Handbook of Media Management and Economics, 2nd Edition [2 ed.] 9781138729292, 9781138729315, 9781315189918

Table of contents :
Cover
Title
Copyright
Dedication
Contents
Contributors
MME Handbook Editorial Review Board
Foreword: Media Industry Sustainability Challenges
Preface
Part I MME Research: Foundation and Overview
1 Media Management and Economics Research: A Historical Review
2 Theoretical Approaches in Media Management Research Revised
3 Evolving Research and Theories in Media Economics
4 Media Management and Economics Research in Europe
5 Media Management and Economics Research in Asia
6 Media Management and Economics Research in Latin America: Challenges and Opportunities for Scholars in the Field
Part II Fundamental Issues in MME Research
7 Human Resource Management in the Media
8 Strategic Management
9 Issues in Financial Management
10 Advertising in Media Management and Economics
11 Marketing and Branding
12 Media Policy
13 Mergers and Acquisitions and Their Performance
14 Content/Program Distribution
Part III Emerging Issues/Areas of Inquiry in MME Research
15 Media Innovation: Three Strategic Approaches to Business Transformation
16 Media Entrepreneurship
17 Social Media
18 Mobile Media
19 Multiplatform: A Distribution Perspective
20 Multiplatform: A Consumption Perspective
21 Media Globalization
22 Changes in Journalism in the Digital Age: The Evolution of News
Part IV Analytical Tools in MME Research
23 Methodological Approaches in Media Management and Economics
24 Audience Measurement and Analysis
25 The Transformation of Advertising Agencies in a Digital World
26 Big Data and Media Management
Part V Future Directions in MME Research
27 Media Management Research in the Twenty-First Century
28 Future Directions for Media Economics Research
Afterword
Index

Citation preview

HANDBOOK OF MEDIA MANAGEMENT AND ECONOMICS The Handbook of Media Management and Economics has become a required reference for students, professors, policy makers, and industry practitioners. The volume was developed around two primary objectives: assessing the state of knowledge for the key topics in the media management and economics fields, and establishing the research agenda in these areas, ultimately pushing the field in new directions. The Handbook’s chapters are organized into parts addressing the theoretical components, key issues, analytical tools, and future directions for research. With its unparalleled breadth of content from expert authors, the Handbook provides background knowledge of the various theoretical dimensions and historical paradigms, and establishes the direction for the next phases of research in this evolving arena of study. Updates include the rise of mobile and social media, globalization, audience fragmentation, and big data. Alan B. Albarran is a Professor of Media Arts at The University of North Texas in Denton, Texas. Dr. Albarran has extensive experience as an editor and author and is widely recognized as an international scholar in the area of media management and economics. He is a former editor of both the Journal of Media Economics and the International Journal on Media Management. Bozena I. Mierzejewska is an Assistant Professor at the Gabelli School of Business at Fordham University in New York, USA. A native of Poland, Dr. Mierzejewska is the editor of The International Journal on Media Management—and serves as an editorial board member at several academic journals. She has authored numerous papers and book chapters on topics related to media management and economics, publishing, and social media. Jaemin Jung is a Professor and Chair in the Graduate School of Information and Media Management at the Korea Advanced Institute of Science and Technology (KAIST) in Seoul, South Korea. A native of South Korea, Dr. Jung is a prolific scholar on topics related to media management and economics, telecommunications, and social media. He serves on several editorial boards for scholarly journals in the field. “This comprehensive Handbook of Media Management and Economics led by the inestimable guru Alan Albarran and colleagues Bozena I. Mierzejewska and Jaemin Jung, brings together focused studies by the media management field’s most established and emerging scholars. It has both breadth and depth treating the most important topics drawing on theory and practice. Established as the Bible of the field from its first appearance forward, this new edition is an essential text and reference work of lasting value.” Everette E. Dennis, Dean and CEO, Northwestern University in Qatar, Qatar “The Handbook of Media Management and Economics is a fundamental source used by scholars w ­ orldwide. The new edition solidifies and expands the publication’s contributions, revealing the maturation and fullness of the field and the global contributions that have brought management approaches to the forefront in explaining media business behaviour and choices.” Robert G. Picard, University of Oxford, UK “Look no further! This is the truly global go-to-guide into the unpredictable world of managing media.” Mark Deuze, University of Amsterdam, The Netherlands

MEDIA MANAGEMENT AND ECONOMICS Alan B. Albarran, Series Editor

HANDBOOK OF MEDIA MANAGEMENT AND ECONOMICS Edited by Alan B. Albarran, Sylvia M. Chan-Olmsted, and Michael O.Wirth THE MEDIA ECONOMY 2ND EDITION Alan B. Albarran WEBCASTING WORLDWIDE Business Models of an Emerging Global Medium Edited by Louisa S. Ha and Richard J. Ganahl THE SOCIAL MEDIA INDUSTRIES Edited by Alan B. Albarran

HANDBOOK OF MEDIA MANAGEMENT AND ECONOMICS 2nd edition

Edited by Alan B. Albarran Bozena I. Mierzejewska Jaemin Jung

Second edition published 2018 by Routledge 711 Third Avenue, New York, NY 10017 and by Routledge 2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2018 Taylor & Francis The right of the editors to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. First edition published 2006 Routledge Library of Congress Cataloging-in-Publication Data Names: Albarran, Alan B., editor. | Mierzejewska, Boçzena, editor. | Jung, Jaemin, editor. Title: Handbook of media management and economics / [edited by] Alan Albarran, Bozena Mierzejewska, Jaemin Jung. Description: 2nd edition. | New York, NY : Routledge, 2018. | Series: Media management and economics Identifiers: LCCN 2017052861 | ISBN 9781138729292 (hardcover) | ISBN 9781138729315 (softcover) Classification: LCC P96.M34 .H366 2018 | DDC 302.23/068—dc23 LC record available at https://lccn.loc.gov/2017052861 ISBN: 9781138729292 (hbk) ISBN: 9781138729315 (pbk) ISBN: 9781315189918 (ebk) Typeset in Bembo by Apex CoVantage, LLC

To the first daughters of my daughters: Lochlynn Jean McLeod and Collette Alan Lloyd —Alan B. Albarran To my family —Bozena I. Mierzejewska To my wife, Hoyeon, and my daughter, Haewon —Jaemin Jung

CONTENTS

Contributorsxi MME Handbook Editorial Review Board xiii xiv Foreword: Media Industry Sustainability Challenges Paulo Faustino Prefacexvii PART I

MME Research: Foundation and Overview

1

  1 Media Management and Economics Research: A Historical Review Alan B. Albarran

3

  2 Theoretical Approaches in Media Management Research Revised Bozena I. Mierzejewska

17

  3 Evolving Research and Theories in Media Economics Brendan M. Cunningham

36

  4 Media Management and Economics Research in Europe Juan Pablo Artero and Alfonso Sánchez-Tabernero

52

  5 Media Management and Economics Research in Asia Jaemin Jung and Youngju Kim

64

  6 Media Management and Economics Research in Latin America: Challenges and Opportunities for Scholars in the Field María Elena Gutiérrez-Rentería

vii

80

Contents PART II

Fundamental Issues in MME Research

93

  7 Human Resource Management in the Media Joyce Costello and John Oliver

95

  8 Strategic Management Nabyla Daidj

111

  9 Issues in Financial Management Ronald J. Rizzuto, Michael O. Wirth and Pisun (Tracy) Xu

130

10 Advertising in Media Management and Economics Louisa Ha

144

11 Marketing and Branding Juliane A. Lischka, Gabriele Siegert, and Isabelle Krebs

159

12 Media Policy Krishna Jayakar

176

13 Mergers and Acquisitions and Their Performance Hans van Kranenburg and Gerrit Willem Ziggers

201

14 Content/Program Distribution Douglas A. Ferguson

219

PART III

Emerging Issues/Areas of Inquiry in MME Research

239

15 Media Innovation: Three Strategic Approaches to Business Transformation Richard A. Gershon

241

16 Media Entrepreneurship Min Hang

259

17 Social Media Andreas Kaplan and Grzegorz Mazurek

273

18 Mobile Media Sangwon Lee

287

19 Multiplatform: A Distribution Perspective Xiaoqun Zhang and Alan B. Albarran

301

viii

Contents

20 Multiplatform: A Consumption Perspective Sylvia M. Chan-Olmsted and Min Xiao

317

21 Media Globalization Xiaoqun Zhang

333

22 Changes in Journalism in the Digital Age: The Evolution of News Angela Powers and Jingyan Zhao

347

PART IV

Analytical Tools in MME Research

361

23 Methodological Approaches in Media Management and Economics Michel Dupagne

363

24 Audience Measurement and Analysis Su Jung Kim

379

25 The Transformation of Advertising Agencies in a Digital World Jürg Kaufmann Argueta and Francisco J. Pérez-Latre

394

26 Big Data and Media Management Philip M. Napoli and Axel Roepnack

410

PART V

Future Directions in MME Research

423

27 Media Management Research in the Twenty-First Century Ulrike Rohn

425

28 Future Directions for Media Economics Research Brendan M. Cunningham

442

Afterword451 Jaemin Jung, Bozena I. Mierzejewska, and Alan B. Albarran Index457

ix

CONTRIBUTORS

Alan B. Albarran University of North Texas Juan Pablo Artero University of Zaragoza, Spain Sylvia M. Chan-Olmsted University of Florida Joyce Costello Bournemouth University, United Kingdom Brendan M. Cunningham Eastern Connecticut State University Nabyla Daidj Telecom Ecole de Management, France Michel Dupagne University of Miami Paulo Faustino Porto University, Portugal Douglas A. Ferguson College of Charleston Richard A. Gershon Western Michigan University María Elena Gutiérrez-Rentería Universidad Panamericana, Mexico Louisa Ha Bowling Green State University Min Hang Tsinghua University, China Krishna Jayakar Pennsylvania State University Jaemin Jung Korea Advanced Institute of Science and Technology (KAIST), Korea Andreas Kaplan ESCP Europe Business School, Germany

xi

Contributors

Jürg Kaufmann Argueta University of Navarra, Spain Su Jung Kim Iowa State University Youngju Kim Korea Press Foundation, Korea Isabelle Krebs University of Zurich, Switzerland Sangwon Lee Kyung Hee University, Korea Juliane A. Lischka University of Zurich, Switzerland Grzegorz Mazurek Kozminski University, Poland Bozena I. Mierzejewska Fordham University Philip M. Napoli Duke University John Oliver Bournemouth University, United Kingdom Francisco J. Pérez-Latre University of Navarra, Spain Angela Powers Iowa State University Ronald J. Rizzuto University of Denver Axel Roepnack Fordham University Ulrike Rohn Tallinn University, Estonia Alfonso Sánchez-Tabernero University of Navarra, Spain Gabriele Siegert University of Zurich, Switzerland Hans van Kranenburg Radboud University, The Netherlands Michael O. Wirth University of Tennessee Min Xiao University of Florida Pisun (Tracy) Xu University of Denver Xiaoqun Zhang University of North Texas Jingyan Zhao Kansas State University Gerritt Willem Ziggers Radboud University, the Netherlands

xii

MME HANDBOOK EDITORIAL REVIEW BOARD

Soontae An, Ewha Womans University, Korea Angel Arrese, University of Navarra, Spain Marianne Barrett, Arizona State University Todd Chambers, Texas Tech University H. Iris Chyi, University of Texas Amy Jo Coffey, University of Florida Steven J. Dick, University of Louisiana at Lafayette Tom Evens, University of Ghent, Belgium Anne Hoag, Penn State University Sonia Huang, National Chiao Tung University, Taiwan Rita Järventie-Thesleff, Aalto University School of Business, Finland Tadeusz Kowalski, Warsaw University, Poland Arne Krumsvick, University of Oslo, Norway Lucy Küng, Oxford University, United Kingdom Laurie Thomas Lee, University of Nebraska Seonmi Lee, Korea Telecom, Korea Joon Soo Lim, Syracuse University Mercedes Medina, University of Navarra, Spain Heinz-Werner Nienstedt, Johannes-Gutenberg Universität, Mainz, Germany Sora Park, University of Canberra, Australia Patricia Phalen, George Washington University George Sylvie, University of Texas Patrik Wikström, Queensland University, Australia Steven Wildman, Michigan State University Kent Wilkinson, Texas Tech University

xiii

FOREWORD

Media Industry Sustainability Challenges Paulo Faustino Centre for Research in Communication, Information and Digital Culture at Porto University and Nova University of Lisbon

It is a great privilege to write the foreword for the second edition of the Handbook of Media Management and Economics, and I appreciate the invitation of the editor, Alan Albarran (with whom I am fortunate to collaborate with over the years at the University of North Texas). The selections of the chapters and contributors of this Handbook are timely, not only because the approaches to the themes are clear and very current but also because these are authors who have produced work of great quality in other academic and scientific contexts (presentations at conferences, publications in other books and journals, teaching, membership in academic associations). In fact, I’ve had the opportunity to accompany and even cooperate, in some cases, in joint projects. Therefore, in a nutshell this Handbook effectively constitutes a kind of “best of ” media management and economics that very well summarizes the main issues and trends of the field, from the perspective of economics, markets, management, innovation, business, technologies, marketing and public policies, and other topics of great relevance. Regarding the main trends in the media industries, the only certainty we have moving forward is precisely the same uncertainty that is observed in several dimensions of media organizations— namely: business models, distribution models, and journalistic models, among many other disruptive elements based on the Internet and on transformation of consumer behavior. However, in the midst of so much uncertainty, we have some certainties about the trend of media consumption—we know that the number of users will continue to grow and will be driven by several factors—namely: (1) broadband access, (2) the growth of the “digital natives” generation and the ever-increasing usability of applications that will sustain population growth with access to the network across multiple platforms (web, mobile, consoles, netbooks, tablet PCs, etc.) and (3) the increase in the average time spent consuming online content and services. These transformations, which are in many cases radical and truly disruptive, have caught many companies, professionals, and entrepreneurs lacking resources (either human or financial) to respond

xiv

Foreword

to all these changes. This is especially true for the economic and financial sustainability of media organizations. The business has become more difficult and is pressing fast changes in media organizations— namely, at the technological, business model, and human resources level, among others. Digital platforms have also brought a strong possibility for measuring audiences in real time, which is also a profound change in how to manage, produce, distribute, and create advertising. Changes in the digital business model have forced organizations into new human resources structures with new qualifications and new profiles. The sustainability of the business model and financing is at the forefront of concerns about the future and economic livelihood of the media industries, especially regarding the role of news and information with the promotion of pluralism. Of course, news organizations and journalism in general should not be reduced to the question of who pays the bill, but in truth it is very difficult to have good journalism without adequate resources. The concerns about media sustainability, financially and economically, are a theme that should concern society in general, based on the principle that the media are still one of the main pillars of development and consolidation of democracies. And it’s not a stretch to say that democracy, even in countries with more consolidated systems, is not a definitive achievement.We must continue to fight for democracy and for a pluralistic and independent media system. Over the last 20 years, there has been a great deal of discussion about the transformation of the media industry and its relationship to telecommunications, which has brought the two industries closer and made them more convergent, especially in terms of content management and distribution. Convergence (driven by digitization and deregulation, among other factors) can be seen as a media movement that was carried out during the twentieth century and that has imposed itself in the early years of the twenty-first century, allowing a confluence between the information transmission platforms that normally competed among themselves. Convergence refers to situations in which some economic and technological activities converge around common business or activities. However, the need to think about technologically nomadic communities is a new issue. For example, mobile devices demonstrate the limits of traditional journalism and allow the emergence of new collaborative and “locative” environments of production, reaggregation, and distribution of information and knowledge. And the big challenge from a business perspective is how to monetize and generate resources that contribute to the sustainability of media companies. The economic sectors that lead convergence include computing (both hardware and software), communications, and content. With the advent of the Internet, the proliferation of computers, and globalization, the communications sector has been challenged to solve infrastructure problems and propose new solutions. Changes to the devices allow access to content, but also create, publish, and share content, whether through computers, netbooks, or mobile phones. The content industry has also modified its production, communication, marketing, and distribution processes. In other words, media companies are increasingly developing with the information and communications technologies sector, resulting in a new designation of a macro-sector: technologies, media and telecommunications (TMT). Convergence in technology, media, and telecommunications is helping to standardize management practices and business strategies. In many media companies one finds a convergence of business models, distribution platforms, means of production, marketing tools, and interactivity with the consumer. Independently of the type, size, or geography of the company or media support, they are confronted, to a greater or lesser extent, with similar challenges in terms of management strategies and practices in the following areas: creation of new products, diversification of revenues, reorganization of work, brand management, investment in technology, cooperation with companies, cost reduction,

xv

Foreword

management by projects, portfolio management, talent management, multiplatform content, continuing training, audience engagement, and productive synergies. It is clear that the main dynamics of the media industry in the present are already identified, and we already know, for example, that the Internet represents not only a distribution system or channel (e.g., radio and television) but also a technology and accelerating platform for the transition from media activity to a new era, a circumstance that reinforces the demand for new knowledge and professional profiles of media organizations, regardless of the segment in which they operate. These challenges, strategies, and other issues related with the media business and markets are much analyzed throughout this new Handbook. It constitutes a true academic “bible” that helps us to understand the transformations in society and, consequently, the impact on media companies. For a more attentive and demanding reader, the contents of this work—of great consistency and intellectual density—are prone to a deeper interpretation on the role of the past, present, and future of media organizations.

xvi

PREFACE

On behalf of my coeditors, Bozena Mierzejewska and Jaemin Jung, we are very pleased to present the second edition of the Handbook of Media Management and Economics. I had the pleasure of serving as editor of the first Handbook, published in 2006 by Lawrence Erlbaum Associates. LEA was later acquired by Taylor and Francis, and “T and F,” as it was known, was acquired by Routledge. Common to these acquisitions was Linda Bathgate, long-time communications editor for LEA,T&F and finally Routledge. Linda was a driving force in the development of the first Handbook, and she started talking about a need for a new edition in 2013. The work for a second edition began with a proposal to Routledge in the spring of 2016. Linda left Routledge in the summer of 2016 for another publishing opportunity. She had been working with Ross Wagenhofer, who took over the communications list. Ross was as supportive of this project as Linda, and after a lot of organization and planning we received a contract for the new Handbook in the fall of 2016. One of my challenges was to form a new editorial team. Sylvia Chan-Olmsted and Mike Wirth served in these roles on the first Handbook, and they did a marvelous job but my sense was that it would be a good idea to incorporate some fresh perspectives. I have known Bozena and Jaemin since both were doctoral students, and I have seen them grow in many ways as scholars and editors. In fact, Bozena really pushed for the second edition of the Handbook and stressed how important it was for the field that it be updated. A huge plus in bringing on Bozena and Jaemin was their familiarity with MME scholarship in Europe and Asia respectively. Since the publication of the first Handbook, a great deal of MME scholarship has emerged from Europe and Asia. Their involvement and awareness would help build the global flavor needed for the new Handbook, and both offered wide contact bases to draw upon as we were investigating potential contributors and reviewers to join us with this project. I am very honored to have Bozena and Jaemin join me on this project; both are outstanding professionals and it has been a privilege to work with them. Once the editorial team was finalized, we had to make decisions about narrowing down the potential list of topics (a very tough task), finding contributors to write specific chapters, and organizing an editorial board to help review chapter drafts and offer outside feedback to the editors. This was accomplished—as were all editorial responsibilities—through Skype sessions across 17 hours of different time zones, countless emails, and sharing of documents through the cloud. Our two overarching goals with each of the chapters were exactly like the first Handbook: we asked contributors to (1) review the relevant literature on the topic, focusing on the years since 2006, xvii

Preface

when the original Handbook was published; and (2) offer a research agenda for future work on the topic based on a synthesis of the literature. Of course, authors approached this from different perspectives and areas of interest, but still there is a uniformity to the Handbook thanks to these two goals. However, many topics in the second edition of the Handbook did not exist in the first edition (e.g., social media, big data, innovation). We have tried to build upon the first edition by expanding the range of topics as the field has expanded since 2006. Several contributors to this edition also authored chapters in the first edition, but most contributors are younger scholars who represent the future of the MME field. We are confident that they will help to grow the field further over the next decade. My hope is that this text will be welcome and appreciated by fellow professors and scholars and graduate students who are interested in the MME field, and passionate about research. I also hope the Handbook will stimulate more research and scholarship focused on MME over the life of this publication. I thank Bozena and Jaemin for their help and dedication to this effort. I thank the contributors for their work and the reviewers for their suggestions. My thanks to Linda Bathgate for helping make the first MME Handbook a reality and for encouraging the second edition. I thank Ross Wagenhofer, assistant Nicole Salazar, and staff at Routledge for their support. Finally, I’m grateful to my wife, Beverly, for her support while working on my fifteenth book, and to my daughters, Beth Lloyd and Mandy McLeod, for their love and blessing us with five wonderful grandchildren (Nate, Lochlynn, Collette, Landry, and Weston). Alan B. Albarran

*** The first edition of this Handbook was published over ten years ago, and then I contributed one chapter. Much about media and this academic discipline has changed since then, but the overall purpose of this book has not. It is written with two groups of people in mind. First, it is intended for anyone who needs deep understanding of media management research and current debates. This would certainly include scholars, policy makers, or students. We hope it will inspire them in their further work. The second group includes those who are working in media or related industries and who aspire to know more about current research and scholarly debates. None of that has changed since the first edition. The second edition has been reorganized and rewritten by a different set of authors to represent the diversity and advancement of the discipline.This book is a necessary and logical step in recording those advancements and achievements in one volume, and creating a resource for our readers. I hope we managed to achieve this goal. The process of creating this volume was lengthy, but enjoyable at every stage. It all would not be possible without leadership and guidance of Alan Albarran, who invited Jaemin and me to be part of this undertaking. Our authors, when invited to contribute, agreed very quickly and generously shared their expertise. They also respected our guidance and sometimes endured our reminders. Reviewers played a key role with their comments and observations, delivered honestly and constructively. Many people helped make this book a reality. I am particularly indebted to Alan Albarran for his mentorship and patience during the writing process. My thanks also go to Jaemin, for joining the team. It has been an honor to be a part of this truly global team of editors. I also thank our publisher, Routledge, and its staff Ross Wagenhofer and Nicole Salazar. Finally, on a personal note, I give thanks to my family, who continually demonstrate incredible support and understanding. I dedicate this work to you. Bozena I. Mierzejewska

*** xviii

Preface

More than ten years have passed since the first MME Handbook was published. A Korean proverb says that “even rivers and mountains change in ten years.” I believe there have been more drastic changes in the media industry throughout the production, distribution, and consumption of news, information, and entertainment. I served as an editorial review board member of the first MME Handbook. There were 37 authors, who wrote 30 chapters. Among them 30 scholars worked for universities or institutions of the United States, and 7 authors belonged to European affiliations. Eighteen out of 21 editorial review board members were from U.S. universities, 2 from Europe, and I was the only person from Asia. In sum, including both the authors and the editorial board members, 48 out of 58 scholars had affiliations in the United States. There were nine scholars from Europe and only one from Asia. In publishing the second edition, we invited completely new authors who work for institutions in diverse regions and changed the content of whole chapters. The editorial members were also invited from across regions. I’m delighted to work with MME scholars all over the world. Whenever I communicated with the authors and the editorial board members, I fully perceived their sincere attitude toward academic research and passion for practical contribution to the media industry. I sincerely thank all the authors and editorial board members, who have made this project possible. It is no doubt that the second MME Handbook will be spread worldwide and will be cited frequently in future research. Given the nature of MME research, industry practitioners will benefit from the Handbook. Although it was challenging, it was an enjoyable journey. Alan asked me not to make any laudatory comments. Nonetheless, I can’t help but express my thanks to Alan and Bozena. I feel very privileged to have had an opportunity to work with them as a coeditor and I learned a lot throughout the whole processes. Whenever I have a chance to express my gratitude in the academia, the list must have my adviser, Dr. Sylvia Chan-Olmsted at the University of Florida. Without her support in my doctoral program, I would not be where I am today. I also must take this opportunity to express my thanks to coauthor Dr.Youngju Kim, at the Korea Press Foundation. I feel privileged to have such a wonderful lifelong coworker in academia. Finally, this work is dedicated to my parents, parents-in-law, wife, and my daughter. Jaemin Jung

xix

PART I

MME Research Foundation and Overview

1 MEDIA MANAGEMENT AND ECONOMICS RESEARCH A Historical Review Alan B. Albarran

Trying to assess the literature reviewing the history of both media management and media economics research is a daunting task. One reason for this dilemma is the vast amount of material available. The earliest scholarship attributed to the study of what could be classified as media management or media economics research traces its roots back to the 1940s in the United States. There may have been published sources in other countries prior to the 1940s available in other nations, but even Google falls short in trying to locate such material, not to mention language and cultural barriers. Media management and media economics are treated by many scholars as separate but related fields of study. Media management and economics are linked interdependently to one another. The industries are by their very nature economic institutions exhibiting a variety of management approaches and practices. One cannot study management without considering the economic aspects of a business enterprise, and vice versa. Yet, most of the scholarship developed since the 1940s has tended to focus on either media management or media economics as separate and distinct subjects. This may have been influenced by the size of media companies and the proximity to available data to study. From the 1940s to the 1970s media companies tended to be bifurcated into smaller, familyowned enterprises, or large corporate owners, such as the major newspaper groups (e.g., Pulitzer, Hearst, New York Times, Gannett) or national broadcast networks (ABC, CBS and RCA, which initially owned NBC). Consolidation of the various sectors of the media industries began in the 1970s. As media companies consolidated, management strategy and practice became more focused on the financial and economic conditions of their portfolios of media brands and what we identify today as platforms. Investment bankers, hedge funds, insurance companies and financial brokers all recognized media as a stable cash-generating business for investors. Hence, a greater emphasis on financial performance became the norm, with corporate owners and stakeholders demanding growing profits and return on investment. Management priorities were centered on building free cash flow and increasing the value of the enterprises they managed. Consolidation also brought with it growing confusion over what the word “media” represents, and what constitutes a “media” firm. Historically, media referred to publishers of newspapers and magazines; broadcasting in the form of radio and television; music and sound recordings, and so forth. Distribution was then a powerful tool of media companies. Now we think of these older industries as “traditional” or “legacy” media that still exist, but complete in a world where distribution is no longer controlled by media firms due to the disruption of digital media. Instead, power has shifted

3

Alan B. Albarran

to the consumer using mobile media, streaming media, social media and transmedia and emerging fields like artificial intelligence and augmented reality. Three other areas of change since 2006 include the rise of user-generated content, popularized by video sites like YouTube and Vimeo. News organizations, at first resistant to using user-generated videos and photos of news events, now regularly feature video captured by smartphones from consumers. Advertising is becoming more sophisticated as a field with the rise of big data, efforts to measure audience engagement, and the actual effectiveness of advertising expenditures. Technology has enabled more precise positioning of advertising, especially via social media and e-commerce platforms (e.g., Facebook, Amazon). The rise of false or “fake news” is impacting the perception of journalism and its relationship to society. User-generated content, changes in advertising effectiveness, and fake news all have managerial and economic considerations for the media industries. Given this overview, the author considered four research questions to provide a framework to use as a guide for developing this chapter. Rather than repeating the work done in the initial MME Handbook (Albarran, Chan-Olmsted, & Wirth, 2006), the focus is on the decade that followed (up until 2016) for analysis to provide a historical review. The research questions are detailed ahead: RQ1:  What significant changes have taken place across the media industries since the publication of the original Handbook of Media Management and Economics (2006)? RQ2:  What were some of the significant MME publications published since 2006? RQ3:  How do we assess the state of knowledge of MME research since the publication of the original Handbook? RQ4:  What propositions should guide the research agenda for the next decade of MME research?

What Significant Changes Have Taken Place Across the Media Industries Since the Publication of the Original Handbook of Media Management and Economics (2006)? To address this question one must consider not just the obvious changes, such as which companies are the industry leaders, new platforms, innovative technologies or the entrance of new entrepreneurs across the media industries, but the environment in which these actions took place. In 2006–2007 the global economy—especially the economies of developed nations—was very strong. Capital and credit flowed freely from borrowers to lenders, often without proper checks and balances. Housing was booming as new subdivisions and housing units were being built to accommodate demand. Employment was strong and near capacity. Apart from the Middle East, where war was waging in Iraq and Afghanistan, there was stability around the globe. Almost overnight everything changed. In the summer of 2008 the housing boom turned into a major bust, bringing with it the near collapse of the banking system in the United States and upheaval in the financial markets worldwide. Stock markets around the world sank in what would later become known as “the Great Recession.” Millions lost jobs and their homes.Valuations fell dramatically as businesses cut back on capital spending. Credit all but dried up. Only coordinated action by the world’s largest central banks and their respective governments prevented a total meltdown in the financial markets by bailing out our failing banks, slashing interest rates to near zero, and purchasing billions in bonds each month to add liquidity to a damaged global economic system. For the next decade, interest rates in the United States would be raised only one time—not until December 2016. The trough in the markets bottomed on March 9, 2008. But it would take nearly ten years for the markets to rebound to its 2007 levels. While the economy was gloomy for much of the decade, technology was a bright spot. Billions were invested in broadband network development by cable and telecommunication companies to improve bandwidth speed for Internet applications and more powerful phone networks from slower 4

Media Management and Economics Research

3G to 4G and later LTE.The power in broadband networks would benefit the development of many distribution and reception technologies. In 2007 the world was introduced to the iPhone, which revolutionized the mobile phone industry. The iPhone launched thousands of applications or “apps” with the creation of Apple’s App Store. Competitors followed, including Android phones powered by a Google operating system. Mobile phones were now called smartphones. Growth in broadband also advanced the ability to stream video to the home, leading to a range of new competitors in the video marketplace—Netflix, Hulu and Amazon Video emerging as the early leaders. New television sets were manufactured with builtin Internet capability to access home Wi-Fi networks. The iPad debuted in 2010, giving consumers another mobile device to use for access to the Internet. Streaming also grew in the audio area as well with the rise of Pandora, Spotify and Apple Music, along with a renewed growth in podcasting. Bluetooth-enabled automobiles allowed consumers to listen to music and podcasts in their cars. Other new technologies either in development or making debuts included drones, driverless automobiles, virtual reality games and wearable technology. Artificial intelligence and augmented reality platforms were also emerging. Social media became mainstream as Facebook,Twitter, LinkedIn, Instagram and Pinterest emerged as popular platforms for sharing information, opinions, photographs and hobbies. The global popularity of social media was quickly recognized by advertisers, leading to a further shift in marketing dollars away from traditional media to digital media. Social media would encounter its own set of challenges with issues like privacy and security, posting of false information and violent live content, and illegal use of copyrighted materials, yet it would continue to grow and expand. Consolidation among media companies was not as prominent during 2007–2016 due to the great recession and little capital available for expansion. Several mergers were completed in the United States, the largest being Comcast’s acquisition of NBC Universal; Disney’s acquisition of Marvel Entertainment; AT&T adding to its distribution capabilities with the acquisition of DirecTV; and consolidation in the cable television space with Charter buying Time Warner Cable and Bright House. Regulators did not allow some firms to merge due to antitrust concerns. Both AT&T and Sprint Nextel tried to merge with T-Mobile but were ultimately rejected. Time Warner and AOL ended their failed merger in 2009; AOL was acquired by the Huffington Post and later Verizon, while AT&T is trying to acquire Time Warner. Facebook, Amazon, Netflix and Google became known as the “FANG” stocks, and were recognized by financial investors for their remarkable growth and ability to dominate the markets where they are engaged. One of the greatest advantages these companies have is their ability to harvest large amounts of consumer data detailing uses and preferences, allowing them to leverage advertisers and marketers. These companies are part of “big data,” a subject treated by a separate chapter in this new Handbook. Napoli (2016) points out that media industries are “well positioned” to tap in to the potential of big data. Big data is generating new markets for research, and ultimately helps media companies in their strategy and decision-making. This short review finds that forces such as economics, technology, globalization, consolidation and the introduction of social media all contributed to a very fast-moving and evolving environment. Together, these events would influence the scholarship produced across the media management and economics.

What Were Some of the Significant MME Publications Published Since 2006? Publication of articles and books in the MME field has flourished since 2006.The growth of scholarship was certainly influenced by some of the significant forces and changes discussed in the previous section, but these were not the only reasons. Many new graduate programs devoted to the media 5

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industries, be it media management, digital media, media economics or other focuses, emerged in Europe, Asia and Latin America, to add to the evolving programs across North America. A new generation of scholars emerged, with strong interests in digital media and emerging technologies. Outlets for scholarship also grew. The Journal of Media Economics and the International Journal on Media Management remain the most prominent journals in the field, along with the Journal of Media Business Studies. Mobile Media and Communication, Digital Journalism, Journal of Social Media Studies, Journal of Digital Media Management, Electronic News, Media Industries, Journal of Media Law, Social Media + Society and Media Watch are just some of the journals where articles related to aspects of media management or media economics may be found. There are also more conferences devoted to the MME field, allowing researchers to present work in progress and acquire comments and critiques on their work before submitting to a journal. The World Media Management and Economics Conference is a biannual event held around the world, as is the International Media Management Association (IMMA). The former is not an association that requires membership. The European Media Management Association (EMMA) holds an annual conference as well as a special seminar for PhD candidates. The Latin American Media Management Association (LAMMA) is another regional association founded in South America. Other conferences, such as the Broadcast Education Association and the Association for Education in Journalism and Mass Communication, have MME-related divisions and annual paper competitions. These publications and conference venues provide scholars numerous outlets for their research, more so than at any time in the history of the MME field. To organize a discussion of key publications since 2006, we will first consider published books over the period 2007–2016, followed by journal articles widely recognized in the MME field. This review is limited to works published in English, while recognizing there are many books and articles published in other languages around the world. Regarding published books, compilations and edited volumes will be considered first, followed by books that focus on topics relevant to MME.

Compilations and Edited Volumes Several compilations and edited volumes have been published that review relevant literature and present different perspectives to readers. Towse and Handke (2013) examined the impact of digitalization in their handbook examining the creative sector of the economy. Picard and Wildman (2015) edited a handbook around the themes of influential factors and practices, platform applications, and economics and policy. Anderson, Stomberg and Waldfogel (2016) edited a two-volume handbook authored primarily by economics scholars from Europe and the United States. Their work is spread among three sections, investigating market structure and performance, individual media sectors and political economy. In terms of political economy, Wasko, Murdock and Sousa (2011) edited the most significant update to this critical approach to media management and economics. Friedrichsen and Mühl-Benninghaus (2013) edited a handbook devoted to the topic of social media management. Regarding edited volumes, several works are included here that have expanded the field in different directions and their focus on individual topics of exploration. Dal Zotto and van Kranenburg (2008) produced a volume devoted to the relationship between management and innovation in the media industries. Deuze and Steward (2010) feature scholars explaining how their work contributes to a critical understanding of the management of media work. Media work was also the subject by Johnson and Compare (2014). Noam’s edited volume focuses on media ownership around the globe (2014). Albarran edited three different volumes: a handbook investigating Spanish language media (2008) and social media (2013) from industry perspectives, as well as an exploration of MME research in a transmedia environment (2013). Küng, Picard and Towse (2011) edited a volume examining the impact of the Internet on the media. Vukanovic and Faustino (2011) explored managing media 6

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content in an age of convergence. Noam (2015) and other contributors looked at the topic of media ownership at a global level. Lowe and Brown (2015) attempted to answer the question “what’s so special about media management?”.

Single-Author Works Many single-authored works related to the media management and economics have been published since 2007. The texts identified here are meant to be a representative sample of key works, not a census of all the published volumes during the decade of analysis. Books devoted to management include titles by Albarran (2017a), Deslandes (2008) and Wirtz (2011, 2015). Books centering on media economics include Albarran (2017b), Picard (2011) and Vogel (2010). Important works in the political economy tradition include McChesney (2008) and Mosco (2009). Other topics extended the field. Noam (2009) authored the most complete review of media concentration and ownership. Küng (2015) conducted an inquiry into digital news, while Graham, Greenhill, Shaw and Vargo (2015) looked at the impact of the Internet on regional newspapers, magazines and local broadcast news. Küng (2017) and Gershon (2013) authored texts related to media strategy using different tools of analysis. Gershon (2016) also published a work examining innovation in digital media and design. International works related to media management and economics include Díez’s (2008) examination of the market for magazines in Argentina, and Gutiérrez-Rentería’s (2014) study of the Mexican media conglomerate Televisa. Zhao (2008) authored one of the first books on the media in China, while Georgiades (2015) studied the topic of employee engagement in media firms in Europe, the U.S. and Brazil. Cunningham, Flew and Swift (2015) examined media economics from both neoclassical and political economy approaches. Artero (2015) has compiled the most complete review of books published on media management and economics, and is an excellent source to locate the earliest texts in the field. While not specifically cited here, works in this area are being published in many “regional” languages where teaching programs and research teams operate. These include Germany, the Nordic countries, and Poland and Russia.

Articles in Scholarly Journals While the MME field features numerous potential publishing outlets, the works cited in this section are limited to the three most important journals in the field: the Journal of Media Economics, the International Journal on Media Management, and the Journal of Media Business Studies. Hence, this is a very selective review of works across the fields of media management and economics rather than an effort to compile a complete literature review of the entire field. Even with a purposive review consisting of just three scholarly journals, one cannot help but be impressed by the wide areas of inquiry and investigation occurring across the field since the publication of the first MME Handbook in 2006. Some initial observations from reviewing the contents of these three journals are warranted. First, traditional media is still a major interest of scholars, primarily in the newspaper, television and film sectors. Digital and social media in all forms are important topics of study. Researchers continue to be interested in topics related to market structure, industry concentration and consolidation, marketing and branding, and advertising. Articles also investigated areas less mentioned in earlier scholarship, such as the multiplatform environment, innovation, entrepreneurship, network analytics and big data. Finally, one can’t help but notice the increase in research generated from scholars across Asia and Europe, reflecting the growth of more PhD programs with an emphasis on media management and economics. Studies are grouped by topics, but not listed in any order of priority. 7

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Management Studies Researchers continue to grapple with basic questions about media management. Küng (2007) questions if media management matters, and offers an analysis of how media companies differ along with a suggested research agenda. North and Oliver (2010) studied managerial perceptions regarding consolidation in the UK independent TV production market. A later study (Oliver, 2013) involved a survey of UK media executives to understand their perceptions of the market. Hess (2014) attempted to redefine what a media company is in terms of both offline and online operations. Malmelin and Moisander (2014) reviewed brands and branding studies in the context of media management research, and called for more theoretical development in the area. Other studies related to management include an examination of leadership in Greek media companies (Tsourvakas, Zotos, & Dekoulou, 2007) and Adams’s (2008) study on newspaper managers and views on technology. Strategic management is widely investigated across the media industries, and two studies are representative of this trend.Vukanovic (2009) researched five different films to assess strategic efforts for both traditional and digital media efforts. Daidj and Jung (2011) determined that even though media companies are engaged in a competitive, converging environment they are still moving toward coopetition practices as part of their strategic efforts.

Market Structure Variables Media economics researchers continue to investigate aspects of the industrial organization model. For example,Yang and Chyi (2011) assessed competition dynamics among online newspapers, while Vizcarrondo (2013) looked at concentration of the media over a 34-year period, and found the media industry to be consistently unconcentrated. Huang and Wang (2014) examined market performance for online news through the application of Anderson’s concept of the long tail. Roson (2008) presented a model that considered price discrimination and audience composition in an advertiser-supported broadcast environment. A later study by Häckner and Nyberg (2012) explicated a model also examining broadcasting channel differentiation when considering news versus entertainment content. Sharma and Wildman (2009) considered how both content delivery and advertising should be utilized in the emerging area of mobile media. The authors correctly surmised that advertising will be an important source of revenues for mobile operators.

Leadership Including Corporate Boards, Stakeholders and Mergers Several studies now exist that help understand the decision-making and performance of corporate boards, along with new studies on mergers and acquisitions. Shao (2010) argues for fixed compensation of CEOs and executive boards to increase performance for stakeholders. Soloski (2015) examined the composition of corporate boards of newspapers before and after the recession of 2008–09, and found few changes were made at the leadership or board level despite the loss of billions in value. Regarding mergers and acquisitions, Owers and Alexander (2011) reviewed 57 different mergers during 1997–2008 to understand restructuring transactions for firms valued at $1 billion or more. Muehlfeld, Sahib and van Witteloostuijn (2007) looked at a sample of newspaper mergers during 1981–2000 and found that transaction-specific and regulatory factors were an important influence on media mergers and acquisitions.

Multiplatform Studies The transition for media companies to a multiplatform environment has spawned numerous studies, recognizing the shift of traditional media companies to utilize new platforms to reach consumers. 8

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Colapinto (2010) authored a case study on the platforms used by the Italian-based company Mediaset. Ksiazek (2011) utilized audience panel data from Nielsen along with network analytics to understand cross-platform audience behavior. Foros, Kind and Schjelderup (2012) examined the various types of advertising prices across multichannel platforms. Järventie-Thesleff, Moisander and Villi (2014) conducted a case study of two different Nordic media firms, encouraging companies to pursue both incremental and radical change across platforms. Doyle (2015) questioned the ability of media companies to provide content across multiple platforms at a time when production budgets were tightly constrained. Lischka (2015) surveyed online and business journalists in Switzerland and found that multiplatform reporting was tied to the innovative values of journalists and enhanced output, but not necessarily working procedures. Sattelberger (2015) looked at multiplatform marketing strategies used in the German film market, while Gimpel (2015) interviewed executives for their insights about implementing multiple platforms in the video entertainment industries.

News and News Management Gade and Raviola (2009) and Sylvie and Gade (2009) offered conceptual-based studies investigating changes in newsroom management and the skills that news managers must develop due to convergence. Steyn and Steyn (2009) examined how managers incorporate teamwork in South African newsrooms. Sylvie and Weiss (2012) conducted a meta-analysis of mass communication literature on newsroom changes to determine the role of innovation and possible use of sociotechnical systems. Opgenhaffen and d’Haenens (2015) analyzed the guidelines used by 12 different news organizations to manage their social media activities. In terms of transnational media, Strube (2010) conducted an overview of the literature over a 25-year period along with a propositional inventory. Strategy by transnational companies was the focus of separate studies by Oba and Chan-Olmsted (2007) and Strube and Berg (2011).

Entrepreneurship Studies The rise of entrepreneurship in general, along with the application of entrepreneurship to the media industries, represents another expansion of MME research. Hang and van Weezel (2007) offered an overview of media and entrepreneurship. Achtenhagen (2008) looked at the topic from the perspective of traditional media—specifically two newspapers in Sweden—and offered a set of propositions for further study. Hoag (2008) applied entrepreneurship metrics to the media industries in the U.S., and found that the media sector was more entrepreneurial than any other service or manufacturing sector. Compaine and Hoag (2012) conducted a study of 30 entrepreneurs to identify areas of support and barriers to entry, discovering that few barriers exist.

Audience Studies The evolving and shifting audience environment has always been of interest to MME scholars. Becker, Clement and Schaedel (2010) considered how both adoption and direct/indirect financial incentives influence user participation in online communities.Van der Wurff (2011) utilized student samples to investigate substitutability among the news media in the Netherlands. Phalen and Ducey (2012) offered ideas for media managers about how to cope with audiences engaged with multiple screens and devices.Taneja (2013) looked at audience measurement in India, where two competitors were offering different rating services, one on a weekly basis and the other overnight ratings. Wikström (2014) utilized a case study approach to determine how traditional media companies might engage audiences in creating cultural content. 9

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Television Studies In terms of television, several studies have examined topics from a management focus, such as the search for business models in digital television (Evens, 2010). Förster (2011) centered on TV brand management across the U.S., UK, Spain and Germany. Ferguson and Greer (2013) examined adoption of mobile DTV by local television stations. Klopfenstein (2011) analyzed advertising clutter on TV. Ferguson and Greer (2016) considered how local TV stations use digital tools to connect with generation C, or content-heavy users, like millennials.

Newspaper Studies While newspapers continue to struggle with circulation and advertising in many countries they remain an area of interest for MME researchers. For example, Schulhofer-Wohl and Garrido (2013) investigated how the closure of the Cincinnati Post impacted voter turnout in elections in Kentucky, suggesting that even small newspapers can have an impact on public life. Russi, Siegert, Gerth and Krebs (2014) considered how competition and financial commitment compared across European newspaper markets using qualitative comparative analysis applied from U.S. markets. The authors found that higher competition intensity and the number of competitors served as a “sufficient condition” for financial commitment.

Motion Picture Industry Studies on the motion picture industry tend to focus on issues like distribution and concentration, as evidenced by the following studies. Agostini and Saavedra (2011) examined vertical integration in the Chilean motion picture market and determined that nonintegrated distributors released more films than integrated distributors. Pardo and Sánchez-Tabernero (2012) analyzed market concentration among Western European nations in regards to film distribution with the goal of understanding the dominance of U.S. film distributors in the region. Walls and McKenzie (2012) authored a similar study, considering data on 2,000 films distributed during 1997–2007 in eight different countries and found that Hollywood films accommodated global demand at a time when American box office receipts were declining. In summary, the literature reviewed in this section, consisting of handbooks, edited volumes, single-authored books, and articles from scholarly journals, showcases a diverse and thriving field of scholarship. The literature illustrates that MME research is very active across most continents that make up the globe.

How Do We Assess the State of Knowledge of MME Research Since the Publication of the Original Handbook? Scholars have pushed the field into new directions, and expanded the scope of knowledge. Researchers continue to examine traditional media, while new and emerging areas of study, such as the multiplatform environment, entrepreneurship and big data, are finding their way into the literature. In assessing the state of knowledge, the following propositions are offered as a summary of the research across the MME field, which will help in establishing future directions for scholars to consider. 1. From a historical perspective, MME research has largely been driven by traditional media, but studies examining new media will be the main driver moving forward. We can anticipate more studies devoted to technology and technological forces of twenty-first-century media—mobile media, social media and the cloud are three likely targets. Big data represents the first body of research that draws upon the cloud for study.

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2. Research across the MME field is becoming more sophisticated in terms of both theoreticaldriven scholarship and methodological tools of analysis. Regarding theoretical development, we are seeing not only refinement and expansion of existing theory but also the utilization of multi-theoretical studies across the literature. In terms of methodological studies, a shift is occurring with the interest in big data, and new and refined approaches in data analysis, especially for complex and integrated data sets. Media economics research witnessed an expanded interest in econometrics over the last decade. 3. Scholars are still wrestling with the basic questions of how to define media management, media economics and media firms, especially in a shifting, technology-driven world. Perhaps it is time to abandon this effort given the wide nature of what now constitutes a media firm and the expansion of what we think of as the media industries. It may be best to simply recognize that media management, as well as media economics and media firms, represents enterprises that operate on multiple levels and are not easily identified as a simple concept. 4. Research could also be strengthened by combining perspectives and approaches that heretofore have been separated from one another. The most obvious are studies that examine both microand macroeconomic issues. The political economy approach should also be considered as a tool to help explain phenomena in areas related to but outside of traditional media approaches, especially considering investigations related to culture and the arts. 5. MME research has been further enabled by an expansion of scholarly organizations and conferences devoted to MME, drawing scholars from around the world. Venues like EMMA, IMMA and the WMEMC have shown increasing levels of participation and activity. In 2018, the WMEMC will hold its biannual meeting in South Africa, the first time a major MME event has been held in the continent. New and existing PhD programs, most developed involving some combination of business/communication programs, are producing new scholars every year.This is important as many of the initial scholars of the field are either in or near retirement. 6. Finally, MME research continues to play a role in both social and regulatory policy around the globe. Consolidation and market concentration remain a concern for regulators, who often look to academic studies for the latest trends and outcomes.The future of newspapers and other legacy media is clearly in question moving forward in the twenty-first century. It is unlikely that policy makers will have the resources to subsidize legacy media in many countries, raising many questions about the role of the news media and an informed democracy. MME scholars will continue to study this situation, as well as shifting audience and advertiser consumption patterns. Given this assessment of the MME field, it is now possible to offer some suggestions to guide the research agenda over the next decade.

What Areas of Study Should Guide the Research Agenda for the Next Decade of MME Research? This final section offers some ideas that scholars may consider for conducting MME research to help move the field forward for the next decade and beyond. The author hopes that the agenda will serve a heuristic purpose, and is not intended to be proscriptive. Rather, it is one senior scholar’s ideas of how to move our field forward over the next decade. 1. The field would benefit from research that considers the impact of media management and media economics across different levels of analysis (e.g., individual, household, national, global) rather than single levels of analysis. Much of the research over the last decade continues to look at MME from a single-level perspective. Conducting research across different levels is

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2.

3.

4.

5.

6.

7.

8.

9.

challenging and time-consuming, and can be expensive, but it would broaden our understanding of the impact of media management and media economics. While research has become more theoretically driven, our field suffers from the development of new theory. As researchers enter new areas of study, such as social media, big data, virtual reality, transmedia and other new and emerging media, these areas are ripe to begin to harvest new theoretical approaches. The field would benefit from studies that test new theoretical assumptions and challenge existing thinking. Regarding media management, we have seen the area continuing to split in to further subareas of investigation.These include such topics as strategic planning, entrepreneurship, leadership and corporate governance and business models. Most studies tend to look at these topics within the confines of a single industry. It would be helpful to see meta-research that includes studies across industries to gain a better understanding of these areas. In terms of the previous point, the same is true for media economics. Over the past decade media economics has become much more refined, with different types of econometric modeling. Studies examining market structure, concentration, policy actions, firm behavior and so forth are highly prevalent in the literature over the last decade. Again, it is time to consider metaresearch that brings these findings together, to consider the impact of larger sets of data using power analysis and other statistical tools. The Great Recession forced all of us to look at finances and financial management and economics in new light. We need studies across the media industries to better understand the role of finance, financial management, and economics in this new multiplatform environment that we are all engaged in. Understanding financial decision-making under different scenarios and environments would add to our knowledge base. Journalism finds itself in a precarious state as this new Handbook was in preparation.Will a combination of digital subscriptions, advertising and possible government subsidies be enough to save print journalism? The future of journalism is as much an economic issue as it is a societal issue. Both the news media and social media face charges of presenting fake news, affecting the perception of the role and value of news to society. Over time, the impact of fake news could further erode the economic support of true journalism entities. There is still a need for researchers to conduct trend studies over time to understand changes across the media industries in areas like market share, advertising and financial support, labor and employment, and audience consumption patterns. Such studies are always beneficial to researchers to understand the basic lay of the field. There is little done in the way of panel studies or longitudinal research any longer, but MME scholars would find such research of interest. New research on global media and globalization from an MME perspective is warranted. Researchers will continue to be interested in the global media companies that dominate the globe and how that composition may change over the coming years. Could one of the FANG companies (Facebook, Apple, Netflix, Google) buy one or more of the major media companies like Disney or 21st Century Fox? At the national level, the importance of the media economy to domestic GDP is a topic that should be studied regularly in every developed country. Technology will continue to be a ripe area for MME researchers to harvest. Consider just a few of the amazing things that are developing in the twenty-first century: the Internet of things (IoT), self-driving cars, robots, drones, wearable technology, virtual reality and augmented reality. Are there opportunities for MME researchers in these areas? What might these studies examine? An entire agenda of technology-driven studies is waiting to be investigated. MME researchers need to be part of this process.

This suggested research agenda is both ambitious and daunting—and hopefully a worthy reflection of a dynamic and exciting area of study. If scholars consider investigating only a few of these topics 12

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over the next decade it will help to make MME research even more valuable as an area of study. It should be noted that in the initial review of media management research in the 2006 Handbook (see Albarran, 2006), most of the propositions and research agenda were either reconciled or advanced. This is something the MME field should be proud of and celebrate. How the field of media management and economics evolves is now up to you, dear reader. Jump in. Try new things. Develop new ideas and approaches. MME research needs fresh perspectives and new faces to lead the field forward in the twenty-first century. It has been an honor and a pleasure to look back, and encourage the development of our future.

References Achtenhagen, L. (2008). Understanding entrepreneurship in traditional media. Journal of Media Business Studies, 5(1), 123–142. doi:10.1080/16522354.2008.11073463 Adams, J. W. (2008). Innovation management and U.S. weekly newspaper web sites: An examination of newspaper managers and emerging technology. JMM: The International Journal on Media Management, 10(2), 64–73. doi:10.1080/14241270802000454 Agostini, C. A., & Saavedra, E. H. (2011). The effects of vertical integration on the release of new films. Journal of Media Economics, 24(4), 252–269. doi:10.1080/08997764.2011.626991 Albarran, A. B. (2006). Historical trends and patterns in media management research. In A. B. Albarran, S. M. Chan-Olmsted, & M. O. Wirth (Eds.), Handbook of media management and economics (pp. 3–21). Mahwah, NJ: Lawrence Erlbaum Associates. Albarran, A. B. (2008). Handbook of Spanish language media. New York: Routledge. Albarran, A. B. (2013). The social media industries. New York: Routledge. Albarran, A. B. (2017a). Management of electronic and digital media (6th ed.). Boston: Cengage. Albarran, A. B. (2017b). The media economy (2nd ed.). New York: Routledge. Anderson, S., Stomberg, D., & Waldfogel, J. (2016). Handbook of media economics (Vol. 1A and 1B). North Holland: Elsevier. Artero, J. P. (2015). Economía y empresa de comunicación: Escuelas académicas y periodos de desarrollo. Austral Comunicación, 4, 11–40. Becker, J. U., Clement, M., & Schaedel, U. (2010). The impact of network size and financial incentives on adoption and participation in new online communities. Journal of Media Economics, 23(3), 165–179. doi:10.1080/ 08997764.2010.502515 Colapinto, C. (2010). Moving to a multichannel and multiplatform company in the emerging and digital media ecosystem: The case of Mediaset group. The International Journal on Media Management, 12(2), 59–75. doi:10. 1080/14241277.2010.510459 Compaine, B., & Hoag, A. (2012). Factors supporting and hindering new entry in media markets: A study of media entrepreneurs. JMM: The International Journal on Media Management, 14(1), 27–49. doi:10.1080/14241 277.2011.627520 Cunningham, S., Flew, T., & Swift, A. (2015). Media economics. London: Macmillan Education Palgrave. Daidj, N., & Jung, J. (2011). Strategies in the media industry:Towards the development of co-opetition practices? Journal of Media Business Studies, 8(4), 37–57. doi:10.1080/16522354.2011.11073530 Dal Zotto, C., & van Kranenburg, H. (Eds.). (2008). Management and innovation in the media industry. Cheltenham: Edward Elgar. Deslandes, G. (2008). Le management des médias. Paris: La Découverte. Deuze, M., & Steward, B. (Eds.). (2010). Managing media work. London: Sage. Díez, E. A. P. (2008). El mercado de revistas en la Argentina. Buenos Aires: Universidad Austral. Doyle, G. (2015). Multi-platform media and the miracle of the loaves and fishes. Journal of Media Business Studies, 12(1), 49–65. doi:10.1080/16522354.2015.1027113 Evens,T. (2010).Value networks and changing business models for the digital television industry. Journal of Media Business Studies, 7(4), 41–58. doi:10.1080/16522354.2010.11073514 Ferguson, D. A., & Greer, C. F. (2013). Predicting the adoption of mobile DTV by local television stations in the United States. The International Journal on Media Management, 15(3), 139–160. doi:10.1080/14241277.2 013.767259 Ferguson, D. A., & Greer, C. F. (2016). Reaching a moving target: How local TV stations are using digital tools to connect with generation C. The International Journal on Media Management, 18(3), 141–161. doi:10.1080/ 14241277.2016.1245191

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Alan B. Albarran Foros, Ø., Kind, H. J., & Schjelderup, G. (2012). Ad pricing by multi-channel platforms: How to make viewers and advertisers prefer the same channel? Journal of Media Economics, 25(3), 133–146. doi:10.1080/08997764 .2012.700975 Förster, K. (2011). Key success factors of TV brand management: An international case study analysis. Journal of Media Business Studies, 8(4), 1–22. doi:10.1080/16522354.2011.11073528 Friedrichsen, M., & Mühl-Benninghaus, W. H. (2013). Handbook of social media management. Value chain and business models in changing media markets. Heidelberg, Germany: Springer. Gade, P., & Raviola, E. (2009). Integration of news and news of integration: A structural perspective on news media changes. Journal of Media Business Studies, 6(1), 87–111. doi:10.1080/16522354.2009.11073480 Georgiades, S. (2015). Employee engagement in media management. Switzerland: Springer. Gershon, R. A. (2013). Telecommunications and business strategy (2nd ed.). New York: Routledge. Gershon, R. A. (2016). Digital media and innovation: Management and design strategies in communication. New York: Routledge. Gimpel, G. (2015).The future of video platforms: Key questions shaping the TV and video industry. The International Journal on Media Management, 17(1), 25–46. doi:10.1080/14241277.2015.1014039 Graham, G., Greenhill, A., Shaw, D., & Vargo, C. (2015). Content is King: News media management in the digital age. New York-London: Bloomsbury Academic. Gutiérrez-Rentería, M. E. (2014). Estrategias de grupo Televisa: del monopolio a la competencia: Análisis económico, político y social de la industria audiovisual en México. Spain: Editorial Académica Española. Häckner, J., & Nyberg, S. (2012). Every viewer has a price: On the differentiation of TV channels. Journal of Media Economics, 25(4), 220–243. doi:10.1080/08997764.2012.729547 Hang, M., & van Weezel, A. (2007). Media and entrepreneurship: What do we know and where should we go? Journal of Media Business Studies, 4(1), 51–70. doi:10.1080/16522354.2007.11073446 Hess, T. (2014). What is a media company? A reconceptualization for the online world. JMM: The International Journal on Media Management, 16(1), 3–8. doi:10.1080/14241277.2014.906993 Hoag, A. (2008). Measuring media entrepreneurship. The International Journal on Media Management, 10(2), 74–80. doi:10.1080/14241270802000496 Huang, J. S., & Wang,W. (2014). Application of the long tail economy to the online news market: Examining predictors of market performance. Journal of Media Economics, 27(3), 158–176. doi:10.1080/08997764.2014.931860 Järventie-Thesleff, R., Moisander, J., & Villi, M. (2014). The strategic challenge of continuous change in multiplatform media organizations—a strategy-as-practice perspective. The International Journal on Media Management, 16(3), 123–138. doi:10.1080/14241277.2014.919920 Johnson, D., & Compare, D. (Eds.). (2014). Making media work: Cultures of management in the entertainment industries. New York: New York University Press. Klopfenstein, B. C. (2011).The conundrum of emerging media and television advertising clutter. Journal of Media Business Studies, 8(1), 1–22. doi:10.1080/16522354.2011.11073516 Ksiazek, T. B. (2011). A network analytic approach to understanding cross-platform audience behavior. Journal of Media Economics, 24(4), 237–251. doi:10.1080/08997764.2011.626985 Küng, L. (2007). Does media management matter? Establishing the scope, rationale, and future research agenda for the discipline. Journal of Media Business Studies, 4(1), 21–39. doi:10.1080/16522354.2007.11073444 Küng, L. (2015). Innovators in digital news. RISJ Challenge Series. New York: IB Tauris. Küng, L. (2017). Strategic management in the media industry:Theory to practice (2nd ed.). London: Sage. Küng, L., Picard, R. G., & Towse, R. (Eds.). (2011). The Internet and mass media. London: Sage. Lischka, J. A. (2015). How structural multi-platform newsroom features and innovative values alter journalistic cross-channel and cross-sectional working procedures. Journal of Media Business Studies, 12(1), 7–28. doi:10. 1080/16522354.2015.1027114 Lowe, G. F., & Brown, C. (Eds.). (2015). Managing media firms and industries: What’s so special about media management? Heidelberg, Germany: Springer. Malmelin, N., & Moisander, J. (2014). Brands and branding in media management.Toward a research agenda. The International Journal on Media Management, 16(1), 9–25. doi:10.1080/14241277.2014.898149 McChesney, R. W. (2008). The political economy of media: Enduring issues, emerging dilemmas. New York: Monthly Review Press. Mosco,V. (2009). The political economy of communication (2nd ed.). London: Sage. Muehlfeld, K., Sahib, P. R., & van Witteloostuijn, A. (2007). Completion or abandonment of mergers and acquisitions: Evidence from the newspaper industry, 1981–2000. Journal of Media Economics, 20(2), 107–137. doi:10.1080/08997760701193746 Napoli, P. M. (2016). Special issue introduction: Big data and media management. International Journal on Media Management, 18(1), 1–7. doi:10.1080/14241277.2016.1185888

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Media Management and Economics Research Noam, E. M. (2009). Media ownership and concentration in America. New York: Oxford University Press. Noam, E. M. (Ed.). (2015). Who owns the world’s media? Media concentration and ownership around the world. New York: Oxford University Press. North, S., & Oliver, J. (2010). Managers’ perceptions of the impact of consolidation on the U.K. independent television production industry. Journal of Media Business Studies, 7(2), 21–38. doi:10.1080/16522354.2010.11073505 Oba, G., & Chan-Olmsted, S. (2007). Video strategy of transnational media corporations: A resource-based examination of global alliances and patterns. Journal of Media Business Studies, 4(2), 1–25. doi:10.1080/1652 2354.2007.11073449 Oliver, J. J. (2013). Media management tools: UK broadcast media executives’ perspective. The International Journal on Media Management, 15(4), 245–257. doi:10.1080/14241277.2013.863100 Opgenhaffen, M., & d’Haenens, L. (2015). Managing social media use: Whither social media guidelines in news organizations? The International Journal on Media Management, 17(4), 201–216. doi:10.1080/14241277.2015. 1107570 Owers, J., & Alexander, A. (2011). Market reactions to merger, acquisition, and divestiture announcements in the media industries. The International Journal on Media Management, 13(4), 253–276. doi:10.1080/1424127 7.2011.597364 Pardo, A., & Sánchez-Tabernero, A. (2012). Effects of market concentration in theatrical distribution: The case of the big five western European countries. The International Journal on Media Management, 14(1), 51–71. doi:10. 1080/14241277.2011.597365 Phalen, P. F., & Ducey, R.V. (2012). Audience behavior in the multi-screen “Video-verse”. The International Journal on Media Management, 14(2), 141–156. doi:10.1080/14241277.2012.657811 Picard, R. G. (2011). The economics and financing of media companies (2nd ed.). New York: Fordham University Press. Picard, R. G., & Wildman, S. S. (Eds.). (2015). Handbook on the economics of the Media. London: Edgar Elgar. Roson, R. (2008). Price discrimination and audience composition in advertising-based broadcasting. Journal of Media Economics, 21(4), 234–257. doi:10.1080/08997760802544749 Russi, L., Siegert, G., Gerth, M. A., & Krebs, I. (2014). The relationship of competition and financial commitment revisited: A fuzzy set qualitative comparative analysis in European newspaper markets. Journal of Media Economics, 27(2), 60–78. doi:10.1080/08997764.2014.903958 Sattelberger, F. (2015). Optimizing media marketing strategies in a multi-platform world: An inter-relational approach to pre-release social media communication and online searching. Journal of Media Business Studies, 12(1), 66–88. doi:10.1080/16522354.2015.1027117 Schulhofer-Wohl, S., & Garrido, M. (2013). Do newspapers matter? Short-run and long-run evidence from the closure of The Cincinnati Post. Journal of Media Economics, 26(2), 60–81. doi:10.1080/08997764.2013.785553 Shao, G. (2010). Thinking about stakeholders: Compensation arrangements of media companies and their performance. The International Journal on Media Management, 12(1), 5–19. doi:10.1080/14241270903408812 Sharma, R. S., & Wildman, S. (2009). The economics of delivering digital content over mobile networks. Journal of Media Business Studies, 6(2), 1–24. doi:10.1080/16522354.2009.11073482 Soloski, J. (2015). Stability or rigidity: Management, boards of directors, and the newspaper Industry’s financial collapse. The International Journal on Media Management, 17(1), 47–66. doi:10.1080/14241277.2015.1017642 Steyn, E., & Steyn,T. F. J. (2009).The challenge to incorporate teamwork as a managerial competency:The case of mainstream South African newsrooms. Journal of Media Business Studies, 6(2), 47–65. doi:10.1080/16522354. 2009.11073484 Strube, M. (2010). Development of transnational media management research from 1974–2009: A propositional inventory. JMM:The International Journal on Media Management, 12(3), 115–140. doi:10.1080/14241277.2010. 531335 Strube, M., & Berg, N. (2011). Managing headquarters-subsidiary relations from a knowledge perspective: Strategies for transnational media companies. The International Journal on Media Management, 13(4), 225–251. doi :10.1080/14241277.2011.597363 Sylvie, G., & Gade, P. (2009). Changes in news work: Implications for newsroom managers. Journal of Media Business Studies, 6(1), 113–148. doi:10.1080/16522354.2009.11073481 Sylvie, G., & Weiss, A. S. (2012). Putting the management into innovation & media management studies: A metaanalysis. The International Journal on Media Management, 14(3), 183–206. doi:10.1080/14241277.2011.633584 Taneja, H. (2013). Audience measurement and media fragmentation: Revisiting the monopoly question. Journal of Media Economics, 26(4), 203–219. doi:10.1080/08997764.2013.842919 Towse, R., & Handke, C. (Eds.). (2013). Handbook on the digital creative economy. Cheltenham: Edward Elgar. Tsourvakas, G., Zotos, Y., & Dekoulou, P. (2007). Leadership styles in the top Greek media companies: Leading people with a mixed style. JMM: The International Journal on Media Management, 9(2), 77–86. doi:10.1080/14241270701263988

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Alan B. Albarran Van der Wurff, R. (2011). Are news media substitutes? Gratifications, contents, and uses. Journal of Media Economics, 24(3), 139–157. doi:10.1080/08997764.2011.601974 Vizcarrondo, T. (2013). Measuring concentration of media ownership: 1976–2009. The International Journal on Media Management, 15(3), 177–195. doi:10.1080/14241277.2013.782499 Vogel, H. L. (2010). Entertainment industry economics: A guide for financial analysis (8th ed.). Boston: Cambridge University Press. Vukanovic, Z. (2009). Global paradigm shift: Strategic management of new and digital media in new and digital economics. The International Journal on Media Management, 11(2), 81–90. doi:10.1080/14241270902844249 Vukanovic, Z., & Faustino, P. (Eds.). (2011). Managing media economy, media content and technology in the age of digital convergence. Lisbon: Media XXI. Walls,W. D., & McKenzie, J. (2012).The changing role of Hollywood in the global movie market. Journal of Media Economics, 25(4), 198–219. doi:10.1080/08997764.2012.729544 Wasko, J., Murdock, G., & Sousa, H. (Eds.). (2011). Handbook of political economy of communications. New York: Wiley-Blackwell. Wikström, P. (2014). Tools, building blocks, and rewards: Traditional media organizations learn to engage with productive audiences. Journal of Media Business Studies, 11(4), 67–89. doi:10.1080/16522354.2014.11073589 Wirtz, B. W. (2011). Media and internet management. Wiesbaden: Gabler. Wirtz, B. W. (2015). Media management. Seattle, WA: Amazon Digital Services LLC. Yang, J. M., & Chyi, H. (2011). Competing with whom? where? and why (not)? An empirical study of U.S. online newspapers’ competition dynamics. Journal of Media Business Studies, 8(4), 59–74. doi:10.1080/16522354. 2011.11073531 Zhao,Y. (2008). Communication in China: political economy, power, and conflict. Langham: Rowman & Littlefield.

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2 THEORETICAL APPROACHES IN MEDIA MANAGEMENT RESEARCH REVISED1 Bozena I. Mierzejewska

Media management scholarship is growing in complexity and volume (Achtenhagen & Mierzejewska, 2016). After emerging at the periphery of communication and management research, it is slowly developing into its own discipline, where scholars are gaining insights into a wide range of topics related to media organizations and markets (see Chapter 1 in this volume). The overreaching aim of media management is to create new knowledge about industries and specific organizations operating within what is commonly defined as “the media sector.” The discipline’s unique features include a scholarly focus on investigating and understanding the economic and business characteristics of media products (Picard, 2005), as well as the interplay between management, economic, social, and regulatory forces influencing the media sector (Albarran, 2008). Common consensus indicates that “media management is different in fundamental ways from management in other industries because of differences in the underlying economics of media products, the utilities audiences gain from content, and the externality effects media have on society” (Hollifield, 2008, p. 182). This chapter reviews the current state of media management scholarship and the theoretical approaches utilized. It revisits and updates the earlier work of Mierzejewska and Hollifield (2006) published in the first edition of the MME Handbook (Albarran, Chan-Olmsted, & Wirth, 2006), and focuses on the developments since publication. While published research is growing significantly (Albarran, 2013; Wirtz, Pistoia, & Mory, 2013) and Picard and Lowe (2016) claim that media management is no longer an “emerging field,” multiple authors lament a lack of unique theory building (Achtenhagen, 2016; Achtenhagen & Mierzejewska, 2016; Albarran, 2014; Murschetz & Friedriechsen, 2017; Sylvie & Schmitz Weiss, 2012). The field of media management has been accused of being atheoretical and descriptive as scholars have relied on management for appropriate theories to deploy in studying how media business operates. This chapter attempts to assess the validity of that complaint by examining theoretical approaches present in the current body of literature (Mierzejewska & Hollifield, 2006).Through comprehensive examination of the state of scholarship, a research community may document the state of knowledge and identify advancements (Briner & Denyer, 2012), reveal strengths and areas in need of improvement (Booth, Sutton, & Papaioannou, 2016), and guide scholars in locating research ( Jones & Gatrell, 2014).This chapter also aims to help shape future directions for scholarship, thus playing a part in the advancement of media management inquiry. The following research objectives guided this study: (1) what theoretical body of knowledge has been used in media management literature; (2) what the major advances are since publication of

17

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the original Handbook of Media Management and Economics; (3) what areas of concern should guide research over the next decade. In the first edition of this Handbook, analysis covered 309 articles published over the 17 years prior to its publication (1988–2005). This comprehensive review examined 847 articles published during 1988–2016 in the Journal of Media Economics ( JME), The International Journal on Media Management (IJMM), and Journal of Media Business Studies ( JOMBS). There are multiple ways to define theory. In traditional science, a theory is a systematically related set of statements about the causes of relationships underlying observable and empirically testable phenomena (Rudner, 1966). Developed by abstracting from observation and confirmed through repeated experiments designed to test hypotheses, theories are law-like generalizations about underlying causes and relationships.The purpose of a theory is to increase scientific understanding through a systemized structure capable of both explaining and predicting phenomena (Hunt, 1991). In other words, theory can be understood as a lens through which we understand, interpret, and validate what is expected to occur. In communication and social science research, theory refers more broadly to conceptual explanation of phenomena. Among social scientists, a theory represents the way in which the observer sees the environment and its forces rather than its specific causes, as is the case in the physical sciences. Few theories developed in the social sciences have met the physical sciences test of describing lawlike causal forces, but social science theories do constitute a set of useful concepts, frameworks, and models that contribute to general understanding. Even though studying “theory” frightens students and managers as it seems “abstract” and “impractical,” good theories help us make predictions and understand what happens in practice and why (Christensen & Raynor, 2003). In addition to positivist theories—those that describe real cause-effect relations—the social sciences have also developed normative theories, a subset describing norms and behaviors that should exist, rather than those that do exist. Normative theories are prescriptive rather than predictive. Recommendations developed based on normative theories challenge existing systems and generate new points of view. Since a theory represents an advanced level of understanding in an area, and emerges after considerable research on a specific topic, younger fields of inquiry lack fully developed theories. In the absence of a cohesive theory, the primary approach draws on existing research that has revealed underlying relationships or variables to build its conceptual frameworks. This may involve identifying and testing interrelationships between variables that emerged in diverse streams of research. It also may take the form of developing a systematic way to categorize phenomena. Conceptual frameworks serve as a frame of reference where useful thoughts can be organized systematically to develop conclusions tailored to a specific context (Porter, 1991). The use of conceptual frameworks is often a step toward the development of a more fully tested theory. Another approach to abstracting or understanding the variables related to a phenomenon is to develop and test models. Models are specific descriptive statements, often visually diagrammed, about the relationships among variables or the process through which something occurs. In communication sciences, models have been widely utilized and offer convenient ways to think about communication (DeFleur & DeFleur, 2016; McQuail & Windahl, 2016). In contrast to a theoretically or conceptually based approach, atheoretical or descriptive research describes phenomena or events without trying to identify anything more than direct, contextually specific factors. Atheoretical research provides a detailed snapshot of conditions at one time. However, because underlying forces are not abstract, as soon as the conditions or contexts change, it can no longer be assumed that the findings are valid. Nor can it be assumed that the findings can be applied to similar situations. Consequently, descriptive research has little long-term value to the scholarly community. In summary, in its abstraction from the specific to the general, theory allows us to recognize, understand, and solve problems that have similar underlying factors, even when those problems may 18

Theoretical Approaches

seem dissimilar on the surface.Theory allows us to predict probabilities, but not certainties, in human behavior. Theories, while useful, do have limitations: • •

Theories are focused and very specific; therefore, they cannot give full explanations of all factors involved. This very characteristic usually results in deterministic explanations. Theories tend to be based on narrow, sometimes unrealistic, assumptions. They aim to develop models for predicting future behavior and consequences, but need to deal with complications of the unpredictability of individual humans and social groups.

As with theories, using models involves some risks. They tend to encourage scholars to harden their conceptions of how a process works, slowing further development and refinement, and they can be self-perpetuating, keeping alive questionable assumptions (McQuail & Windahl, 2016). While the understanding of the value and use of theory has not changed since the mid-2000s, scholars observed that particularly complex and paradoxical phenomena should best be studied by employing disparate theoretical perspectives (Lewis & Grimes, 1999), interpretative methods (Alvesson & Kärreman, 2007), or meta-studies (Point, Fendt, & Jonsen, 2016). These open-minded and nonorthodox approaches enable fields to grow and advance knowledge. Along with the dramatic increase of scholarly output around the world (Bornmann & Mutz, 2015), theorizing and the processes of theory development and theorizing have gained renowned interest (Glynn & Raffaelli, 2010; Shepherd & Suddaby, 2017).

Theoretical Body of Knowledge and a Decade of Major Advances in Media Management Publications This chapter examines all research articles published in three journals widely regarded as the field’s core periodicals (Achtenhagen & Mierzejewska, 2016; Küng, 2007; Strube, 2010).The sample extends from each journal’s founding to 2016, a total of 848 articles (this number does not include book reviews, editorials, announcements, corrigenda, etc.).The articles distributed as follows: JME n = 376 (44%), JMM n = 286 (34%), and JOMBS n = 186 (22%). This set of articles differs significantly from the one used in an earlier study by Achtenhagen and Mierzejewska (2016, p. 24), which analyzed only articles cited more than ten times (276 articles), a much smaller selection. Table 2.1 offers a breakdown of the journals. As the sheer number of published articles shows, the field has grown significantly. It is also worth noting the proliferation of newly established journals and associations with the mission to promote media management scholarship. The author carried out the classification of research methods, theories or conceptual frameworks, and type of data and media sector analyzed. A coding sheet was developed through a deductive process by first identifying working definitions for each category. For example, following Creswell Table 2.1 Overview of articles analyzed.

JME JMM JOMBS Total

Journal start date

# Articles published through 2016

# Articles published 1988–2005

# Articles published 2006–2016

1988 1999 2004

376 (44%) 286 (34%) 186 (22%) 848

244 132  14 390

132 154 172 458

Source: Author.

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Bozena I. Mierzejewska Table 2.2 Research methods in media management scholarship. Research type

1988–2005

2006–2016

Grand total

Qualitative Quantitative Essay Mixed methods Grand total

102 143 140   5 390

175 163  94  26 458

277 306 234  31 848

Source: Author.

(2013), the codebook used common definitions of qualitative, quantitative, and mixed methods. Other elements of coding included theoretical approaches used, as well as media sector studied. In addition, the author acknowledged and briefly examined some of the relevant work in three other journals: Journalism and Mass Communications Quarterly, Media Industries Journal, and the Journal of Media Innovations. Relevant as they may be, these three titles have published a relatively small number of articles that could be included in this data set. Table 2.2 presents the proportion of research methods/methodologies used in the articles. Studies most commonly used qualitative methods, followed by quantitative methods. Since the first Handbook was published, the use of mixed methods has considerably increased, while the number of essaytype studies has declined (see Chart 2.1). Perhaps field emphasis on qualitative methods can be partly explained by the challenges in access or cost of adequate quantitative data sets. The increased popularity of mixed methods is very encouraging as it may suggest growing research sophistication in the field. Quantitative and qualitative methodologies used together can add insights and understanding that might be missed when only a single method is used; moreover, it can produce more complete knowledge informing theory and practice. However, the use of qualitative and mixed methodologies calls for a careful research design (Creswell, 2013). Chapter 23 by Dupagne in this volume specifically deals with methodological approaches in media management and economics research. Considering the sources of data in published articles, secondary data sources continue to be the most prominent means of data collection (46%), while primary sources were used in 29% of all

Secondary

23%

Primary

11%

Conceptual Research

11%

Primary & Secondary 1%

23%

18%

6%

4%

1988–2005

2006–2016

Chart 2.1 Data sources used in media management scholarship. Source: Author.

20

General Media

95

Television

63

Newspapers

Movies

Cable TV

50

14

36

25 12

Broadcast TV

17 19

Internet

20 14

News Media

5 27

Public Service Broadcasting

9 21

Advertising Industry

7 21

Recorded Music

14 12

Online Media

1988–2005

4 16

2006–2016

Chart 2.2 Market segments studied in published articles Source: Author.

81

55

63

Bozena I. Mierzejewska

studies. Since primary data are collected by researchers for a specific study, it increases fit to research questions, but they can also prove costly and time-consuming. The analyzed publications have used data and examples from a variety of media market segments. However, most studies (21%) referred to media generally, either by studying a set of firms operating across all media sectors (e.g., the biggest companies in a geographical area) or by studying organizations operating in multiple sectors of the media industry. Other sectors receiving scholars’ attention include television and newspapers. A shift in market segment foci can be observed as shown in Chart 2.3.Whereas cable TV, broadcast TV, and Internet providers were a main focus before 2005, an increasing number of articles focus on the audiovisual sector as well as newspapers and news media. This reflects the growing importance of media companies diversifying into several new sectors, and popular debates and concerns about the future of news organizations and journalism as a profession. Studies focusing on motion pictures, journalism, and advertising have considerably increased. As technological developments contributed to the emergence of new media sectors, a number of studies focusing on these sectors, such as social media platforms, OTT TV (over-the-top television services), or mobile media, started to appear. Keeping in mind the time lag in getting research results published, we can expect an increase of research focused on those sectors in the future. To organize the discussion and outline the “big picture,” this review must be selective and limited to the most significant observations about media management scholarship of the last decade: consider the sheer volume of material published only in the three main journals of the field. Theoretical perspectives are important ways of seeing and understanding the world, but they are also based on different assumptions.Therefore, we should keep in mind that specific theories are not selected in isolation from the researcher’s own values and priorities or the norms and expectations brought by peers. Concepts and theories are often borrowed from other disciplines, and are being applied to our area. Among all articles analyzed, management theories dominate, characterizing more than half (56%) of the articles. Next in frequency were economic theories, appearing in nearly one third of studies (27%), followed by communication theories and atheoretical/essay items (6% and 10% respectively). This finding is in line with an earlier study by Mierzejewska and Hollfield (2006), where management theories were also most frequent; however, we see evidence that use of economic theories

Management Theories

195

126

Economic Theories

Atheoretical, Applied or Essay

Communication Theories

43

281

106

46

26 25

1988–2005

2006–2016

Chart 2.3 Theories used in published journals 1988–2016 and change over time Source: Author.

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Theoretical Approaches

has declined, while the use of communication theories and atheoretical/essay-type research did not change in the last ten years. This analysis reveals a strong and robust growth tendency in media management research. A more detailed look at studies using management theory shows a broad spectrum of research problems and outcomes. This overview is intentionally broad and aims to highlight the main groups of theoretical approaches and their use in the developing media management field. The following groups of theoretical approaches will be discussed in the next section of this chapter: strategic management theories; audience/consumer behavior theories; organizational and professional culture theories; and finally, theories focusing on technology, innovation, and creativity.

Strategic Management Theories Strategic management has been the most consistently used theoretical or conceptual framework in media management studies. Several studies explored and described the nature media companies’ competitive advantage, specific strategic options, or implementation process. Albarran’s early seminal work explaining media concentration strategy (2002) and Picard’s study of adaptation to changing market conditions (2004) have been expanded by studies on vertical and horizontal integration (e.g., Agostini & Saavedra, 2011; Fu, 2009; Ji, 2015; Sukosd & Lake, 2013), mergers and acquisitions (Hongjai & Sang-Woo, 2010; Muehlfeld, Sahib, & van Witteloostuijn, 2007), and the changing nature of competition (Daidj & Jung, 2011). Media concentration continues to interest scholars (Pardo & Sánchez-Tabernero, 2012; Vizcarrondo, 2013). Since its beginnings, strategic media management research has predominantly relied on two conceptual frameworks: structure-conduct-performance (SCP) and resource-based view (RBV) (Chan-Olmsted, 2006). The SCP approach focuses on the structure of industries and the linkages among an industry’s structure and organizational performance and conduct (Bain, 1968; Porter, 1991). Per the SCP framework, the structure of an industry (e.g., number, size, and location of firms) affects how firms behave (or their individual or collective “conduct”). In turn, the industry’s performance relates to the conduct of firms. Numerous early studies applying this approach (Busterna, 1988; Gomery, 1989; Picard, 2000; Ramstad, 1997; Wirth & Bloch, 1995; Young, 2000) have been expanded by examining the restructuring practices that occur in anticipation of and response to changing markets. The argument that changes in market structures, technology, or regulatory intervention has been used to illustrate strategic alliances (Gade & Raviola, 2009), financial commitment (Russi, Siegert, Gerth, & Krebs, 2014), or specific cases (Colapinto, 2010; Massey & Ewart, 2012), among others. Media management scholars conceptualize performance as economic (the traditional way to measure performance), social (the responsibilities that should be fulfilled for the betterment of democratic society) (Fu, 2003), serving the public interest (Coffey & Cleary, 2011), and as reflected and measured as media diversity (Sjøvaag, 2016;Vizcarrondo, 2013). Market consolidation has stimulated research on market structure and ownership of media companies with the conclusion that structure affects content diversity. This stream of research plays an important role in supporting global policy-making efforts. Media economics and management research has a long tradition of comparing types of ownership structures on type of content (Lacy, 1991), as well as looking for contingencies and performance outcomes in public, private, nonprofit (Maguire, 2009), family (Powers, Broadrick Sohn, & Briggs-Bunting, 2014), or employee ownership (Fedler & Pennington, 2003; Picard & van Weezel, 2008).While scholars have identified a set of characteristics and possible pitfalls affecting performance, there is no agreement as to the optimal form of ownership. There is, however, agreement that regulating ownership is necessary to maintain pluralism and fair competition (Hutchison, 2009; Valcke, 2009; Yanich, 2010). Alongside the trend of consolidation, media companies pursued strategies of entering global markets, which spurred a corresponding surge in research on transnational media. From a conceptual standpoint, much of the early research on transnational media operations 23

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focused on international trade in media products or industry-level structures and economics of overseas media markets (Dupagne, 1992; Gershon, 2000) and on effects of firm-level behaviors within and across international markets (Chan-Olmsted & Chang, 2003). To a lesser degree, the focus was on the effects of foreign market environments on transnational media organizational strategies and decisions (Chan-Olmsted & Chang, 2003; Gershon, 2000). Later studies expanded into discussing specific strategies of how to benefit from access to global markets and audiences ( Jöckel & Dobler, 2006; Oba, 2009; Strube & Berg, 2011). Interestingly, 2011 was the last year that research utilizing the transnational management approach was undertaken. One possible reason is that as global media distribution is less constrained by logistical or legal issues, any media venture online may soon be said to reach global markets or audiences, making “transnational media organization” an outdated term. It is important to note that very few published studies discuss the ownership of distribution platforms and its impact on content selection/filtering. The presence of a few dominant players (and owners) of ISPs and social media platforms, which seem to dominate distribution of online content selection and filter using algorithms based on individual users’ browsing history, signals a clear need to expand this line of research. The resource-based view (RBV) recognizes the importance of resources to competitive advantage (Barney, 2001). It builds on the assumption that a firm can equip itself with tangible and intangible resources, in a way that is more highly attuned to the demands of the environment, thus creating a source of competitive advantage. The differences in how firms adjust to a changing environment can help explain why some firms consistently outperform others. Understanding the ability to adapt is particularly useful in the media sector, which is undergoing rapid change triggered by new “smart” and digital technologies and, resulting from these, unprecedented changes in consumer demand. Studies by Doyle (2013) and Oba and Chan-Olmsted (2007) insightfully utilize the RBV paradigm. In trying to understand the components of strategy and successful outcomes, published studies focused on singular case studies of success stories (Colapinto, 2010; Kim, Heo, & Chan-Olmsted, 2010; Maijanen & Jantunen, 2014). Grounded in the traditional strategy frameworks of Porter’s value chain (1991) several studies focused on identifying the source of competitive advantage (Evens, 2010; Jöckel, Will, & Schwarzer, 2008; Kehoe & Mateer, 2015). While the value chain concept is commonly used in practice and can be well used in pedagogy to iterate core competencies and functional level strategies, it does not advance our understanding of patterns or typologies of activities that would explain superiority in market performance. Resources can potentially be a source of competitive advantage; thus strategic management refers to a company’s ability to utilize its resources to address changing a business environment “as dynamic capabilities” (Eisenhardt & Martin, 2000). The choice and design of a business model are one of the key foundations of dynamic capabilities, enabling a company to reconfigure resources and skills in order to adapt or shape the changing business environment (Teece, 2010). Media business models have become quite a popular theme for research, utilizing concepts and frameworks developed by strategic management scholars. Empirical studies using this approach (Casero-Ripollés & Izquierdo-Castillo, 2013; Cestino & Matthews, 2016; Cook & Sirkkunen, 2013; Ellonen, 2012) focused mainly on data from news organizations (newspapers and online news). The lack of studies covering other sectors is surprising, and should be further explored. Recent popularity of the “business model” keyword at media management conferences and discussion panels suggests that this will continue to be a growing area of publication, and hopefully, contribute to theoretical concepts of media management. Business models research can be utilized in the areas of innovation, change, and performance, enhancing our understanding of which business model components in media are unique and necessary for successful adjustment to the rapidly changing environment. A third approach to studying strategic management in the media management field is based upon ecological niche theory from the biological sciences (Dimmick, 2003; Dimmick & Rothenbuhler, 1984). Niche theory posits that industries occupy market niches just as biological species occupy 24

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ecological niches. The theory has proved to be valuable in examining competition among media corporations for scarce resources, such as advertisers and audiences. It also helps to explain how sectors of the media industry adapt to new competition, such as the Internet or other new technologies. The number of studies using niche theory has declined; notable exceptions were the study focusing on media brands by McDowell (2006), and an examination of the evolutions of newspaper competition strategies (Mierzejewska,Yim, Napoli, Lucas, & Al-Hasan, 2017). While the SCP and RBV approaches and niche theory represent the most frequently used theoretical approaches to strategic management, the study of strategy also covers a wide range of other topics. Research has proliferated using specific strategies and case studies to evaluate success components of new product introductions (Kanuri, Thorson, & Mantrala, 2014; Kaplan & Haenlein, 2009); project management (Lundin & Norbäck, 2009); and market entry (Strube, 2010a). In the three analyzed journals half of all articles anchored their research within a spectrum of strategic management theories. This may not be surprising given the fact that media management has grown alongside media economics, and focuses mainly on a variety of questions about how media organizations function in changing market conditions. What is surprising, however, is that most authors preparing those publications are researchers and faculty who work in nonmanagement departments, like communication, journalism, and advertising.

Media Consumer Behavior Theories Approximately 30% of the analyzed management articles focused on some aspect of media consumption or audience behavior in response to new technologies. While studies published before 2006 sought to observe past and current behaviors, later studies attempt to develop predictions for media usage and consumption. Studies aiming to understand why and how media products or services have succeeded have predominantly used the diffusion of innovations theory (Rogers, 1995), also known as adoption of innovations research. The theory posits that successful diffusion of innovations occurs following predictable patterns and stages. Demographic factors such as age, education, and income have been found to be related to a consumer’s willingness to adopt innovations. The theory originally developed to study farmers’ adoption or non-adoption of new agricultural products; since then, it has been widely applied in social sciences to understand human responses to innovation and change. It can help to explain a number of factors in bringing new products to market, including success, failure, and pricing. In media management, diffusion theory has been used to examine consumer behavior in relationship to a number of new products and technologies, like digital television (Atkin, Neuendorf, Jeffres, & Skalski, 2003; Dupagne & Driscoll, 2010; Ferguson & Greer, 2013), highdefinition (HD) radio (Greer & Ferguson, 2008), and digital cable (Kang, 2002). Another theoretical model built partially on the diffusion of innovations has become widely accepted in management and its subfield of information systems as a means to explain user acceptance. The technology acceptance model (TAM) attempts to explain the factors that determine user acceptance of new technologies in various spheres. Only a small number of studies use the TAM framework to study topics like TV viewing (Hino, 2015), mobile TV (Hazel Kwon & Soo Chon, 2009), or mass customized newspapers (Putzke, Schoder, & Fischbach, 2010). Both approaches (diffusion of innovations and TAM) can be valuable to understand individual decisions to adopt new technologies, but diffusion of innovations can also be used to understand organizational decisions. Only a few media management scholars have used diffusion of innovations to look at organizational adoption issues within media companies (Ferguson & Greer, 2016; Lawson-Borders, 2003). A second stream of research on media consumer behavior deals with understanding and measuring audiences.They can be grouped according to three types of research lenses: observing and understanding audiences; measuring their size, reaction, or qualities; and discussing audience as product. 25

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The main focus of such studies has been to explore attitudes and identify predictors of future audience behaviors. There was significant diversity among them of constructs and frameworks used, which can probably be probably explained by the wide variety of topics and contexts. Mostly exploratory in nature, these studies did not aim to test or develop theories. Perhaps the reason was that audience research tends to be published and discussed within media and communication studies disciplines, and these studies fall on the periphery of media management scholarship. Among studies looking to measure and predict audience and media consumer behavior, the concept of attitude and affinity has been used, in line with the classical attitude-behavior paradigm, which assumes that behavior can be predicted by attitudes or beliefs. Media management studies within this paradigm looked at participation in online communities (Becker, Clement, & Schaedel, 2010), paying for online news (Kammer, Boeck, Hansen, & Hauschildt, 2015), or watching imported content (Yang & Tso, 2007). Traits used in estimating and predicting media consumption included word of mouth (Hsu & Jane, 2016) and nostalgic reactions to content (Natterer, 2014). However, the most consistent stream of research is devoted to identifying factors that influence willingness to pay for media products (Chyi, 2005; Kammer et al., 2015;Yang, Ha, Wang, & Abuljadail, 2015). They show that it is a highly complex phenomenon with a large heterogeneity of factors. Understandably, more research is needed in this area, ideally based on behavioral data rather than self-reported behavior survey data. Within the audience-as-product lens, the media industry conceptualizes audience ratings used to quantify value to advertisers as a “currency.” Hence, the audience is a “product” sold to advertisers, generating revenues to media organizations. In media management research, this stream has contributed to discussions about the technological changes transforming how audiences consume media (fragmentation and autonomy) (Napoli, 2001, 2012), as well as how the audience measurement market operates and evolves (Nelson & Webster, 2016; Taneja, 2013). These new tools of audience data collection challenge the existing institutionalized system of audience valuation. The traditional system of measuring exposure based on representative samples is being supplemented or possibly substituted by measures of engagement and interactivity based on time spent and social listening data. Granted, these studies did not aim to expand already existing theories, but they clearly add to our understating of the pivotal role the audiences play for media managers. In today’s media environment, where audiences can engage in production and distribution of user-generated content, they too can be conceptualized as “producers.” Media management researchers are in a prime position to advance this dual concept of an audience, its valuation, and interdependence. Similarly, the examination of new technologies like big data, algorithmic media, or artificial intelligence, which enable predicting, measuring, and interacting with audiences, almost certainly will be a growing area of research in the foreseeable future. Increasingly, media audiences are being defined as communities of interest unified by media content preferences. Two constructs, media brand and measure value of audience as brand equity, have emerged to become a popular field of research in media management scholarship. Anchored in marketing, psychology, and consumer behavior frameworks, media branding constitutes an important section of media management. Chapter 11 discusses this topic in further detail.

Organizational Culture Theories Culture, defined as a set of “shared beliefs and values of a given group or occupation” (Schein, 2003, p. 171), became popular as a management topic in the 1980s. It has often been equated with decisions, influencing behaviors, and managing organizational practices (Clegg, Kornberger, & Pitsis, 2015). Studies of organizational culture offer a promise of clarity in a confusing, continuously changing world, and seek explanations and solutions to motivate and control employees, increase productivity, or implement organizational changes. As an approach to understanding organizations, 26

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organizational culture theory provides a bridge between the structural and agency camps of organizational studies. In media management journals it became a topic of research interest partly because of the need to craft responses to the uncertainty of the changing market. In the set of articles reviewed for this chapter, 20% of studies focused on various aspects of organizational culture. However, the application of organizational culture theory as a base for studying media organizations and management practices is relatively new (Küng, 2000, 2003a). Some recent examples of studies using culture theory include a case study of the influence of organizational cultural identity on strategies of content development (Deslandes, 2011), and an examination of functional and managerial changes occurring in newsrooms (Sylvie & Gade, 2009). Although the organizational culture lens seems very promising for research in industries affected by dramatic or disruptive change (Alvesson, 2016; Choi, 2011), it is also an opportunity for media management scholarship to study change, innovations, or professional cultures through this theoretical frame. Clearly, this gap should be addressed. Studying professional cultures and subcultures offers a different way to look at organizations. Cultures unite individuals within the same occupation, who share a value system and give the profession their collective identity. Media management research demonstrates interest in professional cultures of those who work within that sector. Witschge and Nygren (2009) wrote about pressures of the journalistic profession; Becker,Vlad, and Martin (2006) conducted an examination of the labor market and hiring practices in media organizations; and the study by Philips, Singer, Vlad, and Becker (2009) looked at how technological change affects the journalistic profession. All those studies reflect long-standing interest in the professional culture and working conditions of journalists. Different professional groups working in the media sector pose an interesting avenue of future research, especially in the context of increased popularity of the sharing economy and the rise of an on-demand workforce (Sundararajan, 2016). Creating organizational cultures that effectively influence employees to change is part of leadership’s function. An effective leader’s skill set includes motivating employees to embrace organizational change. Leadership and culture are fundamentally intertwined and leaders are the “architects of culture” (Schein, 2010, p. xi). In media management literature published in the three journals, a growing number of studies have directly or indirectly examined leadership. Early studies have looked at the relationship between leadership and change (Killebrew, 2003; Pérez-Latre & Sánchez-Tabernero, 2003); organizational issues (Sylvie, 2003); organizational values (Demers, 1996); or human resources (Dal Zotto, 2005). Later studies tend to focus on leadership roles in specific situations, like managing change (Schultz & Sheffer, 2008), managing structural tensions (Achtenhagen & Raviola, 2009), or work practices (Lischka, 2015; Sylvie & Gade, 2009). Skills for guiding organizations through periods of change and uncertainty continue to be essential for media managers, and clearly there is a need for more research in this area. Also, there is a need to expand this stream of research beyond journalism and newsrooms, and look at other sectors of media.

Technology, Innovation, and Creativity With many articles mentioning the words “technology,” “innovation,” or “creativity,” it is surprising that few of them studied those concepts in detail. Besides the theoretical approaches explaining adoption and acceptance of technologies (discussed earlier in this chapter), none of the studies use theories originating in the technology management discipline. Questions related to roles and functions of technology inside organizations or how technologies facilitate new product offerings are just a few posed by the field of technology management. This absence can probably be explained by differences in defining the term “new product development.” While in general management those functions are termed research and development (R&D), and are affiliated with patents, technological processes, and knowledge flows, media management uses it to mean content development, creative endeavors, and innovations of organizations (Dogruel, 2015). Incorporating theoretical perspectives 27

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from technology management can enrich media management research, especially considering the growing importance of technology in developing innovative media products, which include both content and technology components (e.g., apps), and the increasing dependence on tools to create, filter, and distribute content. In contrast, we see considerable growth of research within innovation and creativity. Typically studied in conjunction as closely related concepts, innovation and creativity are actually different constructs. Creativity is often defined as the ability of an individual or a group to produce novel work, while innovation is used in reference to change processes inside an organization. Metaanalyses of innovation and creativity management research within media management provide an in-depth and holistic view of recent developments and capture how researchers theorize their role (Dogruel, 2015; Sylvie & Gade, 2009). This research supports the argument that managers need to consider how to create new competencies, anticipate, and show agility in responding to new market opportunities. Such conclusions align with the newly emerged, and continuously growing, stream of media entrepreneurship research. Media entrepreneurship may be defined as a “new ventures bringing to existence future media goods” (Achtenhagen, 2008, p. 126), or as an individual possessing a set of entrepreneurial traits (Sylvie & Gade, 2009). Studies in this area are particularly relevant to media organizations in times of structural change (Küng, 2003b) as the market shifts from being dominated by organizations with predominantly corporate cultures (e.g., media conglomerates like Disney) to being driven by organizations with start-up, entrepreneurial cultures (e.g., Facebook or Google).

Working Toward a Theoretical Research Agenda Besides showing the theoretical body of knowledge used in media management, and discussing its recent advances, the objective of this chapter has been to show areas of concern that could guide future research. The growth of academic journals, the number of articles analyzed in this study, and also at the considerable research published in books, reports, and conference papers, shows that the discipline of media management is blooming. Since 2006 it has made considerable progress in documenting issues, highlighting challenges, and collecting empirical observations. However, the multiplicity of theoretical perspectives does not bring us closer to consensus about the theoretical roots of the field. Over time, theoretical plurality has grown and it is becoming increasingly difficult to integrate study results and see a systematic approach to the challenges of media organizations. Generally, media management tends to be un-programmatic and idiosyncratic. As such, we do not come closer to developing our own theories. Theory development requires a coordinated program of knowledge development and testing. While this chapter has illustrated the diversity of theoretical approaches, as in any discipline developing new theory is difficult. Media management tends toward using existing theories to explain phenomena rather than developing new ones (Picard & Lowe, 2016). On the one hand, it is helpful for any emerging discipline to worry about status and shortcomings. On the other hand, ideally research should strive to make substantial theoretical contributions.The fundamental question seems to emerge—do we need media management theory or can we continue borrowing from other disciplines? One could argue that borrowing from other fields is both sufficient and necessary to get published, but while they may be valid in their respective domains, exporting them to a new context may diminish their explanatory power. As Achtenhagen (2016) explains, there is a need to further develop the understanding of what is special about media management, while remaining connected to the mainstream discourse of general management. Another challenge lies in the methodology for published research, also observed as “a methodological cloud” (Sylvie & Schmitz Weiss, 2012). Quantitative and qualitative methods are used in equal measure, but the field would benefit from developing robust research designs, clear operationalization 28

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of constructs, and adequate data samples. It’s time to consider working with the same set of research tools to refine their precision and contextual fit. As the media industry evolves, old traditional players (the incumbents) are supplanted by the new kids on the block (the disruptors), so there is a growing need to tackle research questions relevant to media organizations and society. The gap between academia and media practitioners has been of concern for some time (Küng, 2007, 2010, 2016). Besides differing logics and time dimensions there are potential difficulties in communication between academics and practitioners (Bartunek & Rynes, 2014). We need to do more to share our work with practitioners and help them to solve problems as well as engage in discussions to increase the relevance of our research. While the challenges confronting media management have been addressed, we should not overlook its achievements. This study has revealed that the body of media management research has advanced over time and is characterized by greater maturity and sophistication. Growth in the body of literature indicates that there is interest in the topic, which gives optimism for the course ahead. Here are a few suggestions to help move the field forward, and hopefully spur discussion among scholars. •

•

•

•

There is a need to find focus on different theoretical approaches or a shared standard. It will enable fine-tuning of existing models and frameworks, and eventually advance the creation of a unique theory of media management. New technologies will inevitably impact the media sector, with a big chance that future technologies will completely uproot media organizations from the old media–new media dichotomy. Today’s new media will become the old media of tomorrow. It would be useful to develop standards to capture the continuous change, rather than keep formulating new definitions. The field would benefit from studies taking a meta-analytical approach—that is, studies attempting to summarize and cumulate findings across studies. These contribute to building a common understanding of concepts. Scholars need to become agile and relevant to media managers, media workers, and policy makers, and strive for rigor in creatively developing a specialized body of media management knowledge.

Conclusion This chapter looked at theoretical approaches in media management and economics, through a systematic review of 847 articles published in three main journals of the field. It points out the major advances since the publication of the original Handbook of Media Management and Economics and proposes a few suggestions to move further research forward.The largest body of research is anchored in strategic management, followed by theories of media consumer behavior. The danger of borrowing existing theories from other fields falls short in explaining many aspects of media operations. Here the “difference” of media from any other industries makes a case for a new, original theory development. Such theory-building efforts might still be at an early stage, but the aim should be to promote diversity of innovative research designs and questions bringing light to the complex phenomenon of economic and managerial aspects of the media sector. Media management and economics research will soon be celebrating 30 years since its first journal—The Journal of Media Economics—was founded. In this time, we have accumulated a sizeable, diverse, and original body of knowledge. As the rapid pace of technological evolution and other forces continue affecting the media industry, we need to persist in enhancing media management from a theoretical vantage point.

Note 1 Parts of this chapter are based on the earlier version of a publication under the same title.

