain is generally controlled by two companies – News Corp, (owned by Rupert Murdoch) which owns BSkyB, and Virgin Media (owned by Richard Branson).

1.11 Newspaper Ownership in India

The Indian media market differs from those of developed countries in several ways. The reason being, India is a developing country and unlike the developed countries, all segments of the media industry (including print and radio) have a lot to grow. The media market in India remains highly fragmented, due to the large number of languages and the size of the country.

Over 82,000 publications registered with the Registrar of Newspapers as on 31 March 2011.There are various types of media ownership. There are many media organisation in the country that are owned and controlled by a wide variety of entities including corporate bodies, societies and trusts and individuals.

There are many media organisations in the country that are owned and controlled by a wide variety of entities including corporate bodies, societies and trusts, and individuals. Information about such organisations and people is scattered, incomplete, and dated.

The Ownership Pattern of Newspaper in India

♦ The large number of media organisations and outlets often conceal the fact that there is dominance over specific markets and market segments by a few players – in other words, the markets are often oligopolistic in character, i.e. there are a few key players who control the market segment.

♦ The promoters and controllers of media groups have traditionally held interests in many other business interests and continue to do so, often using their media outlets to their advantage.

♦ The growing corporatisation of the Indian media is manifest in the manner in which large industrial conglomerates are acquiring direct and indirect interest in media groups. There is also a growing convergence between creators/producers of media content and those who distribute/disseminate the content.

♦ The absence of restrictions on cross-media ownership implies that particular companies or groups or conglomerates dominate markets both vertically (that is, across different media such as print, radio, television and the internet) as well as horizontally.

♦ Political parties and individuals with political affiliation control increasing sections of the media in India.

 

Unit 1, Part 2

4.1 Introduction

While the production and manufacturing oriented business is focuses on production and tries to sell products. The customer oriented business focuses on the need of the customer and produces accordingly, being aware of the marketability of the services or product sold.

The basic concept of business and marketing is to reach out with the customer with the product he might be interested in. Mass manufacturing is an important aspect of this concept. Historically, the concept of marketing- implicitly or explicitly- was not in existence. When goods were barely produced by machineries, people were dependent on agricultural production, domestic animals and understood barter system. However the growth of civilization and discovery of sea routes in search of newer lands and markets, followed by the machine era came to change this. The discovery of new lands by sailors made people aware of new products and things. Upon using these products, they developed special interest in these products and the demand rose.

However with the machines becoming sophisticated, production went up and there was surplus of goods. The basic problem shifted from that of production to distribution. Hence the business developed a new channel of distribution to reach-out the people with their goods. This happened during the period of early 20th century. It was the era of distribution.

Due to mass production, mass distribution took place. And the problem slowly shifted to convince people to buy products, i.e. to create a market. This problem aroused as more and more products started flooding the market due to heavy production but the distribution mechanism was non-existent, the onus was to convince people to buy a product. Thus, the world entered the era of selling. Here, demand was created. To augment this, the producers also resorted to advertising.

By the middle of the 20th century, when mass production and mass selling were in place, the consumers were the centre of attraction. Buyers started to weigh their choices and were asking for goods of their choice and not what the manufacturer wanted to sell. This created “marketers” and slowly led the path for manufacturers reaches to their target market with their products.

With the advent of marketing, media too grew by multifold. Media is the carrier of advertising and communicating the target market. When industrialisation and modernisation spread all across the globe the media industry also grew, and thus many other businesses came under the umbrella of media business which was traditionally, press, then radio and then TV broadcasting Peter Drucker, author of ‘The Practice of Management,’ considered as the father of modern Management suggested business purpose is to “create customer.”

Let us first understand the distinctive features of four elements of the media business model framework. They are as follows:-

  1. Scaling of business models
  2. Value in content production and distribution
  3. Drivers of value of advertising
  4. Media personalisation

4.2 Scaling of Business Models

In order to understand the complete spectrum of media at different scales, you can refer to the figure 2.1. Here, mass media is at the top depicting the “head,” mid-sized professional publishing as the “shoulder,” and micro-media outlets with small audiences as “tail.” Media have significantly different characteristics, leading to a variety of business models and approaches to scaling businesses. Characteristics that differ include:

I Audience focus– Mass media only accesses broad audiences, whereas further down the tail highly selective niche audiences according to their geographical location or interest.

II Advertising models– At different levels of scale, dedicated, aggregated or combined advertising sales models are appropriate. Different shares of total advertising revenue are associated with these models.

III Cost of content creation– Mass media is associated with high production values, which means creating content remains expensive. Production costs are rapidly reducing, but the premium placed on creative work means that costs will remain high. However production costs for most other forms of content has become very low. This is primarily associated with labour rather than technology costs, which can be low due to lifestyle advantages for content creators.

