Publishing6:B - 1(19)

Entertainment and Media: Markets and Economics

Books, Magazines, Newspapers

Publishing6:B - 2(19)

Magazine Market

Segments Entertainment General Interest Home and Leisure

Firms Very unconcentrated Advance Publications: 6.7%, Time Warner: 6.4%,

Hearst: 3.6%, Meredith: 1% plus dozens of smaller players

Each firm publishes many titles: Broad such as People, Narrow niche such as Art Doll Quarterly

Publishing6:B - 3(19)

Subscription model

Consumers purchase content and the services of providers:

Publishing6:B - 4(19)

Advertising model

Advertisers purchase the attention of consumers and the services of providers who bundle the advertisements with content that consumers want to consume (and are willing to tolerate the ads to do so).

Publishing6:B - 5(19)

The Market for Advertising

Vogel, table 7.1, p. 294

Publishing6:B - 6(19)

Composition of the Advertising Market

Publishing6:B - 7(19)

The distinction between print and online publishing of magazines and news sources becomes less clear. E.g., Apple Newsstand on your tablet or smart phone

In 2014, nearly 100% of magazine publishers format their content for mobile distribution.

Publishing6:B - 8(19)

These are not different.

How does a website that receives revenue only from ads differ from traditional print media?From the seller’s point of view, it doesn’t.

Publishing6:B - 9(19)

Newspaper Market

Largest names News Corp/Wall Street Journal New York Times Corp. Gannett, USA Today

Consolidation Large Failures: Cleveland Plain Dealer, Boston Globe,

Minneapolis Star Tribune, San Francisco Chronicle Near Failure: Washington Post Why?

Diminished value of the main revenue source, advertising in print

Competition from now closer competitors, digital and online.

Publishing6:B - 10(19)

1997 Technological change at the Gray Lady. Automated setup and color printing.

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Revenue Model

Traditional: 80% advertising, 20% circulation (newsstand and subscription)

New Media: 70% advertising, 30% N&S, headed downward.

Publishing6:B - 12(19)

Competition

Publishing6:B - 13(19)

Price Discrimination: Technological aspects of delivery allows segmentation by attributes.

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Vertical Structure in Publishing

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Sramana Mitra: Tech Author

http://www.sramanamitra.com/2008/10/01/will-entrepreneur-journeys-kindle-vertical-integration/print/

Enabled by: (1) Electronic Distribution (2) Amazon’s Marketing – Recommendation System.Author’s royalty is 3-4 times the traditional arrangement.Certain specific genre’s lend themselves to this new format.

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Some genres do not lend themselves well to integrated production and distribution by Amazon/kindle

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Still Room for Technological Improvement in e-Books

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What Model Applies?

E-Book publishers.

Is there market power in any segments in this market?

Is there an incentive for 5 publishers to conspire with Apple to raise prices? (Hachette, Harper Collins, Macmillan, Penguin, Simon&Schuster

What is Amazon’s best market strategy?

Agency Model: Publisher sets the price; Apple gets 30%

Amazon’s Model: Amazon pays ½ cover price, determines its own price.