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Theoretical Approaches Clegg, S. R., Kornberger, M., & Pitsis, T. (2015). Managing and organizations: An introduction to theory and practice. London: Sage. Coffey, A. J., & Cleary, J. (2011). Promotional practices of cable news networks: A comparative analysis of new and traditional spaces. International Journal on Media Management, 13(3), 161–176. doi:10.1080/14241277.20 11.568421 Colapinto, C. (2010). Moving to a multichannel and multiplatform company in the emerging and digital media ecosystem: The case of Mediaset Group. International Journal on Media Management, 12(2), 59–75. doi:10.108 0/14241277.2010.510459 Cook, C., & Sirkkunen, E. (2013). What’s in a niche? Exploring the business model of online journalism. Journal of Media Business Studies, 10(4), 63–82. Creswell, J. W. (2013). Research design: Qualitative, quantitative, and mixed methods approaches. Thousand Oaks, CA: Sage publications. Daidj, N., & Jung, J. (2011). Strategies in the media industry:Towards the development of co-opetition practices? Journal of Media Business Studies, 8(4), 37–57. Dal Zotto, C. (2005). Human resource leadership in highly dynamic environments: Theoretically based analyses of 3 publishing companies. Journal of Media Business Studies, 2(1), 51–70. DeFleur, M. L., & DeFleur, M. H. (2016). Mass communication theories: Explaining origins, processes, and effects. London: Routledge. Demers, D. P. (1996). Corporate newspaper structure, profits, and organizational goals. Journal of Media Economics, 9(2), 1–23. Deslandes, G. (2011). Corporate culture versus organizational identity: Implications for media management. Journal of Media Business Studies, 8(4), 23–36. Dimmick, J. W. (2003). Media competition and coexistence: The theory of the niche. Mahwah, NJ: Lawrence Erlbaum Associates. Dimmick, J. W., & Rothenbuhler, E. (1984). The theory of the niche: Quantifying competition among media industries. Journal of Communication, 34(1), 103–119. Dogruel, L. (2015). Innovation research in media management and economics: An integrative framework. Journal of Media Business Studies, 12(3), 153–167. doi:10.1080/16522354.2015.1069478 Doyle, G. (2013). Re-invention and survival: Newspapers in the era of digital multiplatform delivery. Journal of Media Business Studies, 10(4), 1–20. Dupagne, M. (1992). Factors influencing the international syndication marketplace in the 1990s. Journal of Media Economics, 5(3), 3–30. Dupagne, M., & Driscoll, P. D. (2010). Comparison between early high-definition television owners and nonowners. Journal of Media Economics, 23(4), 216–230. doi:10.1080/08997764.2010.527226 Eisenhardt, K. M., & Martin, J. A. (2000). Dynamic capabilities: What are they? Strategic Management Journal, 1105–1121. Evens,T. (2010).Value networks and changing business models for the digital television industry. Journal of Media Business Studies, 7(4), 41–58. Fedler, F., & Pennington, R. (2003). Employee-owned dailies: The triumph of economic self interest over journalistic ideals. International Journal on Media Management, 5(4), 262–274. doi:10.1080/14241270309390042 Ferguson, D. A., & Greer, C. F. (2013). Predicting the adoption of mobile DTV by local television stations in the United States. The International Journal on Media Management, 15(3), 139–160. doi:10.1080/14241277.2 013.767259 Ferguson, D. A., & Greer, C. F. (2016). Reaching a moving target: How local TV stations are using digital tools to connect with Generation C. International Journal on Media Management, 18(3–4), 141–161. doi:10.1080/1 4241277.2016.1245191 Fu,W. (2003). Applying the structure-conduct-performance framework in the media industry analysis. The International Journal on Media Management, 5(4), 275–284. Fu, W. (2009). Screen survival of movies at competitive theaters:Vertical and horizontal integration in a spatially differentiated market. Journal of Media Economics, 22(2), 59–80. doi:10.1080/08997760902900072 Gade, P., & Raviola, E. (2009). Integration of news and news of integration: A structural perspective on news media changes. Journal of Media Business Studies, 6(1), 87–111. Gershon, R. A. (2000). The transnational media corporation: Environmental scanning and strategy formulation. Journal of Media Economics, 13(2), 81–101. Glynn, M., & Raffaelli, R. (2010). Uncovering mechanisms of theory development in an academic field: Lessons from leadership research. Academy of Management Annals, 4(1), 359–401. doi:10.1080/19416520. 2010.495530 Gomery, D. (1989). Media economics: Terms of analysis. Critical Studies in Mass Communication, 6(1), 43–60.

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Bozena I. Mierzejewska Greer, C. F., & Ferguson, D. A. (2008). Factors influencing the adoption of HD Radio™ by local radio station managers. International Journal on Media Management, 10(4), 148–157. doi:10.1080/14241270802426725 Hazel Kwon, K., & Soo Chon, B. (2009). Social influences on terrestrial and satellite mobile-TV adoption in Korea: Affiliation, positive self-image, and perceived popularity. International Journal on Media Management, 11(2), 49–60. doi:10.1080/14241270902756419 Hino, H. (2015). TV today, mobile TV tomorrow? Extrapolating lessons from Israeli consumers’ adoption of innovative TV viewing technology. International Journal on Media Management, 17(2), 69–92. doi:10.1080/14 241277.2015.1030748 Hollifield, A. C. (2008). Invisible on the frontlines of the media revolution. International Journal on Media Management, 10(4), 179–183. doi:10.1080/14241270802426741 Hongjai, R., & Sang-Woo, L. (2010). Effects of mergers and competition on consumer benefits in the multichannel video programming industry in Korea. Journal of Media Economics, 23(2), 68–89. doi:10.1080/0899 7764.2010.485538 Hsu,Y.-L., & Jane,W.-J. (2016). Bidirectional causality for word of mouth and the movie box office: An empirical investigation of panel data. Journal of Media Economics, 29(3), 139–152. doi:10.1080/08997764.2016.1208206 Hunt, S. D. (1991). Modern marketing theory: Critical issues in the philosophy of marketing science. Cincinnati, OH: South Western. Hutchison, D. (2009). Regulating ownership: A transatlantic comparison. Journal of Media Business Studies, 6(3), 79–92. Ji, S. W. (2015). Vertical integration, regional concentration, and availability in cable programming networks. Journal of Media Economics, 28(4), 184–216. doi:10.1080/08997764.2015.1094077 Jöckel, S., & Dobler,T. (2006).The event movie: Marketing filmed entertainment for transnational media corporations. International Journal on Media Management, 8(2), 84–91. doi:10.1207/s14241250ijmm0802_4 Jöckel, S.,Will, A., & Schwarzer, F. (2008). Participatory media culture and digital online distribution—reconfiguring the value chain in the computer game industry. International Journal on Media Management, 10(3), 102–111. doi:10.1080/14241270802262419 Jones, O., & Gatrell, C. (2014).The future of writing and reviewing for IJMR. International Journal of Management Reviews, 16(3), 249–264. Kammer, A., Boeck, M., Hansen, J. V., & Hauschildt, L. J. H. (2015). The free-to-fee transition: Audiences’ attitudes toward paying for online news. Journal of Media Business Studies, 12(2), 107–120. doi:10.1080/165223 54.2015.1053345 Kang, M. H. (2002). Digital cable: Exploring factors associated with early adoption. Journal of Media Economics, 15(3), 193–207. Kanuri, V. K., Thorson, E., & Mantrala, M. K. (2014). Using reader preferences to optimize news content: A method and a case study. International Journal on Media Management, 16(2), 55–75. Kaplan, A. M., & Haenlein, M. (2009). Consumer use and business potential of virtual worlds: The case of “Second Life”. International Journal on Media Management, 11(3–4), 93–101. doi:10.1080/14241270903047008 Kehoe, K., & Mateer, J. (2015). The impact of digital technology on the distribution value chain model of independent feature Films in the UK. International Journal on Media Management, 17(2), 93–108. doi:10.1080/14 241277.2015.1055533 Killebrew, K. C. (2003). Culture, creativity and convergence: Managing journalists in a changing information workplace. The International Journal on Media Management, 5(1), 39–46. Kim, M., Heo, J., & Chan-Olmsted, S. M. (2010). Perceived effectiveness and business structure among advertising agencies: A case study of mobile advertising in South Korea. Journal of Media Business Studies, 7(2), 1–20. Küng, L. (2000). Exploring the link between culture and strategy in media organizations: The cases of the BBC and CNN. The International Journal on Media Management, 2(2), 100–109. Küng, L. (2003a). Editorial—culture and the media industry. International Journal on Media Management, 5(3), 168–170. doi:10.1080/14241270309390030 Küng, L. (2003b). What makes media firms tick? Exploring the hidden drivers of firm performance. In R. G. Picard (Ed.), Strategic responses to media market changes (pp. 65–82). JIBS Research Reports No. 2004-2. Sweden: Jönköping International Business School. Küng, L. (2007). Does media management matter? Establishing the scope, rationale, and future research agenda for the discipline. Journal of Media Business Studies, 4(1), 21–39. Küng, L. (2010). Why media managers are not interested in media management—and what we could do about it. International Journal on Media Management, 12(1), 55–57. doi:10.1080/14241270903558467 Küng, L. (2016). Why is media management research so difficult—and what can scholars do to overcome the field’s intrinsic challenges? Journal of Media Business Studies, 13(4), 276–282. doi:10.1080/16522354.2016. 1236572

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Theoretical Approaches Lacy, S. (1991). Effects of group ownership on daily newspaper content. Journal of Media Economics, 4(1), 35–47. Lawson-Borders, G. (2003). Integrating new media and old media: Seven observations of convergence as a strategy for best practices in media organizations. The International Journal on Media Management, 5(2), 91–99. Lewis, M. W., & Grimes, A. I. (1999). Metatriangulation: Building theory from multiple paradigms. Academy of Management Review, 24(4), 672–690. Lischka, J. A. (2015). How structural multi-platform newsroom features and innovative values alter journalistic cross-channel and cross-sectional working procedures. Journal of Media Business Studies, 12(1), 7–28. doi:10. 1080/16522354.2015.1027114 Lundin, R. A., & Norbäck, M. (2009). Managing projects in the TV production industry: The case of Sweden. Journal of Media Business Studies, 6(4), 103–121. Maguire, M. (2009). The nonprofit business model: Empirical evidence from the magazine industry. Journal of Media Economics, 22(3), 119–133. doi:10.1080/08997760903129333 Maijanen, P., & Jantunen, A. (2014). Centripetal and centrifugal forces of strategic renewal:The case of the Finnish Broadcasting Company. International Journal on Media Management, 16(3–4), 139–159. doi:10.1080/1424 1277.2014.982752 Massey, B. L., & Ewart, J. (2012). Sustainability of organizational change in the newsroom: A case study of Australian newspapers. International Journal on Media Management, 14(3), 207–225. doi:10.1080/14241277.2012 .657283 McDowell, W. (2006). Confrontation or conciliation? The plight of small media brands in a zero sum marketplace. Journal of Media Business Studies, 3(2), 1–22. McQuail, D., & Windahl, S. (2016). Communication models for the study of mass communication (2nd ed.). London: Longman. Mierzejewska, B. I., & Hollifield, C. A. (2006). Theoretical approaches in media management research. In A. Albarran, S. Chan-Olmsted, & M. Wirth (Eds.), Handbook of media management and economics (pp. 37–65). Mahwah, NJ: Lawrence Erlbaum. Mierzejewska, B. I.,Yim, D., Napoli, P. M., Lucas, H. C., & Al-Hasan, A. (2017). Evaluating strategic approaches to competitive displacement: The case of the U.S. newspaper industry. Journal of Media Economics, 30(1), 19–30. doi:10.1080/08997764.2017.1281817 Muehlfeld, K., Sahib, P. R., & van Witteloostuijn, A. (2007). Completion or abandonment of mergers and acquisitions: Evidence from the newspaper industry, 1981–2000. Journal of Media Economics, 20(2), 107–137. doi:10.1080/08997760701193746 Murschetz, P. C., & Friedrichsen, M. (2017). Making media management research matter. In M. Friedrichsen & Y. Kamalipour (Eds.), Digital transformation in journalism and news media: Media management, media convergence and globalization (pp. 17–28). Cham: Springer International. Napoli, P. M. (2001). The audience product and the new media environment: Implications for the economics of media industries. International Journal on Media Management, 3(2), 66–73. doi:10.1080/14241270109389949 Napoli, P. M. (2012). Audience evolution and the future of audience research. International Journal on Media Management, 14(2), 79–97. doi:10.1080/14241277.2012.675753 Natterer, K. (2014). How and why to measure personal and historical nostalgic responses through entertainment media. International Journal on Media Management, 16(3–4), 161–180. doi:10.1080/14241277.2014.989567 Nelson, J. L., & Webster, J. G. (2016). Audience currencies in the age of big data. International Journal on Media Management, 18(1), 9–24. doi:10.1080/14241277.2016.1166430 Oba, G. (2009). Programming strategies of U.S.-originated cable networks in Asian markets: Descriptive study based on the product standardization and adaptation theory. International Journal on Media Management, 11(1), 18–31. doi:10.1080/14241270802518273 Oba, G., & Chan-Olmsted, S. (2007). Video strategy of transnational media corporations: A resource-based examination of global alliances and patterns. Journal of Media Business Studies, 4(2), 1–25. Pardo, A., & Sánchez-Tabernero, A. (2012). Effects of market concentration in theatrical distribution: The case of the big five Western European countries. International Journal on Media Management, 14(1), 51–71. doi:10. 1080/14241277.2011.597365 Pérez-Latre, F. J., & Sánchez-Tabernero, A. (2003). Leadership, an essential requirement for effecting change in media companies: An analysis of the Spanish market. International Journal on Media Management, 5(3), 199–208. doi:10.1080/14241277.2011.597365 Phillips, A., Singer, J. B.,Vlad,T., & Becker, L. B. (2009). Implications of technological change for journalists’ tasks and skills. Journal of Media Business Studies, 6(1), 61–85. Picard, R. G. (2000). Changing business models of online content services: Their implications for multimedia and other content producers. The International Journal on Media Management, 2(2), 60–68.

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Bozena I. Mierzejewska Picard, R. G. (2004). Environmental and market changes driving strategic planning in media firms. In R. G. Picard (Ed.), Strategic responses to media market changes, (pp. 65–82). ( JIBS Research Reports No. 2004–2). Sweden: Jönköping International Business School. Picard, R. G. (2005). Unique characteristics and business dynamics of media products. Journal of Media Business Studies, 2(2), 61–69. Picard, R. G., & Lowe, G. F. (2016). Questioning media management scholarship: Four parables about how to better develop the field. Journal of Media Business Studies, 13(2), 61–72. doi:10.1080/16522354.2016.1176781 Picard, R. G., & van Weezel, A. (2008). Capital and control: Consequences of different forms of newspaper ownership. International Journal on Media Management, 10(1), 22–31. doi:10.1080/14241270701820473 Point, S., Fendt, J., & Jonsen, K. (2016). Qualitative inquiry in management: Methodological dilemmas and concerns in meta-analysis. European Management Review, 14(2), 185–204. Porter, M. E. (1991). Towards a dynamic theory of strategy. Strategic Management Journal, 12(3), 95–117. Powers, A., Broadrick Sohn, A., & Briggs-Bunting, J. (2014). Family-owned newspapers: Filling niches in local U.S. communities. Journal of Media Business Studies, 11(2). Putzke, J., Schoder, D., & Fischbach, K. (2010). Adoption of mass-customized newspapers: An augmented technology acceptance perspective. Journal of Media Economics, 23(3), 143–164. doi:10.1080/08997764.2010.502514 Ramstad, G. O. (1997). A model of structural analysis of the media market. Journal of Media Economics, 10(3), 45–50. Rogers, E. (1995). Diffusion of innovations. New York: Free Press. Rudner, R. S. (1966). Philosophy of social science. Englewood Cliffs, NJ: Prentice-Hall. Russi, L., Siegert, G., Gerth, M. A., & Krebs, I. (2014). The relationship of competition and financial commitment revisited: A fuzzy set qualitative comparative analysis in European newspaper markets. Journal of Media Economics, 27(2), 60–78. doi:10.1080/08997764.2014.903958 Schein, E. H. (2003). The culture of media as viewed from an organizational culture perspective. International Journal on Media Management, 5(3), 171–172. doi:10.1080/14241270309390031 Schein, E. H. (2010). Organizational culture and leadership (Vol. 2). San Francisco, CA: John Wiley & Sons. Schultz, B., & Sheffer, M. L. (2008). Blogging from the labor perspective: Lessons for media managers. International Journal on Media Management, 10(1), 1–9. doi:10.1080/14241270701820390 Shepherd, D. A., & Suddaby, R. (2017). Theory building: A review and integration. Journal of Management, 43(1), 59–86. Sjøvaag, H. (2016). Media diversity and the global superplayers: Operationalising pluralism for a digital media market. Journal of Media Business Studies, 13(3), 170–186. doi:10.1080/16522354.2016.1210435 Strube, M. (2010a). Development of transnational media management research from 1974–2009: A propositional inventory. International Journal on Media Management, 12(3–4), 115–140. doi:10.1080/14241277.2010.531335 Strube, M. (2010b). Entering emerging media markets: Analyzing the case of the Chinese magazine market. International Journal on Media Management, 12(3–4), 183–204. doi:10.1080/14241277.2010.527313 Strube, M., & Berg, N. (2011). Managing headquarters-subsidiary relations from a knowledge perspective: Strategies for transnational media companies. International Journal on Media Management, 13(4), 225–251. doi:10.1 080/14241277.2011.597363 Sukosd, M., & Lake, W. (2013). From centralization to selective diversification: A historical analysis of media structure and agency in China, 1949–2013. Journal of Media Business Studies, 10(4), 83–104. Sundararajan, A. (2016). The sharing economy:The end of employment and the rise of crowd-based capitalism. Cambridge, MA: MIT Press. Sylvie, G. (2003). A lesson from the New York Times: Timing and the management of cultural change. The International Journal on Media Management, 5(4), 294–304. Sylvie, G., & Gade, P. (2009). Changes in news work: Implications for newsroom managers. Journal of Media Business Studies, 6(1), 113–148. Sylvie, G., & Schmitz Weiss, A. (2012). Putting the management into innovation and media management studies: A meta-analysis. International Journal on Media Management, 14(3), 183–206. doi:10.1080/14241277.2011.6 33584 Taneja, H. (2013). Audience measurement and media fragmentation: Revisiting the monopoly question. Journal of Media Economics, 26(4), 203–219. doi:10.1080/08997764.2013.842919 Teece, D. J. (2010). Business models, business strategy and innovation. Long Range Planning, 43(2), 172–194. Valcke, P. (2009). From ownership regulations to legal indicators of media pluralism: Background, typologies and methods. Journal of Media Business Studies, 6(3), 19–42. Vizcarrondo, T. (2013). Measuring concentration of media ownership: 1976–2009. The International Journal on Media Management, 15(3), 177–195. doi:10.1080/14241277.2013.782499

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Theoretical Approaches Wikström, P., & Ellonen, H. K. (2012).The impact of social media features on print media firms’ online business models. Journal of Media Business Studies, 9(3), 63–80. Wirth, M. O., & Bloch, H. (1995). Industrial organization theory and media industry analysis. Journal of Media Economics, 8(2), 15–26. Wirtz, B. W., Pistoia, A., & Mory, L. (2013). Current state and development perspectives of media economics/ media management research. Journal of Media Business Studies, 10(2). Witschge,T., & Nygren, G. (2009). Journalistic work: A profession under pressure? Journal of Media Business Studies, 6(1), 37–59. Yang, K.C.C., & Tso, T. K. (2007). An exploratory study of factors influencing audience’s attitudes toward imported television programs in Taiwan. International Journal on Media Management, 9(1), 19–27. doi:10.1080/14241270701193466 Yang, L., Ha, L., Wang, F., & Abuljadail, M. (2015). Who pays for online content? A media dependency perspective comparing young and older people. International Journal on Media Management, 17(4), 277–294. doi:10.1 080/14241277.2015.1107567 Yanich, D. (2010). Does ownership matter? Localism, content, and the Federal Communications Commission. Journal of Media Economics, 23(2), 51–67. doi:10.1080/08997764.2010.485537 Young, D.P.T. (2000). Modeling media markets. How important is market structure? Journal of Media Economics, 13(1), 27–44.

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3 EVOLVING RESEARCH AND THEORIES IN MEDIA ECONOMICS Brendan M. Cunningham

In 1951 Kenneth Arrow published the first formal proof of the first fundamental theorem of welfare economics (Arrow, 1952). This theorem states that a competitive market equilibrium is Pareto optimal. That is, perfectly competitive markets give rise to an outcome which cannot be improved upon without reducing the welfare of someone in the economy. In this sense competitive outcomes are socially efficient. Whether this result obtains in reality depends upon whether reality is well represented by the conditions upon which the theorem is predicated. Prominent among these conditions is the presence of perfect information in markets. Information is predominantly supplied by media industries, broadly defined. The Internet, newspapers, television, radio, books, and telecommunications provide a vast amount of details regarding a wide host of topics and events. And effective performance of media industries, as primary suppliers of information to consumers and firms, is a precondition for markets to deliver socially desirable outcomes. Any shortcomings in media industries will necessarily imply that subpar information is available to the economy. Imperfect information gives rise to numerous distortions and market failures. Examples include adverse selection (Ackerlof, 1970), in which a market fails to provide high-quality goods. Suppose that the quality of a product cannot be ascertained in advance but everyone knows that there are as many low-quality “lemons” (valued at 1) in the market as there are high-quality products (valued at 10). Consumers will be willing to pay only 5.5 for the product, which is the value of lemons averaged with the value of quality products. Poor information does not allow buyers to ascertain product quality, which reduces prices. But then sellers of high-quality products are unwilling to sell at this low average price of 5.5, so they exit the market. As a consequence, only low-quality lemons are traded on the market. The advent of the Internet has significantly resolved this information-driven market failure. User-generated reviews of products and services, as well as widespread availability of seller ratings and media stories about a product, provide buyers with a host of information regarding quality. There are even services which evaluate the quality of reviews themselves and signal whether sellers are falsifying those reviews. For example, see fakespot.com, which employs a machine learning algorithm to identify low-quality Amazon reviewers by examining how many reviews they have submitted and whether multiple reviews use the same language and grammar to describe a product. That is, adverse selection in the quality of information itself is addressed by the Internet. A second common information failure in markets is moral hazard, which occurs when inadequate information following a transaction induces a party to behave “immorally,” or in a manner inconsistent with the terms of the transaction (see Arrow, 1965, for the earliest formal discussion of this 36

Evolving Research and Theories in ME

problem in the economics literature). For example, a car driver might drive irresponsibly once s/ he is covered by automobile insurance because the cost of an accident accrues to the insurer. Or in service industries, the quality of a given employee’s effort at work is often unobservable because the product is difficult to quantify and it is the result of group effort. This can induce an employee to offer inferior effort on the job. Social media posts have been used by employers to identify employees who are not exerting the quality of effort which is expected of them as part of their employment. Williams (2015) reports numerous instances in which social media posts by employees, both on and off the job, lead to firing. Wysochanski (2016) reports on the case of a college professor who was fired by a board of trustees for posts she made to her Facebook page. Information revealed through newer forms of media is increasingly addressing moral hazard in labor markets, thereby enhancing the efficiency of those markets. Additional information technologies can be used to address moral hazard. For example, automobile insurers are now providing discounts to drivers who allow them to monitor their driving behavior through computerized car systems (see Lieber, 2014). It is worth noting that the term “media” has two definitions: (1) the industry that facilitates mass communication and (2) an intermediate layer or intervening substance. The media industry simultaneously embodies both of these concepts. Media firms serve as an intermediate layer between numerous constituencies as they facilitate mass communication. From an economic perspective, media firms have traditionally operated as part of a two-sided (or perhaps multisided) market. See, for example, Rochet and Tirole (2003) for one of the earliest discussions of such markets. That is, there are almost always two types of customers in media markets. For example, newspapers and magazines will typically charge a per-issue or subscription price to readers but they will also sell print space to advertisers. In the United States, traditional radio and television broadcasters still cultivate an audience but that audience does not pay for content. Instead, radio and television revenue is largely derived from advertisers. In certain circumstances there are additional sources of revenue. The public may provide a subsidy to broadcasters in the case of certain media firms. Alternatively, individuals and firms might donate to a broadcaster. There are other media industries, though, which do not feature multisidedness. There are a host of nuanced issues in two-sided markets. Should a firm lower the price it charges consumers, thereby sacrificing revenue, in order to expand its audience and draw more advertising revenue? How does disutility from advertising impact audience size and revenues from consumers? What is the nature of advertising and how does it impact product markets and consumers? Government policy is particularly challenging in two-sided contexts. A merger could potentially lower prices for consumers but raise prices for advertisers, who in turn might mark up prices on their own products and reduce consumer welfare. These and other issues have been, at least partially, addressed by a fairly sizeable literature. Increasingly, though, the Internet has destabilized the traditional function of media firms as intermediaries facilitating communication. In the past, the roles of producing information and distributing it were vertically integrated by media firms. For example, a radio station would hire staff to produce programming and gather advertising while also operating broadcast facilities while holding a spectrum license. The Internet has emerged as an alternative distribution mechanism for all forms of media with a variety of convenience and cost advantages, thereby casting a shadow on the viability of the traditional vertically integrated model. For example, podcasting serves as a competitive alternative to the incumbent approach of radio broadcasting. The Internet has also drastically altered the advertising market. Prior to the Internet, the minutes of television and radio broadcasts, as well as the column inches available in newspaper and magazines, were in finite supply. A given number of firms, with a capital stock which was expensive to expand, could send out only a certain amount of information. This implied that the “space” available to advertisers had an inherent scarcity and, therefore, value. Such scarcity was essentially eliminated by the emergence of the Internet in that a comparatively immense volume of column inches, or video 37

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and audio, can be supplied at much lower cost. Consequently, advertising is a far less secure source of income for traditional media firms and many have struggled to stay solvent in the new environment. Moreover, widespread availability of the Internet has lowered barriers to entry in media industries. Creation and distribution of information have historically involved significant fixed costs, costs which could be covered only by raising significant financial capital. Modern information technology and networks allow cheap information distribution and have radically reduced fixed costs. Consequently there is an increasing disintermediation of information flows between producers and consumers. Blogging, podcasting, online video delivery and the like allow almost anyone to create and distribute information for an immense audience at minimum cost. As mentioned earlier, these disintermediated forms of publishing provide advertisers with an “embarrassment of riches” in terms of venues for their material. In such a highly competitive environment there is a far greater role for systems which assist consumers in their pursuit of particular information or entertainment. Providers of those systems, such as Google, have been immensely profitable at a time when the fortunes of traditional media enterprises have largely been in decline. In what follows the existing literature on various aspects of media industries will be described. It begins with a discussion of the fundamental economic role of media. It will then turn to issues associated with the production and consumption of advertising and content. The political impact of media has emerged as an increasingly important topic and this branch of the literature will be discussed next. Finally, policy issues in media industries, including regulation, and the law and economics of the media will be addressed. For each of these topics the impact of the Internet and open research questions which might shape future research will be discussed. A conclusion which seeks to summarize the overall state of the literature and potential overall trends in media economics scholarship will be also offered.

The Economic Role of Media In perhaps the first explicit paper on media firms, Steiner (1952) offered an analysis of the type of information which radio broadcasters would offer to audiences. The central focus of his efforts involved an analysis of how market structure might alter the variety, or diversity, of information offered to audiences. His analysis suggested that a competitive market structure would involve each broadcaster pursuing a “business-stealing” strategy in which firms would attempt to garner more audience by duplicating the output of their competitors.The end result would be a relatively homogeneous supply of information by broadcasters. In contrast, a monopoly broadcaster would avoid this competitive arms race to steal audience and simply capture the whole market by catering to heterogeneous preferences and maximally differentiating its offerings. The availability of a diverse portfolio of information can have a significant impact on consumers and firms. In an environment characterized by uncertainty, the type of information which will be of value to consumers is largely unknown. While media may provide at least part of the information which underpins markets, a vast amount of information is provided by firms themselves through advertising.Telser (1964) notes that advertising serves as a means of informing consumers about the availability of products and the characteristics of those products. In this sense advertising can serve to enhance competition in markets. However, a market which requires significant advertising expenditures on the part of participants is one which is hard to enter. In this sense advertising can serve as a barrier to entry and lower competition. Comanor and Wilson (1979) offer an extensive discussion of the relationship between advertising and competition. They describe theories in which advertising can impact the elasticity of demand for a particular product, thereby inducing a change in pricing and profits. The empirical evidence regarding the impact of advertising on pricing, competition, and demand elasticities, at that point, was mixed. In part this ambiguity was driven by difficulties in determining causality between

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advertising and equilibrium outcomes in markets. Becker and Murphy (1993) provide a highly novel model of advertising and its impact on consumers and the market for advertised goods. The model generates a host of results but their analysis suggests that the most likely role for advertising in markets is that it increases the elasticity of demand while generating profits by shifting the entire demand for a good. Erdem, Keane, and Sun (2008) provide evidence from high-quality microeconomic data which supports this claim for almost all goods they examine.The exception to this finding is ketchup, where the advertising emphasizes horizontal differences in the product. Additional research regarding the competitive impact of advertising is warranted in order to determine whether this result is generalized. Ippolito and Mathios (1990) present evidence that the benefits of advertising may extend beyond competition. In the market for cereal they establish that the lifting of a government ban on advertising of health benefits led to a diffusion of information about the health effects of consumption choices. Importantly, since advertisements regarding health effects have a very low, or perhaps zero, price for consumers, firms were supplying information that was particularly valuable to consumers with a high cost of information acquisition (perhaps due to education levels or related factors). As a consequence of a rise in advertising, consumers began to make healthier choices regarding cereal consumption. Supply of similar information by the government was not as effective as private advertising. Ippolito and Mathios (1995) document a similar pattern of advertising supplying low-cost and valuable information to consumers which led to the adoption of low-fat diets. Efforts to quantify the economic impact of non-advertising content are in great need. Sorensen (2007) presents evidence that appearing on the New York Times bestsellers list can increase sales of books through a market expansion, rather than business-stealing, effect. Similarly, Pope (2009) shows that published rankings of hospitals have a significant impact on patient demand. Jensen (2007) provides compelling evidence that the general impact of information in markets is significant. He establishes that the diffusion of mobile phone technology on the coast of India changed behavior in fishing industries. Specifically, fishing boat operators in near-shore fisheries could call markets and inquire regarding the prices for different kinds of fish. This allowed effective arbitrage across geographically separate markets and reduced the dispersion of prices. Moreover, waste was reduced since, prior to the availability of mobile phones, boats would often bring their catch to markets with insufficient demand, leading to a wasteful surplus. The introduction of valuable information benefited consumers, intermediaries, and suppliers. That is, it was a Pareto improvement. Additional market improvements have emerged as a consequence of Internet media firms. More specifically, Internet firms are at the forefront of challenging and replacing traditional market intermediaries. Barber and Odean (2001) document the impact of online brokerages, in which consumers can employ their own information to engage in what is essentially direct trade in assets. This has reduced the cost of market participation through elimination of costly brokerage fees. Autor (2001) describes the benefits from Internet platforms which have reshaped labor markets. A host of web pages have streamlined job searches, hiring, and remote work. As a consequence local conditions and quirks have a smaller impact on the labor market equilibrium (the Winter 2001 edition of Journal of Economic Perspectives offers a wealth of material on the economic impact of the Internet). Waldfogel and Reimer (2015) describe the large influx of book titles and a corresponding significant increase in consumer welfare as publishers were disintermediated by online markets and electronic books. In general, media’s ability to offer intermediary platforms at much lower costs reduces barriers to entry while increasing competition. This trend is beneficial to both buyers and sellers through reduced transaction costs and fewer frictions. Internet disintermediation began many years ago in numerous markets, which implies that there should be ample data to estimate its numerous welfare effects. Additional effort in this direction would be highly valuable.

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Advertising: Fundamental Issues and New Developments Advertising has long been a mysterious phenomenon, to both economists and market participants. As noted by Jones (1990, p. 234), an early nineteenth-century Philadelphia retailer named John Wanamaker famously observed, “Half the money I spend on advertising is wasted, and the trouble is I don’t know which half.” Bagwell (2007) offers an extremely comprehensive and insightful review of the vast literature on advertising. A summary of Bagwell’s history of thought regarding advertising is as follows. One of the earliest theories of advertising is the persuasive view, in which advertising alters consumer preferences by creating less elastic demand. This will generally give rise to higher prices if firms have any market power. For this reason, advertising can have effects which seem anticompetitive and implicitly serve as a barrier to entry. As time passed a new thread in the literature emerged, in which advertising played an informational role. Firms employed advertising to notify consumers regarding the availability of products as well as the characteristics of those projects. From this perspective advertising allows firms to enter markets and attract consumers who would otherwise purchase from competitors. A third strand of the literature emerged subsequently, in which advertising provided a direct payoff to consumers as a complement to a good that is purchased. Bagwell concludes that empirical efforts to distinguish between the validity of each of these approaches to advertising have found a variety of results. No single theoretical model appears to explain the role of advertising in all contexts. Rather than repeat Bagwell’s thorough and insightful discussion of the advertising literature, instead the literature on advertising that has emerged subsequent to his effort is described. Unsurprisingly, much of this literature has focused on the structural changes to advertising markets as a consequence of the Internet. Evans (2008) and Goldfarb (2014) note that Internet advertising differs significantly from advertising in other media since detailed information regarding particular consumers can be conveyed to advertisers so that they can “target” their message. Athey and Gans (2010) provide a theoretical framework for understanding the impact of the enhanced opportunity to target advertisements online. They find that targeting increases the effective supply of advertising (less advertising is “wasted” on uninterested consumers), thereby reducing prices and increasing the return to advertising. Bergmann and Bonatti (2011) find that targeting enhances the social value of advertising but that prices are nonlinear in targeting (first increasing and then decreasing). Athey, Calvano, and Gans (2013) investigate the impact of greater “multihoming” behavior by consumers, where they consult multiple media outlets instead of one, as a consequence of the Internet. They find that even in the presence of tracking technology, multihoming can lead to lower media profits, a result which is consistent with recent financial stress in traditional media. Advertising markets are also increasingly automated through online transactions which are driven by auctions with dynamic pricing, in contrast to traditional advertising markets. For a thorough and comprehensive review of this emerging issue please see Ma and Wildman (2016), who describe the emergence of online advertising markets, the economics of targeted advertising, search advertising, and auction mechanisms. Further, Edelman, Ostrovsky, and Schwarz (2007) investigate the “generalized second price” auction frequently used by online advertising platforms. They show that truth telling is not an equilibrium in such markets. McAfee (2011) describes how these auctions can be designed to enhance learning about advertising cost and improve the performance of auctions. De Corniere and De Nijs (2016) theoretically investigate the role of information sharing regarding consumers in online advertising transactions. They find that such sharing increases the price of advertised products. In addition, they establish conditions under which sharing is privately and/or socially optimal.

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Chandra (2009) provides important evidence regarding the potential impact of targeted advertising. He establishes that newspapers facing greater competition have lower circulation but greater advertising prices, potentially as a consequence of market segmentation and more homogenous subscriber bases. More recently, Zentner (2012) provides international evidence that the diffusion of the Internet has led to lower advertising expenditures in newspapers, magazines, and television.There is no significant impact on radio advertising. Further exploration of this result is warranted in order to establish if this is a consequence of prices, quantity, and/or both. Further, the heterogeneity of the impact across media types is worthy of exploration. A sizeable literature has also recently investigated traditional advertising markets. For a behavioral approach to non-informative advertising see Brekke and Rege (2007), in which consumers can engage in herding behavior in the presence of advertising. See Banerjee (1992) for an early discussion of herding behavior.When there is imperfect information an individual may become convinced that a group is making a particular decision because it has access to valuable information that the individual lacks. In such a situation the individual may mimic the choice of the group even though that choice runs counter to the information she or he possesses. In this sense the individual is following the group in the same way that an individual animal follows a herd. Such outcomes can lead to inefficiency. In contrast, Doraszelski and Markovich (2007) offer a unique dynamic model of advertising in which asymmetries and strategic advantages can emerge. Peitz and Valletti (2008) show that in television markets, if consumers do not pay for subscriptions there is greater advertising intensity when consumers dislike ads. Also, without subscription revenues the content of media is less differentiated. Reisinger, Ressner, and Schmidtke (2009) show that in a model with pecuniary externalities advertising can be either a strategic complement or a substitute. Market entry can potentially raise profits and advertising levels. Barigozzi, Garella, and Peitz (2009) analyze the choice between generic advertising, in which a firm promotes its own product, and comparative advertising, in which a firm uses ads to differentiate the quality of its product from that of its rivals. In a related effort, Chakrabarti and Haller (2011) establish that comparative advertising can yield a welfare loss and advertising can impact firms that do not advertise by diverting demand. Crampes, Haritchabalet, and Jullien (2009) establish the relationship between entry, advertising, and subscription revenue. They show that under certain conditions there is an excessive level of entry in advertising markets and an insufficient level of advertising. Saak (2012) offers a model in which a monopolist advertises an experience good to heterogeneous consumers. In this setting advertising is high in the early stages of a product’s life as consumers learn about their valuation for the good.While advertising can delay learning, regulations which ban ads can nevertheless reduce welfare. Numerous empirical efforts have recently contributed to our understanding of advertising. Foremost among these are a number of field experiments. In a retail field experiment, Simester, Hu, Brynjolfsson, and Anderson (2009) find complex dynamic advertising effects in which future sales may actually decrease in response to advertising, particularly for the “best” customers. They also report evidence that consumers switch the sources of their suppliers in the direction of those that advertise. Bertrand, Karlan, Mullainathan, Shafir, and Zinman (2010) find that loan demand was significantly impacted by advertising in a field experiment involving direct mail in Africa. Advertising features were randomized among consumers.While not all aspects of advertising were effective, those that were tended to appeal to a consumer’s emotions. For example, including a picture of an attractive woman increased demand for loans. Anand and Shachar (2011) employ an extremely compelling structural estimation framework in order to investigate the impact of advertising for television programs. They find that an advertisement decreases the likelihood that a consumer will choose her best alternative to the advertised program by 10%.Their approach allows them to distinguish between the direct impact of advertising

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on consumers and the information role of advertising. Interestingly, observational analysis has also extended to the macroeconomic role of advertising. Zheng, Kinnucan, and Kaiser (2010) provide evidence that advertising can predict national investment. Cowling, Poolsombat, and Tomlinson (2011) report that rising advertising rates are associated with increased labor supply in the United States. They hypothesize that advertising boosts the return to consumption of goods and services, leading to a substitution of consumption for leisure. As described earlier, the role of advertising in health is an important and relatively recent strand in the literature. Blecher (2008) reports evidence that tobacco advertising increases demand in developing countries. Fast food advertising exhibits a significant impact on childhood obesity in the empirical analysis reported by Chou, Rashad, and Grossman (2008). Somewhat similarly, Saffer, Dave, and Grossman (2016) report that advertising of alcohol does increase consumption but the impact is larger for those who are already significant consumers. Perhaps one of the most noteworthy changes in the advertising landscape in health care markets occurred in 1997 when the U.S. Food and Drug Administration made it easier for pharmaceutical companies to advertise directly to consumers (DTC) on multiple media platforms. Königbauer (2007) offers a model which suggests that such advertising can facilitate the entry of generic pharmaceuticals and improve consumer welfare. Iizuka and Jin (2005) report results which suggest that the market-expanding effect of such advertisements is more significant than the business-stealing effect (the latter is potentially inefficient). Advertising directly to physicians also has a significant impact on pharmaceutical use, according to Iizuka and Jin (2007). Dave and Saffer (2012) estimate that broadcast advertising significantly increases the demand for the drug which is advertised and also increases the drug’s price. Nonbroadcast advertising has a smaller effect. Estimates suggest that broadcast DTC advertising can explain 19% of the growth in drug expenditures. Lakdawalla, Sood, and Gu (2013) provide evidence which suggests that expansion of insurance can induce advertising by pharmaceutical companies, thereby increasing utilization even beyond the newly insured. There is a positive spillover from greater insurance availability which is channeled through advertising markets. Anderson, Ciliberto, Liaukonyte, and Renault (2016) report additional evidence from the over-the-counter pharmaceuticals market which suggests that comparative advertising is less effective at raising perceived quality for the advertised product. Such advertising actually benefits other rivals in markets. In contrast, self-promotion is far more effective at raising the perception of product quality. There is emerging evidence that, at least in pharmaceutical markets, advertising may have important supply-side effects. Both Kwong and Norton (2007) and Grossman (2008) suggest that advertising can also play an important role in product improvements. They report results which suggest that innovation in pharmaceuticals increases in the presence of advertising. Joshi and Hanssens (2010) offer an explanation for this result. Their analysis suggests that the market value of a firm increases in its own advertising. This equity market response may well supply the capital needed for a pharmaceutical company to invest in research and development. The relationship between advertising and innovation is worthy of additional exploration.

Content: Recent Theories and Evidence A necessary condition for the existence of effective and valuable advertising is the production of compelling content by media firms. A host of subtle issues are involved in the decision to produce content of a particular type. Historically, content development has involved significant fixed costs of production and distribution. The Internet and widespread inexpensive information technology have immensely reduced these costs and, consequently, impacted the strategies which media firms adopt when they choose what to produce and how much they will differentiate from their competitors. And the present landscape features the entry of more competitors in content production, in large

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part due to falling costs. Programming is now developed by firms such as Netflix, Amazon, and, in the near future, Apple. Fritz, Mickle, and Karp (2017) describe emerging plans for Apple to enter movie and television production. The incentive for these firms to produce content is not advertising, per se. Rather, it is a means to induce consumers to subscribe to a particular service (examples are Amazon Prime and Netflix streaming) and/or induce demand for hardware which has exclusive access to the content (in the case of Apple). As discussed earlier, Steiner (1952) offers one of the earliest discussions of programming choices with a focus on radio broadcasting. In a theoretical extension to his analysis, Beebe (1977) suggests that a monopolist will broadcast “least common denominator” and homogeneous programming. Similarly, Spence and Owen (1977) show that niche programming with a small potentially audience will be undersupplied when consumers must pay for access to such programming. More recently, the analysis of Berry and Waldfogel (2001) illuminated the implications of entry by media firms.They found that entry results in a welfare loss which is equivalent to 45% of revenue in radio broadcast industries since average costs can potentially increase as each firm produces less output. If the output is defined in radio broadcasting as anything which generates revenue then it is natural to consider the audience (which can be “sold” to advertisers) as a station’s output. If business stealing occurs then entry by radio stations means each station has a smaller audience. This, in turn, means the incumbent station’s average cost, which is the ratio of audience size to fixed costs, increases. It would be worth revisiting this result given that the Internet and information technology have radically altered the structure of costs. Nilssen and Sørgard (2002) provide a model in which consumers have asymmetric costs for consuming media from a less-than-ideal source. They establish that a private incumbent will duplicate the attributes of a public entrant. Similarly, Gal-Or and Dukes (2003) report that media firms have an incentive to minimally differentiate when consumers dislike advertising. By offering similar content, media firms induce a low level of advertising, which, in turn, raises advertising prices. One of the more prominent strands in the literature on content investigates the determinants of product variety in media markets. Perhaps one of the earliest contributions on this topic (subsequent to Steiner 1952, discussed earlier) was Hall and Batlivala (1971), who discuss the relationship between market structure and duplication of programming on television. Bourreau (2003) shows that in a duopoly model the incentive to differentiate is greater under a subscription content market (in contrast to advertising-supported media). His model also establishes that quality is higher under advertising-supported media. Lin (2011) offers an extensive and thorough extension of this analysis. Gabszewicz, Laussel, and Sonnac (2004) provide a model which predicts that, when consumers dislike advertising, media firms will optimally differentiate their programming. Rogers and Woodbury (1996) provide evidence that radio markets with a larger number of stations offer a greater variety of formats. Relatedly, Berry and Waldfogel (2001) provide evidence that mergers in radio broadcasting increased the variety of station formats. This result is consistent with a strategy in which product position is used as a strategy for preemption. George and Waldfogel (2006) report results which suggest that the entry of the New York Times in local markets (as a consequence of lower distribution costs) induced lower circulation of local newspapers among college-educated subscribers. Local papers would then focus on local coverage and reduce coverage of national issues in order to differentiate from the New York Times. Chandra (2009) finds similar results. In a related effort George (2007) provides evidence that in more highly concentrated newspaper markets there is more variety in content. More recently, Gentzkow, Shapiro, and Sinkinson (2014) report results from an estimated and calibrated model which suggests that ideological diversity of newspapers is increasing in competition. Alexander and Cunningham (2004) report similar results for local television news. The variety of results regarding diversity and competition in newspaper markets suggests that additional investigation is warranted.

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In the music industry, Ferreira and Waldfogel (2013) suggest that the wider availability of content across national borders as a consequence of the Internet has not displaced local music. Sweeting (2006, 2009) shows that media may theoretically prefer to coordinate on advertising timing, or differentiate on timing, depending upon consumer behavior. He finds that radio stations generally prefer to coordinate on timing. Such coordination averts consumer switching to avoid advertisements. Berry, Eizenberg, and Waldfogel (2016) estimate that there is significant over-entry in radio markets. In particular, welfare could be improved if high-quality stations were converted into low-quality. Sweeting (2013) suggests that if radio stations were forced to pay performance royalties the consequential radio station closure would be significant and relatively rapid. Mooney (2010) finds that new technology, such as satellite radio and the Internet, were not significant factors in the decline of radio listenership. Rather, consolidation has a larger impact on audiences. Waldfogel (2012) reports results which suggest that quality in the music industry has not decreased since the simultaneous introduction of Napster and reduced costs for the production of music.

Media and Politics The role of media has a long legacy. Thomas Jefferson, one of the “founding fathers” of American democracy, observed, “were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter” (“Jefferson Quotes,” n.d.). Whenever a citizenry influences public decisions, either through elections or referendums, the information which is publicly available will significantly impact realized public policies. Carlyle (1841) described the media as the “Fourth Estate,” a political power which was equal among the other three estates, consisting of the clergy, nobility, and commoners. Particularly in democracies, the information provided by media can have a significant impact on the functioning of the political process. Voters are informed about a wide variety of policy, economic, and social issues from the content they glean from media industries.This information can shape their assessment of political actors and, in part, determine the electoral viability of incumbents and/or their challengers. Particularly in recent years this role of the media in the United States has undergone significant upheaval, a pattern which has been repeated in terms of the fundamental structure of media itself. Besley and Burgess (2001) provide a theoretical model which suggests that a political system should be more responsive in the context of a vibrant media. They also provide evidence from the Indian newspaper market that state governments more promptly addressed food shortages in locales where newspapers had healthy circulation. Leeson (2008) shows that government influence over media results in a less informed and engaged electorate. Besley and Prat (2006) provide a possible theoretical explanation: media may be captured by the political system, which then subverts the availability of valuable information. DellaVigna and Kaplan (2007) show that the introduction of Fox News led to more political support for Republicans in subsequent elections. Oberholzer-Gee and Waldfogel (2009) provide evidence that increased availability of Spanish-language broadcasters increased Hispanic voter turnout in the United States. Gerber, Karlan, and Bergan (2009) provide evidence from a field experiment which suggests that political knowledge and voting tendencies were not impacted through randomized receipt of a free newspaper subscription. However, voting patterns were impacted by the availability of a newspaper. A fascinating recent literature seeks to investigate whether media offers bias-free information to audiences. Mullainathan and Shleifer (2005) provide an extremely compelling model of bias. They assume that a portion of consumer payoffs from media involve confirmation of preexisting beliefs. Their model suggests that under common beliefs there is a slant in news coverage, even under competition. The slant becomes more extreme when consumers do not hold common beliefs. However,

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consuming multiple sources of news will provide an unbiased view of the world. Baron (2006) shows that bias may induce lower prices for news as a consequence of consumer skepticism. His model also shows that there are very limited mechanisms available to control bias. For example, bias is not decreasing in the level of competition. Guo and Lai (2014) show that bias can increase as advertisers have more bargaining power relative to media firms. Gentzkow and Shapiro (2006) provide somewhat similar insights in a model of Bayesian consumers. Such consumers may infer that a news source is of high quality when biased information conforms to their prior beliefs. Similarly, Gentzkow and Shapiro (2010) provide a measure of newspaper slant. Analysis of this measure provides evidence that consumers do reward newspapers which provide information that is consistent with their beliefs. Groseclose and Milyo (2005) provide similar evidence of the existence of bias in media. A somewhat related potential cause of bias is a conflict of interest between editorial staff, who create content, and advertising staff. There may be an incentive to skew content in favor of advertisers in order to curry favor and enhance advertising revenues. Reuter and Zitzewitz (2006) provide evidence that this does occur in the financial press but the negative impact on consumers is limited. Dewenter and Heimeshoff (2014) provide similar evidence in the automobile trade press. Interestingly, the model and results in Chiang and Knight (2011) suggest that consumers may be aware of this bias and use it strategically. Political endorsements can induce support of a candidate but “unexpected” endorsements (e.g., a left-leaning publication endorsing a right-leaving candidate) can have a greater impact on voter behavior. Durante and Knight (2012) provide additional evidence of relatively sophisticated media consumption behavior in Italy and Agirdas (2015) offers very recent insights on the topic of bias in newspapers. Additional insights regarding the impact of biased information on social media platforms are sorely needed. Such platforms are designed to foster “stickiness”—that is, they provide information and interactions which entice consumers to spend a great deal of time on one platform and not switch to others. Showing consumers agreeable information will tend to achieve this goal. This gives rise to the possibility of “filter bubbles” or “echo chambers” in which consumers do not obtain a diverse portfolio of information (some of which they may not like). For a more thorough discussion of this topic see Bozdag (2013). The political implications of this development are relatively unexplored but increasingly important. How do filter bubbles limit the ability to achieve consensus and compromise in politics? Do such bubbles increase instability and influence policy in a particular direction? These are fascinating topics which are worthy of additional consideration.

Government Policy in Media Markets There are many ways in which government policy shapes media. First, as pointed out by Doyle (2006), much of media production has the characteristics of a public good. It is non-rival because consumption of information and entertainment by one individual does not hamper the ability of another to consume it. In the presence of widespread and inexpensive duplication and distribution technology, as offered by modern information technology and the Internet, it is non-excludable.The producer of media cannot generally prevent others from consuming her output. Public goods are generally undersupplied by private producers. Copyright law, which grants exclusive reproduction and distribution rights to media producers, at least partially resolves this issue by creating excludability and inducing production of media. For a compelling discussion of this topic, see Besen and Raskind (1991). Harbaugh and Khemka (2010) offer a model of copyright enforcement which illustrates many of the complex dynamics associated with exclusivity. Their analysis suggests that targeted enforcement of copyright law may be the best way to preserve media producers’ rights. The emergence of the

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Internet and social media may have significant implications for the optimal form of copyright and its enforcement. An alternative solution to public goods challenges in media involves direct provision of media by a government agency or publicly subsidized nonprofit. Additional analysis of copyright and public media is warranted. One public good which is significantly regulated and vital to media is radio spectrum. Typically a regulatory agency will disburse rights to radio spectrum so that broadcasters can deliver content and advertisements to consumers. For a recent discussion on the design of these auctions see Cramton (2013), who suggests that U.S. auction design could be improved by adopting auction procedures used in the UK. Jenkins (2006) provides multiple definitions of media convergence. One such definition involves the availability of the same media across multiple distribution channels. The recent 5–10 years have witnessed a quickening of convergence. Spectrum management has yet to address this trend and additional analysis is welcome. For example, is it efficient to have a radio station available on traditional radio spectrum (e.g., AM or FM) and also available on mobile phone spectrum (via data services and Internet streaming)? Should spectrum be reallocated in the presence of convergence? There are related issues of access to information which are equally important. Fundamentally, there is a question of technological standardization and whether Internet distribution should become the standard for media delivery, thereby freeing resources for competing valuable uses. Daidj and Jung (2011) also note that businesses are pursuing previously unseen strategies as a consequence of convergence. This could have significant implications for regulators. Antitrust policy in media industries has a long legacy. Many policies restrict ownership concentration in markets such as television, radio, and newspapers. These policies depend upon a clear definition of a market. However, Internet distribution has disrupted these market definitions. For example, all local newspapers are now theoretically available everywhere when their content is posted online, rendering a narrow geographic definition of a local newspaper market potentially irrelevant. A critical question for policy makers is the substitutability of Internet media for media in alternative distribution channels. Ellonen, Tarkiainen, and Kuivalainen (2010) provide evidence that for nonsubscribers the online version of a magazine is a substitute for print versions. Liebowitz and Zentner (2012) present compelling evidence that, particularly for younger cohorts, Internet consumption is reducing television viewing. Yoo (2002) provides an early effort to address adjustments to regulatory policy as a consequence of the Internet. Similarly, Yoo (2014) discusses the manner in which conventional merger review may not well fit the new environment for media. Jeziorski (2014a, 2014b) illustrates that mergers have a complicated impact on consumers and advertisers in two-sided markets. The Internet has also born completely new regulatory questions. For example, Owen (2011) analyzes the question of network neutrality—that is, whether regulators should influence the manner in which traffic of different types is treated by Internet service providers. Bauer and Obar (2014) provide a comprehensive discussion of some of the goals pursued by network neutrality advocates and conclude that no single policy will achieve those goals. Dewenter (2016) provide an analysis which suggests that when downstream content is heterogeneous, network neutrality is not necessary to limit distortions from market power upstream. In contrast, Economides and Tåg (2012) establish that under certain conditions network neutrality regulation can be welfare-enhancing. In the future these issues will only grow in importance to regulators, media practitioners, and scholars.

Future Directions for Research This section summarizes some valuable future paths for research in the field of media economics. These areas were also discussed earlier. First, since the nature of advertising has radically changed with the advent of the Internet it is plausible that its impact on competition is also different. Equally

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important is an investigation into the economic impact of new forms of non-advertising content, such as social media. Quantification of the reduction in frictions as a consequence of new media, and implications for market efficiency, is also in order. Recent evidence that advertising may contribute to product innovations is also intriguing and worthy of additional exploration. What portion of productivity improvements can be associated with advertising? Turning to content, there are a wide range of heterogeneous results regarding the relationship between product variety and competition. Pursuing an explanation for diversity in the relationship between variety and competition would be valuable for a variety of reasons, including regulatory consideration. In addition, the role of bias in social media content is an increasingly important topic, particularly as applied to politics. Moreover, alternatives to copyright as a means of inducing media production, such as public subsidies or public broadcasting, are worthy of more exploration as advertising revenues continue to decline. Lin, Fu, Yeh, and Huang (2013) as well as Poort and Baarsma (2016) provide compelling frameworks for analyzing the benefits of public media. Finally, the optimal form of regulation in the presence of media convergence via the Internet is in need of additional analysis. There are also many opportunities for industry-specific future research. The impact of virtual reality on the movie and television industries is worthy of further exploration. Knapp and HennigThurau (2015) examine the economic effect of the 3D feature on movie success. How will content evolve in response to the availability of greater interactivity with consumers? Similarly, how will advertising develop as a consequence of virtual reality? In the music industry, what are the new models for promotion and discovery of artists which best function on social media? How will artists receive compensation when music is increasingly commoditized by streaming services? How will radio broadcasting evolve when on-demand alternatives, such as podcasting, are equally, if not more, beneficial for consumers? Finally, will paywalls or micropayments allow magazine and newspaper publishers to flourish over the next decade or longer? Each of these issues is worthy of additional extensive analysis.

Conclusion The body of media economics scholarship is sizeable, varied, and insightful. This literature has approached the topics of advertising, content, politics, and regulation from a variety of perspectives while employing an impressive diversity of techniques. Presently, media scholars face a compellingly dynamic environment in which rapid and emerging structural changes to costs and distribution methods are significantly altering the behavior of consumers and firms. This milieu represents a simultaneous challenge to established knowledge regarding media industries and an exciting opportunity to create new theories and test those theories with previously unused data and techniques.

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4 MEDIA MANAGEMENT AND ECONOMICS RESEARCH IN EUROPE Juan Pablo Artero and Alfonso Sánchez-Tabernero

Introduction The most relevant institutional fact concerning research on media management and economics in Europe is the opening of the first schools of communication. The field’s academic tradition had started in the United States 50 years earlier, with the Missouri School of Journalism, founded in 1908, and Columbia Graduate School of Journalism (1912). At that time, France already had a school: École Superieure de Journalisme de Paris (1889). Some years later a new one appeared: École Superieure de Journalisme de Lille. However, the French écoles were fully skills-oriented and for many decades they did not develop significant research programs. The London School of Journalism had the same goal of training journalists (1920). In fact, the first European schools of journalism or communication that started within universities frequently used translations of American handbooks as textbooks.The pioneers of the study of communication in Europe followed the works of their colleagues from the United States. The paradox was that, at that time, many European students of communication had more knowledge about the American media system than about the European model. After the Second World War, some journalism schools developed links with universities. On top of that, a group of European scholars was looking into communication issues from their personal backgrounds: economics, sociology, law, political science, or psychology. They were interested in media because, among other factors, the war had showed the power of news and the importance of propaganda and public opinion. In Spain, the University of Navarra launched its Instituto de Periodismo in 1958. The German School of Journalism started in 1961. It was a more academic version of its predecessor, the Werner Friedmann Institute, founded in 1949. In the UK, the University of Central Lancashire started its first journalism course in 1962. Other initiatives followed soon in Cardiff and Kent. Italian universities developed courses about media and advertising during the 1970s, after the experience of some successful institutes, like the Istituto Superiore di Giornalismo di Palermo (1953). In summary, in most European countries, research about media and communication started in the 1960s, in newly created schools of communication or within departments of law, management, sociology, languages, or political science. Research on media management and economics was primarily located within those new institutions created inside universities. The same thing holds true with the then newly created business schools, but the interest from management researchers toward media industries tended to develop in later decades.

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The aim of this chapter is to offer a historical overview of the development of media management and economics research in Europe since its beginnings in the 1930s to the present. Albarran (2006) and Picard (2006) gave similar contributions, but they were not exclusively focused on Europe and most of the references came from the United States. Additionally, those chapters offered historical trends and patterns on media management and media economics separately. Consequently, this chapter will be exclusively centered on European research and will handle media management and economics with an integrated perspective. That leads to highlighting some other works not valued enough in previous pieces of research. As far as the goal of this chapter, although it is intentionally broad, a particular strategy has been selected to handle it. The time lapse has been divided into three periods of development of the field (Artero & Sánchez-Tabernero, 2011; Artero, 2012): introduction (1930–1959), growth (1960–1989), and maturity (1990–2015).The purpose is to give big names and places to each stage. In other words, this chapter intends to highlight the key scholars and institutions that helped to expand the field in Europe. Regarding academics, some of their seminal books will be cited, even though this list is not and cannot be exhaustive and does not claim to be an annotated bibliography. On the other hand, universities will be studied in reference to programs, journals, and research centers that had to do historically with the expansion of media management and economics. Finally, this text proposes a research agenda for the next decade.

Introductory Period (1930–1959) In the first decades, no relevant European contributions can be found from a media management tradition. In fact, management research itself was taking its first steps. But from a media economics perspective, five early books can be identified, illustrating the first steps of the field and some of the pioneering names and places. Klingender and Legg (1937) gave an economic analysis of the Hollywood film industry. Klingender was a Marxist art historian and Stuart Legg was a documentary maker. Because of that, the wellknown Scottish director John Grierson, who is credited to have invented the term “documentary” itself, wrote the preface of their book. In fact, Grierson himself and the periodical World Film News financed the publication. The book studies capital in the American film industry, studio owners, and capitalist backers, as well as the problems of the British one. Schmidt, Schmalenbach, and Bächlin (1948) were Swiss art historians. Their book gives an integral consideration of not only the economic side but also sociological and aesthetic perspectives on the film industry. It was originally published in German 1947 under the title Der film: wirtschaftlich, gesellschaftlich, kunstlerisch, after an exhibition held in Basel in 1943.The Swiss Film Institute prepared the subsequent German and English editions. A French translation of around 130 pages was also issued in 1951. Coase gave a pioneering and specifically economic contribution in 1950. Then a young professor at London School of Economics, he tried to explain how British broadcasting became a public monopoly. His book was published before the Beveridge Report for the renewal of the BBC Charter of 1951. Coase and Beveridge were both colleagues at university. His interest in media industries had been advanced in 1947 with an article at the Journal Economica titled “The Origins of Monopoly Broadcasting in the UK.” Right after publishing his third book in 1950, he migrated to the United States. Coase remained interested in media (including studies on the Federal Communications Commission) throughout the rest of his academic career, which culminated in his winning the Nobel Prize of Economics in 1991. He worked for many years at the University of Chicago and became one of the most relevant leaders of the neoclassical economic school developed at that institution. His liberal intellectual roots were clear from the beginning. For instance, he states in his key text

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on then-monopolistic British broadcasting, “It is reasonable to assume that the force of competition would operate as a stimulus to improvements of all kinds” (1950, p. 185). His seminal contribution was critical to the opening to competition of British television a few years later. From a similar economic perspective, Mercillon’s (1953) French book on American cinema explains how Hollywood reached an oligopolistic structure that worked with a certain fair play. This was his first published volume as a researcher at the Centre National de la Recherche Scientifique. Mercillon later held different positions at French universities like Montpellier, Dijon, and Paris I. Italian Gianelli (1956) also wrote a book on film economics, but it focused more on European countries. A strong believer in European integration, he even declared that “the key to the European union lies in cinema” in a previous book (1953a, 25). In that same year, he published an important survey on the Italian film audience (1953b). All three books were motivated by his job as the secretary of the Italian film industry association, which he represented in a meeting on transnational cooperation at UNESCO headquarters in Paris in 1955. These five cited pioneering contributions illustrate how research on the economic and business side of media in Europe was divided from the very beginning into two different schools of thought. The first one can be labeled as neoclassical, functional, or simply liberal and finds its roots in the Chicago school and the Vienna circle. Regarding media research, it has been recognized as media management and economics. The second school is labeled as neo-Marxist or critical and is based on the perspectives that originated at the Frankfurt School first and other institutions later, like the Birmingham center and the British cultural studies in general. They prefer denominating the field as political economy of communication. This chapter focuses exclusively on the media management and economics research tradition, even though other important works with a more critical background are also included.

Growth Period (1960–1989) From the 1960s onwards, the interest in media management and economics came mainly from three broad academic fields: law, sociology and political science, and business and marketing. But each researcher had his or her own methods, interests, and sources of inspiration.They did not have a specific journal to publish their papers: the Journal of Media Economics was the pioneer and was founded in the United States in 1988. Therefore, their pieces of research were scattered in journals of communication, marketing, law, political science, or advertising. European scholars did not have an international association in the field, although in some countries national associations for research in communication and journalism did exist. On top of that, European professors were able to attend conferences organized or sponsored by associations like the Association for Education in Journalism and Mass Communication (AEJMC), International Communication Association (ICA), and International Association for Media and Communication Research (IAMCR). All of them launched “sections”, “divisions”, or “interest groups” related to media economics or related fields. In its origins, AEJMC was an American association, targeted to professors of journalism. It had different names and at the middle of the last century it expanded internationally. In 1965, it launched its division of   “Advertising”, which was the predecessor of the “Media Management and Economics” division. ICA was also an American association, founded in Austin, Texas, in 1950. Some decades later, it started its “Communications Law and Policy” section. The history of IAMCR goes back to the first years of UNESCO. In 1946, its Committee on Technical Needs in the Mass Media claimed that it was an “International Institute of the Press and information, designed to promote the training of journalists and the study of press problems throughout the world” (Nordenstreng, 2008, 226). After several proposals and controversies, IAMCR had its initial conference in 1957. It was the first true

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association for communication research with an international perspective. It also launched a section called “Political Economy”. From a contextual point of view, two relevant facts should be pointed out. First of all, at that time Europe was still divided in two blocs in which the western world was divided, between the free market countries and the state-directed economies: Western Europe versus Eastern Europe. The battle between capitalism and communism influenced research in the field. The scholars who sympathized with the free market perspective used to study how media markets and companies operate. In contrast, left-oriented researchers tended to emphasize the (usually perverse) effects of media firms in society. The second contextual fact concerns the media industry itself. In this period, the deregulation of the audiovisual industry had not started in Europe. With the relevant exception of United Kingdom, which launched its first private television channel in 1955, radio and television in Europe were almost always owned by the national states. On top of that, market shares of Hollywood studios in the European film markets were high, while most national companies were weak and unprofitable. As a result, research in media management in Europe was not particularly challenging and it was focused on print media. Many researchers tried to identify models of good public broadcasting services. In the music and movie industries, the main interest was the protection of the cultural national identity from the big American corporations. During the growth period, some authors who shared the neoclassical perspective had a positive attitude toward the “laissez-faire” proposal as long as the law was able to restrict the power of the big corporations (Bertrand, 1966;Toussaint, 1978; López-Escobar, 1978; Nieto, 1984). Other scholars studied how the media markets worked but they did not judge the effects and the fairness of the liberal system (Sterling & Haight, 1978;Vejanouski & Bishop, 1983; Lange & Renaud, 1989). All of them considered that the regulators’ prime task is to protect both freedom of the provider of news and entertainment contents and choice of the consumer. At the end of the period, researchers paid attention to more theoretical issues. Nieto (1984) maintained that media operate in the market of citizens’ time, Dunnett (1988) studied the economics of print industries, and Bordwell, Staiger, and Thompson (1985) explained why some content traveled better than others across different countries and cultures. In fact, at the end of the 1980s the discipline reached its age of maturity. It did not limit itself to translating American texts and concepts and it went beyond the mere application of economic theories to the media markets. As stated before, between 1960 and 1989 there was a growing but still scarce number of texts about media management in Europe because of the market context. During that period, media referred more to democracy, freedom of expression, and cultural identity than to profits and growth strategies of big corporations. Such reality applied particularly to the broadcasting industry. As a result, most studies analyzed print media organizations (Nieto, 1967, 1973; Pinillos, 1975; Hoyer, Hadenius, & Weibull, 1975; Engwall, 1978), although some books dealt with all media industries (Conesa, 1978; Tallón, 1981; Picard, 1989). Logically, in the United Kingdom there were some interesting academic contributions in the field of broadcasting management because at that time it was the only national audiovisual European market in which private companies had a relevant role (Barwise & Ehrenberg, 1988; Tydeman & Kelm, 1986). In this field, research evolves from a skill-oriented perspective toward a more complex analysis. The first books followed the American model based on the purpose of explaining how to manage a media organization. In the 1970s and 1980s new concerns appeared: the need to identify consumers’ implicit demands, the paradox of serving two publics with different interests, audiences and advertisers, the relevance of people management in creative industries, the pros and cons of vertical and horizontal integrations, and the difficulty of measuring intangible assets like the value of brands, knowledge, relations, movies or sport rights, and innovative spirit. Those challenges will be studied more in depth in the next section.

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Maturity Period (1990–2015) By 1990 the discipline of media management and economics had been fully established in Europe: the number of scholars and the diversity of interests and research methods have grown in a very significant manner. Most international communication associations have a strong presence of European scholars within their economics and management sections. Three schools of thought or areas of interest have been clearly settled: media management, media economics, and political economy of communication. Two key events will have a vital influence in the period. From the political point of view, the fall of Berlin wall in 1989 meant the end of the communist bloc. As a result, a new group of researchers from the Eastern European countries emerged. On the other hand, from the market perspective, the Old Continent started a process of deregulation of its audiovisual industry, which generated a great interest among policy makers, citizens, and investors but also among researchers. The collapse of the communist regimes in Europe had two main effects: first, media scholars all over the world paid attention to the quick transition from state-owned media outlets to private ownership in newly free market societies. In addition, the old communist system vanished like a house of cards and the countries concerned did not have any investors or entrepreneurs with the knowledge and the capital required to take over the old media firms. In some way, Eastern Europe was, in 1990, a unique laboratory to study how media behave during an accelerated transition from communism to capitalism. The second effect was the emergence of a promising group of researchers from the countries under former Soviet influence. Some of them had leading positions in departments or schools of communication and at the same time were involved in the transformation of private or public companies. They joined boards of public service corporations or worked as consultants for private media firms. Because of that, and perhaps also as a way to forget about the communist indoctrination, most of them had a pragmatic and descriptive approach. Galik (1997) studied the presence of foreign capital in the Hungarian media market. Jakubowicz and Sükösd (2008) undertook several comparative studies of all Central and Eastern European countries ( Jakubowicz always emphasized that his native Poland was in Central Europe, not in the East). Huber (2006) carried out a similar task. The most frequent concepts included in those pieces of research were media in transition, new ownership structures, transformation of firms, and integration in the European market. From a market point of view, the deregulation of the audiovisual industry changed the predominant interests of researchers on media management from print media to broadcasting. During the previous period, European scholars identified the differences between the American press system, based on the dominance of small local newspapers which used to have monopolistic positions, and the European press model, characterized by regional or national titles in oligopolistic markets. In a similar way, in this period the main comparison was about the television industry. In Europe, broadcasters had a strong bargaining power against producers, while in America it was the other way around (Artero, 2008). Moreover, European state-controlled broadcasters had more than one third of national market share, while PBS accounted for less than 3% of the American television audience market. Some scholars were concerned with the dangers of media concentration and tried to assess how to make growth strategies of media firms and the public interest compatible (Sánchez-Tabernero, 1993; Pilati, 1993, 2000; Wolf, 1999; Doyle, 2002; Faustino, 2004; Artero, 2009). Other monographs dealt with management of radio firms (Prado, 1981), movie studios (Creton, 2001; Gates, 2002; Buquet, 2005), or television companies (Dunnett, 1990; Gambaro & Silva, 1992; Richeri, 1993; Dematté & Perretti, 1997; Bustamante, 1999; Medina, 2005).

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A variety of handbooks about media management were published, which shows the maturity of the field. Some authors, after contributing abundantly in academic journals, decided to answer broader questions, like: What is so special about media management? What are the key strategic decisions in communication markets? What are the main competitive advantages in the media and entertainment industries? Those were the basic goals of textbooks like those published by Nieto and Iglesias (1993), Heinrich (1994), Herscovici (1994), Población and García-Alonso (1997), SánchezTabernero (2000), Galik (2001), Doyle (2002), Picard (2002), Aris and Bughin (2005), Nieto (2006), Scholtz (2006), Caro (2007), Aguado, Galán, Fernández-Beaumont, and García (2008), Deslandes (2008), Küng (2008), De Mateo, Bergés, and Sabater (2009), Vukanovic and Faustino (2001), Wirtz (2011, 2015), and Lowe and Brown (2016). At the same time, two more issues became popular: the future of public broadcasting and the effects of the Internet. Public service television was a useful way to balance the commercial logic in the market. But the launching of new private channels in all European countries—more than 100 each year from 1990 to 2000—caused a decrease in PBS’s audience. Public channels faced the risk of becoming almost irrelevant. As a result, the key question was whether PBS should protect its ratings by programming content targeted to the general public or if, on the contrary, they should focus on culture, education, and other programs that were complementary to the most popular content. Fernández Alonso, and Santana (2000), Moragas and Prado (2000), Manfredi (2004), and Lowe and Bardoel (2007), among others, analyzed such dichotomies. After 1996, the Internet was the most disruptive phenomenon changing the rules of the game in communications markets and, logically, it captured the attention of academics. First, scholars pointed out the weakening of barriers to entry, because it made it possible for each citizen to become a content provider (Zerdick, 2000; Lauf & van der Wurff, 2005; Albornoz, 2007; Rojo, 2008; Wirtz, 2011; Nienstedt, Russ-Mohl, & Wilczek, 2013). The strengthening of the field of media management and economics in Europe was possible thanks to the excellent work of a growing number of researchers. But, on top of that, some departments or schools played a leading role. Those academic institutions gave continuity to the scholars’ efforts, funded research projects, sponsored conferences and workshops, launched masters and doctoral programs, and fostered interest in the topic among professors and students. One of the pioneering institutions was the European Institute for the Media (EIM), located in the University of Manchester. Under the direction of George Wedell, the EIM conducted policyoriented research. It pointed out that any action by policy makers should be based on an in-depth understanding of legal, technological, and managerial aspects of the media industry.The EIM’s media monographs were very influential during the 1980s and 1990s because they addressed relevant challenges in the whole European media market. The Departments of Media Management of Turku School of Economics and Jonköping International Business School played a relevant role too. They had a person in common: Robert Picard, who was a “bridge” between the United States and Europe, founded both research groups. Before arriving in Europe, Picard had been the founder of the Journal of Media Economics and had published his seminal book, Media Economics: Concepts and Issues, in 1989. His international prestige and his ability to build teams were very useful for the development of the field, first in Turku and after 2013 in Jonköping and at Oxford University later on. The University of Navarra was also one of the first academic institutions in Europe that paid attention to the managerial and economics aspects of media. The leading figure was Alfonso Nieto, a visionary scholar whose purpose was to understand how media companies would create competitive advantage in the future. Nieto has published papers and monographs since the late 1960s. He was the supervisor of 23 doctoral dissertations about media management in Navarra and created one of the most dynamic research groups in the field.

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Other departments were also very active and have created strong teams, publishing in top communication journals. Gabriele Siegert was a key figure at the University of Zurich and HeinzWerner Nienstedt in Mainz. Peter Goodwin and Charles Brown were the leaders at the University of Westminster, and Gillian Doyle at Stirling, until she moved to Glasgow. Lucy Küng fostered the research area in Saint Gallen and Ghislain Deslandes at the ESCP Europe in Paris. Other relevant academic institutions were the Hamburg Media School, which launched a master’s program in media management in 2004, and Saarbrucken University in Germany, following similar experiences of Westminster, Saint Gallen, Navarra, and Stirling. The maturity of the field in Europe fostered the launch of the International Journal on Media Management in 1999 in Saint Gallen (although the editorial offices moved to New York) and the Journal of Media Business Studies in Jonköping in 2004. One year before, the European Media Management Association (EMMA) was founded in Brussels. EMMA is a not-for-profit academic organization that supports research and teaching in the field and organizes an annual international conference and a summer school for young scholars. Conferences and seminars promoted by EMMA and other academic institutions gave birth to several international projects with the participation of researchers from a big variety of European countries. That was the case for three influential books: the Handbook of Media Management and Economics, edited by Albarran, Chan-Olmsted, and Wirth, in 2006, Media Economics in Europe, edited by Heinrich and Kopper, also in 2006, and Managing Media Firms and Industries, edited by Lowe and Brown, in 2016. A clear evolution took place from the beginning of the 1990s from the point of view of research methods. Most journals, papers, and monographs were focused on providing empirical evidence through quantitative methods.They were already used in the past, but the novelty during this period was that the case studies or the more descriptive pieces of research lost impact. Scholars and editors of academic journals consider that surveys and other market analyses based on hard data have more value than those based on in-depth interviews, focus groups, and other qualitative techniques. Of course, the methods used have a strong influence on the topics studied and the research questions: the predominance of quantitative research during the last decades has caused the popularity of media economics and media market analysis over management of media companies. In other words, most researchers in Europe are paying a lot of attention to what is happening in the market not only because of the uncertainty generated by disruptive technologies but also because it is relatively easy to measure. However, they are not providing enough valuable insights into how to create barriers to entry, how to identify new business models, or how to design better competitive strategies.

Research Agenda for the Next Decade After more than half a century of study and research, media management and economics has become a mature discipline in Europe. A growing number of scholars are paying attention to the field, which is challenging both because of the impact of disruptive technologies in the industry and also because it deals with interdisciplinary issues. In addition, the most relevant problems and controversies are analyzed through a big variety of research methods, which provide rich and complementary insights. On top of that, the end of the communist regimes in most Central and Eastern European countries has expanded geographical frontiers: more market-oriented economies have been added to the European media landscape. However, many questions about media management and economics remain unanswered. New risks and opportunities appear on the horizon, particularly concerning the effects of globalization of media and entertainment companies and markets, and several mistakes of the past should be corrected, like some dogmatic proposals which are contradicted by empirical evidence. In fact, the age of

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maturity allows for walking new paths, discovering new territories, and searching for new approaches and perspectives. The first challenge refers to the research’s lapse of time. The majority of academic papers try to discover and describe what is going on today in a given market. Such coincidence of focus happens because of the methodological feasibility of the research: it is easier to measure the present than to compare the evolution of a given phenomenon across the years. In this context, the step further lies in undertaking more diacritical and prospective studies. Diacritical analysis requires more sets of data, and prospective studies are based on complex qualitative research. But both frames are complementary and they add value to the predominant synchronic studies. A similar problem takes place with the geographical scope of most pieces of research: many scholars are comfortable dealing with their local or national markets and quite frequently they avoid looking into other countries because they do not know the media system in depth. Sometimes they do not understand the language, and they may not be able to find the right sources. This trend has been aggravated by the collapse of the European Institute for the Media, which was the main promoter of comparative studies at the European level during the 1980s and the 1990s. A possible solution is to create groups of scholars from different countries who study the same issue with the same sources and research methods across several national markets. On the other hand, in some way, European scholars should go back to the past and remember that one of the reasons behind the field’s development was its interdisciplinary nature. In the beginning, the mix of different sciences was a need. Media management and economics lacked the required substance and knowledge to survive alone. Now the accumulation of a variety of backgrounds is not compulsory but it adds high value to the field. Until the 1990s, most big research projects were undertaken by groups of experts in the field who worked with lawyers, economists, psychologists, and political scientists. Such richness of perspectives should grow—and not decrease—adding new disciplines to teams. Neuroscientists may help to explain consumption decisions, engineers may provide clues about digital entrepreneurship, experts in fashion, design, and aesthetics may suggest new ways to present the content of media, and philosophers may help to identify the effects of news and entertainment in society and firms’ duty to behave with social responsibility. From the methodological point of view, there is room for improvement concerning theoretical approaches, quantitative and qualitative skills, and reliability of sources. Good theory leads one to ask the relevant questions for firms, citizens, and society at large. Good research methods are essential to find empirical evidence, to validate previous hypotheses through reliable facts and well-reasoned arguments. This scientific approach implies discarding arbitrary speculation or repetition of a priori judgments. Good sources are crucial to differentiate relevant information from unsubstantiated opinions. In fact, the hybrid nature of media management and economics is particularly appropriate to merge deductive, inductive, and descriptive methods. It is also an appropriate field to mix quantitative analysis and more conceptual approaches. Finally, some challenges refer to the most promising areas of study. All of them deal with two great topics: (1) evolution, problems, threats, and opportunities in news and entertainment markets and (2) media firms’ sustainability of competitive advantages in a context of uncertainty and growing level of competition. Without any goal of exhaustiveness, we suggest ten topics that are becoming as complex as they are relevant.

Quality Factors of Media Content How to make compatible the firm’s editorial purpose (identity), with respect for professional benchmarks (quality), with adaptation to consumer demands (appeal)

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Consequences of Changes in Ownership of Media Outlets and Groups Several factors deserve researchers’ attention. The evolution from family-owned firms to public corporations favors transparency and professionalism but it also gives priority to short-term goals. On the other hand, an increasing number of citizens have become providers of content on the Internet but they do not have any professional criteria and some not-for-profit institutions have launched news media to avoid the pressure of commercial interests.

Management of People Media firms are changing the logic of the past, which followed the “model of the assembly line” to the logic of the “learning organization”, in which every employee contributes with his or her talent, knowledge, relationships, creativity, and innovative spirit.

Effects of Digitization and New Technologies The success of the Internet and other new ways to spread news and entertainment content has consequences for media firms. It increases efficiency but it also allows the existence of more rivals in the market. New technologies also have an important impact on society, which has more access to a big variety of sources of information, but at the same time, it may create a gap between the citizens who have digital skills and those who are left behind.

Market Concentration The number of content providers has grown exponentially in Europe. In spite of that, some markets are highly concentrated, particularly those which have network effects (like search engines or social networks) and those which have big economies of scale as it happens in the entertainment economy. Good research could find ways to make the citizens’ rights and the firms’ search for profits compatible.

Identification of New Business Models The two basic sources of income of media—direct payment of consumers and traditional advertising— have decreased because more outlets fight for a “piece of the pie.” As a result, new revenues should be discovered: premium-pay-content, personal services, sponsorship, conferences and executive education, and e-commerce. Media companies unable to reach a high level of resources will decrease the attractiveness of their offers and may become irrelevant for consumers.

The Discovery of New Barriers to Entry, Which Are Needed to Avoid Never-Ending “Price Wars” Some barriers of the past have lost their effectiveness, like economies of scale or production and distribution capacities. Researchers should study how to build up new intangible barriers, like brands, knowledge, relationships, teamwork, creativity, and innovative spirit.

The Use of Big Data and Information About Consumer Behavior to Produce and Market More Targeted Content Digital technology makes it possible to know the habits and preferences of each user. It also favors the elaboration and distribution of products and services adapted to personal needs. 60

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Advertising Management In the past, advertising was based on rigid formats (TV or radio commercial breaks, magazine or newspaper ads) addressed to audiences who could decide only if they wanted to listen or read messages. Nowadays, one-way communication is not tolerated; instead dialogue is compulsory. Everybody feels that he or she has the right to answer and to give his or her opinion. Therefore, media outlets should find innovative solutions which are able to capture the attention of the audience and foster a true conversation between advertisers and users.

Corporate and Business Strategies Adjusted to a Multi-platform Environment Media and entertainment firms should use a universe of devices, many of them mobile, to distribute a large variety of content that is required both for private firms and for state-owned corporations. Each platform determines the content’s characteristics.Therefore, in this context, research should be based on an understanding of consumer demands, technological advances, and managerial implications. In summary, many challenges appear on the horizon for the growing number of European scholars who work in the field of media management and economics. Progress will be arduous because research projects need to use rigorous methods as well as interdisciplinary lenses. The rewards will also be relevant. New discoveries will have a positive impact on society and empirical evidence will foster markets’ freedom, empowerment of citizens, technological innovations, quality and variety of content, employment opportunities, social responsibility of firms, and effective commercial communication.

References Aguado, G., Galán, J., Fernández-Beaumont, J., & García, L. J. (2008). Organización y gestión de la empresa informativa (Organization and management of media companies). Madrid: Síntesis. Albarran, A. B. (2006). Historical trends and patterns in media management research. In A. B. Albarran, S. ChanOlmsted, & M. O.Wirth (Eds.), Handbook of media management and economics (pp. 3–21). Mahwah, NJ: Erlbaum. Albarran, A. B., Chan-Olmsted, S., & Wirth, M. O. (Eds.). (2006). Handbook of media management and economics. Mahwah, NJ: Erlbaum. Albornoz, L. A. (2007). Periodismo digital: los grandes diarios en la red (Digital journalism. The big newspapers on the Internet). Buenos Aires: La Crujía. Aris, A., & Bughin, J. (2005). Managing media companies: Harnessing creative value. New York: John Wiley. Artero, J. P. (2008). El mercado de la televisión en España: oligopolio (TV market in Spain: oligopoly). Barcelona: Deusto. Artero, J. P. (2009). Corporate governance and risk identification in global media companies. Pamplona: Ediciones Universidad de Navarra. Artero, J. P. (2012). Development of media economics as an academic field through its seminal books. In M. McCombs & M. Martín Algarra (Eds.), Communication and social life: Studies in honor of professor Esteban LópezEscobar (pp. 55–76). Pamplona: Ediciones Universidad de Navarra. Artero, J. P., & Sánchez-Tabernero, A. (2011). Economía y empresa de comunicación (Media management & media economics). In J. Cantavella & J. F. Serrano (Eds.), Enciclopedia de la comunicación (Encyclopedia of communication) (pp. 374–491). Madrid: CEU. Barwise, P., & Ehrenberg, A. (1988). Television and its audience. London: Sage. Bertrand, C-J. (1966). The British press: An historical survey. Paris: OCDL. Bordwell, D., Staiger, J., & Thompson, K. (1985). The classical Hollywood cinema: Film style & mode of production to 1960. New York: Columbia University Press. Buquet, G. (2005). El poder de Hollywood: un análisis económico del mercado audiovisual en Europa y Estados Unidos de América (The power of Hollywood: economic analysis of European and American audiovisual markets). Madrid: Fundación Autor. Bustamante, E. (1999). La televisión económica: financiación, estrategias y mercados (The economics of TV: financing, strategies and markets). Barcelona: Gedisa. Caro, F. J. (2007). Gestión de empresas informativas (Management of media companies). Madrid: McGraw-Hill.

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Juan Pablo Artero and Alfonso Sánchez-Tabernero Coase, R. H. (1950). British broadcasting: a study in monopoly. London: Longman. Conesa, F. (1978). La libertad de la empresa periodística (Freedom in newspaper firms). Pamplona: EUNSA. Creton, L. (2001). Economie du cinema (The economics of film industry). Paris: Nathan. De Mateo, R., Bergés, L., & Sabater, M. (2009). Gestión de empresas de comunicación (Management of media companies). Sevilla: Comunicación Social. Dematté, C., & Perretti, F. (1997). L’impresa televisiva (The TV firm). Milano: Etaslibri. Deslandes, G. (2008). Le management des médias (Management of media companies). Paris: La Découverte. Doyle, G. (2002). Understanding media economics. Thousand Oaks, CA: Sage. Dunnett, P. (1988). The world newspaper industry. London: Helm. Dunnett, P. (1990). The world television industry: An economic analysis. London: Routledge. Engwall, L. (1978). Newspapers as organizations. Farnborough: Enzensberger Saxon House. Faustino, P. (2004). A imprensa em Portugal: transformações e tendencias (The press in Portugal: changes and trends). Lisboa: Media XXI; Formalpress. Fernández Alonso, I., & Santana, F. (2000). Estado y medios de comunicación en la España democrática (The State and the media in democratic Spain). Madrid: Alianza. Galik, M. (1997). Evolving the media market: The case of Hungary. Budapest: Budapest University of Economic Sciences. Gambaro, M., & Silva, F. (1992). Economia della televisione (The economics of TV). Bologna: Il Mulino. Gates, R. (2002). Production management for film and television (3rd ed.). Oxford: Focal Press. Gianelli, E. (1953a). Cinema Europeo (The European movie industry). Rome: ICAS Edizioni dell’Ateneo. Gianelli, E. (1953b). Indagine di mercato sul cinema in Italia 1950–1953 (A study about the Italian movie market 1950–1953). (1953). Rome: ICAS Edizioni dell’Ateneo. Gianelli, E. (1956). Economía cinematográfica (The economics of the film industry). Rome: Reanda. Heinrich, J. (1994). Medienökonomie (Media economics). Opladen: Westdeutscher Verlag. Heinrich, J., & Kopper, G. G. (Eds.). (2006). Media economics in Europe. Berlin:Vistas Verlag. Herscovici, A. (1994). Economie de la culture et de la comunication (The economics of culture and communication). Paris: Harmattan. Höyer, S., Hadednius, S., & Weibull, L. (1975). The practice and economics of the press: A developmental perspective. London: Sage. Huber, S. (2006). Media markets in central and Eastern Europe: An analysis on media ownership in Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia. Berlin: Lit Verlag. Jakubowicz, K., & Sükösd, M. (Eds.). (2008). Finding the right place on the map: Central and Eastern European media change in a global perspective. Bristol: Intellect Books. Klingender, F. D., & Legg, S. (1937). Money behind the screen: A report prepared on behalf of the Film Council. London: Lawrence  & Wishart. Küng, L. (2008). Strategic management in the media. London: Sage. Lange, A., & Renaud, J. L. (1989). The future of the European audiovisual industry. Manchester: The European Institute for the Media. Lauf, E., & van der Wurff, R. (2005). Print and online newspapers in Europe: A comparative analysis in 16 countries. Amsterdam: Het Spinhuis. López-Escobar, E. (1978). Análisis del “nuevo orden” internacional de la información (Analysis of the “new world order” of communication). Pamplona: Ediciones Universidad de Navarra. Lowe, G. F., & Bardoel, J. (Eds.). (2007). From public service broadcasting to public service media. Göteborg: Nordicom. Lowe, G. F., & Brown, C. (Eds.). (2016). Managing media firms and industries: What’s so special about media management? Berlin: Springer. Manfredi, J. L. (2004). La televisión pública en la transformación del estado de bienestar (Public television and the evolution of the welfare State). Sevilla: Instituto Andaluz de Administración Pública. Medina, M. (2005). Estructura y gestión de empresas audiovisuales (Market anaysis and management of television). Pamplona: Ediciones Universidad de Navarra. Mercillon, H. (1953). Cinéma et monopoles (Monopolies and the movie industry). Paris: Armand Colin. Moragas, M. de, & Prado, E. (2000). La televisió pública a l’era digital (Public TV in the digital era). Barcelona: Pòrtic. Nienstedt, H. W., Russ-Mohl, S., & Wilczek, B. (Eds.). (2013). Journalism and media convergence (Vol. 5). Berlin, Boston, MA: Walter de Gruyter. Nieto, A. (1967). El concepto de empresa periodística (The concept of newspaper company). Pamplona: Universidad de Navarra. Nieto, A. (1973). La empresa periodística en España (The newspaper company in Spain). Pamplona: Ediciones Universidad de Navarra. Nieto, A. (1984). La prensa gratuita (The free newspapers). Pamplona: Ediciones Universidad de Navarra.

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Research in Europe Nieto, A. (2006). Economia della comunicazione istituzionale (The economics of corporate communications). Milan: Franco Angeli. Nieto, A., & Iglesias, F. (1993). Empresa informativa (Media companies). Barcelona: Ariel. Nordenstreng, K. (2008). Institutional networking: The story of the International Association for Media and Communication Research (IAMCR). In D. W. Park & J. P. (Eds.), The history of media and communication research: Contested memories (pp. 225–248). New York: Peter Lang. Picard, R. G. (1989). Media economics: Concepts and issues. London: Sage. Picard, R. G. (2002). The economics and financing of media companies. New York: Fordham University Press. Picard, R. G. (2006). Historical trends and patterns in media economics (pp. 23–26). In A. B. Albarran, S. ChanOlmsted, & M. O. Wirth (Eds.), Handbook of media management and economics. Mahwah, NJ: Erlbaum. Pilati, A. (Ed.). (1993). Media industry in Europe. Milano: MIND Institute Media Economics. Pilati, A. (2000). Il mercato dei media in Italia (Media markets in Italy). Milano: Hoepli. Pinillos, P. J. (1975). La empresa informativa: prensa, radio, cine y televisión (Media companies: newspapers, radio broadcasting, film and TV). Madrid: Ediciones del Castillo. Población, J. I., & García-Alonso, P. (1997). Organización y gestión de la empresa informativa (Organization and management of media companies). Madrid: CIE-Dossat 2000. Prado, E. (1981). Estructura de la información radiofónica (News radio broadcasting). Barcelona: ATE. Richeri, G. (1993). La TV che conta: televisione come impresa (The TV that matters: TV as a business). Bologna: Baskerville. Rojo Villada, P. A. (2008). Modelos de negocio y consumo de prensa en el contexto digital (Business models and newspaper readership in the digital context). Murcia: Universidad de Murcia. Servicio de Publicaciones. Sánchez-Tabernero, A. (1993). Media concentration in Europe. Industrial needs and the public interest. Manchester:The European Institute for the Media. Sánchez-Tabernero, A. (2000). Dirección estratégica de empresas de comunicación (Strategic management of media companies). Madrid: Cátedra. Schmidt, G., Schmalenbach, W., & Bächlin, P. (1948). The film: Its economic, social and artistic problems. London: Falcon Press. Scholtz, C. (2006). Handbuch Medienmanagement (Handbook of media management). Berlin: Springer. Sterling, C. H., & Haight, T. R. (1978). The mass media: Aspen Institute guide to communication industry trends. Bellmay, NJ: Praeger. Tallón, J. (1981). Empresa y empresario de la información: temas para un curso de empresa informativa (Media companies and managers: issues for a course on media management). Madrid: Dossat. Toussaint, N. (1978). L’économie des medias (Media economics). Paris: Presses Universitaires de France. Tydeman, J., & Kelm, E. J. (1986). New media in Europe: satellites, cable,VCRs and videotex. New York: McGraw-Hill. Vejanouski, C., & Bishop, W. D. (1983). Choice by cable: The economics of a new area in television. Lansing: Institute of Economic Affairs. Vukanovic, Z., & Faustino, P. (Eds.). (2001). Managing media economy, media content and technology in the age of digital convergence. Lisbon: Media XXI. Wirtz, B. W. (2011). Media and internet management. Wiesbaden: Gabler. Wirtz, B. W. (2015). Business Model Management: Design – Instrumente – Erfolgsfaktoren von Geschäftsmodellen (5th ed.). Wiesbaden: Gabler. Wolf, M. J. (1999). The entertainment economy: How mega-media forces are transforming our lives. London: Penguin. Zerdick, A. (Ed.). (2000). E-conomics: Strategies for the digital marketplace. Berlin: European Communication Council; Springer.

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5 MEDIA MANAGEMENT AND ECONOMICS RESEARCH IN ASIA Jaemin Jung and Youngju Kim

Asian Media Market Environment In recent decades, the Asian media industry has been dramatically transformed as a result of several factors. Following the economic success of Japan and the so-called Four Asian Dragons—Hong Kong, Singapore, South Korea, and Taiwan—the two largest developing countries—China and India—are thriving internally and with respect to the global markets. New growth opportunities in South Asian countries, such as Vietnam, Indonesia, and Malaysia, are also receiving attention from the world economy. The region’s economic growth has changed the patterns of world trade, including the soaring media trade within Asia and between Asian countries and the rest of the world (International Trade Association, 2016). As a media content originator and disseminator, Asian countries’ influence has increased. For example, China’s Wanda Group became the world’s largest cinema chain operator by acquiring U.S. cinema chain AMC Theatres, Australian cinema chain Hoyts, and the UK’s Odeon & UCI Cinema Group. Wanda also acquired U.S. film studio Legendary Entertainment, maker of blockbuster hits, such as Jurassic World and the Dark Knight trilogy. South Korea has emerged as a major exporter of popular culture. First driven by the spread of K-dramas and K-pop across East, South, and Southeast Asia, the Korean wave—the so-called Hallyu—evolved from a regional development into a global phenomenon, gaining popularity in Europe and North and South America ( Jin & Yoon, 2017). Digital technologies, social media, and mobile devices have rapidly expanded throughout Asia, particularly in East Asia and in some countries in Southeast Asia. These technologies have transformed the production, distribution, and consumption of news and entertainment and have yielded an increase in new platforms and players. Asian countries have their own search engines, social networking platforms, and messaging services that surpass even the global giants, such as Google and Facebook. For example, although Google dominates the world’s market share as a search engine, China’s Baidu and Korea’s Naver account for approximately 80% of their domestic search engine market share, beating Google (Stat Counter, 2017; Korea Times, 2017, April 23). Asia’s regional messenger apps—WeChat in China, Line (originated in Korea) in Japan, and KakaoTalk in Korea—are leading their respective national markets. New Asian players in the digital world are also noticeable in video streaming services. Iflix, as a Netflix alternative, was launched in Malaysia and the Philippines in 2015 and offers local programming and Hollywood hits to its subscribers in 18 territories across Asia, the Middle East, and North Africa ( Jarvey, 2017). Viu, the multi-territory streaming service

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operated by Hong Kong’s PCCW, is producing original shows for the Chinese, Indian, and Southeast Asian markets (Erater, 2017). Although most East Asian countries enjoy high-speed broadband connectivity, placing them in the highest-ranking group in the world (Statista, 2017), Internet penetration rates of less developed Asian countries, such as Pakistan, Bangladesh, Sri Lanka, Myanmar, Cambodia, Laos, and TimorLeste, are approximately or less than 10%—much lower than the average rate of the rest of the world (Internet Live Stats, 2016). A wave of deregulation and privatization ignited the change in the structure of the traditional media industry and gave rise to new marketplaces for media products and services in Asia. However, strong nonmarket forces still create extra complexity for both researchers and practitioners when analyzing the Asian media market (Ho & Fung, 2016; Kim & Park, 2004). Despite drastic changes in the media environment and heterogeneity among Asian nations in terms of economic power, population, market size, culture, laws and regulations, and technological infrastructure, Asia is still treated as one unit and not much attention has been paid to the Asian media market except for in a few developed East Asian countries. In this chapter, the scope of Asia follows the customary division of Asia into the South, the Southeast, and the East. Oceania and parts of the Asian continent that belong to the Middle East and the former Soviet Union are excluded. Yet, the remaining area covers 26 countries inhabited by more than 4.1 billion people, or 56% of the world population as of January 2017 (Worldnometers, 2017).1

Media Management and Economics Research Trends in Asia The United States is the undisputed pioneer and headquarters of communication research. Europe as a whole represents the second center of communication research activities and hosts such activities in various forms. Apart from these two camps, Asia is a gradually rising “third force” in the field of communication research (So, 2010). Nonetheless, communication and media studies on Asia have been far less publicized in the English-language literature than studies on the United States and European countries. In particular, studies on economic and managerial approaches to the media industry have been far less prevalent and are poorly understood. The dominance of the United States and Europe is also applicable to the field of media management and economics (MME) research. The United States has been leading media economics since the launch of the Journal of Media Economics ( JME). Europe has become the center of media management research with the initiation of two journals: the International Journal on Media Management (IJMM) and the Journal of Media Business Studies ( JOMBS). Although Asia may still be behind the United States and Europe in terms of the size and maturity of its research community, the region should not be overlooked given both the increasingly active role its scholars are playing and its growing economy and global influence (So, 2010). In general, scholarly research interest in the media industry is not a recent trend in Asia. Extant research involving the political economy throughout the 1970s and 1980s addressed the cultural industry as an important research field (Hang, 2006). However, the history of research concerning microeconomic theories and quantitative methodologies is relatively short. Furthermore, managerial research that explores the role of the media firm as a financial institution is a rather recent trend. Given the growing richness and scale of the Asian media market and the growth of MME scholarship, the research field is rapidly evolving. A set of Asian scholars interested in MME as an approach to explain the media market have developed academic communities. For example, the Korea Media Management Association, the Media Economics & Management Division at the Korean Society for Journalism & Communication Studies, and the Broadcasting Management & Marketing Division at the Korean Association

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for Broadcasting & Telecommunication Studies exist in Korea. In China, the Chinese Committee for Media Economics and Management Research (CCMEMR), a national association for media economics and management scholars, was created. Asian media scholars also held global conferences on MME—evidence of the rising interest in this field. The 7th World Media Economics Conference was held in Beijing in 2006 and the International Media Management Academic Association Conference was held in Korea in 2016. According to research that reviewed 1,257 media economics studies, international journals, domestic articles, books, and conference papers in China have increased exponentially over time. In the 1980s, 178 articles appeared, a figure that tripled to 519 in the 1990s. During the four-year period since 2000, 560 studies were conducted (Hang, 2006). In 2003, South Korea launched the Journal of Media Economics & Culture ( JMEC), which—although it publishes broad topics on the media—aims for a core platform of media economics research in Korea. According to a meta-analysis of three major Korean journals, including the JMEC from 2003 to 2007, 118 out of 760 articles were published on media economics, which accounted for 15% of all published articles ( Jung, 2008). The previous meta-review studies on media economics in Asia indicate greater interest by scholars and a surge in demand for research on the economic issues raised by media industries. However, these studies are outdated, written in the local language, and more focused on media economics. In addition, one study was limited to an examination of research in China and another was confined to research in Korea. To paint a more accurate picture of MME research in Asia, it is necessary to review more studies published in English journals, including not only on media economics but also on media management research, by analyzing theoretical and methodological approaches.

Analysis of MME Research in Asia This chapter reviews articles published in the Journal of Media Economics ( JME; 1988–2016), International Journal on Media Management (IJMM; 1999–2016), and Journal of Media Business Studies ( JOMBS; 2004–2016) that focus on Asian countries and regions. Additionally, we analyze the research on MME as published in the Asian Journal of Communication (AJC; 1990–2016). Domestic journals of each Asian country were not analyzed given the limited scope of research and the language issue, which renders them inadequate in the international database.Thus, it should be noted that this chapter is written for an English-speaking readership and better represents how studies of Asian media markets are reflected in journals published in English.

Selection of Articles Because three journals ( JME, IJMM, and JOMBS) publish research on managerial and economic issues, articles on Asian countries are obvious. Although the AJC publishes articles targeting Asian countries, the journal covers all perspectives on communication and media. Thus, we cautiously approached selecting articles in the AJC that focus on MME. Regarding whether an article fits under MME, we most seriously considered the theoretical orientation, relevance of the topic, object of analysis, and implications of the research. The methodological tools, the data, and their relevance to MME were also considered. Additionally, we paid attention to the literature cited and how much of it relates to MME. On the basis of the criteria, first, articles adopting economic and management theories, such as the industrial organization model, the home market effect, niche theory, the resource-based view, and a firm’s strategy—diversification, M&A, investments, or pricing—were clearly selected for the analysis. Although adopted theories do not originate from economics and management but from communication theory, such as diffusion of innovation, when economic or marketing features work

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as critical factors of the study, they were included for analysis. Any article utilizing communication theories and investigating the impacts of financial news on the stock market, public opinion, or managers’ decision making was also included. Second, certain topics such as policy making or the cultural impact on the media market are appropriate to count as media economics research; however, greater effort was devoted to determining whether a topic should be included as MME research. Articles focusing on competition and the pricing of telecommunication and media policies were included. Papers examining the impacts of Western content on local market competition and changes in local firms’ programming were also included. However, a study that was more inclined to a government’s telecommunication political development planning, act, or law was not included as a target of analysis. Papers analyzing the broadcasting and film industry from the perspective of cultural imperialism were not included. In other words, the political economy of media as a form of critical inquiry is not within the scope of this chapter. In the analysis of the four journals, MME research on Asia is depicted by the number of articles (volume), country, target industry, level of analysis, applied theory or framework, methodology, data collection, time frame, and author nationality. To ensure inter-coder reliability, the authors of this chapter discussed and carefully selected articles together, coded each category respectively, and compared the results. For disagreements, we reached a consensus through ongoing discussions.