The interesting fact about this framework is that there is no right or wrong place to be placed in the sequential order. This means nothing is more or less advantageous than each other. It only notes that the advertising or other revenue models and content creation mechanisms need to be aligned with the audience, i.e. specific content for specific audience. As the other frameworks show, attracting niche audiences can result in stronger revenue relative to costs. A “multi-niche” model which is effectively monetised can be more effective than traditional mass media approaches, as it allows sharing of overheads and sales efforts across media properties and gaining more value from highly targeted audiences. Scaling costs and overheads and extracting premium revenue is as viable a strategy as increasing audience size.

4.2 Value in Content Production and Distribution

Digital channels have resulted in a dramatic fall in the cost of content distribution. This means that content creators like film producers, writers and researchers can readily distribute their content directly to their audience, if they prefer it that way. There is substantial ever-growing value to content producers in direct distribution, including control over content, building end-user relationships and not having to share revenue. As user-generated content grows as a factor, users are engaged directly in the content creation process.

However there remains real value in the distribution process. Distributors such as broadcasters, publishers and agents will continue to play an important role in the media landscape, as long as they can effectively establish and build distinctive value-add, including brand, aggregation, scalable infrastructure and attract desirable audience.

Value creation in content production and distribution continues to evolve. It leads to ongoing strategic choices for content producers and distributors. It helps them choose their work and business partners.

4.3 Drivers Of Value of Advertising

Paid content is visibly irreplaceable; it is in demand through subscriptions, pay-perview, and other mechanisms. However the broad trend is that content creation is increasingly supported by advertising. This is becoming more prominent as differentiation emerges in the value and pricing of advertising. Advertising in mass media is priced largely by audience size. There are four additional key drivers of the value of advertising. As the ability to refine these drivers increases, substantial revenues will become possible, even from relatively small audiences.

Let us discuss the key drivers of the value of advertising,

  1. Advertising outcome– The original concept of advertising was exposing an audience to messages. However advertising can now be linked directly to the audience taking action through expressing interest or making buying decisions.
  2. Access target demographic– Accessing generic demographics that are highly desirable such as CEOs increases value for most advertisers. However some advertisers are looking to access very specific profiles. As it becomes possible to target these niches, advertising value increases.

  1. Point of insertion– Advertising used to be inserted solely in distribution channels, i.e. in newspapers or between TV programs. A multiplicity of new approaches to inserting advertising are emerging, including on the end-user device such as the mobile phone or inside content itself, as in for example product placement.
  2. Personalisation– Personalisation is one of the strongest drivers of advertising value. This is covered in more detail in the Media Personalisation framework.

4.4 Media Personalisation

Personalisation is a large part of the future of media. In order to personalise content and advertising, there are multiple requirements including compiling data about audience members and content serving platforms that allow content and ads to be altered on the fly depending on the viewer. There are four levels to personalisation of content and advertising, each of which leads to increased value.

1 Nil– Most content and advertising is not personalised. It is not currently possible to personalise content on mass distribution channels such as broadcast television and newspapers.

2 Content– Personalisation is possible by being associated with audience-specific content. Trade magazines or targeted cable TV channels, e.g. attract particular audiences, effectively enabling personalised advertising.

3 Demographic– Advertising and content can be personalised for a particular demographic area for gender, age or location. This requires being able to match viewers with a profile, which can be generated for example by cookies or Internet Protocol address.

4 Individual– Personalisation for the individual requires both audience profiles, possibly generated through a registration process, and the ability to identify audience members individually. Online and mobile content delivery or interactive TV channels that enable individual personalisation. Yahoo!’s recently launched SmartAds initiative is primarily about individual-level personalisation.

It is important to note that, even if the distribution channel being used enables higher levels of personalisation, there are a range of other requirements for personalisation. These are often left unfulfilled.

Media Personalisation

4.5 Evolution of Media Industry

As the media industry evolves, the business model becomes the message. Business plans like magazine publishing, advertising agency, photography, publisher and other media communications businesses can be counted as some of the branches accounted under media. Media slowly evolved as a business, what started as a medium of communication, needed funds to keep running and thus the revenue started flowing through circulation money and advertisement. These processes took time and slowly advertising units, PR units started flourishing. Now brand and image management is added as a new branch of media. Here are some businesses which entered the market as media businesses:-

♦ Newsagent – Newsstand Business Plan

♦ People’s News

♦ Magazine Publisher Business

♦ Wi-Fi Kiosks Business

♦ Newsletter Publishing Business

♦ Video Television Production Business

♦ Wireless DataComm Business

♦ Integrated Communications Business

♦ Online Booking Business

♦ Music Recording Producer Business

♦ Data Recovery Services Business

♦ Magazine Journalist Business

♦ Display Case Marketing Business

♦ Video Production Business

 
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