Our lives today are vastly different from the lives that we would have led just a few generations ago. Invention of new technologies has revolutionized the way we think, act, and communicate. The transformation is visible in all segments of our lives, both in micro and macro levels. For example, there was no Internet and definitely no smart phone available at the beginning of the 20th century; people were highly dependent on newspapers and magazine for their knowledge of the outside world. Following the conventional supply-demand model, newspaper and magazine publishing businesses were in vogue at that period. Nonetheless, businesses in 21st century have adopted and adapted new strategies and models based on integration, which has changed the economic environment radically over the past few decades, as David Croteau and William Hoynes examine in their 2006 book named 'The Business of media'.
Alan b. Albarran, in his book named 'Media Economy', primarily attributes technology for the present media market economy where change is the only constant. Meeting financial goals and maintaining stability in the market and projecting a profitable revenue growth were not considered as challenges for many decades in the near past. “Media industries were thought of a cash machines, but over time increased competition, a host of technological change, and the flow of money away from traditional media to online or digital media meant declining revenue," suggests Albarran.
Hence, the media companies faced newer and tougher challenges at the beginning of 21st century. Less advertising dollars, rising unemployment, intense competitions are some of the most pressing challenges that the media organizations have to deal with these days.
Media industries were thought of a cash machines, but over time increased competition, a host of technological change, and the flow of money away from traditional media to online or digital media meant declining revenue ~Alan B. Albarran.
There have been changes not only in the mechanism of the media market but also in terms of setting parameters in defining them. According to Robert G. Picard, the traditional definition of a media market took two parameters into consideration: production dimension and geographical dimension. These parameters contributed in forming “dual product market” where products are offered both to audiences and advertisers. The new economic environment of media market has taken this unique property of the media market to an advanced level where the enhanced re-selling of products among different audiences and advertisers are ensured. Albeit, this might seem like a huge market advantage that propagates revenue generation, the trends of “repurposing of media products” are prone to piracy and theft.
The economic environment between the past century and the current one can also be differentiated by the approaches that have been applied to define markets. Traditionally, media markets have been defined as monopoly, duopoly, oligopoly, monopolistic competition and perfect competition. Nevertheless, researchers have found a new trend in market economy, which works much like a hybrid market “combining elements of an oligopoly market with a monopolistic competitive structure”, suggests Albarran. According to Albarran, monopolistic markets have been on the verge of extinction as combination of technology, regulatory and globalization forces play a strong unified role in shaping media market definition.
The new dimensions that shape the multi-platform media market that operates in the new economic environment have forced the marketers to opt for new strategies and business models that can contribute more efficiently in business sustainability. These business models saturate between the two universally accepted models of media- the market model and the public sphere model, suggest David Croteau and William Hoynes. Alan B.Albarran elucidates three business models: the advertising- based model, the subscription-based model and a pay-per-use model. All these models are based on the strategy of allying with different partners for distributing the created contents. Another flagrant model that has been in vogue is the crowdsourcing model, which can also be called the community-funded model. These alternative business models have been in vogue for a while and many of these are currently being tested in different media organizations producing different results. As the scope allows depicting two business models only, the pay-per-use model and crowdsourcing model will be elaborated below for in-depth discussion.
The new dimensions that shape the multi-platform media market that operates in the new economic environment have forced the marketers to opt for new strategies and business models that can contribute more efficiently in business sustainability.
The pay-per-use model, as the Neiman Journalism Lab States, is gaining attention in the United States. According to Alan B. Albarran, pay-per-use is the model where the consumers pay for a particular type of content rather than engaging in a regular subscription. Apple’s iTunes, Amazon Prime and Journalism Online have been mentioned as examples for this particular business model. This model usually occurs when the transaction values are small and can be automated. This model has been amplified in the supply of education services such as web-conferencing, virtual training and etc.
For media offering, as suggested by many sources, the pay-per-model relies on heavy advertising to generate interest in premium contents such as live sporting events, recently released movies and music. The operational implication of the pay-per-use revenue model is that the operations must be structured to distribute high-quality content and process transactions automatically on a larger scale. It is implied that for this model the service delivery should be automatic and prompt. In terms of modality in a media market setting, this model can be combined with advertising revenues and complement other revenue models like Software-as-a-service (SaaS). However, the business sustainability for the media companies who use this particular model depends highly its ability to convert pay-per-use customers into subscriptions.
Pay-per-use is the model where the consumers pay for a particular type of content rather than engaging in a regular subscription. Apple’s iTunes, Amazon Prime and Journalism Online have been mentioned as examples for this particular business model. This model usually occurs when the transaction values are small and can be automated. This model has been amplified in the supply of education services such as web-conferencing, virtual training and etc.
This pay-per-use model has some competitive advantage over the other revenue models that are being applied to different media organization set up. This model can help secure market share and reduce adoption barriers. This model has been particularly effective along with SaaS model and for large media organization that has more capitals to invest on content generation. Since start-up and small and medium businesses are unable to invest a large amount in content generation, it might turn out to be a less appropriate one. Nonetheless, this model has been a successful one particularly for the developed media market in the United States and as Albarran predicts, the multi-platform content distribution and services that are more focused towards catering the needs of a niche market will continue to rise as we further advance in the 21st century.
The second model in discussion is the crowd-funding model that has been popularized recently. Crowd funding campaigns raise money from citizens from all walks of life who often have the same vested interest in stories that are often overlooked. Pertaining to the nature of a unified interest, the content that are created with this approach can be investigative or with some sort of developmental value. Some examples of successful crowdfunding platforms would be Uncoverage, Beacon, sponsume, Contributoria etc.
Integration is the key point when it comes for media organization to sustain in the changing economic realities. As suggested by Albarran, the multi-platform media needs to embrace an approach where the contents are delivered through multiple channels at all times.
Sharing is in the heart of this business model. Generally a story is pitched in a crowdfunding news platform and people and organizations that have a common interest support the funding. This support can be rendered in different forms, it can be monitory or media support. For example, an individual can decide to share the project on social media and consciously or subconsciously support the project. Many successful crowdfunding projects have been warranted for last few years, and journalists from different media have been taking up challenging and expensive projects that were initially not very profit driven for media organizations.
In terms of revenue generation, this business model is highly hybrid in nature as it fosters partnership among different stakeholders like payment providers, business and entrepreneurship communities, large organizations and foundations and individual donors. This financing model is complex and requires lot of promotion and a strong cause. However, this is an appropriate model predominantly for the startups who can use the funding to come up with challenging content which eventually leads to a successful and sustainable business growth.
Integration is the key point when it comes for media organization to sustain in the changing economic realities. As suggested by Albarran, the multi-platform media needs to embrace an approach where the contents are delivered through multiple channels at all times. With the rise of social networks and people leaning more towards mobile technology these days, the competition is ever increasing. It is more likely a fact that if you as a media organization are not reporting and distributing an important information, someone else is. The one thing that is easy to day is to get lost in the diverse communication platforms that are in existence. Thus, it is also crucial for every media organization to be present in all platforms at all time.
The nature of the mass media has been changed and it can be conveniently called a one-on-one media as an individual can have completely control on his or her media consumption. That’s a pressing challenge for all media organization, specially the ones who have been going through a transformation from being traditional to digital. The fact is, the audience might not come to the media anymore or they might come at their convenient time and manner, the media organizations need to be prepared to cater to their needs in as many ways as possible so that the business can be profitable and sustainable.
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