Volume of MME Research As Table 5.1 shows, in the four journals, there are 125 articles on Asian MME issues. In the JME, 44 (11.8%) out of a total of 374 articles were devoted to the analysis of Asian countries, excluding editor’s notes and short commentaries. In the IJMM, there were 20 (6.9%) out of 291 articles on Asia. In the JOMBS, 11 (5.9%) out of 188 articles were devoted to Asian countries. In the AJC, 50 (9.1%) out of 557 articles addressed managerial and economic phenomena in Asia. Overall, in the four journals, 125 out of 1,404 studies published during the analysis period explored media management and economic issues in Asian countries. In sum, articles on MME in Asian countries account for 8.9% of all publications. Regarding the number of MME studies on Asia over time, a gradual increase is observed during the analysis period. After the launch of the JME in 1988, no articles that focused on any Asian country were published for more than ten years. In 1999, Sussman (1999) wrote a paper titled “Who Speaks for Asia: Media and Information Control in the Global Economy,” and noted that East and Southeast Asia have become regional production platforms for the manufacture of Western media and information commodities, primarily driven by transnational institutions. Immediately after Sussman’s work, articles on Asian media markets emerged in the JME. An analysis of the volume of

Table 5.1 Volume of MME research in Asia: 1988–2016. 1988–1990 1991–1995 Total Asia JME 30 IJMM JOMBS AJC 6 Sum 36

0(0)

Total Asia 63 0(0)

1996–2000 Total Asia

2001–2005 Total Asia

2006–2010 Total Asia

2011–2016 Sum Total Asia

74 23

1(1.4) 77 13(17.8) 59 13(22.0) 71 17(23.9) 374/44(11.8) 0(0) 110 4(3.6) 80 12(15.0) 78 4(5.1) 291/20(6.9) 14 2(14.3) 74 5(6.8) 100 4(4.0) 188/11(5.9) 1(16.7) 73 8(11.0) 72 10(13.9) 72 5(6.9) 124 12(9.7) 204 14(6.9) 551/50(9.1) 1(2.8) 136 8(5.9) 169 11(6.5) 273 24(8.8) 337 42(12.5) 453 39(8.6) 1404/125(8.9)

Parentheses = percentage of Asia-related MME articles out of all articles published in that time period.

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research on Asian countries in five-year units shows an apparent increase in the number and proportion of Asian media market papers compared with all articles published during the period. Only 1 (1.4%) out of 74 articles was published during 1996–2000, and this figure increased to 13 (17.8%) out of 77 during 2001–2005. There were 13 (22.0%) out of 59 during 2006–2010, and 17 (23.9%) out of 71 papers during the most recent period of 2011–2016. Articles on Asia first appeared in the IJMM in 2002, three years after the journal launched. Gershon and Kanayama (2002) analyzed Sony’s transnational media management strategy, and 4 (3.6%) out of 110 articles on Asian countries were published during 2001–2005. This figure increased to 12 (15.0%) out of 80 articles during 2006–2010 but declined to 4 (5.1%) out of 78 articles during the next period. The first article on Asia in the JOMBS appeared in 2005 right after the journal’s launch in 2004. Lan and Xu (2005) explored how development in provincial satellite television was altering competition and television firms’ strategy in China. Although two studies were devoted to Asian countries, they accounted for 14.3% out of 14 articles published in the JOMBS during 2001–2005. The number of articles on Asian countries increased to five (2006–2010) and four (2011–2016), but accounted for just a limited portion (6.8% and 4.0%) of the total articles published during these periods. In the AJC, the first article to explore the issue of the Asian media market appeared in 1990. In a longitudinal analysis of the coverage of international news in Taiwan, the authors examined the economic dependency of Taiwan on foreign countries as a decisive factor in news coverage (Tang & Chan, 1990). During each of the next five-year periods, although the proportion was low and there was not much variation in each period, the number of managerial and economics articles on Asian countries seemed to increase. Overall, in the JME, although there was an apparent increase in articles on Asian countries, other journals did not show a critical increase. Nonetheless, the total number of articles on the Asian media market in the four journals increased from only 1 to 8, 11, 24, 42, and 39 in each five-year period. This gradual increase indicates that the interest in media economics and management issues in Asia has been growing (Table 5.1).

MME Research by Country or Region This chapter analyzed 125 articles published in four journals. For cross-country comparison studies on more than two Asian countries, each country was coded respectively. For example, in a study on how newspapers connect with audience communities, the authors compared the cases of Finland, Japan, and Korea (Villi & Jung, 2015). Although it is a single article, we coded Japan and Korea separately. Thus, the number of observations in the country analysis is 140 cases. Overall, among 26 countries in East, South, and Southeast Asia, a total of 12 countries appeared in the publications. A closer look at the countries reveals that four of them accounted for the majority share of all MME research in Asia: China, Japan, South Korea, and Taiwan. Research on these four countries or their people is most prominent. South Korea was the most frequently researched country, appearing 43 times (30.7%). Following South Korea, Taiwan appeared 26 times (18.6%), China including Hong Kong appeared 25 times (17.9%), and Japan appeared 16 times (11.4%). In sum, research that focused on the four countries accounted for 80% of all articles.2 Nine cases (6.4%) covered Asian regions or countries in general rather than a specific country. After the big four comes another group of countries with active research: Singapore (6 times; 4.3%), India (5 times; 3.6%), Thailand (4 times; 2.9%), and Indonesia (3 times; 2.1%). The final group of countries that appeared in research at an even lower frequency includes Malaysia, Bangladesh, and Sri Lanka. Each of these three countries appeared only once in the journals. The remaining countries are inactive in MME research in the four journals. It should be noted that the research on five

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countries—Thailand, Indonesia, Malaysia, Bangladesh, and Sri Lanka—appeared only in the AJC. In other words, the countries appearing in the three MME journals are limited to six: South Korea, Taiwan, China (Hong Kong), Japan, Singapore, and India.

MME Research by Industry The broadcasting, newspaper, and film industry are found to be the major areas for MME studies in Asia. The broadcasting industry, including terrestrial TV/radio, cable, and satellite systems, was most frequently analyzed in Asian contexts, accounting for 43 articles (34.4%). Following broadcasting, newspaper and film are the second most frequently appearing industries, accounting for 21 studies (16.8%). Articles covering the three industries accounted for almost 70% of all articles. In other words, seven out of ten articles published in the four journals dealt with the broadcasting, newspaper, or film industry. In particular, the JME has more publications in the broadcasting (38.6%) and film (29.5%) industries compared with the three other journals. Research on advertising/public relations (6 articles; 4.8%), the Internet (5 articles; 4.0%), telecommunication (5 articles; 4.0%), and music (3 articles; 2.4%) followed the three largest areas. Only one article covered research on the game industry with a managerial perspective. Eleven articles (8.8%) covered the media industry in the Asian market in general rather than focusing on a specific media industry. Despite the emerging trend on social media as a research topic, only one comparative study analyzed the profits and financial market values of Chinese and U.S. social media (Fuchs, 2016).

MME Research by Level of Analysis In terms of level of analysis, we tracked whether a study was conducted along the dimensions of individual (producer/consumer), firm, industry, or country. The firm level was the most frequently studied (39 articles; 31.2%), at which scholars have explored the strategies of media firms. Following the firm level, studies were conducted at the individual level (33 articles; 26.4%) and at the industry level (32 articles; 25.6%). The remaining articles were devoted to the country level (20 articles; 16.0%). Overall, studies are fairly distributed among diverse levels. Although the JME has more articles that focus on the general media industry competition, almost half of the IJMM and JOMBS articles tackled the issues at the firm level. Twenty-five percent of the JME articles were devoted to the country level, but only three such articles existed in the IJMM. Given the nature of the JOMBS, no study was conducted at the country level in that journal. Regarding the individual-level analysis, 24 out of 32 articles were conducted with an audience analysis and focused on consumption. Only eight articles were devoted to analyzing the perception or features of individuals, such as news reporters working for media firms on the production side.

MME Research by Applied Theory or Analytical Framework Various economic, management, and other theories were used to explain the media market phenomena in Asia. Although some papers apparently adopted theories, such as industrial organization economics, the home market model, the resource-based view, niche theory, or game theory, others introduced some concepts as a basis of research and described previous related research. The industrial organization model is most frequently adopted as the theoretical framework to examine the relationship between market structure, competition, and media performance. Twenty articles (16.0%) were conducted on the basis of the industrial organization approach. For example, some studies examined the relationship between market structure, competition, programming (content) diversity, and customer satisfaction in diverse contexts, such as Taiwan’s TV market (Li, 1999;

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Li & Chiang, 2001; Li, Liu, & Chen, 2007) and newspaper market (Lee, 2007), the Korean multichannel video programming industry (Hong, Lee, & Hwang, 2011; Rhee & Lee, 2010), terrestrial TV programming diversity in Korea (Lee & Youn, 1995; Park, 2005), the Chinese TV market (Yuan, 2008), and TV program diversity in Indonesia (Lau & Atkin, 2012). Theories related to the international film trade, such as home market effects and cultural discounts, were adopted in eight studies (6.4%). The diffusion of innovation covering adoption, resistance, or diffusion was also frequently used (7 articles; 5.6%). Studies adopting the niche theory as a framework appeared five times (4.8%). Other studies utilized frameworks such as the resource-based view, game theory, the principle of relative constancy, the survival model, and others. However, the use of those frameworks is very limited in terms of volume. Although 29 studies (23.2%) focused on firm strategy, it is difficult to clarify the theory applied. Similarly, some articles challenging regulation and policy issues did not adopt explicit theories.

MME Research by Methodology We reviewed the methodology used in each article published in the four journals. Broadly, the methodology was categorized as a quantitative, a qualitative, and a mixed approach. First, the quantitative approach was ahead of the qualitative approach in terms of methodology used in MME research in Asia. Eighty-two out of 125 (65.6%) adopted quantitative methods and 39 articles (31.2%) used qualitative methods. Only three articles (2.4%) combined quantitative and qualitative approaches, and one paper was a critical review of economic research on the Asian media market. Although the JME is more inclined to a quantitative approach given the nature of economic research, the JOMBS has more articles with a qualitative approach. Thirty-six out of 44 articles (81.8%) published in the JME and 4 out of 11 articles (36.4%) in the JOMBS adopted quantitative methods. Meanwhile, the IJMM has ten quantitative and nine qualitative articles. In the AJC, the number of quantitative articles (32; 64.0%) was twice that of the qualitative articles (16; 32.0%).

Quantitative Research by Data Collection Methods The quantitative methodology was more specifically coded as a survey, an experiment, secondary data analysis, mathematical modeling, or quantitative content analysis. In the case of using multiple data collection methods, each method was coded respectively.Thus, although 82 articles used a quantitative approach, the total number of data collection observations was 95. Those who conducted quantitative research to study MME on Asia most often relied on secondary data. Half (49.5%) of the quantitative research collected data throughout secondary sources. In particular, 70% of the JME articles utilized secondary data for their research. Obtaining secondary data from firms, commercial organizations, industry associations, or governmental or international agencies is comparatively inexpensive, can be done quickly, and is of high quality (Beam, 2006). Following secondary data gathering, the survey was the second most frequently used method to collect data, taking up 30.5% of quantitative methods. Although the total number of published articles was not large, 70% of the quantitative research in the IJMM and 50% of the quantitative studies in the JOMBS used the survey method to collect data. Meanwhile, secondary data (14 cases; 37.8%) and survey (12 cases; 32.4%) were used almost equally in the quantitative research published in the AJC. The quantitative content analysis method was used in 16 (16.8%) out of 95 cases. Two quantitative studies conducted interviews with managers to collect additional data and quantitatively coded the dialogue. In a study on the effects of ownership concentration in Taiwan’s cable television industry, following the questionnaire survey, Chen (2002) employed personal interviews with presidents, managing directors, or financial managers of cable system

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operators to acquire additional data. In another study that examined the advertising revenue gap between China’s party and mass-appeal newspapers (Huailin & Zhongshi, 1998), the authors conducted a content analysis of advertisements and administered interviews with 20 managers of 12 provincial-level party newspapers. Interview recordings were transcribed and the content was analyzed in a quantitative manner. There was only one modeling approach done without an empirical examination. Ho and Sun (2008) proposed a game-theoretic model to analyze the strategic reaction of the newspaper market incumbent to a tabloid-like entertainment newspaper entrant and its impact on the industrial structure by modifying Judd’s multiproduct competition model (1985), considering the property of heterogeneous competition in the Taiwanese newspaper market. Meanwhile, no study conducted an experiment or another quantitative method to collect data.

Qualitative Research by Data Collection Method The qualitative methodology was divided into focus group interviews, one-to-one in-depth interviews, observations, action research, and others. Regarding the data collection in the qualitative research, 13 out of 39 qualitative research articles published in the four journals conducted in-depth interviews with experts in diverse media industries. In fact, all 39 qualitative articles collected data from secondary data, which seemed to be quantitative data collection. However, different from quantitative data for statistical analysis, the data used in the qualitative studies were primarily from press reports, including the news media, trade magazines, and academic publications, such as books and journals. Firms’ revenue or market share changes over time are included in the article as descriptive explanations. Except for the one-to-one in-depth interviews, other qualitative methods, such as focus group interviews (FGIs), participatory or nonparticipant observations, reflective filed notes, or pictures for data gathering, were not used at all in the 39 qualitative studies. Meanwhile, three studies combined quantitative and qualitative methods to collect data. For example, Bohley (2010) examined country-of-origin effects in a bookstore competition in Singapore using diverse methods. She conducted open-ended interviews with individuals associated with Singapore’s print industry and government. To triangulate the interviews and participant observations, she further conducted a survey of college students. Lee (2006) explored the relationship between partners in joint ventures by studying MGM Network’s entry into the Korean market. She examined the effectiveness of the release strategies of the major Hollywood studios using a correlation analysis and four-year data on 267 Hollywood films distributed in South Korea. Additionally, in-depth interviews were conducted to analyze major Hollywood distributors in South Korea, such as 20th Century Fox, Paramount, and Buena Vista South Korea, a Disney subsidiary. Another study combined a consumer survey with an in-depth interview to understand the cable industry in Taiwan (Li, Liu, & Chen, 2007). Because data were not publicly available, they conducted intensive interviews with firms’ managers and industry experts to collect information on customers and market competition. Additionally, a telephone survey was administered to measure subscribers’ satisfaction.

Case Study Research Design The case study approach is common in media management research because the unit of analysis is often the organization or the firm (Doyle & Frith, 2006). Gaining an in-depth understanding of how an industry works does not necessarily mean researching a large number of cases. Case studies tend to be associated with qualitative research because qualitative data collection methods are common in such studies. However, case studies can also use quantitative data as part of either multimethod or

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single-method research that relies on solely such type of data (Beam, 2006). Indeed, a case study or a comparative case study is not a method but a research design (Hollifield & Coffey, 2006). As a research design, we speculated on whether the research was a study of a single or of multiple cases in a certain country, or cross-country comparative cases. Eleven articles tackled singlecase issues, such as China’s media market after WTO entry (Lin, 2004) or Sony Corporation’s transnational media management (Gershon & Kanayama, 2002). Another 11 studies analyzed multiple cases for comparison purposes: party and mass-appeal newspapers in China (Guo, 2001), competitive strategies for the internationalization of CNNI and BBC World (Shrikhande, 2001), or market-entry strategies of four Western publishing houses in China (Strube, 2010). Fifteen studies conducted cross-country comparative case studies: the effects of recession on advertising expenditures (Picard, 2001), cultural diversity in the movie industry (Moreau & Peltier, 2004), competition in satellite broadcasting (Sohn, 2005), the impact of regulatory changes on cable market performance (Schejter & Lee, 2007), a comparison of the audience measurement system (Taneja & Mamoria, 2012), newspaper firms’ audience community building (Villi & Jung, 2015), and mobile news diversity (Dwyer, 2015). Interestingly, only 2 out of 15 cross-country case studies made comparisons between Asian countries. Lin and Liu (2011) compared market trials of mobile broadcasting TV in Singapore and Taiwan. Another cross-country comparison study between Asian countries was the investigation of four Asian countries’ (Hong Kong, South Korea, China, and Japan) news apps (Dwyer, 2015). Except for two studies, other cross-country studies compared one or two Asian countries with countries in other regions. The most frequently compared country was the United States, which appeared in 11 out of 13 studies. Following the United States, the United Kingdom and France appeared six times; Germany, Italy, and Finland were compared in four studies; and Spain, Sweden, and Australia followed at three times. Twenty other countries in Europe, North America, and South America were compared one or two times with Asian countries in diverse media industry contexts.

MME Research by Time Frame Approach Regarding the timeframe of the research, the cross-sectional study was ahead of the longitudinal research. Approximately 60% of MME articles on Asia were cross-sectional studies, which explored phenomena in the media industry at a certain point in time. In particular, the cross-sectional study accounted for 80% of the articles on Asia in the IJMM, and more than 60% of the articles in the JOMBS and the AJC. Meanwhile, 60% of articles in the JME on the Asian media market were longitudinal studies. However, it should be noted that most studies categorized as having a longitudinal time frame collected data on firm, industry, or country over time, but explained the change in revenues, market share, penetration rates, and others in a descriptive manner. Only a few studies utilized longitudinal panel data and conducted econometric statistics.

MME Research by Author Nationality Because a set of scholars is an essential part of an academic field, we review the authors of MME articles on Asian countries to determine the contribution of Asian scholars.3 Ninety-eight (78.4%) out of 125 articles were written by Asian authors. Seventeen (13.6%) articles were coauthored by Asian scholars and non-Asian scholars. As expected, Asian scholars worked with non-Asian scholars in cross-country comparison studies on the impacts of cable TV policy change in Korea and Israel (Schejter & Lee, 2007), the film trade in the United States, Europe, and Japan (Lee & Waterman,

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2007), an assessment of the newspaper audience community in Finland, Japan, and Korea (Villi & Jung, 2015), and the work motivation of journalists in Taiwan and the United States (Chang & Massey, 2010). Meanwhile, only ten articles (8.0%) were written by non-Asian scholars. There was not much variation by journal: almost eight out of ten articles were written by Asian scholars in three journals—the JME, the IJMM, and the ACJ. Only the JOMBS has fewer articles by Asian scholars (54.5%) and a higher percentage of co-works (36.4%) between Asian and non-Asian scholars.

Lessons From the Meta-Review We reviewed three journals covering MME issues, selected articles on Asian countries, and analyzed the theoretical and methodological aspects of the studies. Additionally, articles focusing on MME published in the AJC were analyzed. The results from the findings presented show the gradual progress of MME research in Asia. After the launch of the JME, studies on any Asian country were not found for the first ten years. Although not drastic, the number of studies on the Asian media industry has increased gradually. In particular, one out of four or five articles published in the JME in the most recent ten years represented research on economic issues of Asian countries. Overall, in the four journals reviewed in this chapter, at least more than one article focusing on managerial and economics issues of the Asian media market has been published almost every year.

Skewed Scope in Country, Industry, Sector, and Theories Considering the increase in MME research on Asia, the scope of the analyzed countries is quite limited.The big four in East Asia—China (including Hong Kong), Japan,Taiwan, and South Korea— take up almost 80% of Asian MME research. Overall, only 11 countries appeared in the analyzed journals. If we count articles in the three MME-focused journals, only six countries (the aforementioned big four, India, and Singapore) were targets of the research. The remaining five countries (Bangladesh, Indonesia, Malaysia, Sri Lanka, and Thailand) appeared only in the AJC. The analyzed target industry was also skewed into three sectors. Almost 70% of the articles explored issues in the broadcasting, newspaper, and film industries in Asia. This result might have occurred because of the provision of reliable and consistent data for these industries. Despite the flourishing academic interest in games, mobile, and social media, only a limited number of studies have been conducted on the issue of MME on Asian countries. In terms of level or dimension of analysis, firm level was slightly ahead of other levels, such as individual, industry, and country. However, out of 32 articles analyzing the individual level, 24 of them were conducted to understand media consumers. Only eight studies were devoted to exploring the perception or behavior of individuals working on the production side. All economic and managerial theoretical perspectives can enrich and deepen the discipline of MME in Asia. However, the findings from the meta-review of studies on the Asian media industry in this chapter revealed that the discipline is still far from achieving the goals suggested by previous studies, suggesting the use of diverse economics and management theories (Albarran, 2004; Fu & Wildman, 2008; Küng, 2016; Lacy & Niebaur, 1995). Only a limited number of economic and managerial theories have been used in analyses of the media industry in Asian countries. As a single framework, the industrial organization model was most frequently and obviously used as a basis of research. Following the IO model, the home market model with a cultural discount, the diffusion of innovation, and niche theory was frequently adopted as a framework. A group of studies used the firm’s strategy as a foundation of that research; however, most studies on strategy were more descriptive explanations with certain concepts rather than adopting theories to examine hypotheses.

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Lack of Diverse Methodological Approaches and Rigorous Statistical Analysis In terms of methodology, the number of articles using quantitative methods (65.6%) was double that of those using qualitative research (31.2%). Meanwhile, only three studies used both quantitative and qualitative methods together. Regarding data collection, although some studies collected data in multiple ways, the most frequently used method was to gather data from secondary sources. Data collection from surveys, in-depth interviews, and content analysis followed. Participatory observation was used in only one study. No study conducted experiments or used other quantitative methods to collect data. In fact, this is not only an issue with MME research in Asia. Previous studies analyzing 309 articles published in the JME and the IJMM for 15 years after the launch of the JME also revealed that the experiment was used only in two studies and field or participant observation was least used (Beam, 2006; Hollifield & Coffey, 2006). A review of articles on the Asian media industry in the four journals revealed statistical problems as well. Given the nature of economics research, more than 60% of the published articles used quantitative approaches. In particular, 36 out of 44 (82%) papers published in the JME used quantitative methods. Moreover, more than 40% of the published articles collected data over time. In the case of the JME, the number of studies using longitudinal data reached 60%. Although most studies ran a regression analysis, they explored single equation models with a single dependent variable and more than two explanatory variables. However, in many situations, such a one-way or unidirectional cause-and-effect relationship is less meaningful. Even worse, many studies did not articulate the issue of autocorrelation between members of series of observations ordered in time (as in time series data) or space (as in cross-sectional data). Admitting that the goal of the studies was not the precise modeling of any event, such as box office or advertising revenues, but rather the examination of the relationship between conceptual phenomena, the problem of endogeneity should still be considered.

Looking Ahead: Suggestions for Future Research Asia as a Content Originator and Distributor Studies published in the four journals mostly addressed the media trade between the United States and any Asian country. Empirical affirmation of the home market model in general offers implicit support for the theory that cultural discounts of U.S. films exist in the Asian market. It should be noted that these studies followed a line of research that treats the United States as a producer and people in Asia as consumers. However, Asian countries also have their own media content production industries that are on the rise. Significant intra-regional trade of media content exists among Asian countries. Furthermore, Asian countries also started to spread their content, such as movies, TV dramas, music, and games, to the rest of the world. By not simply exporting programs but also selling full packages of show formats, Asian countries enhanced the brand power in the global media industry. “Better Late Than Never” is an American reality-travel series that airs on NBC and that bought the remake rights for the South Korean series Grandpas Over Flowers from CJ E&M, one of the largest media and entertainment groups in Asia. In terms of comparative case studies exploring the similarities and differences among firms/industries in other regions, these studies are mostly confined to a comparison between an Asian country and the United States or a few European countries. Only two studies compared the phenomena between Asian countries. Considering increased media trade among and the heterogeneity of Asian countries, more attention should be given to comparative case studies among Asian countries. Thus, it is necessary to elaborate on models that explain the media trade within Asia or predict the success

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factors or comparative advantages of Asian content in other regions. Investing a serious amount of time in building theories and frameworks that are more appropriate in the Asian context, rather than simply applying Western-originated theories to examine Asian phenomena, is highly recommended.

Overcoming Disciplinary Fragmentation As aforementioned, the industrial organization model was primarily adopted to explain the managerial and economic phenomena in the Asian media industry. Research based on industrial organization economics defines the scope of the market and competitors within a certain industry (i.e., broadcasting, film, or newspaper). However, competition is not happening within a certain industry. Because the same media content is consumed in diverse digital platforms and strong Asian media players are prospering, the traditional demarcation of the media industry must be redefined. It is necessary to extend the scope of the newspaper, broadcasting, or film industry to new distribution channels, such as the Internet or the mobile platform. More attention should also be given to social and mobile media in Asia. Considering Asia’s population and its growing economy, research on the economic characteristics of regional search engines and mobile and SNS services relative to global platforms might be valuable. Advanced high technology, such as the Internet of things (IoT), robots, drones, self-driving cars, virtual reality, augmented reality, and artificial intelligence (AI), will provide media scholars with new research opportunities. For example, a study compared the quality of a robot-written article with that of a human journalist’s work in South Korea and found that both the public and journalists gave higher scores to the robot’s work ( Jung, Song, Kim, Im, & Oh, 2017). It could be an opportunity for media companies to reinvent the news production system by generating news faster, at a larger scale, and with fewer errors. As such, new research opportunities are open to every region in the world. However, there might be different values and behaviors in the production and business operation of high technology in the Asian media market due to the different organizational culture and management system.The adoption or the resistance, the diffusion process, and the ethical quandary of media products utilizing high technology will also illuminate a different picture in Asia.

Elaborating on Cultural Values and Nonmarket Factors Most studies adopted theories and frameworks that were developed in Western countries and applied them to the phenomena of the Asian media market. Because MME research in Asia is still at a relatively early stage and is behind that of the United States and Europe in terms of quantity, the application of established Western-originated theories to the Asian phenomena might be meaningful from the aspect of generalization. However, considering the complexity and heterogeneity of the Asian context, building theories and frameworks that can better explain the Asian market is a necessary step to moving forward. For example, one study presented the theories of the ancient Chinese military strategist Sun Tzu and the philosopher Confucius, and illustrated how they have long been applied to marketing strategy (Chen & Wells, 1998). Associating ancient Chinese military and ethical philosophy with modern business competition enabled the presentation of a proper guide for those aiming at the markets in cultural China. From a cultural standpoint, a large number of articles conducted cross-country comparative studies, mostly between the United States or a few Western European countries and any Asian country. They assumed that cultural differences exist between Western and Asian countries without explicitly measuring cultural distance or difference. Moreover, people in different countries in Asia may perceive and act differently given their respective cultures. In contrast, digital technologies might also plausibly dilute the different patterns of consumption caused by cultural differences. Thus, it is

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necessary to delve more precisely into cultural differences and similarities to improve the understanding of the Asian media industry. It should also be noted that understanding nonmarket factors is critical to understanding the Asian media market. Despite the economic progress, liberalization, and privatization of the media industry, market forces are not always the major determinants of what happens in the industry and with policy making in Asia. Nonmarket forces, such as politics or tradition, can exert a far stronger influence on what goes on in Asian media institutions, making Asian cases the more exciting and, at the same time, more complex cases of media markets to understand (Kim & Park, 2004). Thus, additional questions about how media economics and management can resolve nonmarket issues, such as government interventions in explaining the market behavior in Asia and to what degree, should be asked.

Case Studies With Diverse Methods and Multiple Countries One of the highest barriers to testing theories and applying multivariate statistical tools in Asian MME research is the collection of reliable and consistent data. Even basic data, such as paid circulation, advertising price, market share, revenues, and production costs, are mostly confidential, resulting in a lack of reliable quantitative measures. However, widespread use of digital media enables scholars to utilize more reliable data by tracking consumer or firm behavior on diverse platforms. Although we admit the value of quantitative analysis, strategic decisions are not always made on the basis of data analysis but, many times, on managerial cognition. Hence, relying on interviews with industry practitioners and information through observations can be more effective in management studies. Many insights from management research, in particular when less tangible resources were involved, could be explored only using a case study approach and observations of the effects of otherwise unobservable, idiosyncratic effects on business strategy (Chan-Olmsted, 2003; Godfrey & Hill, 1995; Lockett & Thompson, 2001). In fact, a number of articles conducted a qualitative case study on an Asian country. However, they typically presented an analysis of the overall performance of a certain firm or industry, providing a historical analysis only using a literature review and desk research. Without a doubt, in-depth interviews or FGIs with core members of firms, industry, or government and participatory observations provide a more vivid picture for understanding the nature of the Asian media market.

Building Asian Scholars’ Research Community Unfortunately, the academic world is centered on English-language journals. Although this chapter reviewed all articles in the four journals on the media industry of Asian countries, they were all published in English. Thus, domestic MME studies written in each Asian local language are missing. There is no doubt that plenty of domestic journals also publish MME issues in Asia, and their findings would reveal a more concrete picture. In fact, it is a very difficult task to examine all of the different journals published in different languages, let alone identify the journals that publish high-quality research. Although this was not our initial objective, we suggest that attempting to collaborate with local scholars in each Asian country (or even a select number of countries, such as the big four) and conduct analyses of journals published in local languages using comparable quality criteria might be worthwhile. Each country would have a specific evaluation method, such as indices or rankings. We also expect more active research to reveal the inherent nature and the characteristics of not only economically developed Asian countries but also less developed ones to increase the explanation power in Asian media markets. Given the accumulation of MME studies in Asian countries, we could find

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similarities and differences in the media market dynamics not only among Asian countries but also between Asia and other regions. In conclusion, research on MME in Asia is relatively young. However, we have witnessed a gradual increase in the related research on the Asian media industry in both the number of publications and the development of the academic community. The prospering economy of Asia, technological development, the widespread nature of Asian media content, and newly emerged regional players together provide new research opportunities for scholars researching the Asian media market. Based on a meta-review of articles on Asian MME research in the four journals, and suggestions for future research, we hope that scholars and practitioners engage in more serious investigations of the Asian media industry.

Notes 1 The 26 countries are as follows: 8 countries in East Asia (China, Japan, South Korea, North Korea, Taiwan, Hong Kong, Mongolia, and Macao); 7 countries in South Asia (India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan, and Maldives) belong to the South Asian Association for Regional Cooperation (SAARC); and 11 countries in Southeast Asia (Indonesia, Philippines, Vietnam, Thailand, Myanmar, Malaysia, Cambodia, Laos, Singapore, Timor-Leste, and Brunei Darussalam). Among them, ten countries except for East Timor (Timor-Leste), which separated from Indonesia in 1999, belong to the Association of Southeast Asian Nations (ASEAN). Out of the 26 Asian countries, how many countries and how often they have been analyzed with regard to MME are investigated in this chapter. 2 Interestingly, the research focusing on Korea, China, Taiwan, and Japan accounted for 80%. However, it is difficult to determine whether the four markets were of interest to media scholars or whether the researchers had access and the ability (language and otherwise) to conduct research in those countries. Another question is why Japan appeared infrequently relative to the three other major Asian countries. Do scholars have less interest in the Japanese media market? Otherwise, we assume that Japanese scholars have weaker incentive to publish in an international journal relative to Korean and Chinese scholars. 3 Although we relied on the author’s last name as a clue to identifying his or her nationality, doing so can be misleading in several cases, such as surnames that were changed after marriage or second-generation Asian Americans. Thus, we also relied on our personal information about the author and considered his or her previous and current affiliations. Nonetheless, we admit that it is necessary to interpret the nationality of the authors with caution.

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6 MEDIA MANAGEMENT AND ECONOMICS RESEARCH IN LATIN AMERICA Challenges and Opportunities for Scholars in the Field María Elena Gutiérrez-Rentería Introduction Writing about studies in media economics and media management in Latin America is not an easy task, but it is an exciting one given the richness of the region, represented by natural resources, young people, and sociocultural values shared between countries that characterize this part of the American continent. This study is informed by contributions from academics from the perspective of economics and media entrepreneurship in these countries. These works allow us to know and to delve into the characteristics of the media industries that exert great influence on the information and entertainment offered to society, and are important for the economic, political and social development of the region. This study follows Albarran, who defines media economics as the “study of how media firms and industries function across different levels of activity in tandem with other forces, and social aspects using theories, concepts, and principles drawn from macroeconomic and microeconomic perspectives” (Albarran, 2017, p. 3). Albarran emphasizes viewing these studies through a holistic lens (Albarran, 2017), an opinion shared by Godoy (2016). In this research, academic studies carried out on strategic media management are also relevant (Nieto & Iglesias, 2000; Sánchez-Tabernero, 2000). Of special interest are studies that reflect the management behavior of the organization to adapt their business models and to make the economics of the company more efficient, as well as to develop effective strategies to help them compete in the market, expanding both in the domestic region and in foreign markets. The chapter consists of four parts. The first discusses characteristics of the Latin American macroeconomics environment. The second part deals with the microeconomic background of the telecommunications industry and media companies in the most important markets. The third part details studies carried out on media economics and media management in the region. The fourth part presents areas of opportunity for scholars in Latin America and offers a future research agenda.

Macroeconomic Environment in Latin America There are shared social and cultural values in ​​ these Latin American countries that are different from the Anglo-Saxon world.The region is diverse with respect to the system of government, the political

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environment and the economic situation of the various countries. Knowledge of the Latin American market is very useful for understanding the media system and the studies carried out on the industry. To understand the region better, it is necessary to provide a brief overview of its historical origins. Most of the countries in Latin America achieved their independence from Spain, Portugal or France during the nineteenth century. The respective wars of independence were accompanied by armed conflicts against viceroy authorities, as well as against loyalists. Beginning in the first three decades of the twentieth century, the Hispanic-American region was characterized by a liberal economic model, until the crisis caused by the economic depression of the 1930s. From 1930 to 1960, the region was distinguished by a greater participation of the state, and the beginning of populist policies. The years 1960–1980 were characterized by a close relationship between political sectors linked to the power structure, and entrepreneurial groups-—the development of military governments and the retreat of the state. The 1980s and 1990s stand out as the beginning of different democratic movements, the increase of poverty and the presence of neoliberal policies in some countries, like Argentina, Chile and Mexico (Marino, Mastrini, & Becerra, 2010). These two decades are also distinguished by the opening of political systems to democracies, although the military presence remains strong and some political parties weaken. Finally, from the 1990s, the effects of globalization can be observed through the opening of markets, and the liberalization and deregulation of industries. Much has been written about the Latin American problem and its historical aspects, but no specific political system defines this region of the American continent. Dallanegra-Pedraza (2003) describes the characteristics of the political system of the region during the decades after World War II. These are state interventionism, protectionism, nationalist and “nationalizing” attitudes, and the growth of social and labor laws.The same author points out that the liberal or conservative sectors— depending on the case—could accede to the government only by means of the famous coups d’etat. Since 1989, the reduction of state participation and development of neoliberal policies were among the political trends. Most Latin American countries began to experience greater political stability after 1990, though there is still a heterogeneous scenario within the region. Crisafi (2014) points out the reality of the social economic crisis provoked by neoliberalism, low partisan institutionalization and the emergence of new personalist leaderships in Argentina, Bolivia, Ecuador, Peru and Venezuela. These differ from high partisan institutionalization in some countries, such as Uruguay, Chile and, to a lesser extent, Colombia, Brazil and Paraguay. Currently, Latin America and the Caribbean are made up of 33 countries of the American continent and the population in Latin America is close to 626 million (Eclac, United Nations, 2016a). Brazil and Mexico account for 53% of the population of Latin America, while Colombia, Argentina, Peru,Venezuela, Chile, Guatemala and Ecuador account for 33% of the population. The continent is young. Approximately 34.5% of the total population is between 15 and 34 years of age, while 27.8% is made up of children and adolescents between 0 and 14 years of age.The EclacUnited Nations estimates that in 2020, the child and adolescent population will be 24.1% and the population between 15 and 34 years of age will be 32.3% (Eclac-United Nations, 2016a). The opening of international markets and globalization has contributed to the growth of Latin America. The region was considered an emerging economy with positive growth during the final years of the twentieth century and the first years of the twenty-first century, resulting from the rise of raw materials, internal reforms and the growing world economic environment (World Bank, 2016). However, growth in the region has also declined in recent years due to the global economic crisis. The largest economies are those belonging to South America, led by Brazil, and to North America, represented by Mexico (Wainer & Belloni, 2016). These countries show degrees of industrialization, but are based on the export of primary products and their derivatives. On the other hand, the

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ten most competitive countries of the region are Chile, Panama, Costa Rica, Mexico, Colombia, Peru, Uruguay, Brazil, Ecuador and Guatemala (World Economic Forum, 2015). Latin America also stands out for having diverse political environments. In some countries, populist policies remain, while neoliberal policies predominate in other countries. Some of the issues of greatest concern in the area of ​​socioeconomic development in the region are the concentration of wealth and, hence, social inequality; the international economic crisis; Latin America and China relations; the industrialization of the region; confidence in institutions; the development of the financial system; the development of physical infrastructure; the increase of the educational level of the population, including the professional training of the labor force, as well as greater innovation of the private sector (Benavides, 2012; Fajnzylber, Guasch, & López, 2008; Ortigoza, 2016). The use of digital technologies and Internet penetration are increasing. The number of average households connected to the Internet in the region is 43.4% as of 2015 (Eclac-United Nations, 2016b). Despite this, more than half of households still do not have access. The region is also characterized by inequality between countries. For example, Nicaragua, Cuba and Haiti had a penetration rate of less than 15% in 2015, while other countries range between 15% and 45%. The countries with the highest Internet penetration are Argentina, Panama, Paraguay, Chile and Costa Rica.

Media and Telecommunications Industries in Latin America: Background The history of the communications and telecommunications industry is different for most Latin American countries because of the macroeconomic and microeconomic circumstances of each country. The concentrated market structure of the Latin American media is due to political, economic and market forces. For example, contrary to the United States, in Mexico there was no effective legislation to avoid the development of an audiovisual monopoly, such as Grupo Televisa (GutiérrezRentería, 2010b, 2011a, 2011b). None of the rules established in the United States was adopted in Mexico until the first half of the 1990s. On the other hand, the very nature of the audiovisual industry led to the development of a market monopoly, due to the scarcity of broadcast signals and to the elevated fixed costs of broadcasting (Gutiérrez-Rentería, 2001). Reig (2011) claims that the trend in Latin American groups resembles the United States and Europe in regards to the types of synergies, acquisitions, concentration of the industry and capital diversification.The author concludes that entrepreneurial politicization is much more explicit in Latin America than in either Europe or the United States. Sánchez-Tabernero (2000) points out that political power favored the processes of concentration of communication companies in Latin America, as well as southern Europe. Latin America features concentrated market structures; the leading companies are distinguished by having dominated the domestic market for decades (Noam, 2016). Examples are the Mexican and Brazilian industries (Gutiérrez-Rentería, 2007; Moreira, 2016). On the other hand, traditional media companies are privately held firms with a family business origin; some actively participate in capital markets with a presence abroad as publicly held firms. Finally, the region is characterized by high consumption of entertainment through electronic media, mainly radio and commercial television, and a low level of literacy (Godoy, 2016; Gutiérrez-Rentería, 2001; Gutiérrez-Rentería & Santana, 2012; Mazziotti, 1996; Orozco, 2002, 2005). Other features that have distinguished the media system in Latin America are neoliberal policies and the constant intervention of the state through media policies. Guerrero and Marquez (2014) mention the challenges of discretionary practices and little enforcement of the law; Hughes and Lawson (2007) express a similar opinion.

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Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) has also been characterized by the dynamics established by the media industry, represented by family businesses, society and government. It features an oligopolistic market where private initiative has had to circumvent different political regimes (Salzman & Salzman, 2009). The Colombian media industry has had its own challenges, dealing with periods of violence, especially since the 1960s, when guerrillas and paramilitary groups were formed. This situation not only had repercussions in the form of insecurity and social instability but also affected the economy and the development of various industries (Arango-Forero, Gutiérrez, Forero, Valderrama, Prada, Barrera, & Reyes, 2009). Starting in the 1990s, the Colombian media industry also underwent a series of alliances, acquisitions and mergers between communication companies (Arango-Forero, 2012). Perhaps the most significant was the participation of foreign companies in the country. As in other countries, the Colombian press has historically been linked to political activity, and the companies with the highest market penetration participate in an oligopolistic market. The most important firms are family-owned businesses. Important media firms throughout the history of the Colombian media are Grupo Caracol, Organización Ardila and Radio Cadena Nacional (RCN). The case of Venezuela is different. Gibens (2009) points out that the various confrontations that have existed between Venezuelan presidents and information companies are directly related to the diversity of concepts that each of the presidents has had regarding social responsibility and the measures necessary to “protect” citizens and government administrations from opposition attack. The market structure of the media is also characterized by being concentrated, and is led by PhelpsGranier, Grupo Cisneros and Cadena Capriles. The 1990s also saw strategic alliances between media companies and different foreign capital communication groups. Deregulation and liberalization of the Bolivian market also occurred in the 1990s and foreign capital entered. The media industry in this country was characterized not only by the lack of confidence in the media but also by the increase in competition (Soruco & Pinto, 2009). Radio is the most popular medium in the region and the structure of the newspaper market is oligopolistic, run by family businesses. For its part, the newspapers and television sectors are the main sources of information and entertainment in Ecuador. This country is characterized by a media industry under the tutelage of private initiative and represented by almost ten national groups ( Jordan & Panchana, 2009). Some of them are Isaías Group, El Universo Group, Communications Group El Comercio, Fidel Egas Group and Alvarado Group. Jordan and Panchana (2009, p. 121) describe the environment of the industry: “The sector still maintains independence from the state, due to its historical development from private capitals . . . Still, as of 2007 the Correa government created a new media structure affecting radio, television and newspapers.” Chile is one of the most competitive economies in Latin America, open to international markets and returned to the democratic path in 1990. This country is small and the media industry is in the hands of a small group of entrepreneurs (Godoy, 2016). University-based television is the medium of greatest penetration and consumption and the most chosen by advertisers. The national press has a strong brand presence represented by about eight newspaper companies, with El Mercurio obtaining the highest circulation in the country (Benavides, Errázuriz, Kimber, Santa, & van Weezel, 2009). Authors Noam and Mutter (2016) point out Chile has the highest percentage of foreign investment in the media industry. Godoy (2016) characterizes the Chilean media industry as dynamic, marketoriented and open to foreign capital investment. The Argentine media industry was immersed in a restrictive environment between 1930 and 1980, due to the fluctuation between democratic and military governments of the country. Since 1990, the industry has experienced growth and consolidation traits (Silvestri & Vasolo, 2009; Albornoz, 2000).

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The Brazilian media industry had the same initial characteristics as the Mexican one, composed of a commercial audiovisual sector in the hands of few entrepreneurs led by Grupo Globo, a multimedia company with private capital and a dominant position it held for years. The media industry was immersed in a political and governmental environment in an authoritarian regime for almost 20 years (Caparelli & Dos-Santos, 2002). As in other countries, the internationalization of the industry and the consolidation of the national multimedia groups began in the 1990s (Moreira, 2016). Digital convergence and the opening of the telecommunications markets brought opportunities for some leaders from Latin America. For example, the Mexican companies, like Grupo Televisa and América Móvil, have been characterized by their presence in the Ibero-American telecommunications market (Gutiérrez-Rentería, 2014; Gutiérrez-Rentería & López, 2014; Kuhlmann, Robles, & Abdel, 2010; Noam & Mutter, 2016). Otherwise, entertainment through social networks is the main activity of Internet users (Katz, 2015). Katz points out that the availability of social networks in the local language facilitates high consumption, and also reflects the interests and culture of users in each country. According to Katz (2015) services such as medical appointments, online studies and interaction with government agencies are used less than entertainment services. Finally, advertising revenues across Latin America are concentrated among Argentina, Brazil, Chile, Colombia and Mexico. Traditional media accounts for more than 70% of advertising investment, with television the most popular among advertisers. In terms of digital and mobile advertising, Brazil, Argentina and Mexico are expected to lead in advertising expenditures through 2019.

Media Management and Economics Research in Latin America Most of the academic works on media economics in Latin America can be classified as within industrybased applied economics influenced by neoclassical economics. One also finds the critical tradition from the contributions of political economy and Marxist studies, according to the classification suggested by Albarran (2013b) and Picard (2006). Most academic studies related to media management can be classified within the modern school. According to Albarran (2016), the modern school of management considers both the macroeconomic and microeconomic variables of the industry, and is concerned with increasing organizational effectiveness.Table 6.1 shows the classification of the 120 studies related to the fields in Latin America that have been identified and reviewed carefully in order to meet one of the objectives of this chapter. Table 6.1 Main theoretical tradition of Latin American research in media economics and media management, 1983–2017. Tradition Applied

Critical

Institutional foundations Industry-based also influenced by neoclassical economics Marxist studies, British cultural studies, political economy

Level of analysis

Topics examined

Consumer, firm, market, industry

Structure, conduct, performance, spending, diversification, strategy

Nation-state, global

Ownership, power, policy decisions, social and cultural effects of media, globalization, welfare Total studies:

Number of studies 54

66

120

Source: Produced by the author according to criteria established by Albarran (2016, p. 21).

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Studies of Applied Media Management and Economics in Latin America The level of analysis of studies pertaining to applied economic theory is related to the consumer, the company, the market structure and the industry. In most of these studies, neoclassical economic theory is used to explain the behavior of some Latin American industries (e.g., Albarran & Hutton, 2009; Aldana & Vallejo, 2010; Arango-Forero, 2010; Benavides & Leiva, 2014; Gutiérrez-Rentería, 2007, 2001; Gutiérrez-Rentería & López, 2014; Gutiérrez-Rentería & Santana, 2013, 2010; Katz, Koutroumpis, & Callorda, 2013; Pis, 2008; Salzman & Albarran, 2011; Serrano, 2000; Trejo-Pech & Gutiérrez-Rentería, 2011). In some of these works, the authors have attempted to follow the basic academic contributions of neoclassical economics, such as the industrial organizational (IO) model, the theory of the firm, Porter’s five forces model, corporate finance and different theories pertinent to media entrepreneurship. These studies describe the competitive market as well as the environment in which they participate. Most of the research is empirically based. There are studies that clarify the link between applied economic theory and media management. These works have served (a) to explain the strategic action of some communication entrepreneurs according to macroeconomic analysis and microeconomic environment of the industry; (b) to explain the characteristics of their market products; (c) to add to knowledge of demand, from the point of view of the characteristics of either the various audiences or the advertisers (Arango-Forero, 2013; Arango-Forero, Arango, Llaña, & Serrano, 2010; Arango-Forero, Gutiérrez, Forero,Valderrama, Prada, Barrera, & Guzmán, 2009; Barrón, 2009; Benavides & Leiva, 2014; Benavides, Errázuriz, Kimber, Santa, & van Weezel, 2009; Gutiérrez-Rentería, 2007; Gutiérrez-Rentería, Rodríguez, & López, 2016; Katz, 2015; van Kranenburg & Hogenbirk, 2006; Medina & Barrón, 2010; Medina & GutiérrezRentería, 2008; Medina, 2014; Pis, 2008; van Weezel & Benavides, 2009; Wilkinson, 2015). In regards to media consumers, other studies identify the behavior of users regarding digital technologies and new habits of entertainment and access to information through mobile devices (e.g., Albarran & Hutton, 2009, 2013a; Benavides & Leiva, 2014; Gutiérrez-Rentería, Santana, & Pérez, 2016; Leiva, Benavides, Wilkinson, Gutiérrez-Rentería, & Santana, 2016; Túñez-López & GuevaraCastillo, 2011; van Weezel & Benavides, 2013). The following section describes the principal characteristic of media economics and management studies in Latin America. Gutiérrez-Rentería and Santana (2013) discuss the increase of both content supply and distribution channels in a convergent environment in Mexico.The authors present the main strategic actions taken by leaders of the Mexican communications and telecommunications market in a digital environment.They also identify the main characteristics that defined the traditional media in comparison with digital media (Gutiérrez-Rentería & Santana, 2013). Studies by Gutiérrez-Rentería (2007) analyze the competitive strategies needed to enter the audiovisual market in Mexico, characterized by a maximum level of concentration. The same author presents a case study of Grupo Televisa during the period 2003–2009, a time when the company was involved in implementing digital convergence. The study measures the economic performance of the company, using ratio analysis. Finally, Gutiérrez-Rentería (2010a) describes the structure of the Mexican media market facing the digital age, and the opportunities and weaknesses in the era of digital environment. In this study the author identifies the main strategic alliances between Mexican competitors and shows a new dynamic of the industry as a result of the different alliances between companies. A similar study by Medina and Barrón (2010) examines the globalization of the Latin American telenovela industry, as the main TV content product produced in the region. The authors detail the production and distribution of the main exporters of the genre, and the international influence that this segment has had in the emergence of new producers. Barrón (2009) examines the internal

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processes of the leading Mexican groups and their success in international markets. Medina (2014) analyzes the advertising industry in Mexico and points out that the Mexican advertising market is the largest in Latin America and is characterized by high levels of fragmentation, with users producing and consuming information and entertainment simultaneously. The study also shows that younger generations do not like to feel invaded by advertising. Pis (2008) applies economic theory to study the Argentine magazine industry, using macroeconomic and microeconomic environment variables to explain the sector. The study emphasizes the concept of a media company as initially defined by Nieto and Iglesias (2000). Arango-Forero and Bernal (2009) describe the younger television audiences in Colombia, and show the fragmentation of the audiences caused by multichannel consumption in the country. Arango-Forero (2013) analyzes the audiovisual media industry in Colombia through the competitive actions of Grupo Caracol and Radio Cadena Nacional (RCN). The study analyzes the management strategies behind the business model of both companies. Other examples of studies on media consumption include Benavides and Leiva (2014). The authors explore different factors driving local newspaper readers to buy, visit shops and look for additional information about products or services in Chile. On the other hand, van Weezel and Benavides (2013, p. 703) assess if different tactics employed by the media firm can increase audience engagement. Finally, van Weezel and Benavides affirm the results are helpful for managers who use social networks to improve relations between the media brand and its audience. Though these studies contribute to the study of media economics and media management in Latin America, there is still work to be done.

A Research Agenda for Latin America Scholars The following research proposals are suggested after analyzing the various industries in Latin America.This research should not be of merely academic interest; it should include studies which serve and are linked to the industry, considering the contribution academic scholars can make to the training of communication professionals. 1. Lack of information on media markets in Latin America. One of the main obstacles to the study of the media industry in Latin America is the difficulty in accessing information from official sources, or from the media firms themselves (Hughes & Lawson, 2007). Access to information on the region is easier or more difficult depending on local legislation, and political and social circumstances (Boas, 2013; Guerrero & Márquez-Ramírez, 2014; Lugo, 2008; Mastrini & Becerra, 2011; Repoll, 2010). A comparative study to show current public communication policies in each of the countries is needed. Two research questions could guide this project: What does the legislation say about information transparency that must be provided by media companies? What are the official institutions devoted to providing information to the media and what kinds of data are presented? Another proposal is joint work among government, industry and universities to create institutions or consortiums devoted to the construction of reliable databases in the region, as has been proposed by Albarran (2009). This would permit in some way comparative “cross-country” studies to help explain the dynamics of the industry by sector and would contribute to the use of consistent methodologies. 2. Case studies of the main traditional media companies in the region (the leaders from the beginning that are still active in their countries).

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Certain firms have been leaders in their respective domestic markets for many years, and continue to offer services in the region. Some examples are Grupo Globo (Brazil), the newspaper El Mercurio (Chile), Grupo Cisneros (Venezuela), Grupo Televisa (Mexico), América Móvil (Mexico) and TV Azteca (Mexico). These firms have also experienced success in international markets. More studies are needed that somehow reflect the strategic media management that companies require to enter the Latin American market, to remain and to expand their presence not only at home but also in foreign regions. Possible research questions include: How has the structure of the Latin America media market changed over time as measured by sector? What are the leading companies still active in their origin domestic market by sector? What are the strategic actions of Latin American media market leaders that have expanded their presence in other countries? Some theories of media economics that are applicable are game theory on models of oligopoly, and the industrial organization model. The study of the market structure allows one to understand if the company’s positioning is advantageous. At the same time, it can explain the effect of a leadership position or market domination on the company’s bottom line. Knowing the way participants compete in Latin America is useful in understanding the best strategies. As Albarran (2013b) suggests, it is necessary to integrate studies with a global perspective, and not only a single nation. 3. The importance of more studies related to media business models and finance. There is little research that identifies how the business model’s strategy influences the company’s economic and financial performance over time. Studies of this nature of the leading companies would be useful. What is the most representative business model of the company and the performance measured by financial ratios? What are the different digital business models that are emerging or changes in the traditional business model of Latin American companies and their impact on the financial performance? Through these analyses, more complete studies can be constructed to assess the communications market as measured by market attractiveness, as well as to understand the different alliances, acquisitions or mergers between companies in the same region and foreign firms. 4. Studies on Latin American leadership and company culture. What type of leadership has distinguished the principal media entrepreneurs in the region who have managed to circumvent the different circumstances of the macro and micro environment in the region? What are the different types of leadership of young entrepreneurs who are making an impact with digital native media? It would also be relevant to identify the Latin American model of leadership compared to other regions. 5. Studies which define the media consumer by socioeconomic level and demographics in Latin America. Research is needed to delve deeper into the use and consumption of different types of content and media by socioeconomic and age segments in the region. Studies are needed that identify the interests of audiences regarding the content and the motivations for consumption of content that reflect the values ​​and culture of Latin American society. On the other hand, it would be interesting to know the level of confidence and interest that Latin American audiences have in the content offered by companies of national origin, as well as the

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development of a model that contributes to a better understanding of the use and consumption of information from younger generations. 6. Interdisciplinary studies related to media economics. Unfortunately, the Latin American region has few universities that offer media economics, media management, media entrepreneurship or entrepreneurial journalism, unlike the work which has been carried out for decades in the United States and Europe (Barret & Batts, 2016; Graybeal & Sindik, 2016). The development of curricular resources and research studies in an interdisciplinary way with other schools of social sciences, such as economics, sociology, business, finance and marketing, is needed to help bridge this gap. More interdisciplinary studies related to media management and economics are required, with a holistic view of the reality of the environment as suggested by Albarran and Moellinger (2017). Likewise, there should be more studies related to media management in the region, including the characteristics of the market as suggested by Sánchez-Tabernero (2000) and considering variables of the economy that can be compared with other countries.

Conclusions There is a need for more research on media economics and media management in Latin America. Of particular importance is the need to develop models that serve to generate value within the digital economy of the region. As members of a society, we need to learn to generate value in our own local communities helped by the opportunities afforded by the digital economy. On the other hand, the media industry is also at a disruptive stage and needs journalism and communication professionals who bring together interdisciplinary skills and attitudes to contribute to these efforts and add social value. Finally, in the opinion of this author, Latin America is in an area of ​​opportunity for communication professionals and the industry. An example of this is the various cases of young entrepreneurs who, through their participation in the digital native media, have stood out due to their interdisciplinary nature and business attitude, together with their social skills and vision for markets.

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María Elena Gutiérrez-Rentería Gutiérrez-Rentería, M., López, C., & Rodríguez, A. (2016). Estructura competitiva del mercado de las Telecomunicaciones en México: América Móvil y Grupo Televisa (2009–2014). In M. Saavedra & B. Tapia (Eds.), Tópicos Actuales de Finanzas (pp. 700–724). Mexico:VI Congreso de Investigación Financiera FIMEF. Gutiérrez-Rentería, M. E., & Santana, J. (2012). Understanding the radio industry in Mexico: Challenges and opportunities. In J. Hendricks (Ed.), The Palgrave handbook of international radio (pp. 416–428). London: Palgrave Macmillan. Gutiérrez-Rentería, M., & Santana, J. (2013). Convergence in the Mexican media industry 2011. In A. Albarran (Ed.), Media management and economics research in a transmedia environment (pp. 147–159). New York: Routledge. Gutiérrez-Rentería, M. E., Santana-Villegas, J. C., & Pérez-Ayala, M. (2016). Smartphone: Usos y gratificaciones de los jóvenes en México en 2015. Palabra Clave, 20(1), 47–68. doi:10.5294/pacla.2017.20.1.3 Hughes, S., & Lawson, C. (2007).The barriers to media opening in Latin America. Political Communication, 22(1), 9–25. doi:http://dx.doi.org/10.1080/10584600590908410 Jordan, R., & Panchana, A. (2009). The media in Ecuador. In A. Albarran (Ed.), The handbook of Spanish language media (pp. 103–124). New York: Routledge. Katz, R. (2015). El ecosistema y la economía digital en América Latina. Retrieved from www.fundaciontelefonica. com/arte_cultura/publicaciones-listado/pagina-item-publicaciones/itempubli/430/ Katz, R., Koutroumpis, P., & Callorda, F. (2013). The Latin American path towards digitization. Info, 15(3), 6–24. Kuhlmann, F., Robles, A., & Abdel, G. (2010). La industria de las Telecomunicaciones en México: Diagnóstico, prospectiva y estrategia. Mexico: Centro de Estudios de Competitividad del ITAM. Retrieved from http://cec.itam.mx/ sites/default/files/telecomuncaciones.pdf Leiva, R., Benavides, C., Wilkinson, K., Gutiérrez-Rentería, M., & Santana, J. (2016, May).Young adults’ smartphone use: A three-country comparative study. Presented in XII World Media Economics and Management Conference, New York. Lugo, J. (Ed.). (2008). The media in Latin America. London: McGraw-Hill Education. Marino, S., Mastrini, G., & Becerra, M. (2010). El proceso de regulación democrática de la comunicación en Argentina. Oficios terrestres. Retrieved from http://sedici.unlp.edu.ar/bitstream/handle/10915/45366/ Documento_completo__.pdf?sequence=1 Mastrini, G., & Becerra, M. (2011). Media ownership, oligarchies, and globalization In D. Winseck & D. Yong Jin (Eds.), The political economies of media. The transformation of the global media industries (pp. 66–83). London: Bloomsbury Academic. Mastrini, G., & Bolaño, C. (2000). Globalización y monopolios en la comunicación en América Latina. Buenos Aires: Biblos. Mastrini, G., & Marino, S. (2008). Al final del periodo: Los límites del progresismo. Políticas de comunicación en Argentina durante el gobierno de Néstor Kirchner. Revista ECO-Pós, 11(1), 78–96. Mazzioti, N. (1996). La industria de la telenovela la producción de ficción en América Latina. Argentina: Paidós Estudios de Comunicación. Medina, M. (2014). México. In M. Shaver & A. Soontae (Eds.), The global advertising regulation handbook (pp. 18–25). New York: Sharpe. Medina, M., & Barrón, L. (2010). La telenovela en el mundo. Palabra Clave, 13(1), 77–97. Medina, M., & Gutiérrez-Rentería, M. (2008). Globalization with Latin flavor. Journal of Spanish Language Media, 1, 79–83. Retrieved from http://dadun.unav.edu/bitstream/10171/13615/1/JSLMvol-12008.pdf Moreira, S. (2016). Media ownership and concentration in Brazil. In E. Noam (Ed.), Who owns the world’s media? Media concentration and ownership around the world (pp. 606–633). Oxford: Oxford University Press. Nieto, A., & Iglesias, F. (2000). La empresa informativa (2nd ed.). Spain: Ariel. Noam, E. (Ed.). (2016). Who owns the world’s media? Media concentration and Ownership around the World. New York: Oxford University Press. Noam, E., & Mutter, P. (2016). Brazil-data summaries. In E. Noam (Ed.), Who owns the world’s media? Media concentration and ownership around the world (pp. 634–640). Oxford: Oxford University Press. Orozco, G. (2002). La televisión en México. In G. Orozco (Ed.), Historias de la televisión en América Latina (pp. 203–240). Barcelona: Gedisa. Orozco, G. (2005). México. In A. Cooper-Chen (Ed.), Global entertainment media (pp. 203–217). Mahwah, NJ: Lawrence Erlbaum. Ortigoza, M. (2016). Cooperacion académica para la acción política en América Latina y el Caribe. Cuadernos Latinoamericanos, 27(49), 22–37. Picard, R. (2006). Historical trends and patterns in media economics. In A. Albarran, S. Chan-Olmsted, & M. Wirth (Eds.), Handbook of media management and economics (pp. 23–36). New York: Routledge. Pis, E. (2008). El mercado de las revistas en la Argentina. Argentina: Universidad Austral.

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PART II

Fundamental Issues in MME Research

7 HUMAN RESOURCE MANAGEMENT IN THE MEDIA Joyce Costello and John Oliver

Introduction Media companies that adapt to changes in the competitive environment will succeed, while those that don’t will fail. That is the conclusion many of the contributors to this Handbook will make during the course of their arguments. Our discussion on strategic human resource management (SHRM) issues facing media companies now and in the medium-term future is no different. “Adapt or die” is the mantra that we have chosen to adopt in our view of the issues facing many media firms’ HRM departments. An organization’s deliberate strategy to adapt to its changing environment means that SHRM practice and policies need to support the organization’s goals (Shameem & Khan, 2012); therefore, the authors propose examining the key trends in HR functional components of recruitment, performance and retention. These three elements support organizational objectives pertaining to human capital and are the foundation of HRM policies and procedures (Taylor & Woodhams, 2016). This chapter first reviews recent advances made in human resource management research which builds upon Redmond’s (2006) discussion of human relations management in media management studies. While “human relations” tends to focus on the soft skills of interpersonal relations (Taylor & Woodhams, 2016) our discussion focuses on “human resource management,” which we believe enables better human relations management in the long run. This chapter then addresses the need for organizations to remain adaptive to changes in the competitive environment by focusing on the key areas that are most likely to affect strategic human resource management initiatives for the media workforce. Finally, we consider how initiatives such as recruitment, retention and performance may play out in the future. By examining these aspects of SHRM, we can begin to identify the gaps in our understanding of how media organizations’ human resource practices should adapt and evolve over time (Picard & Lowe, 2016).

A Decade of Advancement in HRM Studies in Media Companies? Redmond’s (2006) review of the state of HR in media organizations led him to recommend several key points, such as the need for further qualitative studies, a more comprehensive understanding of the reality of the life of the media worker and how being a shift worker might cause personal problems, and to investigate if companies are going to great lengths to provide support. The overarching theme was about the “quality of career experience” and relates to the individual experience within

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a media organization. Since his call, there have been a limited number of studies that have directly explored SHRM in media organizations (Becker,Vlad, & Martin, 2006; Adams-Bloom, 2009). Achtenhagen and Mierzejewska (2016) identified the top three media management journals as: the Journal of Media Economics ( JME), International Journal on Media Management ( JMM) and Journal of Media Business Studies ( JOMBS). A search of these three reveals that most studies refer to HRM in passing in the context of making recommendations based off their own discussions (Berke, 2011; Bartosova, 2011; Baetzgen & Tropp, 2015), their own experiences ( Joseph, 2011) or interviews of HR managers, but in a context of collaboration between global conglomerates and local companies (Pathania-Jain, 2001). Other studies, such as Panico, Raithel, and Michel (2014), built upon the conversation of constructs that impact hiring when they explored how media coverage affects employer reputation. While this study explored the impact on students getting ready to search for jobs, the authors concluded that integration of PR into HR would assist in managing employer branding (Panico, Raithel, & Michel, 2014). However, there are some studies that specifically focus on functions of HRM in media organizations. Becker, Vlad and Martin (2006) address how changes in the U.S. newspaper labor market has impacted hiring trends. They discovered that large U.S. daily newspapers tend to hire only experienced journalists (Becker,Vlad, & Martin, 2006). This trend would suggest that media organizations will have to invest in training if they want to keep a more experienced journalist up-to-date with technological advancements. The main study from JMM that directly addressed SHRM practices was Adams-Bloom’s (2009) exploration of high-performance work organizations’ (HPWO) initiatives.This study discovered evidence of HPWO practices (profit sharing, feedback and nonmonetary rewards) was more prominent in news organizations than professional development, such as training, advance certification or conferences. Adams-Bloom (2009) concluded “measurement of HPWO success is dependent on demonstrating increases in productivity and profitability” (p. 142).This infers that more research is needed on how performance can impact productivity. Dekoulou, Pühringer, Georgakarakou and Tsourvakas (2010) elaborated on how an organizational learning culture could improve performance among journalists, especially those desiring to attend advanced training. The implications for SHRM were clearly linked to the need to evaluate human resource development practices and engagement, although studies in the past decade have brought mainstream SHRM conversations into media management literature. Overall, it is evident that media management scholars have many opportunities to advance understanding of how HRM practices can be improved and tailored to the changing environment.

Media Companies and Their Employees Need to Remain Adaptive A dynamic media environment is being driven, primarily, by technological influences and change. Media firms need to adapt to this turbulent environment and realign their SHRM policies in accordance with the strategic management of their organization (Shameem & Khan, 2012). Commonly, HR tasks, such as recruitment, retention and performance of employees, are not industry-specific, but competencies of management relating to creative talent management, digital technology that constantly evolves and continuous innovation do influence standard HR functions (Artero & Manifredi, 2016). A central tenet of our discussion is that media firms and their employees need to remain adaptive, particularly as firms that adapt fastest can achieve a competitive advantage over rivals (Oliver, 2016). Research by Reeves and Deimler (2011) and Reeves, Love and Nishant (2012) presented a powerful argument for media firm adaptation. They examined the volatility in the U.S. media industry between 2005 and 2011 and concluded that during periods of turbulence in demand, competition and profit margins, firms that outperformed others did so due to their ability to interpret and adapt to signals of impending market volatility. Their research indicated that DirecTV, Time

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Warner Cable and The Walt Disney Co. had all outperformed their industry rivals (including Omnicom Group, The Washington Post,Viacom, Cablevision Systems and Thomson-Reuters) because of their ability to rapidly adapt their businesses to volatile operating conditions. Central to these adaptive media firm practices and processes is the role that human capital or employees played as a key strategic resource in delivering superior business performance (Wang, Jaw, & Tsai, 2012).

Four SHRM Themes Emerge From a Dynamic Media Environment In our discussion of human resource recruitment, retention and performance initiatives, we should acknowledge that today’s dynamic media environment has resulted in changes in the labor market that have created a challenging context for how SHRM departments manage their workforce. Firstly, while the number of mega-media conglomerates is increasing globally, the workforce is being downsized and employees are being moved from permanent contracts to a freelance working basis (Deuze, 2011). The “casualization of labor agreements, outsourcing, downsizing and freelancing,” and the emergence of zero-hours contracts impact HRM’s ability to recruit, retain and manage the performance of the non-permanent and transient workforce as policies and regulations are not always applicable to this sort of workforce (Lowe, 2016, p. 7). Not providing training and development for temporary employees can sometimes be viewed as a cost-savings measure, although studies have found that if organizations do provide training to non-permanent employees, the training does have a positive effect on their affective commitment to the organization (Chambel, Castanheira, & Sobral, 2016). A second change in the labor market is innovation in technology. Since the transition from analog systems to digital in the 1990s, there is an increased focus on the frequency and manner in which media employees need to be trained if they are to keep up with emerging new medias (Artero & Manfredi, 2016). The migration of training to online platforms introduces other challenges to SHRM, such as individual attitudes and aptitudes relevant to embracing technology (Venkatesh, Morris, Davis, & Davis, 2003). Thirdly, the social voice of internal and external stakeholders has become more prominent in the social media age, impacting organizations’ ability to handle crises ( Johansen, Johansen, & Weckesser, 2016). Consequently, organizations are using employee engagement as a means of channeling this voice. Employee engagement studies have found internal stakeholders, such as employees, want their voices to be heard in a manner that positively affects their work-life balance and well-being (Ruck, Welch, & Menara, 2017), while external stakeholders, such as consumers, have broad societal expectations and are increasingly engaging in dialogue with organizations about expected social responsibilities (Golob & Podnar, 2011). Finally, with the baby boomers changing how and when they exit the workforce, succession planning is no longer a straightforward process. For example, nonprofit organizations have been looking forward to the baby boomers retiring, which would give retirees more time to volunteer, but it turns out that many are not retiring and are instead changing their workday through part-time or contract work (Loretto & Vickerstaff, 2015). Instead, with baby boomers remaining in organizations past the expected retirement age, media organizations may face having employees who have a wealth of technical experience, but may face technological adaption challenges and are ultimately more costly to retain. These four trends disrupt SHRM functions by creating new challenges.The downsizing of organization combined with baby boomers not exiting the workforce as planned could cause obstacles in performance management. A focus on innovation and training has causal implications for training and retention needs. Finally, a rise in social voice may impact how media organizations position themselves in recruiting employees.

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Managing Strategic HRM Functions Into the Future Recruitment: The Rise of Data Analytics Employment could be seen as a simple economic transition in exchange for labor, but the bargaining power of both parties is not always equal. Potential employees are looking for employment, income, fairness, voice, job satisfaction and occupational identity, while the employer is often focused on profit maximization, shareholder value, quality and service and control (Budd & Bhave, 2008). Recruitment is often affected by changes in technology and labor market shortages (Hough & Oswald, 2000). Key issues with recruitment involve the level at which labor turns over and the ability to attract sufficient number of high-caliber candidates for tomorrow’s needs, the latter being increasingly difficult to forecast given one must understand which technical and tactical aspects are needed prior to any time of disruptive innovation. Gade and Lowrey (2011) assert that the public use and expectations of technological innovation by journalists have changed, inferring that there are large external pressures on media organizations to ensure their staff meet those desires. In Jung and Kim’s (2012) study of newspaper firm employees, they found employee burnout and exhaustion can lead to an increased turnover intention. This implies that HRM will not be able to stabilize recruitment patterns. Consequently, SHRM will have to strive to make recruitment more efficient for the organization without taking into consideration the baseline technological skills needed by tomorrow’s workforce. SHRM can accomplish this through the incorporation of data analytics (Shehu & Saeed, 2016) and being more attractive to potential employees via its social impacts (Biswas & Suar, 2016). Hailing from the industrial/organizational (I/O) psychology field, data analytics has slowly been expanding into the realm of HRM, with algorithm or people analytics propelling data-driven recruitment (Fink, 2010). The data mining approach allows for the freedom to develop decision models when selecting recruits.This approach enables organizational strategy to be embedded in the decision tree, thus improving HRM’s ability to react to organizational change in a more concise and measurable manner (Shehu & Saeed, 2016). The goal of people analytics is to embrace the power of algorithmic systems in an attempt to predict a better person-organization fit between high-performing recruits and the company (Fleck, 2016). Even though Facebook and Google have long embraced this technology, the adoption rate in the business world is slowly increasing, from 24% in 2015 to 32% in 2016 (Schwartz, Bohdal-Spiegelhoff, Gretczko, & Sloan, 2016). Especially in industries such as the media, which rely on creative talent, companies are moving beyond apprehension to engage with the technology-driven recruitment. Indeed, Schwartz et al. (2016) found that organizations in media and communications had lower adoption of people analytics, as opposed to life sciences and health care, and financial and consumer businesses. This low adoption by media organizations means the hiring process is not as effective or efficient as other industries. Due to the non-static nature of hiring and the ever-changing and evolving rules around recruitment (Shehu & Saeed, 2016), datadriven recruitment is understood to increase the quality of hiring talented and qualified individuals while also improving the experience and diversity of the candidate. By actively seeking ways to use data to support talent decisions, HRM executives can become a talent multiplier (Harris, Craig, & Light, 2011). Because the complexity of data analytics is not a mainstream HRM competency, HR departments need to adapt. Harris et al. (2011) proposed a ladder of analytical HR applications that integrates six functions in order to provide a framework which could be used by media organizations. The first rung of the ladder focuses on building a solid employee database that goes beyond typical demographic information. Harris et al. (2011) emphasize how Google used its skills in big data to build an employee database that consolidated all the information regarding attitude, behaviors and skills it acquired about employees. This in turn allowed Google to identify performance trends and identify critical talent management—the second rung of the ladder. Harris et al. (2011) use the example of 98

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sports teams, such A.C. Milan, having used this form of analytics when determining in what soccer talent they would invest. Likewise, media organizations, like HRM, could use the analytics of creative performers and build their own algorithm that places values on creative content, audience engagement, reputation enhancement and ability to influence intended outcomes. The third rung focuses on HR investments and managing critical workforces accordingly, through initiatives such as investing in technological training and talent management. With media management and a focus on creative talent, it is easy to forget that those individuals in functional positions within the organization that support and enable talent also need investing. For example, an in-house engineering team that supports journalists could need training in maintaining and repairing new 360-degree virtual reality cameras or drones. Consequently, there needs to be a system in place that can address issues organic to the media organization and tailored to the needs of the individual. The fourth rung—customized employee-value propositions—is particularly important when it comes to employee life-cycle planning. SHRM research has predicted that with the largest percentage of the workforce departing (the baby boomers) succession planning and recruitment will affect all industries (Kiyonaga, 2004). This rung calculates how much value employees place on different benefits and aspects offered by the organization. Because turnover can have a significant impact on an organization on a cultural, moral and financial level ( Jung & Kim, 2012), this application aims at using data to reduce attrition issues. Yet, predicting the future workforce is more than succession planning for the departure of baby boomers. The fifth rung—workforce planning—aims to predict the business and staffing levels needed. For example, in terms of discontinuous innovation and the evolution of how music has been distributed (8-track, cassette, CD, MP3), this transformation in the music production industry saw a complete change on a business level, where the factories and personnel required to produce CDs were not needed with the mainstream adoption of the MP3 format. Workforce planning for media organizations is particularly difficult given the ever-changing nature of disruptive technology. The final rung is the talent supply chain, which focuses on the skills the workforce will need. Just as data analytics is changing the skills needed by HRM personnel, innovation and technological skills are evolving in media organizations. Therefore, Harris et al.’s (2011) proposed framework could assist HRM to provide the initial structure to begin building its big data recruitment. Once populated with organizational data, media management researchers could explore how the different rungs acted as predictors for high performance, engagement and turnover intentions. As highlighted earlier, recruiting the right individual for the right job remains a challenge. By seeking a person-organization fit that optimizes congruence between the organization’s values and needs and the individual (Kristof-Brown, Zimmerman, & Johnson, 2005), SHRM can take advantage of its corporate social responsibility (CSR) programs as a recruitment tool.

CSR and the Socially Aware Recruit Even though data-driven recruitment can help identify talented individuals whose values and capabilities match the needs of the organization, there is often a power play between the workforce supply and the employer’s demands and needs. Historically, media organizations have followed the trend among many private sector corporations of offering stock options and financial incentives as a means of recruitment (Redmond, 2006). This, however, has neglected intrinsically based needs, such as being able to actively contribute to one’s community—an element that millennials entering the workforce are collectively demanding (Feldmann, 2014). As mentioned earlier, there is a general trend toward societal expectations of organizations to operate in a socially responsible manner. This has led to a new “socially aware” recruit who is looking for a work environment that is more aligned with higher ethical standards and social responsibility (Ng, Lyons, & Schweitzer, 2012). 99

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Media products themselves have strong social value in terms of shaping political, economic, social and technological issues (Mierzejewska, 2011). Accordingly, HRM has slowly begun to capitalize on the very core of media organizations’ ability to contribute to society. For example, BSkyB (2002) began including its corporate social responsibility strategies in its annual shareholders report long before the 2010 ISO 26000 guidance on social responsibility. “The goal of the strategy is to enhance the reputation of the Group through: community activities, a commitment to managing environmental impacts, and managing the business in a responsible manner” (BSkyB, 2002, p. 19). The very nature of an organization providing social enterprise has played a part in SHRM communicating its organization’s CSR stance as part of employer branding. Employer branding considers the brand equity, loyalty and ability to attract talent (Biswas & Suar, 2016).Yet, it is the organization’s reputation that often serves as an antecedent to attracting potential recruits. By focusing on how the organization actions can benefit society through ethical behavior or economic development of the community, CSR programs have shown they have the ability to enhance the organization’s reputation (Panico, Raithel, & Michel, 2014; Ruiz, García, & Revilla, 2016). Although CSR has not always been embedded in employer branding, Aggerholm, Andersen and Thomsen (2011) argue that CSR allows the corporate sustainable vision to be part of an integrated communication process between the organization and key stakeholders, such as potential employees. Biswas and Suar (2016) found evidence that CSR and top leadership significantly influenced the individual’s perception of the organizational prestige. From a gender viewpoint, being female has been found to significantly increase the positive relationship between CSR and job satisfaction (Tanwar & Prasad, 2016). Studies have also found that millennials tend to seek out work environments conducive to higher ethical standards and social responsibility (Ng & Gossett, 2013). While media organizations have typically highlighted the economical aspect of CSR (Tsourvakas, 2016), organizations such as Time Warner (2017) now promote that they have high recognition for employee volunteering and were among the world’s most ethical companies in 2014 and winners of Best Place to Work for LGBT Equality in 2016. This helps enable employer branding in terms of highlighting its ethical practices (a key layer of Carroll’s 1991 CSR pyramid) and shows its awareness and action on social issues, such as diversity. Following the assumption that CSR is an important part of future employer branding, CSR can be viewed at an organizational level and at an individual level. Faroq and Rupp (2016) stipulate that the macro CSR literature is dominated by external and internal focuses. At an organizational level, CSR’s six core characteristics focus on social and economic alignment, practices and values, multiple stakeholder orientation, extending beyond philanthropy, voluntary activities and management of externalities. In recent media management literature (Tsourvakas, 2016), CSR’s relation with media organizations has been conceptualized through Carroll’s model of CSR and stakeholder theory. Carroll’s (1991) pyramid of CSR focuses on economic, legal, ethical and philanthropic responsibilities in an ascending order of importance and each construct is identified as required, expected or desired. However, scholars have criticized the non-interlocking levels and proposed a modified version: the three-domain model of CSR (Schwartz & Carroll, 2003). With the focus on economic, legal and ethical constructs, the Venn model accounts for areas that overlap, making it easier to delineate conditions that affect organizations in different scenarios. For example, media organization Pearson PLC (2016) has a CSR policy to responsibly source paper for books for economical and ethical reasons, whereas a public-owned broadcasting network in an emerging economy such as Nigeria may have legally mandated public service announcements that have ethical impact. For SHRM, having implicit knowledge of its organizational culture and if it leans toward more of an economic, legal, ethical or balanced orientation (Schwartz & Carroll, 2003) can be used to better portray the organization’s CSR efforts. Another organizational-based CSR theory that is often used is stakeholder theory, which has two competing perspectives. The neoliberal perspective is that businesses are responsible only to their 100

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shareholders or owners of the business, with the relationship principally economical because of maximizing profits (Scherer & Palazzo, 2010). The stakeholding perspective stipulates the organization is responsible to all those with whom it has significant relationships which might affect their survival (Scherer & Palazzo, 2010). This latter perspective would be more applicable to HRM because of the need and ability to be able to recruit talent. However, scholars have recently begun to investigate the individual’s view on CSR (iCSR) which reflects the individual’s perception of values and principles and the behavior of the organization (Secchi, 2009; Secchi & Bui, 2016). Rodrigo and Arenas (2008) examined the attitudes of employees toward their organization’s CSR programs and developed a continuum for classification. By understanding if the employee was committed, indifferent or dissident, the authors could predict the acceptance of the organizational evolving CSR roles, individual identification with the organization, a sense of importance of work and social justice (Rodrigo & Arenas, 2008). Secchi and Bui (2016) argued that these perceptions could be relative or absolute.The former is related to what one believes should be done, and can be closely related to the prospective employee who most likely would not have any experience working with the organization. Conversely, the absolute perception would be more relevant to current employees who have to deal with “ad hoc situations, problems, and issues” (Secchi & Bui, 2016, p. 4). Individuals’ attitudes toward CSR activities can potentially influence whether they will apply to an organization. Hence, HRM’s communication of CSR activities needs to take into consideration and identify the personal values and attitudes of the ideal candidate. Studies have found that individuals who value CSR initiatives such as corporate volunteering tend to have stronger organizational loyalty than employees who do not value CSR, and decreased turnover ( Jones, 2010). This has important financial implications for the organization if turnover is decreased. So while it is observable that many HRM departments are emphasizing their organizations’ contributions to society as a means of recruitment, there are gaps in our knowledge about whether the recruits have a high sense of individual corporate responsibility or whether they have an economical reason, such as needing a job to pay the bills. One possible area to investigate is whether current media employees believe being socially responsible is an essential reason for their selection and continuation of employment. It is not known if being socially responsible is part of the professional identity of media employees. By understanding more about how intrinsically based motivations are related to CSR programs, HRM departments can determine to what extent they utilize CSR as part of the employer branding scheme. Accordingly, incorporating studies about data-driven recruitment in a media organization context paves the way forward to a more substantive understanding of key characteristics of media employees. By maximizing the communication of the organization’s commitment to impact positive social change and responsibility, HRM should be able to recruit a high caliber of employees who will have a good person-organization fit. Albeit an oversimplification of recruitment, these two aspects lead to the next HRM challenge: enabling conditions for high performance.

Performance: (Re)training Will Improve Productivity in an Increasingly Digital World Whether mass or niche media, competition from participatory or peer media has increased the pressure on media employees to create content that is more engaging (Küng, 2017). However, this has not always resulted in increased labor productivity nor assisted in managing performance. Indeed, labor productivity is an issue that many Western governments and economic commentators have grappled with since the global financial crisis of 2007–11. While employment levels have increased since the crisis, labor productivity has struggled to reach precrisis levels, primarily because of the sustained harshness of macroeconomic conditions, which have affected business capital expenditure, investment in research and development, and skills training. 101

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Recent research by Oliver (2017) examined the productivity of human resources in the UK’s creative industries during 1997–2014. The premise of the study was to examine the strategic adaptation and renewal of human resources following more than two decades of technological change and disruption caused by digitalization and new media. The creative industries’ contribution to the UK economy over this period has significantly increased, with gross value added (GVA) increasing from 3.96% (£31,205m) to 5.20% (£84,067m) of the total UK economy. The total number of employees in these industries has also increased from 931,000 in 1997 to 1,808,000 in 2014. However, the productivity of employees (calculated as GVA per employee £) indicates some of the challenges that companies face. Figure 7.1 illustrates the interindustry GVA per employee (£) performance based on comparative figures for the year ending 1997 and 2014.The UK publishing industry outperformed all other creative industries by increasing the GVA per employee from £20,554 to £45,244 (+120%). The worst-performing industry was film, television, video and radio, where GVA increased by 56%, from £5.985 billion to £10.807 billion and the number of employees increased 63%, from 161,800 to 264,000.The result was a modest increase in GVA per employee of 11% from £36,990 to £40,936. The findings for the UK publishing industry may appear counterintuitive at first glance, since the size of the labor force has decreased from 308,500 in 1997 to 225,000 in 2014. However, the structural changes and adaption of human resources, driven by an increasingly digital publishing environment, have produced a far more productive workforce. However, as productivity can be impacted by macro issues, such as technological innovation, HRMs need to keep abreast of advancements in training in order to facilitate productivity and enhance performance. Although the media industry is often viewed as a pioneer in exploiting technology, the continual evolution of technological platforms requires increased training to meet technical skills required to execute one’s job (Küng, 2017). Understanding “how to analyze basic usage metrics, such as

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open rates, click-throughs and conversions” (Siculiano, 2011, p. 206), is an imperative skill for those involved in any form of online communication. In order to master this skill and others related to technological innovation, there needs to be an investment in training the workforce. From an HRM perspective, there must be a realistic balance between employees meeting deadlines and being able to engage in training. Nowadays there are more ways to adjust training around work constraints as the delivery of training has moved from traditional face-to-face to online virtual environments (Koop & Burkle, 2010). E-learning strategies have enabled HR departments to adapt to changes in the workplace, such as moves toward nontraditional workplaces (i.e., telecommuting), an emphasis on knowledge transfer, and acceleration of the rate at which change is affecting organizations (Brandenburg & Ellinger, 2003). Learning and development research increasingly explores just-in-time training (JITT) and bite-sized or micro learning (BSL) as a means to support selfdirected learning (Kopp & Burkle, 2010; Gray, 2015). In the 24/7 operating cycle, prevalent among media organizations where remote work is common, JITT allows the individual employee to receive requested training on the spot (Kopp & Burkle, 2010). JITT emphasizes an on-demand approach and because of its often online aspect, it can be done “anywhere, anytime, anyhow” (Brandenburg & Ellinger, 2003, p. 9). As multinational media organizations, such as Sky and Pearson’s PLC, may span wide geographical areas, JITT provides a cost and time benefit for employees and the employer (Holton, Coco, Lowe, & Dutsch, 2006). However, a key challenge for HRM staff is that JITT requires them to predict or anticipate learning and development needs for tomorrow’s technology (Brandenburg & Ellinger, 2003). Given the rate of innovation and its ability to impact media organizations, it can be challenging to identify what training the workforce of today will need, for instance, to deal with the evolving artificial intelligence integration tomorrow. Despite the advantage of being able to deliver training just in time, there remains the question of how much training is actually necessary.With the busy nature of media organizations, HRM departments could be tempted to try to get all of the training done in one go. While this is a cost-saving measure and limits disruption, it does not take into account the effectiveness of such a measure, nor does it take into account the human attention span (Gray, 2015). Bite-sized or micro learning (BSL) instead focuses on the amount of learning the individual can effectively absorb. Studies have found that the order of consumption or the individuals being able to treat bite-size learning as a buffet to pick and choose what and how much they needed was deemed more effective (Gray, 2015). For HRM in media organizations, using micro learning mimics the ways individuals access information and entertainment throughout their daily lives. However, with both of these types of learning, it is often down to the individuals’ own sense of self-directed learning. Not everyone will feel comfortable with online training so one of the challenges with e-learning is the individuals’ level of computer self-efficacy or competency (Holton et al., 2006).Theories such as unified theory of acceptance and use of technology (UTAUT) explore the individual’s behavior intentions in terms of technology adoption (Venkatesh, Morris, Davis, & Davis, 2003). UTAUT consists of four dimensions: performance expectancy, effort expectancy, social influence and facilitating conditions (Venkatesh et al., 2003). Performance expectancy measures how the users perceive the technology will assist them in performing their jobs. It is a measure of the degree to which the individual is extrinsically motivated and their outcome expectations. As this construct has roots in social cognitive theory, it suggests the outcomes are directly job-related (Venkatesh et al., 2003). The second dimension, effort expectancy, measures how easy the users perceive using the technology will be. Entrenched in innovation theory, it focuses on the difficulty of use (Venkatesh et al., 2003).This does make the assumption that the technology is predominately viewed as difficult. Together these first two constructs are often strongly linked to predicting the individuals’ intention to use technology (Venkatesh, Thong, & Xu, 2012). Social influence measures how the

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user reacts to the social pressure to adopt technology. This relies on the subjective norms or social factors relevant to the individual. With its origins in innovation diffusion theory, social influence focuses on image and status (Venkatesh et al., 2003). Finally, facilitating conditions measure the users’ perceptions of what kind of support they anticipate their organization will provide for technology adoption.This looks at how the individual perceives compatibility between the internal and external constraints, and is grounded in innovation diffusion theory. Venkatesh et al.’s (2003) scale incorporated the voluntary use of technology by members of the entertainment and telecommunication industries compared to the mandated use in banking and public sector. Studies where individuals voluntarily engaged in e-learning systems found a significant relationship between performance expectancy (Chung, Lee, & Kuo, 2016), effort expectancy, social influence and facilitating conditions (Oh & Yoon, 2014). Researchers have also found that individuals who are intrinsically motivated significantly impact the user’s intention to use e-learning systems (Yoo, Han, & Huang, 2012). This implies that the e-learning does need to be voluntary or perceived as an enjoyable act. An important aspect of UTAUT, which has implications for SHRM, is that many findings imply gender, age, experience and voluntary use significantly moderate the relationship between the constructs and behavioral intentions (Venkatesh, Thong, & Xin, 2016). Several scholars found evidence that being male, a millennial and educated at a bachelor’s level or higher would significantly impact the various UTAUT constructs (Al-Shafi, 2009; Buhler & Bick, 2013; Mohammadyari & Singh, 2015;Venkatesh et al., 2012). This has implications for media organizations that strive to have diverse workforces. Furthermore, scholars such as Prensky (2001) postulate that the younger generations’ acceptance and adoption of technology contribute to an attitude of being a digital native. If JITT and BSL training programs are implemented, then there needs to be controls factored in that will assist non-male, non-millennial, nondegree holders to improve their computer self-efficacy. The more general gaps in UTAUT literature include whether information systems usage is mandated in the organization (Hwang, Al-Arabiat, & Shin, 2016).This provides an opportunity for media management researchers to investigate if just-in-time learning and bite-size learning have a probability of successful engagement if voluntary. Sky (2015) recently developed a “Sky Development Portal System” in order to facilitate learning and development online. This system provides JITT and BSL learning opportunities, but does not account for the employees’ computer literacy. Additionally, it is unknown if the training is voluntary, or if it is an aspect that could play a moderating role between the UTAUT dimensions and its outcome of use. For media management academics wanting a better understanding of how SHRM can improve performance, it is recommended to first analyze if and how training programs have been adapted. With a lack of empirical evidence organic to media organizations, it is difficult to predict how this SHRM function would differ from that of other industries.Yet, because the media industry is often the first to be impacted by technology, it is an opportunity for leaders in the forefront of research.

Retention: Employees Will Demand to Be Intellectually and Emotionally Engaged Finally, in order to retain high-performing, talented employees, organizations must invest in career development programs and look at ways to facilitate a work-life balance and sense of well-being. For media organizations, this is particularly critical as social media has changed the 24-hour news cycle to a minute-by-minute update. Some HR scholars would argue there are many ways to try to manage retention issues related to job satisfaction, organizational commitment, job embeddedness and job alternatives (Phillips & Edwards, 2009). However, instead of treating the symptoms that cause burnout and high turnover, the authors recommend a preventative solution focus. By understanding

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how HRM can foster engagement, media organizations can adapt to the needs of the workforce, thus preventing high turnover. Engagement is habitually used to infer improvement or involvement on the part of the employee. While this puts the onus of effort on the individual, HRM personnel tend to use the term as if to imply the employees are motivated and tuned in to the pulse of the organization. Alfes, Truss, Soane, Rees and Gatenby (2010) define employee engagement as “being positively present during the performance of work by willingly contributing intellectual effort, experiencing positive emotions and meaningful connections to others” (p. 5).This does place the attitude of being engaged with the individual, but also calls on him or her to interact with colleagues in a manner that has purpose. However, the organization’s responsibility in the concept of employee engagement is to be actively listening and open to criticism about what is working and what is not working within the organization. Kahn (1990) proposed that engagement occurs at cognitive, social and behavioral levels. Following the ideas of interactionalist theory in the seminal works of Goffman (1971), Kahn (1990) states, “personal engagement is the simultaneous employment and expression of a person’s ‘preferred self ’ in task behaviors that promote connections to work and to others, personal presence (physical, cognitive, and emotional) and active full role performances” (p. 700). However, Alfes et al. (2010) argued that Khan’s (1990) theory lacked the ability to incorporate the seemingly innate need of people to feel good about their work and their organization. Hence, Alfes et al. (2010) stipulated employee engagement occurs on intellectual, affective and social levels. Intellectual engagement focuses on the cognitive aspect, where individuals analyze their jobs and determine how they can do them better. Media organizations often rely on employees to be creative, but workloads and deadlines may inhibit the individual’s opportunity to actively participate in intellectual engagement. Affective engagement is related to the emotions one feels about doing one’s job (Alfes et al., 2010). For print and broadcast journalists, there may a more immediate feeling of being able to make a positive impact by doing a good job because of the common practice of online engagement with audience members. Social media sites, such as Twitter, allow more immediate interaction between journalists and audiences and can impact journalists’ professional identity (Ottovordemgentschenfelde, 2017). Although likened to a positive attitude, employees’ emotional engagement is not consistent over time and can even backfire. For example, an individual who may have a positive level of emotional engagement could easily change to a negative one if he or she felt an organizational change negatively impacted them. Or, if employees were given a certain level of creative freedom and autonomy, but upon a restructuring, new levels of red tape and bureaucracy were introduced, they could perceive a lack of organizational support, which could easily develop into negative attitudes toward the organization (Reinardy, 2014). Furthermore, Tan and Weaver (2007) found a positive correlation between media agenda and policy agenda. For the journalist who has strong beliefs about immigration but works for a media organization whose agenda runs to the opposite end of the gauntlet, the extreme differences could lead to increased turnover. Finally, Sablonnière, Tougas, Sablonnière and Debrosse (2012) found that negative attitudes toward rapid organizational change resulted in increased psychological distress and burnout symptoms. The last dimension, social engagement, focuses on how frequently employees engage in “constructive dialogue with those around them about their work or how to improve working methods or skills” (Alfes et al., 2010, p. 6). Burke and Fiksenbaum (2009) found that Norwegian journalists who reported higher levels of passion had better work outcomes than those who reported high levels of work addiction. This has important implications for knowledge transfer within organizations if employees are passionate and able to communicate effectively with others. De Jong, Curşeu and Leenders (2014) have found contrary evidence that states negative attitudes and relationships affect group cohesion and performance only when the team has task interdependence. If the social engagement aspect can be moderated by the complexity and interdependence of the task at hand,

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then this implies a higher level of engagement is needed for more complex tasks. For media organizations that are silo-oriented as opposed to agile, this can inhibit social engagement and creation of “a web of strong personal relationships across business units” (Lank, Randell-Khan, Rosenbaum, & Tate, 2008, p. 106). A good employee engagement program allows employees to unlock their potential, increases commitment and desire to maximize individual performance, enables potential creativity and enhances their sense of well-being (MacLeod & Clarke, 2009). For the organization, a good level of employee engagement is supposed to reinforce commitment and encourage retention. HRM incorporates various tools in order to create a workplace where employees and organizational values and goals are in congruence (Kuhn, 2016). One such tool is measuring the employee voice through annual engagement surveys or employee listening tools, such as “pulse surveys, anonymous social tools, and regular feedback check-ins by managers” (Schwartz et al., 2016, p. 6). This active form of listening increases the dialogue between HRM departments and employees. By engaging in actions such as listening to the employee voice, HRM departments can identify well-being issues that affect overall employee engagement. Nevertheless, in a 24/7 operating environment of media organizations, employee well-being may be seen as put to the side and ignored. As employees slowly realize that their smartphone and tablet tether them to being in constant reach, work-life balance may quickly fall by the wayside. Some researchers say this unbalance leads to burnout and work-family (life) conflict. Gourlay et al. (2012) found that individuals working shifts (opposed to Monday to Friday, 9 to 5) reported poor work-life balance. The implications for those in media organizations are very clear. Poor balance can impact the emotional (affective) engagement of the individual. However, this problem does not come with an easy solution for HRM departments.There is a delicate balance between being able to accommodate job-related well-being and avoiding increased burnout and work-family conflict. Consequently, some organizations allow employees to modify their work schedule, telecommute and take sabbaticals to refocus and return reinvigorated (Pagano & Pagano, 2009). While extended leave programs may not be prominent in the media industry (the Associated Press does encourage staff to take sabbaticals), research on the benefits of sabbatical programs is primarily concentrated in medical and academia fields. Finally, some SHRM are incorporating apps and tools to help the employee become less stressed (Schwartz et al., 2016). The adoption of these tools of course relies on the individual’s willingness to engage in technology, as discussed in the section about training.

Conclusions SHRM functional activities within media companies need to attract talented individuals, generate commitment toward the success of the organization, improve the satisfaction of the employees and facilitate employee engagement. While there are some media industry-oriented studies that look at employee e-recruitment (Eckhardt, Laumer, Maier, & Weitzel, 2014), employee motivation and burnout ( Jung & Kim, 2012), and how CSR communication influences employee training and performance (Golob & Podnar, 2011), there remains much to understand when exploring and managing HRM trends in media organizations. It is unknown if CSR as a recruitment tool will enhance the person-organization fit. There remain gaps in our understanding of how JITT or BSL training will be able to meet demands for increasing performance during an era of technological innovation. And employee engagement research could provide beneficial guidance to practitioners who need to balance creative employees’ passion and desire for autonomy with organizational strategies to adapt to changing markets. Meanwhile, there are a variety of views on the research design that media management researchers will need to employ in the future. For example, Picard and Lowe (2016) believe that researchers 106

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should adopt more longitudinal approaches to study phenomena in order to better understand how an issue develops over time. Achtenhagen (2016) on the other hand suggests that more quantitative studies should draw on sample sizes that will allow researchers to generalize their findings to entire populations or sections of populations. This in turn would help researchers understand the magnitude of certain phenomena, as well as cause-and-effect relationships. By designing studies in a manner that seeks to determine causality, Achtenhagen (2016) argues that scholars can build empirical studies that support more evidence that creative employees in media organizations differ from other industries. As many of the studies discussed earlier are based on theories grounded in organizational behavior and general management theories, and Picard and Lowe (2016) argue that media management scholars need to ensure theories that cross over are relevant, it is clear that SHRM would benefit from a theory that incorporates SHRM in an industry where the workforce is a balance of creative and functional employees. In the interim, the authors argue that Harris et al.’s (2011) proposed framework could be used to incorporate big data and HRM analytics throughout the various HR processes. Several organizations, such as Google and A.C. Milan, are already incorporating various aspects of the ladder. This presents an opportunity for media management researchers to work with industry to see what antecedents and outcomes result with adoption of such frameworks. From our discussion, it is evident that more studies concerning media companies that adapt their HRM recruitment, performance and retention policies and procedures in relation to the strategic changes in their competitive environment are needed. In light of our discussion, opening the gambit of “adapt or die” is still relevant but the authors believe it needs to be amended to include the word “invest.” Failing to invest in more technologically advanced recruiting through data-driven analytics or in human resources through training and engagement programs, will inhibit the organization’s ability to adapt. As such, the mantra for SHRM should be “invest and adapt, or die.”

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8 STRATEGIC MANAGEMENT Nabyla Daidj

Firms operate in a more and more complex, dynamic, less predictable environment, especially in the media and entertainment industry. This situation requires companies to follow various strategic approaches and to develop new patterns of strategic thinking. There are several strategic models and tools. Most of them have advantages and disadvantages and have evolved. Furrer, Thomas, and Goussevskaia (2008) studied the evolution of the literature on strategic management between 1980 and 2005 and analyzed the evolution of some “strategic keywords” showing the different academic and environmental influences. Ten years after the publication in 2007 of a paper written by Lucy Küng entitled “Does Media Management Matter?” the question remains a highly topical issue. Consequently, the goal of this chapter is to present some key strategic management tools, to explain how they have evolved since the end of the 1990s and to analyze how they can be applied to the media sector.This chapter forms part of the past and ongoing work on the application of managerial and economic concepts and theories to media industries published by several scholars (e.g., Albarran, 2006, 2013; Mierzejewska & Hollifield, 2006; Picard, 2006). This chapter is divided as follows. The first section describes the evolution of strategic management thinking using the concept of competitive advantage as an example. The second section explains the forces that shape competition in a company’s industry environment using Porter’s five forces model as an overall framework. It moves on to explore the concepts of internal resources and competencies that can impact a media company’s competitive position and performance in the global marketplace. The third section is dedicated to the impact of the digital transformation on media strategies and business models. Digital transformation is a concept which has attracted attention from both practitioners and academics. The concept has received wide recognition, yet in practice, it is a new and evolving concept. The final section concludes and gives a future research agenda.

The Evolution of Strategic Management Concepts From Strategy to Strategic Management There is a variety of meanings and interpretations of strategy and strategic management depending on the author and sources. The term ‘strategy’ is used to refer to different ideas. The concept of strategy was developed first in a military and political context. The military strategy books The Art

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of War, by Sun Tzu, and On War, by von Clausewitz, are famous and have become business classics. Sun Tzu developed the tactical side of military strategy and von Clausewitz (2007) highlighted the dynamic and unpredictable nature of military strategy. If strategy can be seen in decisions and actions used within a military context, it must not be confused with the notion of ‘tactics’. Great battles are often analyzed by historians in terms of strategy (referring to a general plan and to the deployment of resources) and tactics (related to the employment of resources already deployed). As Bracker (1980) pointed out, Since its first mention in the Old testament, the concept of strategy has been largely a semantic issue. . . . Our word strategy comes from the Greek strategos, ‘a general’ which in turn comes from roots meaning ‘army’ and ‘lead’. The Greek verb stratego means to ‘plan the destruction of one’s enemies through effective use of resources’. . . . The first modern writers to relate the concept of strategy to business were von Neumann and Morgenstern (1947) with their theory of games. (p. 219) The strategic management discipline originated in the 1950s and 1960s. When the 1960s gave rise to basic concepts of strategy, the 1970s provided important knowledge about their development and application. There are different streams in this field (see Table 8.1). Although there were numerous scholars, the most influential pioneers were Alfred D. Chandler, Igor Ansoff, and Peter Drucker. Three books are considered ‘classic strategy books’: Chandler’s Strategy and Structure (1962), Ansoff ’s Corporate Strategy (1965), and Learned, Christensen, Andrews and Guth’s Business Policy: Text and Cases (1969). Porter’s seminal work, Competitive Strategy (1980), contributed also to the foundation for the growth of the strategic management field.

Sustainable Versus Transient Competitive Advantage At a general level, strategy refers to actions that have been taken and decisions that are to be made by an organization in achieving its objectives and in particular to achieve a sustainable competitive advantage. It’s worthwhile to look briefly at the notion of sustainable competitive advantage, which has been questioned since the end of the 1990s. The concept of sustainable competitive advantage has remained a cornerstone of management thinking and behavior. It presents a good example for illustrating the evolution in strategic thinking in recent years. Firms compete in international markets. How do firms create and sustain competitive advantage? At the heart of positioning there is a competitive advantage (Coyne, 1986). In the long run, firms succeed relative to their competitors (Porter, 1979). The idea emerged in the 1980s, when Porter (1980) argued that a business can develop a sustainable competitive advantage based on cost, differentiation or both. Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its product. Each of these activities can contribute to a firm’s relative cost position and create a basis for differentiation. (Porter, 1985, p. 33) Other authors (Hall, 1980; Henderson, 1983) insisted on the need for firms to possess unique advantages in relation to competitors in order to survive. Barney (1991) contributed to the discussion by exploring the relationships between a firm’s resources and sustainable competitive advantage. He considered that a firm can achieve sustainable competitive advantage thanks to resources that 112

Table 8.1  Evolution of strategic management concepts Main concepts

Authors

The 1950s

Management by objectives (MBO)

Drucker (1954)

The 1960s

Chandler: Structure follows Strategy

Chandler (1962)

Ansoff matrix (penetrating the market, product development, market development and diversifying)/ and the contingent strategic success paradigm

Ansoff (1965)

SWOT analysis (LCAG)

Learned, Christensen, Andrews & Guth (1969).

