McChesney, R. (2000). So much for the magic of technology and the free market: the World Wide Web and the corporate media system. In A. Herman & T. Swiss (Eds.), The World Wide Web and contemporary cultural theory (pp. 5–35). New York: Routledge.
Norris, V. P. (1984). Mad economics: an analysis of an adless magazine. Journal of communication, 34(1), 44-61.
Schiller, D., & Mosco, V. (2001). Introduction: integrating a continent for a transnational world. In V. Mosco & D. Schiller (Eds.), Continental order? Integrating North America for cybercapitalism (pp. 1–34). Lanham: Rowman & Littlefield.
Despite having aced my high school AP macroeconomics course, I’ve come late to an appreciation of economics and its worldview. In this week’s readings, I’ve started to see the utility of political economy in looking at media, but I’m personally more impressed with it on the micro level than at the macro. Schiller and Mosco (2001) take a very macro view, examining the longitudinal liberalization of trade regulation that has allowed telecommunication and media corporations to conglomerate and spend their capital on foreign direct investment and become transnational corporations, mostly—as this is the focus of their book—in the U.S., Canada, and Mexico. I find the fact that the cultural exceptions were the last restrictions to go quite interesting, and maybe a topic for further study. And I find the general trend toward ever-larger communications conglomerates troubling. But in general, I see this essay mostly as background.
I’m more interested in McChesney (2000), who economically analyzes the claim that the Internet “will set us free” (p. 5). He demonstrates that free markets tend not to result in free competition, but in oligopolies of large corporations (p. 9). Small companies do have influence in the market, spending money on risky research and development programs, but they then tend to be purchased by larger, established companies if they are successful. McChesney writes that large media companies will continue to dominate even on the Web. These large companies have deep pockets and are therefore willing to wait out smaller companies who will determine what applications of the technology will make money. They can also advertise themselves on their existing media networks; transfer their content online with little added cost; and reap the benefits of advertising. I think McChesney is probably right in his overall thesis, that large corporations will continue to dominate online, but I think he might be too gloomy about journalism in particular. A.J. Liebling said that “Freedom of the press is guaranteed only to those who own one,” which has always previously been true: the barrier to entry was much too high for most independent journalism. But even if media giants do dominate the Web, its now almost-zero barrier seems to allow even one-man operations to be able to exist and for networks like blogs to be able to promote them adequately. I disagree that, as McChesney says dismissively, “journalism is not something that can be undertaken piecemeal by amateurs working in their spare time” (p. 29). Who says? Maybe it’s better done by those with training and institutional support, but for the same reason that there is no licensing for journalists in this country, it is almost impossible to limit who is a journalist, and while corporate monsters may dominate, and small media companies may die out or be bought, non-corporate, non-profit journalists can find an audience for the first time. I think a purely economic analysis leaves these independent voices out.
Norris (1984) takes the most microeconomic approach to media, and to me was the most interesting—and because of his specific topic, the most fun. He analyzes the financial data of Mad magazine to see whether—and why—a magazine with no ads could be profitable, which flies in the face of the magazine world’s received wisdom. Magazines have high fixed costs, such as rent for office space and employee salaries (though they generally have small editorial staffs) and variable costs that mostly come from the cost of printing, meaning that their marginal costs (the price of printing one more issue) are low. Because old magazines hardly sell, the publisher assumes the risk of printing costs, paying for all unsold copies (and explaining why many magazines are post-dated by a month or two). Mad’s publisher prints 1.9 million copies of the magazine, and sells about half of them, though there is no way to know in advance which half will be bought. The cover price and the circulation determine whether or not the magazine makes a profit, since the printing costs are relatively unchanged. Interestingly, adding advertisements may increase the fixed costs of publishing a magazine substantially, since that would require adding a sales staff and their overhead, which might not be outweighed by advertising income. Since magazine demand is generally inelastic, the same qualities that make a magazine appealing to advertisers would also allow the publisher to charge a higher cover price without losing circulation (p. 60). Despite this convincing argument, I can’t imagine that a single magazine has canned its ad department in the 20 years since Norris’s essay was published. Maybe this is because ads lend legitimacy to a magazine, somehow separating them from journals or newsletters. In many cases, I imagine that this is because ads are a large part of the appeal of certain magazines—fashion, car, and technology magazines come to mind. I like the pragmatism of this application of economics, and could see using this approach in my own work, though I also see utility in McChesney, and can at least appreciate Schiller and Mosco.