Journalism Chapter 14 Notes
Journalism Chapter 14 Notes JOUR 3190
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This 6 page Class Notes was uploaded by Kyla Brinkley on Wednesday April 13, 2016. The Class Notes belongs to JOUR 3190 at University of Georgia taught by Thomas Hudson in Spring 2016. Since its upload, it has received 12 views. For similar materials see Journalism Writing in Journalism and Mass Communications at University of Georgia.
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Date Created: 04/13/16
Kyla Brinkley JOUR 3190 Spring 2015 Chapter 14 Notes Converging with Other Emerging Media I. Introduction a. Traditionally, American news media have maintained a separation between the news and advertising sales staffs b. Preserve credibility of the news c. “firewall” between editorial and business aspects of a media organization i. it was easy to maintain when news orgs were very profitable d. need for journalists to know about the business of journalism is increasing because: i. profit margins are down so you need to be able to map out your career ii. media system is in flux, with new opportunities for journalists emerging. Taking advantage of these opportunities requires knowledge of business of journalism iii. more journalists are becoming entrepreneurs, spurred by the ease of creating a digital media outlet II. The “Basic Equation” a. Virtually all for-profit businesses are governed by this equation i. Revenues – Expenses = Profit ii. R – E = P b. To make a profit total revenues have to be greater than the total expenses i. Most reporters & editors only see the expenses c. For most businesses the majority of management attention is on revenues i. More variance d. To increase profits i. Increase revenues or decrease expenses 1. Short term solutions ii. Best way way to increase long term profits: increase revenues rather than decreasing expenses iii. Best way to increase revenues is to increase expenses 1. Making an investment in personnel, equipment, marketing etc. III. Journalism Business Models a. 3 types of revenue: advertising, direct payment, subsidy b. emergence of online media has expanded options for news orgs to generate revenue c. Advertising i. Most common source of revenue for US media orgs ii. Print Advertising 1. Traditionally depend on display & classified advertising 2. Display advertising: sold to advertisers on cost-per-space basis by column inch or page 3. Difficulty in comparing cost of ads from different publications 4. Advertisers have to determine “cost per thousand” of people reached based on circulation of the publication 5. Circulation numbers are a currency for the print media 6. Internet caused decline in classified advertising 7. Newspapers also charge retailers for advertising inserts that feature products/services from a single advertiser iii. Broadcast Advertising 1. Fewer options make TV/radio advertising simpler than print 2. Can buy commercial “spot”, sponsorship, or entire time slot 3. Broadcast advertising is priced based on how much time is used a. Also based on number of people reached b. Commercials that run with times of high audiences (“prime time”) cost the most 4. Prime time TV: east coast 8-11pm 5. Radio prime time: drive time = 6-10am, 4-7pm (in car going to & from work) 6. Some exceptions 7. Ratings: estimates of the audience size for TV and radio a. Nielsen Media Research-TV b. Arbitron provides ratings for local radio stations & national networks 8. Rating: a percentage of the total potential audience watching or listening at a particular time 9. Share: percentage of just those tuned in to any TV or radio station who are watching or listening to a specific station at a particular time 10.Cume: the number of different people who tune in at least once in a broad time period 11.Most newsrooms care most about share because it tells you how you’re doing against the competition 12.Most advertisers care more about rating than share because rating can always be translated into an estimate of the number of people reached by a commercial 13.Basic principle: a. Although print can add pages whenever advertising demands increase, broadcasters have a fixed number of commercial availabilities to sell each day b. So, costs vary much more in the broadcast media than in print c. Goal is to set prices low enough so all availabilities are sold, but now so low that demand exceeds the number d. Broadcast commercial availabilities are perishable because if they aren’t sold, they’re wasted iv. Sponsorships 1. In addition to selling individual commercial spots, most broadcasters also sell sponsorships for specific programs/events 2. Allow advertisers to become identified with specific programming 3. Cost more: offering additional revenue v. Longer Time Slots 1. Sometimes a broadcaster will sell an entire half-hour or hour to a single advertiser a. Infomercial i. Full length program to sell product or service b. Advertiser buying time slot, producing program or other content for that slot, and keeping all advertising time during the program i. Popular during early days of TV vi. Per-Inquiry Advertising 1. Sometimes broadcasters air commercials offering to sell products or services directly & immediately 2. Advertiser pays station a fixed amount