The 1970s

Mc Kinsey matrix (1970-1975) Boston Consulting Group analysis and matrix PIMS (Profit Impact of Marketing Strategies, 19601980)

Consulting groups (BCG, Mc Kinsey, AD Little)

The 1980s

Five forces framework, value chain, sustainable competitive advantage (differentiation, cost)

Porter (1980, 1985)

Resources, competencies, capabilities (RBV) Strategic intent

Barney (1991); Hamel & Prahalad (1989, 1993, 1994); Wernerfelt (1984, 1989).

Profit patterns

Slywotzky & Morrisson (1988).

Hypercompetition

D’Aveni (1994); D’Aveni, Dagnino, & Smith (2010)

Coopetition, complementor, value network

Bengtsson & Kock (1999)  Brandenburger & Nalebuff (1996)

The 5 types of management (strategy as plan, as ploy, as pattern, as position and as perspective) into “10 schools of thought” (The Design School; The Planning School; The Positioning School; The Entrepreneurial School; The Cognitive School; The Learning School; The Power School; The Cultural School; The Environmental School; The Configuration School)

Mintzberg, Lampel, & Ahlstrand (1988)

Disruptive innovation (technologies/products)

Christensen (2000)

Knowledge and Knowledge management (KM)

Davenport & Prusak (1998); Nonaka & Takeuchi (1995)

Blue ocean versus red ocean

Kim & Mauborgne (2005a and b; 2014)

Business ecosystems Open innovation Keystone advantage

Moore (1996) Chesbrough (2003) Iansiti & Levien (2004)

Platforms (two-sided and multi-sided)

Eisenmann, Parker, & Van Alstyne (2006) Gawer & Cusunamo (2002, 2008); Hagiu & Wright (2015).

Business models (value creation, capture and monetization)

Afuah & Tucci (2000); Massa & Tucci (2014); Osterwalder & Pigneur (2009);Timmers (1998); Zott,Amit, & Massa (2011).

The 1990s

The 2000s

The 2010s

Lean startup

Ries (2008)

Shared value

Porter & Kramer (2011)

Transient/temporary advantage in a changing context (digital transformation, uberization)

McGrath (2013a, b and c)

Source: adapted from Daidj (2015, 2017) and updated.

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must possess four attributes—value, rareness, inability to be imitated, and inability to be substituted— which are widely known as ‘VRIN-scheme’. Since the end of the 1990s, a debate on what actually constitutes a sustainable competitive advantage has ensued. For Christensen (2001), the pursuit of competitive advantage is not futile, but the real issue for strategists is to understand the process of competition and how competitive advantage comes about. In their analysis of business ecosystems, Iansiti and Levien (2004) pointed out the fragile nature of competitive advantage “in situations of significant technological and market upheaval” (p. 9). McGrath (2013a, 2013b, 2013c) asserted that sustainable competitive advantage is obsolete for competing in today’s dynamic world. Firms operate in rapidly changing economic and technological environments in relation with hypercompetitive markets (D’Aveni, 1994). McGrath proposed to refer to another concept named ‘transient competitive advantage’ because markets change in a radical way. “Stability, not change, is the state that is most dangerous in highly dynamic competitive environments” (McGrath, 2013b, p. 7). “The end of competitive advantage means that the assumptions that underpin much of what we used to believe about running organizations are deeply flawed” (McGrath, 2013a, p. 18). She gave several examples of companies from the media sector which were not able to see change coming, such as Kodak, Sony, and Blockbuster. According to McGrath, the new ‘playbook’ is based on six assumptions of competing in arenas (not industries alone) and exploiting temporary competitive advantages: continuous reconfiguration; healthy disengagement; using resource allocation to promote deftness; building an innovation proficiency; leadership and mind-set; and personal meaning of transient advantage. A good example of this is the strategic evolution of Kodak, an American company created in 1880 by George Eastman, a visionary pioneer and philanthropist. His slogan ‘You press the button, we do the rest’ made him famous around the word. In 1963, Kodak launched the Kodak Instamatic Camera, which found worldwide success, with more than 50 million units sold over seven years. In 1987, Kodak unveiled the first concept of a ‘one-time-use’ camera. Until that time, no one had considered the camera to be a consumable. Kodak invented the first digital camera in 1975. Launched in 1995, the Kodak DC40 was the first digital camera marketed by Kodak. In the 2000s, Kodak operated mainly in the imaging sector, covering the entire graphic production chain: image acquisition, printing, print consumables (paper, ink) and storage. Kodak marketed its products and services to individual customers, professionals, and government agencies, such as NASA. But on January 19, 2012, Eastman Kodak Company filed voluntary petitions for Chapter 11 business reorganization. What happened during the 2000s? Is it the end of the myth of sustainable advantage? In 1997, Christensen, in his book The Innovator’s Dilemma, developed the idea that a new technology (often disruptive) could unexpectedly overturn the dominant technology in the market sector. Disruptive technologies are those that force changes in industry frontiers, business processes, and business models. The Kodak case has been analyzed by Christensen. Kodak completely dominated the industry of analogue photography for decades. Thanks to its R&D program, Kodak was the first to market its digital camera. But innovation is a necessary requirement, but not the only one. The firm did not succeed in adapting its business model to a disruptive technology, such as digital imagery. In addition, the camera itself is less popular throughout the world. Today people take pictures more and more with their mobile phones.

A Strategic Approach at Two Levels: External and Internal To simplify in the field of strategic management, two complementary approaches enable an explanation of the sustainable competitive advantage of a company, or alternatively its difficulties and its positioning problems in the market. The purpose of this section is less a comprehensive presentation of strategic tools and concepts but rather a focus on two of them (Porter five forces framework and RBV) to analyze their advantages, limits, and even more the obstacles to their implementation. 114

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The General Overview Environmental factors are those areas over which an organization has little control. Several tools can be used in order to analyze the external conditions—to identify the key factors from the external environment that might affect the organization, the current factors, and the changes that are going to happen in the external environment. The initial ‘external’ analysis of the environment calls on the use of various models, including PESTEL (political, economic, social, technological, environmental, & legal) and SWOT (strengths, weaknesses, opportunities, & threats), which is a model originated in the 1960s by Humphrey on the one hand and Learned, Christensen, Andrews, and Guth (LCAG) on the other hand. Several authors would have contributed to the development of the SWOT analysis. One of them was Albert Humphrey, who conducted a research project in the 1960s and 1970s at Stanford University. This project led to his team action model (TAM). Many authors refer to the LCAG model, including SWOT analysis, divided into two parts, external (OT) and internal (SW). Regarding external market conditions, LCAG suggests analyzing the opportunities and threats. In addition, in this category, Porter’s five forces framework (1980, 1985) can be included.This well-known model determining industry attractiveness stresses the fact that the company must adapt to its environment and find attractive and profitable sectors—that is, sectors that are characterized by relatively weak competitive pressure (low rivalry, low threat of substitutes, low threat of entry, low buyer power, and low supplier power). The traditional analysis of the internal level is phrased in terms of strengths and weaknesses of the firm related to SW(OT). A second ‘internal’ analysis, based on ‘resources, competences and capabilities’ (Barney, 1991; Prahalad & Hamel, 1990; Wernerfelt, 1984), insists conversely on the ability of a company to use and transform its environment. The most competitive company is the one which possesses the most advantageous resources and the competences necessary for the implementation and combination of these resources. Table 8.2 presents these two levels of analysis: external and internal. Both of them are based on several tools mentioned earlier. Concepts presented in bold are particularly relevant for a strategic analysis.

Table 8.2 The levels of strategic analysis. Internal level (company level)

External level (environment/market) SWOT portfolio models (matrix) BCG, McKinsey, A.D. Little (ADL)

Resource-based view (RBV) (resources, competencies, capabilities), knowledge-based view (KBV) Company value chain

PEST(EL)* five forces framework + 1

Value chain

Business models Revenue models *  PESTEL: political, economic, social, technological, ecological, and legal. Source: Adapted from Daidj (2015) and updated.

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Industry value chain Interorganizational networks (value network, business ecosystem)

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Structural Analysis of Industries and Positioning Within Industries (External Analysis) The Presentation of the Framework In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy”, by Michael Porter. Porter’s five forces are an important framework used for assessing the potential for profitability in an industry. It draws upon industrial organization (IO) to derive forces that determine the competitive intensity and therefore attractiveness of a market. It takes into account supply and demand, substitutes (products), the relationship between volume of production and cost of production, and market structures like monopoly and oligopoly. In this seminal work, Porter identified five factors that act together to determine the nature of competition within an industry. The five forces framework is an external environment tool for understanding the ‘big picture’ of the environment, enabling the company to take advantage of the opportunities and minimize the threats. This model gives the company an edge over its competitors. The strength of the five forces varies from industry to industry and determines longterm industry profitability. The five forces are as follows: the threat of new entrants, the threat of substitution, the bargaining power of suppliers, the bargaining power of customers/buyers (BtoA, BtoB, BtoC), and competitive rivalry within the industry. Rivalry refers to the intensity of competition and to the degree to which a firm responds to strategic moves of its competitors in the industry.

Limitations of Porter’s Five Forces Model Porter’s five forces model has been a subject of criticism, though it is considered a powerful tool for industry analysis and strategic design. Regarding first data and information, this framework has the same limitations as the PESTEL model. In order to conduct a relevant analysis, the sources have to be viable, reliable, and valid. The amount of detailed information required is very high and it is not easy in some cases to gather data on competitors. Porter’s framework has been discussed by other academics, such as Coyne and Subramaniam (1996), who have stated that three dubious assumptions underlie the five forces model: First, that an industry consists of a set of unrelated buyers, sellers, substitutes, and competitors that interact at arm’s length. Second, that wealth will accrue to players that are able to erect barriers against competitors and potential entrants; in other words, that the source of value is structural advantage. Third, that uncertainty is sufficiently low that you can accurately predict participants’ behavior and choose a strategy accordingly. Even if the odds of each assumption being individually correct is moderate, the combined chances of at least one of these being wrong is high. (pp. 15–16) According to the two authors, these three assumptions are not valid and consequently the analysis will not be sufficiently robust for firms to plan and respond to competitive behavior. Another limitation of the five forces framework is related to its lack of relevance in dynamic environments. Teece (2007) considers that there are several factors that underline inherent weaknesses of the model but the most important point is that market structure is considered ‘exogenous’. In addition, Teece (2007) adds that “relevant factors ignored or underplayed by the five forces include technological opportunities, path dependencies, appropriability conditions, supporting institutions, installed base effects, learning, certain switching costs, and regulation” (p. 1325).

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The Five Forces’ Application to the Media Industry Several authors (MacDonald, 1990; Silk, Klein, & Berndt, 1999) have analyzed the media industry or one of its markets through the lens of Porter’s five forces. But we can provide a typical example showing the limitations of the five forces framework as a strategic predictive tool. As the external factors change at a very fast pace, it is difficult to predict development that may affect the present or future of an organization and the potential arrival of new competitors. This is precisely what happened in the market for game consoles. At the end of the 1990s, three console manufacturers, Sony, Nintendo, and to a lesser extent Sega, dominated the video games market. Sega was present with its 32-bit Saturn console, launched in 1994 (a huge failure), and then with its Dreamcast console in 1998. Even if the Dreamcast launch was successful, this success was short-lived, however, because of the fierce competition with Sony (later on with Microsoft) and led Sega to stop its activities as a console manufacturer. Originally, Sony was mainly a consumer electronics group, renowned for the quality, originality, design, and innovation of its products since its creation in 1946. Sony developed its expertise in the field of electronics to design the first PlayStation (PS1) in 1994. With this launch, Sony was the first to change game formats and offer CDs instead of the old cartridges, thus contributing to the spread of 3D in the video game field. Nintendo, a company founded in 1889, diversified its electronics activities in the 1970s and launched the Family Computer (Famicom) in 1983 in Japan, later launched in the United States as the NES (Nintendo Entertainment System). Then, the firm developed and produced the Super Nintendo, launched in September 1991, followed by the Nintendo 64-bit N64 in late 1996. What are the main features of the video game consoles industry? In this industry, innovation is considered to be the key success factor and technological prowess has grown with each new generation of console launched (Carpenter, Daidj, & Moreno, 2014). Substantial R&D expenses are required. It is also a two-sided platform industry with proprietary standards and high direct and indirect network externalities (Daidj & Isckia, 2009). The subsidized pricing of the console, for example, serves to develop the user base and draw in developers. The sector is also characterized by path dependency whereby choices made by console manufacturers in relation to next-generation consoles are determined, in part, by previous decisions for part generations. Consequently the barriers to entry are very high and the threat of new entrants should be very low in this situation, as represented ahead. But that has not prevented Microsoft from entering this market in 2001 with its Xbox.

Expansion of the Five Forces Model In the 1990s following many criticisms, the five forces model was augmented by several scholars in order to include a sixth force, effectively completing the model. The six forces model became a market opportunities analysis model, as an extension to Porter five forces analysis. Three main trends have appeared: •

•

Government: government policy (laws, norms, regulations) is one of the forces to consider when analyzing the structural environment of an industry. Gordon (1997) considered that the government could be the sixth force as it has direct and indirect influence in the industry on main stakeholders. This sixth force in the model is described also as the power of other stakeholders, and can refer to a number of other groups or entities. Hunger and Wheelen (2001) adopted this approach and suggest that this sixth force could include, besides government, local communities, special interest groups, and shareholders. Innovation: one of the limitations of the five forces model is that it assumes relatively static market structures and does not take into consideration changes and dynamic market trends based in

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•

particular on technological innovation. Innovation is then often considered as the sixth force in order to analyze rapidly changing and highly competitive environments (hypercompetition). Complementors: this notion has been introduced in the mid-1990s by Grove (1996), former CEO of Intel Corporation, and Brandenburger and Nalebuff (1996). Grove (1996) defined complementors as “other businesses from whom customers buy complementary products. Each company’s product works better or sometimes only works with the other company’s product” (p. 29). Hardware and software companies are classic complementors: faster hardware increases users’ willingness to pay for more powerful software. Grove stated that these complementary activities, as a sixth factor, can influence the industry as changes in these businesses (e.g., new technologies) can impact the dynamics between the industry and the complementors.

Porter knew these researchers’ work but referred to innovation, government, and complementary products and services as ‘factors’ that affected the five forces (Porter, 2008) but considered that they were not the sixth force. The influence of these factors can also be captured in the other five forces. Porter (2008) writes, Advanced technology or innovations are not by themselves enough to make an industry structurally attractive (or unattractive) . . . . Government is not best understood as a sixth force because government involvement is neither inherently good nor bad for industry profitability. The best way to understand the influence of government on competition is to analyze how specific government policies affect the five competitive forces. . . . Government operates at multiple levels and through many different policies, each of which will affect structure in different ways. . . . Complements can be important when they affect the overall demand for an industry’s product. However, like government policy, complements are not a sixth force determining industry profitability since the presence of complements is not necessarily bad (or good) for industry profitability. Complements affect profitability through the way they influence the five forces. (pp. 86–87) Actually, all strategic tools considering only the external environment should be combined with other tools describing the internal conditions of the organization itself, as we will explain in the next section.

The Internal Diagnosis External analyses have been developed in order to describe the environmental conditions that favor high levels of firm performance. But these analyses are not sufficient to understand how firms generate competitive advantage and superior performance. Both external and internal analyses are important in the strategic management process.

The Resource-Based View (RBV) Approach The idea of considering firms as a large set of resources goes back to the seminal work of Penrose (1959). But this concept received renewed attention in the 1980s, in particular by Wernerfelt (1984, 1989). Since then the resource-based view (RBV) has become an influential framework for analyzing corporate strategy (Barney, 1991; Grant, 1991; Hoopes, Madsen, & Walker, 2003; Peteraf, 1993; Wernerfelt, 1984). Peteraf (1993) analyzed links between the resource-based model and competitive advantage. He highlighted several factors necessary to sustain the rents: resource heterogeneity,

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ex post limits to competition, imperfect resource mobility, and ex ante limits to competition. Amit and Schoemaker (1993) developed a behavioral view of strategic assets and analyzed how to target, develop, and deploy them. Wernerfelt (1989) proposed some guidelines for firms in order to identify their critical resources and decide how to apply them. In this approach, the aim is not to focus on the external environment of the company but instead to thoroughly analyze the company’s resources. The RBV considers the firm a ‘collection’ of resources which are tied to the firm’s management: firms are heterogeneous with respect to their resources and capabilities. This analysis, based on ‘resources and competencies’, insists on the ability of a company to use and transform its external environment and to change the rules of the game or the game it chooses to play. It is based on the idea that the organization can be studied as a set of resources, which may differ depending on the company. The resources are of various kinds: physical (machines, manufacturing facilities), human (qualifications, degree of adaptability of employees), and financial (the various sources of liquid assets). They may also be intangible and may be based on goodwill (existence of intangible assets, such as a patent, brand, or know-how). “Resources and capabilities can be viewed as bundles of tangible and intangible assets, including a firm’s management skills, its organizational processes and routines, and the information and knowledge it controls” (Barney,Wright, & Ketchen, 2001, p. 625). Intangible assets are particularly important in that they are hard to access and imitate. They often constitute strategic resources—that is, unique resources from which the company’s competitive advantage stems. The analysis of the strategic capacity of a company depends on several factors. To describe a general overview of a firm, the RBV analysis must be combined with the competence-based view (CBV), representing the second level of analysis. The concept of resources is thus often associated with the concept of organizational competencies—that is, the routines, know-how, and processes that are specific to the company and to its collective learning process. They must be difficult to imitate in order to create a sustainable advantage. They form part of the “core competencies that are the collective learning in the organization, especially how to coordinate diverse production skills and integrate multiple streams of technologies” (Prahalad & Hamel, 1990, p. 82). In addition, these competencies enable the organization to outperform its competitors.With strong core competencies in its existing businesses, a company can seek new customers by developing new value chains. Core competencies have to be analyzed in relation to resources and distinctive capabilities. Both of them provide sustainable competitive advantage.

Extensions of the RBV Hamel and Prahalad (1993, 1994) proposed a complementary approach to Porter’s external analysis by identifying internal factors affecting the firm’s competitiveness with an emphasis on dynamic capabilities and competencies. Hamel and Prahalad (1989) deepened this analysis and defined the concept of strategic intent, in which the organization must develop a long-term strategy thanks to its core competencies to achieve a leadership position by defining emerging market opportunities, identifying markets in which its capabilities provide a sustainable competitive advantage, or creating entry barriers (linked with a high level of innovation, capital investments, proprietary technologies, or a strong brand). In this situation, the firm becomes a key player and may alter its competitive environment. The knowledge-based view (KBV) is an extension of the RBV. The firm is considered a heterogeneous-bearing entity (Hoskisson, Hitt, Wan, & Yiu, 1999). The KBV considers knowledge as a key element to combine the distinctive resources and the core competencies of organizations. As Chan-Olmsted and Shay (2016) write, “recent developments in corporate branding research grounded in the resource-based view (RBV) of the firm have argued for the inclusion of corporate

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branding as a strategic resource that meets the parameters of an intangible knowledge-based resource” (p. 52). The audience could be also considered a specific and a key knowledge-based resource (Dimmick, 2003). A better understanding of the audience (key features and evolution) is the basis for increasing revenue. There has been some criticism about the RBV by several authors, such as Porter, about the lack of consideration of external conditions (market, industry). “While the organizational differences emphasized by the resource-based view are surely meaningful . . ., it would be misguided to disconnect the influence of organization from the industry and competitive contexts in which firms operate” (McGahan & Porter, 1997, p. 30).

The RBV’s Application to the Media Industry The RBV is one of the most relevant approaches adopted by several authors who have published on strategy in the media industry (Chan-Olmsted, 2006; Chan-Olmsted & Chang, 2003; Liu & ChanOlmsted, 2003; Mierzejewska & Hollifield, 2006; Mierzejewska, 2011; Oba & Chan-Olmsted, 2007; Picard, 2002). A large number of publications already exist and various topics have been analyzed by referring to this framework since the end of the 1990s. For example, Miller and Shamsie (1996) have applied and tested the RBV in a study of the major U.S. film studios from 1936 to 1965. They have explained that property-based resources are likely to contribute most to performance in stable and predictable settings but “in contrast, knowledge-based resources in the form of production and coordinative talent and budgets boosted financial performance in the more uncertain (changing and unpredictable) post-television environment of 1951–65” (p. 519). Peltier (2004) suggested that the content access control is a key issue following the ‘content is king’ motto developed by Bill Gates in 1996 (Gates, 1996). Content represents a scarce resource and a source of value for both traditional (books, newspapers, TV channels) and new (Internet, video games) media. This fear of a shortage in content has motivated several M&As (among them AOL Time Warner,Vivendi) and upstream vertical integration operations. Chan-Olmsted and Chang (2003) have also explained how resources play a role in shaping the conglomerates’ diversification strategies. Many other firm-specific resources and capabilities relevant to the media products are likely to shape a conglomerate’s preferences in both product and geographic diversification as well. . . . Knowledge-based resources such as access to content production talents (e.g., writers, actors, producers) and the capability of transferring or repurposing content products for different media outlets as well as the availability of a multi stream revenue system would also determine the degree of geographic diversity and the extent, directions, and mode of product diversification. (Chan-Olmsted & Chang, 2003, p. 230) As suggested by previous studies, which stress the flexibility of knowledge-based resources in coping with changing and uncertain environments (Miller & Shamsie, 1996), the knowledge-based resources of media conglomerates (Daidj, 2016) would be more critical in determining the effectiveness (i.e., performance) of their international product diversification strategy. Since the beginning of the 2000s, the convergence of information and communication technologies (ICT) has affected various industries (telecommunications, media, Internet) and has led to multiple linkages between different market sectors: broadcasting, content production, IT, telecom, web, consumer electronics, video games, media, social media, and advertising (Daidj, 2015). Convergence has transformed established industries and has enabled entirely new forms of content (user-generated

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content), services, and applications to emerge (Daidj, 2011, 2015; Picard, 2011; Wirtz, 2001, 2017) and business models (Westerlund, Rajala, & Leminen, 2011). It has led also to the emergence of new players, new sources of value creation, a greater transferability of strategic capabilities, and a growing interest in the media from telecommunications groups (both operators and manufacturers), Internet protocol television operators (IPTV), and IT companies (equipment and software). Table 8.3 shows the key resources and competencies of three ‘Internet giants’: Apple, Google, and Microsoft. They have succeeded in a context of convergence (Schimmer, Müller-Stewens, & Sponland, 2010) thanks to the development of distinctive resources and core competencies as they have progressively diversified their activities. At a more general level, as Küng (quoted by Tokbaeva, 2016) has explained, one of the key current disruptive forces in the media industry is closely related with the sheer scale of the new tech giants. This is probably the biggest strategic challenge, since these disrupters pose a number of threats, all of which impinge on media organizations’ strategic sovereignty. These include loss of control over distribution, over the context in which content is consumed, of a direct relationship with consumers, and of data relating to that relationship. (p. 27)

Business Models Evolution in a Context of Digital Transformation The issue is no longer how firms have adapted their strategy to technological and industrial convergence, but rather how the sector is going to face the current digital transformation (Matt, Hess, & Benlian, 2015), which affects the whole economy and all levels of society. The objective of this section is to identify and to explore main issues related to digital transformation for a better understanding of them in the media and entertainment sector without aiming to be exhaustive. It is a relatively new and complex phenomenon, demanding in-depth analysis in the future.

From Convergence to Digital Transformation Digital transformation is a buzz and polysemous word.There are many dimensions of digital transformation sometimes confused with other terms, such as digitization or digitalization. Digital transformation is often considered the next step of digitization. There are many explanations and definitions for digital transformation. Both academic and professional groups address this topic (Table 8.4). Digital transformation is not just about tools and digital technologies, defined by Liu, Chen, and Chou (2011, p. 1728) as “the integration of digital technologies into business”. Most definitions include additional changes in user experience, products, offerings, and business models, including value proposition and revenue (see next section). Digital transformation has also had an impact within companies on business process and digital capabilities (Westerman, Bonnet, & McAfee, 2014). The foundation of digital business transformation is closely related with organizational and external changes (market strategy). Users at both internal and external levels are affected (Earley, 2014).

Impact of the Digital Transformation on Business Models in the Media Sector: Toward Disrupted Business Models? Innovative ICT industries coupled with ever-growing products, services, and applications have placed business models at the heart of the new digital revolution (Osterwalder & Pigneur, 2010). As an integrating concept, the business model makes it possible to approach the various aspects related

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Table 8.3 The main resources and competencies of Apple, Google, and Microsoft. Apple

Google

Microsoft

Core business

Designing and manufacturing consumer electronics, PCs, and related software and peripheral products and networking solutions.

Development of a very powerful search engine: “matching Internet users with advertisers looking for leads”.

Threshold resources (tangible and intangible)

Organizational culture promoting entrepreneurial behavior Significant brand equity Customer service

Sophisticated search technology Strong brand image

Threshold competencies

Know-how in designing small, power-efficient consumer electronic devices Alliances with recording companies (iTunes 24x7 online commercial platform) Diversification strategy in a context of convergence

Unique (or distinctive) resources and/or core competencies

World’s number one brand name Provide innovative products and solutions via design and development of hardware and software Vertically integrated digital content distribution business Human resources The end of charismatic leadership? How to manage in the future?

Capability to solve both software engineering and hardware engineering issues to make Google Search viable and the most widely used search tool Capacity to create BE Diversification strategy in a context of convergence Scaling systems to handle traffic and monetizing it resulting in the development of the most widely used research engine Content (acquisition of YouTube in 2006)

Development, manufacturing, licensing, and supporting software products (operating systems, server & business solution applications). R&D resources focused on cloud computing services Technology Brand image Patents licenses Expertise in many IT-based innovations and technologies Implementing knowledge competencies in an online system Building BE Diversification strategy in a context of convergence Financial resources (high performances)

Key challenges by 2020/impact on resources and competencies

Source: Adapted from Daidj (2011, 2015) and updated.

How to define a “new conglomerate” strategy Creation of Alphabet Inc. in 2015: toward more autonomous business units and brands?

How to continue to add value and to achieve a sustainable competitive advantage?

Strategic Management Table 8.4 Key words related to the digital transformation. Authors

Definition

Key words

Bounfour (2016)

“Digital transformation is a new development in the use of digital artifacts, systems and symbols within and around organizations” (p. 20). “Digital transformation is concerned with the changes digital technologies can bring about in a company’s business model, which result in changed products or organizational structures or in the automation of processes. These changes can be observed in the rising demand for Internet-based media, which has led to changes of entire business models (for example in the music industry). Digital transformation is a complex issue that affects many or all segments within a company. Managers have to simultaneously balance the exploration and exploitation of their firms’ resources to achieve organizational agility” (p. 124). “Tomorrow’s management, supported by digital transformation, reflects many different tensions; notably between internal and external resources, horizontality and verticality in organizations, and short timeframes for decision making” (p. 1732). “Executives in all industries are using digital advances such as analytics, mobility, social media and smart embedded devices—and improving their use of traditional technologies such as ERP—to change customer relationships, internal processes, and value propositions” (Capgemini, 2011, p. 1). “A truly digital enterprise stands for more than just using new technologies for the sake of it. Rather, what truly distinguishes and gives a digital enterprise its competitive advantage is its culture, strategy and way of operating. Digital enterprises strive continuously to enable new and leaner operating models underpinned by agile business processes, connected platforms, analytics and collaboration capabilities that enhance the productivity of the firm. A digital enterprise relentlessly searches out, identifies and develops new digital business models” (p. 9).

External and internal levels

Hess, Matt, Benlian, and Wiesböck (2016)

Liu, Chen, and Chou (2011)

Bonnet (2013); Capgemini Consulting (2011); Fitzgerald, Kruschwitz, Bonnet, and Welch (2013) Weinelt (2016)

Changes in products, organizational structures, and process Agility

Management tensions

Reenvisioning customer experience, operational processes, and business models Digital enterprise Agile business process Connected platforms New digital business models

Source: Elaborated by the author.

to implementing a strategy: which resources and competences to mobilize in order to deliver their product or service, how to develop this product or service, and how to organize their activities in order to generate revenue. The choices made in these three fields directly influence the structure of revenue and the expense level (which together form the revenue model) and ultimately determine the profitability of the company’s chosen business model (Casadesus-Masanell & Ricart, 2007). A business model includes revenue streams.The key question is how to generate revenues. A firm can

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develop a revenue model based on subscription costs and fees (customer side), advertising (often used in media and entertainment), sponsoring revenues, revenue sharing (with other firms), and commissions and transaction cuts from provided services, and by simply selling a product. However, a business model is also a complex model. According to Baden-Fuller and Mangematin (2013), So far the literature lacks clear typological classifications that are robust to changing context and time (Hempel, 1965). Here we suggest the typology that considers four elements: Identifying the Customers (the number of separate customer groups); Customer Engagement (or the customer proposition); Monetization; and Value Chain and Linkages (governance typically concerning the firm internally). Each of these dimensions relates to the business model definition of either value creation or value capture, or both, and lends themselves to creating subcategories and thus the chance of a meaningful map of possibilities. (p. 420) Since the value chain is closely linked to the idea of business models, it may cast light on the sharing of revenues between the different companies involved (Daidj, 2015). Chan-Olmsted and Shay (2016) have evolved the concept of value chain by referring to the new digital media value network: Rooted in Porter’s concept of value creation activities and Wirtz’s business model approach, the proposed model demonstrates how media firms can develop a competitive advantage in corporate branding by leveraging the linkages between users, social media, interfaces, and the firms themselves. In essence, technological advances have significantly altered the role of media consumers. (p. 48) Given these brief reminders about business models, there remains the matter of the effects of the digital transformation on business models in the media sector. As was already mentioned, digital transformation is very often associated with on the idea of disruption. Disruption is rarely the result of a single innovation but occurs when two or more technologies converge. Disruptive innovation studies often analyze the issue of adaptation from the perspective of incumbents but research must take into consideration how new entrants introduce and develop disruptive innovation and therefore how they develop new business models. These are several disruptive technologies and innovations that shape enterprises in the field of IT. Media groups are also affected by these technological changes, which will have a significant impact on business models and revenues.

Future Research Agenda Bowman, Singh, and Thomas (2002) have underlined a parallel evolution between strategic thinking and how environmental challenges (technological and strategic) have changed over time. The objective of this chapter was not to give a comprehensive overview of the evolution of the concepts and tools of strategic management reflecting the changing dynamics of economies. The main goal was rather an attempt to give insights about the present challenges the discipline of strategic management has to face in order to facilitate a better understanding of dramatic strategic changes companies experience nowadays and to propose renewed frameworks related to the media industry. Technology breakthroughs like social media, mobile computing, analytics/big data, cloud computing, and to a lesser extent the Internet of things (IoT) have already begun to produce several

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effects in the media sector. An examination of the impact of two technologies—namely, cloud computing and business analytics—is proposed as follows. With cloud technology, any application or service can be delivered over a network or the Internet, with minimal or no local software or processing power required. The cloud refers also to the process of sharing resources (e.g., hardware, development platforms, and/or software) over the Internet. Multiple users can access the infrastructure simultaneously from different organizations. Cloud computing is considered a key innovation as it converts a fixed cost—maintenance of a data center—into a rental cost, which facilitates entry by new competitors. The pay-as-you-go (or pay-per-use) model is presented as the main business model of cloud technology. The cloud is enabling the explosive growth of Internet-based services, from search to streaming media to offline storage of personal data. For example, Netflix has been one of the biggest customers of Amazon cloud services—although Amazon’s recent move toward a monthly subscription model will put it into direct competition with Netflix for the pool of monthly subscribers and may change that (Bensinger, 2016). It is well known also that predictive data analytics play a key role in the success of companies which demand “powerful business analytics to make sense of the information and take full advantage of it” (Berman, 2012, p. 16). Media companies have long gathered customer data to understand who watched their content and consequently to increase audience and revenue per customer for content and offerings. Several ‘data-powered’ media companies have already adopted analytics and business intelligence (Newman, 2017). The ‘convergence motto’ known as AnyTime, AnyWhere, AnyDevice (ATAWAD) and ATAWADAC (ATAWAD + AnyContent) has to be combined in order to match each client’s needs and to improve the personalization of the viewing experience. As Küng (quoted by Tokbaeva, 2016) has underlined, “media management is an applied science; it seeks to apply theory to real situations. But the scope and velocity of change in those situations make scholarly investigation difficult: change is endemic, boundaries are being redrawn, the next ‘new thing’ becomes old very fast” (p. 29). The digital transformation is an emblematic example of this more complex reality. The concept has inspired numerous researchers and academics and has given rise to different interpretations. In the near future, digital transformation should be analyzed in depth and closely linked to other classical concepts in the strategy field, including value creation and capture, value chain (reconfiguration), business and revenue models (evolution), and networks (renewed linkages), in particular in the media and entertainment industry. Further research could address and investigate these key issues.

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9 ISSUES IN FINANCIAL MANAGEMENT Ronald J. Rizzuto, Michael O. Wirth and Pisun (Tracy) Xu

Introduction Ten years ago this Handbook chapter focused on media academic finance research in the following areas: dividend policy, capital structure theory, mergers and acquisitions, financial restructuring with a focus on tracking stocks, and real options analysis. At that time, media academics were doing limited research on these topics, with the exception of mergers and acquisitions. Notable research included Chan-Olmsted and Chang (2003), Compaine and Gomery (2000), Gershon (2002), Munk (2004) and Ozanich and Wirth (2004). Over the past ten years, media academics have broadened their focus to include financial restructuring with a particular emphasis on divestitures—sell-offs and spin-offs. As a result, this chapter discusses the topics noted earlier plus the area of business valuation, and interweaves the research work of media and traditional corporate finance academics. Following the literature review, the chapter concludes with ideas for future media finance research. This chapter provides a comprehensive review of recent media finance research with a focus on the U.S. market. Perspectives based on international markets are different due to variations in accounting standards, institutional environment and market structure.

Literature Review The following corporate finance topics are included in our literature review: corporate restructuring; mergers and acquisitions; business valuation methodology and research; capital structure and leverage decisions; and dividends and share repurchases. Developments in the academic literature (i.e., since 2005) are emphasized.

Research on Corporate Restructuring Eckbo and Thorburn’s (2013) survey of the theoretical and empirical corporate finance literature provides a comprehensive review of the concept of a “conglomerate discount” for excessive conglomeration, the valuation penalties corporations incur, the strategies available to companies to unlock value for shareholders, and an extensive discussion of restructuring techniques and their impacts, including: divestitures, spin-offs, equity carve-outs, tracking stocks, leverage recapitalizations

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and leveraged buyouts (LBOs). They also provide a review of the corporate restructuring empirical findings from both U.S. and international financial markets. Landers’s (2004) media industry divestiture research focused on the activity of several media companies (AOL Time Warner, Walt Disney, Viacom, News Corp., Comcast, AT&T, Cox Communications and Clear Channel Communications) between 1996 and 2000. The author observed that divestitures were a distinct research area and were not merely “acquisitions in reverse.” Landers noted that the 1996 Telecommunications Act created the opportunity for media industry mergers and necessitated the restructuring of many companies. The following categories were used to catalogue the 261 divestitures that occurred during this time period: portfolio restructuring (sell-off, spin-off, equity carve-out, split-off, split-up); financial restructuring (leveraged buyout); and organizational restructuring (downsizing). Of the 261 divestitures, 84% were sell-offs (where a parent company divests a subsidiary by selling it outright to an acquirer), 12% were downsizing/closures (where a parent company reduces the number of employees or closes a subsidiary), and 3% were equity carveouts (a partial divestiture where a parent company sells a portion of a subsidiary’s shares to the public while retaining an equity stake in the unit). Common reasons for divestiture included: furthering the brand, generating capital to reduce debt, refocusing on the core business, cutting costs and compulsory divestitures. Landers’s key contributions were: (1) recognizing divestitures/restructuring as an important media research area and (2) linking the media restructuring literature with the existing corporate finance restructuring literature. Alexander and Owers (2009) observed that there were more media industry divestitures, 2,382, than mergers and acquisitions, 496, from 1997–2008. Of the divestitures, 66 were over $1 billion as compared to 59 acquisitions of this size. Their article used an event study methodology for five case studies to gauge the impact of the announcement of restructuring on cumulative abnormal returns (CAR)—that is, the sum of the abnormal daily stock return relative to the sum of the average daily stock return after the announcement over different time periods. CAR’s statistical tests evaluate the significance of the market’s reaction to a divestiture announcement. Of the five cases evaluated, three were sell-offs (Vivendi, Tribune and Clear Channel) and two were spin-offs (Viacom and Liberty Media). The five case studies encompassed various motivations for restructuring: (1) Vivendi—raise cash to reduce debt, (2) Tribune—raise cash to buy back stock to reverse a declining stock price, (3) Clear Channel—reversal of an earlier overaggressive acquisition strategy, (4) Viacom—undo an earlier unsuccessful acquisition of CBS, and (5) Liberty Media—simplify a complicated corporate structure that financial analysts and investors found difficult to understand.The authors found that all of the case studies led to material economic gains for the restructured companies and the impact of the announcements was statistically significant for all firms except Vivendi. Owers and Alexander (2011) extended their 2009 research by empirically testing whether the 65 $1 billion+ media divestiture transactions (57 sell-offs and 6 spin-offs), 1997–2008, generated positive returns (including firm value impact) for buyers and sellers.They found a 3.66% average increase in selling firm abnormal returns and a 3.22% average increase for buying firms relative to the market over the three trading days around the time of the announcement.They concluded that the abnormal returns, for both buyers and sellers, were comparable to those in previous cross-industry studies (Hite, Owers, & Rogers, 1987; Markides, 1992).

Research on Mergers and Acquisitions This section focuses on two fundamental merger and acquisition (M&A) financial performance questions: (1) Do mergers generate benefits for buyers and sellers? (2) How do mergers create value for buyers? Several approaches have been used to answer these questions. The first stream of research studies the short- and long-time horizon wealth effects on shareholders by employing event study

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methodology to examine abnormal returns to the shareholders of acquiring/target firms over varying time periods surrounding the announcement of a transaction. The consensus of the short-term wealth effects literature is that M&As create statistically large gains for target shareholders. Golubov, Petmezas and Travlos’s (2013) survey found (1) average returns to target shareholders ranged from 20% to 40% at the time of acquisition announcements and (2) the combined value of the acquirer and target is, on average, marginally positive, with the target capturing the majority of the gains. The empirical evidence regarding short-term wealth effects suggests that acquiring shareholders do not gain in M&A transactions and that targets benefit at acquirers’ expense. Alexandridis, Mavrovitis and Travlos (2012) compared the sixth merger wave (2003–2007) with previous waves. They found that acquirers continued to destroy shareholder value and that cash-financed acquisitions destroyed more value than in the past (see Golubov, Petmezas, & Travlos, 2013, for a detailed review of earlier M&A research studies). A growing body of empirical research questions this traditional view by providing evidence supporting the neoclassical theory of M&A (Maksimovic & Phillips, 2001; Jovanovic & Rousseau, 2002; Harford, 2005), which argues that firm profit maximization drives the ownership of assets to their highest value use because acquirers expect, on average, to gain from M&A activity. Consistent with this perspective, a significantly positive abnormal return to acquiring shareholders was found to be associated with the first bid within an industry (Cai, Song, & Walkling, 2011), the acquisition of nonpublic firms (Arikan & Stulz, 2016) and public acquisition beyond the most competitive M&A markets in the United States, UK and Canada (Alexandridis, Petmezas, & Travolos, 2010). In addition, Ahern and Harford (2014) identified a new metric to measure the division of merger gains and found that targets do not do a great deal better than acquirers. The long-run wealth effects literature extends the event window to several years after the announcements and examines the acquirers’ post-acquisition stock performance. The findings are inconclusive. The size and direction of long-run M&A effects depend on the estimation techniques used (benchmark performance measure versus event window), means of payment (equity versus cash), bid status (hostile versus friendly), type of target firm (private versus public) and industrial relatedness of the acquirer and target. Bouwman, Fuller and Nain (2009) added a market valuation dimension. The authors found that acquirers purchasing during high stock market valuation periods underperformed those purchasing during low stock market valuation periods two years after the announcement. A second stream of research in this area studies the impact of the acquisition on the operating performance of the acquirer.The general approach is to compare accounting measures (e.g., earnings per share [EPS], leverage, profit margin, return on assets or equity) prior and subsequent to a transaction and to isolate the M&A effect by making adjustments for the industry trend or constructing a matching sample of non-acquisition firms by controlling for firm characteristics such as size and market-to-book ratio. Despite the breadth of the literature in this area, there is no clear evidence of improved post-acquisition performance, showing that earnings-based performance measures are associated with a decline in profitability of merging firms while cash flow performance measures are associated with a significant gain (see Martynova & Renneboog, 2008; Golubov, Petmezas, & Travlos, 2013). Post-acquisition performance is not related to the types/strategies of M&A deals in terms of related versus unrelated, horizontal versus vertical and/or focusing versus diversifying. However, Ghosh (2001) demonstrated that method of payment had a significant impact. Cash flow increased significantly following cash acquisitions but declined for stock acquisitions. A third stream of research studies the drivers of value creation in M&As by focusing on the two basic types of synergy—operating and financial. Common sources of operating synergy include economies of scale, greater pricing power, efficiency improvement and higher growth in new or existing markets resulting from the combination of two firms. Financial synergy is usually associated 132

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with a lower cost of capital or higher cash flows, such as tax benefits and/or increases in debt capacity. Using a sample of 264 large mergers, 1980–2004, Devos, Kadapkkam and Krishnamurthy (2009) reported average M&A synergy gains equivalent to 10% of the pre-merger equity values of the combined companies (8.38% from operating synergies and 1.64% from tax savings) with most operating synergies generated from savings in capital expenditures and working capital. Hoberg and Phillips (2010) investigated product market synergies and found value creation for M&A transactions with similar product market language. Bena and Li (2014) provided evidence of synergistic benefits based on technological linkages between acquirer and target firms’ innovation activities. Media M&A studies closely follow the first two streams of research reviewed earlier by examining M&A stock and operating performance. The general conclusion is that M&A destroys value for media acquirers. Peliter (2004) examined the relationship between economic performance, as measured by return on assets and net profit margin, and key motivations for making M&A decisions, including economic efficiency (size and scope), complementarity of assets, diversification across the media business, and internationalization. Utilizing a sample of 45 mergers by 11 major media firms (Time Warner, Disney, Viacom, News Corp, Sony, Bertelsmann, EMI, Vivendi, Lagardere, Pearson and Reed Elsevier), 1980–2000, Peliter found inverse correlations among all the metrics and profitability with the exception of the degree of internationalization. Owers and Alexander (2011) investigated the market’s reaction to media merger announcements, 1997–2008, in addition to divestiture announcements, as discussed in the corporate restructuring section.They found average abnormal returns for the target company increased by 15.25% but declined by −4.15% for the acquiring company over the three trading days around the M&A announcement, indicating that, on average, short-run media M&A transactions are good for the seller but destroy shareholder value for the buyer. They noted that the positive impact on the media target was comparable to the average gain of 18.21% documented in the cross-industry study of Hackbarth and Morellec (2008). However, the negative impact on the media acquirer was greater than the average abnormal return of −0.52% acquirers experienced in broader industry studies.

Research on Valuation This section builds on Ozanich (2006) from the first edition of this Handbook by focusing on recent advances in the valuation literature. Readers are encouraged to read Ozanich’s chapter to familiarize themselves with media valuation research literature not provided here. Albarran and Patrick (2005) reviewed valuation models used in the radio industry, detailing and comparing the multiple of revenues, multiple of cash flows, and a discounted cash flow model. Glaum and Friedrich (2006) stressed the increased importance of discounted cash flow (DCF) valuations for telecommunications companies and a reduced role for the relative valuation/market multiples (RV) approach after the “high-tech bubble.” Based on interviews with 25 sell-side analysts specializing in the European telecommunications sector, they found that DCF (72%) and RV models (24%) were the preferred valuation methods. The “DCF-dominant” analysts said they continued to use the multiples method as a “sanity check.” Nineteen of the 25 analysts indicated their valuation methods had changed since the high-tech bubble, noting that “their valuations were more fundamentally driven and cash-flow oriented today than [they were] at the end of the 1990s, with DCF now being the dominant valuation technique” (Glaum & Friedrich, 2006, p. 172). Bancel and Mittoo’s (2014) survey of 365 European financial analyst practitioners from a variety of industries found that DCF and RV were equally popular.There was widespread agreement regarding valuation frameworks but significant disagreement on the process for evaluating DCF valuation model parameters. While 87% of practitioners used the weighted average cost of capital to estimate the DCF discount rate and 80% used the capital asset pricing model (CAPM) to estimate the DCF 133

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cost of equity, there was significant divergence in the estimation of CAPM parameters. Bancel and Mittoo highlighted the importance of parameter estimation in the valuation process and urged academics and practitioners to focus on this issue. The authors also found that the 2007–2008 financial crisis caused 45% of respondents to revise their DCF parameters: 30% changed their discount rate, 24% their cost of debt, 21% their country risk assessment and 14% their firm liquidity assessment. Hoffman (2013) analyzed the process used by TeleCable, Landmark Communication’s cable television affiliate, in its acquisition of 145 companies over a period of two decades.The DCF framework employed in the company’s valuation process provided strict discipline for evaluating acquisitions as well as a structure for managing the integration of the acquisition into the core business. The company’s DCF model parameters included: a ten-year projection time frame, reasonable revenue and cash flow projections consistent with recent past performance, a minimum 15% after-tax hurdle discount rate as a baseline for acquisitions, a terminal value based on a multiple of EBITDA (earnings before interest, taxes, depreciation and amortization), and a “standard exit EBITDA multiple” (typically a multiple of 5) used for all acquisitions. Although Landmark’s board based its final acquisition valuations on a simpler criterion (a multiple of EBITDA), the DCF analysis was a required part of acquisition decisions. As Hoffman stated, the justification for DCF analysis . . . was not that it produced superior valuations. . . [T]he exercise was valued for the requirement that management carefully evaluated the economic drivers of the business, the opportunities to control costs, the rationality of forecasted growth rates, and the probability of competition and market forces affecting short- and long-term results. (Hoffman, 2013, p. 118) This approach resulted in $100 million in acquisitions, generating a $1.4 billion sale price for Landmark and nine-figure dividends over its history. Over the past few years, many new companies have appeared in the Internet, social media, mobile advertising and e-commerce space. Firms such as Google, Twitter, Facebook, Etsy, Alibaba and Snapchat (Snap) have become public companies, requiring financial analysts to grapple with how to value firms that did not have positive cash flow and sometimes did not have revenues prior to their initial public offering (IPO). Martin and Medina’s (2017) equity analyst’s report provides a valuation of Snap’s IPO and underscores the valuation challenges associated with these types of companies. In 2016, Snap had revenues of $404.5 million, EBITDA of −$459 million and net income of −$514.6 million. The report projects that the company will continue to generate negative EBITDA and free cash flow (FCF) until 2020. Several models/methods were used in valuing Snap: DCF, multiples including enterprise value (EV) to Sales, EV to EBITDA, P/E (price to earnings) and several FCF metrics. Martin and Medina concluded that Snap was overvalued by comparing its 2017 EV/Sales multiple of 30 with Facebook’s 2017 EV/Sales multiple of 10 and Google’s multiple of 6. In addition, based on an average EV/Sales multiple of 9 for Google and Facebook three years after their IPOs, they projected a 12% decline in Snap’s value based on 2019 projected revenues. Martin and Medina (2017) estimated Snap’s equity value between $21.9 and $27.4 billion ($19 to $23 per share). Alternatively, Nowak, Constantini and Lanterman (2017) estimated Snap’s equity value at $33.1 billion ($28 per share) using a ten-year DCF model as their primary valuation technique. These two valuations of Snap underscore two key points about valuations. • •

Valuation model parameters are more important than the valuation model used. New companies in the Internet, social media, mobile advertising and e-commerce space have become increasingly important parts of the media ecosystem. 134

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Research on Capital Structure and Leverage This section provides a broad view of the most relevant capital structure literature.The seminal work of Modigliani and Miller (1958) and the developments of the trade-off and pecking-order theories ( Jensen & Meckling, 1976; Myers, 1977; Myers, 1984; Myers & Majluf, 1984) highlight the work that’s been done to address three key capital structure research questions: (1) How do companies determine their capital structure? (2) Is there an optimal capital structure? (3) How does capital structure affect firm value? In spite of the extensive work that’s been done to answer these questions, empirical results are largely inconclusive (Graham & Leary, 2011). As a result, many financing decisions remain unexplained and capital structure remains a puzzle. Research in this area has broadened the earlier studies’ focus on cross-sectional variation to the time series nature of corporate capital structure and the aggregate trend. Graham, Leary and Robert’s (2015) analysis of capital structures of U.S. nonfinancial publicly traded firms, from 1921–2010, provides a representative work.The authors found that the aggregate leverage ratio, measured as debt to total financial capital, for unregulated firms fell from 17% to 11% from 1921 to 1945, more than quadrupled to 47% by the early 1990s, and declined to 28% by 2010. In contrast, the capital structure of the regulated sector (utilities, railroads and telecommunications) remained quite stable, with the aggregate leverage ratio ranging from 40% to 55% over time. Changes in government borrowing, macroeconomic uncertainty and financial sector development were found to be the most important factors associated with the substantial shift in financing behavior over time rather than traditional firm characteristics-based determinants. The two classic capital structure theories are trade-off theory and pecking-order theory.Trade-off theory suggests that a firm chooses an optimal capital structure by balancing the costs (e.g., financial distress) against the benefits (e.g., debt interest tax shields) of debt financing. Based on asymmetric information and adverse selection, pecking-order theory asserts that a firm’s capital structure reflects its cumulative financing decisions over time, with internal finance preferred over external finance and debt preferred over equity. These theories leave many of the observed capital structure patterns unexplained, such as the deviation from target leverage. Graham and Leary (2011) provide a comprehensive review of the successes and struggles experienced by traditional capital structure models. Extensions of existing theory, such as dynamic capital structure theory, have been developed to fill in the research gap. The dynamic capital structure theory incorporates the dynamic and endogenous nature of capital structure decisions into the conventional static framework of balancing the tax benefits of debt and the costs of financial distress. One strand of literature utilizes the costly adjustment model, which assumes a high cost of constant recapitalization, leading to an expectation that a firm’s leverage will drift within a range around the optimal leverage ratio (Fischer, Heinkel, & Zechner, 1989; Goldstein, Ju, & Leland, 2001). Capital structure adjustments are undertaken only when the benefits of being close to the target outweigh the costs of rebalancing. Empirical studies confirm the existence of leverage targets and the mean reversion behavior of gradual adjustments toward targets (Byoun, 2008; Faulkender, Flannery, Hankins, & Smith, 2012; Hovakimian & Li, 2011; Huang & Ritter, 2009; Kayhan & Titman, 2007). In contrast, the speed of adjustment (SOA) of capital structure has become a topic of intense debate in the literature. The magnitude of SOA documented in the aforementioned studies ranged from rapid adjustment, 17%–23% per year, to slow adjustment, 35%–40%, over five years. Empirical studies exploring SOA heterogeneities find evidence that differential SOAs are related to firmspecific factors impacting the costs and benefits of capital structure adjustments, including the degree of deviation from target, firms’ financing needs, cash flow situation, financial constraints, the sensitivity of cost of equity to leverage, and corporate governance quality (Byoun, 2008; Chang, Chou, & Huang, 2014; Faulkender, Flannery, Hankins, & Smith, 2012; Zhou, Tan, Faff, & Zhu, 2016). In 135

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addition, Cook and Tang (2010) found that firms adjusted their leverage toward target faster when macroeconomic conditions were good, providing firms with better access to external capital. The other strand of inquiry in this area studies dynamic capital structure by endogenizing the financing decision with other corporate decisions, such as investment. DeAngelo, DeAngelo and Whited (2010) show that firms deviate deliberately, but temporarily, from target by issuing transitory debt to meet funding needs associated with investment shocks when equity issuance and cash holdings are costly. They also conclude that intentional temporary movements away from target lead to low leverage targets, leverage changes accompanying investment spikes, and slow average speed of adjustment to target. Another area in which capital structure inquiry has expanded is to examine the impact of nonfinancial stakeholders, such as suppliers, customers and employees, on capital structure choices. Related studies focus on the important role of product/labor market conditions and the strategic use of debt financing. Research results demonstrate that, on average, companies maintain a lower debt level when they operate in an industry with strategic alliances or joint ventures established with its customer/supplier industry (Kale & Shahrur, 2007); when their suppliers are dedicated, with much of their output being sold to one customer (Banerjee, Kim, & Dasgupta, 2008); and when they adopt more employee-friendly policies as measured by the Employee Treatment Index (Bae, Kang, & Wang, 2011). Furthermore, using the right-to-work laws and unemployment insurance work stoppage provisions as sources of exogenous variation, Matsa (2010) found that companies use more debt financing to improve their bargaining power with workers.

Research on Dividends and Stock Repurchases Payout policy involves large wealth transfers in the economy and plays an important role in corporate finance. The level (how much to pay) and form (how to pay) of corporate payout have changed remarkably over time. A prominent trend is that stock repurchases have become the dominant form of stockholder payout (Floyd, Li, & Skinner, 2015). The level of repurchasing activity has increased dramatically and the distribution is widespread across firms. Because traditional theories of payout policy (i.e., agency, signaling, free cash flow, tax- and clientele-based theories) lack the power to explain the secular changes and increased repurchases (Farre-Mensa, Michaely, & Schmalz, 2014), research has explored alternative motivations and provides additional insights regarding why firms repurchase stock. This section reviews the latest academic studies focusing on stock repurchases. As noted in Brav, Graham, Harvey and Michaely’s (2005) survey, stock repurchases are preferred because they provide greater financial flexibility—the ability to avoid underinvestment as well as financial distress. In contrast, dividends constitute a long-term commitment of regular payments that cannot be easily reversed, which creates significant constraints (Leary & Michaely, 2011). Bonaimé, Hankins and Harford (2014) relate payout policy to corporate hedging policy and find that firms that do not engage in risk management have a more flexible payout mechanism, favoring stock repurchases over dividends. Hoberg, Phillips and Prabhala (2014) argue that payout flexibility allows firms to aggressively combat product market competitive threats. As a result, firms facing changes in the product market have a lower (higher) propensity to pay out (retain cash or liquid assets) and are particularly conservative with respect to paying dividends. Kulchania (2016) examined the effects of cost structure on payout and found that firms with higher fixed costs choose to pay a higher fraction of their total payout via stock repurchases. Stock mispricing and opportunistic market timing to exploit mispricing are also cited by managers as key repurchase determinants (Brav, Graham, Harvey, & Michaely, 2005). One strand of literature examines long-run abnormal returns following repurchase announcements. Positive long-run abnormal returns, often interpreted as evidence of repurchase timing skill, appear to be

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associated only with overly pessimistic analyst recommendations (Peyer & Vermaelen, 2009) and occur only after the completion of individual repurchase programs but not during the periods between authorization and completion (Bargeron, Bonaimé, & Thomas, 2017). Furthermore, Fu and Huang (2016) show that repurchases from 2003 to 2012 did not incur positive long-run abnormal returns and argue that recent repurchase events were for business-operating reasons rather than for market timing. Another strand of literature examines market timing behavior by testing whether firms consistently repurchase shares at below-average price points. A few studies utilized actual repurchase data (available on a monthly basis since 2004 in the United States) and found that repurchase prices were lower relative to average stock prices during the same month or quarter. Managers exhibited better market timing ability: within small and growth firms (Ben-Rephael, Oded, & Wohl, 2014) and within firms that repurchase less frequently and whose insiders are simultaneously purchasing in their own accounts (Dittmar & Field, 2015). Conversely, Dittmar and Dittmar (2008) examined the repurchase waves and found a positive relationship between relative market valuation and growth in repurchasing activity. They also found that repurchases are highly pro-cyclical and that they follow GDP growth. Managerial incentives and compensation practices have drawn much attention in the literature as a primary driver for payout policy trends. Recent studies in this area have advanced our understanding of traditional channels linking compensation to corporate payout, including the dividend protection channel and the earnings per share (EPS) channel. The dividend protection channel builds on the value impact of dividend payments on stockbased compensation. Executive stock options are generally not protected against the decline in stock price (Lambert, Lanen, & Larcker, 1989; Murphy, 1999). As a result, the adoption of non-dividend protected options incentivizes management to avoid/reduce dividends, and, if there is a target payout amount, to replace dividends with repurchases. Recent findings consistently show a negative (positive) relationship between executive stock options and dividends (repurchases), following the dividend tax rate reduction in 2003 (Aboody & Kasznik, 2008) and across international regimes (Burns, McTier, & Minnick, 2015; De Cesari & Ozkan, 2015). Cuny, Martin and Puthenpurackal (2009) reveal the dominant effects of disincentives from lack of dividend protection for options. Reductions in dividends were not fully offset by repurchases, resulting in lower total payout for firms with higher options usage. The EPS channel links repurchase decisions to EPS-related considerations. A well-documented EPS-related motivation for repurchases is to offset the earnings dilution caused by the exercise of employee stock options. Consistent with previous literature (Kahle, 2002), Cuny, Martin and Puthenpurackal (2009) found evidence of antidilution-driven repurchases and conclude that the increase in repurchases due to antidilution incentives is of smaller magnitude and does not offset the decreased dividends due to non-dividend protection incentives. EPS-based executive compensation contracts also play an important role in payout policy.Young and Yang (2011) used a sample of UK nonfinancial firms, 1998–2006, to document a significant positive link between the level of repurchase activity and the compensation arrangement contingent on EPS, including bonus and long-term incentive plans conditioning rewards on EPS performance. Cheng, Harford and Zhang (2015) found that U.S. CEOs with EPS-based bonuses were more likely to repurchase, and the closer they are to their EPS bonus threshold, the greater the effect. Another EPS channel that motivates repurchases relies on benchmark-beating earnings management activity. Almeida, Fos and Kronlund (2016) studied the repurchases employed to meet analyst forecasts and show that such repurchases are negatively related to R&D, employment and cash holdings.Their findings shed new light on how payout policy affects other corporate decisions, suggesting that managers are willing to sacrifice valuable investments to finance repurchases.

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Future Media Industry Finance Research This section provides ideas for future media industry finance research, emphasizing the potential for applying finance theory and methodology to answer media industry research questions. The continued evolution of information delivery mechanisms and related technology underscores the importance of this particular research topic.

Corporate Restructuring Research The media industry is a fertile area for research on corporate restructuring because there are numerous examples of companies attempting to unlock value through spin-offs, divestitures, split-offs and tracking stocks. Contemporary examples of corporate restructuring in the media industry include: Gannett, Tribune Company and E.W. Scripps in the newspaper industry; and AOL Time Warner, Liberty Media, Viacom and NBC Universal in the cable/broadcasting industry. The prospect for more of this type of activity in the future appears to be great. At the time this chapter was being written, speculation suggested that Disney may spin off ESPN and ABC as separate companies. Possible research projects in the area of corporate restructuring include the following: 1. Investigate the size of the conglomerate discount in the media industry by chronicling the size of the discount as well as whether the restructurings unlock value for shareholders similar to the research of Khorana, Shivdasani, Stendevad and Sanzhar (2011). 2. Extend the research of Mazur (2015) to other media companies beyond Liberty Global and Expedia by developing research projects focused on how media industry spin-offs create an acquisition currency. Likewise, examine how spin-offs like Starz Entertainment are merged into other firms (e.g., the Lions Gate Entertainment merger with Starz). 3. Document the pace of spin-offs/separations over time for the media industry by exploring how media industry experiences with respect to spin-offs/separations compare to other industries. This would provide a comparison to the work of Zenner, Junek and Chivukula (2015). 4. Develop a case study focused on Liberty Media’s various tracking stocks to extend and update the research of Davidson and Harper (2014), and their view that tracking stocks are disappearing. Davidson and Harper’s research ignores John Malone’s Liberty Media, which currently has three tracking stocks: Liberty SiriusXM Group, the Braves Group and the Formula One Group, along with the tracking stocks that are being created as a result of Liberty Media’s acquisition of GCI Cable.

Mergers and Acquisitions Research As illustrated in the foregoing literature review, the research on mergers and acquisitions is extensive. Research focused on whether mergers generate benefits for buyers and sellers and on whether mergers create value for buyers is massive. However, the results are not definitive. Some future suggestions for research questions on which media finance researchers interested in mergers and acquisitions might focus include the following: 1. Empirically investigate the factors associated with the poor returns realized by media industry M&A acquirers. Are the poor returns a result of competition and high premiums, bad decision making or other factors? 2. Empirically examine the sources of value and synergies in media mergers and acquisitions. New areas to focus on include: technology and innovation, product synergies, market power and corporate governance.

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Valuation Research Although there is a substantial body of valuation-focused corporate finance research literature, very little of it comes from media academics. This is an interesting anomaly given the existence of many public companies in various segments of the media industry. Some interesting research topics media finance researchers might pursue include the following. 1. Conduct a survey research study focused on media industry financial analysts and finance professionals to see how their valuation methodology has changed since the dot-com/Telecom bubble (1999–2001) and the “Great Recession” (2007–2009). The broader industry research of Glaum and Friedrich (2006) and Bancel and Mittoo (2014) provides the comparison points for studies in this area. 2. Identify the DCF and CAPM parameters used by media financial analysts and their rationale for selecting those parameters as part of an academic research study focused on media industry valuation methodology. 3. Develop a baseline academic study of the methods and parameters used to estimate the value of Internet, social media, mobile advertising, e-commerce and other types of new media companies. 4. In the valuation literature review, we did not find any additional research related to the use of real options for company valuations. As the corporate finance research of Block (2007) shows, the adoption of real options for company valuations and capital investment decisions has been quite slow to develop. However, given the potential for real options to capture the value of embedded options, media academics should continue to monitor developments in this area for possible future media finance research ideas.

Capital Structure and Leverage Research Media researchers have not focused on capital structure, possibly because capital structure/leverage in the media industry is rather stable and cross-sectional variations are limited. However, given the substantial developments in cross-industry research discussed earlier, capital structure/leverage presents a promising area for future research and deserves more attention from media researchers. A few suggestions for research in this area are provided ahead. 1. Extend the dynamic capital structure models to the media industry and investigate how media firms manage capital structure over time. Possible research questions include: Is there a leverage target? Do firms make adjustments if leverage ratios deviate from the target? If so, how rapidly do the adjustments take place? What might prevent firms from making immediate adjustments? 2. Endogenize the financing decision and focus on its interrelation with other corporate decisions. Following DeAngelo, DeAngelo and Whited (2010), it would be interesting to see how media firms meet funding needs associated with unanticipated investment shocks. 3. Examine the product market effects of capital structure and link firms’ financial policy to real activities. As documented in recent studies (Kale & Shahrur, 2007; Banerjee, Kim, & Dasgupta, 2008), the interests of a firm’s suppliers and customers play an important role in the determination of capital structure. A noteworthy extension would be to explore whether and how financing decisions may affect and be affected by the characteristics of the upstream and downstream firms in the media industry vertical supply chain. 4. Explore the strategic role of financing choices. Recent literature uncovers the strategic impacts of labor contracting on financing decisions (Bae, Kang, & Wang, 2011; Matsa, 2010). Given the considerable power of labor unions in the media industry, research on labor-related questions

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could be rewarding. Do media firms consider labor effects in making financing decisions? What are the important labor-related factors? Can labor account for the within-industry variation in financial policy?

Dividend and Stock Repurchase Research The payout pattern in the media industry has followed the general trend across all industries, with stock repurchases becoming the primary payout vehicle. Lazonick (2015) found that four media companies (SBC Communication, now AT&T, Time Warner, Disney and DirectTV) were among the top 25 stock repurchasers from 2004 to 2013. The average percentage of dollars spent in repurchases over net income ranged from 45 to 230%, while the average percentage of dollars spent in dividends over net income ranged from 0 to 78%. In spite of the dramatic changes over time and notable economic impacts, little research has studied payout policy in the media industry. Ideas for future research in this area include the following. 1. Document the evolution of corporate payout policy in the media industry and investigate the determinants.The main research questions include: How have media industry corporate payouts changed over time? Do the existing payout models explain the changes identified? If not, what forces are behind these changes? 2. Extend recent payout literature related to financial flexibility, mispricing and compensation practices to the media industry. Some interesting research questions include: Does financial flexibility play a role in media firms’ payout policy? Are repurchases in the media industry “good” buys? What is the long-run stock performance following repurchase announcements? Do media managers time the market when buying back shares? How does the executive compensation structure of media firms affect the level and form of payouts? Through which channels do a media firm’s compensation practices impact its payout choices? 3. Analyze how payout policy interacts with other corporate decisions by studying the existence, magnitude and importance of payout causal effects on investments (Almeida, Fos, & Kronlund, 2016). The review of recent corporate finance literature provided in this chapter covers the areas of restructuring, valuation, capital structure and leverage, and dividends and repurchases. Fruitful avenues for future media finance research are identified and rich and accessible information is provided to broaden knowledge of media financial management practices and of the evolving media industry finance landscape.

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10 ADVERTISING IN MEDIA MANAGEMENT AND ECONOMICS Louisa Ha

What Is Advertising? Advertising is commonly referred to as “the paid communication from an identified sponsor using mass media to persuade an audience” (Thorson & Rodgers, 2012, p. 4). However, such a definition’s emphasis on payment excludes public service announcements (PSAs) and other pro bono advertisements as common forms of advertising in media. Also, using “mass media” in general does not differentiate the editorial content and advertising messages. Hence, it is proposed that for media management purposes, advertising should be defined as any deliberate message with an identified sponsor displayed in third-party editorial media. This definition underscores the role of editorial media and third parties in the advertising process. Third-party editorial media are media producing professional editorial content which is independent from and not owned by the advertiser or sponsor.The purpose of advertising is to utilize the mass reach and credibility of independent editorial media other than the advertiser itself to inform and persuade consumers. Based on this definition, station promos on a TV station’s own program or its sister stations’ programs would not be counted as advertising but self- and cross-promotion respectively.Websites also would not be considered third-party editorial media and so the advertiser’s web content is not advertising from media management’s perspective. TV commercials for newly released movies would be considered advertising unless the movies are owned by the TV networks airing the commercials, such as Paramount (owned by Viacom). The choice of which third-party media to use to advertise the product is an important decision for advertisers. The deliberateness of message includes both persuasive intent and informative or goodwill intent because advertising can have multiple purposes other than persuasion that do not involve any change in attitude, such as reinforcement, reminders, and announcements (Faber, Duff, & Nan, 2012). Media management is about the management of media with editorial content in which the media organization selects the content or sets rules for content to be displayed in its media outlet. So, user-generated social media, such as Facebook and Twitter, is still editorial media, albeit most of its content is not created by the companies themselves. One of the media industry’s economic characteristics is that it operates in a dual product market, serving both the advertisers and the consumers. Media companies can have dual sources of income with direct and indirect consumer payment (Picard, 1989; Albarran, 2002). Direct consumer payment may be in the form of subscription, pay-per-view, single copy price or admission tickets. Advertising is a common form of indirect consumer payment, in which media consumers receive 144

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the advertisements and buy the advertised product instead of paying for the media content directly. It has become the lifeblood of media with the largest audiences, such as broadcast TV networks and social media. The free or very low price further increases the reach of the media. The large audience of editorial media is what attracts advertisers to pay for the advertising space or airtime. Consequently, the media industries become the drivers of popular culture (Anderson & Gabszewicz, 2006). Media managers can choose their revenue model, relying on either indirect payment income, such as advertising, sponsorship, commission on sales or government and organizational funding, or direct payment income, such as subscription fee or single copy sales or a mix of both. The importance of advertising as the income revenue for the media industry is paramount in capitalist markets, such as the United States, Japan, and South Korea. Government-owned media are more a niche service in these markets. Corporations are the major sponsor of media content. In the United States, advertising expenditure in 2017 was estimated to reach 210 billion U.S. dollars (eMarketer, n.d.). All major media either are funded solely by advertising income, such as broadcast TV and radio, or have a substantial portion of income coming from advertising, such as newspapers, magazines, and basic cable TV. The maximization of the value of the advertising inventory and advertising sales management are important topics for media management. Advertising inventory is perishable and can be available only once, similar to a seat on an airplane. Furthermore, if the advertising space is unsold, the media organization must fill it with editorial content and lose revenue. The lost sale of the unused advertising space cannot be recuperated at a later time. Although these topics are not commonly found in published research, media managers have their own internal training on how advertising value can be maximized by putting a premium on space and airtime with the highest demand and filling the rest with a low advertising price. Apart from being the primary source of funding for commercial media, advertising is also part of the media content. In television, there are paid programs and infomercials that fill the fringe airtime of television. The Sunday inserts of newspapers with coupons and shoppers are what attract people to buy Sunday newspapers. The amount of advertisements determines the amount of newsholes (news editorial space) to fill for newspapers and other news media ( Jones & Carter, 1959; Lacy, Robinson, & Riffe, 1995). This chapter will focus on research about advertising’s influence on editorial content and its implications for media management. Research on this broad topic can be subdivided into five categories: (1) the economic nature of media, (2) importance of advertising revenue in different media, (3) revenue models of media, (4) commercial pressure on media and influence of advertising on editorial content diversity and independence, and (5) advertising clutter and perception of editorial quality.

Economic Nature of Media as Goods The study on the economic nature of media sheds light on how media product and services should be provided to the public. There are three forms of goods: public goods, mixed goods, and private goods (Blümel, Pethig, & von Dem Hagen, 1986). Not all forms of media products are the same in economic nature. Broadcast and online media are public goods or near public goods because they are non-rival in consumption and are almost non-excludable (Hoskins, McFadyen, & Finn, 2004; Owen & Wildman, 1992). Non-rival consumption means that someone consuming a broadcast TV program will not diminish another person consuming the same program at the same time. Everyone can simultaneously consume the same program without additional cost. Broadcast radio and TV are also non-excludable because anyone with a receiver will be able to receive the terrestrial broadcast within its footprint. Online content is basically the same as broadcast. As long as people have Internet service, they can access the online content without diminishing others’ use of the digital content because the Internet service provider does not control what content is accessed by the users. To 145

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exclude someone from accessing online content for free requires extra effort and cost to the content provider, such as a paywall or authentication system that blocks people from using it, similar to cable TV. Cable TV makes the program service excludable through the set-top box’s scrambling of the cable transmitted signals. Movies shown in cinemas and pay cable are mixed goods because consumers can consume the content at the same time (non-rival) but they are excludable through the ticket admission and cable subscription and provision of set-top box to display the TV signals. Online entertainment content, such as Netflix, can more easily achieve online subscription because of the on-demand convenience, binge watching possibilities not available offline, exclusive original shows, and much lower price compared to high cable subscription fees and movie tickets. Print books are private goods as one individual can read only one book at a time and others have to read another hard copy of the book. Typically, people cannot share a book at the same time. Based on the economic nature of the media product format, for public goods such as broadcast TV and radio, the government is the natural funding source because of the difficulty of excluding people from use and also the strategic importance for the government of having a mass medium to communicate with the public. But government is a natural monopoly. Many government-funded media become the propaganda machine for the government. If we want competition of media products and diversity of content, and to have the media serve a watchdog function for the public to monitor the government’s performance, then they have to be provided by private sectors. Public broadcast networks, such as the BBC, are a still monopoly because public revenue such as broadcast license fees cannot support multiple public broadcasters competing for the same revenue pool. If the private sectors are to provide public good types of media product formats, they have to use an indirect form of consumer payment to compensate for the cost because no one will pay for the service as broadcast and online content is non-excludable and non-rival in consumption. Advertising becomes the best form of funding support or revenue for these media forms because the public nature of these media means they will reach a large number of audiences at no additional cost to the media.They can charge advertisers a high price for access to the large audience. Advertisers themselves lack the independent editorial content and the audience base of TV networks and popular web sites.They have to pay for that access to audiences. The extremely high price of Super Bowl broadcast TV commercials in the United States is an example of the provision of a highly popular sports game to give advertisers simultaneous reach to the largest national audience with a very high profit margin for the network that owns the broadcast right. The protection for the broadcast TV network is the exclusivity as the only source for the commercial airtime and the live broadcast for all audiences. In general, people are unwilling to pay for media content when there are substitutes available for free, even though those substitutes may be of lower quality. Ha and Zhang (2017) discussed the parity readers or audiences who care less about the quality and the importance of public good property of news content, especially online content, when access to free alternatives is easy for Internet users. The rise of free tabloids and free newspapers in the United States and other parts of the world which are totally supported by advertising shows that the concept of free news content is well accepted by consumers (Gabszewicz, Laussel, & Sonnac, 2012; Tennant, 2014). These free newspapers operate on a public good basis to serve parity news readers. Although these newspapers probably are perceived as lower quality than the elite newspapers, they are seen as functional substitutes for news to many mass audiences. Despite readers’ annoyance about advertising, they would still rather get information and entertainment for free than pay a high price. Chyi’s (2012) study of U.S. adults online regarding news payment found that how users are charged does not make much difference—whether they are charged does. Bleyen and Van Hove (2010) examined the revenue models of different Western European online newspapers and found that elite quality papers more likely to charge subscription fees online than the popular press. Similarly, in the United States, the newspapers that reported success using subscription models for online newspapers are limited to the elite papers, such as the Wall Street Journal and 146

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the New York Times. Most paywalls of U.S. newspapers were not successful (Ha & Zhang, 2017; Mutter, 2015). In fact, the media market will be much smaller if the direct pay model dominates because only a few news media outlets are able to command a price people are willing to pay directly.

Importance of Advertising to Different Media Because of the different economic properties of media formats, the importance of advertising is different for different media. To those media formats that are more of a public good in nature and for which it is easy to find substitutes, such as broadcast television, radio and online media, advertising is the most important source of income. Peitz and Villeti (2008) show how broadcast TV stations that have no mechanism to collect money from consumers and have to rely totally on advertising resulted in an advertising nuisance, while pay-TV, such as cable, can have dual sources of revenue and is less likely to have market failures. Advertising is supplemental and not the primary income for cable TV service. Pay-TV service already compensates the welfare of the viewers with highly differentiated programs and the role of public broadcasting is deemed unjustified to correct market failure. Evans (2009) explicates how online advertising provides two potentially significant economic efficiencies: online advertising allows the economy to reduce the amount of resources devoted to creating content for aggregating and sorting potential buyers. Online advertising increases the accuracy of the match between the buyer and the seller with user data so that the seller has greater ability to target consumers who are likely to buy, and the consumer is more likely to receive useful messages and less likely to receive time-consuming but irrelevant messages. Based on these economic functions, advertising should be the primary source of income for online media. Using a Marxian critical approach, Robinson (2015) explains the success of Facebook and Google as a nonpaying sphere coexisting with a capitalist enterprise by how the relationships with other capitals together with the loyalty of their users are crucial factors in their ability to accumulate capital to be attractive to advertisers.Their dependence on advertising income means they create value produced elsewhere in the economy instead of charging the users. One important question for media managers is what factors affect advertising revenue. In an early study on newspaper advertising, Glover and Hetland (1978) found circulation is the most important predictor of advertising revenue, more than the advertising rate. Although studies such as Kalita and Ducoffe (1995) found no impact of advertising revenue on the price of magazines, they cannot deny the importance of advertising as an income for consumer magazines. These results show only that magazine price is independent of advertising income. Depken II and Wilson’s (2004) study of 95 U.S. magazines found mixed results. For about half the magazines, advertising intensity correlates with higher magazine price and higher number of subscriptions, but for some other magazines, advertising intensity lowers the cover price and the number of subscriptions. Entertainment magazines benefit the most from advertising. Indeed, the price of consumer magazines now is very hard to study because of the deep discount practices of magazines in selling their subscriptions and the great difference between single copy and subscription prices. Most importantly, some trade magazines totally rely on advertising. In addition to the magazine’s readership size, Wirtz, Pelz, and Ullrich’s (2011) study of German magazines demonstrated that advertising revenue performance can be substantially affected by the advertising marketing competence of the magazine. Kind, Nilssen, and Sørgard’s (2009) economic analysis shows that the scope for raising revenues from consumer payment is constrained by competition which offers close substitutes.They proposed that the less differentiated the media firms’ content, the larger the proportion of their revenue from advertising. However, when the number of competing media products is large, the firm’s ability to get revenue from advertising is lowered and would facilitate the growth of direct payment. For many traditional media, their online websites are still just a complementary service of existing traditional media (the clicks and bricks) of broadcast and cable TV, playing just a supportive role 147

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rather than a full-blown content service or a primary revenue generator (Chan-Olmsted & Ha, 2003, Ha & Chan-Olmsted, 2004). By operating on an additional online platform, the advertising income from the offline traditional media supports both the offline and online operation because typically online advertising does not generate sufficient income for the websites.

Revenue Models of Media Because the media industry has dual product markets, revenue models of media products highly vary. They can range from completely free to consumers (supported fully by advertisers) to completely paid by the consumers, such as premium cable service, like Home Box Office (HBO). Advertising allows people who cannot afford or are unwilling to pay for media content access to information and entertainment. Free content can maximize audiences because there is no monetary risk to the audience. So, for media that strive to achieve the largest audience, the free model supported by advertising is the best way to go. This indirect payment revenue model is a win-win situation for the two sides of the media markets—the advertisers, who need to find ways to communicate to a large or specific audience, and the audience, who wants to get content for free. Media get profits from advertising and serve both advertisers and audiences as customers. Several studies on the “free” model of media content payment supported such benefits of advertising as the revenue source of media. Halbheer, Stahl, Koenigsberg, and Lehmann’s (2014) econometric analysis of free, sampling, and full paid content models of online newspapers shows that a paid content strategy is optimal only if advertising effectiveness is sufficiently low compared to prior quality expectations. For intermediate levels of advertising effectiveness, the publisher should use a sampling strategy. The publisher should switch to a free content strategy once advertising is sufficiently effective compared to posterior quality expectations. The free sample strategy (metered paywall) should be kept even if paid content is used to engage the readers. Kesenne’s (2012) study shows that media companies earn more by charging advertisers rather than consumers in sports programming, entertainment content, and news. After analyzing the business practices of 48 leading webcasters in the United States and South Korea, Ha and Ganahl (2004) found that both clicks-and-bricks and pure-play webcasters in both countries have a similar reliance on advertising as their major source of revenue, even though they employ different content strategies to their own media’s advantages. Ha and Ganahl’s (2007) study of the business models of webcasters worldwide found that indirect consumer payment is most prominent in all types of leading webcasters in their study of 16 countries and the Arab region. Those that do not receive a parent organization subsidy or government support rely on advertising to provide the free webcast service.Very few of the leading webcasters were able or willing to charge consumers for their content except in download and exclusive entertainment content. This is especially important for all new media services as free content reduces risk perception and encourages trial. Consumers have more latitude for technical problems and other issues when it is free. In online media where no geographic protection is afforded to the media content providers, content providers compete on offering unique content and better packaged content. Podcasts and mobile apps use the same free trial concepts to maximize trial and use. In fact, more than 90% of mobile apps are free and many are advertising-supported (Ruiz, Nagappan, Adams, Berger, Dienst, & Hassan, 2016). Basically, all popular social media run on a primarily advertising-supported model to maximize their audience. The only exception is LinkedIn, a professional social media site, which uses a combination of advertising (recruiting service for companies) and subscription at the premium level. Media managers have to face the reality of finding revenue or funding support for their media content. Although Waterman and Ji (2012) painted a gloomy picture of overall revenue decline of the U.S. media industry as a percentage of GDP and the shift toward direct market payment of media products and services from advertising, other scholars see media technologies bringing new business models and opportunities for media companies. Kumar and Sethi’s (2009) study of web content 148

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providers concludes that pure revenue models, such as free-access models and pure subscription feebased models, are not sufficient to support the survival of online information sellers. They advocated hybrid models based on a combination of subscription fees and advertising revenues to replace the pure revenue models. Using the optimal control theory, they identify optimal levels of subscription fees and advertisements for web content over time. It is especially important for a monopolist or market leader to choose a hybrid model to capture the market (Lin, Ke, & Winston, 2012).YouTube, the largest video portal, now employs a hybrid model, offering YouTube Red, which is free of advertising for U.S.$10 a month, and regular YouTube with advertising for free. It was reported that six months after its launch it was able to get 1 million paid subscribers, and another 1.5 million subscribers were on free trial. The bulk of its audience is still the free users (Singleton, 2016). This is following Anderson’s (2009) freemium model, in which digital products can be provided as free at a basic level and also at a premium for those willing to pay for them with higher-quality or exclusive content. As Tag (2009) shows, companies that allow a package without advertising provide a good-quality experience for their subscribers, but those consumers who chose to have the free ad-supported version received an increased quantity of ads, which created a bad experience for consumers. These tactics were employed to drive them to the ad-free version. Pauwels and Weiss’s (2008) study of an online service provider changing from a free to fee model concludes that the failure was caused by pushing for the change before the momentum in fee subscriptions has materialized, when they set prices higher than the level the consumer is willing to pay for their content, when they are up against a dominant competitor with better (perceived) content and/or lower price levels, when they charge fees for all (previously free) content, and when they fail to ramp up marketing communication efforts and execute them effectively. Should media managers just choose between two extremes—an extremely annoying ad-supported media environment and a clean ad-free environment—or can we find a good compromise? More importantly, should advertisers be denied a healthy and credible editorial media to communicate their messages to their consumers? Finding the right balance is a challenge for media managers and advertisers.

Variations of Advertising (Sponsored Messages) Due to public skepticism toward advertising and audiences’ skipping and avoidance of commercials and advertisements, advertisers try to attract attention to the brand and advertising messages via integrating with editorial content (hybrid advertising formats), such as product placements and sponsored content (von Rimscha, Rademacher, Thomas, & Siegert, 2008). Product placements can take the form of prop placement putting the brand product in the background or planned integration into the editorial content. Sponsored programs attach the brand name to a TV/radio program. In 2014, product placement revenue reached 6 billion U.S. dollars and is expected to grow to 11.5 billion by 2019 (Lafayette, 2015). But many of these product placement packages include commercial spots. These variations of advertising are all sponsored messages that have a commercial intent to promote a brand or a product.These sponsored contents are not skippable or blockable by adblocker programs and DVR skipping functions. They become forced brand message exposure to the audience. But in von Rimscha et al.’s (2008) interviews of 20 advertising industry experts, including agency executives, advertisers, and media company executives, they did not think these hybrid forms of advertising were as effective as traditional TV commercials because of the many limitations of using those formats and advertising creativity was very limited. These hybrid forms were seen as useful supplementary materials to reinforce the product commercials. Surprisingly, the media companies were more eager than the advertisers and agencies to offer integration of editorial content and advertising messages. Their study shows that both advertisers and media company executives believe that advertising should be editorial content itself in a longer form so that commercials themselves are attractive to the audience and do not rely on editorial content to support them. Ham, Park, and 149

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Park’s (2016) national study of 21,944 U.S. consumers found their responses to product placement in television and movies highly varied from apathetic, negative, entertainment, information value to ambivalent with mixed feelings. Those who are more positive toward product placement are also those who are positive toward advertising. Hence product placement does not mitigate the negative attitudes toward advertising. It is still preaching to the choir. Native ads, also known as sponsored content (Wojdynski & Evans, 2016), are getting more and more traction as people avoid advertising in editorial media, especially online. Business Insider estimated U.S.$4.1 billion was spent on native ads and forecast that 74% of all digital advertising revenue by 2021 would be from native ads, which include native in-feed ads on publisher properties and social platforms (Boland, 2016). Wojdynski and Evans’s (2016) experiment found very few participants can distinguish native ads from editorial content. They also found that a middle-positioned disclosure attracts greater visual attention and likelihood of fixation compared to top- and bottompositioned disclosures, which have been believed to have stronger attention. Nonetheless, recognizing the advertising disclosure negatively affected the credibility of the native ad as a news story. But in general, most people did not know the content was sponsored. The persuasive effect is also low for sponsored content. Their study results indicate the need to develop sponsor disclosure standards based on empirical evidence to avoid lowering the credibility of the media. Carlson’s (2015) case study on a controversial Church of Scientology native advertisement on the Atlantic website shows that the acceptance of native ads is not just a desperate attempt for online sites to receive sufficient advertising support or about how to properly label the sponsored content, but it also presents a challenge to publishers and advertisers to provide native content that matches and blends well with accompanying editorial content.The nature of native ads is still a philosophical debate about whether advertising should be part of the editorial content.

Commercial Pressure on Media and Influence of Advertising on Editorial Content Diversity and Independence Because the advertiser’s interest is to gain access to its target audience to push for its products and the media’s interest is to satisfy such needs of the advertisers to reach the largest audience (popular content) or the most profitable consumers (young or affluent consumers), media executives have been accused of not trying to develop innovative content and of going for the least objectionable programs and “dumbing down” programs to appeal to the masses (Brown & Cavazos, 2005; Eastman & Ferguson, 2013). Blasco and Sobbrio (2012) called this commercial media bias the inherent limitation of advertising-supported media. Does commercialized content result in lower quality or diversity of content? Many studies on mass media blamed advertising for homogeneous and mass appeal programs and media content. Einstein’s (2004) study of U.S. commercial broadcast networks’ programs found advertising drove the program development of these networks and reduced the diversity of program content. Picard’s (2004) study on commercialism’s impact and newspaper quality found advertising-supported newspapers lower their quality by emphasizing content of social value less and appealing to sensationalism and other questionable practices. Lischka’s (2014) study of German newspapers shows those which have more advertising revenue are more likely to report less about the economic crisis and unemployment problems than those which have less advertising. Nonetheless, Pires (2014) purports that the size of the market determines if advertising promotes diversity in political ideology in news media. When the market size is small, advertising will reduce the diversity, but when the advertising market size is large, news media compete with multiple political ideologies to capture readers and adapt more to the political preference of the audience. In contrast to the common perspective of advertising’s negative effect on content, there are other studies that show that improvement in diversity and content actually attracts more advertisers. Li and 150

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Thorson (2015) found that when newspapers increase the proportion of news content and diversity, they improve both subscription and advertising revenue. Sun and Zhu’s (2013) study compared the change in content of blogs with ad revenue and those did not adopt ad revenue sharing programs and showed that those blogs participating in the ad revenue sharing program indeed shifted toward popular topics, such as the stock market, salacious content, and celebrities, to attract audiences and advertisers. But they did not find a decrease in quality. They found the quality also increased with popularity. So, advertising as a revenue actually professionalizes media content by improving quality as well as popularity. In addition to advertising effects on editorial quality, advertising’s negative effect on editorial independence and self-censorship practice has been studied quite extensively by researchers. Soley and Craig’s (1992) survey of news editors who perceived pressure from advertisers showed that 90% of them reported advertisers’ attempts to influence their news coverage.Yet most of them would still report news that is negative about the advertisers. Another study by An & Bergen (2007) from the perspective of advertising directors of newspapers shows similar pressures from advertisers, especially at small newspapers and chain-owned newspapers. Germano and Meier (2013) found that newspapers are more likely to not cover negative news about their advertisers through self-censorship. Rinallo and Basuroy’s (2009) study of newspapers and magazines in the United States and several European countries shows that advertisers indeed have an advantage in positive news coverage of them in the news media and publishers that depend more on a specific industry for their advertising revenues are prone to a higher degree of influence from their corporate advertisers than others. But is the advertiser’s pressure that high on news reporting? Price’s (2003) study of U.S.TV networks’ news correspondents found only 7% of the respondents felt pressure from advertisers. Owners’ pressure is more important than that of advertisers but still in general they perceived they have a high degree of autonomy in their reporting. Colistra’s (2014) study on TV reporters demonstrated that pressures from advertisers predicted reporters’ perceived instances of agenda cutting (reducing coverage or omission of items) in news decisions. So, these studies show that advertisers’ influence on news editorial content depends on how much the newspapers rely on the specific advertisers and the autonomy of the editorial staff. Front-line news people seem to be less susceptible to influence from advertisers than the advertising sales staff and editors. In general, advertisers are found to be a threat to editorial independence. Usually the editorial staff is unwilling to compromise while the advertising sales staff is torn between clients and editorial colleagues. However, studies on business news coverage show the press is much more independent from advertisers or the business sector than those studies that examine the influence of advertising on editorial content. Zhang’s (2014) study on the food industry’s news coverage in the United States found that major firms in the food industry have all been reported about negatively in regard to food safety. Another study on the negative coverage of the BP oil spill (Watson, 2014) and a recent CBS report on the Ford Explorer’s exhaust leakage on 60 Minutes and CBS News (CBS News, 2017) seem to indicate news media give higher priority to public interest than protecting businesses in news coverage. Although these studies did not focus on advertiser pressure on editorial content or measure the advertising spending of these large firms on the newspapers under study, these large firms under study are all large advertisers for news media. Negative reports on them risk losing their advertising support. So, these are counterexamples of commercial pressure on news media. Public interest and inter-media agenda setting can override the advertiser’s pressure on news coverage.

Advertising Clutter and Perception of Editorial Quality Advertising clutter has been defined as the “a large amount of non-editorial content in an editorial medium” (Ha & McCann, 2008, p. 570). It is more about the density rather than the quantity of such noneditorial content. Goldstein, Suri, McAfee, Ekstrand-Abueg, and Diaz’s (2014) experiment 151

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studied the economic and cognitive costs of annoying online display advertisements and concluded that media lose their audiences by accepting annoying ads. As Ha and McCann (2008) pointed out, advertising clutter can be the objective physical presence of advertising (actual amount of advertisements) and the subjective perceived amount of advertising (which varies by individuals). Different people have different expectations or acceptance level of advertising. The advancement in digital technologies allows a more sophisticated way of presenting and customizing advertisements based on location and other user data. To media managers, advertising clutter is both an evil (possible irritation to the audience) and a blessing (more advertising revenue and indication of a high demand for advertising for the media company). Based on prior studies on advertiser pressure on news media mentioned earlier and newshole and press performance studies which assume that a larger amount of advertising will lower the readers’ perceived editorial quality (e.g., Lacy & Fico, 1991), Ha and Litman (1997) examined whether an increase in advertising clutter in consumer magazines results in a decline in circulation and diminishing returns in advertising revenues of those magazines using a longitudinal analysis. They indeed found diminishing and negative returns of advertising clutter for circulation of leading consumer magazines in the United States, which may reflect consumers’ perception of lowered editorial quality when the magazine has too many ads and consumers’ lower inclination to buy the magazine. They recommended media companies set a maximum amount of advertising based on the optimal point before diminishing returns for circulation, which is about half of the total pages for entertainmentoriented magazines. Ha’s (1996) experiment on the three dimensions of magazine advertising clutter found only negative effects of perceived quantity and intrusiveness on readers’ attitudes toward the advertising in the media. Schumann, von Wangenheim, and Groene (2014) found lower click-through rates among consumers who reported higher ad clutter in their experiment. Lee and Cho’s (2010) experiment found that for a highly cluttered web page, frequency of the target ad facilitates the memory but not recognition of banner ads. Bellman et al.’s (2012) study found that there was a marked decline in online ad recall and recognition beyond three minutes of commercials within the prime-time shows online. Zanjani, Diamond, and Chan (2011) confirmed that online information seekers are more likely to feel intruded on by ad clutter than surfers. Ha (2017) points out that the increasing consumer avoidance of advertising with the aid of technology such as digital video recorders (DVRs) to skip advertising and other adblocker software is a serious warning for advertisers and media managers to create a healthy advertising environment. They have to make advertisements more informative and entertaining for the consumers. Ads may not be perceived as clutter when consumers are the one who requested the information/ads (pull), such as a product search on Google. But when ads are unsolicited (push), then they are easily perceived as clutter unless they offer consumers other value, such as entertainment. An optimal advertising environment should make advertising available on demand and offer entertainment and information value to consumers.

Research Agenda for the Next Decade Advertising is a moving target as a research subject because it continues to evolve in format with the advancement in technologies and acts as an indirect payment for many editorial media. This author proposes five topics on advertising that are important for media management and economics researchers to study in the next decade: (1) Is blurring or mixing editorial content and advertising a good thing for advertisers, media, and consumers? (2) Is advertising the culprit or scapegoat for editorial quality/integrity problems in media? (3) What is the audience’s receptiveness toward new forms of advertising in different media? (4) Should advertising still be the primary source of revenue for commercial media or is direct payment a better way to ensure quality content in the consumer’s

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interest? (5) Regarding advertising clutter, what is the optimal amount of advertising and acceptable advertised product types in editorial media?

Is Mixing Editorial Content With Advertising a Good Thing? The foregoing discussion on the latest trends in advertising format variations points to advertisers’ worry about dwindling exposure to advertising when people can skip ads and are skeptical of traditional advertising formats. The effectiveness of such advertising variations remains to be seen and empirical studies actually point to the ineffectiveness of native ads on brand recall and preference. In fact, empirical evidence shows that consumer attitude toward product placement is similarly as negative as it is in advertising. This trend of mixing editorial content with advertising to increase exposure and credibility is quite troubling. On the one hand, making ads more like editorial content means that they should be more informative (advertorial/native ads) and true to the actual use of products (as in product placement) and relevant to the editorial content consumption. On the other hand, by hiding the advertising purpose of the content, this runs into the ethical question of deceit. Why do advertisers hide their advertiser identity if they have legitimate products to promote? The revival of branded TV programs, such as Redbull TV, and custom publishing of branded magazines, such as Rhapsody (for United Airlines), is another trend for researchers to study. Are they effective in building brands? Are consumers receptive to the concept of content created by advertisers only? The experimental study by Cole and Greer (2013) shows consumers rated branded magazines as having lower credibility than non-branded magazines. But more research is needed on TV programs and different types of branded content. The inherent promotional nature of advertising of native ads and branded content apparently contradicts the impartiality expectation of third-party editorial media. The more advertising is mixed with editorial content, the more likely editorial content of media may lose credibility, which will damage their reputation and lower the support of the audience. These are important media management questions that media managers should weigh in on, and researchers should provide guidance with empirical research from both ethical and pragmatic perspectives to determine who the true benefactors of native advertising in the short and long term are.

Is Advertising the Culprit or Scapegoat for Editorial Quality and Integrity Problems in Media? While there is ample research evidence of advertisers putting pressure on editorial media to gain positive coverage or minimizing negative coverage of themselves, and the inclination toward content with mass appeal to maximize audience, advertising is not the only culprit for unsatisfactory media performance in society. The increasing distrust in media and concern about media bias probably indicate a bigger issue (Tsfati & Cappella, 2003). If advertising is the only culprit for lower editorial content quality, then all state-owned or non-advertising-supported media should have the highest editorial quality. More importantly, who determines editorial content quality? The elites and the intellectuals? Or the media managers and editors who serve as gatekeepers for media organizations? Or the consumers at large, who have different interests and backgrounds? We want to make sure that advertising does not become the easy scapegoat for media’s own problems and that advertising provides a win-win solution to providing media content to the largest audience with choices for the audience. If media are only favoring advertisers, then they will lose credibility and audience, which is to the detriment of advertisers and media ultimately. Advertisers need editorial media that have the trust and support of their audiences. So, researchers should identify specific conditions when advertisers cross the line between the church and the state distinction between editorial content and advertising and when advertisers have unruly influences on editorial

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content that jeopardize the trust of audiences and perceived bias of media. Most importantly, how the audience perceives these interfering advertisers has not been studied. Putting the audience into the equation will help advertisers and media managers understand that they are running the risk of losing the audience. In addition, those studies that examine advertising’s (negative) effect on editorial quality should control for other structural and organizational factors, such as a media organization’s investment in the newsroom, number of large advertisers (advertiser concentration), ownership of the media, the editorial staff ’s perceived autonomy, journalistic norms, and competitive environment in the market. Defining editorial quality and integrity clearly with consistent measures for both information and entertainment media is an essential step toward this direction.

Audiences’ Receptiveness Toward New Forms of Advertising in Different Media As discussed regarding the different media forms and research on clutter, audiences’ receptiveness toward advertising in each form of media varies. This may be due to tradition and expectations. However, new forms of advertising are not within the common expectations of the consumers. How receptive they are to those new forms of advertising, such as native advertising, programmatic advertising, and location-based advertising, is still largely unknown. Promoted tweets resemble regular tweets and how consumers respond differently to regular tweets and promoted tweets is not fully understood. Product placements integrate the advertised product with editorial content and directly influence the content through the use of the products in editorial content. However, for unknown brands, product placement has minimal effects because consumers cannot recognize the brand in the placement. But for well-known brands, product placement is a good way to remind consumers that popularity of the brand is a part of the prop of the program.Would consumers welcome a disclaimer that the product placement is paid for in the program credits rather than the natural use of the product in the program? Would consumers have a positive or negative attitude toward paid product placement if they knew about it? How much can consumers learn about the product in product placement? There are certainly limitations in product placements as a form of advertising. How about paid explicit endorsement of products by YouTubers who are popular personalities? These are all important questions for researchers to answer in studying audience’s receptiveness toward new forms of advertising.

Should Advertising Still Be the Primary Revenue Source for Commercial Media? Although prior research has shown that direct payment will lead to more customer satisfaction providing either niche or exclusive premium content that consumers cannot get otherwise, media managers still have the option to capitalize on the dual product market of media. Media managers have to choose whether they provide content free to consumers using advertising (broadly defined as any sponsored content, including infomercials and home shopping channels), charge consumers a highly subsidized low price (charging consumers, but below cost and subsidized by advertising), or offer a metered use with free samples or fully paid by the consumers directly. Each type of payment model has found success. However, as the media environment is getting more and more competitive with more entrants to the markets online as either user-generated media, mobile apps, or over-the-top (OTT) streaming, the landscape may be tilted more toward a fully advertising-supported model and other forms of indirect payment as these news digital media entrants are all by nature public goods, as discussed earlier. As media consumers can be broadly divided into parity consumers, who do not care so much about exclusive and unique content, and non-parity consumers, who care about the quality of the experience, media managers should increasingly consider a hybrid model that serves 154

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both types of audiences differently if they want to maximize the impact of their media content while preserving an advertising-free environment for those consumers who have high demands and resent advertising. Because of the unwillingness to pay for online content in general and the higher willingness to pay for entertainment content by consumers (Yang, Fang, Abuljadail, & Ha, 2015), the perceived substitutability among different types of online news content versus entertainment and reasons for such perception will be an important study area. Media management researchers should study managers of different media regarding their beliefs about the type of model most profitable or best suited to the media form and how such beliefs influence their content strategies. Content analysis comparisons of different media forms with different revenue sources can also assess the impact of advertising on content quality and content diversity.

Advertising Clutter, Optimal Amount of Advertising, and Types of Acceptable Advertised Products in Different Types of Editorial Media As long as editorial media still accept advertising, advertising clutter will continue to be a concern because consumers consider it not as part of the editorial content and as interfering with their editorial content consumption. Advertising clutter can affect their perception of editorial content quality and resentment toward advertising. Traditional media, such as television, radio, and newspapers, still heavily rely on advertising as income; then the task for media managers is to study the optimal amount of advertising in their type of media. Ha and Litman’s (1997) study shows entertainment-oriented and information-oriented magazines have different thresholds of diminishing and negative returns of clutter for circulation and advertising revenue. We need more research on other media to find out the optimal amount of advertising to maximize the exposure to the advertising while maintaining editorial quality perception for the consumers. Comparing the optimal amount of advertising in different types of media will be a fruitful way to help media managers set their advertising limit policy and for legislators and industry associations to set up guidelines for industry to follow. More research should also be done on advertising inventory management and how media companies optimize the advertising rates to ensure a healthy amount of advertising. In addition, consumers should be educated on the contribution of advertising to the provision of free media content. As Schumann et al.’s (2014) study demonstrates, once consumers are reminded of such benefit, their negative attitude toward advertising is greatly reduced. Apart from setting the maximum amount of advertising, developing norms for types of products and services and execution quality that are acceptable for advertising should also be explored. Advertising executions that are annoying and below standard quality should not be accepted. Products that are hazardous to health or advertisers that have bad records in the Better Business Bureau should not be allowed to advertise. Such standards may vary by the type of media. User-generated media and mobile media may be the focus media in future studies as they contain the most consumer information for advertisers and media managers have the least control of when and how ad content is shown because many ads are programmatic and automatically fed to the screen.These proposed research topics will ultimately foster the development of an optimal media environment for advertisers, media companies, and the audience.

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11 MARKETING AND BRANDING Juliane A. Lischka, Gabriele Siegert, and Isabelle Krebs

Introduction Over a decade ago, McDowell (2006) stated that the primary motive for media brand management is the competitive marketplace, which also holds true for media marketing. The rise of media marketing—which refers to the marketing of media companies, not the marketing that uses media as vehicles to deliver ad messages to target groups—dates back to the 1970s and 1980s, when new competitors entered and the media market changed from a seller’s to a buyer’s market. During this time, media markets with dominant public service broadcasters were “suddenly” confronted with commercial competitors. The increasing competition concerning audience and advertising markets forced all media companies to invest in marketing activities and orient the organizations to meet the customers’ needs and desires. Related to the value chain of media production, media marketing is sometimes referred to as the final step after content production, packaging, and distribution. However, media marketing in the broadest sense covers a market-oriented media management, as is the case for marketing in general: “We see marketing management as the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value” (Kotler & Keller, 2006, p. 6). Although media marketing refers to the supply side as well, the focus lies on the sales market. For decades, media marketing referred to the four Ps—product, price, place (distribution), and promotion—until it finally turned toward the concept of customer-relationship-marketing (e.g., Sohn, Lacy, Wicks, Sylvie, & Powers, 1999, pp. 270–272). As competition increases and audiences fragment throughout the modern-day digital age, media companies are urged to increasingly pay attention to their brands (Chan-Olmsted & Kim, 2001; Ots, 2008; Siegert, 2008), as it becomes increasingly more difficult for media brands to remain visible and become recognized by consumers in online social network environments. According to the Reuters Digital News Report (2017, p. 10), most UK news users remember the path through which they found a news story (Facebook, Google, etc.), but “less than half could recall the name of the news brand itself when coming from search (37%) and social (47%)”. At the same time, consumers request trusted news brands and bemoan the decline of newspapers “with many valuing the immersive, personal experience of reading their favourite title”, as a study of German, Spanish, UK, and U.S. news users reveals (Vir & Dodds, 2016, p. 14). As an important goal for media companies has always been differentiation from competitors, branding remains a very common strategy in the media industry (for an overview, see the

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Handbook of Media Branding: Siegert, Förster, Chan-Olmsted, & Ots, 2015). One of the most essential aptitudes of a media brand is the capacity to signal symbolic characteristics to audience members, advertisers, employees, and other stakeholders, beyond its functional value. These symbolic characteristics support differentiation and decrease market failure problems that media products experience. Therefore, media organizations can gain a competitive advantage through a strong brand. Media branding can be seen, on the one hand, as a prototype of a media marketing strategy, and, on the other hand, as an integrated management strategy that covers external as well as internal relationships. Based on McDowell’s (2006) brand definition and Küng’s (2008) definition of media industries, we define a media brand as: 1. An organization or person who creates, edits, publishes, or distributes, or 2. A product that contains • •

Informative, entertaining, or educational content that is publicly available, and Signals symbolic value to internal and external stakeholders.

