t success promoting and distributing music through online CD sales or digital distribution services such as iTunes appliance program. YouTube makes it easier for videographers to reach a surprisingly large market, often surpassing even professional sites such as Hulu.
Companies employ many different ways to raise revenue for their services, but all boil down to two fundamental ideas: The money comes either from consumers or from advertising. In practice, many outlets combine the two to give themselves a flexible stream of income. Equally, consumers may be willing to pay slightly more for fewer ads, or to sit through more advertising in exchange for free content.
Traditional book publishers, which make practically all of their money by selling their products directly to consumers, lie on one extreme end of the spectrum. In some respects, cable companies use a related model under which they directly sell consumers the delivery and subscription of a bundled package of programming channels. However, cable channels primarily rely on a mix of media revenue models, receiving funding from advertising along with subscription fees. Magazines and newspapers may fall into this middle-ground category as well, although online classified advertising has caused print publications to lose this important revenue stream in recent years. Broadcast television is the clearest example of advertising-driven income, as there are no subscription fees for these channels. Because this lack of direct fees increases the potential audience for the network, networks can sell their advertising time at a premium, as opposed to a cable channel with a more limited and likely more narrow viewership.
Print media fall into three basic categories: books, newspapers, and magazines. The book publishing industry is basically an oligopoly; the top 10 trade publishers made up 72 percent of the total market in 2009, with the top five alone comprising 58 percent of this.Michael Hyatt, “Top Ten U.S. Book Publishers for 2009,” January 15, 2010, http://michaelhyatt.com/2010/01/top-ten-u-s-book-publishers-for-2009.html. Newspapers tend toward local monopolies and oligopolies, as there are generally few local news sources. In the past classified advertising made up a substantial portion of newspaper revenue. However, the advent of the Internet—particularly free classified services such as Craigslist—has weakened the newspaper industry through dwindling classified advertising revenues.
The newspaper industry also entails a mix of initial, or first copy costsThe added cost of the first unique good produced, such as the initial copy of a print newspaper., and relatively low marginal costsThe costs per unit of a good, such as a print newspaper.. Journalistic and editorial costs are relatively high, whereas the costs of newsprint and distribution are fairly low. The transition from the labor-intensive process of mechanical typesetting to modern electronic printing greatly reduced the marginal costs of producing newspapers. However, the price of newsprint still goes through cyclical ups and downs, making it difficult to price a newspaper in the long run.
The highest costs of publishing a paper remain the editorial and administrative overheads. Back-office activities such as administration and finance can often be combined if a company owns more than one paper. Unlike the historical restrictions on broadcast media that limited the number of stations owned by a single network, print media has faced no such ownership limits. Because of this, a company such as Gannett has come to own USA Today as well as mostly local newspapers in 33 states, Guam, and the United Kingdom.Columbia Journalism Review, “Who Owns What,” August 13, 2008, http://www.cjr.org/resources/index.php. Other companies, such as McClatchy, also run their own wire services, partly as a way of reducing the costs of providing national journalism to many local markets.
Like newspapers, magazines are largely owned by just a few companies. However, unlike newspapers, many magazine chains are themselves owned by much large