for each order received because of the commercial vii. Online Advertising 1. Most prominent: display advertising a. Sold by shape b. Most popular: banner ads 2. Most lucrative: small text ads a. Not intrusive b. Matches content of page 3. Difference between online & traditional ads a. Cost of traditional ads rises as more people see the ad b. Online ads are priced as “cost per click” i. Advertiser pays fixed amount for each person who clicks on the ad 4. Video ads: similar to TV commercials a. More common b. Pop up before watching a video or throughout longer videos 5. Pop up windows, floating over content, ads that automatically start audio or video 6. Doesn’t yield as much revenue as print/broadcast viii. Demographics 1. Not all people have same value to advertisers 2. Harder it is to reach members of a group, the more they will pay for ads targeted at them 3. Also care about people’s spending habits d. Direct Payment i. Simplest business model for any medium ii. Consumers pay directly for specific content iii. Principle of Relevant Constancy says that over time the proportion of disposable income spent on media products by consumers is relatively constant iv. (there is only so much money consumers will spend on content, so any new purchases take money away from existing purchases) v. direct payment usually has greatest return per user to the media org vi. consumers are only willing to pay directly for the most valuable media content e. Subscription i. Consumer makes periodic payment to receive a package of media content 1. Like a newspaper ii. Provide financial security for many media orgs iii. Guarantee a continuing flow of revenue iv. Consumers enjoy them for greater variety of content v. Most successful media orgs usually depend on combo of subscription/ad revenues f. Subsidy i. One of the oldest forms of revenue for media orgs ii. Person or company finances the org without direct remuneration iii. Content is usually subsidized because it is deemed important enough by the sponsor to be produced and distributed, but it’s not lucrative enough to be supported with advertising or subscription revenues g. Not-for-Profit Models i. Not all media orgs are designed to generate profits ii. Churches, city/state govs, community foundations iii. Budget is usually much less than in for-profit media iv. Most news orgs supported by subsidies are nonprofit IV. Cutting-Edge Business Models a. New media outlets almost always create opportunities for new types of revenue, esp. advertising revenue b. Social media leading to social advertising: resembles a conversation or community i. Targeted Facebook ads c. Proliferation of tablets/ereaders d. Media orgs failed to charge for content i. Key to charging for content is its value to the user ii. Need to offer convenience and assurance of quality e. Micropayment for media content i. Users may pay only a few cents every time they view a page or download content f. A major advantage of increasing the number of revenue sources is that the org depends less on any single source of revenue, so changes in one source have less impact on the org V. The Search Engine Challenge a. most lucrative form of online advertising is the tin text ads that accompany results from search engines like Google, Yahoo, and Bing b. not intrusive, relate to content c. journalists should be concerned about these ads because i. sometimes appear on news org’s websites alongside stories and photos that are in wrong context ii. when these ads appear on search engine results pages they divert revenue from the news orgs d. contain excerpts from news stories but all revenue is kept by the search engine VI. Expenses a. Media orgs have a different cost structure from most industries b. Lower expenses c. Fixed costs: those required no matter how many people consume a product d. Variable costs increase with every additional user e. For most media orgs, fixed costs are larger than variable costs i. Costs more to gather/edit news than to distribute to public f. Number one expense for most news orgs is fixed cost of personnel g. Next big expense is marketing & promotion i. But, most media managers would rather put more money into the content than into promoting it h. Next big expense: distribution expenses i. Can be large for newspapers: newsprint, ink, vehicles/people used to deliver ii. All of a broadcaster’s costs are fixed costs 1. Marginal cost of adding additional users is zero iii. Cable TV and online news have variable costs 1. Online: have to guess how many users might visit site or it will crash i. Other costs i. Rent, utilities, computers, office supplies, payroll, etc. j. any business has to separate “operating” expenses from “capital” expenses i. operating expenses are incurred day to day ii. capital expenses are for major items with life spans usually measured in years iii. media orgs have relatively low capital expenses VII. Entrepreneurial Journalism a. Working for yourself b. Choosing assignments c. Selling work to existing publications d. Hardest part of freelancing is selling the first story e. Negotiate fees and expenses beforehand to pay taxes f. Pay attention to contract terms being offered g. Can also set up website h. freedom
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