Examples of the aforementioned categories include: (1) publishing houses, online distributors, and television channels, as well as news hosts, journalists, actors, directors, authors, and owners of media organizations, in addition to (2) television series, movies, legacy and online news outlets, radio stations, radio shows, newspapers, and magazines. Although Facebook often refuses to refer to itself as a media company (Segreti, 2016), this definition includes Facebook as a media brand because it is an organization that manages and distributes mass-media content. A value chain–based comparison of the two types of media companies—namely, platform operators and content providers—has been provided in Hess (2014). Today’s multi-platform environment, which enables the distribution of media content in different formats to different audiences, sparks new challenges for media marketing and branding. This “technological convergence, fostered by the transition from analog to digital communication, has blurred the once familiar distinctions among all types of communication platforms” (McDowell, 2006, p. 246). This chapter reviews the state of traditional media marketing and branding research, specifically contemporary research focusing on media marketing and branding facing a complex and audience-centered media environment, identifies established and developing research areas on a map of media marketing and branding research, and suggests a research agenda for the next decade, considering today’s media marketing and branding environment.

Roles of Marketing and Branding for Media Marketing and branding matter, in particular, to media organizations, as media products are experience or credence goods. As such, audience members cannot assess their quality before consumption, yet, they need to experience the product. In other words, one must watch the new James Bond movie to know whether one was entertained. Regarding news, it can be hard for audience members to assess whether the information is accurate, even after consumption, especially with the growing number of news sources online or on social networks, where entry barriers are low for content providers. In an online or social network environment, news brands can signal credibility and authority. Here, media brands assist audience members in making their consumption choices and evaluating media content. As Daidj and Jung (2015, p. 42) explained, “Therefore, [publishing] activities depend not only on a large extent on advertising expenses and marketing and publishing policies, but also on reputation (the star system, word of mouth, reviews, prizes, awards, etc.)”, which become part of media brands.

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Thus, a brand can repair the experiential and credence good characteristics of a media product to a certain extent. This suggests that media brands “can be viewed as institutional arrangements which help to ease market problems to a certain degree” (Siegert, 2008, p. 12), since they signal quality and credibility. For example, when a consumer has an indirect experience with a new movie (e.g., through a trailer, media reports, or word of mouth), he or she can more easily evaluate the entertainment value of that movie beforehand. In fact, the mere function of movie trailers is to reduce market failure through providing a priori information without giving away too much content prior to viewing the movie—that is, retaining a movie’s perishability. Similar functions hold true for news headlines (i.e., informing the reader about the expected value of reading the article), audio samples of a song, or the cover text of a book. Thus, the way media products are presented and structured indicates an attempt to decrease market failure through a priori information, as such knowledge eases consumption decisions. Media brands have a similar function, as they indicate a priori information for audience members as part of the image users develop in their minds. According to Keller (2008), the power of a brand lies in the minds of its customers. How customers regard a brand depends on consumption experiences with the brand as well as marketing communication. Media brand marketing aims to build strong relationships with audiences. Through brand awareness and brand knowledge, audiences create a brand image, attachment, preference, and, eventually, loyalty (Aaker, 1996; Keller, 2008). Media marketing differs from other brand communication regarding communication goals, media messages, or platforms (Weinacht, 2015). Media brand messages, such as trailers, develop specific expectations for audiences and build a framework of how the content will be perceived. Additionally, media organizations that self- or cross-promote their own products are often advertisers, advertising objects, and an advertising channel in one. They can use their audience-building competencies to communicate—that is, “The ability to win individuals over to view, listen to and read by offering them content which is interesting and target group specific” (Siegert, 2008, p. 22). Apart from consumers, media brand communication also addresses advertisers as the other side of the two-sided market. Media brands assist advertisers in choosing a certain advertising vehicle over another and placing their advertisements (Dahlén, Friberg, & Nilsson, 2009; Sommer & Marty, 2015). Moreover, media brands assist online content distributors in evaluating media content. Concerning the latter example, Facebook tends to classify the most liked and commented-on topics, and shares real-world events only as trending topics when they are also leading in the coverage of major news media brands, such as “BBC News, CNN, Fox News, The Guardian, NBC News, The New York Times, USA TODAY, The Wall Street Journal, Washington Post, BuzzFeed News” (Facebook, 2016). Sadly, names or visual appearances of popular news brands are also misused to help spread fake news purporting to be real news on social networks, such as Facebook (Gilbert, 2016), which can potentially damage a particular news brand. Media brands also address the task of aligning different value sets in a media company—that is, personal value sets of employees, organizational value sets of the company and the editorial department, and professional standards. Thereby, the media brand coordinates the organization’s decisionmaking processes, such as the development, production, and distribution of media products, with the aim of achieving market success as well as legitimacy (Siegert, Gerth, & Rademacher, 2011; Siegert & Hangartner, 2017).

State of Traditional Media Marketing and Branding Research The following section defines central terms in media marketing and branding and develops media marketing and branding research maps by reviewing three recent meta-studies: Weinacht (2015), Malmelin and Moisander (2014), and Krebs and Siegert (2015). Previous reviews of media brand

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research were provided by Walter McDowell in his book chapter “Issues in Marketing and Branding” (McDowell, 2006) and by Sylvia Chan-Olmsted in her article “Media Branding in a Changing World: Challenges and Opportunities 2.0” (Chan-Olmsted, 2011). McDowell and Chan-Olmsted considered not only publications about media branding but also traditional marketing literature and publications on branding in general. Thus, their reviews do not focus on solely media branding and marketing.

Approaching the Field of Traditional Media Marketing and Branding Research Weinacht (2015) conducted a qualitative content analysis of English and German media brand management literature relating to the terms “media and brand management”, “communication and management,” and “public relations and media” published between 2000 and 2014. The focus of the analysis was on communication goals, media messages, media platforms, and selected instruments in the communication mix. Communication goals of media marketing are often related to the concepts of brand awareness, brand image, and brand loyalty, according to Weinacht’s (2015) findings. Brand awareness refers to familiarity with a brand, which is a cognitive goal of communication. Brand image relates to thoughts and feelings regarding a brand, which is the affective dimension of attitudes. Brand loyalty can be defined as repeated intentional or behavioral consumption of a brand (McDowell, 2006, p. 234). The concept of brand loyalty can be broadened to attitudinal dimensions—that is, cognitive, affective, and conative dimensions—when referring to “the degree to which customers intend to repeat their purchases in the future (intention of future behavior), express a positive attitudinal willingness toward the provider (affective loyalty), and consider this provider to be the sole option for future transactions (cognitive loyalty)” (Picón, Castro, & Roldán, 2014, p. 747). Loyal users of media brands spend more time watching a certain program and decide to visit media brand websites more often. On the cognitive dimension, an audience member regards a media brand as the best alternative to fulfill his or her needs. On the affective dimension, an audience member prefers a certain media brand and decides to continue patronizing, or reusing, its services. On the conative dimension, an audience member expresses a reuse intention, which transfers to the actual reuse behavior (Lischka, 2015). However, these goals of media marketing can conflict with normative goals regarding the editorial content of the media brand, which could lead to a decrease of editorial credibility. Such interdependencies between media brands, organizational actors, and audiences are illustrated in the MBAC (“media, brands, actors, and communication”) model by Siegert et al. (2011) that describes brand identity–driven decision making. Research on brand messages focuses on: (1) typologies of media brand presentation with regards to content, (2) strategic capabilities of media messages from a manager’s perspective, (3) functions of media brands from an audience perspective, (4) usage of messages in media brand campaigns, and (5) effects of media brand communication (Weinacht, 2015). The author notes that platforms of media marketing are rarely studied in depth—except for television, which is the preferred object of investigation. Similarly, research on instruments of the communication mix, such as advertisements, promotion, social media, internal communications, public relations, or product placement in media marketing, is rare, according to Weinacht (2015). Malmelin and Moisander (2014) offered a meta-theoretical analysis of existing research on branding published in international, peer-reviewed academic journals—namely, the International Journal on Media Management, the Journal of Media Business Studies, and the Journal of Media Economics from 2000 to 2012. They analyzed 35 articles dealing with media brands and branding—namely, articles that at least mentioned the concept of brand. The meta study, therefore, excluded research published in monographs or edited volumes. 162

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The authors arrived at five basic conceptions of brand in media management research: (1) product, (2) extension, (3) identity, (4) differentiation, and (5) equity (Malmelin & Moisander, 2014, p. 13). Media brands as products are referred to as news brands, website brands, or television brands, as well as “collections of cross-media brands” (Doyle, 2006, p. 107) in times of platform convergence. Wellestablished media brands can use brand extensions to exploit and grow their business. The outward expression of a brand is discussed as brand identity or personality, including concepts such as brand attributes, brand promises, brand name, and logo. Brand identity can also act as a decision-making tool for brand management and content production (Siegert et al., 2011; Siegert & Hangartner, 2017). Furthermore, media brands are viewed as strategic differentiation of media products through marketing. Finally, media brands are conceptualized as valuable financial and symbolic assets that offer equity to media organizations. Improvement of brand equity can be achieved through marketing. Customer-based brand equity includes the brand relationship, which consists of consumers’ brand image, association, satisfaction, and loyalty (Chan-Olmsted, 2006; Keller, 1993; Krebs & Lischka, 2017; Oyedeji, 2010). Thus, these media brand concepts are closely related, and marketing is a means to reach and change one of the concepts.

Network Analysis of Media Marketing and Branding Research Based on the key concepts that Malmelin and Moisander (2014, pp. 23–25) and Krebs and Siegert (2015) ascribed to each reviewed article, we performed network analysis to map the research areas of media branding and marketing. A network analysis is a widely used methodological approach to visualize network connections. Network analysis is a powerful way to reveal how theoretical concepts are related in academic research—namely, which concepts play a central role, whether certain concepts create cliques, which concepts build the periphery of a network, or how distant certain concepts are from each other (Paisley, 1989; Rice, Borgman, & Reeves, 1988). Network analyses have been applied to map academic research areas—for example, communication technology research (Zheng, Liang, Huang, & Liu, 2016), agenda setting research (Tai, 2009), or Internet studies (Peng, Zhang, Zhong, & Zhu, 2013). In this chapter, social network analysis is used to reveal the associations and structures of research areas within media marketing and branding research. The goal of this network analysis is to illustrate research-created relationships between media marketing and branding key concepts in order to identify research areas for further development. The ascribed key concepts by Malmelin and Moisander’s (2014) and Krebs and Siegert’s (2015) studies constitute the nodes within the network.The studies using these concepts represent the connections between nodes. For example, Malmelin and Moisander (2014, p. 22) ascribed the key concepts “media brand”, “brand association”, and “brand image” to Chan-Olmsted’s (2011) study “Media Branding in a Changing World”. Thus, the terms “media brand”, “brand association”, and “brand image” create a triangular network. McDowell’s (2004) study, which utilized the ascribed key concepts of “brand association”, “brand equity”, and “brand differentiation” (Malmelin & Moisander, 2014, p. 23), extends that triangular network with two additional nodes, “brand equity” and “brand differentiation”, as both are connected to “brand association”. In that network, brand association is the central node with one “bow tie wing” on each side. As more studies become available to connect key concepts, the area of said network becomes increasingly denser. A network, thus, reveals highly connected and isolated research areas. It also shows which concepts or topics are central to the field and which lie on the periphery. Therefore, networks illustrate the connectivity of research areas in media marketing and branding in an innovative way. Malmelin and Moisander (2014) ascribed 31 different key concepts in total to 35 articles, ranging between one and eight concepts ascribed to each article. Such key concepts were, for example, brand, branding, brand loyalty, media brand, brand image, news brand, brand architecture, or brand trust. Almost every article included the general concept “brand” or “branding”, which would have created 163

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an immense artifactual node in a network.Therefore, and since “brand” was a qualifying criterion for Malmelin and Moisander’s (2014) meta study, we did not add this key concept to the network. The resulting network, thus, identifies the research area beyond the general terms “brand” and “branding”. Figure 11.1 reveals the network of media branding and management research based on Malmelin and Moisander’s (2014) data. The network is rather sparse (density = 0.196, i.e., 20% of potential connections within the network exist) and decentralized (centralization = 0.255, i.e., connections between nodes do not relate to one central “broker” node). From visual analysis, the network consists of two core areas: (1) media brand, brand equity, and brand personality, and (2) brand management, brand extension, and brand identity (printed in bold in Figure 11.1), several peripheral areas, and one isolate topic (brand power). The two core areas that are most connected to other concepts can be summarized as (1) an “ingredients theme”, consisting of media brand, brand equity, and brand personality (black nodes), and (2) a “process theme”, consisting of brand management, brand extension, and brand identity (white nodes). The ingredients theme consists of concepts of objects of brand management. The process theme predominantly consists of concepts relating to overall brand management activities. There are many peripheral concepts around the two cores in media branding and marketing research. Except for the isolated node, all peripheral concepts are connected to other peripheral themes, and often to the central nodes. Therefore, there is a great variety of concepts in research that appear to be connected through one or two studies. Very few concepts are related through the maximum count of three studies, although brand identity, being a rather ingredientsrelated research topic, appears to be connected to research on brand management and extensions as

satisfaction differentiation

trust

awareness

image

association

Small media News

loyalty

affect

Magazine

personality equity

Media

Parent/global Heritage mngmt

book

extension

owner

casting

name identity

attribute

Strategy Format

promise

power

TV architecture

Figure 11.1 Research areas in media branding and management based on Malmelin and Moisander (2014). Core terms printed in bold. Grey arrows indicate one or two studies linking two terms. Black arrows indicate three studies linking two terms. Three studies is the maximum count of studies linking two terms. Similar node patterns indicate a “theme clique”. Uppercase terms precede the word “brand”—for example, Magazine brand. Lowercase terms follow the word “brand”—for example, brand equity.

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well as to similar peripheral topics. The ingredients and process cores are directly connected to each other and through the two concepts’ parent/global brands and brand names (light grey nodes). The ingredients theme is connected to many attitudinal concepts, such as satisfaction, awareness, trust, loyalty, or image (in italics), as well as to a few specific media categories, such as books, magazines, small media, or news. These themes build the periphery around the ingredients theme. Within the attitudinal peripheral area, brand satisfaction, brand loyalty, and brand associations are central themes (light grey nodes with black frame). The concepts of the process theme relate to organizational concepts, such as strategy or architecture, as well as brand features, such as attributes, format, heritage, or promise on the periphery.These concepts are well connected to each other, but have no connections to other areas of the network, except for the process core theme. Overall, the media branding and management research universe consists of two “galaxies”, each with one among and across a wellconnected tripartite “sun”. The concepts around the suns are diverse, but rather exclusive to one galaxy. For example, there is no study relating media brand identity and brand image, according to Malmelin and Moisander’s (2014) coding. Thus, research in one galaxy may refer to the suns in the other galaxy, but rarely to the “alien” concepts of those suns. Krebs and Siegert (2015) analyzed 221 media brand and branding research publications in English and German referred articles, books, and book chapters from 1995 to 2013. The authors identified the major theoretical approaches used—namely, (1) brand identity, (2) brand position, (3) brand image, (4) brand strategy, (5) brand management, (6) brand personality, (7) brand equity, and (8) brand extension. These approaches constituted the network nodes. The authors found that media brand strategy and management is the key area of research, followed by the brand perception and image perspective. For our network analysis, we included only literature from the year 2000 and onwards, similar to Malmelin and Moisander (2014). Thus, the sample for the network analysis covers literature published between 2000 and 2013 (2000 to 2012 in Malmelin and Moisander 2014) in referred articles, books, and book chapters (referred articles of three major academic journals in Malmelin and Moisander 2014). In addition, the coding schemes differed between Malmelin and Moisander (2014) and Krebs and Siegert (2015) and, thus, the number of nodes in the networks differed accordingly (31 and 8, respectively). Figure 11.2 illustrates the networks between theory approaches of the English (n = 121), German (n = 111), and English and German publications (n = 232) analyzed in Krebs and Siegert (2015). The node colors for the concepts were kept identical to the colors in Figure 11.1. For a direct comparison with Malmelin and Moisander’s (2014) network, the English literature network in Figure 11.2 is more appropriate. In contrast to Figure 11.1, the network of the English literature is rather dense (density = 0.643, i.e., 64% of potential connections within the network exist).Therefore, the English-language research connects the eight key approaches well to each other.Yet, this density increase is also due to the less granular coding scheme used in Krebs and Siegert (2015). Similar to Figure 11.1, it is also decentralized (centralization = 0.213, i.e., connections between nodes do not relate to one central “broker” node). Except for the brand extension perspective, which is the least connected concept, all other theory concepts are well connected within the English-language literature. Brand management is the best-connected concept, although not being “broker” nodes, brand management and brand image are in the center, as they are the best-connected theory approaches within the network. Both core topics are similar to the core ingredients and process themes in Figure 11.1. Hence, although sample and coding categories differ, there is a major similarity between both networks of the English literature: the core of the research area of media branding lies in media brand objects, or ingredients, and their management process. In the German literature network in Figure 11.2, all concepts are equally well connected to each other. The German literature network is denser (density = 0.786, i.e., almost 80% of

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Image

Extension

Management Personality

Management

Position

Identity

Image Position

Identity

Strategy

English literature Identity

Strategy

Equity

German literature Image Equity

Extension Personality Management

Position Strategy

English and German literature Figure 11.2 Research areas in media branding and management based on Krebs and Siegert (2015). Black arrows indicate five (ten) or more studies linking two terms in English or German (or English and German) literature. Grey arrows indicate less than five (ten) studies linking two terms in English or German (or English and German) literature. Node patterns relate to the node patterns in Figure 11.1.

potential connections within the network exist) and less central than the English literature network (centralization = 0.106). Therefore, German-language research almost equally relates all key concepts to each other. However, brand image and brand management are the only concepts related to brand personality. Thus, image and management have a “broker” role for the brand personality concept. Combining English-language and German-language literature, the network results in an almost perfectly dense (density = 0.893) and decentral (centralization = 0.020) network. Therefore, by employing the English and German literature, the scholarly field of media branding connects the major theory concepts very well to each other, lacking a theory core or peripheries. Thus, there are no insufficiently researched key theory concepts. However, more research applies to brand management, whereas studies that employ brand personality or brand equity are relatively rare.

Contemporary Research Into Media Marketing and Branding Facing a Complex and Audience-Centered Media Environment The changes in the media industry induced by digitization, like multi-platform environments with new communication streams and multi-platform strategies, also brought about new challenges to

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research. This chapter focuses on topics of the latest research dated 2015 and younger and trends in the current media environment. Today’s media marketing and branding environment is characterized by international competition, ambiguity, aggregation, and participation. Picard and Lowe (2016, p. 62) portrayed the media environment as “VUCA”—that is, volatile, uncertain, complex, and ambiguous—“in which platforms multiply, channels proliferate, and markets fragment”. When facing such an increasingly competitive future, media brands are a potent tool for media organizations that signal relevant characteristics to internal and external stakeholders for the audience and advertiser markets. However, given marketing and branding, concepts must be adapted to the multi-platform environment.This especially applies to the expansion of established brands into the web, as a possible brand fit and brand extension strategies were named as fields of interest for the industry and research (Chan-Olmsted, 2011). Social media and extended possibilities of user engagement alter marketing and branding. Users now interact more directly with media brands and even shape content and media brands. Research is investigating the effects of this new relationship between users and brands and possible consequences, for instance, arising from user engagement for traditional media brands (Krebs & Lischka, 2017; Ots & Karlsson, 2012). Participatory or co-branding and a diminishing brand control only two of major trends named, in addition to influences of a new value chain, as well as an increase of integrated content and others, which will further shape marketing and branding research (Chan-Olmsted & Shay, 2015). According to Jones (2005), brand value is cocreated through interaction with various stakeholders. Not only brand value but also marketing and branding are no longer intra-organizational processes, but rather result from negotiation processes between intra- and extra-organizational stakeholders. Stakeholders increasingly request to know more about an organization that is standing behind a brand, which is resulting in organizational self-disclosure; in turn, companies open channels for engagement with their stakeholders (Hatch & Schultz, 2010). Chan-Olmsted (2011, pp. 3–4) assumed that media branding and marketing had become more complex with the development of multiple online channels and platforms, especially through social networks allowing a direct contact with audience members, as they had noted that changes in “consumer behavior, communication technologies, and market conditions, mostly triggered by the arrival of Web 2.0, mean that the success of branding today is increasingly dependent on an organization’s ability to manage its brand in a dynamic environment”. As a result, “media work must be viewed not as a value chain, but more broadly as value networks in which companies, consumers, partners and subcontractors work closely with one another” (Malmelin & Villi, 2017). This applies even more so for a multichannel and social media–focused environment. Within this more interactive sphere, the changing role of consumers for branding has also come into focus. Users not only receive brand associations but also participate in creating brand associations (Chan-Olmsted & Shay, 2015). With social networks, media managers lose and audiences gain some control over the marketing and branding processes. On Facebook,Twitter, Snapchat, and so forth, audiences and content providers are organized in peer-to-peer structures, and are engaged in content creation, distribution, and conversations around a brand; thus, they play an essential role in cocreating a media brand. Ots and Hartmann (2015) explained that audience interactions may indicate sincere appreciation, while also making media brands increasingly difficult to control or direct for managers. Thus, media managers turn from brand “guardians” to “hosts” (Christodoulides, 2009) that (must) invite formerly external stakeholders as well. In this participatory media environment, media brands become objects of a public negotiation process. As a result, media brand images may vary individually and dilute in comparison to the intended image. Social TV is one example of how audiences are involved in the production process through conversations on social networks. Van Es (2016) identified a participation dilemma between the

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producer’s desire to control the production process and the goal of emotionally involving a large audience. Using the example of several seasons of the U.S. television show The Voice, the author revealed that producers had reconfigured the ability of the audience to intervene in the production process through social media and regained control over the production process.Van Es (2016, p. 120) argued that “Producers, it seems, concluded that their interactive and real-time qualities became a threat to the tightly structured narratives needed to attract eyeballs and keep them watching the show”. The audience-centered perspective in media brand research has been reviewed in Förster (2015a), stating that the role of consumers as codevelopers of brands, innovations, and products has yet to be considered very much in research. In recent research, an audience perspective on media branding has strengthened through the concept of customer-based brand equity (CBBE) (Aaker, 1991; Keller, 1993;Yoo & Donthu, 2001). CBBE has been studied for newspapers in local (Bakshi & Mishra, 2016) and online environments (Krebs & Lischka, 2017), as well as for cable news outlets (Oyedeji & Hou, 2015). Bakshi and Mishra (2016) showed that, regarding local newspapers in India that contain local news, a fit between the newspaper’s ideology and world views of the reader, credibility, and entertaining content enhance brand equity. Guo (2015) noted that traditional newspaper and television brands heavily engage with users on social networks through community building and experience sharing—a trend that has started in the competitive online marketplace (Davidson, McNeill, & Ferguson, 2007). Malmelin and Villi (2015) argued that the audience community is an important strategic resource for media brands, due to information gained about the audience when engaging. Oyedeji and Hou (2015) showed that the credibility of online brand extensions of legacy news channels is strongly determined by the audience evaluation of the parent news outlet. In online environments where users can interact with and comment on news, Lischka and Messerli (2016) illustrated that online engagement can slightly enhance loyalty toward a media brand. Krebs and Lischka (2017) confirmed this result and revealed that serious content is more important for the media brand equity of users than any form of audience engagement. McDowell (2015b, p. 153) also reached a similar conclusion: “In an overcrowded media marketplace, the best way to nurture a sustainable competitive advantage over rivals is to provide audiences with extraordinary branded content”. However, it has often been argued that audience engagement and integration can increase commitment with the media brand (Malmelin & Villi, 2015). In addition to this audience perspective, the role of media brands has been studied in the TV branding process (Förster, 2015b) and related to small media brands (McDowell, 2015a). Sommer and Marty (2015) analyzed media brands as a decision criterion in media planning and, therefore, assess media brands on the second side of the market—namely, the advertising market. Recent studies assessing media marketing are related to multi-platform strategies in movie marketing (Sattelberger, 2015) or social network marketing for traditional media brands (Wolter, 2015), news magazines (Friedl & Förster, 2015), and for a Netflix show (DeCarvalho & Cox, 2016). Apart from a focus on social networks as communication channels, no overall pattern novel to the current research area of media marketing and branding has been disclosed. Related to audience engagement, diversified roles and tasks emerge at media organizations, such as community or social media managers. In an age of online media work, the responsibilities of media managers increasingly focus on supporting collaborative networks and developing systems that enhance creativity and innovation (Malmelin & Villi, 2017). As media organizations also compete in the employee market, the media brand can signal relevant characteristics to attract the most appropriate employees and prevent a “brain drain”. Traditional organizations have reported that it is harder to attract and retain talented managers, as start-up companies have become more attractive for young professionals (Axelrod, Handfield-Jones, & Welsh, 2001; Beechler & Woodward, 2009). For example, the news outlet BuzzFeed was able to hire top

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journalists and, thus, has become a competitor to legacy news outlets, not only on the level of audience attention but also in terms of content (Küng, 2015). Legacy news brands not perceived as innovative will have a harder time attracting employees who could act as agents of innovation. Thus, employer branding might become more relevant for media brands. In an ambiguous environment, legacy media organizations are required to innovate, whereas their products have a (sometimes large) residual fit (Gilbert, 2006) in the market. In many countries, traditional news users still strongly prevail compared to younger online or social network news users (e.g., in Germany, France or Australia; see Newman, Fletcher, Levy, & Nielsen, 2016, p. 88). Media brands that address a general audience must be known by and appeal to such traditional as well as younger online audiences. Thus, media organizations and brands must be able to develop their media brands in an ambidextrous way—namely, profit from established brand resources, yet develop novel brand resources in parallel.Thus, not only product innovation but also innovation of established brands and the creation of brand extensions are necessary, especially for legacy media organizations. Regarding the multi-platform media environment, media brands are present on various channels communicating to different audiences. In this regard, public service broadcaster brands have become public service media brands (Lowe, 2011). Although the parent brand characteristics are transferred to brand extensions, as shown by Oyedeji and Hou (2015), media brand image may still differ across distribution platforms due to platform-specific content distribution and additional platform brand images. Chan-Olmsted and Shay (2015) also highlighted the strategic advantages of co-branding to manage the audience’s experience across different platforms and increase consumer touch-points—for example, through cross-industry co-branding (Netflix and Best Buy). In this case, the term “co-branding” refers to cross-industry branding, whereas, for audience integration, it refers to co-creation. In the future, media brands will have to deal with consumption situations in which content is aggregated with content of other sources and media brands, and the distribution channel is a brand of its own. In a social network or online search environment, fewer users remember the brand name of the media outlet from which they received news (Newman et al., 2017, p. 10). When distributing content on social networks, it is harder for media brands to create a specific brand image than in traditional media consumption situations, especially with young audience members who do not know a media brand through its direct channel and may recognize a certain brand only after many occasions. In addition, media brands lose control over distribution on algorithm-based platforms, such as Facebook. Since content is a very important factor that affects brand equity (Krebs & Lischka, 2017), media brands lose brand management capacity due to aggregating platforms. Although language and geography are found to shape patterns of global media use (Taneja & Webster, 2016), a media brand can become an international player, such as the streaming service and entertainment producer Netflix. Such global brands challenge established players in national markets that must reconsider their brand positioning and brand proposition for their audiences. A competitive media environment also implies the rise of new market players. Start-up media organizations should first develop a brand identity and image. For example, the relatively new news outlet BuzzFeed still focuses on creating an image of a credible news source in the minds of audiences (Tandoc & Foo, 2017). More generally, journalists and editors of start-up news outlets must assess whether and how they address audiences and news issues (Carlson & Usher, 2016). They “learn” whether a news issue fits their news brand and, thus, the brand identity becomes more established. This is a great opportunity for media brand researchers to observe media brand development and branding processes from the beginning. In sum, three fields of contemporary media marketing and branding research can be summarized: social network marketing and branding, participation or co-branding, and branding of media organizations in specific market situations—namely, start-ups or global media organizations.

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A Map of Traditional and Contemporary Media Marketing and Branding Research A summary of the media branding and management research field based on the previous network analyses and most recent studies is illustrated in Figure 11.3. The brand ingredients core—namely, relating to objects of marketing and brand management—and management process core—namely, relating to marketing and brand management activities—which were disclosed in the network of Malmelin and Moisander’s (2014) study-, define the center of the media branding and management field. These core areas are very well connected, as shown in the networks of Krebs and Siegert’s (2015) study. The media brand ingredients area is connected to research on media brand attitudes and media categories. The recent focus on CBBE enhances the equity concept of media brands. The management process area is connected to research on media brand organization and media brand features. More recently, media marketing and audience-centric branding in participative media environments as well as branding of media start-ups have become current research interests.

Research Agenda for the Next Decade Regarding the future of the research in media brands and marketing, we suggest, in line with Weinacht (2015), to further challenge theoretical models and approaches presuming that insights from general business studies can be simply transmitted to media brand management. In relation to media branding, Malmelin and Moisander (2014, pp. 16–17) suggested three areas of further research: (1) theoretical research on specific media brands, (2) empirical exploration of the strategic nature of media brands, and (3) analysis of challenges and complexities of media brand management. Krebs and Siegert (2015, pp. 44–45) suggested that future research should address social media and overall changes in media usage, affecting the relationship of program and content brands—for example, through nonlinear TV consumption. In addition, we propose suggestions for future research in four areas, relating to major environmental conditions concerning media marketing and branding. Today’s media marketing and branding environment is characterized by international competition, ambiguity, aggregation, and participation (CAAP), which has implications for audiences and advertisers as well as employees and media brand managers. Future research should address this CAAP situation, which offers unique opportunities for future media marketing and branding

3) Brand Features

1) Brand Attitudes CBBE Brand Equity

2) Media Categories Brand Ingredients

Media Brand

Brand Mngmt Brand Extension

4) Brand Organization Management Process

Brand Brand Perso- Identity nality

5) Social-Network Marketing and Branding 6) Participational/ Co-Branding

Established Field Developing Field

7) Start-up/ Global Branding

Figure 11.3 Research area map of media marketing and branding.

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research. Research in the following areas will provide answers to media marketing and branding in practice and scholarship. 1. Competition • • •

Observe media brand identity and image development for start-ups from the very beginning Describe the formation of global media brands in relation to local brands Explain how to foster employer branding to attract relevant, innovative employees

2. Ambiguity • • • • •

Analyze the effects of competition between news brands dedicated to journalism and other brands offering news Support the balancing act of targeting media brands and marketing to audience groups using traditional “old” and “new” aggregative or participatory distribution channels Understand how to profit from established means and create novel media brand resources Show how media brands can adhere to economic as well as societal values Explain the relationship between brand culture and corporate culture

3. Aggregation • • •

Understand the role of media brands in a social network environment in which content is algorithmically selected and fake news suppliers may misuse media brands Translate media marketing and branding concepts and approaches to a multi-platform, multiplayer usage environment Find solutions for media brand management that is facing decreasing control over content distribution on aggregative content sites, such as social networks

4. Participation • • •

Find out how to trigger engagement and participation of a broad range of users Assess effects of audience participation on media branding and marketing Find novel ways for media brand management that is facing decreasing control over content through audience participation

Beyond that, media marketing and branding research must closely observe industry trends in order to address new challenges for media brands in a CAAP environment. Overall, media marketing and branding research will face great research opportunities in the future. On the one hand, there are opportunities to enhance the media aspect in media marketing and branding through research for various media categories and media-related challenges. On the other hand, the importance of the media aspect may decrease the focus on globalizing trends of content suppliers and distributors.

Summary This chapter reviewed the state of the literature and proposed suggestions for future research into media marketing and branding. The authors developed a research map based on two metastudies (Krebs & Siegert, 2015; Malmelin & Moisander, 2014) and the latest media marketing and branding research focused on media marketing and branding, which is facing a complex and audience-centered media environment. The core concepts of media marketing and branding— namely, brand equity, media brand, brand personality, brand management, brand extension, and brand identity—are well connected in traditional research. Established research areas connected

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to these core concepts are (1) brand attitudes, including the developing field CBBE, (2) media categories, such as magazines, news, television, or small media brands, (3) brand features, such as brand attributes, heritage brand, format brand, and brand promise, and (4) brand organization, including brand architecture or brand strategy. Developing research areas are (5) social network media marketing, (6) branding in a participatory environment, and (7) branding for start-ups or global media brands. The authors suggest four areas for future research based on an analysis of today’s competitive, ambiguous, aggregative, and participatory (CAAP) media marketing and branding environment. Future research should address this dynamic CAAP situation, which has implications for audiences and advertisers as well as employees and managers of media brands. In summary, media marketing and branding research should focus on the ambiguity of coping with “old” distribution channels and audiences and while simultaneously embracing “new” aggregative and participatory online and social network content environments.

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12 MEDIA POLICY Krishna Jayakar

Policy is defined as any course of action or decision rule that an organization voluntarily adopts or is required to adopt, under the influence of an external agent. In the media and telecommunications industries, a number of external agents make policy according to this definition—either by imposing rules of decision or behavior on firms, or by shaping the external business environment. These external agents include legislatures, regulatory agencies, government departments at the federal, state and local level, the courts, industry groups, professional associations, standard-setting bodies, international organizations and so forth. In addition, policy-making bodies may be technical groups (e.g., the Internet Engineering Task Force, IETF), or multi-stakeholder organizations (e.g., the Internet Corporation for Assigned Names and Numbers, ICANN). Reviews of media policy have often been organized along the lines of media industries (e.g., newspapers, radio and television broadcasting, cable, broadband).The silo model may no longer make sense in the era of convergence. The digitization of all traffic has erased the distinctions between different platforms and modes of media consumption. For example, data for 2017 show that in the United States, only 74.7% of prime-time TV viewership was live, the rest coming from time-shifted viewing using digital video recorders (DVRs) and video on demand (VOD) (Comscore, 2017). Consequently, television networks are forced to significantly alter their ratings analysis and advertising pricing strategies, and/or negotiate distribution agreements with over-the-top (OTT) video providers. Millennials and younger viewers (age 18–34) especially are unlikely to draw a distinction between live TV and other forms of audiovisual consumption. Similarly, voice over Internet protocol (VoIP) calls carried over broadband networks now provide a near-perfect substitute to telephone service provided by a telecommunication company. As a consequence, data show that for the first time since the 1930s, telecommunications carriers’ international voice traffic was down in 2015–17, the slack being made up by VoIP providers, such as Skype (Beckert, 2017; Christian, 2017). Media policy is also erasing previously held distinctions between different media, in favor of integrated regimes. Media managers are also likely to be impacted by policy initiatives in all industries, not just those pertaining to the specific market niches in which they function. To systematize the presentation of a topic that is very broad and multidimensional, this chapter divides the analysis into three levels—local (including municipal governments, states, provinces and regional governments), national and international—and into two areas—content and infrastructure (see Table 12.1). Several policy areas have overlapping local, national or international jurisdictions, but they are discussed at the most relevant level. For example, copyright is discussed at the national level, even though it is governed by international treaties, and copyright enforcement requires 176

Media Policy Table 12.1 Levels and areas of policy. Local/state Content

Infrastructure

Tower citing, ROW, cable franchising, pricing, universal access

National

International

Broadcast content, advertising codes, copyright, accessibility, national origin programming, subsidies Spectrum management, ownership, interconnection, net neutrality, mergers and acquisitions, universal access

Data protection, copyright

Domain names, standard setting

local government actions, such as search of suspected manufacturing sites and seizure of offending material. Turning to policy areas, content refers to the informational content transmitted over electronic media, including one-to-many (broadcast content), one-to-one (voice communications) and many-to-many (social media) content, including the policies covering the derivative information created by interactions with media (call records, transaction generated information (TGI) and web analytics data). Infrastructure policies cover the wired and wireless infrastructures over which information is transmitted to the end customer, including policies promoting universal access to broadband networks. Since the objective is to analyze how media policy affects management in general, the chapter will focus less on the specifics of national policy in any country, and more on the general themes and trends in media policy studies. For example, the First Amendment is hugely important in protecting freedom of speech in the United States, and the extensive history of court cases and regulatory decisions that hinged on it is not discussed in this chapter, but freedom of speech and expression as a concept is discussed. The presentation of topics in this chapter is as follows. In separate sections, media policies at the local, national and international levels are discussed, in that order. Within each section, policies pertinent to content and infrastructure are discussed in that order, except for local/state policies, which are mostly confined to infrastructure issues. For each topic, the policy issue is discussed, and selected publications are cited, indicating the status of the literature, followed by directions for further research.

Media Policy-Making at the Local/State Level Media and communication networks, by their very nature, are national and international in nature. Broadcast signals are not easily confined within territories, and the very purpose of telecommunications networks is to enable communication over vast territories. In the United States, broadcasting is considered a form of “interstate commerce” subject to federal jurisdiction (Kirkpatrick, 2011; Lee, 1925). Therefore, local and provincial jurisdictions are not usually heavily engaged in policy-making for media and telecommunications. However, they often oversee the links (the so-called last mile) connecting end users to networks utilizing a variety of technologies, such as telephone wires, satellite dishes, coaxial or fiber optic cable and fixed wireless connections.

Zoning Laws, Tower Placement and Rights of Way Local governments often have rules and regulations on the permissible use of land for a variety of purposes, including the protection of local property values, improving traffic safety, avoidance 177

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of interference with aviation, environmental concerns and aesthetic considerations. The placement of broadcast and mobile communication towers and the collocation of such elements on existing facilities have to comply with zoning ordinances as well as with applicable environmental regulations. Rights of way enable media and telecommunications providers, such as cable companies, to lay coaxial or fiber optic cable in privately and publicly owned land. Rights of way may also involve the connection of wires to the poles, ducts or conduits owned by a third party. Facilities such as broadcast and mobile communication towers and cable plants are required to abide by local regulations on zoning and rights of way. Scholars have examined whether inconsistencies and differences in local policies on land use cause problems for media firms and create the potential for discrimination (Cramer, 2016; Judd, 2014, 2015; Lester, 2013). Some media firms, such as former monopoly telephone and cable companies, were often allocated preferential rights-of-way treatment unavailable to later entrants, who had to negotiate with incumbents for rights of way and pole attachments. In 1978, the United States Congress directed the FCC to harmonize local laws and ensure that nondiscriminatory access to pole attachments and rights of way would be available to cable companies at just and reasonable rates. In 1996, FCC rulemaking consequent to the Telecommunications Act expanded the right to both telecom and cable companies; however, it also implemented two different rate methodologies, a “cable rate” and a “telecommunications rate,” with telecom companies in most cases having to pay higher rates under similar circumstances (FCC, 2011, 2015). These discriminations are no longer justifiable in a converged marketplace, and subsequent rulemakings in 2011 and 2015 brought the rates closer into parity (FCC, 2015). To address these problems, national laws have sometimes preempted or limited local land use policies ( Judd, 2014, 2015). For example, the 1996 Telecommunications Act in the United States, while reiterating local authority over land use, stated that local agencies may not unreasonably discriminate among providers or regulate in a way that limits the deployment of mobile services, and must act promptly on applications and provide written justifications for decisions (Section 332(c)(7)). But in other cases, national regulations have moved in the opposite direction. In 2014, Industry Canada announced changes to their Antenna Tower Siting Policy strengthening requirements for telecommunications firms to consult with and provide more information to municipal governments and communities (Skovron & Heyman, 2014). In response to zoning laws and tower placement regulations, telecom companies have had to change the pace and timing of infrastructure investments. In some cases, over-strict land use regulations have impeded the deployment of telecommunications networks to rural areas (Lester, 2013). Practices such as cellular tower collocation, facilities leasing and infrastructure sharing have also become more common, though these changes may be attributable to economic factors as well (Meddour, Rasheed, & Gourhant, 2011).

Licensing of Media and Telecommunications Firms Local and state governments in many jurisdictions have varying degrees of authority to permit media and telecommunications firms to operate in their territories, through licensing, franchising and subsidy support. In addition, local and state governments sometimes offer differential treatment to certain firms in return for the assumption of certain responsibilities—for example, through common carrier designations and carrier of last resort (COLR) obligations. Local/state governments may exercise controls over the entry of media and telecommunications firms, or preferentially channel public support to some authorized firms. In the United States, cable companies were franchised to offer service in each area by local governments under the provisions of the 1984 Cable Act ( Jackson, 2016). The franchising rules in the 1984 Cable Act, and its further amendments in the 1992 Cable Act and the 1996 Telecommunications Act, spell out the rights and

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responsibilities of both parties: the cable franchisee and the franchising authority. For example, the 1984 Act limited the franchising fees that municipalities could impose on providers and required them to provide explanations if franchises are not renewed; cable franchisees were required to serve all customers in the market. The 1992 Cable Act prohibited local authorities from exclusive franchising—namely, restricting the market to only one approved video provider; thereafter, cable systems have continued as monopolies only in markets where local economic factors did not justify competitive entry. The 1996 Act phased out cable rate regulations except for the basic tier. It may also be noted that franchising requirements never applied to internet service providers (ISPs) offering broadband service; only multichannel video program distributors (MVPDs) were subject to local authorization. Local preferences may also be expressed through subsidy support instead of entry restrictions. In Germany, the Lander (provinces in the federated system) governments have their own public broadcasters to serve their territories and support them with license fees charged to viewers; some Lander collaborated to support public broadcasters active in all their territories.Though private broadcasters are permitted, they rely exclusively on advertising support. Also, in the United States, state regulators have the authority to designate telecom providers as eligible telecommunications carriers (ETCs), allowing them to receive subsidies from federal universal service programs (see section on universal service later in this chapter).

Price Regulation In many jurisdictions, some media and telecom services are provided by monopoly firms, due to economic or historic reasons (e.g., Mueller, 1997, on the U.S. telephone history). To prevent these monopolies from exploiting the customer, governments have typically imposed rate regulations on the services that face no competition. Only the few services that are exclusively within the territory of a state are subject to local regulation; others are regulated nationally. Local price regulations have applied to local exchange telephone carriers, intrastate long-distance carriers and local cable systems. Telephone local exchange carriers (LECs) were historically subject to rate of return regulation that limited their profit margin to a rate negotiated between the carrier and the state public utility commission (PUC) (Viscusi, Harrington, & Vernon, 2005). Some states have moved toward price caps, in which the prices of individual services are benchmarked in a particular year and then annually adjusted based on inflation and productivity improvements in the industry. Newbury (1998) found that price caps are economically more efficient than rate of regulation. Access charges are payments from a long-distance company to an LEC for the origination or termination of long-distance traffic, since part of that traffic travels over the local plant owned by the LEC ( Jayakar, Schejter, & Taylor, 2010). Since most carriers will pass on these costs to their end customers, access charges have a direct bearing on consumer prices. Only where such traffic is entirely within the geographical boundaries of a province or state is the state PUC responsible for its regulation; interstate access charges in the United States are regulated by the FCC. In most other nations, local authorities have no role in access charge regulation; due to its larger territory and federal constitution, the United States is an exception (see Jayakar, Schejter, & Taylor, 2010). Another example of state regulation of prices is basic cable rates. Prior to 1984 in the United States, cable rates were regulated by municipal governments, resulting in a patchwork of regulations, and in some cases excessive financial burdens that resulted in some systems going bankrupt ( Jackson, 2016). To address this situation, the 1984 Cable Act fully deregulated prices, but this resulted in a sharp increase in subscription rates. In 1992, Congress re-regulated cable prices, but only at the basic tier. MVPDs continue to offer a bare minimum number of channels in the basic tier, including over-the-air television signals available in the local market, leased access channels, and public,

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educational and government (PEG) channels—indeed, requiring franchisees to offer PEG channels in their basic line-up is one of the few prerogatives remaining to local franchising authorities. MVPDs have persistently tried to “up-sell” their basic tier customers to higher-priced tiers, and subscription to the basic tier has fallen significantly.

Universal Access A major government responsibility in many countries is the promotion of universal access to broadband and other telecommunications networks. States and local governments have also taken on this responsibility either under legislative requirements or as part of local economic development efforts. National governments often assign tasks to local governments to achieve broadband deployment goals. A 2011 survey investigated 74 municipal broadband systems in ten European Union countries and found that municipal systems within the same country shared common characteristics and differences with systems in other countries, since they were based on common national legislative and financial frameworks (Troulos, & Maglaris, 2011). In the U.S. state governments have often supplemented federal efforts at broadband and mobile network deployments through state universal service programs (see Lichtenberg, 2015 and prior year reports for a comprehensive listing and description of state universal service funds). In the United States, state PUCs also have other responsibilities for universal service. For example, state PUCs designate telecom carriers as ETCs, enabling them to receive subsidies from federal universal service programs, such as Lifeline. Though Lifeline is a federal program, many administrative and oversight functions are exercised by state PUCs. In addition to designating ETCs, they approve the Lifeline bundles offered by firms (number of minutes, services included), set eligibility thresholds and specify the requirements for proving eligibility (Conkling, 2015). In 2016, a major reform of the Lifeline program, in addition to extending Lifeline subsidies to broadband, appeared to “federalize” aspects of the program and diminish the role of the states. First, it instituted a “National Verifier” database to assume responsibility of verifying the program eligibility of households from the ETCs (and the responsibility to oversee the process from the state PUCs). Second, it created a streamlined federal Lifeline broadband provider (LBP) authorization process, parallel to state processes to authorize ETCs to provide broadband. Third, it amended the rules to remove state-specific eligibility criteria for Lifeline participation. In 2017, the FCC partially reversed course and put a moratorium on the federal LBP authorizations, and turned over exclusive authority to the states once more ( Jayakar & Park, 2017).

Media Policy-Making at the National Level Though local jurisdictions do have several policy-making and implementation functions within their territories, media and telecommunications policies are predominantly within the jurisdiction of national authorities. The activities of national regulators and government agencies extend to content, infrastructure and human resources issues. In this section, these three issue areas are discussed separately.

Content Legal traditions in many liberal democratic countries include protections for media organizations against government interference with freedom of speech. However, authoritarian states and even some democratically elected governments have challenged or denied free speech rights (Puddington, Piano, Dunham, Nelson, & Roylance, 2015). Legal restrictions on free speech have been placed on a variety of grounds, including sedition, promotion of communal disharmony, blasphemy, and 180

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propaganda against the established political order. But in addition to these codified restrictions, other constraints on free speech emerge from the arbitrary actions of government officials often justified on the pretext of preserving social order or controlling harmful cultural influences or propaganda. Media organizations in the globalized media landscape are at risk of running afoul of the unstated and arbitrary policy preferences of state actors (Puddington et al., 2015). However, this review of media policy focuses only on the declared policies of states with regards to content. In general, media policies have focused on promoting desirable content, and restricting other types considered harmful on economic, cultural or social grounds. Favored content includes children’s programming and national origin programming (defined variously in various jurisdictions as films and television programs reflecting local cultural values, involving significant local production investments or local artistic talent, and so on). Other types of content have attracted restrictions. Even in countries recognizing strong protections for free speech rights, such as the United States with its First Amendment, it is recognized that freedom of expression is not an absolute right. Reasonable restrictions may be placed on speech “based on the type of speech, the type of the speaker and even the medium of communication” (Olson, 2016, p. 31). Other types of speech may not be placed under prior restraint, but may be subject to legal sanctions after the fact if they are found to have caused harm—for example, through defamation.

Broadcast Content: Obscenity, Incitements to Violence, and So Forth For a variety of reasons, broadcast media enjoy fewer free speech protections than print media. First, broadcast media use a scarce public resource, the broadcast spectrum, and in return are expected to assume certain public service responsibilities. Second, broadcast signals are more intrusive and available unsolicited to all persons, including children, with a compatible receiver within the broadcast zone. Third, the psychological effects of incitements to violence or of audiovisual depictions of obscene or violent content are stronger and more immediate than written incitements or descriptions. Accordingly, media policy in many countries restricts several types of content, including pornography, indecency and incitements to violence. For example, India’s Programme and Advertising Code prohibits television programs containing a long list of proscribed content, including that which violates good taste or decency; wounds religious sentiments; contains obscenity, attacks the dignity of the courts or senior officials, such as the president; or promotes ethnic, linguistic or racial superiority (Rules 6 and 7) (Cable Television Network Rules, 1994). Some of these categories are so vaguely defined that it permits the government to act against practically any content it deems offensive, and exerts a chilling effect on broadcasters. Violating content policies may expose broadcasters to fines and other penalties, and therefore have economic implications. Even more liberal countries have created guidelines for broadcasters on issues such as gender portrayals or graphic depictions of violence. For example, see the Canadian Association of Broadcasters’ Equitable Portrayal Code (Canadian Radio-television and Telecommunications Commission [CRTC], 2014a), or the Violence Code (CRTC, 2014b). In Europe, far-right hate speech against immigrants has renewed debate on the right legal and policy responses (Maussen & Grillo, 2014). Others have questioned whether indecency regulations, such as “safe harbors,” are enforceable in the new technology environment given that vulnerable groups, such as children, have access to broadcast material over DVRs and streaming media (Steele, 2010).

Program and Content Diversity As public trustees, spectrum licensees are expected to serve the public, including minorities, children and special needs populations. However, economic modeling shows that the tendency in advertisingfunded models is to provide least common denominator programming that will be acceptable to a 181

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large audience, rather than niche programming of high interest to small audiences (Owen & Wildman, 1992). Choi (2006) updated this analysis to examine program diversity outcomes in competition between a purely advertising-supported platform and one supported through subscriptions and advertising revenue. Media policy seeks to promote pluralism and diversity of broadcast content, by including program diversity as a condition in licensing hearings. In the United States, for example, the FCC has adopted policies to promote access to diverse and independent programming to viewers, including a 2016 order banning pay-TV carriage agreements that unreasonably burdened smaller and independent television producers (FCC, 2016b). However, some of the emphasis on program and content diversity has lessened, since broadcast spectrum scarcity is not as much of a pressing concern.Viewers now access content from a wider mix of cable and satellite television networks, subscription VOD services, over-the-top (OTT) content providers and advertising-supported video distribution sites. With channel scarcity no longer a bottleneck, the importance of content diversity in media policy has also waned. While political coverage is encouraged, media regulators have sought to encourage values such as fairness, impartiality, editorial independence, balance and neutrality. Regulators may be concerned about coverage of politics in news and current affairs, or about political advertising. In terms of news content, the British Broadcasting Corporation’s Editorial Guidelines advocate the following values: trust, truth and accuracy, impartiality, editorial integrity and independence, avoidance of harm and offense, service of the public interest, fairness, protection of privacy, transparency and accountability (BBC, 2017). A Center for Law and Democracy report surveyed national rules for political advertising (Karanicolas, 2012), and divided regulatory regimes into strong, permissive and middle-path systems. The United Kingdom is classified as a strong regulatory regime for political advertising. In the United States, which Karanicolas (2012) classifies as a permissive regulatory regime, the First Amendment prohibits a direct government role in the regulation of broadcast content, but the FCC has used its responsibility to promote the public interest, convenience and necessity to prescribe rules that ensure balanced political advertising. Broadcast stations are required to provide equal opportunity to all legally qualified candidates for political office to use its facilities—but the appearance of a candidate in any bona fide newscast, interview, news documentary or on-the-spot coverage is exempt from this requirement (Section 73.1940, Title 47 Code of Federal Regulations). Such access also needs to be provided at the lowest unit charges prevailing around the time of the election (Section 73.1941, Title 47 Code of Federal Regulations). Political advertising has been enormously lucrative for media organizations, with the data provider Statista (2017) estimating that aggregate political advertising spending on broadcast television, radio and cable networks in the United States in the 2016 election year reached $8 billion. Media diversity continues to attract research attention as mergers and acquisitions drive the vertical and horizontal integration of markets, even as audiences continue to diversify. Researchers have continued to seek tools to measure various dimensions of diversity. Napoli and Gillis (2008) describe and critique a new Diversity Index, which seeks to quantify ownership concentration in a market cutting across multiple industry segments (e.g., newspapers cross-owned with a local television station and an FM broadcaster). Sjovaag (2016) argues that media pluralism in a tightly interconnected global ecosystem needs to be measured on multiple dimensions and proposes five: structure, organization, production, output and reception of media messages. How online content producers might respond to new technological environments has also come in for attention. Garcia Pires (2015) models how a content provider might alter the diversity of its offerings in environments with and without network neutrality. The author finds that without net neutrality, the overall diversity of content offerings online might be reduced. Media researchers have also examined how content diversity might be used as a brand management tool by corporate media producers (Kohnen, 2015).

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Broadcast Content: Economic Interests Regulations have been put in place over time to protect the economic interests of television stations in preserving the viability of their markets and protecting broadcast content, or conversely, to ensure that broadcast networks would not exploit competitors in the aftermarket for broadcast content. When cable systems first emerged, the FCC stipulated that cable systems “must carry” all broadcast signals available in their coverage area, and prohibited the importation of distant television signals that duplicated a local television station’s broadcasts. In 1992, the FCC initiated “retransmission consent” as an option for television stations, under which cable systems would need to negotiate a per-subscriber carriage fee prior to retransmitting a television station’s signal. Stations are required to make an irrevocable choice of either “must carry” or “retransmission consent” every three years, but a station electing the more lucrative “retransmission consent” but failing to conclude an agreement risks losing carriage on its local cable system altogether. Researchers have examined this dynamic from a variety of perspectives, including discrete choice of programming networks (Clements & Abramovitz, 2006), bargaining case studies (Gershon & Egen, 1999) and game-theoretic models (Chae, 1998). For direct satellite broadcasts (DBS) as well, operators are required to obtain retransmission consent before carrying station signals into territories where they are available off the air (the “local into local” rule) and are obliged to, on the request of stations, to carry all signals in a market when they carry any one station (the “carry one carry all” rule) (Frieden, 2006). The digital transition of television broadcasting during 2009–2011 renewed the controversy over must carry and retransmission consent. Television stations may utilize the 6-megahertz channel to generate multiple program feeds; “digital must carry” applies only to the “primary broadcast feed” of each television station. How must carry rules adapt to the converged marketplace remains to be seen; Garcia-Murillo and Macinnes (2011) examine must carry rules in the transition to a “net-centric” model of television distribution. Other rules were put in place to guard against the discriminatory and anticompetitive effects of vertical integration in television production and distribution. In the 1970s, the Financial Interest and Syndication (Fin-Syn) rules limited the amount of prime-time programs that the networks could produce themselves, and prohibited the networks from controlling the aftermarket for television programs, specifically through in-house syndication arms. In 1991, the Fin-Syn rules were relaxed, allowing vertical reintegration between production houses, networks and syndicated distributors. Concerns about the anticompetitive effects of vertical integration have come to the fore in mergers, such as Comcast-NBC Universal (Yoo, 2014).

Advertising Advertising and marketing communications, representing attempts by an individual or company to persuade others to consume its products or services in pursuit of revenue and profits, is considered commercial speech that generally merits less protection than non-commercial speech. Even as commercial speech is regarded as essential for the smooth and efficient functioning of markets, it is also recognized that governments are free to regulate commercial speech that is “false, misleading, deceptive, or that promote(s) illegal products and services” (Kerr, 2016, p. 152). For example, in the United Kingdom, the Advertising Standards Authority (ASA) acts as an independent industry-funded regulator that implements the Advertising Codes authored by the Committee of Advertising Practice (CAP) (ASA, 2017). ASA functions under a system of co-regulation, in which it acts under contract with the official regulator, Ofcom.The Advertising Code has separate sections dealing with misleading advertising, advertising to children, political advertisements and so forth. In addition, the marketing of products considered especially sensitive, such as medicines and

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medical equipment, slimming products, financial services, gambling, lotteries, alcohol and tobacco, faces special attention. In the United States, advertising and marketing regulation is primarily the responsibility of the Federal Trade Commission (FTC). FTC regulations cover a wide range of advertising and marketing practices, including advertising to children; health claims in foods, over-the-counter drugs, dietary supplements; claims of national origin (“Made in USA”), telemarketing and online advertising (FTC, 2017). In email marketing, the FTC is the primary agency responsible for enforcing the Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) Act of 2003, which aims to ensure that email campaigns are labeled clearly as advertising, do not use deceptive headers, identify senders and their location clearly, and offer recipients the opportunity to opt out of future mailings. Media managers and researchers have examined the economic effects of advertising regulations from many perspectives: the effectiveness of regulations, the impacts on consumers and industry, and the responses of industry to regulation. For example, Bosqueprous, Espelt, Guitart, Bartroli, Villalbi and Brugal (2014) find that Europe countries with tighter restrictions on alcohol advertising had significantly lower incidences of hazardous drinking. Jones and Gordon (2013) found that co-regulation (partnership between a government agency and an industry body) and voluntary regulation are ineffective. Iwasaki and Tremblay (2009) studied the effects of an advertising restriction on industry-wide efficiency in the U.S. tobacco industry and found that in an imperfectly competitive market, such as cigarettes, advertising restriction can be efficiency-enhancing. Firms are able to enhance their joint output with fewer inputs by saving the “zero-sum” spending on advertising. Savell, Fooks and Gilmore (2016) compare the systematic campaigns by the alcohol and tobacco industries to influence marketing regulations.

Copyright Copyrights are awarded to original works of authorship fixed in any tangible medium of expression, such as literary, musical, scientific, dramatic and artistic works and sound recordings (Vaidyanathan, 2001). Copyrights provide the owner with the exclusive right to make, use, distribute or sell the protected product, process or creative work, and license such activity by others on payment of appropriate royalty. These rights are typically granted for a limited period of time, after which the creative work passes into the public domain. In each country, national laws decide what works are covered, the specific rights granted and the duration of protection. For example, France grants protection for the life of the author and 70 years for musical compositions, while the U.S. term was the life of the author plus 50 years, until it was amended to the life of the author plus 70 years in 1998 (UNESCO, various years; Vaidyanathan, 2001). Also, rights protected by one regime may not be available under another, an example being the French moral rights (droit morals or droit d’auteur), the creator’s rights to preserve the artistic integrity of his or her works. Copyrights are also a matter of policy, since the substantive rights granted under national laws may not be safeguarded unless administrative procedures are put in place: formalities for recognition, permissible and non-permissible use, the burden of proof, remedies for infringement, dispute resolution and any rights of appeal ( Jayakar, 2003). Though copyrights in most jurisdictions are automatically secured when a work is created and published in a tangible medium, a copyrighted work may still need to be registered with a national authority to protect certain rights (Gregory, Saber, & Grossman, 1994). In the United States, registration is necessary for filing a case of infringement in court and seeking damages and penalties (United States Copyright Office, 2012). Reporting copyright offenses, collecting evidence and prosecuting violators require cooperation from courts, local customs and

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border inspection officials, prosecutors and law enforcement agencies. Implementation issues thus cross over from the purely legal domain and enter the political-administrative arena. The emergence of social media has further complicated the legal and administrative dimensions of copyright (Curtis, 2015). First, it has created a forum where users, deliberately or inadvertently, may violate the copyright of media companies and other individuals. In such cases, social media sites have put in place notification and takedown systems, by which the copyright owner may notify the social media site of a copyright infringement, and the site promptly removes the allegedly infringing content. However, aggressive use of notice-and-takedown provisions may also limit opportunities for fair use of copyrighted content for artistic expression, critical commentary or scholarship (Collins, 2010). A related question is also what liability, if any, social media sites have for copyright violations by their members. In most countries, digital intermediaries, such as social media sites and Internet service providers, were not considered liable so long as they adhered to notice-and-takedown (Seng, 2010; Wu, 2014), though Elkin-Koren (2014) questions whether immunity is still justifiable as social media platforms evolve technologically. Also, the extent of the social media sites’ control over usergenerated content is still being debated (Reed, 2014): for example, to what extent can a user ask for her content to be removed, and what rights does a social media site have to curate, archive and disseminate user-generated content? Questions of copyright ownership and liability will be central to social media business models based on monetization of user-generated content.

National Origin Programming Many countries have put in place a preference for content that originates within the country, and reflects the nation’s culture, values and social circumstances. Research has shown that economic factors acting in isolation may result in a surfeit of cheap international programming, usually of American origin (Crane, 2014; Richeri, 2016; Waterman, 2005). American movies and television shows with high production investments, good technical quality, star power and mass market appeal displace local productions, leading Hollywood to capture the majority market share in many film and television markets around the world.This eventually decimates local production industries, which are fragile to start, by depriving them of needed revenues and investments. Especially when broadcasting systems are deregulated and opened up to competition, cheap, high-quality Hollywood products rush in to fulfill the increased demand for audiovisual products. To ensure the survival and competitiveness of local film and television production industries, many countries have put in place multipronged policies of support (Bakhshi, Cunningham, & MateosGarcia, 2015; Lee & Lim, 2014). Some of these measures include input quotas for foreign films and television programs, minimum program percentages for local productions on broadcast television, subsidies for national productions, tax incentives for local audiovisual production industries, training programs, and direct government investments in production facilities. For example, the European Commission revised its Audiovisual Media Services Directive in 2016 to reiterate that preferences will continue to be given based on the country of origin of audiovisual products (European Commission, 2016a).The directive states that at least half of the television broadcast time should be allocated to European films and television programs, and video-on-demand (VOD) services should also feature European works prominently. In Canada, the regulator CRTC requires that broadcasters “must contribute to creating and presenting Canadian programming” and that it should be “a priority” (CRTC, 2017). Though subsidies for national origin programming enjoy significant local support, they have also been critiqued by economists as market-distorting, and as incentivizing producers to “game” the system. For example, Jones (2015) conducted a survey of British producers engaged in film coproductions with other European nations, and found that the primary incentive was financial—in order to

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gain access to European coproduction subsidies—rather than creative or audience-driven. However, the strategy was not without benefit, since the productions were more “culturally European” than pure British products, which enabled them to perform better in the European market. However, Mackenzie and Walls (2012), in their analysis of Australian films, found that subsidies had no impact, positive or negative, on the popularity of films at the domestic box office.

Infrastructure National media policies are deeply concerned about infrastructure issues, among them the rollout of information networks, the quality of service on information networks, the accessibility and affordability of networks for consumers and nonaffiliated content and service providers.

Spectrum Management The electromagnetic spectrum comprises all types of electromagnetic radiations, of which the range 3 kHz to 300 gHz may be used for communications and broadcasting (National Telecommunications and Information Administration [NTIA], 2016). Though technological advances have gradually increased the range of the spectrum that may be used for various purposes and increased the efficiency of spectrum use in terms of information through-put, the number of services relying on the spectrum has also increased dramatically. The emergence of new applications, such as 5G mobile communications, the Internet of things (IoT) and self-driving cars, is likely to further increase the demands on the spectrum (European Commission, 2016b; NTIA, 2017). To maximize the use of the spectrum and avoid harmful interference between applications and users, national spectrum management agencies have created complex allocation schemes in which frequency bands are reserved for specific types of uses (e.g., maritime communications, terrestrial broadcasting, cellular mobile communications, satellite services), and within each band, channels are allocated to different users.The allocation process to users may involve different mechanisms, such as licensing hearings or spectrum auctions. In each method, spectrum is usually allocated for the exclusive use of the licensee/auction winner for a fixed, often renewable, period of time, and for specifically identified uses (Hazlett & Bazleton, 2007). Economists recommend more flexibility in spectrum use; under these proposals, auction winners would be able to reallocate spectrum to services with the greatest market demand, or share it with third parties through lease or resale (Kash, Murty, & Parkes, 2014; Minervini, 2014). Governments have aimed to increase spectrum availability for new applications using a variety of strategies. One approach is to reallocate spectrum to new and high-demand services from existing use categories, such as defense (Cheah & North, 2011). In the United States, reverse auctions were used to incentivize TV stations to vacate their UHF channels, and go off air, move to a VHF channel allocation or share another station’s VHF channel. The freed spectrum was then auctioned to mobile communications providers; the difference in price between the reverse auction payments to broadcasters and forward auction revenues from mobile carriers resulted in $19.8 billion in net revenues as of March 2017 (FCC, 2017a). Technological solutions, such as spectrum sharing and using lower-power cells, have also been proposed. Finally, a “spectrum commons” approach has been put forward, in which a larger portion of the spectrum is allocated to unlicensed use, which smart sharing technologies can utilize without interference (Brito, 2007).

Broadcast and Mobile Spectrum Allocation Closely related to the issue of spectrum management is the allocation of channels to specific users within use categories, such as terrestrial broadcasting and mobile communications. The primary 186

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purpose of frequency licensing is to eliminate chances of destructive interference between signals; channels are spaced sufficiently apart to minimize its chances. But in addition to technical considerations, equity, social need and competition may also factor into the allocation decision. In Canada, the CRTC examines four factors: ownership, financial capacity, technical capacity and programming in making the broadcast station licensing decision (CRTC, 2016). The goal of promoting program diversity is another factor in station licensing. In the United States, the FCC attempted to promote minority ownership of broadcast stations in the expectation that minority ownership will lead to greater amounts of minority-oriented programming (Mason, Bachen, & Craft, 2001; Napoli & Yan, 2007). Station licensing hearings may also build in preferences for independent owners (versus multiple-station groups), or for women and local ownership. Many jurisdictions, such as the United States, also impose limitations on the number of stations that might be owned by the same group, or the percentage of the national market that may be reached cumulatively by the group-owned stations. Some countries have also put in place cross-media ownership restrictions, such as limiting the number of radio and TV stations that the same group may own in the same market (FCC, 2016a). Traditionally, mobile communications licenses were allocated based on regulatory hearings, with or without licensing fees. But problems of corruption, such as India’s 2G spectrum scandal (McDowell & Lee, 2003), have led many jurisdictions to a relatively more transparent auctions model. But auctions too are not without problems, since success may be the result of overbidding, the so-called winner’s curse. The winner’s curse has saddled winning bidders with onerous payments to government, sometimes making them unable to make the necessary network investments or even slide into bankruptcy. The evidence for the winner’s curse is mixed. Mackley (2008) found evidence for a short-term winner’s curse in European 3G auctions, but Cable, Henley and Holland (2002) found no such evidence in their econometric analysis of spectrum auctions in the United Kingdom, nor did Lee, Seol and Kweon (2013) in their study of the first spectrum auction in South Korea. Equity and other considerations have played a role in mobile spectrum allocations as well. For example, the FCC in its spectrum auctions has aimed to ensure that a portion of mobile licenses will be awarded to small businesses. In 2005, one-third of the radio spectrum for broadband personal communications services (PCS) was set aside for small business bidders (Congressional Budget Office [CBO], 2005). However, the CBO (2005) found that this preference came at a cost. Smaller bidders, without the technical know-how and financial resources of the large, established telecom companies, may be unable to deploy services as quickly or efficiently as the latter. Secondly, the CBO estimated that consumer prices may be higher in the short term as smaller bidders may not have the scale advantages available to larger players. Third, the CBO stated that auction proceeds from these restricted auctions may also be lower, leading to less revenue for the taxpayer. However, many jurisdictions continue to build in these small business preferences into auction processes in order to prevent oligopolistic concentration of the industry into the hands of the dominant telecommunications providers, and the opportunities it creates for competitive discrimination against upstream and downstream providers and consumers.

Mergers and Acquisitions Mergers and acquisitions have become a regular feature of those industries, motivated by a variety of factors, including the following: to obtain economic scale and scope (Dutz, 1989; Warf, 2003), to control related product lines or distribution channels (Albarran & Dimmick, 1996, Foley, 1992), to foreclose competition in upstream or downstream segments (Leveque & Shelanski, 2003), to seize opportunities created by free cash flow ( Jensen, 1987), and to respond to globalization and deregulation (Koi-Akrofi, 2014; Warf, 2003). Scholars have examined the consequences of mergers and acquisitions too, for firm performance and corporate governance (Ferris & Park, 2002; 187

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Rheaume & Bhabra, 2008; Ulset, 2007), industry structure and impact on competition (Atkin, Lau, & Lin, 2006; Tardiff, 2007). A consequence (often overlooked) is that mergers and acquisitions can have a cascading effect on the industry, as competitors respond with their own merger activity (King & Schriber, 2016). Due to these wide-ranging consequences, media and telecommunications mergers have attracted considerable attention in media policy. Specifically, mergers are reviewed for impacts on consumers, upstream and downstream suppliers and competitors, and the markets for complementary goods (Chen, 2007; Shelanski, 2002). A starting point might be the examination of the change in market concentration as a consequence of the proposed merger, using measures such as the Concentration Ratio 4 (CR4) and the Herfindahl-Hirschman Index (Naldi & Flamini, 2014); but many other considerations may figure in the agency decision. Typically, multiple agencies in charge of consumer protection or antitrust enforcement may review a merger. In the United States, for example, the FCC and the Federal Trade Commission (FTC) may review a media or telecommunications merger. Both agencies apply somewhat different criteria to their reviews (Barkow & Huber, 2000). Mergers may be permitted after review by the agencies, or blocked, or allowed to proceed subject to conditions. Dual review has sometimes come in for criticism—this is the system by which more than one regulatory or executive agency reviews a proposed merger utilizing often divergent benchmarks.Yoo (2014) argues that dual review of the 2011 Comcast-NBC Universal merger allowed the agencies to extract concessions from the merging parties, which were not directly related to the merger itself. Merger review is also inherently a political process, in which corporate lobbying, political connections and media campaigns all play a role (Ferris, Houston, & Javakhadze, 2016).

Standard Setting Standards policy is an integral part of a country’s industrial and high technology policies, which also has great relevance for the media and telecommunications industries. Standards for devices, interfaces, network equipment, and services have a strong bearing on the speed of network deployment, consumer adoption, accessibility and the quality of service. The role of mobile communication standards in these processes has attracted considerable research attention (Gruber & Verboven, 2001; Koski & Kretschmer, 2005; Lee, Chan-Olmstead, & Kim, 2007; Lee & Lee, 2014). Gruber and Verboven (2001) found that setting a single standard accelerated the diffusion of analog mobile technologies. Koski and Kretschmer (2005) measured the diffusion of 2G wireless phones and found that standardization leads to more firm entry and speedier adoption, but higher prices; after controlling for prices, convergence to a single standard was found to have a significant positive effect on adoption. Lee and Lee (2014) found that standards competition was a driving force behind early smartphone adoption in OECD and BRICS countries, though additional factors, such as operating systems competition, open source platforms and price were also additional factors. However, premature standardization can reduce innovation (Mackie-Mason & Netz, 2006), and lock in an inferior standard (Katz & Shapiro, 1986; Mackie-Mason & Netz, 2006). Researchers have also disputed the price effects of standardization. On one hand, standard setting increases the substitutability between products, reducing the pricing power of providers, and leads to lower prices. Conversely, inter-standard competition can also have major pricing impacts. Competition between standards, especially in the presence of network externalities, leads to “all or nothing” outcomes, causing the competitors to more aggressively price their product when competing between standards. Koski and Kretschmer (2005) in their analysis of OECD data find evidence for the latter effect. Verification of these competing effects requires more study and analysis. Standard setting, especially the development of an indigenous technology standard, may be used by countries to give domestic industries a manufacturing advantage or to create barriers to the 188

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importation of foreign equipment and parts. Emerging economies have sometimes adopted indigenously developed standards, as in the case of China’s TD-SCDMA standard (Liu & Jayakar, 2015). The objective appears to be to catch up with their more technologically advanced competitors and build their national innovation systems (Kshetri, Palvia, & Dai, 2011). However, the adoption of an indigenous standard deprives national operators and consumers of many of the benefits of standardization identified by Mackie-Mason and Netz (2006). For example, adopting an indigenous standard runs the risk of depriving national operators of the benefits of lower equipment costs due to economies of scale, limits consumer benefits deriving from network externalities (development of complementary goods and services) and may give lesser incentive to technological innovation within the indigenous standard due to the smaller size of the potential market. Multiple standards may initially slow the growth of markets and disadvantage domestic firms in competition with better-established international players.The adoption of standards, whether domestic or international, is an integral part of media policy and impacts all stakeholders.

Access, Interconnection and Net Neutrality A seamlessly interconnected broadband infrastructure has advantages both for consumers who want to reach a wide variety of services and for service providers, especially start-ups and new entrants who want to reach customers.The higher levels of the Internet hierarchy present no major problems for connectivity due to sufficient surplus capacity and densely redundant connections. Policy-makers avoid intervention and leave connectivity between networks to be worked out through a variety of “peering arrangements” (agreements by which networks exchange traffic) (Frieden, 2012). However, the last mile—the point of access from an individual household or business to the network—often constitutes a bottleneck. The high cost of the physical infrastructure implies that there is no effective substitute for the last-mile connection; even where customers can switch to a competing provider or another platform, they may be constrained by the high cost of equipment (digital set-top boxes, satellite dishes, etc.) or long-term subscription contracts. The telephone LEC or ISP has significant pricing power in the last mile, as well as the opportunity to discriminate against upstream providers. Media policy therefore has been concerned with access and interconnection in the last mile, for traditional telephone networks as well as for broadband. For telephone calls, interexchange carriers were expected to pay access charges to LECs for the origination and termination of longdistance calls; this was considered compensation for the interexchange carriers’ customers’ use of local exchange companies’ last-mile connections at origination and termination of the calls ( Jayakar, Schejter, & Taylor, 2010). Access charges were fixed by regulators using a variety of methods in various jurisdictions, all with the intent of allowing reasonable compensation for the LECs without unduly burdening long-distance customers. On broadband networks policy-makers have been concerned that the ISPs’ control of the lastmile connection should not be used to discriminate against upstream providers (Frieden, 2015; Greenstein, Peitz, & Valletti, 2016). Cable companies providing both video and broadband access have an added reason to discriminate against upstream video providers, since access to OTT video services has led some customers to disconnect from the ISP’s video services (cord cutting), or reduce their consumption to lower-cost basic tiers (cord shaving) (Accenture, 2016). ISPs therefore have the incentive to practice a number of anticompetitive behaviors, such as blocking or throttling (deliberately slowing) traffic from unaffiliated video providers. Network neutrality rules have been put forward in many countries as a way of avoiding these potential anticompetitive actions by ISPs. In the U.S., net neutrality as a policy proposal emerged in 2003 (Wu, 2014) and after bitter debates, including a reversal by the courts of the FCC’s initial 2010 attempt, the FCC in 2015 adopted the Open Internet Order (FCC, 2015). Essentially, network 189

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neutrality imposes an obligation on ISPs to deliver traffic from all content and service providers to end customers without selectively blocking, throttling or paid prioritization of any traffic, subject only to reasonable traffic management actions.While its supporters argue that net neutrality is essential to ensure that the Internet remains an open forum for innovation, its opponents claim that net neutrality is tackling a problem that does not exist (Hass, 2007), or that it may violate the free speech rights of ISPs (May, 2007). The FCC’s 2015 order was also specifically critiqued for violating the First Amendment rights of broadband providers (Campbell, 2015), and that it will reduce broadband providers’ incentives to invest in infrastructure (Wright and Hazlett, 2017). But the order received strong support from consumer groups, which saw it as an essential rule to ensure freedom of access on the Internet, and against the known anticompetitive behaviors of large ISPs (Gasparini, 2017). In 2017, the FCC, in a statement titled “Restoring Internet Freedom,” announced that it would no longer be implementing the Open Internet Order (FCC, 2017b).

Universal Service Policy-makers and scholars recognize that access to a high-quality, reliable telecommunications and broadband infrastructure is an essential prerequisite for participation in the social, economic and political life of modern societies (Strover, 2014). In addition, widespread broadband and telecommunications availability has been shown to contribute to job creation ( Jayakar & Park, 2017), firm productivity (Grimes, Ren, & Stevens, 2012) and economic growth in general (Holt & Jamison, 2009). Many countries have implemented universal service policies, aiming to make telecommunications and broadband services accessible and affordable to all citizens. Though the term “universal service” has a long history (Dordick, 1991; Mueller, 1996), there is ambiguity about what services should be included in the universal service package. Initially applied only to basic voice service, universal service was gradually expanded to include other services, such as long-distance, directory assistance and emergency services. Later, the definition was expanded to include broadband and mobility services (FCC, 2010). In some countries, universal service subsidies also cover telecom and broadband access in schools, libraries and rural healthcare clinics. A closely related policy question is where funding for universal service programs should originate. Countries have experimented with a number of models, such as general government budgets in countries where the telecommunication system was publicly owned, or a share of telecom industry revenues, or from a subset of telecom services (e.g., only public switched telephone network revenues, excluding VoIP or ISP revenues) (Crandall & Waverman, 2010). In India the Universal Service Obligation Fund was created, into which all telecommunications providers contributed a share of revenues ( Jayakar & Liu, 2014).

Media Policy at the International Level Though media policy is primarily the responsibility of the governments of sovereign states, international organizations play a significant role in areas of decision-making where states cannot effectively coordinate their actions. Many of these international organizations are those in which sovereign states are members—for example, various United Nations agencies, the International Telecommunications Union (ITU), the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO). Others are global multi-stakeholder entities, such as the ICANN and IETF, mentioned earlier.These international organizations help nation-states coordinate their actions across national boundaries, in several issues spanning both content and infrastructure: copyright, data protection, domain names and standards.

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Content Copyright In an increasingly interconnected world, where information goods flow seamlessly across national borders, it is imperative for the protection of creative artists and computer programmers that their intellectual property is globally recognized. However, significant differences may exist between countries on the legal statutes, procedures and implementation processes by which copyright owners gain recognition and protection for their works ( Jayakar, 2003). Countries have tried to remove this nonuniformity through international intellectual property rights (IPR) conventions. The most important of these conventions are the Berne Convention of 1886; the Universal Copyright Convention of 1952, and the 1994 Agreement on Trade Related Aspects of Intellectual Property (TRIPS).The Berne Convention is administered by the World Intellectual Property Organization (WIPO). The TRIPS agreement addresses distortions in international trade resulting from inadequate IPR enforcement, and seeks to remove these distortions; in 1995, TRIPS was folded into the World Trade Organization (WTO). All IPR conventions seek to lay down common standards of protection—the scope of rights, duration and procedures—that states are expected to copy into their national legislation. These conventions are also based upon the principle of national treatment, wherein all nations agree to extend the same protections to citizens of all signatory nations which are available to their own citizens. Over time, most states have become signatories to international IPR treaties. As required by these agreements, states have legislated domestic laws that create similar substantive rights for intellectual output in every jurisdiction. But since these agreements were not particularly concerned about procedures and implementation, a number of treaties focusing specifically on enforcement were enacted under WIPO, and later as part of the TRIPS negotiations. The TRIPS agreement specifically binds states to enact adequate enforcement mechanisms to protect the rights guaranteed by the earlier agreements, including civil judicial procedures for IPR enforcement, standards for evidence taking, injunctions and damages, border control measures, and criminal prosecutions for large-scale IPR violations. Bilateral agreements may focus on copyright enforcement. For example, the U.S. has laws such as the Omnibus Trade and Competitiveness Act (1988), which requires annual reviews of the IPR enforcement practices of U.S. trade partners, and permits retaliatory trade sanctions against violators. The European Union has similar laws. International copyright enforcement is enormously important for media firms, which are increasingly multinational in their corporate structure and derive a larger share of revenues from foreign markets. U.S. trade associations, such as the Motion Pictures Association of America (MPAA), are strong advocates of international copyright enforcement, since its members now draw a larger share of revenues from international markets than they do domestically. Media economists have also addressed the issue of international copyright enforcement: Picard (2005) quantified piracy losses, while Waterman (2005) explored why some IP industries are better protected than others. Harbaugh and Khemka (2010) model copyright enforcement assuming two types of buyers: high-value buyers, such as corporations and government, and low-value individual users.They found that stricter copyright enforcement tended to increase prices toward “super-monopoly” levels for all users, leading the low-end users to switch to inferior pirated copies. Paradoxically, Harbaugh and Khemka’s model reveals that stricter copyright enforcement may actually increase low-end piracy.

Data Protection Even as the ability of corporations and government to collect, archive and process individual data has expanded exponentially, no consensus has emerged on common standards of protection for personal

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information. At the same time, the collected data also might easily be transported across national borders to be archived and processed in a location where the individual’s expectations of privacy and data security, based on his or her home country laws, may not be fulfilled. Dominant informationbased businesses, such as Google, Apple, Facebook and Amazon, are global corporations, with customers and operations in hundreds of countries. Harmonization of national laws on data protection and privacy may be required through international treaty. Various international organizations, such as the European Union and the OECD, have attempted to evolve an international legal framework for data protection. A 2010 court case in Spain resulted in a ruling that recognized the right of all EU citizens “to be forgotten”—namely, to request that their personal data be removed and made inaccessible from search engines (European Commission, 2012). A similar case brought against Google in Japan was dismissed in February 2017 (Russell, 2017). But despite the voluminous coverage and controversy surrounding the issue, Ambrose and Ausloos (2013) argue that the “right to be forgotten” remains conceptually vague. It conflates the “right to oblivion” or full erasure of publicly available data (including those at potentially dispersed sites on the Internet) with the “right to erasure”—namely, the removal of data submitted to a service provider by an individual, from the provider’s own database, once the relationship is terminated by either party or the individual requests erasure. Ambrose and Ausloos argue that the “right to erasure” is not likely to be burdensome to the service provider, unlike the “right to oblivion.” A further issue in data protection is what Bauer, Lee-Makiyama, van der Marel and Verschelge (2014) have called “data localization” and its consequences for the trade in services. In order to ensure that citizens’ data would be guaranteed all the rights and protections available under national law, several states have prohibited the international transfer of personal information. In some cases, countries have negotiated bilateral treaties that extend data privacy protections to its citizens within a foreign trading partner. Researchers have addressed initiatives such as the European Union’s Privacy Shield, which sought to protect the privacy rights of European Union entities in the United States (Tracol, 2016). According to Bauer et al.’s survey, several nations, including China,Vietnam and Indonesia, have “data localization” requirements in place. Their simulations show that “data localization” may reduce GDP growth, in the case of Vietnam by as much as 1.7%.

Infrastructure As in the case of copyright and data protection, several infrastructure issues require international coordination as well. Two of these are the domain name system and international standard setting.

Domain Name System The two-part name-and-number domain name system (DNS) is the addressing system that uniquely identifies every device connected to the Internet. It envisions a hierarchical and distributed naming system organized in an inverted tree structure, beginning with the “root” server at the very top, followed by a number of top-level domains (TLDs), classified into generic top-level domains (gTLDs) (also called global top-level domains) and country-code top-level domains (ccTLDs). Name servers in each level contain the list of name-and-number assignments made at the level immediately below. The operations of the DNS require the performance of a number of different activities, including the assignment of domain names and addresses, address resolution, technical standard setting, the creation of new top-level domains, dispute resolution, coordination and communication. A number of institutions handle these various managerial functions: the Internet Engineering Task Force to develop technical standards for the Internet; the Internet Research Task Force (IRTF) for longterm planning; the Internet Architecture Board or IAB to oversee the IETF and the IRTF; and the Internet Society (ISOC), an umbrella organization that coordinates between the various ad hoc 192

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organizations active in the management of the Internet. It accepts both individuals and organizations as members. Since 1998, the Internet Corporation for Assigned Names and Numbers (ICANN), a private sector organization, has functioned as the overseer of the Internet DNS. Its chief responsibilities are to coordinate the functions of the Internet Assigned Numbers Authority (IANA), including establishing the policies for the allocation of IP number blocks; overseeing the root server system; creating new top-level domains as required; and promoting standards and technical parameters. ICANN is supported in its activities by several supporting organizations and advisory committees, representing various Internet stakeholder groups: registries and registrars, ISPs, IP owners, ccTLD managers and individual users. In keeping with the private sector orientation of ICANN, national governments have no direct role in ICANN; they find a voice on the Government Advisory Committee (GAC), which has only a purely advisory function and no decision-making authority. This led some observers to herald ICANN as a new type of international organization, with a clear global mandate but no basis in multilateral treaty, and no role for national governments (Feld, 2003; Mueller, 2002). Several aspects of the operations of the DNS are of interest to economists and management researchers. The registrar and registry business of assigning domain names to users and enabling address resolution services has emerged as a multibillion-dollar business opportunity. Katz, Rosston and Sullivan (2010) model the economic consequences of the expansion of gTLDs. Halvorson, Der, Foster, Savage, Saul and Voelker (2015) describe the new economic opportunities created by the creation of new TLDs, such as. academy, as a “land rush.” Significant attention has been devoted to the question of the protection of trademarks online, specifically centered on ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP) (Fernbach, 2013; Loutocky, 2014).

International Standard Setting Standard setting for telecommunications networks, satellite communications and the Internet requires coordination spanning national boundaries. Traditionally, this was achieved through international bodies with wide national representation: intergovernmental organizations, such as the International Telecommunications Union, or national membership organizations, such as the International Electrotechnical Commission (IEC), or associations of national standard-setting bodies, such as the International Organization of Standardization (ISO) (Liu, 2014). Standard setting through these international organizations worked through consensus-building and consultation at periodic meetings, and adopted standards utilizing majority voting, processes more amenable to an environment where the rate of technological progress was slow. However, the ITU-IEC-ISO process was critiqued as too slow, bureaucratic and inefficient for the new technology environment, resulting in its rapid eclipse in favor of newer types of standardsetting organizations (Besen & Farrell, 1991). These new types of organizations were less likely to be governmental, or nationally representative; most are voluntary organizations of experts, ad hoc coalitions or consortia of industry, and technical forums (Buthe & Mattli, 2010; Rysman & Simcoe, 2005). However, national governments and leading international trading blocs are not without power. Bradford (2014) demonstrates how the EU exercised influence over international markets and standard setting via its ability to influence the terms of trade between its huge market and global partners. However, the activities of these competing industry consortia or regional trading blocs have led to the “balkanization” of the standard-setting process (Liu, 2014).

Summary and Directions for Future Research Media and telecommunications policy-making functions at the intersection of law, engineering and economics, and seeks to achieve socially optimal results in a highly contested political environment. 193

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Policy-makers have to contend with multiple causes and effects and insufficient and imperfect data. With these imperfect tools, policy-makers have to seek equitable and socially just outcomes using the least intrusive methods. However, their decisions are enormously consequential to media managers and firms. Researchers may therefore wish to investigate telecommunications and media policy as it intersects with management and economics. Here is a sampling of such topics: • • • • • • • • • • • • • • • • • • • •

Impact of land use regulations and tower placement rules on cost of service to rural areas and the timing of infrastructure rollout plans Impact of state authorizations for eligible telecommunications carriers (ETCs) on participation in federal programs, such as Lifeline Comparative analysis of licensing, franchising and subsidy policies as barriers to entry to markets, across nations and across subnational units, such as states Changing demographics of subscription to basic cable tiers and premium tiers in the context of cord cutting and cord shaving Efficacy of traditional policy options, such as “safe harbors,” in protecting children in a converged media environment Dimensions of media diversity; metrics to measure media diversity across platforms Media mergers and impact on content diversity Impact of advertising regulations on consumers, industries and social welfare Monetization of social media content; copyright in user-generated content and the business models of social media Impact of national origin subsidies on the competitiveness of individual films and film industries; cost-effectiveness of film and television production subsidies Effectiveness of spectrum sharing and unlicensed spectrum; market for spectrum Equity considerations in spectrum allocation; impacts on spectrum revenues Benchmarking media concentration in a converged marketplace for merger review Effect of intra-standard and inter-standard competition on prices and quality of service in the mobile industry Business use of broadband technology; effects on firm productivity, and economic activity Effect of net neutrality on innovation, network investments and access to content and services Copyright enforcement and prices, production of derivative products Quantifying the impact of new gTLDs Empirical analysis of trademark protection and ICANN’s dispute resolution policies Dynamics of international standard setting by industry consortia; standards as trade barriers; standards and national competitive strategy

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13 MERGERS AND ACQUISITIONS AND THEIR PERFORMANCE Hans van Kranenburg and Gerrit Willem Ziggers

Introduction Globalization, deregulation, technological innovation, and the convergence of previously separated sectors, such as media, entertainment, information, and consumer electronics sectors, have changed the media landscape into a turbulent environment. The development of new media has accelerated the blurring of the boundaries and the convergence of different sectors into the integrated information multimedia entertainment sector. Most technologies described as ‘new media’ are digital, often having characteristics of being manipulated, networkable, dense, compressible, and interactive (Kranenburg & Ziggers, 2013). Because of these developments, many firms are experiencing severe challenges, as content proliferates, audiences change behaviors, advertising revenue erodes, and new competitors emerge. For example, the rapid convergence between fixed and mobile distribution is a structural driver underpinning convergence in the sector (Chan-Olmsted, 1998). Mobile communication provides the opportunity of quadruple services (broadband Internet, TV, telephony, and mobile services), enabling customers to get all their household communications from a single provider against lower churn and acquisition costs (Chan-Olmsted & Guo, 2011). In response to this development fixed and mobile operators are colliding. The offensive move of UK telecom incumbent BT by acquiring EE from Deutsche Telekom and Orange in a deal valued at £12.5 billion challenged the pay-TV market, urging Sky and Virgin to look for mobile operators.(Evans & Donders, 2015). Overall, firms developed capabilities and resources and created new businesses or adapted to existing businesses and emerging markets through internal growth or used external sourcing options to improve their performance and to sustain their competitive advantages. Mergers and acquisitions (M&As) provide opportunities for firms to get access to and to develop a range of new resources, capabilities, and new products that they need to further develop both core activities and complementary activities. Moreover, M&As have a unique potential to transform firms and to contribute to firms’ growth and renewal. They can be instrumental in renewing market positions, acquiring capabilities and resources at a speed not possible through internal development or alliances.The wave of M&A transactions in the integrated information multimedia entertainment landscape during the last decades is an indication of the popularity of the use of M&A strategies of firms. For example, PWC (2016) in its research on megadeals (deals of at least $1 billion) in the entertainment, media, and communications industry during 2011–2016 concluded that during the 2011–2016 period four different M&A strategies prevailed in this sector, expressed as percentage of megadeal value,

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consolidation considerations (67%), capabilities extension (20%), content enhancement (6%), and innovation acquisition (5%). Remarkable and apparent in all four categories is their limited geographic expansion. Only 19 of the 90 megadeals during this period had cross-border implications, and their numbers have been decreasing, mainly due to cultural, language, and regulatory challenges. The aim of this chapter is to gain a deeper understanding of what M&A activity drives in the integrated information multimedia entertainment sector, its performance assessment, and future research topics. First M&A as an external sourcing option among internal development and alliances will be discussed from the perspective of the strategic importance of firm’s activities and the firm’s relative strength compared to competitors. Next the motives and theoretical rationale for M&A activity will be elaborated by addressing some of the driving theories. It will be followed by a section on the success of M&A activity performance measurement resulting in a typology for M&A performance assessment. Finally, the chapter concludes with an agenda for future research.

Market Exchange, Alliances, and M&As Sector convergence, digital disruption, and changing customer preferences continue to impact the integrated information multimedia entertainment landscape. These developments raise the question of how firms can cope with these changes and forces of competition. In general, firms engage in competition for the market usually through research and development (R&D), competition to develop the ‘killer’ product, service, or feature that will confer market leadership and thus diminish or eliminate actual or potential rivals (Kranenburg & Ziggers, 2013). Moreover, firms find ways to invent new or better products, improve services, and/or identify cost savings through better processes or technologies, and enter new markets. Firms are also forced to better connect with customers who are accessing and interacting with content in fundamentally different ways compared to the past. One way for firms to deal with these developments and to create a sustainable competitive advantage is through internal growth. Some firms may have the knowledge and capabilities needed to create the necessary internal growth.These firms have access to a range of capabilities and resources that the firms need to further develop both core activities and complementary activities. However, firms in the integrated information multimedia entertainment sector operate under rapidly changing conditions and are constantly faced with changing internal and external conditions. In general, the effort to develop desired capabilities and resources and to create new businesses or to adapt to existing businesses and enter emerging markets through internal growth would be a risky strategy. Firms may lack the time, knowledge, resources, and capabilities to create the necessary internal growth. Furthermore, new markets might be difficult to penetrate because a lack of market presence and information on customers’ needs, local operating conditions, and government regulations. Therefore, external sourcing options, such as market exchange, alliances and mergers, and acquisitions, give firms access to a range of capabilities and resources and access to markets that the firms need to further develop both core activities and complementary activities (Kranenburg, Pennings, Dal Zollo, & Hagedoorn, 2008). The choice for a particular external sourcing option depends on the strategic importance of the resources, capabilities, or activities for the firm’s performance and sustainable competitive advantage. If the importance is high then firms prefer to control or even to possess the resources, capabilities, or activities instead of being dependent on the willingness of other parties to cooperate with the firm. Firms prefer to control or possess the resources, capabilities, or activities when they have already or can create a strong position in comparison to their competitors. The management literature shows that mergers, and acquisitions, if properly managed, contribute to the improvement of long-term performance of firms (Chakrabarti, Hauschildt, & Sueverkruep, 1994; Hitt, Hoskisson, Johnson, & Moesel, 1996). This holds if these options are applied to increase innovative capabilities and to build a substantially enlarged user base for new activities and new businesses.

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Table 13.1 presents an overview of preference for external sourcing options. The choice is based on the strategic importance of resources, capabilities, or access to markets for the firm and its position compared to its main competitors. Market exchange is defined as an entire complex of institutions which people buy and sell and hire and borrow and lend and trade and contract and shop around to find bargains (Schelling, 1978). Market exchanges require an almost instant (real-time) bid- and ask- matching mechanism, settlement and clearing, and marketwide price communication and determination. Many broadcast companies are buying content from the market. For instance, content offered by television broadcasters influences the competition for audience and advertisers between television broadcasters. In the race for content, live sport plays a very important role.Viewers are watching programs on demand, skipping the ads. Live sport is therefore crucial for advertisers, particularly in the United States.The other major shift—more evident in Europe—is competition between pay-TV firms and telecommunications firms. The UK firms Sky and BT both sell television and broadband packages to consumers. BT, which makes substantial profits on broadband, was able to pay more for sport content than Sky’s previous rivals for the English Premier League football rights—Setanta and ESPN—which had only subscription and advertising revenues. In 2015, Sky and BT Sport paid a record £5.136 billion for live Premier League TV rights for three seasons during 2016–17. Since BT entered in 2012, the UK rights for Premier League games have nearly tripled to £1.7 billion per season (Financial Times, 2015). These firms have also been seeking to lock in their costs through long-term deals. That could make it harder for other firms, such as Netflix, Google, or Apple, to buy into the market. Other European telecommunications firms (e.g., Spain’s Telefónica and Germany’s Deutsche Telekom) also are interested in offering sports content. In general, market exchanges are not appropriate when a firm considers the needed capabilities and resources or access to the market as strategically important to create sustainable competitive advantage (Capron & Mitchell, 2004). When firms undertake market exchanges, they have generally limited opportunities to learn the intangible aspects of the technology, customers, and markets or the firm may become too dependent on the resources and capabilities of the other firms or access to the markets. More integrative modes may help the firm to develop the needed future resources and capabilities or access to important markets. They provide stronger opportunities for a firm to get access to and develop a range of resources, capabilities, and activities that a firm needs to develop further both core capabilities and activities and complementary ones. A popular integrative mode is an alliance. Alliances play a particularly important role in rapidly changing industries, such as the multimedia entertainment landscape, where learning, sharing costs, and flexibility form the basis of competition (Daussauge & Garrette, 1999; Gomes-Casseres, 1996). Many different forms of alliances exist, such as licensing agreements, customer-supplier relationships, research contracts, and partnerships between rival firms. A distinction between the forms of alliances can be made based on equity. The two main

Table 13.1 Overview of preference for market exchange, alliance, or M&A. Strategic importance of resource, capability or activity

High Medium Low

Alliance M&A Alliance Alliance Market exchange Market exchange Low Medium Strength compared to main competitors

Source: Author’s summary.

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categories are equity-based alliances, especially joint ventures, and non-equity agreements, such as joint R&D, marketing, and supply agreements. Equity-based alliances are often established to raise mutual dependence. A non-equity alliance is more flexible and needs lower investment costs than the equity-based alliance. The non-equity alliance is any contractual agreement between two or more firms in which none of the firms have a degree of ownership. It is generally believed that this type of alliance has a relative short-term focus. This type of alliance is particularly suited to monitor technological developments, new opportunities, and new product markets at relatively low costs (Hagedoorn & Kranenburg, 2003). Alliances can also be classified into horizontal, vertical, and conglomerate alliances. When firms are operating in the same product market and are allied, the partnership is classified as a horizontal one. A vertical relationship is defined as an agreement between firms operating in a different stage of the value chain within a specific market. Finally, a conglomerate partnership is an agreement between firms with no vertical or horizontal relationship (Gomes-Casseres, 1996; Daussauge & Garette, 1999). Alliances can help firms to create a sustainable competitive advantage in the integrated information multimedia entertainment sector. For instance, the alliance between Netflix and film production firm MRC helps Netflix to transform its firm into a serious player in the world of quality TV. MRC is the firm behind the successful television series House of Cards. MRC historically has done a lot of unusual distribution deals, whether it be film or digital. MRC and Netflix established an exclusive partnership for the production and distribution of House of Cards. It became the first original show on Netflix. Due to these types of alliances, Netflix reduces its dependence on market exchange transactions for content. Even if alliances are successful, there is no guarantee that the alliance will survive. For instance, in 1991, U.S. computer animation film studio Pixar established an alliance with U.S. multimedia and entertainment conglomerate Walt Disney Company. Due to this alliance, Walt Disney had access to the incredible creative talents of Pixar to deliver a new animated movie segment to the market and the customer enjoyed the new products that were result of the partnership. Five animated movies were made in the partnership, including Toy Story and Finding Nemo.These movies have earned more than $3 billion and accounted for more than 25% of Disney’s profits. However, CEO of Pixar Steve Jobs terminated the alliance because of cultural differences and incompatible objectives between the two partners. To safeguard access to the creative talent of Pixar, Walt Disney acquired Pixar in 2006 (CNN Money, 2006). M&As provide a viable vehicle when the firm needs to make extensive changes or respond fast to the developments to maintain or improve its competitive advantage. These actions give firms immediate access to the needed resources, capabilities, technologies, mind-sets, and future streams of innovations, and may build the needed market position (Gaughan, 1991; Hitt et al., 1997; Hagedoorn, Cloodt, & Kranenburg, 2006). In general, these actions are strategically crucial for firms to improve their competitive advantage and their survival chances. M&As have a unique potential to transform firms and to contribute to corporate growth and renewal. They can be instrumental in renewing market positions at a speed not possible through internal development or market exchange.Through M&A existing capabilities can be leveraged into much more significant positions. They can provide the ability to access the benefits from combining assets and sharing capabilities in a way not obtainable through alliances (Haspeslagh & Jemison, 1991). Although M&As refer to integrative modes that serve to transfer ownership control from one firm (the target) to the other (the acquirer), strictly speaking, they are different. A merger is defined as a transaction whereby two or more equally valued firms become one. This transaction is negotiated with the target’s management and, when approved by its board of directors, the terms of the offer are submitted to a vote of the shareholder. However, not all transactions between firms are negotiated with and approved by the target firm’s management, especially transactions in which a dominant firm

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acquires the assets of the less dominant target firms. This type of transaction is known as acquisition (Kranenburg, Pennings, Dal Zotto, & Hagedoorn, 2008). Sometimes the term ‘acquisition’ also refers to those deals in which the acquirer buys only minority shares or voting rights of the target firm. In other words, the acquirer buys only part of the firm. All M&A transactions fall into the more general concept of takeovers (Hirshleifer, 1995). In turn, takeovers may be friendly or hostile. When the target firm’s manager initially rejects the acquisition offer the takeover turns hostile ( Jenkinson & Mayer, 1994). In reality, most mergers are acquisitions, with one firm controlling the other; therefore the terms ‘mergers’ and ‘acquisitions’ are used interchangeably. M&As can be classified as horizontal, vertical, and conglomerate transactions. M&As are considered horizontal when the firms are in direct competition and share the same product lines and markets.They are considered vertical when one is a customer of the other—namely, when they have a downstream-upstream structure in which the former buys inputs to the latter to produce the final output. Finally, mergers are considered conglomerated when firms are in different markets and/or do not have business lines in common (Hay & Morris, 1991). An interesting example of a conglomerate acquisition is the acquisition of motor sport organization Formula One by U.S. media conglomerate Liberty Media. In 2016, Liberty Media, controlled by John Malone, acquired Formula One from Luxembourg-based investment fund CVC Capital Partners in a complex deal that valued the sport at $8 billion. John Malone also owns two other major media conglomerates, Liberty Interactive and Liberty Global. Liberty Interactive’s subsidiaries include the home shopping channel QVC. UKbased Liberty Global is one of the world’s biggest broadband Internet service providers and international cable firms, with operations in 14 countries. Furthermore, Malone also has a stake in Barnes and Noble, the biggest retail bookseller in the United States. Liberty Media is a major media conglomerate with stakes in several sports and entertainment businesses. Liberty Media also has stakes in U.S. cable TV firms, entertainment and ticket sales firms, and the satellite and online radio company Sirius XM. A main reason for Liberty Media to acquire Formula One was the exclusive rights to offer Formula One races to its viewers. The acquisition of the Formula One racing business opens a new chapter for the motor sport. Liberty Media sees the opportunity to draw more fans to the sport around the world, lift television ratings, and increase commercial revenues. Broadcasting revenues account for up to 35% of Formula One annual revenues of more than $1.8 billion. Race promotion accounts for another third, 15% comes from advertising and sponsorship, with the rest made up from hospitality, TV production, licensing, and other sources (Financial Times, 2016).

