Recap: Three strategies to deal with culture

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RecapThree strategies to deal with culture

• Universalization (e.g., Doraemon)
• Localization
• Transculturation

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5. Economics of Print Media

• 5.1 Economics of the daily newspaper
• 5.2 Economics of books and magazines

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5.1 Economics of the Daily Newspaper

• Newspaper markets
• Financial performance
• Government policies
• Globalization

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The Newspaper Market

• One of the most profitable of all media
  industries even though the circulation is in
  decline
• A means of reaching mass audiences, rather than
  segmented audiences, in the eye of advertisers

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The Newspaper Market

• Primarily a monopoly (96) in the U.S.
• Where there is competition, differentiated
  newspapers exist (e.g., broadsheet vs. tabloid)
• Barriers to entry are high, because of
• Costs
• Advertiser preferences

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The HK Newspaper Market

• Facts
• Monopolistic competition

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Financial Performance

• Dual product market
• Circulation spiral circulation advertising
• Increased prices as a result of inelastic demand
  for newspapers i.e., no close substitutes are
  available for consumers to choose other products
  at a lower price
• Daily vs. weekly papers
• TV, cable, and radio

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Advertising

• Newspapers get 5 times more advertising revenue
  today than they did at the end of WWII
• 3 major categories
• National advertising
• Retail advertising (from local businesses)
• Classified advertising
• More substitutability is evident in the
  advertising than in the information product market

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Operating Budgets

• Revenues
• Advertising 65-80
• Local/retail 55-60
• Classified 20-35
• National 10-15
• Circulation 20-35

• Expenses
• Editorial 7-10
• Advertising 5-6
• Circulation 9-10
• Promotion 1-2
• Mechanical 13-15
• Newsprint 15-30
• Administration 8-12
• Building and land 1-3

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Cost Structure

• High first-copy costs
• Relatively low reproduction costs because of
  economies of scale

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Government Policies

• No comprehensive economic policy toward the
  newspaper industry has ever been established in
  the U.S.
• Tax exemptions and incentives
• Anti-trust laws

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Globalization

• The newspaper industry is less affected by
  globalization and remains primarily a domestic
  industry
• Agree? Disagree?
• Newspapers vs. magazines vs. books
• Overseas Chinese newspapers

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5.2 Economics of Books and Magazines

• Market structure
• Financial performance
• Government policies
• Globalization

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The Book/Magazine Market

• Americans are spending less time and money on
  consumer books and magazines
• Books
• Intense competition
• Minimal barriers to entry
• Mergers and acquisitions since the 1960s

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The Book/Magazine Market

• Magazines
• Monopolistic competition
• Total number of magazines purchased 1.3
  copies/adult
• Average cost for a single copy at newsstands
  US2.13
• Growing consolidation
• AOL Time Warner was the largest owners of
  magazines in the U.S.

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Financial Performance

• Books
• Most books are discounted by publishers to
  bookstores, distributors, etc.
• Profit and loss (PL) analysis
• Magazines
• Revenue streams
• Paid circulation
• Newsstand circulation
• Ads
• Business model

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The Prospects of E-books?

• Low consumer acceptance
• Too expensive
• Inconvenient and unappealing

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Web-based Magazines

• E-magazines can break new stories, update
  existing articles, and provide useful links
• Allow advertisers to buy both print and
  electronic ads simultaneously
• Convergence is the key
• Prospects?

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Globalization

• The major export destination of U.S. books
• Canada
• UK
• Australia
• Hong Kong
• Mexico
• The Netherlands
• Taiwan
• The Philippines