M&A Waves M&As behave in waves of short periods with intense M&A activities. A majority of M&A activities occurred during one of these major waves of M&As (McNamara, Haleblian, & Dykes, 2008). The occurrence of M&As is highly cyclical, which results in booms in the occurrence of M&As followed by slumps of M&As. These booms in the occurrence of M&As are driven by high valuation of bidder stock and economic shocks (Garfinkel & Hankins, 2011). Managers can become afraid that their firm will become the target of an acquisition in the case that they do not acquire themselves. Shareholders may express fear that their firm is left behind when potential target firms are acquired by competitors. The consequence is that firms show herd behavior. Of course, the acquiring firm does not necessarily need the target firm and therefore it may pay too much to acquire the target firm. Each wave is characterized by a concentration of M&A activities in specific industries. The very first wave started with horizontal mergers in the U.S. oil, steel, railroad, telephone, and mining sectors at the beginning of the 1900s (Stearns & Allan, 1996). Many firms with small, stand-alone market shares consolidated in these sectors.These firms used the word ‘trusts’ for their business arrangements

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and big trusts became big monopolies, which ended up raising anticompetitive concerns. This is what led the emergence of antitrust laws in the United States. The second merger wave took place also mainly in the United States during the 1920s and was characterized by vertical mergers. During this period, giant automobile manufacturers emerged and the public utility sector was particularly involved too. The third wave of M&As was in the 1960s. Many firms adopted a diversification strategy and spread out their business lines into new industries and areas of research activity. This way is characterized as the existence of conglomerates. However, since many firms did not achieve the expected synergies, the market capitalization of these firms significantly decreased at the end of the 1960s. Consequently, many firms started to divest their acquired activities. The fourth wave, occurring in the 1980s, has been called the wave of disciplinary mergers. Many of these M&As largely occurred in a hostile takeover environment which involved a replacement of the target’s manager. Most M&As took place in the banking and financial services industries. Deregulation and privatization boosted a new wave of M&As in the 1990s (Mitchell & Mulherin, 1996). Another important driver for this fifth wave of M&As was the Internet revolution (Andrade, Mitchell, & Stafford, 2001). The fifth wave can be characterized as size-increasing M&As. Many of the most prominent M&As were neither purely horizontal or vertical nor purely unrelated. Rather they presented market extensions of firms in the same industry that served different and currently non-competing markets. The most remarkable M&As were concentrated in the banking and financial services as well as in the telecommunications, entertainment, media, and technology sectors (Kranenburg, Cloodt, & Hagedoorn, 2001). At the end of 2000 this wave experienced a slowdown apparently due to a collapse in the Internet bubble and the earnings and financial problems of the telecommunications industry (see Kranenburg & Hagedoorn, 2008). Finally, since 2002 a considerable increase of M&As has been observed worldwide in the telecommunications, entertainment, media, and technology sectors once again as these sectors converged into the information multimedia entertainment sector (Kranenburg & Ziggers, 2013). Empirical evidence shows that M&As are a viable mode to provide a quick and seemingly easy route to achieving product market objectives and to enter new technological fields and to gain access to new technology and technological knowledge capabilities. An important development in the information multimedia landscape is the accelerated technological convergence on the product market level. In general, in this landscape the product market and technological motives for undertaking M&As are at work simultaneously. Box 13.1 presents an overview of the M&A activities of the U.S. information multimedia entertainment company Alphabet for the period 2001–2016.

Box 13.1  Alphabet’s acquisition strategy for future value creation Google, a young company in 2001, beginning to enter the online search world, offers the struggling online business Deja and its fading hosting Usenet community a lifeline by taking over the company and promising to service the needs of the community. Besides this promise, it made another promise in the accompanying press release in 2001 for the takeover announcement. Google would continue to build and acquire necessary technologies to provide the best search experience to millions of Google users worldwide. Around 200 acquisitions later it is hard to argue that Google, reorganized in late 2015 as a new entity called Alphabet, has not kept its word. Its main strategy is the acquisitions of technologies with which to supplement its key products and services. Acquisitions allow Alphabet to operate in a variety of businesses: media and entertainment, auto tech and navigation, robotics, smart home, commerce, Google for enterprise/productivity, cloud, health care, payments, and telecommunications.

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What can be learned from Alphabet’s acquisition strategy? Alphabet follows in general a low-key approach to its technology takeovers, giving the impression that technology is originating from its own engineering staff. This is an often overlooked benefit of acquiring smaller firms or ones that do not have a fully released product. Alphabet’s $1.65 billion purchase of YouTube in 2006 may not fit this picture and shocked analysts and observers as it was considered just a cash-cow integrated with Google’s ad and search platforms with no alterations. This impression was wrong as Google picked up another seven companies to bolster YouTube’s services. Only three of those deals’ values were publicly released, totaling ‘only’ $158 million. The rationale of this strategy is that Alphabet is targeting companies with passionate, talented teams and a strong focus on user experience, creating inclusive and universal products understood by the majority. In the words of CEO Larry Page a deal has to pass the toothbrush test: is the product something you use daily and would it make your life better? Companies that are small and flexible can better adapt to Alphabet’s culture and way of thinking, adjusting their products to be immediately identifiable as ‘Google products.’ One of the key success factors for Alphabet’s acquisitions is the retention of the founders of the entrepreneurial spirit. It works closely with founders of acquired companies and at the core provides the opportunity for them to have access to plenty resources. This has resulted in that in 2015 about 67% of start-up founders who accepted jobs at Alphabet between 2006 and 2014 were still with the company. With its constant bets on future developments, like the opportunity for digital interaction in real-world environments (e.g., InGress), it needs such people to sustain the flow of ideas. The motive that drives Alphabet’s acquisition strategy is the quest for new technologies, capabilities, and entrepreneurial talent that serve future markets and stay ahead of competition. There are huge question marks over the YouTube deal over time, how a market will evolve, or whether a market will actually emerge. In performance terms, it is likely to be a failure in conventional terms, but over time a deal could be tremendously significant in influencing market development and placing the acquirer in a privileged position for future strategic moves. (Sources: CBInsights, 2017; Luckerson, 2015; Stringer, 2017)

M&A Motives Firms can have different motives to participate in mergers and acquisitions. In general, these motives can be classified into two main groups: M&As motivated by strategic intent versus manager’s self-interest. The first group includes motives that increase the value of the merging or acquiring firms. The M&A has the potential to increase the actual or future economic profits of the firms. The second group of motives is related to the interest of the managers of the firm and less to the increase of the firm’s value. Most scholars agree that M&A decisions are driven by a complex pattern of motives and that no single theoretical approach can explain the motives underlying an M&A decision. The strategic management field identifies several theories explaining the logic behind mergers and acquisitions. For instance, Trautwein (1990) identifies seven different theoretical approaches and explanations regarding motives for M&As. However, agency theory can also be used in combination with the empire-building theory. These eight motives can be organized into three categories: M&As as rational choice, M&As as process outcome, and M&As as macroeconomic phenomenon. Table 13.2 adapted from Trautwein (1990) presents the M&A motives and the theories. 207

Hans van Kranenburg and Gerrit Willem Ziggers Table 13.2 M&A motives. Motive

Theory

Description

M&A as rational choice

Efficiency theory

M&A is planned and executed to achieve synergies: operational, financial, and managerial synergies. M&A benefits bidder’s shareholders. M&A is planned and executed to achieve market power. Horizontal and conglomerate M&A may allow firms to cross-subsidize products, simultaneously limit competition in more than one market, and deter potential entrants from the market. M&A benefits bidder’s shareholders. M&A is planned and executed by managers who have better information about the target’s value than the stock market. M&A benefits bidder’s shareholders. A raider is a person who causes wealth transfers from the shareholders of the firms (s)he bids for in the form of greenmail or excessive compensation after a successful takeover. M&A benefits bidder’s shareholders. M&A is planned and executed by managers who thereby maximize their own utility instead of shareholders’ value. M&A benefits managers. M&A decisions are outcomes of processes governed by one or more of the following influences: organizational routines, political games played between a firm’s subunits and outsiders, and individuals’ limited informationprocessing capabilities. M&A waves are caused by economic disturbance. Economic disturbances cause changes in individual expectations and increase the general level of uncertainty, thereby changing the ordering of individual expectations. Previous nonowners of assets now place a higher value on these assets than their owners and vice versa. The result is an M&A wave.

Monopoly theory

Valuation theory

Raider theory

M&A as process outcome

M&A as macroeconomic phenomenon

Empire-building theory/agency theory Process theory

Disturbance theory

Source: Adapted from Trautwein (1990).

M&As as Rational Choice To achieve a competitive position in a market, firms must work efficiently. Firms become more efficient when they create synergies (Clougherty & Duso, 2011). The word ‘synergy’ is derived from the Greek word ‘synergos,’ which means working together. In the strategic management literature, synergy refers to the ability of two or more units or firms to generate greater value by working together than they could achieve by working apart (Goold & Campbell, 1998). Efficiency theory views M&As as being planned and undertaken to create value through synergies.This theory assumes achievements of financial, operational, and managerial synergies. Financial synergies result in lower cost of capital while operational synergies are achieved by combining operations of separate units or by knowledge transfer. Operational synergies can be classified into cost and revenue synergies (Schweiger & Very, 2003). These synergies can be achieved through economies of scale, vertical economies, and economies of scope in production, R&D, and administration (Larsson, 1999). Managerial synergies are achieved by using the bidder’s superior management planning, tactics, and monitoring abilities in the target’s organization. 208

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Monopoly theory also refers to value creation through synergies. The theory states market power is achieved by planned and executed M&A transactions.This theory summarizes three main advantages of M&As which are called collusive synergies (Chatterjee, 1986). These synergies can be obtained by strategically cross-subsidizing products (profits from one market used to sustain a fight for share in another market) or by simultaneously limiting competition in more than one market by, for example, building a foothold in a competitor’s main market, which in turn offers the same in its main market (Porter, 1985). Finally, these synergies can also be obtained by threatening potential competitors from the market of the firm.These collusive synergies can be realized from either horizontal or unrelated M&As. Valuation theory views M&A transactions as planned and executed by managers. The main argument of this theory is that managers have better private information about the target’s value than what is known to the stock market. Trautwein (1990) suggests that bidders’ managers may have unique information about possible advantages from combining the target’s business with their own or may have detected an undervalued firm just waiting to be acquired. The main motive for M&As in raider theory is the transfer of value from shareholders of the target firm to those of the acquiring firm. The raider is a person who causes wealth transfers from the shareholders of the firms he or she bids for. The transfers include greenmail or excessive compensations to the raider after successful takeovers. Per the efficiency, monopoly, valuation, and raider theories, M&As especially benefit the bidder’s shareholders. However, the other rational choice theory to explain the motive of M&As does not have the benefits of the bidder’s shareholders in mind, although it also views M&As as planned and executed transactions. In empire-building theory, M&As are planned and executed by managers intentionally to maximize their own utility instead of the shareholders’ value. Empire building is the act of attempting to increase the size and scope of an individual’s or organization’s power and influence. Empire building is typically seen as unhealthy for a corporation, as managers will often become more concerned with acquiring greater resource control than with optimally allocating resources. Hence, individual managerial goals and benefits can explain the motive underlying the M&A decision.The theory that describes the natural conflict between shareholders and managers is the agency theory. The conflict arises because individuals choose actions to maximize their own utility, suggesting that managers will not always act in the best interest of shareholders ( Jensen & Meckling,1976).

M&As as Process Outcome Process theory can also be used to explain the logic behind M&As. This theory explains M&As by saying that firm’s strategic decision-making process and its results are impacted by a firm’s routines, its social and political development, and its characteristics, such as experience of previous transactions. Old solutions for similar situations are used on new problems and new solutions are an alternative only when the old ones fail. Routines play an important role in the decision-making process (Cyert & March, 1963). They are the outcome of what the organization has learned over time to be appropriate steps to take to meet different problems. Strategic decisions, such as M&As, are the outcome of political games between different internal and external stakeholders, their tactical considerations, and the mutual adjustments they make throughout the process (Pettigrew, 1977). Hence, M&A decisions can be explained as outcomes of processes characterized by several nonrational influences. The strategic decision seems to be more rooted in ‘rules of thumb’ and ‘gut feeling’ than rational and comprehensive analysis.

M&As as Macroeconomic Phenomena The third group of motives can be explained with disturbance theory. This theory looks at waves of M&As which are caused by economic disturbance on a macro level, causing changes in individual 209

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expectations and increasing the level of uncertainty (Faulkner, Teerikangas, & Joseph, 2012). These economic disturbances cause change in expectations of owners and nonowners of assets. In general, nonowners of assets place higher value on assets than their owners, and vice versa, resulting in an M&A wave. Laamanen and Keil (2008) emphasize that firms tend to imitate each other’s M&A practices, which looks to macroeconomic effects. This phenomenon is also known as herd behavior of firms.

M&A Performance M&As remain a core strategic priority in the integrated information multimedia entertainment sector (Ernst & Young, 2016). Despite its popularity, a substantial body of analysis of M&A performance shows failure rates for acquirers of between 45% and 82% on a wide variety of measures (Angwin, 2007; Hunt, 1990; Papadakis & Thanos, 2010). This contrast between its popularity and failure rate raises the question of why firms’ management continues to engage in M&A deals both in number and in monetary terms when they are likely to fail. The answer to this question may be grounded in how performance is assessed and the motives for acquiring firms.

Performance Measurement Most research on M&A performance assessment can be grouped into three research streams (Zollo & Singh, 2008): accounting-based measures (e.g., Kusewitt, 1985; Lu, 2004; Zollo & Meier, 2004), stock market–based measures (e.g., Agrawal, Jaffe, & Mnadelker, 1992; Sudarsanam & Mahate, 2003; Haleblian & Finkelstein, 1999), and managers’ personal assessments regarding the realization of upfront set objectives (e.g., Angwin, 2004; Homburg & Bucerius, 2006; Papadakis, 2005).These three performance measures will be briefly discussed.

M&As Performance Based on Accounting-Based Measures The rationale behind studies that use accounting-based measures to evaluate the success of an acquisition is that the strategic aim of it is to earn a satisfactory return on capital (McGee, Thomas, & Wilson, 2005). This should be reflected in accounting measures, such as return on assets (ROA) (Hitt, Harrison, Ireland, & Best, 1998). The approach in accounting-based evaluations is to compare post-acquisition returns to the weighted average of the pre-bid returns of each target and acquiring firm (Sudarsanam & Mahate, 2003). In general, the results of this stream of research provide no clear evidence of improved post-acquisition performance (Tuch & O’Sullivan, 2007; Papadakis & Thanos, 2010). Although accounting-based measures do have advantages, there are reasons to question the usefulness of these measures (e.g., Chenhall & Langfield-Smith, 2007; Lubatkin, 1983). First, accounting profits represent the narrowest measure of performance, as they measure only the economic performance of a firm (Lubatkin & Shrieves, 1986); they are said to reflect only a firm’s past performance (Chenhall & Langfield-Smith, 2007; Montgomery & Wilson, 1986). Finally these measures fail to assess the success of a specific acquisition due to the fact that they provide aggregated data of an entire firm’s performance (Chenhall & Langfield-Smith, 2007; Montgomery & Wilson, 1986; Papadakis & Thanos, 2010).

M&As Performance Based on Stock Market–Based Measures The rationale behind studies that use stock market–based measures is that the firm’s purpose is to maximize shareholder value (McGee, Thomas, & Wilson, 2005). M&A performance is measured 210

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by examining the development of either the target firm’s share price or the acquiring firm’s share price during a certain period. Besides reflecting a direct measure of shareholder values, they are also easily accessible for publicly traded firms. These measures are used because they are the only direct measure of shareholder value and data are easy to acquire (Lubatkin & Shrieves, 1986; Papadakis & Thanos, 2010). The use of stock market–based measures has been criticized too. One main shortfall is that short-event windows represent an ex ante and not an ex post measure of performance. They reflect shareholders’ expectations of future profits, rather than predicting the M&As’ future profitability (Montgomery & Wilson, 1986; Zollo & Meier, 2008). Other important restrictions are that they can be used only for listed companies and share prices may fluctuate not because of an acquisition (Schoenberg, 2006).

M&As Performance Based on Managers’ Assessment The rationale behind studies using subjective measures is that managers can provide both financial and nonfinancial information (Brouthers,Van Hastenburg, & Van Den Ven, 1998) capturing performance in a more multidimensional way. Moreover, studies indicate that managers’ perception defines how they act (Papadakis & Thanos, 2010). A more pragmatic reason is that researchers often face problems obtaining objective measures of performance. Inherent on using subjective measures of M&A performance is that the information provided may be subject to managerial bias (Lubatkin & Shrieves, 1986). Managers may overestimate their firm’s performance (Venkatraman & Ramanujam, 1986), a reason multiple sources are required (Bowman & Ambrosini, 1997). The few studies that used objective and subjective performance measures provided ambiguous results. For example, Schoenberg (2006) did not find correlations between objective and subjective measures of acquisition performance, while Papadakis and Thanos (2010) found correlations between managers’ subjective measures and accounting measures but not with stock market–based measures. The lack of comparability between performance criteria reported may explain the contradictory results often reported for M&A performance. Do these findings point to a need for a better M&A performance measure? According to Meglio and Risberg (2011), ambiguity is not the problem with M&A performance assessment, but the problem lies in the effort to overcome such ambiguity by searching for a general measure of performance that is valid across all types of M&A activities. The range of measures should not be considered a method problem, because M&A performance is a construct that does not have a general connotation (Meglio & Risberg, 2011). This implies that that one should not seek the best measure that is applicable in all situations, but unambiguous measures that spell out what is measured. A clear definition of M&A performance, along with its boundary conditions, is pivotal to prevent the common mistake of comparing different measures as if they were the same (Meglio & Risberg, 2011). Practically, measures of M&A performance therefore should account for the multiple motives for M&As.

M&A Performance—for the Good of the Firm The general assumption is that an acquiring firm will engage in M&A only where it will increase economic value for shareholders. This logic refutes the likelihood that managerial actions could be in the best interest of the firm and yet may not result in improved firm value from the transaction (Angwin, 2007). On a single M&A basis, profit maximization may be secondary to what is good for the firm. This raises new questions over the way in which M&A performance maybe assessed. A more sophisticated view of motivations may cause M&A performance evaluations to be revised, considering ‘actual’ rather than ‘inferred’ practice, and help unravel why so many deals appear to perform poorly and why so many M&A transactions continue to take place. M&A performance studies in general tend to focus on single items or use broad single categories; however, there are far more motivating factors in M&As. Consequently, M&A performance is 211

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evaluated in narrower terms than is required, because significant motivations are not included, their complexity massively underestimated, and the role of context and process largely ignored (Angwin, 2007). These exclusions imply that the results of M&A performance research may be biased as many deals are being evaluated on distorted views of M&A motives, not representing the main intention of management. Motivations for acquisitions and mergers will vary depending upon different socioeconomical-political systems and therefore should be at least be evaluated in terms of what management intended to achieve. In terms of data gathering, caution is required for obtaining motives as those reported (e.g., doffer documents, public statements, surveys) as they may be designed for the public and to comply with legal and institutional requirements, not representing the full or the real reasons for acquisition (Angwin, 2007). Instead it is more likely reported motivations will be in terms of the legitimate language of economics and finance, with emphasis on improving financial returns (Trautwein, 1990). Gathering information on motivations for that reason requires thorough, in-depth data collection. Based on the shortfall in capturing M&A performance, Angwin (2007) developed M&A archetypes that better reflect reality. Based on these archetypes hypotheses can be generated about the configuration of motives which may result in superior outcomes and those that result in lesser outcomes. Among the dimensions are acquiring firm-level motives (i.e., shareholder value maximization, increased competitiveness in the short term [exploitation] versus creating opportunities through exploration, influence, or stability), contextual drivers (i.e., the extent to which contextual drivers are strong or weak and whether they are in harmony with the acquiring firm’s competitiveness), and top management motives (i.e., acting selflessly or prevailing self-interest). Using these three dimensions Angwin (2007) identified eight archetypes, which will be briefly explained. Type 1:The classical M&A type The firm is conducting M&A based on rational value maximizing strategies (e.g., economies of scale and scope; increasing bargaining power). Management is acting as good agents and the contextual drivers encourage this type of M&A—for example, the string M&A of Verizon acquiring AOL, which acquires Millennial. The acquisition of AOL, completed in mid-2015, was announced to allow Verizon to push more rapidly into the market shift to digital content and advertising and mobile video content. Just after the deal AOL announced it was acquiring Millennial, a mobile ad platform that should enlarge AOL’s own digital mobile ad platform offering. Millennial, after an IPO and some acquisitions and briefly valued at around $2 billion, had stayed independent. It fell prey to industry consolidation. AOL finalized the deal in late October 2015 for just over $200 million (Siglin, 2015). Type 2:The contextual dissonant, classical M&A type The contextual pressure may be at odds with the firm’s wishes to maximize shareholder value. This type may represent conflict between firm and management rational value maximizations and those of the context. The Comcast/Time Warner merger was almost a done deal when the FCC informed Comcast it needed to convince it of the merger’s merits. The Justice Department concluded that the merger was against the best interest of the American consumer. The intended merger had to be terminated. Netflix was apparently one of the companies that objected to the proposed merger as it argued that the combination of Comcast and Time Warner would be “just too much in one company” (Siglin, 2015).

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Type 3:The contextual dissonant, non-value-maximizing M&A type Contextual factors may be at odds with classic firm motives, but may be accommodated if the firm is motivated by non-maximizing motives. It will be unlikely that the acquisition will succeed in classical terms but may be beneficial in the long term. For example, an acquirer facing ethical pressure would seek to avoid likely censure in the media. Type 4:The contextual consonant, future value–creating M&A type Contextual factors set conditions for a classic M&A and management motives are aligned. However, rents may be generated in the future due to the need for exploration or stability. For example, a firm may be anticipating the convergence of industries/technologies, suggesting future profit opportunities or influence. Consider the acquisition of NBS by Livedoor. The purpose of this acquisition was to gain power over Fuji TV. NBS being a leading shareholder in Fuji TV provided Livedoor power in the Fujisankio Communications Group. The aim was not to get immediate benefits out of the acquisition (Angwin, 2007). In classical terms this M&A is likely to underperform (see also Box 13.1). Type 5:The contextual dissonant, management self-interest M&A type Contextual pressures force the acquirer into deals which do not fit with classical motives and may also face an agency problem. The deals may result in satisfying management and addressing the context, but they are unlikely to benefit the firm in classical terms. Firms that are caught up in an M&A fashion and over-acquire are an example of the M&A type. Type 6:The management self-interest M&A type Contextual factors may be favorable for M&As in terms of maximizing firm value. An agency problem may mean that management seeks to benefit personally from the deal.This does not exclude the possibility of the deal being successful. The acquisition of Blue Circle by Lafarge is an example of the acquirer seeking to achieve global dominance through acquisition and enhance the profitability through economies of scale. The agency problem involved was the CEO was suggested to benefit from the deal as he became CEO and overpaid for the deal. However, the deal was regarded as a success (Angwin, 2007). Type 7:The contextual dissonant, non-value-maximizing, self-interest M&A type The contextual pressures may not be in line with the firm’s classical motives, but could fit with exploratory motives. For example, the awareness of global warming could provide firms with opportunities to acquire prototype alternative technologies in anticipation of this ongoing trend. An agency problem does give top management the opportunity to benefit personally and is likely not to provide benefits to the firm. Type 8:The non-value-maximizing, self-interest M&A type The contextual pressures may be favorable for M&A by the firm, although the firm may be motivated by non-maximizing outcomes. This may allow the firm to engage in speculative acquisitions and mergers, encouraged by top management self-interest. The merger

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of SolarCity and Tesla may exemplify this M&A type. The motive of the merger was to accelerate the transition toward a sustainable world by creating an integrated firm. Both companies are heavily indebted and Musk as both owner and shareholder in both companies was accused of self-interest (Financieel Dagblad, 2016, 2017). Angwin (2007) stresses that only a few archetypes can be described as classically oriented toward improving shareholder value. Most of the archetypes are likely to underperform in classical terms and a more refined approach to M&A motivations could therefore result in quite different results, something which is confirmed by Nugyen, Yung, and Sun (2012). In their study using a sample of 3,520 domestic acquisitions in the United States their overall conclusion is that about 80% of the deals involved multiple motives and that in general value-increasing and -decreasing motives frequently coexist, the latter being an explanation for the lack of value gains of M&As (Mehrotra, van Schaik, Spronk, & Steenbeek, 2011). All in all, M&A performance is complex and one should evaluate M&A performance beyond classical evaluations to capture other motives of M&A activity. Instead of considering whether it is right to experiment and explore for future gain or whether to comply to governmental pressure, one could wonder if firms in these situations may be significantly worse off if they didn’t engage in M&A activity (Angwin, 2007).

A Research Agenda The wave of M&As in the integrated information multimedia entertainment landscape during the last decades shows the popularity of M&A strategies for firms to improve their performance and to sustain or improve their competitive advantage.Taking this into consideration, several suggestions for future research can be made that allow for a deeper understanding of M&A activity, its complexity and impact. A first area of future research entails the study of (real) motives that drive M&A transactions. Those insights may help to improve not only the value of the target firm’s shareholders but also the value for the acquiring firms and their stakeholders. In general, M&As are used when firms want to achieve certain strategic and financial objectives. Of course, the main objective of M&As is to create value in terms of better financial advantages, improvement of market power, diversification and reduced earnings volatility, financial, operational, and managerial synergies, economics of scale, access to capabilities, and resources and technologies, and to capture new and fast-growing markets. However, empirical evidence shows that many M&As fail to create value or even destroy value (Papadakis & Thanos, 2010). In most cases, the real winners of M&As are the target firm’s shareholders, who receive a significant takeover premium on top of market prices (Dess, Picken, & Jay, 1998). Over the past decades, there has been only modest improvement in the M&A success rate (Schoenberg, 2006; Marks & Mirvis, 2011). To increase the success rate of M&As, it is important to understand the real motives behind M&A transactions. M&A decisions are driven by a complex pattern of motives and generally no single theory can explain the motives underlying them. Another interesting area of research is the success of M&As, from both a process and measurement perspective. Successful M&As are neither an art nor a science, but a process (Sherman & Hart, 2006). Shrivastava (1986) claims many M&As fail due to poor integration. Jemison and Sitkin (1986) identified the M&A process as an important aspect to take into consideration to create value. The process perspective emphasizes that the M&A process is a factor, in addition to strategic and organizational fit, that affects performance. The M&A process can be divided into different phases. Most common is to divide the process into four phases: idea, acquisition justification, acquisition integration, and results (Haspeslagh & Jemison, 1991).The first two phases make up the pre-combination stage, while the other two phases make up the post-combination stage. Even though the process is divided into different phases, they must be considered together. Every phase of the process is important for the 214

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outcome of M&A transactions and will influence performance. Enhancing our understanding of the interaction of the different phases during the integration process will contribute to the improvement of the success rate of M&A transactions. However, this must be linked with the measurement of M&A performance. The literature is not clear about how to measure performance of an M&A. Different methods exist to measure M&A performance. Although these methods measure different facets of performance, they still are not able to explain the significant variance in post-M&A performance. There is a need for additional theory development and new perspectives on M&A performance measurement methods. A third area of research interest is the impact of M&A activity on business models. In a multiplatform environment and urged by the increased rivalry on the distribution side and the quest for content, there is a need to get insight into the impact on the traditional business and earning model of content providers and content distributers. Self-exploitation could generate more profits for content rights owners. As argued by Evans (2014) contrary to lump-sum payments, which implies a financial burden for new distributors without any guarantee of attracting new subscribers, content owners’ surplus is maximized by pay-by-subscription. Thus, future research could address how business and earning models affect the entrance of new distribution platforms, and how they affect competition and bargaining power between content providers and distributors. Finally, a fourth area of research interest is how M&A activity affects consumer welfare. In general, regulatory authorities evaluate the effects of M&As on the involved market products’ prices, quality, diversity of choice, and innovation since these factors directly affect consumer welfare. Hence, M&A activity in the integrated information multimedia entertainment sector may also influence media pluralism and content production. Excessive concentration of media ownership may pose a risk to media diversity and democratic opinion forming. It is not clear what the effects of these M&As are on consumer welfare, media pluralism, and content production, as well as how antitrust authorities should set rules, both ex ante and conventional ex post regulation, that ensure open market competition. Therefore, it is recommended to study the effect of the current development of M&As on consumer welfare and on media pluralism and content production.

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14 CONTENT/PROGRAM DISTRIBUTION Douglas A. Ferguson

This chapter examines business-to-business and business-to-consumer market activity among media companies and industries with regard to content and distribution.What follows is a broad consideration of managerial and economic issues and strategies as they exist now, with some contextual discussion of how they evolved.The focus is on the features of content distribution in the United States but the chapter also observes how international markets (where traditional media remain vital) contrast or compare with American considerations (Adilov & Martin, 2013; Ballon, 2014). The goal is to convey the nature of discontinuous change in the content distribution sphere, an upending of conventional media industries (e.g., the marginalization of broadcast networks and later cable networks). Regarding the organization of the chapter, the first section of the chapter briefly examines the recent research on content distribution. The next section considers the current and shifting structure of media outlets with subsequent topics branching into specific differences and discontinuous change. In effect, this chapter often bases its initial analysis on the part of the media sphere that is the least revolutionary. Many of the examples in this chapter focus on media that combine sight, sound, and motion (television and motion pictures) because of their sheer dominance in public life, but other media forms, like print, radio, and Internet, cannot be ignored. Certainly the separate silos in which each legacy medium has most often operated are no longer dominant, although many legacy corporations still specialize in a particular type of content. Media economics scholars (e.g., Albarran, 2017) have popularized a similarly broad-brush approach to understanding how media commerce operates. The most importance sources for research on content and program distribution are centered upon a handful of communication journals devoted to the media industries: Journal of Media Economics, International Journal on Media Management, and Journal of Media Business Studies. Other major journals of interest include the Journal of Broadcasting & Electronic Media and Journalism & Mass Communication Quarterly. Media displacement owing to competition and newer technologies is an important consideration for content distribution. Mierzejewska, Yim, Napoli, Lucas, and Al-Hasan (2017) studied the U.S. newspaper industry and identified a mimicking strategy whereby traditional media have attempted to provide the benefits of newer forms of distribution.The authors concluded from 20 years of data that a mimicking strategy is inferior to product differentiation for traditional media. Pantea and Martens (2016) have examined similar models in Europe with regard to entertainment via the Internet. The Internet is the root of competitive pressure on traditional media (Hess, 2014).

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Kinjo and Ebina (2015) have considered the role of habit among Japanese TV audiences, especially older viewers. Similar studies of viewer inertia provide some solace to traditional content providers because programs made available on newer distribution platforms are not always met with changes in habit. Jang and Park (2016) presented media diary evidence in Korea to confirm the complexity of media choice. Gimpel (2015) created an acronym for the anywhere, anytime, any device (AWATAD) lifestyle and has argued that media companies face severe challenges going forward. Cross-platform media behavior has generated interest among researchers. Kim (2016) identified the media repertoire approach as a useful tool to understand media use across media platforms and confirm past predictors (Ferguson & Perse, 1993). Another study by Ksiazek (2011) used a network analytic approach to factor audience duplication into models of choice.

The Modern Era of Content Distribution Digitalization of the media has made possible different distribution avenues for the same types of products. A television series was once the exclusive domain of television networks and their affiliated stations. No other means of distribution was possible until the advent of cable, satellite, home video devices, and Internet connectivity. Over-the-air signals enjoyed a protected space and both content creation and distribution were orderly if not entirely simple. Much has changed. For example, newspapers and radio stations have video feeds. Television stations use social media. The boundaries between entire media industries have become more porous. This chapter necessarily weaves an ongoing discussion of the latest media/digital platforms: online TV, podcasts, blogs, smartphones, social networks, user-generated content, and video game consoles. All of this change has not escaped the attention of other media economics scholars. For example, Albarran (2017, p. 2) noted, “Increasing fragmentation and digitalization of the media industries have eliminated the boundaries associated with studying ‘traditional’ media. Television, radio, and newspapers no longer operate as single entities, but as enterprises offering content across multiple distribution platforms. Doyle (2016) addressed the survival of television channels (also raised in this chapter) from the standpoint of the UK. Evens and Donders (2016) have reviewed research on economics and policy with regard to television, but it remains difficult to examine the forces behind discontinuous change, as developments unfold and sometimes seem ready to explode. As a starting point, the next section reviews the structure and function of media content. The discussion follows the “who says what to whom over which channel” (sourcemessage-receiver) pattern of mediated communication (Lasswell, 1948). The dominant thread throughout the chapter is the amount of sometimes-discontinuous change shaking the foundations of suppliers and their audiences.

The Structure of Content Remembering what the media world still resembled in the early 1990s is worth brief consideration. Newspapers and magazines operated on a subscription or single-purchase model because the government did not claim ownership of the paper or ink they used. Advertising was useful, ancillary information that slowly evolved into a major revenue stream by the late 1800s. Readers found new commercial ventures interesting, but merchants desired ongoing attention to their goods and services. Publishers were happy to oblige with display and classified advertising. The motion picture industry followed a variation on single-purchase in the form of an admission price. Performances were not live but still functioned as a theatrical experience. The film industry first established a division among producers, distributors, and exhibitors. As the cost of content rose,

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the big eight Hollywood producers became distributors and muscled their way into the exhibition business. In 1948 a Supreme Court case broke the vertical integration hold of Paramount and other monoliths, just as television was capturing the public attention. As indicated earlier, no medium quite draws a crowd like those that combine sight, sound, and motion. Radio took root in a different historical era than newspapers, when the electromagnetic spectrum was considered public (and after the federal government had decided that centralized regulation was the best tactic to facilitate commerce). A nascent broadcast medium in the late 1700s might have seen greater freedom, but past decisions and policies in the United States have made speculation a moot question. Broadcasters quickly became heavily regulated and thereafter provided a free service and their stations supported themselves with advertising revenue. Television developed in the 1930s but waited until the resolution of World War II to dominate the second half of the 1900s. Radio adjusted to television in the 1950s by evolving a format-driven way to differentiate audio content while newspaper dailies consolidated within cities and regions. Cable and satellite television nibbled away at broadcasting in the 1990s and today the new distributors making the most headway are using the Internet to sell content, perhaps less uninterrupted by advertising (Lotz, 2007; Schweidel & Moe, 2016; Wilbur, 2015).

The Function of Content The function of media content is to provide information and entertainment while finding a way for content providers to show a profit (or at least cover their costs, in the case of nonprofit public media). When the distribution models had clear physical or electronic channels within which providers could compete, the economics were based on audience availability and scheduling structure (Webster, 2009). Static and streaming content offered by the Internet complicated the profit model for various traditional media. Entertainment continues to invade the transmission of information. Usergenerated content (UGC) is a nontrivial competitor to traditional media but distribution of such content is largely controlled by new companies, like Google and Facebook. For example, YouTube Red provides a new type of television network, still unproven in profits, while Facebook, Snapchat, and Apple attempt to reach under-40 audiences in a variety of nontraditional ways. Facebook, for example, seeks an alliance with local broadcast news operations to reach younger audiences as an advertising partner with television affiliates (Greeley, 2017). In turn, the public wants to be informed and entertained, sometimes satisfying both desires at the same time. Over time these wants have become needs, if program loyalties and consumption habits are credible and consistent. The cost of mass content was for many decades offset by advertising but commercial-free subscriptions to HBO and newer home-recording devices that bypass viewing advertisements (e.g.,TiVo) may be changing the acceptance of commercial interruptions. Audiences, especially younger consumers, are slowly becoming accustomed to skipping ads (or choosing a subscription that provides “what you want, when you want it, uninterrupted”). Two important audience metrics for traditional media consumption are “time spent” and “average audience size” measured by time of day or by the quarter hour. In 1990, it was still possible to sample all the popular TV shows, listen to the radio while commuting, read a morning newspaper, and still have time for other activities. Today, 24/7 access to smartphones and the Internet and the steady availability of streamed audio and video have transformed a quiet media universe into one that produces more content than the typical person has the time to read, watch, or hear. In economic terms, the ability to profit from content distribution depended on relative scarcity. With only three major broadcast television networks in the 1960s, regulators at the FCC complained that ABC, CBS, NBC, and their major-market affiliates had a license to print money.When the number of choices and voices for mediated content was limited, the same scarcity applied to distributors

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for video. Local television made deals with seven or eight movie studios. The ability of print and audio media to generate revenue was also a function of scarcity, but times began to change in the 1980s and 1990s, with fierce competition from cable and satellite, better known today as multichannel video program distributors (MVPDs). Newspaper subscriptions and revenue have dramatically declined in the recent past even as readership has increased (Sass, 2015). Radio in the United States today is still format-driven but consolidation of ownership (and competition from live streaming, music downloads, or podcasts) continues to limit innovation in radio stations, as debt obligations at major radio corporations (e.g., Cumulus, iHeartMedia) loom large at this writing. The year 2016 was a watershed for media content with Netflix and other bundlers eager to acquire first-run content. FX Networks president and general manager John Landgraf complained in 2016 that the amount of original content was unsustainable, with at least 430 shows (breaking the record of 419 programs in 2015). Levin (2016) described all the video content this way: 150 prime-time scripted series on the major broadcast networks; 50 more on pay cable channels including HBO, Showtime and Starz; 180 on basic-cable channels and 130 or more on streaming services, including 71 that have aired or been announced on Netflix alone, excluding kids and foreign-language series. Viewers began to wonder if they would have time to watch it all. The ease with which usergenerated content could find a loyal following on YouTube made stars out of PewDiePie, Lilly Singh, Tyler Oakley, and a legion of imitators. The functions of media content have not changed with additional choices but the competition for audience attention has accelerated. Producing a successful program on the Internet no longer requires the deep pockets of a network or film studio. Viewer habits are forever altered, especially among younger audiences. The news is on our social media and carried in our pockets. People may still read a newspaper, but the choice between free content versus a paywall is a nonstarter. The number of functionally equivalent news sources online makes it difficult to justify a paywall, except for highly specialized content (e.g., Wall Street Journal). Furthermore, ad-blocking software (e.g., AdBlockPlus, added to web browsers) reduces audience exposure to online advertising (Arrese, 2015). Even professional sports suffered a loss of audience in 2016. NFL football and other major sports compete for young audiences with Twitch and its growing supply of viewers watching video game battles or poker matches. No one has forecast the demise of sports entertainment but cracks have appeared in the foundation. ESPN, which spends over $3.3 billion annually just to broadcast the NFL and NBA, eliminated a number of high-priced talent positions to save on expenses (Draper, 2017). Modern electronic devices themselves make a huge difference in consumption patterns. Consider the ubiquitous smartphone. It serves as a pocket television receiver. At one time consumers watched TV when they got home from school or work. They might see TV in a common space or at a bar/restaurant, but until the last decade, television viewers were mostly homebound. For major events, audiences still prefer a large screen, but an office computer monitor or a smartphone is more than adequate when the viewer is bored while waiting for something else to happen. The sight of a toddler with an iPad is increasingly common in public spaces. People on long flights bring their own movies to watch. Yu, Lee, Ha, and Zo (2017) have proposed a model of perceived value that accounts for growing acceptance of tablet devices. Moreover, the expectation that content can continue to be advertiser-supported has come into question. Netflix and HBO have no commercial interruptions. Netflix is a thriving (54% penetration in 2017) “over-the-top” (OTT) distributor of programs, both original and repurposed. Its competitors are Hulu, Amazon Prime, Crackle,YouTube Red, and Seeso, some of which include advertising

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that can be avoided for an additional premium cost. Traditional cable networks have responded by streaming their own content, so much so that some MVPD networks (e.g., Scripps) that do not stream their shows are designated pure-play networks (Bednarski, 2017). Broadcasters are adjusting to new strategies, too. CBS, for example, has planned to take its streaming services CBS All Access and Showtime OTT to a global audience (Munson, 2017). Thus, it is easy to make the claim that much has changed with the number of increased voices and choices. It is a little more difficult to predict the best strategies and tactics for the considerations that have been revealed in this section.

Sources of Media Content The main source of video content comes from film and television studios in the form of scripted and reality shows. Broadcast and cable news operations and their associated sports programmers add dozens of original shows that typically air just once. Motion picture studios are the logical place to begin this discussion of sources. Finding a list of content distributors begins with identifying the major content producers. In most cases these are variations on the big eight movie studios of the last century: Paramount, Warner Brothers, RKO Radio (now defunct), 20th Century Fox, MGM, Columbia (now Sony), Disney, and Universal. MGM merged its distribution arm with United Artists at about the time its fading movie studio business changed hands between 1971 (when its merger with Fox failed to materialize) and 2010, when it emerged from bankruptcy. Dozens of independent producers also operate out of Hollywood and other film centers but distribution is funneled largely through six of the original studios. Content targeted at different audiences has produced multiple names for the same company. For example, Disney separated its distribution from RKO in the 1950s and was known as Buena Vista (until 1995), Disney Studios, and Touchstone (depending on whether the movie was rated G or PG-13). Until 2005, even the films of R-rated motion picture company Miramax were distributed by Disney. Another example is 21st Century Fox, which includes separate movie brands Fox Searchlight and Blue Sky computer animation. Ulin (2014) noted that the “greatest power that the studio brings to a film is not producing. Rather, studios are financing and distribution machines that bankroll production, and then dominate the distribution channels to market and release the films they finance” (p. 4). Distribution is so crucial in Hollywood that studios rarely invest in a film without obtaining and exercising distribution rights. Studios are experts in “the art of maximizing consumption and corresponding revenues across exploitation options.Whereas marketing focuses on awareness and driving consumption, distribution focuses on making that consumption profitable” (p. 5). The cost of maintaining a pipeline of content from studio to theaters is considerable. According to Ulin (2014), “The overhead required to run the distribution apparatus cannot be justified without a sufficient quantity of product to market and sell.This relationship is fairly straightforward: the more titles released, the greater the revenue, the easier to amortize the cost of the fixed overhead” (p. 9). Overhead is so immense that many companies form joint ventures to help spread the risk. The numerous logos before the opening of a typical motion picture serve as a reminder of the complexity of most movie deals. Sometimes the international market seems additionally obvious to the audience when the various actors represent multiple nationalities and enhance the worldwide appeal. International box office for total film revenue has grown from 40% in the 1980s to well over 60% nowadays (Ulin, 2014). Global appeal, however, is only one pathway to financial success. In the case of surprise hits (e.g., Stranger Things), new faces of unknown talent and a very compelling story make the difference. Distribution is economic on one hand but creative on the other. If money was the only factor, the biggest deal would always succeed.

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Television Sources While consumers are familiar with their cable or satellite provider, the industry tracks them as multichannel video program distributors (MVPDs). Four such U.S. companies have over 10 million subscribers as of 2017: AT&T-DirecTV (25.3 million), Comcast (22.5), Charter Communications (17.2), and DISH (13.7). The rest (controlling less than 20% of the 110 million homes in the United States) have fewer than 5 million subscribers (Farrell, 2017). After decades of top-ten MVPDs, the consolidation into the big four distributors nowadays rivals the movie studios and broadcast networks. MVPDs typically use a subscription model that favors the one-size-fits-all or smorgasbord approach. At the other extreme are services like Amazon Prime, Vudu, and Google Play that offer on-demand streaming. But in the middle are new streaming services (virtual MVPDs) that appeal to cord-cutters and others who want to pay less for the channels they watch. DirecTV Now, PlayStation Vue, Roku, Sling TV, and YouTube TV offer less than the full list of cable channels but strive to offer the most popular options at a monthly cost between $20 and $40. Palladino (2017) has noted the intricacies that differentiate the streaming options, especially with regard to the number of people who can simultaneously use the same streaming account: You only get one stream with Sling Orange, but if you upgrade to the $25-per-month Sling Blue, you’ll get three simultaneous streams. DirecTV Now doesn’t hide the fact that you’ll get two concurrent streams with your subscription, and that doesn’t increase if you pay for a higher-priced tier of the service.

Other Strategies One strategic opportunity for streaming services like YouTube TV and other virtual MVPDs that include advertising is to target commercial messages to individual viewers. Targeted advertising would capitalize on the unique difference between regular MVPD channels and their virtual counterparts. At this writing, however, all of the recent services are delivering the same television commercials as one would see on regular channels—namely, undifferentiated by appeal to individuals (Poggi, 2017). By 2010, the popularity of high-speed Internet in most American homes transformed broadband from a luxury to a necessity. Given a choice between Internet and conventional cable, some homes have “cut the cord” to cable or satellite service but not to web access. Younger viewers tend to be cord-nevers rather than cord-cutters (Van Esler, 2016). They (and many older viewers) seek fewer channels at a lower monthly cost. In response to streaming options, traditional MVPDs have attempted to create their own “skinny bundles” of channel offerings. Hoefflinger (2016) has defined skinny bundles as “just the channels most of us care about,” which are in contrast to the total number of channels built into even the lowest-tier service that still includes channels viewers seldom care about. Different viewers care differently, of course, but for many years MVPDs had an economic reason to provide thicker bundles: value creation. The tactic is similar to how film studios formerly packaged bundles of old movies to local television stations. To get the best titles buyers have to take a few titles with low audience appeal. But now that virtual bundles have become less expensive than traditional bundles, the big MVPDs have begun to build comparable channel packages. Another strategy they employ is to withhold channels from the streaming services (Kafka, 2017). The future is unclear, but in 2017 CEO Jeff Bewkes of Time Warner projected that virtual MVPDs were three to five years away from passing the largest MVPDs (Pressburg, 2017). As noted earlier, the specialization of content to a particular producer, distributor, or exhibitor is less certain. Newer media are sometimes at odds with specific microeconomic ideas that “[media] 224

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firms (including businesses and corporations) exist and make decisions to maximize profits” (defined as the theory of the firm, according to Investopedia, 2018). Audiences nowadays, however, can frequently bypass the middleman distributor, a concept called disintermediation. Albarran (2017) noted that the theory of the firm is less useful with disintermediation:“In the 21st-century media economy, market structure cannot clearly be defined using broad and simplistic labels” (p. 23).

Media Exhibitors As focused as this chapter has been upon distribution, the constellation of exhibitors in the media value chain should not be ignored.This section examines each medium with regard to how it is supplied for each of its components.

TV Television in the United States is a combination of legacy and newer forms of media.The traditional broadcast networks began as four (with Dumont) and then three networks until the arrival of Fox in the 1980s. The number grew to six (not counting Hispanic networks) with UPN and the WB in the late 1990s but shrunk back to five networks when the WB and UPN merged in 2006 to become the CW. The changes were direct evidence of distributors like Fox and Warner Brothers taking full advantage of the new legal limits of owning stations in big cities. As the number of Hispanic viewers has grown, six major Spanish-language networks (not counting specialty networks) are leaders in this area of the television marketplace: Azteca, Estrella TV, Galavisión, Telemundo, UniMás, and Univision. Network-affiliated stations (affiliates) and their digital subchannels (diginets) still broadcast 6-MHz bandwidth terrestrial signals to mostly wired homes. Cable and satellite distributors also offer channels, called networks, which use market segmentation strategies to serve up the nonbroadcast viewing (for which the relative proportion has shrunk). Starting in the 1980s, cable television created network after network that became competitors to over-the-air channels. Scheduling cartoons on Saturday morning vanished with the arrival of 24/7 alternatives from cable/satellite or multichannel providers. Further complication arrived in the 2010s with libraries of streaming channels delivered through “over-the-top” (OTT) devices (e.g., Chromecast, Apple TV, Roku), including videogame boxes like Xbox and Nintendo. These individual OTT channels grew into OTT services (virtual MVPDs). One giant question is whether TV stations can evolve quickly enough into “Internet-enabled” airwaves (under the name “TV 3.0”) to survive the OTT world. The ATSC 3.0 is a third iteration of high-definition channel realignment after the turn of the century, “created with the idea that most devices will be Internet-connected” (Morrison, 2016). The system will be a hybrid of old transmission over the air but with targeted advertising (sent via mobile phone broadband components) that will be integrated into the programming. Some broadcast groups are also considering programming that would compete with shows seen by millennials on streaming platforms like YouTube and Twitch. For example, Sinclair, a group owner in 81 television markets, announced a 52-market rollout in 2017 of broadcast programming designed to target “millennial mothers in mornings and throughout the day, younger girls after school and younger gamers during prime time” (Mirabella, 2017).

Radio Depending on the format, radio stations acquire news and music content from distributors. Entire radio program formats are offered by such syndicators as Premiere, IHeartMedia, CBS, and Westwood One (Newton & Kaiser, 2013; Norberg, 2016). IHeartRadio became the first large-scale 225

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Internet radio aggregator (over 800 U.S. broadcast stations available to mobile devices and video game systems) and later added “music recommender” services in 2015 to compete with Pandora and Last.fm, two other such services. Another competitor, Spotify (from Sweden), serves 50 million paying subscribers worldwide but has never turned a profit. Some U.S. artists (e.g.,Taylor Swift) have pulled their music from Spotify. Radio depends increasingly on mobile phone dissemination for listeners not in their automobiles. In the last century, potential listeners outside their homes, work, or cars might carry a portable radio for music, but gradually the Apple iPod and access to downloaded music cut into total radio listening. The trend is moving in favor of radio again, as users discover that their smartphone is a source of live radio programming at no additional cost (e.g., using the iHeartRadio app). Listeners use a portion of their cell phone plan (and listen to commercials) but receive free 24/7 music, plus timely local information unavailable on broadband services like Spotify and Pandora, in a manner unimagined a decade ago.

Streaming Audio One of the concerns within the music industry is whether on-demand streaming audio services will cannibalize download or CD purchases. Wlömert and Papies (2016) recruited panels of major German distributors and measured the introduction of Spotify in 2012. They found an overall positive effect on revenues to music companies despite the obvious decline in traditional purchases.

Newspapers Syndicates supply columns, news content, and comic strips to daily and weekly newspapers in the United States. The New York Times News Service and the Associated Press are the major suppliers of national and international news, along with Tribune Media and Universal Press. Comic strips have their own dominant syndicates (e.g., King Features) as do columnists (e.g., Washington Post Writers Group). A more complete list is available at www.columnists.com/resources/guide-to-syndicates. The outlook for newspaper revenue is often gloomy. Declines in circulation and display advertising lead some researchers to wonder how long major-market daily newspapers can survive. Again, the answer likely lies in digital content opportunities and strategic alliances with electronic media. Newspapers can deliver video through their web apps and their ability to give in-depth coverage to local stories and politics easily rivals the radio and television outlets in their respective markets.

Mediated Content The “messages” sent by sources to audiences make up the content being produced and distributed. Depending on the medium, the types of content can be enumerated. Ulin (2014) notes the audience’s genre preferences for scripted entertainment on television: action, romance, comedy, thriller, drama, history/reality, family, music, and adult content. Unscripted entertainment includes sports and live news/interviews. For radio, content is typically format-driven from as many as 120 different formats that reduce to a handful of major music formats: Pop, Rock, Country, Urban, Dance, Easy Listening, Oldies, Latin, Gospel, Classical, and others. Stations strive to retain listeners and register AQH (average quarter hour) and TSL (time spent listening) ratings. Advertisers care most about ratings, which translate into total or target listeners, but programmers focus upon shares, which translate into competitive advantage. Radio programmers also pay attention to unique listeners, known as the cumulative audience, called cume.

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Sequence of Content Creation The path for media content starts with an idea and ends with audience consumption. In terms of vertically integrated media conglomerates, the stages are usually labeled production, distribution, and exhibition. Adams and Eastman (2013) have traced the path of a typical television series on broadcast and cable networks. Ideas become properties that are submitted for development (Ulin, 2009). Maybe 600 concepts are pitched by producers, many of whom have a successful track record. An idea for a new situation comedy (sitcom) produced by Chuck Lorre (Two and a Half Men, Big Bang Theory) gets more attention than a similar show produced by a newcomer. Networks take options by signing a step deal that sets forth the economic parameters if the show makes it to the schedule or even to success. An expanded treatment or final script is commissioned, with the network providing the development money at each step. Maybe the idea will be produced as a movie. If it succeeds, then it becomes a series. If the idea fails, then all parties will decide it was only ever a motion picture. In 2017, the Writer’s Guild of America (WGA) specified no less than $28,052 for the first draft of a half-hour show. Scripts typically run $50,000 for a lesser-known script writer to over $200,000 for someone with an established record. The schedule of WGA fees also includes fees for full-script orders and a bible (which specifies characters and their history). The next stage is a pilot episode, for which program costs can run at least $1 million for a sitcom. Networks at the first step can reject and turn over creative control. After that, they can reject, shelve, or assign to a different producer, while providing money for script development, a pilot, or a limited order of episodes. Some networks push for presentation films that run five or ten minutes. Adams and Eastman (2013) outline the top five factors that decide the fate of a network television series: viewer preferences, costs, similarity to ideas that have worked, ability to deliver advertising target audiences, and competing shows. Beyond that list, a second list includes another five considerations: writer/producer reputation, appeal of the talent (performers), time period availability, compatibility with returning shows, and longevity of the concept. A third list considers syndication to other countries, ability to reuse the show, size of DVD or OTT sales, cost-sharing with other companies, and cross-promotion tie-ins. Littleton (2012) reported on the trend toward allowing distributors to “fast-track” a successful sitcom, based largely on the reputation of its creator with previous series.The so- called 10–90 method chooses a sitcom idea with a commitment to ten episodes to run on a cable channel or broadcast television network. The deal stipulates that if the series is an initial success, then the commitment is made to produce 90 more episodes, so that syndication rights can be presold, rather than waiting four seasons to accumulate the industry-standard 100 episodes necessary for off-network or off-cable syndication.

Valuation of Content Albarran (2017) has described a media value chain that begins with the creation of an idea. Sometimes the idea is sold or “optioned” to a producer, which continues the rest of the value chain: the production, distribution, and exhibition sequence described earlier. Creators “pitch” (sell) their ideas to studios and networks. With media scarcity, the number of ideas far out-supplies the number of opportunities. Albarran also noted that some parts of the value chain disposed of non-core assets at the same time that newer media companies like Google attempted a “different approach to vertical integration by attempting to be all things related to the Internet” (p. 47). Ulin (2014) has identified four drivers of value: time, repeat consumption (e.g., media platforms), exclusivity, and differential pricing.Time varies with how immediate the audience demand to

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consume a media product is (versus waiting for a less expensive opportunity). Repeat consumption considers the potential for a media product to be consumed multiple times in different “windows” of availability on various media platforms (Shay, 2015). Exclusivity applies to whether the consumer has functional alternatives. Finally, differential pricing capitalizes on the other three drivers in combination. As the number of program suppliers and exhibitors has grown with digitalization, the chance of hearing “no” from one or two networks is less of a death sentence. On the 1990s comedy series Seinfeld, viewers got a taste for how ideas are pitched, in that case “a show about nothing” (i.e., nothing beyond the relationships among friends). In today’s content climate, the chance of finding a home for a highly unusual show, termed “high-concept” as networks look to differentiate their content, gets somewhat easier in terms of generating a “breakout” hit. Even then, the sameness is evident for the next miniseries with a similar protagonist, like the story of a mysterious girl who has a mysterious past (e.g., The Fifth Element, Blindspot, Stranger Things, The OA, Logan). Not every new idea is really a new idea, but a growing number of distributors feed a growing number of channels and streaming platforms. Content producers often buy “new” ideas but sometimes develop brand extensions in the form of prequels, sequels, spin-offs, and remakes (Ulin, 2014). The money saved in repurposing old ideas, scripts, and concepts is sometimes lost. But the idea of repurposing an old idea is intoxicating and helps build the new season.When it works, even meager success removes the need to buy or develop new ideas. In 2017 CBS had high hopes for Little Sheldon, a prequel to Big Bang Theory. Regardless of strategy, content producers and distributors in the United States earned between $20 and $40 per cable subscriber per year, according to 2015 RBC data (Spangler, 2016). In terms of EBITDA (earnings before interest, taxes, depreciation, and amortization) per subscriber that year HBO led with $44.40, followed by Netflix ($33), CBS ($31.84), and ESPN at $21.95. When measured per hour, however, ESPN ranked first ($0.35). Economics of content are based on the nonphysical, non-consumable nature of information (Bates, 1990). It is a public good and is readily shared by those without the physical means for production or exhibition, no longer bound by space or time or heavy investment in equipment. Barriers to entry are low when someone with compelling information or other UGC adds it to YouTube or uses Facebook Live to reach followers. Ulin (2014) notes that motion picture studios now struggle to compete in a media world “where infrastructure needs are now commoditized and minimized, where a sole producer with a Web site can achieve equal reach” (p. 4). On the other hand, the major producers and distributors have a huge advantage in terms of promoting big-budget programming to a mass audience. It is customary for a major motion picture to require an amount equal to the production cost on campaigns advertising or otherwise promoting the film and its stars. In contrast, niche programs rely on word of mouth as amplified in some cases by viral campaigns on social media. Twitch is a good example of streaming content that grew large numbers of followers (over 2 million unique viewers per month) without an alliance with a major content provider or distributor. In 2014, Amazon purchased Twitch for almost $1 billion after it attracted 100 million visits per month.

Supply and Demand Considerations In the case of both radio and television, stations and networks are constrained by a schedule. Time slots are consumable. Prime-time network programs account for 8,800 hours per year (Adams & Eastman, 2013). Newspapers can expand sections to accommodate more content and the supporting advertising. Movie theaters have a limited number of screens and make decisions based on holiday and summer seasons, for which the major studios time their release dates for big-budget films.

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But by 2017 companies like Netflix operated as channels without regard to scheduling. Online streaming services are more like 24/7 subscription libraries of media content (what you want, when you want it) than advertising-supported media, but legacy media and libraries provide the same content function. With the exception of live events, media scholars wonder when the tipping point will be reached, where the library metaphor is more apt than the airline schedule. Regardless of when that might occur, distributors who create libraries of on-demand content are not constrained by scheduling options. In this sense, the long tail of lower-demand shows is viable (Waldfogel, 2017). Exclusivity remains an economic boundary for certain second-window movies available on either Amazon or Netflix but not both. In the case of digital television stations, broadcasters have extra platforms (diginets) that create second and tertiary channels bound to a schedule. Themed genres segment the viewers by age or appetite for something different. Digital radio has a similar capability to multiplex its assigned frequency to reach different HD radio audiences with additional music formats.

Strategic Alliances As Albarran (2017) has noted, an alliance with “web portals, niche websites, and Internet service providers is a widely adopted strategy among traditional media companies” (p. 73). For example, NBC, ABC, and Fox collaborated to launch Hulu to form such a strategic alliance, which Albarran (2017) characterizes as a way “to increase their reach, acquire niche and new audiences, construct web properties, build cross-platform structures, and expand their brands” (pp. 73–74). Albarran (2017) also classifies these new business models as advertiser-supported, subscriptions, and pay-per-use.

Technology Another major influence on distribution is technology. According to Albarran (2017), it is “one of the most disruptive forces in the media economy, primarily because media markets are technologically dependent from all positions on the traditional media value chain: production, distribution, and exhibition” (p. 62). Additionally, lower barriers to entry for new distributors result when digital technology lowers distribution costs. In the 1980s, television stations would receive syndicated shows on film and videotape delivered by UPS or FedEx. Satellite distribution eased that burden. Nowadays the Internet connects consumer to content owner, which occasionally disintermediates the need for a distributor. As a result, distributors must look for any means to own content or coproduce with upstart suppliers.

Strategic Considerations for Distributors and Exhibitors Scholars (e.g., Eastman & Ferguson, 2013; Ulin, 2014) have described “windows” as opportunities to consume content, with attention to when a particular program is shown. Until recently, this was the sequence for a major motion picture: (1) theatrical release, (2) home video and DVD, (3) pay television, (4) free television (broadcast), (5) hotel/motel, (6) airline, (7) pay-per-view (PPV) or VOD, (8) nontheatrical, and finally, (9) cable network and TV station syndication. Over time, the windows have changed positions or closed forever (Doyle, 2016). For most television programs the contemporary sequence is (1) network, (2) off-network, (3) first-run, and (4) syndication (stations or diginets or OTT). Made-for-syndication talk shows, for example, begin as first-run programs. Some media content like soap operas and live competitions are seldom seen after their first showing. Scripted shows are easier to repurpose in another window than unscripted “reality” programs, but season-ending compilations (e.g., The Bachelor) give

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audiences an opportunity to relive a moment (and the producers a way to repurpose old material without much expense).

Syndication Programming offered by various media can be produced locally but much is licensed through program syndicators. This applies to TV, radio, and print (as outlined later). Syndication is one of the windows discussed earlier. Some major suppliers dominate each medium but there are dozens of choices (e.g., broadcasting has a very long list at http://rbr.com/media-links/networks-syndicators). Old strategies notwithstanding, the new question regarding availability windows is if (not when) a medium loses its relevance in the media content hierarchy. It is impossible to predict whether ABC, CBS, or NBC (the networks with the longest history) will survive in their current state or merge with a technology company, like Facebook or Google. It should be noted that some past mergers of giant corporations (e.g., AOL-Time Warner in 2000) were disastrous failures. An even newer consideration for distributors and content owners is stacking rights, which permit the simultaneous “streaming release” of all episodes of a program, either in-season or postseason. Netflix and other OTT providers have popularized postseason showings of critically acclaimed series, such as Breaking Bad and Dexter. Original series (not acquired after a previous network showing) like House of Cards, Orange Is the New Black, or Stranger Things are often released all at once, often with a great amount of prerelease promotion for a new season. Broadcast and cable networks have the option of holding back their weekly “day and date” release while selling stacking rights for previous seasons to other exhibitors, like Netflix. At this writing, in-season stacking rights are controversial, with some networks (NBC and ABC) eager to negotiate complete stacking rights for new season renewals (Andreeva, 2016). Other broadcast and cable networks (and their suppliers if ownership is not retained by the network) accept the “rolling five” method, where the network retains streaming rights to only the most recent five episodes during the season for any series. Another strategic consideration for content owners and distributors is the withholding of episodes or second seasons for runaway hits (e.g., House of Cards or Stranger Things). If the second season of Stranger Things (Netflix) had been ready sooner than a projected Halloween 2017 release, the content owner could have accelerated (or further delayed) a window to build demand. If partners are in the mix, however, it is unclear who decides the timing of new episodes. As with networks and studios, attempts to differentiate the quality of a media property is sometimes a matter of branding appeal (e.g., Netflix versus Hulu versus Amazon Prime).The annual Emmy Awards often create demand for critically acclaimed shows that viewers may have overlooked (or lacked a subscription for access to them). To the extent that promotional tactics can capitalize on past success, newer platforms can position their total service as superior to functional alternatives. On the other hand, people watch individual shows, not platforms, and platform loyalty is often thin. OTT services have no flow-through, lead-in, or lead-out. And like HBO, Netflix licenses content from other producers for a period of time.When it periodically loses the rights to shows that viewers might not have seen yet, perhaps that last opportunity could influence a viewer’s decision to watch something, as a last chance before it vanishes. This strategic appeal is not quite the same as appointment television, but is still a reasonable substitute.

Audience-Side Economics and Strategic Response Albarran (2017) noted the importance of attention economics, defined as focused mental engagement on an activity, including media consumption. The author further pointed out that, in addition to examination at the individual consumer level, “researchers could also examine the strategies media 230

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companies use to promote relevance among consumers, as well as how different types of content promote greater or lesser attention” (p. 25). This section of the present chapter focuses upon the audience for media content. Albarran (2017) also posited the “audience fragmentation is at an all-time high” and media consumers are “more empowered than at any other time in media history” (p. 65). Clearly the combination of more audience power and less time to attend to mediated content and messages is a toxic brew for content owners and distributors.Yet they must respond to maximize the value and revenue of their goods and services. Historically the value has come in part from subscriptions and purchases, but primarily from advertising. As noted elsewhere in this chapter, the live schedule, even for prerecorded content, has placed the consumer in a flow of information and entertainment interspersed with “a word from our sponsor.” Moviegoers see the advertising before the film. Broadcast audiences see the commercials before, during, and afterwards. Print readers selectively attend to display advertising that is sometimes in separate sections or printed on better-quality newsprint.

Old Scheduling Strategies and New Realities Strategies for distributing content in a media world with low barriers to entry are vastly different today because the old strategies are less effective. Still, it is necessary to understand the old strategies, most of which gained popularity in the heyday of broadcast television when scheduling was king. Adams and Eastman (2013) list 14 “classic” scheduling strategies from television’s era of limited choices: anchoring, lead-in, hammock, blocking, doubling, linchpin (also known as tentpoling), bridging, countering, blunting, stunting, supersizing, seamless (transition between programs), rotating, and strip sampling (not the same as stripping a syndicated game show or off-network rerun). Each strategy was born in a three- or four-way race for viewer attention in prime time (e.g., 8–11 p.m. Eastern). If a broadcast television network has an abundance of successful programs, it can still attempt the hammock strategy to position weaker or new programs between stronger shows.Viewer inertia has kept this strategy from fading away completely even in a multichannel universe. If fewer strong series are available to a struggling network, it can position the strongest at the beginning of a primetime evening as an anchor (or lead-in) to weaker shows, or in the middle of prime time at 9 p.m. as a tentpole or linchpin. Showing the same type of program with back-to-back choices is called blocking and competitors can choose a different type of program as a countering strategy (blunting is a variant where competitors go head-to-head with an identical genre—e.g., sports versus sports). Stunting is event programming like an awards show. Bridging is rarely used, but is a strategy that attempts to get the jump on the competition by starting shows earlier. Doubling and supersizing are attempts to stretch the time period for a particular show by showing two episodes or lengthening a single episode. Rotating strategy is used when there are not enough episodes in a series, so a single time period alternates two shows. Seamless strategy removes the natural break between shows to hold onto the audience. Strip sampling is used to put the same prime-time program every evening at the same time to form a habit, but it burns through episodes more quickly and was last used with temporary success when ABC ran Who Wants to Be a Millionaire?. These scheduling or program strategies began to crumble when more choices became available and viewing options changed.Viewers acquired DVRs that obviated the need for so-called appointment viewing. Being able to watch a missed show online the next day erased the “must-see” element of live sampling with prime-time programs. With the rollout of specialized cable channels, the need for broadcast networks to serve different appeals gradually vanished in the 1990s. Saturday morning cartoons vanished with the arrival of all-cartoon networks. Game shows exited weekday mornings when the Game Show Network came on the scene. 231

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Streaming television series and movies have quickly evolved into binge viewing, where the audience watches three or more episodes of a series in a single session (Deloitte, 2015). Such viewing is increasingly commonplace, as 86% of the younger millennials and even 33% of those over 69 years old engage in binge-watching TV series (Statista, 2015). Distributors make strategic decisions on whether to increase the value of a property by building anticipation with a weeklyrelease tactic (e.g., Game of Thrones, Breaking Bad) or by generating a stunt appeal with all-at-once release (e.g., House of Cards, Orange Is the New Black). The decision is complicated by partnerships with exhibitors. Cable networks favor weekly release and OTT exhibitors like Netflix prefer binge-worthy shows. Other media platforms (e.g., motion picture distributors) sometimes use a variation on these strategies whereby a tentpole is an imagined franchise, a series of sequels that justify initial investment.With radio, the choice among music formats represents a blocking strategy. Newspapers segregate content by sections (e.g., sports, business, and lifestyle). Consumer habits are changing in a subscription-based world, where commercials are absent or very limited. For home entertainment, HBO was always there as an option, but had limited content and a nontrivial premium price. Netflix began as a mail-order video rental company that began a service that is the functional equivalent of a channel. The media world is finally at the point that there is a Netflix button on remote control devices. Statista (2017) estimates there are over 94 million Netflix subscribers worldwide in 2017 (four times the total in 2012), a number that may call into question the centrality of advertising in what has been a dual product market—namely, selling content to consumers and selling consumers to advertisers. Both markets compete on scarce attention to messages but the former market focuses on information and entertainment and the latter upon commerce for goods and services.

New Strategies As program schedules are replaced by digital libraries of content, content distributors and networks focus more on acquiring exclusive content. Ulin (2014) predicted that downloads and video on demand (VOD) have begun to “dramatically” influence and change the “historical windowing patterns of films and TV” (p. 46). Furthermore, set-top boxes (e.g., cable, satellite, TiVo) have begun to integrate multiple services to provide their subscribers with central locations for purchasing on-demand (or subscribing) to services that move directly to the high- definition room display, without the need for a Fire TV Stick (Amazon) or Chromecast (Google) plug-in device. Home digital assistants, like Amazon’s Alexa, Google Home, and Apple’s Siri, could eventually be the command central for set-top boxes, so future strategies depend on adoption rates and interoperability.

Consumer Spending A key consideration for content producers, distributors, and exhibitors is the extent to which customers spend on media-related products and activities (Albarran, 2017, p. 135). The Census Bureau stopped reporting media spending information in 2012, but the Bureau of Labor Statistics (Wesley, 2016) estimates that the average household spent $2,827 on entertainment, compared to $6,462 on food. Spiegel (2016) identifies “ubiquity of mobile devices and distribution platforms providing instant access” as the key driver of value for media content, along with new distributors angling for synergy, the importance of a strong content portfolio, innovation, and security. With the general decline of newspaper subscriptions and time spent with legacy media like broadcast and cable, consumers have greater interest in mobile media. One only needs to observe the

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growing number of handheld glowing rectangles (e.g., nearly every shopping cart toddler) to suspect a growing reliance on custom media experiences. Smartphones are clearly public necessities. Home Wi-Fi eventually became a household necessity, even for cord-cutters. Consumers continue to replace large-screen media displays for their homes, but the cost for a 50-inch television has fallen from $1,000 in 2010 to $500 in 2017 (Greenwald, 2017). One can easily find a discounted HD receiver for $400 or less. The number of screens per household continues to proliferate.

Advertising Future strategies also fly directly into the face of the established realm of advertiser-supported programs. No one expects advertising to vanish, but most observers worry that avoidance of Internet and broadcast display advertising has become too easy. Albarran (2017) has predicted “a slow, secular decline” for most areas of media advertising (p. 184). The critical need to hold onto an audience (e.g., time-spent, average quarter-hour ratings) was built into the DNA of past strategies. Commercial-free venues like Netflix (and HBO) have given viewers a taste for no interruptions and they seem to enjoy the freedom. The unanswered question is how much the consumer is willing to spend. Switching from a $30/month landline phone to a $100/month smartphone plan is sufficient evidence that consumers can tolerate spending more if the value (or perceived necessity) is great enough. Even audiences with a preference for traditional (“legacy”) media are tired of paying for all the channels. At the end of 2016, TiVo collected survey data that revealed a rising percentage of multichannel subscribers (77%) who desire fewer channels through some “a la carte” scheme. As discussed earlier, the popularity of Sling and YouTube TV is evidence that skinny bundles of channels have become popular among many heavy-use media homes.

In-App Purchases One potential new revenue stream for content owners and distributors lies within the applications (apps) through which most users of mobile devices obtain free and premium streaming content. Many gaming apps are free unless users buy a version without in-app purchases. If content providers can adapt this revenue stream, it might provide lower cost to consumers (and better access to advertisers). For example, being offered the choice to pay $2.99 to watch a movie when compared to the alternative of watching a five-minute “product information” presentation (and completing a survey) could lure viewers to choose the “free” option. Albarran (2017) has summarized the many strategies of free content. The author’s suggested business models are strategic responses to new media realities: (1) direct cross-subsidies (e.g., free cell phones with paid usage), (2) three-party/two-sided markets (e.g., free content in exchange for free advertising), and (3) freemium models (e.g., give away samples and sell content). Freemium models, as noted earlier, are very common nowadays with free phone apps that offer ingame purchases.

Conclusion The mediated world has transformed from discrete media to new media forms that often alter functionality and audience behavior. The common appliance is the screen, now portable, not solely for television channels but also for books, games, news information, and (virtual) human communication. The key game changer is connectivity.

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Although legacy sources of media are beginning to see competition everywhere, legacy distributors have new markets for their products. Facebook is a good example. Seetharaman and Marshall (2017) reported that Facebook was seeking up to 30-minute episodes in a variety of genres: sports, science, pop culture, lifestyle, gaming, and teens. Producers and distributors have opportunities for old and new content. Facebook wants users to stay longer and return more often for fresh programming and information. The potential to reach Internet-connected television audiences reached 74% in 2017. It seems likely that existing sources of information and entertainment must strive for exclusive or otherwise unique programming to remain competitive, or survive at all.The media industries have experienced dramatic change every ten years or so in the past quarter-century, but the newest nontraditional sources represent the greatest opportunities to distributors (and threats to existing business models). Media companies must enhance value of their content the old-fashioned way, by earning the attention of audiences. Media researchers need to develop newer models for program choice and distribution economics.

Research Agenda for the Next Decade Media scholars should continue to focus on economics, social uses, and predictive/heuristic models but also attempt to measure the new behaviors of media consumers. Mergers and acquisitions occasionally foreshadow as well as reflect the new media realities of usage. One important area might be the continued role of advertising in an environment increasingly hostile to advertising (Wilbur, 2015). Another area ripe for research is the development and testing of both competition and strategic models. Models of competition are still relevant (Adilov & Martin, 2013). But with regard to strategic models it has been decades since mainstream media journals have published studies on audience inertia and lead-in effects. Models of audience choice are somewhat limited to the studies by Webster and colleagues (e.g., Taneja, Webster, Malthouse, & Ksiazek, 2012; Webster, 2011; Webster & Ksiasek, 2012;Webster, 2014). Additionally, nonlinear consumption of content needs better measurement and scholarly attention, especially for new media entrants, like Netflix,YouTube, Apple, and Facebook. Media platforms themselves deserve more attention because they seem highly fluid with each passing season of television. The existing work by media scholars (e.g., Kim, 2016, Ksiazek, 2011) is a good starting point. Missing detail about the sustainability of escalating numbers of new television series is a specific need that should erupt about 2018 or 2019.The future of movies looks a little dim at this writing, with the failure of many major movies at the summer box office (a trend that dates back to the rise of Netflix). Finally, scholars must turn their attention to media brands, not because they have been ignored (e.g., Kim, 2017) but because the newest ones (e.g., Netflix) might be understudied. Malmelin and Moisander (2014) set forth an agenda to follow, complete with a review of research literature. The authors note the complexity (which suggests the urgency) of the situation with regard to media brands. Better theory is needed, although the media companies themselves are using some version of trial and error to ensure their success (which should be assessed by scholars). The distribution business shares the same goal of other businesses, not just profitability but also survival.

References Adams, W. J., & Eastman, S. T. (2013). Prime-time network programming strategies. In S. T. Eastman & D. A. Ferguson (Eds.), Media programming: Strategies and practice (9th ed.). Boston, MA: Thomson Wadsworth. Adilov, N., & Martin, H. J. (2013). Editors’ note on future directions for the Journal of Media Economics. Journal of Media Economics, 26(3), 115–119. doi:10.1080/08997764.2013.828522 Albarran, A. B. (2017). The media economy (2nd ed.). New York: Routledge.

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Content/Program Distribution Andreeva, N. (2016, May 15). NBC’s Bob Greenblatt calls in-season stacking rights “the future of our business”, talks program ownership. Deadline | Hollywood. Retrieved from https://deadline.com/2016/05/bobgreenblatt-in-season-stacking-rights-nbc-1201756628/ Arrese, Á. (2015). From gratis to paywalls. Journalism Studies, 17(8), 1051–1067. doi:10.1080/1461670X.2015. 1027788 Ballon, P. (2014). Old and new issues in media economics. In The Palgrave handbook of European media policy (pp. 70–95). Basingstoke: Palgrave Macmillan. Bednarski, P. J. (2017, March 6). OTT starts rocking the cable boat. MediaPost. Retrieved from www.mediapost. com/publications/article/296470/ott-starts-rocking-the-cable-boat.html Deloitte. (2015). Digital democracy survey. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/ us/Documents/technology-media-telecommunications/us-tmt-DDS_Executive_Summary_Report_ Final_2015-04-20.pdf Doyle, G. (2016). Resistance of channels:Television distribution in the multiplatform era. Telematics and Informatics, 33(2), 693–702. Draper, K. (2017, March 6). Here come big ESPN layoffs. Deadspin. Retrieved from https://deadspin.com/ here-come-big-espn-layoffs-1793002796 Eastman, S. T., & Ferguson, D. A. (2013). Media programming: Strategies and practices (9th ed.). Boston, MA: Thomson Wadsworth. Evens, T., & Donders, K. (2016). Television distribution: Economic dimensions, emerging policies. Telematics and Informatics, 33(2), 661–664. Farrell, M. (2017, February 20). Four for the money. Multichannel News, pp. 8–10. Ferguson, D. A., & Perse, E. M. (1993). Media and audience influences on channel repertoire. Journal of Broadcasting & Electronic Media, 37(1), 31–47. doi:10.1080/08838159309364202 Gimpel, G. (2015). The future of video platforms: Key questions shaping the TV and video industry. International Journal on Media Management, 17(1), 25–46. Greeley, P. (2017, March 6). Broadcasters getting schooled on Facebook. TVNewsCheck. Retrieved from www. tvnewscheck.com/marketshare/2017/03/06/broadcasters-getting-schooled-on-facebook/ Greenwald, D. (2017, January 11). The best TVs of 2017. PC Magazine. Retrieved from www.pcmag.com/ article2/0,2817,2372085,00.asp Hess, T. (2014). What is a media company? A reconceptualization for the online world. International Journal on Media Management, 16(1), 3–8. Hoefflinger, M. (2016, May 12). The skinny bundle will be neither skinny nor bundled—but it will be great. TechCrunch. Retrieved from https://techcrunch.com/2016/05/12/the-skinny-bundle-will-be-neitherbut-it-will-be-great/ Investopedia. (2018). Theory of the firm. Retrieved from www.investopedia.com/terms/t/theory-firm.asp Jang, S., & Park, M. (2016). Do new media substitute for old media? A panel analysis of daily media use. Journal of Media Economics, 29(2), 73–91. Kafka, P. (2017, February 9). Viacom says it’s keeping its newest shows away from streaming services. Recode. Retrieved from www.recode.net/2017/2/9/14562734/viacom-hulu-bob-bakish-daily-show-ott Kim, D.D.E. (2017). A unified measure of media brand personality: Developing a media brand personality scale for multiple media. International Journal on Media Management, 19(3), 197–221. doi:10.1080/14241277.2017. 1306531 Kim, S. J. (2016). A repertoire approach to cross-platform media use behavior. New Media & Society, 18(3), 353–372. Kinjo, K., & Ebina,T. (2015). State-dependent choice model for TV programs with externality: Analysis of viewing behavior. Journal of Media Economics, 28(1), 20–40. doi:10.1080/08997764.2014.997242 Ksiazek, T. B. (2011). A network analytic approach to understanding cross-platform audience behavior. Journal of Media Economics, 24(4), 237–251. doi:10.1080/08997764.2011.626985 Lasswell, H. D. (1948). The structure and function of communication in society. In L. Bryson (Ed.), The communication of ideas (pp. 37–51). New York: Harper. Levin, G. (2016, August 9). Too many TV shows? FX chief has all the numbers. USA Today. Retrieved from www.usatoday.com/story/life/tv/2016/08/09/number-of-scripted-tv-shows/88489532/ Littleton, C. (2012, June 26). Fast-tracked sitcom may be way of future. Variety. Retrieved from https://variety. com/2012/tv/columns/fast-tracked-sitcom-may-be-way-of-future-1118055951/ Lotz, A. D. (2007). The television will be revolutionized. New York: New York University Press. Malmelin, N., & Moisander, J. (2014). Brands and branding in media management—toward a research agenda. International Journal on Media Management, 16(1), 9–25.

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Douglas A. Ferguson Martin, C. (2017, January 29). Internet-connected TV penetration reaches 74%. MediaPost. Retrieved from www.mediapost.com/publications/article/293854/Internet- connected-tv-penetration-reaches-74.html Mierzejewska, B. I.,Yim, D., Napoli, P. M., Lucas, H. C. Jr., & Al-Hasan, A. (2017). Evaluating strategic approaches to competitive displacement:The case of the U.S. newspaper industry. Journal of Media Economics, 30(1), 19–30. Mirabella, L. (2017, March 8). Sinclair Broadcast rolls out TBD network targeting millennials. Baltimore Sun. Retrieved from www.baltimoresun.com/news/maryland/bs-bz-sinclair-launches-tbd-20170308-story.html Morrison, G. (2016, May 11). ATSC 3.0: What you need to know about the future of broadcast television. C|NET. Retrieved from www.cnet.com/news/atsc-3-0-what-you-need-to-know-about-the-future-ofbroadcast-television/ Munson, B. (2017, March 7). CBS CEO: All access, showtime OTT global expansion ‘very possible in not-toodistant future.’ FierceCable. Retrieved from www.fiercecable.com/broadcasting/cbs-ceo-all-access-showtimeott-global-expansion-very-possible-non-too-distant-future Newton, G. D., & Kaiser, M.T. (2013). Music radio programming. In S.T. Eastman & D. A. Ferguson (Eds.), Media programming: Strategies and practice (9th ed.). Boston, MA: Thomson Wadsworth. Norberg, E. G. (2016). Radio programming:Tactics and strategy. London: Routledge. Palladino,V. (2017, March 7). How YouTube TV stacks up against DirecTV Now, PlayStation Vue, and Sling TV. Ars Technica. Retrieved from https://arstechnica.com/business/2017/03/tv-streaming-services-comparedyoutube-tv-is-strong-but-struggles-with-variety/ Pantea, S., & Martens, B. (2016). The value of the Internet as entertainment in five European countries. Journal of Media Economics, 29(1), 16–30. Poggi, J. (2017, March 9). YouTube TV and Hulu aren’t reinventing the live TV ad model yet. Advertising Age. Retrieved from http://adage.com/article/media/reinventing-live-tv-ad- model-priority-virtual-mvpds/308202/ Pressburg, M. (2017, March 7). Time Warner chief Jeff Bewkes says streaming won’t pass big cable for 3 to 5 years. The Wrap. Retrieved from www.thewrap.com/time-warner-chief-jeff-bewkes-says-streamingwont-pass-big-cable-3-5-years/ Sass, E. (2015, October 15). Newspapers reach record numbers online—but revenues don’t follow. MediaPost. Retrieved online at www.mediapost.com/publications/article/260511/newspapers-reach-record-numbersonline-but-reve.html Schweidel, D. A., & Moe, W. W. (2016). Binge watching and advertising. Journal of Marketing, 80(5), 1–19. doi:10.1509/jm.15.0258 Seetharaman, D., & Marshall, J. (2017, March 4). Facebook steps up video efforts. Wall Street Journal. Retrieved from www.wsj.com/articles/facebook-intensifies-hunt-for-tv-like-video-programming-1488551106 Shay, R. (2015). Windowed distribution strategies for substitutive television content: An audience-centric typology. International Journal on Media Management, 17(3), 175–193. doi:10.1080/14241277.2015.1099526 Spangler, T. (2016, September 15). Netflix ‘monetization gap’: Streamer earns less per hour viewed than most TV networks, study finds. Variety. Retrieved from http://variety.com/2016/digital/news/netflix-earningsper-hour-viewed-1201861725/ Spiegel, B. (2016). 5 things driving tomorrow’s content deals. PwC. Retrieved from www.pwc.com/us/en/ industry/entertainment-media/publications/global-entertainment-media-outlook/driving-content-deals. html Statista. (2015). Share of consumers who ever binge view television shows in the United States as of November 2015, by age. Retrieved from www.statista.com/statistics/431166/binge-watching-tv-shows-reach-by-age-us/ Statista. (2017). Number of Netflix streaming subscribers worldwide from 3rd quarter 2011 to 4th quarter 2016. Retrieved from www.statista.com/statistics/250934/quarterly- number-of-netflix-streaming-subscribers-worldwide/ Taneja, H., Webster, J. G., Malthouse, E. C., & Ksiazek, T. B. (2012). Media consumption across platforms: Identifying user-defined repertoires. New Media & Society, 14(6), 951–968. Ulin, J. C. (2014). The business of media distribution: Monetizing film,TV, and video content in an online world (2nd ed.) New York: Focal Press. Van Esler, M. (2016). Not yet the post-TV Era: Network and MVPD adaptation to emergent distribution technologies. Media and Communication, 4(3), 131–141. Waldfogel, J. (2017). The random long tail and the golden age of television. Innovation Policy and the Economy, 17(1), 1–25. Webster, J. G. (2009). The role of structure in media choice. In T. Hartmann (Ed.), Media choice: A theoretical and empirical overview (pp. 221–233). New York, London: Routledge. Webster, J. G. (2011). The duality of media: A structurational theory of public attention. Communication Theory, 21, 43–66. Webster, J. G. (2014). The marketplace of attention: How audiences take shape in a digital age. Cambridge, MA: MIT Press.

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Content/Program Distribution Webster, J. G., & Ksiasek, T. B. (2012). The dynamics of audience fragmentation: Public attention in an age of digital media. Journal of Communication, 62, 39–56. Wesley, D. (2016, December 23). How much the average American spends on entertainment. Retrieved from www. creditloan.com/blog/average-american-spends-on-entertainment/ (see also www.pwc.com/us/outlook) Wilbur, K. C. (2015). Advertising content and television advertising avoidance. Journal of Media Economics, 29(2), 51–57. Wlömert, N., & Papies, D. (2016). On-demand streaming services and music industry revenues—insights from Spotify’s market entry. International Journal of Research in Marketing, 33(2), 314–327. Yu, J., Lee, H., Ha, I., & Zo, H. (2017). User acceptance of media tablets: An empirical examination of perceived value. Telematics and Informatics, 34(4), 206–223. doi:10.1016/j.tele.2015.11.004.

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PART III

Emerging Issues/Areas of Inquiry in MME Research

15 MEDIA INNOVATION Three Strategic Approaches to Business Transformation Richard A. Gershon

Introduction The international business landscape has become ever more challenging. Global competition has engendered a new competitive spirit that cuts across countries and companies alike. No business enterprise large or small remains unaffected by the desire to be profitable and strategically well positioned for the future. Such companies are faced with the same basic question—namely, what are the best methods for staying competitive over time? In a word, innovation. This chapter will examine the importance of innovation to the long-term success of media and telecommunications companies. Specifically, it will address three important questions. First, what does it mean to be an innovative media business enterprise? Second, why do good companies fail to remain innovative over time? Third, how do good companies create a culture of innovation? This chapter considers three strategic approaches to media business transformation.They include: (1) business model innovation, (2) product innovation and (3) business process innovation. Special attention will be given to three companies: Amazon.com, Apple and Netflix. This chapter will further consider some new and emerging areas of media innovation research. The arguments presented are theory-based and supported by case study evidence. As a methodology, the case study is unparalleled for its ability to consider a single or complex research question within an environment rich with contextual variables (Eisenhardt, 1989; Morgan & Smircich, 1980).

What Is Innovation? The study of innovation has a long-standing history in the field of business and economics research. Scholarship in this field is widely diverse but shares the common goal of explaining innovation within the larger context of organizational performance (Chesbrough, 2003; Christensen, 1997, 2003; Fagerberg, Mowery, & Nelson, 2006; Kanter, 1989, 2006; Shavinina, 2003;Tushman & O’Reilly, 1997; Utterback, 1996). There is a greater appreciation for the multiplicity of factors that can make an organization smart and creative. From organizational culture and technology prowess (internal strengths) to competitive business climate and technological change (external influences), these and other factors can directly affect a company’s ability to be strategically well positioned and successful (Fagerberg, 2006; Jaaniste, 2009; Marinova & Phillimore, 2003). In the field of media management and economics, the study of innovation has become one of the most critical areas of research (Dal

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Zotto & van Kranenburg, 2008; Dogruel, 2014; Gershon, 2014, 2017; Habann, 2008; Küng, 2011, 2017; Storsul & Krumsvik, 2013; Mierzjewska, 2011; Mierzjewska & Shaver, 2014).

Sustaining vs. Disruptive Technologies Renowned scholar Everett Rogers (1995) defines innovation as “an idea, practice or object that is perceived as new by an individual” (p. 11). In principle, there are two kinds of innovation—namely, sustaining technologies versus disruptive technologies. A sustaining technology has to do with incremental product improvement. The goal is to expand on an existing technology by adding new and enhanced feature elements (Christensen, 1997; Storsul & Krumsvik, 2013). A smartphone manufacturer, for example, is routinely looking to improve on basic design elements like speed, audio reception and graphics display. For most companies, sustaining technology is the most common form of innovation, often receiving more than 80% of the organization’s total research and development budget (Davila et al., 2006). Sustaining technology is very important because it provides the steady and necessary improvements in product design that guard against rival product offerings. It also demonstrates a commitment to brand improvement. The goal is to try to maximize value from an existing product without having to engage in a major product redesign and/or retooling effort in production. By doing so, a company can preserve market share, extend brand awareness and maintain profitability (Banbury & Mitchell, 1995; Christensen, 2003). In contrast, a disruptive technology represents an altogether different approach to an existing product design and process. It redefines the playing field by introducing to the marketplace a unique value proposition (Amit & Zott, 2012; Gershon, 2013a, 2017, 2013a; Kim & Mauborgne, 2005; Küng, 2011, 2017). A disruptive technology is the quintessential game changer. It sets into motion a whole host of intended and unintended consequences for the marketplace.

Why Is Innovation Important? Innovation is important because it creates lasting advantage for a company or organization. It allows a business to develop and improve on its existing product line as well as prepare the groundwork for the future (Aris & Bughin, 2005; Hamel, 2006; Küng, 2013). Successful innovation occurs when it meets one or more of the following conditions. First, the innovation is based on a novel principle that challenges management orthodoxy. As an example, Sony Corporation’s Ken Kutaragi, inventor of the PlayStation videogame system, initially met with a lot of resistance from the company’s senior management because the idea of developing a videogame system was not in keeping with their view of the Sony brand (Nathan, 1999). By combining the power of a small computer with high-end video graphics, the soon-to-be created PlayStation videogame would represent a major step forward in videogame technology. Second, innovation is systemic; that is, it involves a range of processes and methods. The success of Dell computers, for example, was built on five business process principles—specifically, (1) building an e-commerce platform for the sale of personal and laptop computers, (2) building computers using just-in-time manufacturing capability, thus eliminating large excess inventories, (3) constructing a highly sophisticated global inventory management system that would ensure a steady supply of parts and equipment for the company’s worldwide manufacturing facilities, (4) developing a direct-to-home sales delivery system, thus eliminating the need for traditional retail stores, and (5) building a 24/7 customer support center for the purpose of providing greater customer focus. As a consequence, Dell became a global leader in the sale and manufacture of personal computer equipment (Gershon, 2011).

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Media Innovation: Three Strategic Approaches Table 15.1 Successful innovation: feature elements. The innovation is based on a novel principle that challenges management orthodoxy.

The innovation is systemic; that is, it involves a range of processes and methods.

The innovation is part of an ongoing commitment to develop new and enhanced products and services.

Home Box Office: Developed the principle of premium television entertainment. Amazon.com: Established the world’s first and preeminent e-commerce business model. Amazon.com: Direct-to-home sales delivery, global inventory management, 24/7 customer support. Netflix: Online video rental, global inventory management, television/film video streaming. Apple: iPod → iTunes → iPhone → iPad.

Source: R. Gershon, adapted from Hamel (2006).

Third, the innovation is part of an ongoing commitment to develop new and enhanced products and services. Rather than relying on the success of one product, forward-looking companies are constantly challenging themselves to develop the next generation of media products and services. There is a tacit recognition of the importance of linking design strategies with an organization’s core competencies (Danneels, 2002). Consider, for example, that Apple introduced four major product types in the course of ten years: iTunes ( January 2001), iPod (October 2001), iPhone ( January 2007) and iPad ( January 2010). There is natural progression in product design and development (see Table 15.1). While most organizations recognize the importance of innovation, there is a significant difference of opinion regarding the method of and approach to innovation. For some business enterprises, innovation is deliberative and planned. It is built into the cultural fabric of a company’s ongoing research and development efforts, as evidenced by companies like Apple, where the emphasis is on constant product design and refinement (Lashinsky, 2012). In contrast, innovation can also be the result of a triggering event—that is, a change in external market conditions or internal performance that forces a change in business strategy. The challenge for such companies is to dynamically restrategize and adapt one’s resources and capabilities to meet the uncertainty of a changing, highly competitive media environment (Hensman et al., 2013; Oliver, 2016; Picard, 2004; Teece et al., 2016). The most successful companies are those that are able to adapt and adjust strategy faster than one’s rivals (Lal & Strachan, 2007; Naldi et al., 2014; Oliver, 2014). The successful introduction of the Apple iPhone in 2007, for example, forced dramatic changes in the cellphone industry. It challenged companies such as Nokia, Blackberry and Samsung to reenvision their product design and purpose. Such pivotal moments represent what former Intel CEO Andy Grove calls a strategic inflection point, a time when a triggering event in the life of a company requires new solutions or it faces the prospect of business extinction (Webber, 2011).

Business Model Innovation The term business model innovation involves creating entirely new approaches for doing business. Business model innovation is transformative; that is, it redefines the competitive playing field by introducing an entirely new value proposition for the consumer (Amit & Zott, 2012; Holm et al., 2013; Osterwalder & Pigneur, 2010). Business model innovation represents the development of new and unique ways to achieve financial success in support of a company’s larger business strategy (BadenFuller & Mangematin, 2013; Morris et al., 2005; Rayna & Striukova, 2016; Spieth et al., 2014). The study of business model innovation typically falls into two different research perspectives. The first

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Richard A. Gershon Table 15.2 Select examples of media and telecommunications business model innovation. • Apple • Amazon.com • Google • HBO • Netflix

Launched iTunes, the first sustainable MP3 music downloading business of its kind. Created the world’s preeminent EC business model for goods and services online. Helped advance Internet keyword search advertising and developed the principle of micromarketing. Introduced the principle of pay television service. Developed world’s most successful online video rental service.

Source: Gershon (2017).

perspective looks at the relationship between business model design and competitive advantage. The goal is to look at the connections between the selection of business model type and how it provides value for both the customer and organization (Amit & Zott, 2001, 2012; Küng, 2011; Osterwalder & Pigneur, 2010).The second perspective looks at business model innovation and context—specifically, the dynamic interplay between the business model and different ancillary issues, such as emerging technology (Doyle, 2010; Gershon, 2013a; Napoli, 2011; Schlesinger & Doyle, 2015), innovation and creativity (Nylund, 2013; Sylvie et al., 2012; Unsworth, 2001) and innovation failure (Christensen, 1997; Gershon, 2013b). In Blue Ocean Strategy, authors Kim and Mauborgne (2005) make the argument that to create new growth opportunities, innovative companies must invent an entirely new market space. They use the metaphor of red and blue oceans to describe the market universe. Red oceans are all the industries in existence (i.e., the known market space). Direct competition is the order of the day. In contrast, blue oceans describe the potential market space that has yet to be explored. Competition is irrelevant because the rules of the game are waiting to be set. In order to create new market opportunities, demand is created rather than fought over. Table 15.2 provides a comparison of media and telecommunications companies that are industry leaders in the use of business model innovation. Each of the said companies was first or second to market and provides the basic blueprint for others to follow.

Amazon.com Amazon.com, Inc., is an American-based electronic commerce company headquartered in Seattle, Washington. Company founder Jeff Bezos incorporated the company in July 1994. Amazon.com is the largest electronic commerce (EC) retailer in the world. Amazon employs a multilevel EC strategy. In its formative years, Amazon focused on business-tocustomer (B-to-C) EC—specifically, books. The challenge was to become more fully diversified in terms of product and service offerings (Brandt, 2011). In time, the company incorporated customer reviews and leveraged such information as a way to sell more products and services as well as improve the customer experience. Amazon has greatly expanded its third-party marketplace, where merchants worldwide can set up their own virtual stores on Amazon.com and sell their products alongside Amazon’s—all the while leveraging Amazon’s large customer base and credit-card-processing services. The value proposition for all would-be Amazon shoppers is exchange efficiency, which can be translated in one of three ways: selection, convenience and low prices (Gershon, 2014). In sum, Amazon.com has created an altogether new business model that maximizes the potential for instantaneous communication to a worldwide customer base.The company has taken the principle of exchange efficiency to a whole new level in terms of retail trade and distribution. It has created one of the most sophisticated supply chain management systems of its kind and fundamentally changed how retail trade is conducted in terms of information gathering, marketing, production 244

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and distribution (Matthews, 2012). The Amazon.com business model proved highly transformative. Soon other companies would follow suit by offering their own version of Amazon’s production and distribution system.

Product Innovation Product innovation refers to the complex process of bringing new products and services to market as well as improving (or enhancing) existing ones. Highly innovative companies display a clear and discernible progression in the products they make (Rainey, 2005). They force themselves to create newer and better products while challenging the competition to do the same (Annacchino, 2007; Brooke & Mills, 2003; Danneels, 2002). If successful, an original product innovation creates an entirely new market space and invites a host of imitators to follow. For that reason, being first to market can represent a huge advantage, as evidenced by such companies as HBO (pay cable television), Sony, (the Walkman portable music player), the Apple iPhone (digital smartphone), ESPN (cable sports network), Amazon.com (EC) and Netflix (online video rental and home delivery service), to name only a few. The difference of a three- to four-year head start can make a significant difference in helping to establish brand identity and market share. Some notable examples of media and telecommunications product innovation can be seen in Table 15.3.What is interesting to note is the disruptive and transformative effect that each of the said products had on the competitive playing field at the time.

The Power of a Good Idea What is the power of one good idea? From the groundbreaking design of the original Macintosh computer to the social networking possibilities of Facebook, the word “innovation” has come to mean the ability to create something new or entirely different. The best innovators have natural curiosity about their environment. They are keen observers of human behavior and one’s natural landscape. They are willing to juxtapose various idea combinations in order to see what happens. The principle of ideation represents the creative process for developing unique and original ideas for the purpose of advancing new product development (Kelley, 2005). Ideation has two main stages: (1) idea generation, where quantity and diversity of viewpoints matter, and (2) synthesis, in which ideas are discussed, refined and narrowed down to a small set of viable options (Cunha et al., 2015; Nylund, 2013; Küng, 2011). A good idea has to be malleable; that is, it must be capable of adapting to various designs and configurations. As Johnson (2010) points out, a good idea is really a network of possibilities. A good idea spawns infinite connections and opportunities.

Apple For most inventors, lightning strikes once or twice in the course of a lifetime, whereas for Steve Jobs (and by extension—the team from Apple) lightning has struck multiple times. What is most

Table 15.3 Product design and the power of a good idea. • The Macintosh computer, the iPhone • The compact disc • Theme parks and resorts • Social networking • Cable sports network

• Apple • Sony and Philips • Walt Disney • Facebook • ESPN

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important, however, is the degree to which Apple products have influenced consumer behavior by creating a type of digital lifestyle. From the original Mac computer to the Apple iPad, these and other devices have had a transformative effect in the way the public communicates. In 1976, Steve Jobs together with his friend Steve Wozniak helped popularize personal computing by introducing the Apple computer.The launch of the Apple Macintosh in 1984, with its simple-to-use graphics interface and software, challenged the prevailing thinking of the time that computers were strictly the domain of IT professionals in white lab coats. Instead, the Mac was intended for the everyday user (Lashinsky, 2011; Isaacson, 2011). In 1998, Steve Jobs (and the team from Apple) were responsible for the development of the Apple iPod digital audio player. The iPod is an example of a blue ocean strategy that redefined the playing field of music recording and storage by enabling the device to record and store music using prevailing MP3 Internet technology and software. The blending of the Apple iPod and iTunes media store created the first sustainable music downloading business model of its kind (Gershon, 2014, 2017). The Apple iPod and iTunes combination qualifies as an example of new product development and business model innovation as well as a business process innovation since it successfully takes advantage of MP3 software distribution technology. Some years earlier, Jobs recognized the importance and commercial potential of a graphical user interface (GUI) while visiting Xerox Parc Labs in June 1979. The concept of a GUI would have important implications for the future of all Apple devices, most notably the Apple iPhone and iPad. In 2007, Apple introduced the Apple iPhone, which was described at the time as a three-in-one device that includes music, a phone and a mobile Internet capability. The smartphone concept was an absolute game changer in terms of redefining the purpose and scope of what a cell phone was intended to do (Gershon, 2013a, 2017). Taking an integrated approach has been a central tenet of Apple’s basic design philosophy. For Steve Jobs, one way to accomplish this was to control all aspects of the hardware and software design and to make them fully integrated. And equally important, the design itself should convey a kind of simple elegance. As Apple CEO Tim Cook (2017) points out, Steve’s DNA will always be at the base for Apple . . . Because that is what the company is about. His ethos should drive that—the attention to detail, the care, the simplicity, the focus on the user and the user experience, the focus on building the best, the focus that good isn’t good enough, that it has to be great, or in his words “insanely great,” that we should own the proprietary technology that we work with because that’s the only way you can control your future and control your quality and user experience. (“Tim Cook on Apple’s Future,” p. 52)

Business Process Innovation Innovation is about much more than developing new products. It’s about reinventing business processes and building entirely new markets to meet untapped customer needs. Davenport and Short (1990) define business process as “a set of logically related tasks performed to achieve a defined business outcome” (pp. 11–12). Business process implies a strong emphasis on how work gets done within an organization. It should service the organization’s internal and external customers as well as crossing organizational boundaries. Business process innovation involves creating systems and methods for improving organizational performance. The type of business process innovation can occur in a variety of ways within an organizational structure, including product manufacturing, inventory management, customer service,

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Home Box Office Dell

Netflix has become the largest online DVD rental service in the world. The company has developed a highly sophisticated supply chain management system as well as a proprietary recommendation software tool. In 1975, HBO helped advance the principle of satellite/cable networking by using satellite communication to advance long-haul television distribution. In the area of computer manufacturing, Dell created a highly successful business model utilizing just-in-time manufacturing techniques as well as direct-to-home sales capability and 24/7 customer service.

distribution and so forth (Davenport, 1993). A highly successful business process has two important consequences. First, a highly successful business process is transformative; that is, it creates internal and external efficiencies that provide added value to the company and organization. Second, it sets into motion a host of imitators who see the inherent value in applying the same business process to their own organization (Gershon, 2011, 2017; Stoddard & Jarvenpaa, 1995). Table 15.4 provides a comparison of three media and telecommunications companies that are industry leaders in the use of business process innovation. Each of the said companies has rendered a host of imitators that have adopted similar approaches to business process.

Netflix Netflix is an online subscription-based DVD rental service. Netflix was founded by Reed Hastings in 1997. Netflix was founded during the emergent days of EC when companies like Amazon.com and Dell were starting to gain prominence. Netflix was conceived at a time when the home video industry was largely dominated by two major home video retail chains, Blockbuster Video and Hollywood Video, as well as numerous “mom-and-pop” retail outlets. The challenge for Hastings was whether he wanted to duplicate the traditional bricks and mortar approach used by such companies as Blockbuster.The alternative was to utilize the power of the Internet for placing video rental orders and providing online customer service. Netflix is the world’s largest online video rental service (Shih et al., 2007). Netflix qualifies as a uniquely designed business model and demonstrates important features of business process innovation (Gershon, 2011, 2017; Izquierdo-Castillo, 2015). The company has engaged in a number of strategies that have enabled it to be successful. First, Netflix has developed a highly sophisticated supply chain management system that allows the company to offer subscribers both good selection and fast turnaround time. Second, Netflix has harnessed the power of the Internet to create a virtual store. The company maintains a set of centers that serve as hub sites for DVD collection, packaging and redistribution. Early on, Netflix made the decision to partner with the U.S. Postal Service (USPS) to deliver DVDs to its online subscriber base (Shih et al., 2007). Third, Netflix utilizes a proprietary rating and recommendation system which makes suggestions of other films that the consumer might like based on past selections (Gershon, 2014, 2017; GomezUribe & Hunt, 2016; Hallinan & Striphas, 2016). Fourth, Netflix has steadily adapted to changing technology by offering a “Watch Instantly” feature, which enables subscribers to stream DVD quality movies and recorded television shows instantly to subscribers equipped with high-speed Internet connectivity.

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What is interesting to note is that the video streaming of movies is delivering in real time and in greater numbers what cable television failed to achieve in terms of its once highly touted video-on-demand system capability. Such services as Netflix, Hulu and HBO-Go are now referred to as over-the-top services that enable cable subscribers to effectively cut the cord and depend exclusively on their broadband connection for the delivery of video services. Hastings has said on several occasions that Netflix’s purpose is not to provide DVDs via the mail but rather to allow for the best home video viewing for its customers. It’s about the business process of delivery. Streaming will become more and more the centerpiece of how Netflix plans to distribute its television service in the future.

Media Innovation: New and Emerging Areas of Research The field of media management and economics has undergone considerable development in the study of innovation. In this next section, we consider a number of new and emerging areas of media innovation scholarship. They include: (1) the challenges of staying innovative, (2) creating a culture of innovation, (3) innovation and the future of the newspaper, and (4) innovation networks, clusters and global project teams.

The Challenges of Staying Innovative Business failure is typically associated with bankruptcy or poor financial performance. But at a deeper level, business failure is also about the proverbial “fall from grace.” A once highly successful company is faced with a public perception that it has lost all relevancy in an otherwise highly competitive business and technology environment.The consequences are very real symbolically as well as financially. Scholars point to a number of contributing reasons that help to explain why companies fail to stay competitive and/or lose their creative edge.

The Innovator’s Dilemma Authors Collins and Porras (1994) make the argument that highly successful companies are those that are willing to experiment and not rest on their past success. In time, tastes, consumer preference and technology change. Christensen (1997) makes the argument that even well-managed companies are sometimes susceptible to innovation failure. The main reason is that such companies are highly committed to serving their existing customers and are often unwilling to take apart a highly successful business in favor of advancing unfamiliar and unproven new technology and service. He posits what he calls the innovator’s dilemma—namely, that a company’s very strengths (i.e., the ability to develop reliable suppliers and be responsive to customer needs) now become barriers to change and the unwitting agents of a company’s decline. Advancing new technologies and services can sometimes require expensive retooling, whose ultimate success is hard to predict. Such companies lose because they don’t invest in new product development and/or fail to notice small niche players who enter the market and are prepared to offer consumers alternative solutions at better value (Kanter, 2006). The anticipated profit margins in developing a future market niche can be hard to justify given the high cost of entry and the possible destabilization of an otherwise highly successful business. Therein lies the innovator’s dilemma.

The Tyranny of Success Past success can sometimes make an organization very complacent; that is, it loses the sense of urgency to create new opportunities. Companies, like people, can become easily satisfied with organizational 248

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routines. They become preoccupied with fine-tuning and making slight adjustments to an existing product line rather than preparing for the future (Gershon, 2013b; Lucas & Goh, 2009; Tushman & O’Reilly, 1997). But what happens when management orthodoxy and past success stand in the way of innovation? Suddenly, creative thinking and the ability to test new ideas get caught up in a stifling bureaucracy. Sometimes what passes for management wisdom and experience is inflexibility masquerading as absolute truth (Hamel, 2006). Such examples can be seen with the demise of such companies as Eastman Kodak, Blockbuster Video and Blackberry, which allowed an adherence to past practices stand in the way of embracing the future.

Risk-Averse Culture Successful businesses with an established customer base find it hard to change. There is a clear pattern of success that translates into customer clients, predictable revenue and public awareness for the work that has been accomplished to date. The adage “why mess with a winning formula” slowly becomes the corporate norm. There are no guarantees of success when it comes to new project ventures. The difficulty, of course, is that playing it safe presents its own unique hazards. Even well-managed companies can suddenly find themselves outflanked by changing market conditions and advancing new technologies. Worse still, a company’s past success can sometimes make an organization risk-averse and unwilling to make the necessary changes in planning for the future (Utterback, 1996). As Kanter (1989) writes, whenever something new is created, there is always going to be a high degree of uncertainty tied into the project. No one knows for certain what resources will be required and how the project will be received.

The Challenges of a Disruptive Technology The lessons of business history have taught us that there is no such thing as a static market. There are no guarantees of continued business success for companies regardless of the field of endeavor. Schumpeter (1942) introduced the principle of creative destruction as a way to describe the disruptive process that accompanies the work of the entrepreneur and the consequences of innovation. In time, companies that once revolutionized and dominated select markets give way to rivals who are able to introduce improved product designs, offer substitute products and services and/or lower manufacturing costs. The consequences of creative destruction can be significant, including the failure to preserve market leadership, the discontinuation of a once highly successful product line and the potential loss of jobs. Consider, for example, the effect that EC has had on traditional retail department stores. In cities and small towns alike, the basic department store has been severely challenged by the likes of Amazon.com, iTunes and equivalent EC sites. At issue is the fact that customer convenience and the wide scoping availability of goods and services online make EC sites often preferable to the traditional department store.

Creating a Culture of Innovation Creating a culture of creativity is important to the success of project design and innovation. A growing body of research has emerged that looks at the role of creativity as an important consideration in the success of contemporary media companies. The goal is to create an environment in which creative works can best flourish (Ford & Gioia, 2000; Küng, 2008; Nylund, 2013; Sylvie et al., 2012; Unsworth, 2001). Creating media content, whether it be television, film, music or Internet communication, requires a special appreciation for digital media and creative storytelling. 249

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Leadership and Innovation Leadership is a process that involves influence and the art of directing people within an organization to achieve a clearly defined set of goals and outcomes. Successful leaders know what they want to accomplish in terms of organizational outcomes (Albarran, 2013; Hollifield et al., 2016; Northouse, 2004).The executive leader often sets the creative tone for an organization when it comes to product design and innovation (Aris & Bughin, 2005; Bilton, 2007; Gershon, 2017; Küng, 2017). This can be seen with such people as Steve Jobs (Apple), Walt Disney (Walt Disney Company) and Akio Morita (Sony), to name only a few.

Serendipitous Connections One of the important lessons in innovation is that some of the greatest discoveries occur as a result of a chance encounter. The history of business and technological discovery often starts with the chance encounter or accidental mix of things. As Johnson (2010) points out, some of the best discoveries occur when different people with diverse backgrounds and skill sets find themselves in a common space sharing their ideas. The unfiltered exchange of a chance idea can sometimes spawn a radically new working concept. Kelley (2005) makes the argument that the best projects and design configurations are a collaborative effort; they never finish where they began. The author describes it as the “magic of cross-pollination” (p. 68).

Creative Work Space Creating a culture of innovation presupposes having the right work environment with which to develop and implement great ideas. From the corner office to the nondescript cubicle, there is considerable difference of opinion as to how to create the best and most efficient work space. There are, however, certain truisms in terms of what makes for a creative work space. Innovation needs a place to flourish and grow. The creative office should function like a well-designed stage set, thereby contributing to great performance. Good design space creates opportunities for prototyping new ideas (Kelley, 2005). One consideration is the importance of building intelligence into the design of the modern office work space. The combination of computer and telecommunications technology has had a major effect on the spatial design and activity of the modern organization. The buildings and office space that we occupy are not nearly as important the tools we use to get work done. The blending of powerful communication tools with flexible work space can greatly enhance productivity and innovation (Waber et al., 2014). Vitale (2014) extends the argument and considers the importance of virtual networks in support of global project teams and innovation clusters, making the argument that transnational organizations now have to think differently in terms of project design teams, group interactions and so forth. Related to the idea of building intelligence is the importance of mobility, which recognizes that business professionals and creative teams need information access anytime and anywhere. Location should never be an obstacle.

Innovation and the Future of the Newspaper Change is never easy. Change is especially difficult when a new start-up company and/or technology is poised to displace a well-established business. Nowhere is this more evident than the impact that digital media has had on the newspaper industry. The contemporary international newspaper industry finds itself on the receiving end of creative destruction. Starting in 2008, the world’s newspaper

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industry entered into an unprecedented period of decline. At issue is the future of quality reporting and an informed public (Nielsen & Levy, 2010).The causes of newspaper circulation decline are well documented. A number of media research studies have identified five major causes.They include the following: • • • • •

The availability of good substitutes in obtaining news information The loss of advertising dollars due to information available on the Internet A change in readership demographics among younger audiences The high cost of newspaper production and distribution The failure to fully appreciate the importance of the digital lifestyle (Esser & Bruggemann, 2010; Nielsen & Levy, 2010;Van Kranenburg, 2017)

The major test ahead for the modern newspaper owner and publisher is finding the right combination of news gathering, writing and technology delivery efficiencies that is both cost-effective and sustainable over time.Van Kranenburg’s (2017) edited works collection considers the state of the newspaper industry in Europe and features a number of invited scholars to discuss and review best practices related to media innovation by country. The combination of news information on the Internet coupled with the ease and access of posting news information and blog commentary has fundamentally challenged the economic business model for newspaper and magazine production on a worldwide basis. The move from print media to digital has not been easy for newspaper or magazine publishers. Research has shown that readers are reluctant to pay for news content on the web. Several research studies indicate a decline in online readership following the implementation of paywalls in newspapers (Chyi & Tenenboim, 2016; Evens & Van Damme, 2016; Kammer et al., 2015). Research by Chiou and Tucker (2013) suggests that paywalls in local newspapers have proven to be a disincentive for younger readers and tends to drive them away. As such, they are more inclined to seek free news on the Internet and/or news made available via social media (Goyanes, 2015). The problem is made worse by the fact that many organizations are unwilling to pay as much for online advertisements (Esser & Bruggemann, 2010; Nielsen & Levy, 2010). In sum, the business of news media is threatened by the sheer quantity of free news in a variety of formats, ranging from radio, television and cable to multiple Internet newspaper and magazine websites. Not everyone agrees. Edge (2014) makes the argument that while newspapers are undeniably downsizing in terms of laid-off journalists and support staff, there is some evidence to suggest that we may be exaggerating the scale of the financial crisis. Nevertheless, such changes have affected the quantity and quality of news information now available to the public. It’s now possible to contemplate a time when some major cities will no longer have a newspaper and when magazine and broadcast news operations will employ no more than a handful of reporters. According to Picard (2010), we are in danger of moving toward a system in which social elites have access to high-quality news and information because they can pay for it and the rest of the public is left with a poorer news selection. Therein lies the challenge. How does one turn an audience that appreciates news but undervalues it into paying customers? Researchers have considered the effect that digital media and, more specifically, computer tablets and smartphones have had on the newspaper industry. Such technologies have forever changed how we experience reading news. It has introduced into the reader’s experience a number of different value propositions, including graphic images, video streaming, portability and the ability to customize one’s news story interests (Chan-Olmsted, 2016; Doyle, 2010; Gershon, 2013a; Napoli, 2011; Salaverria, 2010; Schlesinger & Doyle, 2015).

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Innovation Networks, Clusters and Global Project Teams One of the most important lessons executives have learned about innovation is that companies can no longer afford to go it alone. The traditional model of R&D is to create and manufacture products exclusively within the confines of one’s own organization. The basic logic is that if a company wants something done right, it builds it in-house.There is a vast body of research that challenges that assumption and makes the argument that the not-invented-here approach is no longer sustainable. Instead, there is a clear and decided move toward innovation networks, clusters and global project teams.

Innovation Networks Successful innovation for the modern enterprise requires building a combination of both internal and external partners. According to Chesbrough (2003), the idea behind open innovation is that there are simply too many good ideas available externally and held by people who don’t work for your company. Even the best companies with the most extensive internal capabilities have to take into consideration external knowledge and information capabilities when they think about innovation. To that end, companies should be drawing business partners and suppliers into so-called innovation networks. The goal of the innovation network is to bring together both internal and external partners to work on a problem or design issue that is better solved collaboratively. New types of creativity are formed by building connections with people and start-up groups that have unique and highly specialized skill sets. One such example can be seen when Apple collaborated with and eventually acquired a company called Portal Player, which led to the creation of the Apple iPod.

Innovation Clusters The term innovation clusters can be used to describe cross-network collaborations between researchers, model developers, program sites and practitioners. Such clusters are composed of researchers, developers and site leaders whose purpose is to codevelop new product ideas or develop solutions to meet specific problems (Kuah, 2002). Surowiecki (2006) argues the value of how crowd-thinking (or the wisdom of the crowds) can enhance business intelligence. Karlsson and Picard’s (2011) edited work collection considers media clusters in particular and how they are used to help advance the international collaboration of television and film productions, news story development and new media project start-ups. Jackson (2017) makes the argument that co-working spaces (i.e., project team clusters) increase the likelihood of ideation, transmedia project design and the development of entrepreneurial partnerships.

Global Project Teams International project teams are the key to smart, flexible and cost-effective organizations. A global project team represents working professionals from a transnational corporation’s (TNC) worldwide operations assembled together on an as-needed basis for the length of a project assignment. They are staffed by working professionals from different countries (Martins et al., 2004; Maznevski & Chudoba, 2000; Lipnack & Stamps, 1997). More and more, the transnational organization uses global virtual teams as part of a larger effort to share international expertise across the entire TNC. The global virtual team offers up certain distinct advantages, including shared access to information, collaborative research and design work, and

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reduced travel costs (Gershon, 2016). A variation on this idea is the formation of an international alliance group, where two or more international companies work together on a common project (Chan-Olmsted, 2004; Hollifield, 2001). One such example can be seen with the partnership that was formed between Sony and Philips Corporation that led to the development of the original compact disc. Advancements in communication technology and intelligent networking have elevated the principle of teamwork to a whole new level in terms of collaborative effort (DeSanctis et al., 2000). At the same time, global virtual teams bring with them a unique set of challenges. Foremost are issues pertaining to trust, involving differences of culture, geographic dislocation, complex problem solving and the effective collaboration of ideas. Specifically, how does one creatively engage a group of people whom one has never physically met, trusting that everyone is equal to the task (Evaristo, 2003; Potter & Balthazard, 2002; Jarvenpaa et al., 1998)? The global project team presents both opportunities and challenges in terms of utilizing the principles of virtual communication in tandem with intelligent networks.

Discussion and Suggestions For Future Research Research in the field of media innovation has significantly increased during the past decade. It has become one of the centerpieces of media research scholarship worldwide. This is reflected in the number of books, journal articles and edited work collections dedicated to the subject, as noted earlier in this chapter.We have also seen the study of media innovation become the basis for a dedicated journal to the subject, as evidenced by the launch of The Journal of Media Innovations. There are a few reasons that account for the growing interest in the subject matter. The explanation in part is due to the natural synergy (or tie-in) between business strategy and innovation. Any attempt to create something new or different is part and parcel of a larger media business strategy. One of the goals in writing this chapter was to provide a working structure that describes the three major types of media business innovation, and more specifically, how they are used in support of a larger business strategy—hence the title of the chapter. A second reason for the growing interest in media innovation is tied to entrepreneurship and leadership theory. What is it about entrepreneurs like Jeff Bezos (Amazon.com), Steve Jobs (Apple) and Akio Morita (Sony), to name only a few, that has made these respective companies commercially successful? More specifically, what is it about these people as leaders and the culture of the companies they created that makes such organizations creative innovators in the best sense of the term? Pilotta, Wildman and Jasko (1988) make the point that corporate culture is a direct reflection of the people who founded them. A third reason for the emergent interest in media innovation is tied directly to specific technology changes—most notably, the Internet and electronic commerce, broadband delivery of services to the home, and intelligent networking and artificial intelligence. Broadband delivery is the great infrastructure challenge of the twenty-first century. Advancements in broadband delivery will figure prominently in the Internet of things (IoT), which has multiple design implication for smart homes of the future. A fourth and final reason for studying media innovation has to do with the issue of disruption— specifically, how does the diffusion of a new technology affect current business players and technology in the marketplace? The most direct example, as noted earlier, is the effect that digital media has had on the newspaper and magazine industry. Similarly, the future of video streaming technology and over-the-top (OTT) television services is poised to disrupt both the broadcast and cable television industries in a variety of ways. OTT will require a new kind of business model that will involve a major rethinking of television in terms of program content, organization, financial modeling and distribution.

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Here, then, are a few questions that media scholars should consider when conducting future research studies. • • • • • • •

What is the relationship between leadership and innovation? Specifically, how do the best companies promote a culture of innovative thinking? How do smart innovative companies adapt to change? What are some of the innovative ways in which the Internet of things (IoT) will be applied to smart houses and smart cities of the future? To what extent will over-the-top television services affect the delivery of broadcast and cable television programs and how will they change existing program structures? How will artificial intelligence be used to advance personal digital assistants? In keeping with the principle of creative destruction, how will electronic commerce affect the future of traditional retail sales and delivery? In keeping with the principle of opinion leadership, how does social media—specifically, blogs, postings and EC rating systems—affect public perception of goods and services?

It is sometimes tempting to apply the label of innovation to any business strategy approach that is new or different. But that is not what makes a company or person innovative. The real innovators are those people and companies that introduce a product or service in an altogether different way. Or they go about solving a technical problem by developing unconventional solutions. Most companies like to talk a good game about being innovative. But in practical terms, many such organizations want to avoid failure at all costs. In my view, experimentation lies at the heart of every company’s ability to innovate. The most successful companies are those that are willing to experiment and not rest on their past achievements. Such companies create a culture of innovation, where experimentation and mistakes are all part of the process of testing new boundaries. As Thomke (2001) writes, The systemic testing of ideas is what enables companies to create and refine their products. In fact, no product can be a product without having first been an idea that was shaped, to one degree or another, through the process of experimentation. (p. 66) Kelley (2005) believes that it is important to rethink the role of failure in the design process.When a novel idea fails in an experiment, it can expose important knowledge gaps. But such efforts can also reveal unique ways of looking at a problem. It can refocus the group’s efforts in more promising areas. A culture of innovation means taking risks and with it the very real possibility of product failure. It’s part of the DNA of what it means to be innovative.

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Richard A. Gershon Gershon, R. (2016). Intelligent networking and the transnational corporation: Redefining business work space. In A. Lugmayer & C. Dal Zotto (Eds.), Media convergence handbook, II (pp. 17–31). Heidelberg, Germany: Springer. Gershon, R. (2017). Digital media and innovation: Management and design strategies in communication.Thousand Oaks, CA: Sage. Gomez-Uribe, C., & Hunt, N. (2016).The Netflix recommender system: Algorithms, business value, and innovation. ACM Transactions on Management Information Systems (TMIS), 6(4). http://dx.doi.org/10.1145/2843948 Goyanes, M. (2015).The value of proximity: Examining the willingness to pay for online local news. International Journal of Communication, 9(18), 1505–1522. Habann, F. (2008).Towards a methodological foundation of media innovation research. In C. Dal Zotto & H. van Kranenburg (Eds.), Management and innovation in the media industry (pp. 67–86). Cheltenham: Edward Elgar. Hallinan, B., & Striphas, T. (2016). Recommended for you: The Netflix prize and the production of algorithmic culture. New Media & Society, 18(1), 117–137. Hamel, G. (2006, February).The what, why and how of management innovation. Harvard Business Review, 72–87. Hensmans, M., Johnson, G., & Yip, G. (2013). Strategic transformation: Changing while winning. London: Palgrave Macmillan. Hollifield, C. A. (2001). Crossing borders: Media management research in a global media environment. Journal of Media Economics, 14(3), 133–146. Hollifield, C. A., Wicks, J., Sylvie, G., & Lowry, W. (2016). Media management: A case study approach (5th ed.). New York: Routledge. Holm, A., Günzel, F., & Ulhøi, J. (2013). Openness in innovation and business models: Lessons from the newspaper industry. International Journal of Technology Management, 61(3/4), 324–348. Isaacson, W. (2011). Steve Jobs. New York: Simon & Schuster. Izquierdo-Castillo, J. (2015). The new media business concept led by Netflix: A study of the model and its projection into the Spanish market. El Profesional de la información, 24(6), 819–826. Jaaniste, L. (2009). Placing the creative sector within innovation:The full gamut. Innovation: Management, Policy & Practice, 11(2), 215–229. Jackson, L. (2017). The importance of social interaction in the co-working spaces of Boston USA and London UK. Paper presented at the 2017 European Media Management Association Conference, Ghent, Belgium. Jarvenpaa, S., Knoll, K., & Leidner, D. (1998). Is anybody out there? Antecedents of trust in global teams. Journal of Management Information Systems, 14(4), 29–64. Johnson, S. (2010). Where good ideas come from:The natural history of innovation. New York: Riverhead Books. Kammer, A., Boeck, M., Vikaer Hansen, J., & Juul Hadberg Hauschildt, L. (2015). The free-to-fee transition: Audiences’ attitudes toward paying for online news. Journal of Media Business Studies, 12(2), 107–120. Kanter, R. (1989). When giants learn to dance. New York: Simon & Schuster. Kanter, R. (2006, November). Innovation: The classic traps. Harvard Business Review, 73–83. Karlsson, C., & Picard, R. (Eds.). (2011). Media clusters: Spatial agglomeration and content capabilities. Cheltenham: Edward Elgar. Kelley, T. (2005). The ten faces of innovation. New York: Doubleday. Kim, W., & Mauborgne, R. (2005). Blue ocean strategy. Boston, MA: Harvard Business School Press. Kuah, A. (2002). Cluster theory and the small business. Journal of Research in Marketing and Entrepreneurship, 4(3), 206–228. Küng, L. (2008). Innovation and creativity in the media industry: What? Where? How? In C. Dal Zotto & H. van Kranenburg (Eds.), Management and innovation in the media industry (pp. 3–13). Cheltenham: Edward Elgar. Küng, L. (2011). Managing strategy and maximizing innovation in media organizations. In M. Deuze (Ed.), Managing media work (pp. 43–56). Los Angeles, CA: Sage. Küng, L. (2013). Innovation, technology and organizational change: Legacy media’s big challenges. In S. Storsul & A. Krumsvik (Eds.), Media innovation: A multidisciplinary study of change (pp. 9–12). Göteborg, Sweden: Nordicom. Küng, L. (2017). Strategic management in the media: From theory to practice. London: Sage. Lal, D., & Strachan, P. (2007). Understanding strategizing in the telecommunications industry: Lessons for global telecom firms. Journal of General Management, 32(3), 19–43. Lashinsky, A. (2011). The legacy of Steve Jobs:1955-2011. New York: Fortune Books. Lashinsky, A. (2012). Inside Apple. New York: Business Plus. Lipnack, J., & Stamps, J. (1997). Virtual teams: Reaching across space, time and organizations with technology. New York: John Wiley & Sons. Lucas, H., & Goh, J. (2009). Disruptive technology: How Kodak missed the digital photography revolution. Journal of Strategic Information Systems, 18, 46–55.

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16 MEDIA ENTREPRENEURSHIP Min Hang

The media industries have undergone tremendous changes in recent years. Technological advances and deregulation and privatization in information and communication sectors have brought huge opportunities to foster new business. The increasing use of social media, mobile, Internet, broadband Internet connections and development in streaming technology have created possibilities for delivering media content via multi-platforms. In the traditional media industries, the advances of digital technology have opened new windows of opportunity for legacy media to distribute content online so as to enhance their service, readership and audience experiences. Media companies have moved even further toward mobile devices to achieve a new way of delivery, making media content available at any time, any place and anyhow. New business opportunities appear in a variety of forms in the media industries. To cope with high uncertainty within a fast-changing media environment, and to sustain the competitive advantages of a company, media firms are increasingly engaging in new business activities. In addition, the developments of digital and data technology have reduced the costs of media production and content delivery, and thus new media startups, we-media and other kinds of entrepreneurial ventures are emerging intensively in the media territory. These booming entrepreneurship practices have largely aroused scholarly research attention; similar to the boom of entrepreneurial practices in the media industries, research on media entrepreneurship is also fast-growing. Especially during the recent decade, scholars in the field have made tremendous effort to add new knowledge to the field, by proposing consensual definitions for media entrepreneurship (e.g., Achtenhagen, 2008; Khajeheian, 2017), by constructing an integrative framework for media innovation research (e.g., Hang, 2016), and by contributing measurements and tools for media entrepreneurship (e.g., Hoag, 2008). To portray the landscape of media entrepreneurship research, this chapter will start with clarifying key concepts in the field, and then move to present findings from a survey investigating scholarly publications on media entrepreneurship in the last decade; a conclusion and discussion will follow, and finally, future directions and a research agenda will be proposed.

Understanding Media and Entrepreneurship Though the concepts of media and entrepreneurship have been discussed by a large number of scholarly works in the past and much progress has been made, there are still distinctions blurring the conceptualization. 259

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Understanding Entrepreneurship Ambiguities in Defining Entrepreneurship For entrepreneurship, the word itself is widely used, yet offering an unambiguous definition is still challenging. The definitional ambiguities can be seen from a number of scholarly works—for example, Davidsson (2004) listed at least seven definitions of entrepreneurship; Shane and Venkataraman (2000) started a long dialogue in the Academy of Management Review for the definition they gave—the definition is still ambiguous (Hang & van Weezel, 2007), fragmented (Anderson & Starnawska, 2008) and context-related (Zahra, Wright, & Abdelgawad, 2014). The earliest reference to entrepreneurship can be traced back to Richard Cantillon circa 1734. To him, entrepreneurship was self-employment with an uncertain return. In recent decades, there emerged at least two distinct clusters of thought on entrepreneurship (Gartner, 1988).The first group of scholars focused on the characteristics of entrepreneurship (e.g., innovation, growth, uniqueness), while the second focused on the outcomes of entrepreneurship (e.g., creation of value). Among scholars subscribing to the notion that entrepreneurship should be defined by its characteristic attributes, most seem to rely on variations of one of two definitions, the first proposed by Schumpeter (1934) and the second proposed by Gartner (1988). For Schumpeter, an entrepreneur is a person who carries out new combinations, which may take the form of new products, processes, markets, organizational forms or sources of supply. Entrepreneurship is the process of carrying out new combinations. In contrast, Gartner (1988) stated that entrepreneurship is “the creation of organizations” (p. 26). Shane and Venkataraman (2000) noted that the largest obstacle in creating a cohesive conceptual framework for entrepreneurship is many scholars overlooking the fact that entrepreneurship involves two phenomena: the presence of lucrative opportunities and the presence of entrepreneurial individuals. Putting these two aspects together, they describe the field of entrepreneurship research as “the scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited” (p. 218).

Entrepreneurial Opportunities For entrepreneurial opportunities, Casson (1982) defined them as situations in which new goods, services, raw materials and organizing methods can be introduced and sold at greater than their cost of production. Shane and Venkataraman (2000) concurred with Casson when stating that entrepreneurial opportunities “enhance the efficiency of existing goods, services, raw materials, and organizing methods” (p. 220). Shane (2003) further illustrated the notion of entrepreneurial opportunity by eliminating the profit requisite, defining an entrepreneurial opportunity as a situation in which a person can create a new means-ends framework for recombining resources that the entrepreneur believes will yield a profit. There are also other scholars discussing opportunity. Hean, Maw and Boon (2002) defined an opportunity as the future situation that the decision makers deem personally desirable and feasible. Baron (2004) defined opportunity through three central characteristics: potential economic value, newness and perceived desirability. Renko, Shrader and Simon (2012) defined entrepreneurial opportunities as a perception which demonstrates both objective and subjective qualities. WHERE DOES THE OPPORTUNITY COME FROM?

Schumpeter recognized three sources: technological changes, political and regulatory changes, and social and demographic changes (Shane, 2000). Others have expanded the sources for opportunities 260

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to a larger scope (Vaghely & Julien, 2010). Drucker (1985) identified sources for opportunities at the macro-environmental level and industry/firm level. At the macro-environmental level, sources for opportunities include government actions through political, legal and economic measures, demographic and geographic changes, changes in perception, and changes in consumers or overall economics (Schibbye & Verreynne, 2003). At the industry/firm level, opportunities come from industry changes, changes in the process pursuing certain tasks, changes in suppliers and consumers, changes in competitors and changes arising from internal organizations. In addition, some universal sources include new knowledge, technological changes, the reuse of old ideas and unexpected occurrences under random events; an opportunity can also be discovered from incongruity—for instance, creating modifications to current products (Fuduric, 2008; Hargdon & Sutton, 2000; Ozgen & Baron, 2007; Shane, 2000). HOW DOES AN OPPORTUNITY EMERGE?

Based on research conducted by Hayek (1945), Knight (1921) and Buchanan and Vanberg (1991), Sarasvathy, Dew, Velamuri and Venkataraman (2010) identified three major types of opportunities. The first is opportunity recognition, which deals with the exploration of existing markets (e.g., arbitrage and franchises). The second is opportunity discovery, which is related to the exploration of existing and latent markets (e.g., applications for new technologies). The third is opportunity creation, which involves the creation of new markets. Opportunity recognition occurs when sources of both supply and demand are rather obvious, and the opportunity for bringing them together has to be recognized, with the match-up between supply and demand implemented through either an existing firm or a new firm. This notion of opportunity involves the exploitation of existing markets. Examples of such in the media industries include the exploitation of the online market with print media content and the delivery of news and entertainment videos to mobile devices. In such cases, on the one hand, there are capabilities of media companies to provide new services (both media content and digital technologies are available); on the other hand, there are also demands from the customer side for these new media products and services. What companies need to do is to recognize the opportunity, and to combine their existing resources for new media production. Opportunity discovery occurs if only one side exists—that is, demand exists, but supply does not, and vice versa—then, the nonexistent side has to be discovered before the match-up can be implemented. This notion of opportunity has to do with the exploration of existing and latent markets. Examples include the emergence of the high-definition digital TV via the broadband network, and high-speed online gaming business services. In such cases, there are demands from the customer side, either for the high-speed gaming entertainment experiences or for the improved bandwidth; therefore, opportunities are discovered, and media companies start to develop their network capabilities in order to embrace new businesses. Opportunity creation occurs while neither supply nor demand exists in an obvious manner, one or both have to be created, and several economic inventions in marketing, financing and so forth have to be made for the opportunity to come into existence. This notion of opportunity has to do with the creation of new markets. Examples of such include many next-generation high-tech IT products—for instance, the emergence of the Netscape browser in the early stage of Internet development.Venture capital investments in the media industries are vigorously targeting such nextgeneration products in order to pursue future market success (Hang, 2016). As stated by Sarasvathy, Dew,Velamuri and Venkataraman (2010), different types of opportunities are not distinct but integrated with each other—an opportunity may be created, discovered and recognized. The emergence of various opportunities in the media industries in recent years also indicates the integration of creation, discovery and recognition of opportunities. 261

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Entrepreneurial Individuals In addition to entrepreneurial opportunities, entrepreneurial individuals, individually and collectively, also play critical roles in successful entrepreneurship efforts (Sandberg, Hurmerinta, & Zettinig, 2013). At the senior management level, the role of entrepreneurs is mainly to heed entrepreneurial imperatives and to provide visions regarding the pursuit of entrepreneurial opportunities. In this vein, it has been argued that top-level managers must be purveyors of the entrepreneurial vision, and that they must shape the corporate purpose to pursue new businesses (Kuratko, 2016). The role of senior managers is fundamental in initiating and putting venturing activities forward. For instance, there are a number of media leaders who have entrepreneurial spirit: Rupert Murdoch in News Corp and Ted Turner in Time Warner; these top-level entrepreneurial individuals initiated various new business venturing activities in their companies—their influence on the decisions to engage in venturing is evident. At the middle management level, the role of entrepreneurial individuals is to effectively serve as a conduit between those at the top and those at the operational level or front-lines (King, Fowler, & Zeithaml, 2001).These individuals interactively synthesize information, disseminate that information to both top- and operating-level managers as appropriate, and champion projects that are intended to create newness. They are enablers of individual entrepreneurial actions that are taken to create new ventures. In addition, they play a critical role as intermediaries in corporate entrepreneurship, as their central position in the organization allows them to gather and absorb innovative ideas from inside and outside of the firm. Therefore, the entrepreneurial individuals at the middle management level endorse and refine entrepreneurial opportunities and identify, acquire and deploy resources needed to pursue those opportunities (Morris, Kuratko, & Covin, 2010). There are also entrepreneurial individuals at the first management level and nonmanagement level. These ‘grassroots-level’ personnel have experimenting roles, adjusting roles and conforming roles (Floyd & Lane, 2000). They operate as order takers, implementing entrepreneurial initiatives endorsed at higher organizational levels, and pursuing recognized entrepreneurial opportunities that have not been specially induced from above. Also importantly, these personnel are often in a unique position to recognize entrepreneurial opportunity because they frequently work in a position within the organization where much of the core transformational activity of the firm is performed (Morris et al., 2010). Furthermore, through their daily work routines, they have significant potential to recognize and pursue entrepreneurial opportunities. In a firm, entrepreneurial individuals at all levels may actively participate in the process of recognizing and exploiting innovative opportunities. It is possible that each of them has an impact on a firm’s entrepreneurial initiative; thus entrepreneurial individuals are also the focus of investigation in entrepreneurship studies (Hang, 2016).

Entrepreneurship Hierarchy of Terminology Based on entrepreneurship basics presented earlier, the concept of entrepreneurship can be defined broadly to encompass “acts of organizational creation, renewal, or innovation that occur within or outside an existing organization” (Sharma & Chrisman, 2007, p. 18).The conditions that define entrepreneurship are related to newness in the sense of strategy or structure, business renewal or innovation. Included in this domain are also entrepreneurial opportunities and entrepreneurial individuals. Despite the breadth of this definition, it is consistent with the prevalent view of entrepreneurship in the existing literature (cf. Davidsson, 2004; Gartner, 1988; Schumpeter, 1934; Zahra et al., 2014). Within the domain of entrepreneurship, entrepreneurial activities are undertaken differently; those undertaken within the context of an organization are differentiated as ‘independent entrepreneurship’

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and ‘corporate entrepreneurship’. Independent entrepreneurship is the process whereby an individual or group of individuals, acting independently or in any association with an existing organization, creates a new venture organization. And corporate entrepreneurship is the process whereby an individual or a group of individuals, in association with an existing organization, creates a new organization or instigates renewal or innovation with that organization (Kuratko & Audretsch, 2013; Sharma & Chrisman, 2007). Within the boundary of an existing organization, corporate entrepreneurship encompasses three types of phenomena: (1) the birth of new business within an existing corporation; (2) the transformation of existing organizations through the renewal of the key ideas on which they are built; and (3) innovation. The first type of phenomenon has been often referred to as corporate venturing, while the second type has been called strategic renewal. Both strategic renewal and corporate venturing suggest changes in either the strategy or structure of an existing corporation, which may involve innovation. Strategic renewal refers to the corporate entrepreneurial efforts that result in significant changes to an organization’s business or corporate-level strategy or structure. These changes alter preexisting relationships within the organization or between the organization and its external environment and in most cases will involve some sort of innovation. Renewal activities within an existing organization are not treated as new businesses by the organization. And corporate venturing refers to corporate entrepreneurial efforts that lead to the creation of new business within the corporate organization. They may follow from or lead to innovations that exploit new markets or new product offerings. These venturing efforts may or may not lead to the formation of new organizational units that are distinct from existing organizational units in a structural sense (e.g., new division) (Kuratko, 2010; Sharma & Chrisman, 2007). Among corporate entrepreneurial activities, the major difference between corporate venturing and strategic renewal is that corporate venturing involves the creation of new businesses whereas strategic renewal leads only to the reconfiguration of existing business within a corporate setting. Thus, corporate venturing is usually radical innovations that lead to developing new product-market frameworks, and strategic renewal is the incremental business development that is mostly conducted inside the existing product-market frameworks (Hang, 2016). To better portray the relationship between these concepts, Figure 16.1 presents a entrepreneurship hierarchy of terminology.

Understanding the Nature of Media Understanding media and entrepreneurship from a media perspective, media products and services differentiate themselves from other industrial outputs with some unique features. Scholars have

Entrepreneurship Corporate Entrepreneurship

Independent Entrepreneurship

New Venture

Corporate Venturing

Figure 16.1 Entrepreneurship hierarchy of terminology.

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described the particular characteristics of media companies and their products, agreeing that the most important ones are uncertainty of demand and novelty of content in an adequate support (Caves, 2000; Napoli, 2003, 2016). Also, innovation in the media industry is necessary to attract new consumers who want to be surprised and want the content delivered by their favorite means (e.g., Internet, mobile phone). The characteristics of media products are very much aligned to the dimensions of the entrepreneurial process—that is, autonomy, innovativeness, risk taking, proactiveness and competitive aggressiveness. These dimensions represent the entrepreneurial orientation of the firm, which can be defined as the processes, practices and decision-making activities that lead firms to decide to enter a new market or launch a new product (Kreiser & Davis, 2010). Media firms are urged to be particularly risk-taking and innovative, so the entrepreneurial approach they have to develop is without doubt extremely important. Moreover, as the nature of media is the format to store or to deliver information, media products have profound impact on public perceptions of entrepreneurship and the image presented by media influences people’s behavior. For instance, the entrepreneur role model advocated by media may create positive images of entrepreneurial individuals for the public, so as to promote entrepreneurship spirit. But in contrast, the neglect of entrepreneurial phenomena by media may hinder the proliferation of entrepreneurial activities in society.

A Special Relationship Between Media and Entrepreneurship In view of the linkage between the nature of media and the essence of entrepreneurship, scholars in the field indicate that media and entrepreneurship have strong relevance to each other—on the one hand, entrepreneurship heavily impacts media business, as long as media industries, in their very nature, fall into the culture and creative industries. A creative feature and an artistic process of content production differentiate media products and services from other industrial outputs. Therefore, the essential characteristics of entrepreneurial activities, such as creation, innovation and novel ways of thinking, are critical in building media business success. On the other hand, media also play a vital role in influencing the entrepreneurship phenomenon by creating a discourse that transmits values and images ascribed to entrepreneurship, by providing a carrier promoting entrepreneurial practices, and by encouraging an entrepreneurial spirit in society. This special relationship between media and entrepreneurship has been examined with research efforts identifying how entrepreneurship affects the media industries and, at the same time, how media influence entrepreneurial activities, by reviewing literature published between 1971 and 2005, relating to either entrepreneurship in media or the impact of media on entrepreneurship (Hang & van Weezel, 2007). Despite the time span of more than 30 years, the number of articles found on the research issue was very limited, the majority of which were classified as studies of entrepreneurship in media, while a small number corresponded to studies of the impact of media on entrepreneurship. Within the former category, the most frequently addressed topic was innovation, followed by the entrepreneurship phenomenon, the entrepreneur as an individual in the organization, and family business. The latter category was mainly focused on women’s role on entrepreneurship, and on well-known media founders seen as entrepreneurs. The study concluded that even though there was an obvious trend of growing interests in examining media and entrepreneurship, research attention was unevenly distributed, with newspapers, film and music being the favored industries, and the topics of innovation and family business the most frequently addressed. Also, very few efforts have been made to examine how media affect the entrepreneurship phenomenon.

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A Recent Observation on Research of Media Entrepreneurship Well past the time of media landscape transformation and entrepreneurship development, standing at the same point a decade after, much progress has been made. Therefore, a continued observation on media entrepreneurship was made recently to identify the emerging landscape and new knowledge in the field, based on a literature review of journal articles, books and other related academic publications listed between 2005 and 2016—a decade following the last review. A bibliographical method was applied and three major databases selected, including Academic Search Elite (EBSCO), JSTOR and ABI/INFORM (Proquest). Over 300 journal articles, conference papers, working papers and books were identified as relevant to some aspects of the research issue.Through observing these publications, it is possible to find the status quo, patterns and trends of media entrepreneurship research emerging in the last decade. The following will present some major findings based on the survey.

Rising Interests and Diverse Topics for Research The observation indicates rising interests in media entrepreneurship research along the time period. A large variety of topics, spanning from traditional media to new media, are studied with robust empirical data. Different aspects of entrepreneurship, including entrepreneurial opportunities, entrepreneurial individuals, innovation, intrapreneurship, and entrepreneurship education, are covered, with more evenly distributed study efforts—which is largely different from the landscape a decade ago, when only newspapers, film and music were the favored industries, and the topics of innovation and family business were the only two most frequently addressed issues.

Progress on Concept Clarification and Framework Building In the past decade, the field of research witnesses much progress on concept clarification and framework building for media entrepreneurship research.

Concept Clarification A number of studies have been done to clarify key concepts in the field. For example, in 2008, Hoag made an effort to define media entrepreneurship, emphasizing its feature of adding voice or innovation to the media marketplace. Achtenhagen (2008) defined media entrepreneurship with a focus on new ventures’ activities, conductors and consequences. More recently, Khajeheian (2017) integrated key features of the emerging media environment to define media entrepreneurship as taking the risk to exploit opportunities by innovative use of resources in transform of an idea into activities to offer value in a media form that meets the need of a specific portion of market, either in an individual effort or by creation of new venture or entrepreneurial managing of an existing organizational entity and to earn benefit from one of the sources that is willing to pay. (p. 102)

Theory and Framework Building Similar to the concept clarification, there are also efforts to develop an integrated framework for media entrepreneurship studies. For instance, Dogruel (2015) developed an integrative framework for innovative research in media management and economics, focusing on micro- and meso-level

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approaches. Hang (2016) proposed a theoretical framework integrating economics and strategic management theories for media entrepreneurship studies. Hass (2011) investigated the German publishing industry and suggested a theoretical framework for intrapreneurship and corporate venturing. For years, scholars in the field have called for more attention to theory and framework building for media entrepreneurship research (e.g., Achtenhagen, 2017; McKelvie & Picard, 2008); recent progress has shown significant endeavors toward this pursuit.

Innovation Leads the Way Among all studies, innovation leads the way, being one of the issues addressed most frequently. For instance, Gynnild (2014) investigated a rapidly expanding branch of journalism innovation in online news media. Preston and Cawley (2009) studied innovation and knowledge in the digital media sector with an information economy approach. Khajeheian and Tadayoni (2016) examined user innovation in a public service broadcaster from a value-creating perspective. Raviola and Dubini (2008) presented a study to understand the relationship between incumbents and newcomers in the presence of architectural innovation. Lokshin and Knippen (2013) studied innovativeness and broadcaster listenership with evidence from the German radio industry. It is not surprising to find ever-growing interests in media innovation, as media products are, in their very nature, creative products, and innovation and creativity are built-in characteristics of media products and services; thus in the predictable future, innovation may continue to be a focal issue for media entrepreneurship research.

News Production and Newsroom Entrepreneurial Activities Likewise, news production is also a process characterized by innovation, especially with the increasing use of digital media technologies. In the literature, a large number of studies put emphasis on entrepreneurial activities in the newsroom and news producing process. For instance, Meier (2007) explored innovation in central European newsrooms and suggested that entrepreneurial thinking and innovation in newsrooms may increase speed and journalistic quality. Schmitz and Domingo (2010) examined four newsroom cases to discuss the innovation process in online newsrooms. Lowrey (2012) studied journalism innovation and the ecology of news production, and proposed a news ecology model to explain development and stasis of news production. Lillie (2011) addressed the issue of multimedia news production, and argued that many reported newsroom arguments regarding how video versus audio slideshows should be used are focused on the quantity, rather than quality, of multimedia news stories.

Media Startups, Small Businesses and Family Firms With the development of digital technology, an increasing number of new media ventures emerged, and thus much research attention has been paid to media startups. For instance, Naldi and Picard (2012) explored how factors present at the startup of online news enterprises influence their development and sustainability. Mckelvie and Picard (2008) studied the growth and development of new and young media firms.Yoo,Yang, Kim and Heo (2012) discussed key value drivers of startup companies in the new media industry. In addition, family firms and small business companies are also central topics for study. For example, Powers, Broadrick and Briggs-Bunting (2014) studied family-owned newspaper companies in local U.S. communities, and findings indicated that familyowned newspapers were getting stability in retaining their core print businesses while migrating content to the web. 266

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Entrepreneurial Individuals, Intentions and Opportunities Some other general topics of entrepreneurship research, including entrepreneurial individuals, intentions and opportunities, are also frequently observed by scholars in the field. For example, Singer (2016) studied journalists as entrepreneurs in the widely emerged journalistic enterprises. Goyanes (2015) analyzed how demographic, familiar, contextual and personal factors influence the entrepreneurial intention of journalism and media studies students. Zboralska (2017) explored the entrepreneurship motives of individuals in the Canadian television sector. Compaine and Hoag (2012) discussed factors supporting and hindering new entry in media markets and pointed out two sources of support for media entrepreneurs, including the effects of technological innovation and so-called big media, as major sources of opportunity.

Issues of Media Corporate Entrepreneurship Compared to other topics included in media entrepreneurship, corporate entrepreneurship has received obviously much less attention. Among the existing studies, Hass (2011) examined intrapreneurship and corporate venturing in the media business; the article explored why and how entrepreneurial activities take place in established media companies, and proposed a theoretical framework based on examples from the German publishing industry. Hasenpusch and Baumann (2017) studied corporate venture capital approaches of technology, information, media and entertainment (TIME) incumbents, and the findings revealed a taxonomy of three different types of corporate investors: aggressive, attentive and dispersive. Hang (2016) studied media corporate entrepreneurship and proposed an integrated framework to understand corporate venturing organizational decisions. In a highly competitive digital environment, established media companies are facing increasing challenges, suffering from low levels of entrepreneurial orientation. Therefore, careful observations on best practices of how legacy media companies innovate with digital opportunities are needed, in order to shed more light on media firms’ successful transformation.

Emerging Issues in Entrepreneurial Journalism and Media Entrepreneurship Education Entrepreneurial journalism is a topic emerged in the recent decade, which has been discussed increasingly in media entrepreneurship scholarly work. Journalism Practice even published a special issue on the topic in 2016. A large number of scholars devoted efforts to studying entrepreneurial journalism from different aspects. For instance,Vos and Singer (2016) studied media discourse about entrepreneurial journalism. Casero-Ripollés and Izquierdo-Castillo (2013) discussed the future trend of entrepreneurial journalism, by evaluating the willingness of journalism students to develop their own business project. Media entrepreneurship education development is another emerging topic of interest. Therein, Ferrier (2013) discussed curriculum development and faculty perception of media entrepreneurship education. Sparre and Færgemann (2016) examined the impact of entrepreneurialism on postgraduate students of journalism. Sindik and Graybeal (2017) examined media entrepreneurship programs and suggested that isomorphism has emerged within media entrepreneurship programs, so media entrepreneurship is becoming a legitimized ‘industry’ within media management and economics and journalism fields.

Use of Social Media to Promote Entrepreneurship A more recent focal issue for study is the use of social media to promote entrepreneurship. For example, Hindle and Klyver (2007) investigated mass media’s role in shaping or changing people’s 267

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Concept Clarification and Theory Building Small Business, Family Firms and Media Startups

Entrepreneurial Individuals, Intention and Opportunities

Entrepreneurship in News Production Innovation in Media Business

Media Corporate Entrepeneurship Entrepreneurial Journalism and Education

Media and Entrepreneurship

Media’s Role in Influencing Entrepreneurship Use traditional media to provide creative methods

Use mass media to promote participation in entrepreneurship

Use social media to support entrepreneurship

Figure 16.2 Topics included in media and entrepreneurship research.

values and choices. Geho, Smith and Lewis (2010) discussed Twitter’s commercial use for small business. Harris and Rae (2009) discussed social networks’ function as the future marketing tool for small business. Zanjani, Gholamali and Abbasi (2013) studied the social network and success of SMEs in the media industries.There is even a study that developed a new factor of “social media self-efficacy” as a predictor of perceived behavioral control in entrepreneurial intent (Ajjan, Fabian, Tomczyk, & Hattab, 2015). With the proliferation of social media use, it is expected that media’s role in influencing entrepreneurship practices would be a more prosperous topic for study in the years to come. Figure 16.2 presents different topics included in media entrepreneurship research.

Discussion and Future Research Agenda In the last decades, much progress has been made on research of media and entrepreneurship. The field of research is getting to be more mature and prosperous; yet looking toward the future, there is still work to accomplish, and gaps of knowledge to fill in. The application of advanced digital technologies, including augmented reality (AR), virtual reality (VR) and artificial intelligence (AI), in the media sector has also opened windows of entrepreneurial opportunity creation, and entrepreneurship study will remain a focal issue in the field of media management research. Previous studies have devoted attention to various issues in media entrepreneurship. Yet, more sophisticated investigations need to be done to link media’s unique nature to entrepreneurship activities and behaviors, so as to find industry-specific features of media entrepreneurship. As noted by Achtenhagen (2017), “we need to clearly point out how media entrepreneurship substantially differs from or pinpoints mainstream entrepreneurship”; “only then does it deserve focused research attention to better understand the functioning of media entrepreneurship” (p. 2). In addition, for further development of the field, a more solid foundation of theory building is necessary. Media entrepreneurship is, in its nature, an interdisciplinary domain of study, and therefore,

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an integrated theoretical framework is required in the field of inquiries. While integrating different theories, separate sets of theories may complement each other and they may also conflict. How to reconcile different theories to construct holistic grounds for media entrepreneurship study is another challenge in the way ahead to move the research forward. Moreover, research on media’s impact on entrepreneurship should be very instructive as there is no shortage of evidence for the role of media in influencing societal decision-making and public and individual conceptions and attitudes. From the social and psychological perspective, entrepreneurship— as an innovative and creative way of business conducting—can be educated, enhanced and affected by the discourse carried by various media forms.The message and knowledge conveyed by media are crucial in building role models, social attitudes to entrepreneurial activity and even systems to foster or to hinder entrepreneurship.Thus, more academic efforts should be made to systematically find out how to better use media—traditional media and more recently, Internet, mobile and social media—to support entrepreneurship development in society. And also, while observing media entrepreneurship research in the media management and economics journals, a number of articles were found in the International Journal on Media Management (IJMM) and Journal of Media Business Studies ( JOMBS). IJMM has even published two special issues on media entrepreneurship in 2017 and 2002. However, only a few studies were seen in the Journal of Media Economics ( JME), which clearly indicates the lack of academic effort on media entrepreneurship from the economics perspective. Economics observation is an indispensable part of the media management scholarly field; therefore, for the setting of future research agendas, more economics theories and tools should be applied for media entrepreneurship research. Last but not least, as Hang and van Weezel (2007) pointed out a decade ago, “there is a unique and significant mutual effect between media and entrepreneurship: entrepreneurship affects media business development, and at the same time, media promote entrepreneurship” (p. 51). However, a decade after, even though there is more research examining either side of the coin, there is no holistic study investigating this mutual relationship. Nevertheless, media entrepreneurship is unique as the terms ‘media’ and ‘entrepreneurship’ are reciprocal, with entrepreneurship benefiting media and media supporting entrepreneurship at the same time. Therefore, if the future agenda is set to elaborate the two sides of the coin with holistic empirical evidence, it will have great implications for the field, as this proves an embedded entrepreneurial nature in the media business, and in the meantime, media as an indispensable part of entrepreneurship development and promotion.

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Innovation and knowledge in the digital media sector: An information economy approach. Information, Communication & Society, 12(7), 994–1014. doi:10.1080/13691180802578150 Raviola, E., & Dubini, P. (2008). Never say never: Incumbents and newcomers in the presence of an architectural innovation. Journal of Media Business Studies, 5(1), 95–121. doi:10.1080/16522354.2008.11073462 Renko, M., Shrader, R. C., & Simon, M. (2012). Perception of entrepreneurial opportunity: A general framework. Management Decision, 50(7), 1233–1251. doi:10.1108/00251741211246987 Sandberg, B., Hurmerinta, L., & Zettinig, P. (2013). Highly innovative and extremely entrepreneurial individuals: What are these rare birds made of? European Journal of Innovation Management, 16(2), 227–242. doi:10.1108/14601061311324557 Sarasvathy, S. D., Dew, N.,Velamuri, S. R., & Venkataraman, S. (2010).Three views of entrepreneurial opportunity. In Z. J. Acs & D. B. Audretsch (Eds.), Handbook of entrepreneurship research (pp. 77–96). New York: Springer. Schibbye,T., & Verreynne, M. (2003) In search of competitive advantage—how do small business find business opportunities? Auckland University of Technology. Schmitz, W. A., & Domingo, D. (2010). Innovation processes in online newsrooms as actor-networks and communities of practice. New Media & Society, 12(7), 1156–1171. doi:10.1177/1461444809360400 Schumpeter, J. A. (1934). The theory of economic development. New Brunswick, NJ: Transaction. Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4), 448–469. doi:10.1287/orsc.11.4.448.14602 Shane, S. A. (2003). A general theory of entrepreneurship:The individual-opportunity nexus. Cheltenham: Edward Elgar. Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217–226. Sharma, P., & Chrisman, S.J.J. (2007). Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship. In A. Cuervo, D. Ribeiro, & S. Roig (Eds.), Entrepreneurship: Concepts, theory and perspective (pp. 83–103). New York: Springer Science & Business Media. Sindik, A., & Graybeal, G. M. (2017). Media entrepreneurship programs: Emerging isomorphic patterns. International Journal on Media Management, 19(1), 55–76. doi:10.1080/14241277.2017.1279617 Singer, J. B. (2016).The journalist as entrepreneur. In C. Peters & M. Broersma (Eds.), Rethinking journalism again: Societal role and public relevance in a digital age (pp. 131–145). New York: Taylor & Francis. Sparre, K., & Færgemann, H. (2016). Towards a broader conception of entrepreneurial journalism education. Journalism Practice, 10(2), 266–285. doi:10.1080/17512786.2015.1123110 Vaghely, I. P., & Julien, P. A. (2010). Are opportunities recognized or constructed? An information perspective on entrepreneurial opportunity identification. 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17 SOCIAL MEDIA Andreas Kaplan and Grzegorz Mazurek

Social media are commonly defined as “a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user-generated content” (Kaplan & Haenlein, 2010, p. 61). It is probably safe to state that social media, such as Facebook,YouTube, or Twitter (Kaplan, 2016), impact almost every aspect of personal and corporate life. Facebook has almost 2 billion monthly active users. On YouTube there are more than 400 hours of content uploaded each minute, and 1 billion hours of content is watched every day. And the microblog Twitter (est. 2006) has more than 300 million monthly active users who send approximately half a billion tweets per day. These impressive figures have transferred the social media phenomenon into the professional and more specifically media world as well as into academia and scientific research. Over the last 10–15 years, several professors and PhD students have analyzed and decrypted social media by proposing definitions, frameworks, and classifications, by looking at their use and impact, and by applying various theories and methodologies to the field. The importance and high-speed evolution of social media in the private, professional, and academic world suggest the necessity for a chapter analyzing the state of the art of scientific literature in the field as well as a proposal for a research agenda. Before responding to this need, the authors of this chapter will briefly give an overview of the history of social media in general as well as presenting a classification of social media applications, which will subsequently serve as a basis for the literature review. This thematic and macro-level discussion of social media research will then lead to a research agenda with respect to the next couple of years.

History The history and evolution of social media can be structured along four distinct time periods with the very first applications, though not yet referred to as social media, starting to pop up nearly 40 years ago (Kaplan, 2015a, forthcoming). The first period, which started in the early 1980s, mainly revolved around online newsgroups as well as text-based real-time and multiplayer virtual gaming worlds. One of the most prominent newsgroups was Usenet, which enabled individuals to write and read forum-style messages in various categories, such as science fiction, technology, and physics. Usenet can be seen as the precursor of the Internet forums that are widely used today.The best-known ambassador of early virtual worlds

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was the Essex MUD (Multi-User Dungeon), a game with the objective of killing things in order to score points, perfectly translated in one of its slogans, “You haven’t lived until you’ve died in MUD.” First running only on the Essex University network, it became the first massively multiplayer online role-playing game (MMORPG) in 1980, when Essex University connected its internal network to an early form of the Internet. The second period started around 1995 and is characterized by the founding of Internet giants, such as Amazon.com, Google, and eBay. During this time the Internet was taken over by these and several other large corporations, with their online domination resulting in a marginalization of individual users’ online activities. Nevertheless, during that period there were also some social media applications starting out, such as the first social networking site, Six Degrees, created in 1997, which allowed individuals to upload a profile and make friends with others. This conquest of the virtual sphere came to an end quite soon afterward, at the turn of the new millennium, with the explosion of the dot-com bubble. Corporations such as Cisco, whose stock declined by an impressive 86%, lost a large portion of their market capitalization but remained stable and profitable. Others, such as eBay, later recovered and even surpassed their dot-com-bubble peaks. The end of the dot.com bubble was simultaneously the start of the third period, marked by the founding of several of today’s well-known social media applications. Wikipedia started its adventure on January 15, 2001, with the words: “Hello world. Humor me. Go there and add a little article. It will take all of five or ten minutes.” The online encyclopedia and collective project was soon followed by LinkedIn (est. 2003), Facebook (est. 2004), YouTube (est. 2005), Twitter (est. 2006), and GooglePlus (est. 2007). The Internet returned to its original roots with individual users taking over the virtual sphere, sharing and exchanging user-generated content. Finally, the last period was heralded by social media going mobile (Kaplan, 2012), starting at the end of the 2000s. Foursquare (est. 2009), probably the most prominent ambassador of mobile social media, provides companies and individuals with a multitude of new opportunities due to locationand time-sensitivity. Nowadays almost all major social media applications, originally usable only on a PC, are also to be found on mobile devices using the broad range of new possibilities afforded by geolocation. Others, designed from the outset as mobile social media applications, include Instagram (est. 2010), Snapchat (est. 2011), and Tinder (est. 2012).

Classification The application of concepts and theories from the field of communications and media sciences (media richness, self-disclosure, self-presentation, social presence; Kaplan & Haenlein, 2010), leads to six different groups into which social media can be classified: (1) collaborative projects (e.g.,Wikipedia), (2) (micro)blogs (e.g.,Twitter), (3) content communities (e.g., Flickr), (4) social networking sites (e.g., LinkedIn), (5) virtual game worlds (e.g., EverQuest), and (6) virtual social worlds (e.g., Second Life). These social media classes vary in terms of the individual’s self-presentation, which is the way in which individuals are able to control the image others create of them (Goffman, 1959). They moreover are distinct in the degree to which they demand self-disclosure, which is the conscious or unconscious revelation of private information that is consistent with the reputation one would prefer to transmit (Schau & Gilly, 2003). Additionally, they differ in the degree of “media richness” they have, which represents the amount of information to be transferred in a given time period (Daft & Lengel, 1986), and in the intensity of social presence, which is the acoustic, visual, and physical contact that they facilitate (Short, Williams, & Christie, 1976). Table 17.1 gives a detailed presentation of the characteristics of the six social media classes (adapted from Kaplan & Haenlein, 2010, p. 62). Collaborative projects, with their most prominent ambassador, Wikipedia, are applications that “enable the joint and simultaneous creation of knowledge-related content by many end-users”; this social media class includes wikis (Bruns, 2008), social bookmarking sites, online forums, and review 274

Social Media Table 17.1 Classification of social media. Media richness | Social presence

Self-disclosure | Self-presentation

High Low

Low

Medium

High

(Micro)blogs Collaborative projects

Social networking sites Content communities

Virtual social worlds Virtual game worlds

Source: Adapted from Kaplan and Haenlein (2010, p. 62).

sites (Kaplan & Haenlein, 2014, p. 617). Nardi and colleagues (2004) define blogs as web-based forms of communication that include frequent updates and a series of archived entries made in reverse chronological order. Microblogs, such as Twitter, enable “users to exchange small elements of content such as short sentences, individual images, or video links” (Kaplan & Haenlein, 2011a, p. 106). Content communities, such as YouTube and Flickr, “enable the sharing of pictures, videos, and other forms of media” among a multitude of users (Kaplan & Haenlein, 2010, p. 62). On social networking sites (e.g., Facebook), individuals create their personal profiles and connect with others by letting them view, post, and interact with their profiles. Virtual gaming worlds (MMORPGs) and virtual social worlds are two subgroups of virtual worlds, which can be defined as artificial online environments through which individuals embodied as avatars can interact with each other (Castronova, 2005; Kaplan & Haenlein, 2009). While virtual social worlds enable individuals to act freely and to transfer their real lives into the virtual sphere, virtual game worlds are stricter and bind their users to acting according to predetermined rules.

Literature Review Collaborative Projects Collaborative projects have become a point of focus in the scientific literature also due to the possibility of applying collaborative projects for media management and corporate purposes (Lam, Yeung, & Cheng, 2016). In general, businesses should inspire valuable content generated by consumers in a collaborative manner (Muniz & Schau, 2011). Consumers are a source of significant value, whether acting individually or collectively. Those companies who wish to inspire consumergenerated content should think of a range of opportunities to create the desired value, and it is the role of professionals to come forward with practices that could make this feasible (Muniz & Schau, 2011). If companies let consumers establish and get involved in collaborative communities, and give them the means to influence the shape and form of the products they get from a given brand, they will definitely take advantage of it. In recent times, collaborative projects have been seen as platforms able to change the identity of organizations. Such platforms encourage indirect communication, forming the basis of a flowering of collective intelligence (Mačiulienė & Skaržauskienė, 2016). Lastly, collaborative projects are often based on crowdsourcing, which has contributed to the appearance of new business models that are able to maintain a competitive advantage and offer new challenges to both executives and entrepreneurs at the same time (Täuscher, 2017). A good business example of effective implementation of social media as a collaborative project platform is the case of Dell, where experience has been used to adopt social media to operate as a collaborative community and to transform into a social business (Weinberg, de Ruyter, Dellarocas, Buck, & Keeling, 2013). Collaborative activities undertaken by businesses may improve knowledge sharing and information exchanges across and within organizations, enhance the interaction between businesses and their 275

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customers, streamline internal coordination, make employee cooperation easier, and trigger generation of new ideas. Such initiatives are essential to the improvement of operational workflow (Lam et al., 2016). They boost knowledge sharing through and across social networks rich in information, which translates into improved innovativeness and operational efficiency. Information-rich social networks are vital to building competitive advantage based on knowledge (Lam et al., 2016). Recapitulating what has been said so far, we can see that the literature devoted to the subject draws our attention to a range of goals that can be pursued with the aid of collaborative projects, especially when it comes to taking advantage of such projects for successful communication (Kaplan & Haenlein, 2014), creation of social business (Weinberg et al., 2013), cultivation of innovation, acceleration of product implementation, experience sharing, knowledge accumulation, and organizational learning (Nguyen,Yu, Melewar, & Chen, 2015), and when it comes to promoting collective intelligence (Mačiulienė & Skaržauskienė, 2016). Still, the concept has undergone a clear transformation. At the initial stage of research and application, collaborative projects tended to be viewed in very functional, practical terms—as tools employed to achieve particular objectives or to manage organizations (e.g., knowledge management). The idea of organization has gradually changed, and social media should become an integral part of organizations. Contemporary businesses are more and more often based on communities, according to the principle of collaboration. The key idea is that the significance and domination of organizational structures should not become redundant, but rather adapted and supported by an element of a collaborative community to meet current market expectations (Weinberg et al., 2013).

(Micro)Blogs The scientific literature threw light on blogging quite early, with blogs being considered the most common form of new media. Some blogs may be individual, diary-like sites, while others may be open to groups of people where everyone posts their own content or comments, making conversations spark and continue (Bruns, 2008). According to Chan-Olmstead (2004) blogging can improve efficiency and effectiveness, help media outperform competitors and enhance communication with audiences. Moreover, blogs can help traditional media increase audience and create more revenue opportunities (Sheffer & Schultz, 2009). Reference sources also point to the aspect of collective content creation and to a departure from the division between creators-communicators and recipients. For instance, Zhao and Whinston (2006) argue that blogs are typical C2C platforms, whereas Marken (2005) defines blogs as collective conversations. Blogs fulfill multiple objectives and can be used for marketing intelligence, facilitating ongoing dialogue, initiating and supporting communication, acquiring new product ideas, and amplifying promotional actions (Mazurek, 2008; Singh, VeronJackson, & Cullinane, 2008). Blogs may also be successfully employed in internal communication (Nianlong, Xunhua, Jin, Guoqing, & Nan, 2015). They are often used by journalists and news media managers (Sheffer & Schultz, 2009). There has been a rapid rise in the development of a particular type of blog, so-called microblogs, with the best-known example being Twitter. It appears that despite the array of available social networking tools, microblogging tends to be picked most often and considered most convenient thanks to its format: microblogging is about communicating in a short, responsive, spontaneous, and mobile manner. Researchers believe that the qualities that make microblogging so popular are ambient awareness, which involves quite high levels of social presence; a unique type of communication this tool offers, embodied in the increasingly popular push-push-pull communication; and the ability to form an environment perfect for self-display and for learning details of others without being exposed (Kaplan & Haenlein, 2011a). Rogers (2014) states that Twitter began with a focus on daily chatter and ambient intimacy; today it has morphed into an event-tracking platform, drawing in ever higher numbers of readers and journalists (Opgenhaffen & d’Haenens, 2015). 276

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Businesses have shown a growing interest in blogs because consumers are more likely to believe and gain the trust of other individuals, such as private bloggers, than be convinced by businesses, and also because blogs appear to affect their readers’ behavior (Sepp, Liljander, & Gummerus, 2011). Singh et al. (2008), in turn, stress that “the continuing fragmentation of media and information overload lead customers to become less and less interested in companies’ brand messages delivered through traditional media” (p. 281). Studies conducted by Uribe, Buzeta, and Velásquez (2016) cover the same context, and the authors argue that at present, the Internet serves as the main source of information about a wide range of consumer goods. This is so because of the recent explosion in the number of blogging-based consumer reviews. The authors also note that reviews posted in a blog-like format tend to be considered more reliable and regarded as more independent sources of information than traditional advertising. A separate area of research devoted to blog qualities involves determining the impact of blogs on the growth in customer involvement. For example, companies tend to experiment with blog tools, virtual environments, and social networks in order to engage and interact with their customers in the course of the process of product development (Nambisan & Baron, 2007). Blogs constitute useful and interesting means of interaction with consumers thanks to a number of qualities, such as cost efficiency, user-friendliness, potential reach, and ways to create opportunities to generate and draw consumer feedback as part of product tests taking place in a natural, in-home setting (Sawhney, Verona, & Prandelli, 2005). With respect to microblogging, Li and Du (2017) propose a framework for identifying opinion leaders and maximizing the dissemination of messages by analyzing existing microblogs. This can be applied to determine a company’s most suitable targets, identify keywords, structure ontologies, retrieve data on existing networks, estimate and analyze the indices of bloggers’ influence, identify effective opinion leaders, and estimate the influence of opinion leaders in a microblog network. Research by Hennig-Thurau, Wiertz, and Feldhaus (2015) provides an empirical test of the “Twitter effect,” which postulates that word of mouth shared through Twitter and similar services affects early product adoption behaviors by immediately disseminating consumers’ post-purchase quality evaluations.

Content Communities Content communities gain in popularity mainly and essentially thanks to content created by their members, including brands, whose motivation to pursue such activities may have different sources. As Schau and Gilly (2003) argue in their paper, communities act as platforms of consumers’ pursuit of self-definition, attained mostly through their expressed online presence. Wasko and Faraj (2005) have found that members of communities are inspired to publish and share content because of the opportunity for social exchange and a chance to gain social capital. Becker, Clement, and Schaedel (2010) show that the success of online communities depends on the providers’ abilities to motivate potential users to adopt the service and to actively participate. From a brand’s point of view, consumers who take an active part in content communities can be seen as amplifiers of the message that surrounds them, especially when it comes to providing a better exposure to, or highlighting, the communications delivered by companies or brands. Such consumers then become essential components of communication systems (Noguti, 2016). This is particularly significant in situations common to contemporary times, where content communities act as alternative sources of information on the essence of purchase-related decisions. UGC (user-generated content) plays a very important role in guiding contemporary consumers in their purchase decisions. It is therefore important to explore the value of the content that is published and shared, and the factors that encourage consumers to “like” or “share” such content. For example, a study focuses on methods of investigation that can be used in reviewing community 277

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feedback to target high-quality content in an automatic way (Agichtein, Castillo, Donato, Gionis, & Mishne, 2008). There are also other studies which evaluate the impact of the number of posts, views, and reviews on the perceived usefulness and reliability of certain content. The analysis of content published across social media offers a new research area called content curation. This involves situations where users play a key part in the assessment of the quality of particular content, and of the spread and distribution thereof (Goldberg, Oestreicher-Singer, & Reichman, 2012). The significance of this issue is not to be diminished, especially as while Internet users look for new information, taking advantage of algorithm-based mechanisms, such as Google, or intelligent agents used with information aggregating sites (e.g., Booking.com), they also rely on information spread or assessed by other Internet users, who are often popular and enjoy other Internet users’ recognition. There is also another issue that is directly connected with content communities. This issue concerns the involvement of businesses as providers or creators of content regarded as word of mouth (WOM; known as firm-created WOM). It has been drawing increasing attention since 2006, when Dellarocas (2006) published a paper covering the possible gains companies may take advantage of if they create online WOM content. Godes and Mayzlin (2009) argue that such a strategy should be employed by businesses trying to sell goods which are still not very widespread in the starting phase of the process of selling. In other words, WOM may help products whose target audience is not very aware of their presence. Dellarocas’s (2006) argument revolved around the idea that online WOM offered both challenges and promises, devoting much of his attention to the matter of how the online mechanisms of feedback impact one’s behavior in web-based communities. Further studies prove that online WOM and expert reviews play a critical role in consumption behavior in the age of the Internet and social media (Kim, Park, & Park, 2013). Sure enough, in the context of further research on content communities, it appears necessary to pursue deeper studies of causality (performance versus observation of discussions) and behavior predictability (online discussions as a reflection of consumer offline behavior), taking the opposite into account as well—that is, how the offline influences the online.

Social Networking Sites Social networking sites have gained the interest of both researchers and management professionals. Communication based on social networking has become a must for any business that wants to stay competitive (Wang, Yeh, Chen, & Tsydypov, 2016). This is due to the fact that the information featuring across social networking platforms has great value to an increasing number of social media users when it comes to making purchase-related decisions. Taking advantage of social networks to popularize e-WOM, however, still poses a great challenge. Practitioners have generally little idea of the main factors behind Internet users’ active involvement in activities related to the spread or use of e-WOM (Wang et al., 2016). Also, companies still fail to appreciate the value of social networks as a means to foster and win consumer loyalty; instead, they tend to see them as resources useful in the process of creating and spreading brand awareness (Gamboa, Martins, & Alves, 2014). This is why some studies explore the factors that are able to predict consumers’ inclination to share instances of viral advertising communication with their acquaintances and friends in their social network (Kaplan & Haenlein, 2011b; Ketelaar et al., 2016). Others concentrate on an empirical examination of the role of contextual, individual, and social networking factors in determining customers’ intentions to engage in negative word-of-mouth communication taking advantage of social networking sites (Balaji, Khong, & Chong, 2016). There are also other studies that deal with the matter of social factors responsible for consumers’ loyalty to certain social networking sites (Tsiotsou, 2015). Furthermore, there are studies that directly investigate preferred qualities in the case

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of posts published by brands across social networks in order to be able to engage consumers. For example, Kujur and Singh (2017) argue that there are five important qualities of posts published by brands, which can be considered as the main triggers for consumers’ online engagement: vividness, interactivity, information, entertainment, and incentive. All of these factors are significant from the point of view of online involvement, and if they are coupled with a consumer’s positive attitude, the likelihood of such a consumer’s active online engagement in a social networking site grows (Kujur & Singh, 2017). The number of users and the level of their involvement in the activities that can be pursued online determine the success of every social networking site. It is important to bear in mind that despite the usually large number of contacts an average user has in his or her social network (i.e., “friends”), only some of these contacts are able to have an actual impact on one’s activity on a given site.The biggest challenge in this context is to evaluate the potential of every contact of an individual to affect that individual’s online behavior. This knowledge is of great value to brand managers, who can take advantage of it to determine the range of influence of a given user, to design their advertising strategies, and to plan retention activities accordingly (Amatulli, Guido, & Barbarito, 2014). In recent years, the aspect of privacy and of taking advantage of the personal data of social networking site members as key sources of information, not only about those members but also about the possibility of publishing and displaying as many user-personalized adverts as possible to those members, has also been gaining a lot of attention. A very interesting area of recent research is the effectiveness of advertising and privacy issues. According to studies by Tucker (2014), the perception of control of one’s personal details among Internet users may influence their readiness to click on online ads published across various social networking sites.The author argues that letting users access and control their details in an open manner can be beneficial and have a positive impact on media supported by ads, translating into a number of advantages granted to advertisers. More specifically, adverts making use of more private data for the purpose of message personalization and targeting, featuring an option to opt out from, for example, subscriptions in privacy settings, have been found to be more effective (Tucker, 2014).

Virtual Game World The globally expanding market of virtual entertainment, such as virtual game worlds—namely, MMORPGs—is also of significance to the development of research devoted to the aspect of consumption of such digital content. For instance, there are studies focusing on network externalities in virtual game worlds, where authors provide evidence to prove that the size of the installed base has an impact on the ratings of a particular game (Liu, Mai, & Yang, 2015). There are also other studies dealing with the network effects typical of free online games—that is, games where no subscription fees are required, and profit is gained through the sale of accessories—virtual items appearing within such games. Authors of such studies have come to the conclusion that offering free virtual game worlds can be a strategy to maximize revenue when a given game’s positive network effect is high and when a given accessory’s negative network effect is low (Wu, Chen, & Cho, 2013). Taking into consideration the outcomes of studies devoted to MMORPGs, social identity theory, and online communities, participation in virtual game worlds is driven by the human need to socialize. Importantly enough, the sense of attachment to such worlds is significant as well, but it is the relations established among fellow players that drive consumption behaviors (Badrinarayanan, Sierra, & Martin, 2015). Some other studies also show that MMORPGs are played for a number of different reasons too, including the desire for a sense of achievement, or the need to detach oneself from reality and immerse in a virtual environment (Billieux et al., 2013). Some papers also focus on the way the features available in such virtual worlds, such as watch lists, wish lists, or digital virtual goods (DVGs),

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affect consumer behavior. A study by Denegri-Knott and Molesworth (2013) provides some unique insights into the understanding of the concept of consumer desire and of digital virtual consumption by taking into account the role of nonhuman agents in the practice of consumer desire, a role which somehow appears to be too often neglected. Virtual game worlds seem to be growing in importance as a new channel for brand-building activities. Studies analyze the issue of detachment of the brand concept from any physical manifestation, or representation. Branding has already reached the virtually simulated world; among the most notable examples are virtual brands of films, books, video games, and other virtual environments open to multiple users. According to research findings—and real-life evidence—purely potential brands (called “protobrands”) launched in virtual environments can enjoy significant consumerbased brand equity. Furthermore, it appears that the equity of such brands may be capitalized on in the real world and become subject to legal protection. This capitalization may be taken advantage of through a process of reverse product placement—that is, when a protobrand is actually launched in the physical world (the hyper-real brand). Virtual worlds do not always last long. Several issues need to be taken into account when professionals intend to set up—and shut down—virtual worlds. There are virtual worlds developed for marketing purposes, also known as adverworlds, which are populated by consumers contributing to building a brand-centric environment. If such worlds need to be “discontinued” because of budget cuts or insufficient marketing performance, what should be done with the community inhabiting any such world? An example of such a virtual environment is Virtual Magic Kingdom, created by Disney (Scaraboto, Carter-Schneider, & Kedzior, 2013). A study on consumer reactions to the discontinuation of this adverworld has pointed to three areas of tension in this sphere: access and ownership, relationships, and communication. The authors identified different models of logic followed by consumers and marketers, with each model affecting the said areas of tension and influencing the manner in which consumers deal with the ensuing conflicts of interest (Scaraboto et al., 2013).

Virtual Social Worlds Virtual social worlds have been drawing attention for some time now, with the heyday of their popularity marking the release of Second Life, a pioneer in allowing its residents to retain full ownership of their virtual creations (Herman, Coombe, & Kaye, 2006; Huang, 2011). However, of late, the interest in this phenomenon seems to be gradually shifting toward the area of virtual and augmented reality. The decreasing interest in virtual social worlds has been already studied, and according to studies by Yoon and George (2013), it appears that organizations tend to implement and take advantage of virtual worlds if other organizations do so. But this rarely happens, actually.The second reason for the lower level of interest in the phenomenon is the fact that if some organizations have already adopted virtual worlds for their needs but do not gain any advantage from them, their competitors do not follow suit. In order to implement a virtual world successfully, it is necessary to ask oneself why people are inclined to use such a world and what drivers of motivation may have an impact on their behavior. As argued by Eisenbeis, Blechschmidt, Backhaus, and Freund (2012), virtual social worlds tend to be appealing because of not only the opportunities offered for social interaction, like in the case of other virtual environments (e.g., virtual communities), but also the levels of creativity they allow. According to study findings, there are three individual-level motivational drivers that influence the inclination to get involved in a virtual world: socializing, creativity, and escape.The first is mainly about forming and maintaining personal relations with other “inhabitants” of a given world.The second involves the technical advantages offered by the range of possibilities to design and create virtual items in such a virtual setting (Eisenbeiss, Blechschmidt, Backhaus, & Freund, 2012). According to other research

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results, people join social virtual worlds to fulfill their social and hedonic needs, and, of course, to get away from the constraints forced upon them in the real world—as in the case of gamers and virtual community members. Additionally, virtual social worlds offer a unique chance to create virtual objects according to one’s very own idea—and to sell them ( Jung & Kang, 2010). In the light of the foregoing, it is important to gain an understanding of consumer goals related to consumption in virtual social worlds. Entering a virtual world involves creating one’s avatar, a practice common to virtual environments. Avatars are virtual representations of inhabitants, used to interact with the population of the virtual world they are created in. According to the findings of various studies, there are four main motivation drivers behind creating avatars in a virtual world. These are: (1) virtual exploration, which lets users make the most of their online presence and take full advantage of immersive environments by pursuing activities otherwise difficult or impossible to engage in; (2) social navigation, which involves finding your way through these heterogeneous environments to make friends and make your mark; (3) contextual adaptation, which is about adapting and reacting to various sociocultural contexts; and (4) identity representation—presenting either the ideal or the actual self (Lin & Wang, 2014).

Research Agenda According to Lamberton and Stephen (2016), we live in times of a rapid increase in the significance of the need for social media in particular and the digital sphere in general. Both business practice and academia are paving the way to research in social media. However, even though the subject of social media abounds with material for research purposes, the very phenomenon still remains somewhat new and as yet unexplored, especially if we look at the difference between the business potential and the popularity of the media. There is not enough connection between academia and business practice, which leads to a discord between the product of research and business needs, something the authors refer to as “frustrating asynchrony” (Lamberton & Stephen, 2016, p. 168). They point to several issues that need to be addressed to amend the current situation, including a lack of studies that would offer in-depth and thorough tests of previous theories and hypotheses, fragmentation of the available research, and no answers to essential questions—for example, how has the consumer’s fundamental decision-making process changed due to digital experiences and environments? It is highly likely that a series of new studies focused on meta-analysis of keywords used across social media would provide us with a better understanding of at least some of the issues in question. Lamberton and Stephen (2016) follow up by highlighting the necessity to repeat studies from earlier periods and to take advantage of the body of knowledge gained so far. They also propose establishing special research teams dedicated to processing huge data sets to address the most urgent matters, making good use of the data offered by businesses, and analyzing the needs of the business environment with respect to utilization of social media in more detail and with more care. These new directions of research are surely valid and embrace not just the area of social media but also many other disciplines at the same time. A subject that has recently drawn a lot of interest, and one which should by all means be researched in more detail, is that of online ethics and privacy (Bechmann, 2014; Godes & Mayzlin, 2004). The power of social media manifested in their impact on our everyday life, on consumer choices, or on political decisions requires a discussion on the quality of information and intentional manipulation thereof across various social media platforms. As Brooke (2016) argues, social media platforms should take greater responsibility for the content that is created and shared through them. She also adds that the greatest challenge will involve finding the balance between quality control and the free flow of information, while avoiding censorship and the spread of threats and lies. Recent evolutions with Facebook fighting so-called fake news are to be mentioned in this context. Remarkably, the world in

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which algorithms determine our way of perception of reality has been already described by Nicholas Negroponte (1995), the founder of MIT’s Media Lab. He imagined that we have an “interface agent” that could “read every newswire and newspaper and catch every TV and radio broadcast on the planet, and then construct a personalized summary” (Negroponte, 1995, p. 153). Additionally, there is a clear need for more studies on the interaction that takes place between the offline and the online. Schweidel and Moe (2014), for instance, combine the content shared across social media with performance indicators based on stock prices and offline studies of brand-tracking. This results in an opportunity to establish measures of the level of sentiment, which translates into predictions of the impact of online talk on certain significant outcomes taking place offline. In a similar manner, mobile ubiquity, which can be explained as an interdependent plane of spatial flexibility and time saving, provides researchers with new ways to establish novel theories of human behavior in virtual environments (Okazaki, Molina, & Hirose, 2012). It also points to a need for reviewing and redefining the notion of engagement, especially in the context of changes in consumer behavior as a result of today’s ever-presence of mobile devices and their effects (Calder, Isaac, & Malthouse, 2016). Lamberton and Stephen (2016) present another argument, stating that mobile research opens a new path toward new theories of behavior in virtual worlds. Online consumers provide data from various sources because of the omnichannel nature of today’s media and the said mobile ubiquity. This, in turn, leads to a need to measure their broad-ranging activities in an efficient way. A good example of studies focusing on multichannel activities is a paper by Fossen and Schweidel (2016). They have taken a closer look at the phenomenon of social television, itself a product of the more and more popular multitasking. As part of the study, they analyzed cases of people watching TV and using social media at the same time—and checked the effectiveness of advertising in such circumstances. Measurement of the outcomes of activities pursued across social media is another research area affected by the current development of mobile technologies and social media. There is a whole new range of ways for brands to interact with consumers, and there are new means of consumerto-consumer interaction. This calls for solutions to measure the value of such interaction. According to a report by the American Marketing Association (AMA, 2014), professionals will learn how to coordinate social media metrics with business goals and filter and transform social data into valuable and understandable insights.Thus, social media measurement will turn into media measurement, and media measurement will become business measurement. In a similar vein, the connection between video content and social media marks the direction for new research and conceptual frameworks focusing on the measurability of the rate of engagement and effectiveness. According to what we can learn from the AMA (2014) report, video content will be the main driver behind 85% of all online search traffic in the United States by 2019. It appears therefore that professionals must focus on video content on social media first and foremost, whether Instagram, Facebook, or Snapchat. Moreover, they also need to learn to understand the way each social media channel optimizes its platform to let more video content be displayed in the user feed, and how brands can take advantage of video content to attract their fans and followers and to make them more involved (Karhoff, 2017). It is more and more common to hear that we are entering the post-digital era, which means that a differentiation between offline and online is no longer valid and we should switch to a single notion instead, especially since nowadays almost any activity is subject to digitalization one way or another (Lamberton & Stephen, 2016). As well as marketing, for instance, there is a boost in the development of research on the use of social media in human resources. Deutsche Bank, for example, has decided to take advantage of various social media platforms, such as LinkedIn or Twitter, to look for bright representatives of the generation of millennials and convince the most promising of them to pursue a career in finance. The bank has implemented a program to monitor the online activity of university students to identify those who might be a good fit for the bank but would not apply through traditional channels, such as on-campus recruitment drives (Noonan, 2017).

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Conclusion As stated in the introductory comments of this chapter, social media influence all dimensions of society (Kaplan, 2015b). Individuals and organizations alike are decrypting how best to make use of the numerous social media applications available in the virtual sphere. Stars like Britney Spears, Rihanna, Justin Bieber, and Lady Gaga have all revolved their communication strategies entirely around (mobile) social media (Kaplan & Haenlein, 2012). Politicians such as Barack Obama or Donald Trump win elections partly due to their extensive use of social media for communicating with their potential voters. Governments and public administrations apply social media, including the European Union intending to create a feeling of European identity, pride, and self-assertion among its half a billion citizens via Facebook, Twitter, and YouTube (Kaplan, 2014). Finally, the higher education sector is also influenced by social media (Kaplan & Haenlein, 2016; Pucciarelli & Kaplan, 2016), as reflected in the rising numbers participating in and completing MOOCs (massive open online courses) and SPOCs (small private online courses). With many of the important social media applications, such as Facebook or Foursquare, having been invented by students still at university and business school at the time of invention, one could say that we have come full circle, with smart students who were ahead of their universities in creating new communication channels. Today these same applications are reentering academia for innovative teaching purposes, potentially changing the entire sector.

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18 MOBILE MEDIA Sangwon Lee

The rapidly changing and growing mobile industry is an interesting research field for media economics and management scholars. Mobile is one of the key drivers of disruptive innovation, such as connected cars and drones. The rise of mobile media creates new markets, such as mobile payments (mPayments), the Internet of things (IoT), location-based advertising, and an entire ecosystem of applications, including social media (Deloitte, 2016). Also, mobile media has changed people’s lives. Mobile phones have become important tools for shopping, working, spending leisure time, watching television, and talking with friends (Deloitte, 2016). Mobile markets are expanding. Forecasts estimate that mobile phone penetration will reach nearly 72% by 2020 (GSMA, 2016). It was also suggested that the 5G mobile broadband network will cover one third of the world’s population by 2025 and that there will be 5.7 billion smartphone subscriptions globally by 2020 (GSMA, 2017). Moreover, global mobile advertising expenditure will reach 247.36 billion dollars (USD) in 2020 from 71.75 billion dollars (USD) in 2015 (Statista, 2017). Recently, the mobile industry is experiencing very fast technological change and the marketing channel involving mobile devices is growing rapidly in the multichannel environment (Shankar & Balasubramanian, 2009). This chapter is devoted to a discussion of the diverse issues in mobile media economics, management, and policy. What are the main issues in mobile media industry studies? What theoretical perspectives have been utilized by media economics and management scholars? This chapter is organized as follows. The next section surveys the diverse issues in mobile media economics studies. The third section provides scholarly studies on mobile media management. The fourth section introduces policy issues in the mobile industry, and the final section provides issues and questions related to future research focused on mobile media.

Review of Literature The body of academic studies in the mobile media field is growing. However, because the area of mobile media research is very diverse, the literature review provided in this chapter focuses on mobile media scholarly studies in the field of media economics, management, and policy.Tables 18.1, 18.2, and 18.3 provide a summary classification of the mobile media academic studies reviewed. Most of the reviewed literature was limited to peer-reviewed journal articles in the areas of media economics and management.

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Sangwon Lee Table 18.1 Summary classification of issues in mobile media economics. Competition in mobile industry • Church and Gandal (2008)—Platform competition in telecommunications • Bohlin, Gruber, and Koutroumpis (2010)—Diffusion of new technology generations in mobile communications • Kalmus and Wiethaus (2010)—On the competitive effects of mobile virtual network operators • Lee and Lee (2014)—Early diffusion of smartphones in OECD and BRICS countries: an examination of the effects of platform competition and indirect network effects • Houngbonon and Jeanjean (2016)—What level of competition intensity maximizes investment in the wireless industry? Substitutes/Complements • Vogelsang (2010)—The relationship between mobile and fixed-line communications: a survey • Ongena, Bouwman, and Gillebaard (2012)—Displacement and supplemental effects of the mobile Internet on fixed Internet use • Jang and Park (2016)—Do new media substitute for old media?: a panel analysis of daily media use • Lange and Saric (2016)—Substitution between fixed, mobile, and voice over IP telephony—evidence from the European Union • Lee, Lee, and Chan-Olmsted (2017)—An empirical analysis of tablet PC diffusion Mobile Diffusion • Jang, Dai, and Sung (2005)—The pattern and externality effect of diffusion of mobile telecommunications: the case of OECD and Taiwan • Gruber and Koutroumpis (2010)—Mobile communications: diffusion facts and prospects • Bohlin, Gruber, and Koutroumpis (2010)—Diffusion of new technology generations in mobile communications • Curwen and Whalley (2010)—Mobile telecommunications in a high-speed world: industry structure, strategic behavior, and socioeconomic impact • Chan-Olmsted, Rim, and Zerba (2012)—Mobile news adoption among young adults: examining the roles of perceptions, news consumption, and media usage • Lee and Lee (2014)—Early diffusion of smartphones in OECD and BRICS countries: an examination of the effects of platform competition and indirect network effects • Struckmann and Karnowski (2016)—News consumption in a changing media ecology: an MESM-study on mobile news • Tarute, Nikou, and Gatautis (2017)—Mobile application–driven consumer engagement

Issues in Mobile Media Economics The research areas in mobile media economics are divided into competition in the mobile industry, substitutes/complements, and mobile diffusion studies.

Competition in the Mobile Industry The industry environment, such as competition, often has a direct effect on a media firm’s strategic behavior and the growth of media markets. In the telecommunication industry, it has been argued that competition creates additional incentives to reduce costs and brings innovations (Laffont & Tirole, 2000). Also, the reviewed literature in the area of mobile telecommunication revealed that competition is an influential factor of mobile diffusion (Bohlin, Gruber, & Koutroumpis, 2010; 288

Table 18.2 Summary classification of issues in mobile media management. Strategic management • Chan-Olmsted (2006a)—Content development for the third screen: the business and strategy of mobile content and applications in the United States • Methlie and Gressgärd (2006)—Exploring the relationship between structural market conditions and business conduct in mobile data service markets • Lee, Chan-Olmsted, and Ho (2008)—The emergence of mobile virtual network operators: an examination of the business strategy in the global MVNO market • Banerjee and Dippon (2009)—Voluntary relationships among mobile network operators and mobile virtual network operators: an economic explanation • Chang (2010)—Bandit cellphones: a blue ocean strategy • Ghezzi, Cavallaro, Rangone, and Balocco (2015)—On business models, resources, and exogenous discontinuous innovation: evidences from the mobile applications industry Marketing • Bauer, Reichardt, Barnes, and Neumann (2005)—Driving consumer acceptance of mobile marketing: a theoretical framework and empirical study • Bruner and Kumar (2005)—Explaining consumer acceptance of handheld Internet devices • Konana and Balasubramanian (2005)—The social-economic-psychological (SEP) model of technology adoption and usage: an application to online investing • Shankar and Balasubramanian (2009)—Mobile marketing: a synthesis and prognosis • Varnali and Toker (2010)—Mobile marketing research: the state-of-the-art • Ström,Vende, and Brendican (2014)—Mobile marketing: a literature review on its value for consumers and retailers

Table 18.3 Summary classification of issues in mobile media policy and regulation. Spectrum • Gans, King, and Wright (2008)—Wireless competitions • Curwen and Whalley (2010)—Mobile telecommunications in a high-speed world: industry structure, strategic behavior, and socioeconomic impact • Park, Lee, and Choi (2011)—Does spectrum auctioning harm consumers? • Zaber and Sirbu (2012)—Impact of spectrum management policy on the penetration of 3G technology Standards • Gruber (2005)—The economics of mobile telecommunications • Koski and Kretschmer (2005)—Entry, standards, and competition: firm strategies and the diffusion of mobile telephony • Cabral and Kretschmer (2007)—Standards battle and public policy • Bohlin, Gruber, and Koutroumpis (2010)—Diffusion of new technology generations in mobile communications • Lee, Marcu, and Lee (2011)—An empirical analysis of fixed and mobile broadband diffusion Mobile Virtual Network Operators (MVNOs) • Kalmus and Wiethaus (2010)—On the competitive effects of mobile virtual network operators • Kim, Kim, Gaston, Lestage, Kim, and Flacher (2011)—Access regulation and infrastructure investment in the mobile telecommunications industry • Cricelli, Grimaldi, and Ghiron (2012)—The impact of regulating mobile termination rates and MNOMVNO relationships on retail prices

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Gruber; 2005; Kauffman & Techatassanasoontorn, 2005; Koski & Kretschmer, 2005; Lee & Lee, 2014). For instance, Bohlin, Gruber, and Koutroumpis (2010) discovered that competition between mobile firms has been the key determinant of the diffusion speed across all mobile technology generations, but there are indications that the effect dissipates in the transition from the second to the third generation. Interestingly, the second-generation mobile markets show a switch in the influence of standards competition, with a positive effect on diffusion in the early phase and a negative effect later on. Also, platform competition in mobile markets plays a key role in mobile market growth. Platform competition occurs when different, sometimes incompatible, technologies compete to provide telecommunication services to end users (Church & Gandal, 2008). Platform competition in mobile service markets involves competition among different mobile network standards. For instance, diverse mobile network standards like LTE, CDMA 2000 1x EV-DO, CDMA 2000 1x, W-CDMA, and HSXPA were adopted by different countries. Thus diverse wireless standards and different types of services across mobile technologies enable the existence of diverse competing systems, which may lead to more and better mobile services (Gruber & Verboven, 2001). Platform competition in the smartphone industry involves competition among different mobile operating systems, such as Android, iOS, and BlackBerry OS (Lee & Lee, 2014). Lee and Lee (2014) found that mobile OS competition and mobile network standard competition have an impact on the early diffusion of smartphones. In addition, some scholars analyzed the effects of competition in the mobile industry. For instance, Houngbonon and Jeanjean (2016) examined the relationship between competition and investment in the mobile industry. Interestingly, the results of their data analysis revealed that the relationship is an inverted-U-shape. Their finding suggests that investment increases with competition as long as operators’ profits are above the thresholds of 37% or 40% of their revenues. Under these thresholds, there is a trade-off between competition and investment.

Substitutes/Complements Some media economics scholars examine whether mobile media is a complement or a substitute for other media ( Jang & Park, 2016; Lange & Saric, 2016; Lee, Marcu, & Lee, 2011; Lee, Lee, & ChanOlmsted, 2017; Ongena, Bouwman, & Gillebaard, 2012; Vogelsang, 2010). Lange and Saric (2016) examined the access substitution between fixed lines, mobiles, and managed voice over Internet protocol (VoIP) in a unified EU cross-country framework. Their analysis demonstrates a strong access substitution between fixed lines and mobiles and provides indicative evidence on the substitution between fixed lines and VoIP (Lange & Saric, 2016).Vogelsang (2010) also surveyed fixed-to-mobile substitution (FMS). Vogelsang (2010) suggests that FMS is supported by the interaction of positive cross-elasticities of demand and reductions in mobile relative to fixed communications prices. FMS is also supported by relative declines in mobile network costs, network effects in demand, and quality improvements of mobile services (Vogelsang, 2010). Lee, Marcu, and Lee (2011) examined whether mobile broadband is a complement or a substitute for fixed broadband in a nonlinear diffusion model. Their analysis suggests that in many OECD countries, mobile broadband service is a complement to fixed broadband service. Ongena et al. (2012) also confirms that mobile broadband service is a complement to fixed broadband service. Employing an online survey method, Ongena et al. (2012) collected data on the use of information, communication, entertainment, and transaction services. Ongena et al. (2012) discovered that mobile Internet reinforces, rather than replaces, Internet usage. When people possess an iPhone or (mobile) laptop, this reinforcement effect is present for entertainment services (Ongena et al., 2012). Also, media economics scholars examined the user substitutability and complementarity of diverse media. Using individual-level media consumption data from a media diary, Jang and Park (2016) 290

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discovered significant substitution among newspaper, television, and computer use, while mobile telephone use and computer use seem to be complementary in regard to time of use. Moreover, Jang and Park (2016) found that televisions and computers exhibit substitutability for watching real-time television, cameras act as substitutes for video devices for viewing movies/videos, newspapers and computers exhibit substitutability for reading news articles, and computers and mobile telephones substitute for one another in using informative content. Lee et al. (2017) investigated diverse macrolevel adoption factors influencing tablet PC diffusion in 43 countries. Their results reveal that tablet PCs are a complement to smartphones in the early diffusion of smart devices (Lee et al., 2017). Also, the country-level study demonstrates the substitution nature of PC-tablet and PC-smartphone in the initial diffusion period of tablet PCs (Lee et al., 2017).

Mobile Diffusion The reviewed literature in the area of mobile industry also revealed that mobile diffusion has been often examined (Bohlin, Gruber, & Koutroumpis, 2010; Gruber, 2005; Gruber & Koutroumpis, 2010; Lee, Marcu, & Lee, 2011). The existing literature has largely identified a diverse range of adoption factors, such as price, income, competition, and policy, as well as demographic factors playing key roles in mobile diffusion. For instance, Bohlin, Gruber, and Koutroumpis (2010) identify factors that affect the diffusion of new generations of mobile telecommunications technologies. They discovered that income, urbanization, and Internet/broadband penetration as well as regulation positively affect diffusion across all generations of mobile technologies. Interestingly, their study also found that the diffusion of first-generation technologies boosts the adoption process of second-generation networks, but that second-generation adoption negatively affects the adoption of third-generation technologies. Gruber and Koutroumpis (2010) examined the diffusion of different generations of innovative mobile services and compared actual market performance with expectation at the time of introduction of each generation.Their study suggested that whereas 1G and 2G were an unexpected success, 3G did not live up to expectations. Gruber and Koutroumpis (2010) emphasize that the rapid diffusion of 2G for voice services at low prices definitely indicates demand-pull in innovation, in particular prepaid cards.This demand-pull has been less so with 3G, where there are several indications that supply push elements were in place, such as the reservation of spectrum and the early deployment of technology. (p. 144) They argued that 3G mobile diffusion was pushed too much on the supply side, rather than pulled on the demand side (Gruber & Koutroumpis, 2010). Also, network effect, which is the effect that the value of certain type of services to each individual user may depend to some degree on the number of other individuals using those services, is related to mobile diffusion. In other words, for products characterized by network effects the decision by consumers regarding which network to join will depend not only on relative product characteristics and prices but also on the expected size of the network (Church & Gandal, 2008). The role of the size of the existing installed base in determining the size of the network in the future arises because positive network effects give rise to positive feedback effects (Shapiro & Varian, 1999). Jang, Dai, and Sung (2005) found that the pattern of the diffusion of mobile telecommunications for OECD countries is generally characterized by an S-shaped curve; nevertheless, significant differences exist in the spread of the S-curve, largely due to differences in the magnitude of the network externality coefficient. Grajek (2010) developed a structural demand model for mobile telephony that facilitates the identification of network effects. Grajek (2010) suggested that network effects are measured as the dependence of consumer willingness to pay on the installed base of subscribers and compatibility 291

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is measured by the relative extent of cross- and own-network effects. Grajek’s study demonstrates that ignoring network effects leads to the overestimation of demand elasticity. It was also suggested that with network effect, prices may fall—that is, as more people use mobile phones, mobile phone vendors will be able to achieve scale economies in the production of handsets and consequently prices may fall (Curwen & Whalley, 2010). In turn, this will encourage the further uptake of mobile handsets, increasing the size of the mobile market (Curwen & Whalley, 2010). In addition, Lee and Lee (2014) found that the share of open source mobile OSs is an influential factor of smartphone diffusion. Their study suggests that indirect network effects exist in the diffusion of smartphones (Lee & Lee, 2014). They emphasized that “a mobile OS for a smartphone becomes more valuable as the variety of available mobile applications through app stores increases, and this variety increases as the total number of smartphone users increases” (Lee & Lee, 2014, p. 351). Some media economics scholars have examined the adoption of mobile technologies, mobile content, and mobile applications at the individual level of analysis (Chan-Olmsted, Rim, & Zerba, 2012; Ferguson & Greer, 2013; Tarute, Nikou, & Gatautis, 2017). For instance, employing the frameworks of innovation diffusion and the technology acceptance model, Chan-Olmsted et al. (2012) investigated the predictors of mobile news consumption among young adults. The study discovered that the perceived relative advantage (especially content), utility, and ease of use of mobile news are positively related to its adoption. They emphasized “young adults’ news consumption patterns and preferences, as well as media usage, all play a role in the adoption of mobile news” (Chan-Olmsted et al., 2012, p. 126). Also, utilizing the situational theory of new media behaviors, Struckmann and Karnowski (2016) examined the influence of situational characteristics on communication device choice for news consumption. The study suggested that “while traditional devices and PC/notebook do limit news consumptions in a situational perspective, mobile devices extend news usage to a broad range of new situations, and thereby completely penetrate the everyday lives of users” (Struckmann & Karnowski, 2016, p. 315). In addition,Tarute et al. (2017) investigated which features of mobile applications stimulate consumer engagement and lead to continuous use of mobile applications. Their study discovered that “perception of such features as design solutions and information quality will result in higher engagement leading to continuous usage of mobile applications and consumer engagement positively influenced users’ intention to continuous usage of mobile applications” (Tarute et al., 2017, p. 145). Some scholars have examined the adoption and content of mobile television (Lee et al., 2011; Schuurman, Marez,Veevaete, & Evens, 2009). For instance, Lee, Kim, Ryu, and Lee (2011) examined the factors influencing young people’s mobile TV adoption behaviors. The study revealed that information needs and newspaper reading were negatively associated with mobile TV adoption, while entertainment needs were found to be a significant positive predictor of the adoption likelihood, which imply that young adults tend to adopt and use mobile TV for entertainment purposes, rather than for informational purposes. (Lee, Kim, Ryu, & Lee, 2011, p. 239)

Issues in Mobile Media Management The mobile media management research domain is divided into strategic management and marketing issues. The literature reviewed here focuses on key theories and issues in media management.

Strategic Management The reviewed literature in the area of the mobile industry revealed that an analysis of the linkage between a firm’s strategy and its external environment has been often performed (Ghezzi, Cavallaro, 292

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Rangone, & Balocco, 2015; Lee, Chan-Olmsted, & Ho, 2008). Traditionally, an industrial organization (IO) view of strategy, which emphasizes a firm’s strategic choice is often supported by a sensitive, ongoing analysis of the external environment, has been widely employed in media management and economics studies (Chan-Olmsted & Jung, 2001; Rolland, 2003). In the IO perspective, the identification and understanding of the opportunities and threats that a firm faces are the goal of the analysis of the external environment (Aaker, 1984). Employing the IO approach, Lee et al. (2008) found that the general environment of a firm, such as industry, policy, consumer, and technological factors, influences a mobile virtual network operator’s (MVNO) strategy. Specifically, Lee et al.’s (2008) study proposed an analytical framework for MVNO strategy, which focuses on the linkage between Porter’s (1980) generic strategies and an MVNO’s external environment. The analytical framework for MVNO strategy is derived from the notion that “the essence of formulating competitive strategy is relating a company to its environment” (Porter, 1980, p. 3). In the IO perspective, there is a link between market conditions, business model choices, and performance (Methlie & Gressgärd, 2006).This link was formulated in the structure-conduct-performance (SCP) framework in the field of IO. By conducting case studies, Methlie and Gressgärd (2006) identified the relationships between specific structural conditions and the business model choices made by the mobile data service providers. Methlie and Gressgärd (2006) emphasize that “firms that are able to recognize customer needs and preferences, and also act upon this information by introducing unique and non-substitutable products and services, will experience rapid adoption and achieve value network influence” (p. 24). Ghezzi et al. (2015) examined whether and how exogenous discontinuous innovation influences the business model designed and the resources, competencies, and capabilities endowment in the mobile application industry. The study reveals that an exogenous discontinuous innovation acts on the business model parameters of value proposition and financial configuration (Ghezzi et al., 2015). Also, the resource-based view (RBV) approach has been employed in the area of mobile industry studies (Ansari & Munir, 2008; Ghezzi et al., 2015). The RBV approach emphasizes the individual firm’s unique capabilities and their impact on the firm’s business strategy in the market (ChanOlmsted, 2006b). In the perspective of the RBV, firms are a unique collection of tangible and intangible resources and competences (Barney, 1991; Chan-Olmsted, 2006b). Employing the RBV approach, Ghezzi et al. (2015) examined the relationship between the change induced by innovation in the business model and the change in the resources, competences, and capabilities in the mobile industry. The study reveals that the set of resources, competences, and capabilities is affected by a change in the subset of business model parameters in the mobile industry (Ghezzi et al., 2015). In addition, the blue ocean strategy has been employed for the analysis of cellphone markets (Chang, 2010). The blue ocean strategy emphasizes avoiding competition while creating value innovation that drives down costs while simultaneously driving up value for buyers (Kim & Mauborgne, 2005). Kim and Mauborgne (2005) proposed a framework to reconstruct buyer value elements to craft a new value curve. The framework includes four actions: factors to be eliminated, reduced, increased, and created. Chang (2010) utilizes the four actions framework to analyze the “bandit” cellphone (i.e., unbranded or unknown-brand “white box” cellphones; low-cost, high-value-added features are characteristic of bandit cellphones) strategy. Chang’s (2010) study suggests that the bandit cellphone employs a unique strategy for value innovation, which eliminates the competition-based business models used by major brand cellphones. Furthermore, the analysis of strategic networks has been utilized in the area of mobile industry studies (Banerjee & Dippon, 2009; Chan-Olmsted, 2006a). In general, strategic networks are defined as the “stable inter-organizational relationships that are strategically important to participating firms” (Chan-Olmsted, 2006b, p. 169). Through an economic analysis, Banerjee and Dippon (2009) examined conditions sufficient for profit-maximizing mobile network operators (MNOs) and MVNOs to 293

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form voluntary strategic partnerships based on resale, product differentiation, and rebranding. Their economic analysis found that the value of the MVNO’s brand reputation and wholesale discount at which the MNO offers services to the MVNO are key factors of forming voluntary strategic partnerships between MNOs and MVNOs (Banerjee & Dippon, 2009). Also, through a case study, Chan-Olmsted (2006b) found that various strategic partnerships have been formed between different members in the mobile value chain systems, especially among mobile content developers and mobile operators, mobile device manufacturers, and mobile content aggregators. In particular, the study discovered that, to increase the efficiency of their offerings and gain access to a larger number of end users, many mobile content developers are working closely with established mobile content aggregators.

Marketing Innovations in mobile technologies and the increased penetration of smart devices like smartphones and tablets have ushered in an era of ubiquitous broadband access from anywhere and anytime. With this trend, mobile media have become compelling channels for digital marketers, and the reach of mobile marketing is large and growing (Watson, McCarthy, & Rowley, 2013). Mobile marketing is defined as a set of practices that enable organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network (Mobile Marketing Association, 2017). There are key differences between mass marketing and mobile marketing. Mass marketing (typically conducted through mass media, such as magazines and television) addresses a broad range of existing and potential customers, whereas mobile marketing is restricted to owners of mobile devices, and in many cases, to a subset of those owners who opt in to receive communications from marketers (Shankar & Balasubramanian, 2009). Also, “with mobile marketing, the seller can more precisely target customers at a specific location and at a particular time, better measure and track consumer response, and have lower unit costs of communication with the target audience than those associated with mass marketing” (Shankar & Balasubramanian, 2009, p. 119). In addition, compared to mass marketing, the brevity of communication through a mobile device can also enable more frequent interactions between the marketer and the customer (Shankar & Balasubramanian, 2009). Key issues in mobile marketing are divided into consumer adoption of mobile devices and services and consumer behavior. Consistent with the drivers of the adoption of new media technologies, diverse technology adoption models and theories have been proposed for examining the key drivers of a consumer’s decision to adopt a mobile device or service. For instance, the theory of reasoned action (TRA), the technology acceptance model (TAM), the theory of planned behavior (TPB), the model of personal computer utilization (MPCU), the innovation diffusion theory (IDT), and social cognitive theory (SCT) have been widely employed to examine the drivers of a consumer’s decision to adopt a mobile device or service. For instance, TAM has been widely employed to explain user adoption of diverse mobile services, including mobile phones (Chong, Ooi, Lin, & Bao, 2012; Pagani, 2004), mobile payment systems (Chandra, Srivastava, & Theng, 2010), short message services (Lu, Deng, & Wang, 2010), and mobile shopping (Lu & Su, 2009). Also, to integrate these diverse new media technology adoption models, Venkatesh, Morris, Davis, and Davis (2003) developed the unified theory of acceptance and use of technology (UTAUT). The UTAUT identified four core determinants of intention and use of technologies: performance expectancy, effort expectancy, social influence, and facilitating conditions (Venkatesh et al., 2003). For example, the reviewed literature applied the UTAUT model to the user behavior of mobile services, such as mobile Internet/data services (Wang & Wang, 2010), and tablets (Moran, Hawkes, & Gayer, 2010). Also, as summarized in the SEP model of innovation adoption, a range of interrelated influences of social (S), economic (E),

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and psychological (P) origins can influence the adoption of a mobile device or service (Konana & Balasubramanian, 2005; Shankar & Balasubramanian, 2009). Another key issue in mobile marketing is consumer behavior studies. Varnali and Toker (2010) suggest that consumer behavior studies in mobile marketing aim to develop models incorporating individual-level characteristics, such as demographics, motivations, traits and perceptions, social and cultural influences, and other consumer-based constructs to explain the adoption of mobile marketing and prediction of mobile consumer behavior. (p. 147) Researchers focusing on the mobile consumer behavior have examined various constructs, including consumer-based variables that influence the acceptance of mobile marketing, perceived value, and attitudes (Varnali & Toker, 2010). From a theoretical perspective, consumer acceptance of mobile marketing studies widely employed the TAM, the TRA, the TPB, and innovation attributes (Ström,Vende, & Brendican, 2014). Also, some empirical studies in mobile marketing areas have examined perceived value and attitudes. For instance, Bruner and Kumar (2005) suggest that while perceived usefulness (a utilitarian aspect) contributes to the consumer adoption of Internet devices, what contributes even more is their “fun” attribute (a hedonic aspect). In other words, “the influence of hedonic value is stronger when compared to utilitarian value in building attitudes towards mobile technology in general” (Varnali & Toker, 2010, p. 148). Bauer, Reichardt, Barnes, and Neumann (2005) examined attitudes toward mobile marketing. Their study found entertainment value as well as information value to be the strongest drivers of the acceptance of the mobile phone as an innovative medium for advertising content communication, whereas the effects of prior knowledge and general attitude toward advertising were found to be very low.

Issues in Mobile Policy and Regulation Another area of interest in mobile media studies among media management and economics scholars is studies in mobile policy and regulation. The main issues in mobile media policy and regulation include spectrum, standards, and MVNOs.

Spectrum Mobile communication generally uses the radio spectrum. Since the radio spectrum in general has been viewed as a scarce natural resource, telecommunication regulatory agencies allocate radio spectrum licenses to mobile operators for the best use of the resource (Curwen & Whalley, 2010; Zaber & Sirbu, 2012). It is generally agreed that telecommunication regulators around the world adopt spectrum management policies to ensure efficient use of this radio spectrum. Important policy decisions for efficient spectrum management involve selecting which band of the spectrum is to be assigned to which operator for what use (Zaber & Sirbu, 2012). In these policy decisions telecommunication regulators may award mobile operators a specific spectrum band or allow them to reuse their existing licensed spectrum.The advantages of mandating a spectrum band may include ensuring global roaming and economies of scale as well as avoiding problems of non-compatibility (Bohlin, Madden, & Morey, 2010), while an advantage of a band neutrality policy may entail mobile operators achieving greater leverage through repurposing previously acquired bands (Zaber & Sirbu, 2012). Interestingly,

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Zaber and Sirbu’s (2012) empirical study indicates that countries that mandated a specific frequency band for 3G saw faster rollout, but in the long run those countries experienced a slower growth rate. For the allocation of new spectrum, regulators generally use auctions or beauty contests (sometimes referred to as “comparative hearings”) or a hybrid of both. Usually, beauty contests involve potential users submitting business plans to the government (or its appointed committee), and then the winners of radio spectrum are chosen from those mobile operators submitting plans (Gans, King, & Wright, 2008). In general, for beauty contests there may be some payment to the government by the winners (Gans et al., 2008). For instance, France, Norway, Spain, and Sweden have employed beauty contests for the allocation of 3G licenses (Curwen & Whalley, 2015). On the other hand, in auctions the mobile operators bid for spectrum lots, and licenses are assigned to those who value them most highly (Curwen & Whalley, 2010). The advantages of using auctions may include ensuring transparency and guaranteeing that the party that values the spectrum most gets it (Zaber & Sirbu, 2012). However, auctions are criticized by mobile network operators because the resulting high prices raise operators’ costs and in most auctions the telecommunication regulators impose certain obligations on the licensees, which could affect the efficiency of the use of the spectrum (Park, Lee, & Choi, 2011). In spite of this debate, Zaber and Sirbu (2012) found that 3G diffusion is not significantly affected by the choice of auctions versus alternative license award processes.

Standards It is generally agreed that standardization is a critical issue in the success of mobile technology. It depends on the telecommunication regulator to decide whether to impose the adoption of a particular technical standard (Gruber, 2005). In other words, the telecommunication regulator may choose a government-mandated single standard or market-mediated multiple standards in the mobile industry. There are both advantages and disadvantages to market-mediated standardization policy relative to government-mandated standardization policy. In general, compatibility and standardization may lead to efficient outcomes in the market. However, in spite of market-mediated standards’ limited network externalities and economies of scale, multiple wireless standards and different types of services across technologies enable the existence of diverse competing systems, which may lead to more and better mobile services (Gruber & Verboven, 2001). The reviewed literature empirically examined the effects of market-mediated standardization policy and government-mandated standardization policy. Gruber and Verboven (2001) discovered that the early diffusion of digital technologies in mobile markets was faster in Europe, where most countries had adopted a single standard. Koski and Kretschmer (2005) argued that standardization has a positive but insignificant effect on the timing of initial entry of 2G services but can also lead to higher prices by dampening competition. Cabral and Kretschmer (2007) examined the effectiveness of policy in the context of competing standards with network externalities and found that current mobile diffusion levels are quite similar between the United States (multiple standards) and Europe (mostly single standard). Interestingly, Zaber and Sirbu (2012) discovered that the presence of multiple technologies for the previous generation is associated with 3G rollout delay. However, utilizing the Herfindahl-Hirschman Index (HHI) for measuring mobile standard competition, Bohlin, Madden, and Morey (2010) found that competition among different mobile standards positively affected the diffusion of 2G mobile. Also, Lee, Marcu, and Lee (2011) discovered that multiple standardization policy is one of the main factors affecting initial mobile broadband diffusion.

Mobile Virtual Network Operators (MVNOs) Another issue of interest among media management and economics scholars is MNVOs. An MVNO is an operator that services mobile communications to subscribers without its own airtime and 296

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licenses granted by the government (ITU, 2001). MNNOs generally sell mobile services to end users under their own brand names but use the network of another mobile phone operator (ITU, 2006). Between June 2010 and June 2015, the number of MVNOs worldwide increased by 70%, reaching 1,017 in June 2015 (FierceWireless, 2015). The reviewed literature examined the impacts of MVNOs on mobile service markets. For instance, Kalmus and Wiethaus (2010) examined the competitive effects of MVNOs. Employing a two-stage model, their study found that MNOs host MVNOs if and only if the latter do not exert a competitive constraint on MNOs’ retail businesses (Kalmus & Wiethaus, 2010). Their study suggests, absent access regulation, MVNO entry may happen but is unlikely to reduce consumer prices (Kalmus & Wiethaus, 2010). Kim et al. (2011) also empirically examined the effects of MVNO entry and access regulation on the investment behavior of MNOs (Kim et al., 2011). Employing firm-level data for 58 MNOs in 21 OECD countries, Kim et al. (2011) found that the mandated provision of access is related to lower investment intensity of MNOs, while voluntary access provision has no effect. Cricelli, Grimaldi, and Ghiron (2012) examined the economic justifications for potential regulatory intervention that defines the level of mobile termination rates (MTRs) and negotiations and agreements among MVNOs and hosting network operators (HNOs). The study reveals that symmetric MTR reduction leads to competition growth among operators, forcing all operators to reduce retail prices, and consequently enhancing consumer welfare (Cricelli et al., 2012).

Suggestions for Future Research The reviewed literature reveals that research themes such as competition in the mobile industry, substitutes/complements, mobile diffusion, mobile strategy, mobile marketing, spectrum management policy, standardization policy, and MVNOs are critical issues in the mobile industry. It appears that these identified research themes are continuously important for future studies in the field of media economics and management. Media economics and management scholars need to improve their work in these identified areas and also need to examine more diverse research themes. Also, the provision of diverse theoretical perspectives and multiple theory testing are necessary for continuous improvement in this field. In terms of methodologies, multi-method research and multiple analytic synthesis might be considered and utilized by media economics and management scholars. The reviewed literature suggests that researcher attention is needed for 4G (or 5G) mobile adoption and some mobile-based emerging services like OTT (over-the-top). Also, as mobile marketing is shaped by the innovation and growth in emerging technologies, such as big data, IoT, and VR/AR, future studies need to examine the role and impact of these new technologies in mobile marketing research. In addition, more researcher attention is necessary in the areas of mobile marketing, such as customer satisfaction and loyalty. Some possible research questions media economics and management scholars might employ as a basis for future studies in this field include the following:   1. How do the different market structures in the mobile industry affect investment incentives?   2. Does 3G mobile adoption negatively (or positively) affect the adoption of 4G (or 5G) mobile technologies?   3. Are the adoption factors of 4G (or 5G) mobile technologies different between developed countries and developing countries?   4. What are the adoption factors of emerging mobile-based OTT services?   5. Is mobile-based OTT service a complement or substitute for other pay-TV platforms, such as cable, IPTV, and satellite?  6. How have the MNOs’ strategic partnerships and value chains been affected by 4G (or 5G) mobile technologies? 297

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  7. What are the key factors that inhibit greater use of mobile services for the purchase of products or services?   8. Can mobile marketing be employed to improve customer satisfaction and loyalty?   9. Is 4G (or 5G) diffusion significantly affected by the choice of auctions versus alternative license award processes? 10. Does market-mediated standardization policy affect the diffusion of 4G (or 5G) mobile technologies? The studies on the mobile media industry are very broad and still in an early stage of development. Therefore, there are diverse research directions in terms of research themes, theoretical perspectives, and methodologies. Future studies on the mobile media industry should pursue more diverse research directions.

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19 MULTIPLATFORM A Distribution Perspective Xiaoqun Zhang and Alan B. Albarran

Among the many changes across the media industries since the publication of the first Media Management and Economics Handbook in 2006 is the rapid expansion of digital platforms, expanding opportunities for media firms to engage audiences and advertisers in new and exciting ways. The idea of “platforms” existed prior to the digital age. Newspapers, magazines and radio and television broadcasts were not referred to as platforms originally, but now are considered “traditional” media platforms. The Internet revolution gave birth to digital platforms in different forms (websites, applications, streaming services, etc.). Now we think of media companies as multiplatform enterprises (Albarran, 2017). The platforms used by media companies to distribute information and entertainment are associated with the various brands and products owned by the media company, which are often part of the broader portfolio. Large conglomerates, such as the Walt Disney Company, Comcast/NBC, and 21st Century Fox, have large portfolios of brands and platforms, involving both traditional and digital media. Even small media enterprises now offer a portfolio of products and platforms. For example, a local radio station will likely have a streaming platform in addition to its broadcast and HD radio channels, and offer its own applications (apps) for mobile use as well as blogs and social media channels (Facebook, Twitter, Instagram, etc.). This chapter focuses on the topic of multiplatform distribution, by reviewing key literature, presenting a cost analysis and offering a research agenda for further work in this rapidly evolving area of the media industries. The media industries have undergone a profound evolution due to media convergence, a process epitomized by the combination of technologies, products, staffs and geography among previously disparate industries, such as print, broadcasting, cable and the Internet (Singer, 2004). There are two major driving forces for media convergence. One driver is the deregulation policies toward the media industries adopted by many countries. For example, in the United States the Federal Communications Commission (FCC) relaxed many rules that had prevented one media company from owning multiple outlets in a single market (Ahrens, 2003). These deregulation policies facilitated mergers and acquisitions across the media industries, enabling media companies to distribute their products through a variety of platforms. Another driving force is the rapid progress of information communication technologies (ICTs), which enable media companies to integrate their resources and produce a variety of media products for multiple platforms. The digital ICTs have diffused rapidly worldwide during the past decades. The number of Internet users in the world is over 3.7 billion, which constitutes 49.6% of the world’s population. In North America the Internet penetration rate is 88.1%, and in Europe it is 77.4% (Internet World 301

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Stats, 2017).The number of social media users is over 2.3 billion. More than 30% of the world population are now social media users (Statista, n.d.). There are more than 2.6 billion smartphone users worldwide. There will be an estimated 6.1 billion smartphone users, constituting 70% of the world’s population, by 2020 (Luden, 2015). The rapid diffusion of digital ICTs further accelerates media convergence. As more and more media consumers use digital ICTs to get media content, media companies see the great potential of capturing more audiences through digital platforms, via websites, social media and mobile media. Today’s media company employs a multiplatform strategy, which is “a strategic approach where media companies are focused on making or putting together products and services with a view towards delivery and distribution of that content proposition on not just one but across multiple platforms” (Doyle, 2015, p. 51). In practice, they apply a 360-degree approach through which new ideas for content are considered in the context of a wide range of distribution possibilities and not just one platform (Parker, 2007). Although a multiplatform strategy and 360-degree approach seem an appropriate choice for media companies, there are several tough questions that deserve exploration: Does every media company need to use all available platforms? Is each platform equally useful? What are the costs to use various platforms? How can a media company achieve optimal benefits across platforms (Picard, 2009)? This chapter attempts to analyze these questions from a microeconomics perspective.

Economic Concepts for Analyzing Multiplatform Enterprises Economies of Scale and Economics of Scope Economies of scale arise “when an increase in all inputs leads to a more-than-proportional increase in the level of output” (Samuelson & Nordhaus, 2005, p. 111). This is the driving force for the expansion of firms: the more output a firm produces, the lower its average production cost. Media companies have been seeking economies of scale by expanding their sizes. Giant transnational media corporations (TRMCs) have emerged through these acquisitions and mergers. These TRMCs dominate media markets and account for a large share of market and revenue all over the world (Albarran, 2017). Economics of scope arises “when a number of different products can be produced more efficiently together than apart” (Samuelson & Nordhaus, 2005, p. 342). The strategy of producing and distributing media products across multiple platforms has the potential to reap economics of scope as media content can be reused and reformatted multiple times without huge cost. Albarran (2017) presents several case studies on the successful multiplatform strategy of national and international companies, including NBC, The Wall Street Journal, BBC Radio and WFAA television, a local TV station in the Dallas/Fort Worth TV market. These companies produce different media products and distribute them through a variety of traditional and digital platforms. Other studies offer examples of a multiplatform distribution strategy (see Colapinto, 2010; Järventie-Thesleff, Moisander, & Villi, 2014: Sattelberger, 2015).

Public Good Samuelson (1954) defined a public good as one “which all enjoy in common in the sense that each individual’s consumption leads to no subtraction from any other individual’s consumption of the good” (p. 387). In other words, the consumption of a public good is non-rival. Other economists argued that a public good also has the characteristic of non-excludability—that is, a producer is unable to prevent anyone from consuming their products (Pearce, 1997).

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Some media economists believe that the content of media products has a non-rival character (Collins, Garnham, & Locksley, 1988). Meanwhile, whether media products have a non-excludability character is dependent on the platforms. The broadcasting media offers open access to their content. Thus, they are very nearly a pure public good (Owen & Widman, 1992). Newspapers and cable are not non-excludable because they exclude those people who do not pay for the content. Whether online content is non-excludable is determined by the business models. If online content is freely accessible and its revenue depends on advertising, it does not exclude anyone who has access to the Internet. If online content utilizes paywalls or subscriptions to charge for its consumption, it excludes those who do not want to pay.

Business Model A business model is a firm’s logic and activities that create and appropriate economic value (Björkdahl, 2009). It answers crucial questions, such as who are the customers; what are the values of the customers; how does a firm make money in its business; and what is the underlying economic logic that explains how a firm can deliver value to customers at an appropriate cost (Magretta, 2002)? Three types of business models are mainly employed in media industries: advertising, subscriptions and pay-per-use. In an advertising model, a media company generates revenues from advertisers. In a subscription model revenues come from the payments of subscribers of its products (Albarran, 2017). Some media companies apply models that are a mixture of subscription and advertising. For example, the Wall Street Journal website provides general news content for free but places the top financial news behind a paywall, a model called freemium (Goyanes & Durrenberg, 2014). In a pay-per-use (also called metered service) model, a media company provides potentially unlimited resources to consumers but charges only for what they actually use (Danielewicz-Betz, 2016). Two related business models, streaming/pay-per-view and video on demand (VOD), allow audiences to pay only for the content they choose, like a pay-per-use model.

Value Chain Porter (1985) argues a firm is a collection of activities that are performed to design, produce, market, deliver and support its product. The value chain is a theoretical framework that disaggregates these activities to understand the behavior of costs and competitive advantages. These activities are not independent but related with each other. The linages are the relationships between activities in terms of cost and performance. Optimizing and coordinating these linages can lead to competitive advantages. Albarran (2017) explains the traditional media value chain has four activities: content creation, production, distribution and exhibition. Content creation is an essential part of media production. Media production is closely related to media distribution as media companies reuse/reproduce media content into multiple media products and distribute them through multiple platforms.

Substitutes and Complements Economists explored the relationship of goods and identified two types: substitutes and complements. The goods are substitutes if an increase in the price of one good causes an increase in the demand for another good.The goods are complements if an increase of one good causes a decrease in the demand for another good (Samuelson & Nordhaus, 2005). Cross elasticity of demand is used to measure these relationships, calculated by the percentage change in quantity demanded for one good divided by the percentage change in price of another good (Frank, 2008). A positive cross elasticity

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of demand denotes the goods are substitutes. A negative cross elasticity of demand denotes the goods are complements. Media scholars explored the relationship of news products distributed through print and online platforms. Some studies found that print newspapers and online newspapers are substitutes (e.g., Cao & Li, 2006; Flavian & Gurrea, 2007), while others found evidence for a complementary relationship (e.g., Stempel, Hargrove, & Bernt, 2004). However, the cross elasticity of demand has not been applied in these studies to gauge the relationship between print and online news products.

The Choice of Platforms by Media Companies: A Cost Analysis In this era of media convergence, the production and distribution of the value chain of multiplatform media companies are more integrated than before. They produce multiple media products based on the same or similar content resources and distribute them through multiple platforms. There are several potential benefits of extending distribution across multiple platforms for media companies. From an economic perspective, the most important potential benefit is to achieve greater economies of scale and economics of scope through more consumption of the content across platforms. The second benefit is to better serve audiences’ needs by providing more options and flexibility. The third is to build higher audience loyalty and brand equity with more engagement (Doyle, 2010). Nevertheless, traditional media companies, such as newspaper publishers, have great difficulties in transforming these potential benefits into revenue as they obtain only a small proportion of income from digital platforms. The Pew Research Center (2016) found that only one-fourth of newspapers’ advertising revenue comes from digital platforms. With such a sharp contrast, one needs to ask how media companies optimally utilize multiple platforms to achieve maximum benefits. This chapter conducts a cost analysis of the platform choice of a media company based on a microeconomic framework, along with economic concepts related to multiplatform enterprises. The scenario of this analysis is that a traditional media company makes decisions on multiplatform distribution. It must decide what kinds of digital platforms to employ to reach more audiences and maximize profits. The decisions are based on the cost analysis of multiple platforms. For any firm, the total cost (TC) consists of two major elements: fixed costs (FC) that do not change when output changes and variable costs (VC). For example, a movie production company needs equipment, physical sets, lighting and so forth to make a film, as well as costs for offices and business operations. Variable costs might include such things as the labor involved in production, special fees and permits to shoot scenes at different locations, and the different wages associated with talent. For media companies, a proportion of total cost is associated with platforms through which media products are consumed. Another characteristic of the cost structure of media products is that its fixed cost is relatively higher and variable cost is relatively lower since the copies of the first product can be produced with low costs. The non-rival characteristic of media content means it can be used over and over (Albarran, 2017), as the consumption of the content by one individual does not reduce its supply to others (Collins, Garnham, & Locksley, 1988). Considering the even lower cost of digital copies of media products, the variable costs of media products on digital platforms are even lower. Figure 19.1 and Figure 19.2 illustrate the cost structures of traditional media products and digital media products with relative high fixed costs (FCt and FCd) and low variable costs (VCt and VCd). Figure 19.3 illustrates the fixed costs (FCm) and variable costs (VCm) of a media company when it uses a digital platform as an additional platform to deliver its media products. To maximize its profit, a company searches for the lowest average cost (AC), which is the total cost divided by the total number of units produced. A media company also needs to do that when it pursues a multiplatform strategy. That is, it searches the quantity of output where its average cost is

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TCt VCt FCt

Q

Figure 19.1 Cost structures of traditional media products. Source: Author’s rendition.

TCd VCd FCd

Q

Figure 19.2 Cost structures of digital media products. Source: Author’s rendition.

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TCm

VCm

FCm

Q

Figure 19.3 The fixed costs and variable costs of a multiplatform media company. Source: Author’s rendition.

lowest. The marginal cost rule holds that when marginal cost, which is the extra cost of producing one extra unit of output, equals average cost, the average cost reaches its lowest level (Samuelson & Nordhaus, 2005). Figure 19.4 and Figure 19.5 illustrate the average cost curves and marginal cost curves of traditional platform production and digital platform production of a media company. This media company finds the optimal number of traditional media products (Qt) where its marginal cost (MCt) curve pierces its average cost (ACt) curve, and finds the optimal number of digital media products (Qd) where its marginal cost (MCd) curve pierces its average cost (ACd) curve. Figure 19.6 shows when the company produces and distributes its products through both traditional and digital platforms, its optimal total output should be Qm when its combined marginal cost (MCm) equals its combined average cost (ACm). Production needs a variety of inputs, such as labor, factory/office space and equipment. A firm must decide on the combination of these inputs. The least-cost rule holds that to minimize its production cost, a firm should buy inputs until it has equalized the marginal product (MP), which is the extra output resulting from one extra unit of specified input when all other inputs are held constant, per dollar spent on each input (Samuelson & Nordhaus, 2005). For a media company, its inputs include talent and craft professionals, producers and directors, physical production spaces, equipment and so forth. It also needs similar inputs for distributing its media products through platforms, and marketing and promotion through other venues, like social media. Different from other industries, the output of media industries should be measured by the aggregate number of audiences instead of the number of units of products. For example, the Super Bowl is broadcast once but reaches millions of people. In this case, the output is appropriately measured by the size of the audience instead of one unit of product, as the revenue of that program is 306

MCt

ACt

Qt

Q

Figure 19.4 The average cost curve and marginal cost curve of traditional platform production. Source: Author’s rendition.

MCd

ACd

Qd

Figure 19.5 The average cost curve and marginal cost curve of digital platform production.

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MCm

ACm

Qm

Q

Figure 19.6 The average cost curve and marginal cost curve of multiplatform production. Source: Author’s rendition.

dependent on the audience.Therefore, the marginal product of a media company is the extra number of audiences resulting from one extra unit of specified input when all other inputs are held constant. To be more specific for the analysis of media industries, the marginal product is called marginal audience (MA). With the least-cost rule, the media company minimizes its cost of production when the marginal audience of each dollar spent on each input is just the same. This implies that:

MA of Input1 MA of Input 2 = ... = Price of Input1 Price of Input 2 

(1)

For a media company, the least-cost rule not only works for one platform but also works for other platforms. That is, the marginal audience of each dollar spent on each input is just the same for not only one platform but also for all platforms it uses to distribute its media products. The media company in this scenario has two platforms: a traditional platform and a digital platform. It minimizes its cost when the marginal audience of the traditional platform (MAt) and the marginal audience of the digital platform (MAd) of each dollar spent on each input are the same. This implies that:

MAt of Input1 MAd of Input1 MAt of Input 2 MAd of Input 2 = = = ... = Price of Input1 Price of Input1 Price of Input 2 Price of Input 2 

(2)

Assuming the price of every input for the traditional platform and digital platform is the same, formula (2) indicates that when marginal costs of every input are the same for both the traditional platform and digital platform (MCd = MCt), the media company minimizes its cost. As marginal cost

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and marginal audience are reciprocal, if the marginal cost of a digital platform is lower than that of the traditional platform, the marginal audience of the former is higher than the latter—that is, if MCd < MCt, then, MAd > MAt. Since media products have a non-rival attribute and their content can be reproduced into a digital format with very low marginal cost as suggested in Figure 19.5, it is possible that MCd < MCt, and then MAd > MAt.This means one unit of an input of digital media products will generate more extra audiences than that of traditional media products. In this case, a media company will put more inputs on the digital platform and generate more digital audiences until MCd = MCt and MAd = MAt. Nevertheless, the non-rival attribute does not ensure the lower marginal cost of the digital platform, as the need to adapt it to suit the platform and to produce extra material may involve additional effort and resources (Boczkowski & Ferris, 2005; Erdal, 2007). It is also possible that MCd > MCt and MAd < MAt. This means one unit of an input of digital media products will generate less extra audiences than that of traditional media products. In this case, a media company will put fewer inputs on the digital platform and generate fewer digital audiences until MCd = MCt and MAd = MAt. This cost analysis helps explain the choice decisions regarding multiple platforms of media companies. Because multiplatform distribution capitalizes on the non-rival characteristic of media content, and the reuse and reformat of media content render a relatively low marginal cost, media companies could make much fuller commercial exploitation of media content assets across additional distribution outlets (Küng, 2016). They formulate a 360-degree strategy that produces media products in the context of a wide range of distribution possibilities and not just a single platform (Parker, 2007). However, media companies have different cost structures for various platforms. Whether a media company needs to use all of the available platforms and to what extent a media company uses a variety of platforms depend on the marginal costs and marginal audiences of these platforms. A media company’s inputs flow to the platforms that have lower marginal costs and higher marginal audiences until the marginal costs and marginal audiences of every platform become the same. At this point, a media company achieves optimal benefits across platforms.

Business Models of Digital Platforms The cost analysis suggests the ways that a media company minimizes its costs of multiplatform production and distribution, and optimally allocates its resources among multiple platforms. These are essential for a media company to keep sustainable and profitable. On the other hand, a media company should also monetize its audiences, to generate revenue.The cost analysis does not take this part into account. The cost analysis has an assumption that the marginal audience of every platform has the same value for a media company. In the scenario of this study, the marginal audience of the traditional platform generates the same amount of revenue as the marginal audience of the digital platform. However, this assumption does not hold true in most situations. This happens when a successful business model on traditional platforms—such as a subscription—is no longer successful on digital platforms for some media products, simply because the audience is not willing to pay online for content, because “over a decade, the prevailing orthodoxy of the Internet has been that information wants to be free” (Edgecliffe-Johnson, 2009, p. 11). For example, after providing free content for more than a decade, 450 newspaper companies in the United States have attempted to use paywalls to obtain online subscribers (Edmonds, Guskin, Michell, & Jurkowitz, 2013). However, most of these paywalls are not successful (Ingram, 2013). The success of the New York Times and the Wall Street Journal is exceptional because they produce unique content (Ingram, 2015). The unsuccessful subscription model of online newspapers is the result of the competitive environment of the Internet. There are a huge number of news sources where people can get news content besides online newspapers. In fact, the top three news websites in the United States are all news

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aggregators and portal sites:Yahoo News, Google News and the Huffington Post (eBizMBA, 2014). These news aggregators are free and offer a greater amount of news than traditional news platforms by displaying news from multiple sources. These free news sources are strong competitors of online newspapers and cultivate people’s unwillingness to pay for online newspapers. Jenkins (2012) also argues that newspaper paywalls are leaky in that people can have alternative access to get a free article from the newspapers, such as via Google search. This further facilitates people’s unwillingness to pay for online newspapers. Martin (2013) found that the majority of online news audiences are parity readers who do not care much about the difference in news content and think that similar content is often available from other free news sources. For these parity readers, the headline news and brief summaries are sufficient and they do not care about in-depth coverage. Along with these studies, Ha and Zhang (2017) argued that online newspapers possess two fundamental characteristics of a public good. First, the content of online newspapers is non-rival in consumption in that one person’s online reading does not reduce their availability to anyone else. Second, online newspapers are nonexcludable as the Internet’s free-content environment makes it impossible to prevent anyone from getting some free news content online. The subscription model does not work because of the public good attributes of online newspapers. The lack of a successful subscription model for online newspapers has implications for the broadcast TV industry. Online advertising revenue has expanded rapidly in recent years, indicating that advertising revenue is moving from traditional platforms to digital platforms (Noel, 2013).TV broadcasters have adopted their own set of digital platforms to try to maintain audiences and advertisers in this competitive environment. The television networks all offer over-the-top (OTT) subscription services, notably Hulu (owned by ABC, NBC, Fox) and CBS All Access.The networks also have their own digital news platforms available for streaming for free.The local level is much more complicated. Most local TV stations have apps devoted to news, weather and in some markets sports—but these are mostly free and stations try to monetize these additional platforms with advertising. It is challenging to develop unique content at the local broadcast level that audiences would consider paying for with a subscription. Digital platforms also create challenges for advertisers. Advertisers make purchase decisions by considering multiple media audience factors (e.g., audience size, audience attention, audience loyalty, engagement). However, research suggests that most online audiences pay little attention and have low loyalty to online content (Martin, 2013). This suggests the online audience does not have the same value as the offline audience for advertisers, which violates the assumption of the cost analysis that the marginal audience of every platform has the same value for a media company. A report from Pew Research Center shows that although the number of online newspaper readers approaches half of total newspaper audience population, the digital advertising revenue counts for only 25% of total advertising revenue of newspapers (Barthel, 2016). The situation is similar for television viewing, where people are spending more time with digital platforms, but the advertising on these platforms has not achieved parity with traditional media (Edwards, 2014). Nevertheless, digital platforms are superior to traditional platforms in areas like interactivity between media companies and their audiences.These interactions help media companies understand more about audience tastes and preferences so that they can produce content to better cater to their needs. Moreover, this two-way communication enables media companies to forge more engaged and intensive relationships with audiences than before (Lotz, 2007; Ytreberg, 2009). These relationships cultivate more loyalty in audiences, which makes them more valuable for advertisers. Another advantage of digital platforms is that they enable audiences to search for and obtain specific information quickly. In this regard, they save audiences time in searching for the content they desire. Digital platforms satisfy people’s need of using their time efficiently (Zhang & Ha, 2015). Another superiority of digital platforms, especially mobile media, is that they enable people use

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the interstices—for example, small time slots between activities—to consume content (Dimmick, Feaster, & Hoplamazian, 2010), enhancing the time available for media consumption (Zhang & Ha, 2016).This superiority is a driving force for the uprising usage of mobile media. Statista (2014) shows that American people on average spent 142 minutes on tablets and 122 minutes on smartphones (non-voice), which is much more than the time spent with radio (93 minutes), newspapers (30 minutes) and magazines (33 minutes) in 2013. Because of these superiorities, the audiences of digital platforms offer a higher value for advertisers and will continue to generate a significant proportion of advertising revenue for media companies. The third major business model of digital platforms is pay-per-use. The multiplatform environment enables content providers to offer this option to consumers (Lambrecht & Skiera, 2006). Pay-per-use provides audiences more flexibility in choosing only the content products they desire. It also enables content providers to offer optimal price plans to increase their profits (Kim, Park, & Park, 2015). Pay-per-use has become one of the prevalent business models for digital music distribution (Burkart & Westgate, 2014). iTunes utilizes a pay-per-use business model and allows users to purchase individual music, TV programs and movies without a subscription. Apple takes a percentage of each song item sold, and the remainder goes to the owner of the original content (Albarran, 2017). This model is very successful and helped iTunes quickly become the largest music retailer on the planet. Apple’s iTunes allows users to sample over 2,000 music sample files for free, but charges only a small fee for a complete download of any given song (Danielewicz-Betz, 2016). As of 2013, Apple’s iTunes had 435 million registered users in 119 countries and sold 25 billion songs (Griggs & Leopold, 2013). In 2017 multiple sources estimated the iTunes user base at over 800 million people. Not all media companies can benefit from the pay-per-use model. Although some experts in the newspaper industry are optimistic about this business model, only a few newspapers have tried it. For example, the Winnipeg Free Press is the first newspaper to try pay-per-use in North America and charges 21 cents per article (Federman, 2015). However, the pay-per-use model faces the same challenge as the subscription model does. Unless the content is unique and holds value for audiences, they will not pay for news content online.

Relationships Between/Among Platforms and Optimization Strategy The cost analysis has another assumption that the output/audience of digital platforms does not affect the output/audience of traditional platforms. This assumption does not hold true in reality as there is some interference between the two platforms. For example, a news reader may read news from a smartphone but may not read print newspapers, while a music fan streams music and may not listen to terrestrial radio. Platforms therefore compete for audience time and attention with each other when the contents are the same or similar. However, the literature of newspaper research suggests more complex relationships between/among platforms. Online newspapers and their print counterparts are the products that publishers distribute through online and offline platforms. Since the content of the two overlaps to a high degree (Van der Wurff & Lauf, 2005), there is competition between them in capturing audiences and advertisers. This competition creates a kind of cannibalism that may contribute to the decline of print newspaper readership (Flavian & Gurrea, 2007). Cao and Li (2006) empirically illustrated that the growth of online newspaper readership was negatively related to the circulation of the print newspaper. On the other hand, some scholars found evidence unsupportive of the substitution effect. Stempel and Hargrove (2004) found that Internet users who read online news were more likely than the nonInternet users to read print newspapers. Chyi,Yang, Lewis, and Zheng (2010) reported that 66.2% of online newspaper readers in U.S. local markets also read the same newspapers in print. These studies

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supported a complementary effect in that online news and print news can be complementary rather than substitutionary. Nevertheless, previous studies did not estimate the cross elasticity of demand of online and print newspapers, and the prices of print newspapers or online newspapers were not considered. Online newspapers are free and thus have only opportunity costs in terms of time and attention by the users. Online newspapers that use paywalls charge a price. In many situations, the prices of online newspapers increase as newspaper companies change their business model from advertising/free access to subscription or pay-per-use. As newspaper circulation has continuously declined in recent decades, the cross elasticity of demand of online newspapers and print newspapers should be negative, indicating they are complements. Whether other media products distributed through traditional media platforms and digital platforms are substitutes or complements deserves further investigation. The competitive environment of online newspapers may be different. People can receive news from other sources, such as Yahoo News and Google News, or Facebook and Twitter. Thus, the decline of print newspaper readership could be the result of a substitution effect from these free news sources. Other content, such as music, film and live shows, does not offer as many free online sources as newspapers due to copyright issues. Streaming media platforms, such as Spotify, Apple Music, Netflix and Amazon Prime, use a subscription model.YouTube and Hulu use hybrid models, offering services with a combination of advertising, subscriptions and some free access. These platforms compete with “bundles” offered by cable, satellite and telco platforms. The prices of streaming media subscriptions are typically lower than those of a bundle, and many people are cutting their bundled subscriptions, known as cord cutting. This cord cutting behavior became prevalent first among low-income and younger audiences (Prince & Greenstein, 2016). Cord cutting suggests a substitution relationship between streaming media and bundles offered by cable, satellite and telco companies. However, this argument needs to be tested by estimating the value of their cross elasticity of demand. For a multiplatform media company, it is crucial to investigate the relationships between/among the platforms used to distribute content. Understanding these relationships will help formulate business models and price strategies. The basic demand curve of economics holds that when the price of a good increases, demand will decrease. When a media company switches its business model from free content with advertising to a subscription model, the price of its media product on the platform increases, and the demand decreases. Will this strategy impact media products on other platforms? Consider the definitions of substitutes and complements. When the media products on two platforms are complements, demand will increase/decrease in the same direction; when the media products on two platforms are substitutes, demand will increase/decrease in opposite directions. Only with the consideration of these relationships can a multiplatform media company make an optimal strategy to maximize its revenue. The increase in price of a media product will increase the revenue if the audience does not decrease. But this strategy would likely cause the loss of the size of the overall audiences because some of them would not buy it when the price increases. This strategy will also render the loss of audiences of another media product in another platform if the two products are complements, according to the definition of complements. On the contrary, the decrease in price of a media product will decrease its revenue if the audience does not increase. But this strategy would likely increase the audience size because the lower price attracts new audiences. This strategy will also increase the audiences on another platform if the two products are complements. Of course, opposite changes will occur when the media products on two platforms are substitutes. The audience is the overall goal of media platforms as advertisers spend money to purchase audiences. Generally speaking more audiences generate more advertising revenue. A media company needs to estimate the gains and losses in the revenues from audiences and advertisers of all platforms when it changes its business model and price strategies.The optimization strategy of a multiplatform media company is to maximize its revenue income from all platforms. It is clear that investigating 312

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the relationships between/among platforms is a key to an optimization strategy. And cross elasticity of demand provides an effective tool to gauge optimization efforts.

A Future Research Agenda The multiplatform evolution is far from over. We can expect to see further expansion of media content platforms as new technologies and innovations continue to be developed and introduced to the marketplace.Virtual reality and augmented reality applications are among the likely candidates to drive new distribution platforms. Platforms have provided media firms new ways to distribute content to audiences and to build revenues. But traditional media companies have had a more challenging time in monetizing their digital platforms compared to native digital platforms. Regardless, the cost analysis introduced in this chapter provides the tools to optimize the use of multiple platforms by media companies. In proposing a research agenda for future studies in the multiplatform distribution environment, we offer some suggestions for research that is applied in nature and based on the cost analysis presented earlier, and studies that are theoretically driven. Together, research in these directions will provide greater understanding and knowledge of multiple platforms used as a distribution tool by media companies. In terms of applied research built on the cost analysis in the chapter, we propose the following as possible research topics: 1. Evaluate the marginal cost and average cost of each platform. These evaluations are valuable for media companies to determine their optimal outputs/audience for each platform. Per the marginal cost rule, the average cost reaches its lowest level when marginal cost equals average cost. Each company pursues the lowest production cost and needs to find the optimal output to obtain lowest cost. A multiplatform media company needs to do this for every platform it uses to distribute its media products. 2. Evaluate the marginal audience of each resource for each platform. A media company also needs to optimally allocate its resources among multiple platforms. A firm minimizes its production costs when every input has an equal marginal product.To obtain minimum cost, a multiplatform media company needs to evaluate the marginal audience of each input. Based on this evaluation, it should enhance the input that has higher marginal audience, or reduce the input that has lower marginal audience, until every input has the same marginal audience. It should do this evaluation for every platform and adjust resource allocation among platforms accordingly. 3. Evaluate the value of marginal audience of each platform. Different media platforms generate different audience populations. And these audiences have different media usage habits in terms of time spent, engagement and loyalty. These differences affect the value of marginal audience. The revenue of a media platform may come from one or multiple business models. The evaluation of the value of marginal audience should count the revenues from all viable business models. This evaluation is essential for a multiplatform media company to assess its platform assets and further allocate its resources optimally. Additionally, we propose the following theoretical research topics: 1. We need studies to help us understand the extent of non-excludability of media products. The literature indicates media content is non-rival, in that one audience’s consumption does not lead to the subtraction of content from any other audience’s consumption. However, non-excludability has not been explored intensively. There is a variation of this attribute across platforms. More complexity exists on digital platforms as there are more alternative sources of content. The 313

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non-excludability attribute affects the business model of digital platforms. The subscription model and pay-per-use model are not viable if the digital media products are completely nonexcludable. And the extent of non-excludability of a media product will determine the success of subscription and pay-per-use models. 2. More studies are needed on the relationships between/among platforms. These relationships influence the optimization strategy of a media company, necessary to maximize revenue through the use of multiple platforms. Besides the conceptual analysis of these relationships, the cross elasticity of demand is a useful tool to quantify these relationships. The estimation of this index will indicate whether the media products on two platforms are substitutes or complements, and to what extent they are substitutionary or complementary. The exploration of these relationships not only furthers our understanding of the competition and coexistence of a variety of media platforms but also helps media companies formulate their business models and price strategies. 3. We need research to understand how media managers formulate and evaluate their multiplatform distribution strategy beyond price considerations. Further, how does this decision-making process differ among media companies in terms of size and product dimensions? None of the multiplatform literature to date considers the managerial decision-making involved in determining the question of which platforms should be utilized.

Conclusion Media companies in the twenty-first century are multiplatform enterprises, using a range of platforms to distribute information and entertainment with the overall goal of attracting audiences and increasing revenues. It is important to remember that the multiplatform “revolution” is still in a nascent stage, and there will no doubt be further refinement and evolution of distribution platforms, business models and strategy options moving forward. MME researchers can further develop and refine the research agenda over the coming years to help us better understand this multiplatform environment, especially from the perspective of distribution. The opportunities for research in this topic are plentiful, and both applied and theoretically driven studies are needed to further develop our knowledge of this growing area of the MME field.

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20 MULTIPLATFORM A Consumption Perspective Sylvia M. Chan-Olmsted and Min Xiao

Multiplatform media use or media multitasking describes the act of consuming two or more media platforms at the same time. Multiplatform media use is not a byproduct of the emerging digital platforms, but a phenomenon that has been in existence for decades. People have long used radio as a background sound while reading newspapers or magazines. By definition, media multitasking might also consist of consuming media content while engaging in non-media tasks, such as watching TV while studying ( Jeong & Fishbein, 2007). Though such a consumption pattern has been around for a while, the inclusion of newer digital media platforms like smartphones has changed the dynamic and complexity of such behaviors. The advancement of communication technology has led today’s consumers to relate media usage experience with a heightened level of personalization, immersion, and interactivity. Furthermore, the low stakes of switching between screens and increasing cross-platform fluidity facilitate the intensity and frequency of such simultaneous media use. As a result, multiplatform consumption has become ubiquitous and a part of the daily lives of media consumers. Note that in the context of this chapter, cross-platform media use is seen as synonymous with multiplatform media use. For media companies, the growth of multiplatform media use brings changes in content distribution, organizational structure, and media marketing/advertising strategies. First, digital media technologies enable media companies to deliver contents in various formats on multiple media platforms to create multiple touch-points with the targeted consumers. For example, CNN can distribute its news report beyond its TV channel, including its website, mobile applications, and its social media platforms. The content can be either identical or complementary to one another. Secondly, to be competitive against other digital media outlets, legacy media companies have invested and developed in-house digital media divisions/specialists in order to efficiently distribute contents on multiple media platforms (Doyle, 2015). Finally, realizing the importance of a consumer-centric marketing plan, media companies and advertisers have embraced the practice of digital analytics and incorporated digital media platforms designed to maximize the effectiveness of message delivering and audience engagement (Dreyer, 2013). As multiplatform media use becomes a consumption norm, this chapter aims to review the concept and practice of multiplatform media use, explore the drivers for such a consumption behavior, examine the potential impacts of the practice, address the issues related to cross-platform measurement, and discuss relevant future trends and implications.

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Relevancy of Multiplatform Media Consumption The question of audience delivery weighs heavily on the minds of media industry professionals because never before has the audience had more control over an evolving ecosystem of devices and platforms (The Nielsen Company, 2014b). The use of social media, connected devices (e.g., tablets and smartphones), and an array of streaming TV players in recent years is becoming mainstream among media consumers. This means that most consumers have access to multiple platforms concurrently and are skilled in multitasking. Reports have shown that, in 2016, 68% of people use smartphones while watching TV, 52.1% of people use computers simultaneously with TV, and 30.9% of people use tablets and TV concurrently (NewBay Media, 2016). In the United States, 78% of Internet users claim that they frequently use other devices while watching TV (IAB, 2015b). As the ecosystem of media platforms and devices continues to grow, multiplatform media use is becoming a norm (Pew Research Center, 2015b), reflecting the audiences’ desire to control their viewing experiences with the devices that best fulfill their media needs. Moreover, adults aged 35–49 spend most of their media consumption time per week on smartphones, computers, and tablets (The Nielsen Company, 2017b). Among news consumers, the reach of broadcast TV news, local TV news, national cable news, and radio news is significantly lower in 2016 than the level in 2012, while the time people spend on consuming news from digital media has increased, possibly revealing people’s multiplatform news consumption behaviors in an indirect way (The Nielsen Company, 2017a). From an industry perspective, amid the audience adoption of a growing array of media platforms, media outlets such as the TV networks have embraced an all-inclusive platform approach to the distribution of content (Doyle, 2010). The development of multiplatform content distribution and audience engagement strategies means that media managers see multiplatform media use as a fact of life and premise of operation. Media companies provide complementary contents on various platforms to engage consumers when they are switching between devices or platforms. This also means that media brands have more touch-points to inform and engage their audiences. In addition, media companies have a cost-effective way of reaching audiences at different times and in different spaces. On the other hand, audiences can create a small amount of quality content that can be adapted and placed on multiple media platforms (Doyle, 2010, 2013, 2015). In general, the prevalence of multiplatform media use means new opportunities for media companies to reach targeted audiences as well as to make strategic shifts on many production, distribution, and marketing fronts.

Patterns of Multiplatform Media Consumption Multiplatform media use has grown in popularity. But what are the platforms that are typically used simultaneously? An earlier study conducted by Google (2012) identified several common combinations of multiplatform use: TV–mobile devices (both smartphones and tablets), TV-computers, and computers-smartphones, as well as using tablets and smartphones simultaneously. Chan-Olmsted and Xiao (2016) identified the top three combinations of multiplatform media use among young millennials: mobile devices–TV, mobile devices–radio, and computer-TV. It was estimated that over 86% of the consumers have the experience of using multiple media platforms simultaneously (IAB, 2015a). It was also reported that smartphones (69%), computers (54%), and tablets (53%) are the top three devices used to surf the Internet while watching TV in the United States (IAB, 2015a). Over 80% of people stated that they consume information on the Internet mostly unrelated to the show they are watching on TV (Google, 2016). Generationally speaking, millennials (18–32) and teens (14–18) are more likely to multitask while watching TV compared to Generation X (33–49), baby boomers (50–68), and matures (69+) (Deloitte, 2016). While the smartphone-TV combination is the most typical form of multiplatform media use, it seems that TV programs are no longer garnering consumers’ full attention as audiences divide their 318

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attentions between the big and small screens to consume different types of content. One plausible explanation is that when consumers use digital media platforms (e.g., mobile phones and computers) they have more control over the content consumption journey, compared to almost the completely passive experience of watching TV.Thus, consumers may choose to use digital media platforms more frequently than TV (or print media) if the programs they are watching are dull or presented with commercial breaks. This phenomenon can be further exemplified by the behavior of using social media on mobile devices during media multitasking. A symbiotic relationship exists between the growth of smartphones and social media use, as using social networking applications is among the top mobile activities, especially for young adults (Perrin & Duggan, 2015). The media industry has aggressively taken advantage of this trend and implemented cross-platform audience engagement activities, especially through the interaction of social media and TV (Flomenbaum, 2015).

Empirical Studies Exploring Factors Influencing Multiplatform Media Consumption Various empirical studies have investigated the predictors of multiplatform media use or media multitasking in general. Duff, Yoon, Wang, and Anghelcev (2014) used student and national samples to explore the factors influencing media multitasking.The study found that sensation seeking, creativity, and perceived utility positively influenced media multitasking of participants drawn from a student sample, while personal control and need for simplicity negatively influenced their media multitasking behaviors. When examined with participants from a national sample, their study found that all the variables, including age, gender, sensation seeking, creativity, and perceived utility, positively influenced media multitasking. Based on the uses and gratification (U&G) approach,Wang and Tchernev (2012) studied reciprocal influences between needs for media multitasking and corresponding gratifications. They found that both emotional needs (e.g., feelings of entertainment or relaxation) and habitual needs are gratified by media multitasking. Moreover, people with neuroticism personality and the tendency to experience distress are more likely to engage in media multitasking (McCrae & John, 1992). Furthermore, several researchers have identified other factors, such as innovativeness (Zhong, Hardin, & Sun, 2011) and attentional impulsiveness (Sanbonmatsu, David, Strayer, Medeiros-Ward, & Watson, 2013), that influence media multitasking as well. From the perspective of the media industry, multiplatform media use has led media companies to modify their strategies. Media managers have incorporated a multiplatform commission system to help them distribute content onto various digital platforms (Bennett & Strange, 2014; Sørensen, 2014). Additionally, growth of multiplatform use has encouraged the convergence of digital and traditional media production (Candy, 2014; Spyridou, Matsiola, Veglis, Kalliris, & Dimoulas, 2013). However, Doyle (2015) has noticed that recycling contents produced for one media platform and using them on other platforms is a widely applied strategy among media companies. It is possible that the net increase of content variety is inflated. The following section will explore the factors that might play a role in the simultaneous consumption of multiple media platforms based on an empirical investigation of the millennials’ multiplatform use by Chan-Olmsted and Xiao (2016).

Factors Affecting Media Multitasking Behaviors The behavior of consuming content via multiple media platforms concurrently is likely based on a multiplicity of conditions. First, the consumers have a certain level of dependency on one or more than one platform that they have a propensity to access during most media use. Secondly, the consumers have the urge to consume information from different media platforms to gratify their various 319

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needs. Thirdly, the unique personality of an individual or the feature of the media platform may facilitate the process of adoption of media multitasking behaviors. Fourthly, social influences from family, friends, and acquaintances may also affect consumers’ media multitasking behaviors. In terms of the actual multiplatform activities, social media and mobile devices have been cited frequently as the main second screen experience (The Nielsen Company, 2015b). The ability to access media content online has revolutionized not only media consumption behavior but also the media industry (Perrin & Duggan, 2015). Hence, consumers’ affinity to access similar content online or offline would also contribute to the understanding of the multiplatform behavior because it typically involves the consumption of both online and offline contents. Accordingly, Chan-Olmsted and Xiao (2016) examined the influencers of multiplatform media use from a variety of angles. Based on their study, what follows are the conceptual frameworks and corresponding empirical results that shed light on the factors affecting such behaviors.

Media Dependency The centerpiece of the media dependency theory is that a medium will be more important and has a greater influence on a person than any other media, if the person heavily relies on this medium as a source of information (Ball-Rokeach & DeFleur, 1976). In the context of multiplatform media use, people’s reliance on using one medium may lead them to keep using this medium while consuming information from other media platforms (e.g., TV, Radio, and the Internet). In other words, the person may be very likely to use multiple media simultaneously. Among all media platforms, traditional TV is still the most popular medium, with over 32 hours of weekly viewing among U.S. adults (including time-shifted viewing) (The Nielsen Company, 2015c). Even though people are constantly switching screens when they are using multiple platforms, TV remains a crucial platform when audiences are jumping between different media (Hess, Ley, Ogonowski, Wan, & Wulf, 2011). Therefore, the dependency on using TV could be a factor influencing multiplatform media use. In a similar vein, people who are dependent on using digital media platforms may as well become potential media multitaskers. Among all digital media platforms, smartphones are increasingly leading the way in consumers’ daily life. ComScore (2015) reported that people spent 60% of their digital media usage time on mobile devices. Another report shows that 38% of American smartphone owners never disconnect from their devices; 89% of them check their smartphones at least once a day; and 71% of them sleep with their phones (Corselli, 2015).The relevance of Internet-connected mobile platforms in the lives of today’s audiences makes it their constant companion, including during the act of media consumption. In addition to smartphones, reports suggest that tablets and laptops are the two other connected mobile devices that are most prevalent in the digital lives of U.S. adults (Anderson, 2015). Therefore, dependency on using connected mobile devices may be a potential factor that influences multiplatform media use. Empirical evidence from the study seems to support the notion (Chan-Olmsted & Xiao, 2016). Regression results from the study revealed that TV dependency explained a significant portion of the variance in attitude toward multiplatform media use. Connected mobile media dependency was also found to be significant for both tablet owners and non-tablet owners. This finding reaffirms the central role of TV in the process of multiplatform consumptions and the symbiotic dependency between mobile and TV platforms for this group of young media consumers.

Technology Fluidity Technology fluidity theory asserts that consumer perception of a technology’s ability in providing its users a dynamic, fluid use experience will affect the adoption likelihood of that technology (Lin, 320

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2003). Lin (2008) defined such fluidity as “the ease of a medium to take on a different modality (i.e., text, data, graphics, audio and video) to shape, transmit, and receive communication via a variety of delivery systems” (p. 87). Research has shown that around 60% of respondents who used their smartphones or tablets while watching TV were more likely to pay attention to their TV (as opposed to 50% for computer users) (IAB, 2015c). Connected mobile devices, especially smartphones and tablets, seem to be most appropriate for concurrent media use as they are convenient and intuitive for most consumers. It is plausible that how consumers perceive the ability of these platforms in delivering the media experience will affect their attitude toward multiplatform use. Hence, the perceived fluidity of mobile platforms may influence multiplatform media use. ChanOlmsted and Xiao (2016) found that smartphone fluidity was a significant predictor for non-tablet owners in explaining the variance in the attitudes toward multiplatform media use. No fluidity measures showed any significance on attitudes toward multiplatform media use for tablet owners (Chan-Olmsted & Xiao, 2016). It seems that for the audience who relies on smartphone during multiplatform consumption, perceived technology fluidity across platforms somewhat contributes to a better attitude toward its use.

Technology Acceptance Model (TAM) The TAM suggests that our beliefs about a technology’s utilities and ease of use would help induce positive attitudes toward the intention to adopt the technology (Davis, Bagozzi, & Warshaw, 1989). The model has been widely applied in studying the adoption or usage of technology (Davis, 1986, 1989; Park, Baek, Ohm, & Chang, 2014; Lederer, Maupin, Sean, & Zhang, 2000;Venkatesh, Morris, Davis, & Davis, 2003). Moon and Kim (2001) used the model to study how people started to accept and use the Internet in the early 2000s;Vijayasarathy (2004) examined consumers’ intentions to shop online under the theoretical framework of the TAM; Ha, Yoon, and Choi (2007) used the model to help them examine factors that influence mobile gaming attitudes. In all studies cited, perceived ease of use and perceived usefulness (or value of using the technology) are positively correlated with attitude or intention to use the technology. Thus, the perceived ease of using multiple media platforms and the perceived usefulness or value of using multiple media platforms are possible influencers of the actual multiplatform media use. According to Chan-Olmsted and Xiao (2016), perceived value and ease of use were both positively related to attitude toward multiplatform media use. The TAM seems to be readily applicable also for the multiplatform media use scenario.

Subjective Norm The theory of reasoned action (TRA) is an established theory that aims to explain volitional behaviors of people (Ajzen & Fishbein, 1977). The theory proposes that behavioral intention is a reliable predictor of actual behavior, while attitude and subjective norms are two predictors of the intention to perform a behavior.The theory also assumes that behavioral beliefs and normative beliefs influence attitude and subjective norms respectively (Albarracin, Johnson, Fishbein, & Muellerleile, 2001). The proposed relationship between attitude and behavioral intention in the TRA may be self-explanatory. Empirical studies frequently discovered a significant correlation between the two constructs. For example, Hsu and Lin (2008) found a positive correlation between attitudes toward using blogs and behavioral intentions. In contrast, Fishbein (2008) discovered a negative correlation between people’s attitude toward family planning and the person’s intention to use family planning products. On the other hand, the concept of subjective norms may require further explanation. Subjective norms represent people’s perceived social influences or pressures about whether he/she should 321

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perform a behavior (Fishbein & Ajzen, 1975). Numerous studies have discussed the correlation between subjective norms and behavioral intentions. Ryan and Bonfield (1980) found that a person’s friends and family positively influence his or her intentions to purchase a product. Similar results are discovered in studies about consumers’ intention to buy sustainable food or groceries on the Internet (Hansen, Jensen, & Solgaard, 2004;Vermeir & Verbeke, 2006). Moreover, some empirical studies suggest that subjective norms also influence attitude formation (Chang, 1998; Bock, Zmud, Kim, & Lee, 2005; Ryan, 1982; Shepherd & O’Keefe, 1984). In the context of multiplatform media use, attitude toward multiplatform use may influence the behavior and behavioral intention of media multitasking. In a similar vein, subjective norms may also influence the use of multiplatform media or indirectly influence behavioral intentions through attitude. Chan-Olmsted and Xiao’s (2016) study found subjective norms to significantly explain the variance in the attitude variable. Additionally, attitude toward multiplatform use is also positively correlated with each combination of multiplatform media use (Chan-Olmsted & Xiao, 2016).

Online-Offline Media Affinity The U&G approach addresses the importance of needs gratification when people consume content from various media (Katz, Blumler, & Gurevitch, 1974). For instance, Rubin (1984) studied TV audiences and proposed nine major needs that could be gratified by watching TV programs. Specifically, watching TV satisfies one’s needs for relaxation, companionship, habit, entertainment, information, escape, arousal, and social interaction (Rubin, 1984). In today’s multiplatform media use environment, a different set of needs may be gratified by using digital media platforms. Given that online information can be highly interactive and personalized, consumers may tend to choose online media rather than traditional media when the two platforms deliver similar functions (Obrist, Cesar, Geerts, Bartindale, & Churchill, 2015). Under such logic, consumers who choose to skip the online alternative of offline content may very well utilize other devices to compensate for the lost functions and acquire more interactivity or information. The online-offline media affinity concept posits that a higher online media affinity would position a consumer to have less need for multiplatform use because of the fluidity and integration offered in an Internet environment (Lin, 2008). On the other hand, a higher offline media affinity would require a consumer to integrate other media devices into the consumption process to achieve the desired gratifications or utilities. Needs gratification also can be found in social media content consumption and creation. Studies have shown that the reasons people create or consume social media content are very different. Altruism is one explanation for content creation or sharing behaviors (Munar & Jacobsen, 2014). On mobile media, self-entertainment is said to drive creators to contribute content on mobile social applications. On the other hand, people consume content from mobile applications because they constantly need high-quality information from a platform that they can access anywhere. Interestingly, those who contribute to the content on mobile applications are also likely to consume content from the same platform (Chua, Goh, & Lee, 2012). To sum up, the affinity to use online or offline media and social media consumption/creation behavior may be related to the use of multiple media platforms because using these media gratifies the consumer’s various needs. Chan-Olmsted and Xiao (2016) examined the concept of the online-offline media affinity in using online video, audio, and print media. Through a series of simple regressions, they found that online-audio affinity was significant in explaining the variance in the attitude variable with a negative direction. The results also showed that both social media consumption and social media creation were significant in explaining the variance in the attitude variable. The tendency to use an online platform instead of an offline platform to access a specific class of media content (e.g.,

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video, audio, and print) was mostly insignificant in relation to the attitude toward multiplatform media use. However, there is an exception in the case of affinity toward offline radio use (i.e., the more one prefers offline radio use, the more he or she has a positive attitude toward multiplatform use).The use of offline radio has declined in recent years, especially among young listeners (Pew Research Center, 2015a). An affinity toward this platform in a multiplatform use setting is surprising. Traditional radio is different from offline TV and print media in that the former is a more personal medium than the latter and it represents a consumption experience different from its online alternatives. On the other hand, social media activities, in both consumption and creation forms, are positively related to the attitude variable, supporting previous findings regarding the importance of social media in media multitasking (Courtois & D’heer, 2012).

Consumer Characteristics Rogers’s diffusion notion regarding the concept of innovativeness provides a good foundational framework for identifying consumer characteristics that might play a role in affecting multiplatform behavior (Rogers & Shoemaker, 1971). Innovativeness resides in almost every individual and it is a characteristic of human beings to search for novelty (Hirschman, 1980). Extant research suggests a significant and positive correlation between innovative characteristics and adoption of emerging media, such as social media (Zolkepli & Kamarulzaman, 2015). Innovativeness was found to significantly influence the daily usage of mobile devices, such as smartphones and iPads (Zhong, 2013), and predict millennials’ intention to buy and use mobile devices (Eastman, Iyer, Liao-Troth, Williams, & Griffin, 2014). Consumer innovativeness also affects their perceived ease of use of smartphones, which in turn influences their intention to keep using them (Park, Kim, Shon, & Shim, 2013). In general, the innovativeness of an individual may affect the likelihood of his or her simultaneous use of multiple media platforms. The diffusion of innovation also generalizes that earlier adopters tend to have a higher level of education and socioeconomic status than later adopters (Roger & Shoemaker, 1971). Chan-Olmsted and Chang (2006) found that gender and income are two significant predictors of consumers’ intentions to adopt digital TV. Other studies also suggest that age, gender, and personal income affect consumers’ intentions to adopt mobile Internet (Okazaki, 2006). Therefore, demographic variables, such as age, gender, and income, are potential factors that influence multiplatform media use. The result from Chan-Olmsted and Xiao’s study shows that gender and consumer innovativeness are factors that influence attitude toward multiplatform media use (Chan-Olmsted & Xiao, 2016).

Impacts of Multiplatform Media Consumption As indicated, the growth of multiplatform media use has significantly changed the way the media industry conducts its business. These impacts are discussed ahead from the perspectives of advertising, media industry, social media, audience, and areas that drive the strategic options of today’s media managers.

Advertising: Cross-Platform Campaigns The proliferation of media platforms creates both challenges and opportunities for advertisers and media practitioners. The abundancy of media outlets leads to audience fragmentation, making it very difficult for advertisers to effectively reach their target audiences because consumers can easily switch between media platforms to find intriguing contents and avoid annoying advertisements

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(Webster, 2014). On the other hand, the multiplication of media platforms also enables advertisers to place their ads on various media platforms, helping mitigate the damaging influence of audience fragmentation (Voorveld, Smit, & Neijens, 2013). Similar to the history of multiplatform media use, cross-platform advertising is not a product of emerging digital media platforms but an advertising strategy that has been widely applied in the industry for decades. Empirical studies also have investigated cross-platform advertising for years on either traditional or digital media platforms. Researchers have compared the effect of advertising on individual media platforms in the extant studies. Montgomery and Silk (1972) examined different marketing communication effects of direct mail,TV ads, and product sampling. Dahlén, Murray, and Nordenstam (2004) compared nine pairs of identical online banner ads and magazine print ads in an experiment.They found that online banner ads were more effective than print among low-involvement products, inexperienced Internet users, and consumers with negative dispositions toward the brand. Another branch of studies focuses on the combined effect of cross-platform advertising. Regarding traditional media platforms, several research projects have investigated the combined influence of advertising on radio and print media ( Jagpal, 1981); TV and print media (Naik & Raman, 2003); and TV and radio (Edell & Keller, 1989). In recent years, scholars have expanded the scope of their research about digital media platforms.Voorveld’s (2011) findings indicated that the integrated effect of using both online and radio advertising would amplify the positive influence of ads compared to just repeating the ads on one medium. A similar result was also obtained by Voorveld, Neijens, and Smit (2011) from their study of cross-platform advertising on TV and the Internet. In general, with the trend of media convergence and increasing multiplatform use, recent empirical studies keenly addressed the reality of such media consumption patterns when assessing the effect of advertising messages. In other words, the integrated, synergistic effect of cross-platform advertising, not individual platform effects, should be carefully evaluated for a brand’s advertising campaigns ( Jagpal, 1981; Naik & Raman, 2003; Naik & Peters, 2009).

Media: Industry Synergy Naik and Raman (2003) defined media synergy effect as “the combined effect of multiple media activities that surpasses the sum of the individual effects” (p. 375). Conceptually, media synergy is an organic part of a bigger marketing theory—integrated marketing communication (IMC)—that addresses the importance of “harnessing synergy across multiple media to build brand equity of products and services” (Naik & Raman, 2003, p. 375). For example, a person may listen to radio programs while watching TV. He/she may be exposed to an advertising message first on TV and subsequently, the same message in a different format, on radio. Under the influence of the radio advertising message, the person is very likely to remember the content of the TV ad. However, if the person is simply exposed to a radio ad repeatedly, the sum of the advertising effects may not necessarily ensure that the person remembers the content of the ad. In this scenario, it is safely said that the combined media effect is larger than the sum of the individual effects. Over the years, numerous empirical research projects have focused on studying media synergy effects. Chang and Thorson (2004) found that the combination effect of TV and online advertising is greater than the simple repetition of the ad. Specifically, participants were more focused on the ad, perceived the message as more credible, and were more likely to form positive thoughts when they were assigned to the synergetic experimental conditions. Additionally, Lim, Ri, Egan, and Biocca (2015) examined the synergy effect of advertising on TV, the Internet, and mobile platforms. Their study is one of the few attempts to research mobile video advertising. Findings of their study provide implications that consumers are likely to have higher purchase intentions, more positive attitudes, and more credible perceptions of an advertising message when they are exposed

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to advertising in repetition over multiple platforms than in repetition on a single platform. Other studies also found significant synergy effects between different forms of advertising, such as TV, print, and online advertising campaigns (Havlena, Cardarelli, & De Montigny, 2007; Sheehan & Doherty, 2001). The synergistic effect due to the use of multiple platforms is not only applicable to delivering effective advertising messages. It also provides the opportunity for media brands to engage audiences on various content consumption journeys. For example, ESPN not only delivers sports content through its broadcasting but also displays stats and pictures/videos on social platforms like Instagram and Snapchat. As a result, it provides a richer environment for audience engagement and develops a deeper connection with the audience through various experiences. Collectively, the synergistic effect is more likely to lead to better relationships with the audience.

Social TV: The New TV Experience The concurrent use of social media and other media platforms is more common among younger demographics (under 24) than their older counterparts (Voorveld & van Noort, 2014). Extant studies suggest that multitasking with social media is among the top combinations of media multitasking patterns among German, American, British, Dutch, French, and Spanish audiences (Voorveld, Segijn, Ketelaar, & Smit, 2014). Additionally, many people use their mobile devices to consume information on social networks while watching TV (Rooksby et al., 2014). This phenomenon is referred to as social TV, “real-time backchannel communication on social networking sites (SNSs) during a live television broadcast” (Lim, Hwang, Kim, & Biocca, 2015, p. 158). People have long been talking about their reaction to TV shows or programs with their friends or family at workplaces or around the dinner table. Social media simply extends this interaction onto the online virtual world, connecting and involving more people in the conversation. For example, people read or post information about presidential debates (Gottfried, Hardy, Holbert, Winneg, & Jamieson, 2017), sports events (Lim, Hwang, Kim, & Biocca, 2015), or special events, such as the Grammy Awards and the Oscars (The Nielsen Company, 2016), on social media while they are watching the show or sporting game. Thanks to social media, American TV audiences are aware of more TV programs, enjoy the viewing experience more, and record more shows to watch later (The Nielsen Company, 2014b). Among all social media platforms, Twitter plays a special role in cultivating a symbiotic relationship between using social media and watching TV. Given the reactive nature of Twitter that allows users to comment on TV shows in real time, some scholars have defined Twitter as a backchannel for TV (Bruns & Burgess, 2011; D’heer & Verdegem, 2015). It is believed that three elements contribute to the success of Twitter in the “social TV” consumption experience among American audiences. First, the fluidity or flexibility of information on Twitter that allows users to circulate information in various formats (text, picture, or video) provides users a rich information consumption experience. Secondly, the hashtag convention and little limitation on who can view your tweets (unless you choose not to let the public see your tweets) facilitate the dispersion of a message because more people have a chance to view your tweets (Deller, 2011; Highfield, Harrington, & Bruns, 2013; Wohn & Na, 2011). Thirdly, the succinct and convenient nature of tweeting is suitable for users to express their feelings after watching a TV show in a concise, quick, and timely manner. As some of Twitter’s features are also adopted by other major social media platforms, such as Facebook and Instagram, the elements are also applicable in explaining social TV use in the context of other social media platforms. The consumption of social media and TV in combination has evolved over the years from consumers passively consuming TV content with occasional social media use to social buzz surrounding

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major sporting events, season finales/premieres, reality shows, and many other social media marketing programs created to engage audiences (Van Es, 2016).There have been various definitions for the term “social TV.” While some regard social TV as communication platforms that allow TV viewers to interact while watching TV (Roy, 2013), some see the use of social media for TV engagement as a more comprehensive strategy that goes beyond concurrent social media–TV usage (Cunningham & Eastin, 2017). Then there are those who define social TV loosely as interacting with TV via social media while viewing or not viewing the TV content (The Council for Research Excellence, 2014). It’s interesting to note that while social media use during TV is high, use in relation to what is actually on the TV is low (Advanced TV, 2015). Whether the social media and TV union is concurrent, the symbiotic relationship between the two platforms is significant. In Nielsen reports (2012, 2014a, 2015a), viewers have more enjoyment when they use social media during their viewing of a show or a program. In addition, they are more inclined to keep up with shows when joining conversations on social media. Most studies have suggested that social TV is linked to increased engagement in TV programming (Cunningham & Eastin, 2017; Lim, Hwang, Kim, & Biocca, 2015). Previous studies (D’heer & Verdegem, 2015; McDonald, Lin, Anderegg, Na, & Dale, 2014;Wohn & Na, 2011) on social TV analyzed predominantly the Twitter platform. Many found the online interactions and comments during a TV program to be related to contents (McDonald et al., 2014), implying that people are actually engaging more on an in-depth level with the programming when the two platforms are used in combination, especially in the case of Twitter. Studies on social TV use have also shown that demographic factors play a role in its use. A study conducted by the Council for Research Excellence (2014) found that females and Hispanics overindexed others in social TV consumption. In a relevant study about second screen use, which is usually associated with social media use, Gil de Zúñiga, Garcia-Perdomo, and McGregor (2015) concluded that age and gender are predictors for using a second screen; young adults and females were more likely to use a second screen than others. According to an Accenture study (2012), young adults (63%) aged 18–24 are more likely to interact with social media while watching TV, as compared with 11% of adults aged over 65.

Audience: Attention as Commodity in a Multitasking Life Finally, it is important to note that multiplatform media use is not only an option for consumers to use media but also an integrated lifestyle nowadays. The presence of multiplatform media use is seen in almost every occasion. A walk-through of a person’s daily activities may help us understand how multiplatform media use is integrated with an audience’s daily life. Let us call this person John. On his way to work, John commutes on public transit, reading novels with background music played in his earphones. At work, an intriguing YouTube video makes John giggle while he is replying to emails sent from his colleagues. At home, John sits comfortably on the couch, watching Monday Night Football, while checking team statistics on his tablets and chatting via mobile phone with his friends on Facebook Messenger about the football match. As stated earlier, multiplatform media use is becoming so ubiquitous that people start to consider it a norm of life. This phenomenon is even more common among digital natives as they are more adept in using new media technology compared to their older counterparts. Despite age, the integration between multiplatform media use and lifestyle may be more prevalent among those who are from developed societies, where new media technology is available and affordable. Some have argued that different media platforms are increasingly competing against each other to earn limited attention of the audience. As the audience multitasks, the value or quality of their attention diminishes per platform.We have indeed entered an era that delivers consumer attention as

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a commodity. In other words, the quality of audience attention is the new currency of audience valuation. Nevertheless, the proliferation of media platforms also provides more opportunities for media managers to engage their audiences that the old one-way model could not deliver. The industry overall has to work harder to understand its audience, which includes what matters to them, what is relevant to them, and what is authentic to them.

Future of Multiplatform Media Consumption: Divergent Convergence and Audience Engagement On the surface, the term “divergent convergence” sounds contradictory, but it is an accurate depiction of the trend in multiplatform media use. On one hand, people still consume information from different media platforms for each platform’s unique features or offerings. There is a reason when an audience chooses a certain platform. For example, some people use Twitter news feeds to filter news that they would like to read, while others prefer to sit in front of a TV and watch the evening news. On the other hand, the information offered on different media platforms may serve the same purpose. For instance, an online news article or a TV news report may talk about Brexit (Britain exiting the European Union) in a similar way and for a same purpose—to inform the audience about what has happened. The difference lies in the format of the information and in how consumers connect with a particular platform. In a similar vein, a multiplatform advertising campaign’s purpose is to raise brand awareness or persuade consumers to purchase a product. In this case, different formats of the information or ways of demonstration offer consumers unique information consumption experiences that may help optimize the effectiveness of campaign messages (Lim, Ri, Egan, & Biocca, 2015). In a sense, while the act of consumption converges multiple platforms, there is divergence in the perceived value of each platform. Consumers still look for unique usage experiences from using different platforms and seek, collectively, a better overall media journey that is better than the sum of individual parts.What does this mean from the perspective of media managers? It is important to cultivate the strength of the core platform (e.g., broadcast TV) while utilizing others (e.g., social media) to enhance the audience’s consumption experience. There has to be an anchor platform that sets the agenda for the media use experience based on the target consumer’s lifestyles and preferences. As communication technology continues to develop, we are witnessing the birth of more platforms, such as virtual reality (VR), that might be added to the audience media experience. New media platforms expand the range of possible combinations of multiplatform media use. For example, new media technologies, such as wearable devices, can be easily connected with other mobile devices, making media multitasking even more convenient. In contrast, some of the new media technology is detrimental to the likelihood of people to multitask. For instance, VR headsets cover the eyes of the users and prevent them from using anything else. Though the experience can be immersive, the probability of a person to multitask with a VR headset is almost impossible. A possible solution is to create a virtual portal or a representation of the device in the VR world that can be connected with the real-world devices through Wi-Fi or Bluetooth technology. By doing so, people will regain control of their devices and multitask with them in the virtual world.The future of multiplatform media consumption, in other words, might go beyond the physical world and be simply separated by original content sources.

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21 MEDIA GLOBALIZATION Xiaoqun Zhang

Conceptualization and Measurement Globalization is a process that has existed for centuries (Mickkethwait & Woolridge, 2000). However, the word “globalization/globalisation” was first coined in the English language in 1959 and entered into dictionaries two years later (Schreiter, 1997;Webster, 1961). It has gained fast popularity in English and other languages since then (Scholte, 2008). Although most scholarly studies on globalization have appeared since the 1960s, Karl Marx and Frederick Engels discussed the inevitability of globalization one and a half century ago ( Jellissen & Gottheil, 2009). The authors stated, “the bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization” (Marx & Engels, 1848, p. 8). In the preface to Capital (Volume 1), Marx argued, “the country that is more developed industrially only shows, to the less developed, the image of its own future” (Marx, 1867, p. 13). What Marx and Engels described is economic globalization, which has occurred profoundly in the past decades, and is still affecting the contemporary world. Many studies have focused on this aspect of globalization and proposed many definitions for the term. For example, van Meerhaeghe (2012) defined economic globalization as “the rapidly growing interpenetration and interdependence of countries worldwide through increasing border transactions in goods, services and capital, and through the more rapid diffusion of technology. It is the logical result of capitalism” (p. 240). Scholars also studied other aspects of globalization and proposed definitions from other perspectives. For example, Giddens (1990) defined globalization from a sociology perspective; globalization is “the intensification of world-wide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa” (p. 64). Although globalization has become a prominent cross-disciplinary research field in academia, and many scholars have made efforts to define and interpret it, its conceptualization is plagued by persistent ambiguity and confusion. Giddens (1996) noted, “there are few terms that we use so frequently but which are in fact as poorly conceptualized as globalization” (p. 1). To advance the conceptualization of globalization, Scholte (2008) categorized the definitions into four groups: (1) globalization as internationalization, which “refers to a growth of transactions and interdependence between countries” (p. 1473); (2) globalization as liberalization, which refers to “a process of removing officially imposed restrictions on movements of resources between countries in order to form an ‘open’ and ‘borderless’ world economy” (p. 1475); (3) globalization as universalization, which refers to “a process of dispersing various objects and experiences to people at all inhabited parts of the earth” (p. 1476); (4) globalization as westernization/Americanization, which refers to a process 333

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in which “social structures of Western modernity (capitalism, industrialism, rationalism, urbanism, etc.) are spread across all of humanity, in the process destroying pre-existent cultures and local selfdetermination” (p. 1477). Based on the conceptualization of globalization, scholars have made efforts to quantify it as a variable. Four main measurements have been developed: the ATK Globalization Index (The Global Top 20, 2007), the CSGR Globalization Index (Lockwood & Redoano, 2005), the MGI Globalization Index (Martens & Raza, 2010), and the KOF Index of Globalization (Dreher, Gaston, & Martens, 2008). Each of these four measures uses a multiple-dimension framework to quantify globalization. In particular, the ATK Index, CSGR Index, and KOF Index consider four dimensions: economic dimension, political dimension, social dimension, and technological dimension (the ATK Index uses “personal contact” instead of a social dimension, and the CSGR Index and KOF Index include a technological dimension in the social dimension).The MGI Index includes an ecological dimension (Caselli, 2012).These four measures also use different variables to quantify the multiple dimensions of globalization, as well as globalization itself at the overall level. And these different variables yield different results of values and rankings of globalization indexes (Caselli, 2013). The multiple-dimension framework used in these measurements reflects that they realize the multiple aspects of globalization and attempt to quantify globalization comprehensively. Compared with the other three measures, the KOF Index is the one that has been most frequently updated.

Impacts of Globalization on the Media Economy As many scholars have noted, globalization is primarily driven/represented by the fast growth of transactions in goods, services, and capital, which is defined as economic globalization. Historical data suggest that the total volume of world merchandise exports increased approximately 20 times during the last five decades of the twentieth century (Leinbach & Bowen, 2004). Data indicates the value of merchandise trade and trade in commercial services in 2015 is nearly twice as high as in 2005 (World Trade Organization, 2016). Historical data also indicates that foreign direct investment (FDI) grew rapidly in both developing and developed countries during the twentieth century (Te Velde, 2006). FDI has kept growing since the 1990s (United Nations Conference on Trade and Development, 2015). It is clear that countries have been more interconnected and interdependent with each other through international trade and capital flow than ever before. The media economy is a part, a big part for some countries, of a nation’s national economy. The international trade of media/cultural products is included in the General Agreement on Trade in Services (GATS) architecture of the World Trade Organization (WTO). However, compared with the huge number of studies on the impact of globalization on national economies, there are only a few studies exploring the impact of globalization on the media economy. Specifically, Millar, Choi, and Chen (2004) argued that globalization promotes the media economy as strong brands and intellectual assets associated with the film, music, and media industries create a strong globalization “pull” on the demand side, while production and global sourcing in turn provide a strong globalization “push” on the supply side. Yang and Shanahan (2003) examined the impacts of economic openness (measured by ratio of trade to GDP) on the penetration levels of various media products across countries. The authors found significant correlations between economic openness and media penetrations. Chang and Chan-Olmsted (2005) explored the impacts of economic openness (measured by the percentage of foreign direct investment in GDP) on advertising expenditures across countries, but did not find any significant relationship between economic openness and advertising expenditure. Zhang and Albarran (2016) investigated the relationship between globalization and the percentage of media expenditures in GDP, using the KOF Index as the measure of globalization. The authors found that the overall globalization index had a significant correlation with the percentage of media expenditures 334

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in GDP, and the social globalization index was a significant predictor for the percentage of media expenditures in GDP, after controlling for the economic, population, and social variables.

Flows of Media Products/Services Across Countries Pike and Winseck (2004) argued that media globalization began in the 1850s when domestic ­telegraph systems in multiple countries became linked to create a worldwide communications network. As the most advanced country at that time, Great Britain was the country that mainly led media globalization. British companies had control over the manufacturing and deployment of telegraph cables and owned two-thirds of the world’s cables in the nineteenth century. When the United States surpassed Great Britain and became the most powerful country in the world in the early twentieth century, its media companies expanded rapidly throughout the world. For example, during the 1930s and 1940s, Hollywood movies occupied about 75% of the Chinese film market (Su, 2011). A later study showed Hollywood movies had prevailed in the world, and American TV products had been setting the tone for television programming worldwide (Dizard, 1964). The process of media globalization has accelerated since the 1980s with breakthroughs of new technologies and deregulations in the United States and many other countries. According to the United Nations Educational, Scientific and Cultural Organization (UNESCO), the export of world cultural goods increased from $38.3 billion to $59.2 billion from 1994 to 2002 (UNESCO, 2005). A newer report showed that the value of world exports of cultural goods in 2013 was $190.5 billion (UNESCO, 2016). Although UNESCO embraced a broad definition of cultural goods across five categories (cultural and natural heritage, performance and celebration, visual arts and crafts, books and press, and audiovisual and interactive media), the last two categories belong to media products. The data of world trade of culture goods showed that during 2004–2013 the average growth rate of exports in the books and press category was 16.3%; the average growth rate of imports in the books and press category was 12.4%; the average growth rate of exports in the audiovisual and interactive media category was 111.9%; the average growth rate of imports in the audiovisual and interactive media category was also 111.9% (UNESCO, 2016). Scholars noted there was an asymmetry of media product flows across countries. For example, Schramm (1964) observed that most news flowed from the developed countries to developing countries in the early twentieth century. The United Nations Conference on Trade and Development (UNCTAD) and United Nations Development Programme (UNDP) (2010) reported that most developing countries were net importers of television programs. During the years 2002–2008, developed countries occupied 89.5% of the audiovisual goods market share, while the developing countries—for example, China—and economies in transition like the Russian Federation, had shares of only 9.2% and 1.2% respectively. Hollywood movies have dominated the world movie market for a long time.The top 20 films of all time by gross box office worldwide were produced by Hollywood movie studios (All time box office, n.d.).

Driving Forces of Media Globalization Technological Progress Breakthroughs in communication technologies are one of the driving forces of media globalization. After the first satellite TV channel was launched in the early 1980s in Europe (Chalaby, 2016), many TV channels have successfully increased their cross-border audiences. These transnational TV channels provide a variety of content genres, including news and business news (Bloomberg, CNBC, Euronews, etc.), nonfiction entertainment (e.g., the Discovery and National Geographic), entertainment (AXN, HBO, and Fox-branded channels), children’s television (e.g., Cartoon Network, the 335

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Disney brands, and Nickelodeon), sports (Eurosport, ESPN), music television (MTV,Viva, etc.), and films (e.g., Studio Universal and Turner Classic Movies) (Chalaby, 2009). Many of these TV channels gained popularity in other parts of the world as well. The advent of the Internet in the late 1990s further facilitated media globalization. McLuhan (1962, 1964) predicted technology would create a global village. The Internet indeed connects everyone in the world who has access to a broadband network, and provides media organizations a platform to reach global audiences. For example, Internet users can get news from multiple news portals, such as Yahoo! News, Google News, and Huffington Post. Most news organizations, such as CNN and the New York Times, provide at least some free content online. The breakthroughs in streaming media technologies further enable Internet users to get audio and video content online. And TV and film producers have found that streaming media platforms are an effective way to reach the global audiences who had been unapproachable through other media platforms, such as satellite and cable. For example, popular U.S.TV programs, such as The Big Bang Theory and Homeland, gained popularity in China through online video platforms where the broadcasting and cable TV market is highly controlled by the government.

Liberalization Liberalization refers to a trend in which many countries have more reliance on market forces, rather than the state, to steer economic activities (Wolf, 2004). Deregulation and privatization are two essential parts of liberalization. Fox and Waisbord (2002) argued that these basic tenets of a market economy have driven the development of media systems. In the United States, the Telecommunications Act of 1996 was a significant overhaul of telecommunications laws, removing or relaxing many regulations, including the limits on media ownership. This gave media companies more freedom to be integrated and expanded (Tabernero, 2006). Head, Spann, and McGregor (2001) noted that privatization and deregulation have gained momentum in Europe since the mid-1980s in the cable and telephone industries. MacBride and Roach (2000) also observed that deregulation of media in many developing nations along with openness to private investment started in the 1980s. McChesney (2005) argued that deregulation occurred in the cable and digital satellite systems around the world in the 1980s and 1990s. Some scholars held that international trade organizations, such as the WTO, forced some highly regulated economies to lower their barriers of trade of cultural/media products and foreign investment. For example, Head, Spann, and McGregor (2001) stated that after joining the WTO, China allowed foreign investors to hold up to 49% of certain telecommunications companies, including Internet firms. Wyatt, Cieply, and Barnes (2012) noted that China also raised the quota of imported movies from 10 to 34 titles a year.

Transnational Media Corporations Scholars also argued that media globalization has been pushed by large transnational media corporations (TRMCs), which are defined as media corporations with “overseas operations in two or more countries”, where “strategic decision making and the allocation of resources are predicted on economic goals and efficiencies with little regard to national boundaries” (Gershon, 2005, p. 17). Leckner and Facht (2011) found that the world’s top 25 TRMCs are headquartered in the United States, Japan, Western Europe, or Australia. Albarran (2017) noted that six of the world’s top eight TRMCs are headquartered in the United States, and the other two are headquartered in Japan and Germany. These TRMCs are the major organizations that push the flows of media products/services from the developed countries to developing countries.

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Scholars explored why the biggest TRMCs are headquartered in a few of the most developed countries, especially the United States. They argued that the huge media markets in these countries render economies of scale of content production, which significantly reduce the average production cost and increase profits at low prices (Lowenstein & Merrill, 1990; Van Elteren, 2003). Consequently, these countries attract great talents and enormous resources dedicated to content production (Scott, 2002). Other scholars argued that the rapid rise in income levels in many developing countries promotes the consumption of American/Western media products/services (Lowenstein & Merrill, 1990).

Issues in Media Globalization Localism Even in the globalization era, people around the world still have strong preferences for locally produced content (Straubhaar, 2007).This poses a challenge for TRMCs: although they can employ new technologies to reach global audiences, they must cater to people’s preferences for local content.This ability has become a condition of viability for TRMCs operating in different countries (Waisbord, 2004). Western TV conglomerates have learned how to adapt their resources to serve local tastes. These channels share brands, resources, infrastructures, and much of the programming, but adapt to native cultural and commercial environments (Waisbord, 2004). For example, Discovery owns 24 brands in 22 European countries (Animal Planet, Discovery Channel, DMAX, Quest, etc.), reaching 436 million cumulative subscribers.These brands are localized in most of the countries in which they operate (Chalaby, 2016). It should be noted that not all types of content can or should be localized.The degree of localization varies from type to type, and from genre to genre. Since audiences in other parts of the world do not have the same background knowledge and linguistic competence as the audiences in the countries where the content is created, and live in societies with different cultural values and social norms, they cannot fully appreciate the media products from foreign countries. That is, a part of the appeal of foreign media products can be lost during the process of globalization.The lost value, in this regard, has been defined as a cultural discount (Hoskins & Mirus, 1988; Waterman, 1988; Wildman & Siwek, 1988). TRMCs implement strategies to reduce cultural discount. For example, the Hollywood studios use advanced special effects, spectacular scenes, simple narratives, universal themes (e.g., romantic love, friendship, and/or family relations), and settings basically nowhere (e.g., Jurassic Park, AI, Harry Potter, Star Wars, and so on) to attract global audiences (Dancyger, 2001). These strategies help them enhance global popularity and minimize cultural discount.

Digital Divide McLuhan (1962, 1964) predicted the advent of a global village along with a new media platform, the Internet, through which people around the world are more closely connected. Although the commercialized Internet has only a two-decade history, it has transformed our senses of time, space, and community, and changed the world into an information society, a new society never experienced before (Khiabany, 2003). Because of its significance, the United Nations (UN) (2011) advocated that Internet access is one of the basic human rights in contemporary society. However, not everyone has access to the Internet. The National Telecommunications and Information Administration (NTIA) (1995) coined the concept digital divide to describe this phenomenon. Digital divide is defined as a gap between those who have access to information communication technologies (ICTs) and those who do not. This report noted that people without access to ICTs are at a growing disadvantage

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since they have less opportunity to take part in the education, training, shopping, entertainment, and communications that are available online. Many empirical studies demonstrated that although the digital divide was reduced between many developed countries and developing countries from 1991 to 2010, the gaps are still huge, especially between the richest countries and poorest countries (Zhang, 2013). The existence of a digital divide is a hindrance of media globalization, as the Internet has become the major platform for TRMCs to reach global audiences.

Resistance to American’s Cultural Hegemony The prevalence of American media products in the world raised the concerns of many countries. They are concerned with the harmful impacts of American’s cultural hegemony on their native cultures. In the 1970s, many third-world members of the United Nations Educational, Scientific, and Cultural Organization (UNESCO) initiated the movement for a New World Information and Communication Order (NWICO), trying to address the asymmetric flow of cultural/media products between the developed countries and underdeveloped countries. To protect the interests of American media corporations, the United States withdrew its membership from UNESCO. In recent years, many countries have made efforts to resist American’s cultural hegemony within the WTO framework. McChesney (2005) observed a trend of cultural protectionism in developing nations; they attempted to build some ground rules “to protect their cultural fare from the Hollywood juggernaut” (p. 93). Even some developed countries, like Canada, Spain, and France, have placed quotas on importing American media products (Dominick, 2002). The Chinese government did not make any commitment to liberalize its media market within the General Agreement on Trade in Services (GATS) architecture (WTO, 2001), and its fundamental regulatory philosophy is to protect Chinese media from external influences. Crane (2014) noted that the Chinese government adopts strict quotas on Hollywood movies and strong protectionist barriers concerning political content. Several TRMCs, including News Corporation and Google, attempted to enter China’s markets, but had to withdraw their businesses because of the strict regulations of the Chinese government. China has adopted aggressive approaches to challenge American’s cultural hegemony. The Chinese government implemented the “external propaganda” project with an estimated $10 billion annual budget to support the expansion of Chinese media overseas (Shambaugh, 2015). The Xinhua News Agency employs 3,000 journalists and has 170 bureaus around the world. It has also developed a strategy of becoming a new TRMC, competing with the other Western TRMCs, such as News Corporation, Viacom, and Time Warner (Shambaugh, 2015). China Central Television (CCTV) broadcasts in six languages around the world, and set up branches in Nairobi, Kenya, and the United States. China Radio International broadcasts in 38 languages and maintains 27 overseas bureaus. And its subsidiary—G&E Studio—controls airtime on at least 15 U.S. radio stations and many stations in other countries (Qing & Shiffman, 2015). Chinese big conglomerates, such as Wanda, have made consecutive purchases in Hollywood, which are regarded as the biggest moves of Chinese companies to break into the Western film industry (Kung & Back, 2012). These purchases aroused the concerns of U.S. officials, who suggested a broader definition of national security by including media and soft power institutions (Wong, 2016).

Three Major Theoretical Frameworks for Studying Media Globalization Diffusion of Innovations Theory The diffusion of innovations theory (DIT) is an applicable framework to explore the flows of information and knowledge around the world. “An innovation is an idea, practice, or object perceived as

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new by an individual or other unit of adoption” (Rogers, 2003, p. 11). In DIT, new information and knowledge are innovations, with most created in developed nations, like the United States and the United Kingdom. The flow of new information and knowledge from developed nations to developing nations is a process of diffusion of innovations. Media are the main channels through which new information and knowledge are diffused. And media globalization facilitates the diffusion across countries. DIT defines diffusion as “a process in which an innovation is communicated through certain channels over time among the members of a social system” (Rogers, 2003, p. 5), and defines the rate of innovation adoption as the “relative speed with which an innovation is adopted by members of a social system” (p. 22). This theory presumes that if the cumulative number of adopters is plotted over time, an s-shaped curve will be obtained. This s-shape curve portrays the trajectory of the innovation diffusion process. At the beginning, when only a few people adopt the innovation, the curve is relatively flat. Gradually, more people adopt it and the curve becomes steeper. As time passes, fewer and fewer people are left who have not adopted the innovation. And the curve becomes relatively flat again. When this curve reaches its asymptote, the diffusion process is finished. DIT categorizes the adopters of an innovation into five categories based on the adoption rate: innovators, early adopters, early majority, late majority, and laggards. These categories of adopters have different characteristics in terms of social status, education, financial liquidity, and attitudes toward risks and innovations. According to Rogers (2003), different innovations have different adoption rates, and even the same innovation has different adoption rates in different social systems. The DIT framework also developed the theoretical construct “critical mass”, which was defined as the point “at which enough individuals in a system have adopted an innovation so that the innovation’s further rate of adoption becomes self-sustaining” (Rogers, 2003, p. 363). Different innovations have different time points when critical mass is reached. And the same innovation has different time points when critical mass is reached in different societies. Following the tradition of DIT, many scholars advocated a free-flow paradigm of media products worldwide and argued it is the outcome of natural economic laws (Hoskins & Mirus, 1988; Hoskins, McFadyen, & Finn, 1998) and the best choice for the world (Read, 1976). Schramm (1964) explained the role of media in the social development of developing nations. Zhang (2009) explored how the knowledge flow from the developed economies to developing economies promotes the economic growth of the latter. DIT is also an applicable framework to investigate diffusion processes of various media platforms in different societies, as it expounds different diffusion curves and critical mass in these societies. Many studies on the digital divide used DIT as a theoretical framework to study the differences of diffusion of information communication technologies (ICTs) across countries (Bagchi, 2005; Billón, Marco, & Lera-López, 2009; Bohlin, Gruber, & Koutroumpis, 2010; Chinn & Fairlie, 2007; Dewan, Ganley, & Kraemer, 2005; Guillen & Suarez, 2005; Zhang, 2013, 2017). As the Internet becomes a major framework through which media globalization takes place, DIT works as a theoretical framework to study the process and issues in media globalization.

Cultural Imperialism Schiller (1976) defined cultural imperialism as the sum of the processes by which a society is brought into the modern world system and how its dominating stratum is attracted, pressured, forced, and sometimes bribed into

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shaping social institutions to correspond to, or even promote, the values and structures of the dominating center of the system. (p. 9) Many scholars employed this theoretical construct to criticize the dominance of Western/American culture and its negative effects on the dominated societies (e.g., Beltran, 1978; Desousa, 1982; Galtung, 1979; Laing, 1986). Related concepts were proposed, such as media imperialism (Boyd-Barrett, 1977), structural imperialism, (Galtung, 1979), cultural dependency and domination (Link, 1984; Mohammadi, 1995), cultural synchronization (Hamelink, 1983), electronic colonialism (McPhail, 1987), and ideological imperialism (Mattleart, 1994). Although cultural imperialism was mainly proposed and developed by European and American scholars, it evolved in the 1960s and 1970s out of Latin American dependency theory (Lee, 1980), and was the core thoughts underlying the social movements against the hegemony of Western/ American culture, such as NWICO. It also has influenced critical studies in developing nations. For example, African scholars argued that the dominance of Western culture eliminates many various cultures and worldviews (wa Thiongo, 1986), and therefore leads to identity deformation, misrecognition, loss of self-esteem, and individual and social doubt in self-efficacy in African nations (Abdi, 2000). Chinese scholars argued that Hollywood movies are spiritual opium full of sex and violence, and deprived of aesthetic value and philosophical depth, and they create an ideological illusion that endangers Chinese cultural values, replaces Chinese narrative traditions, destroys China’s indigenous film industry, and finally induces Chinese people to lose their collective national identity (Yin, 2001; Zhou, 1996). In studies of emerging democracies of Eastern Europe, Western/American movies and televisions are believed to offer an appealing alternative to the communist lifestyle behind the Iron Curtain, and undermined the ideology of these communist regimes (Nye,1990; SUNY Levin Institute, n.d.). Like other theories, cultural imperialism has survived along with criticisms. For example, Lee (1980) noted that it lacks conceptual precision. Liebes and Katz (1990) held that it does not account for an audience actively processing information and interpreting messages. Some scholars argued that cultural imperialism was applicable only to the 1970s, when it was proposed. Due to modern communication technologies enhancing the multidirectional flow of information between countries, it is no longer a useful framework (Sengupta & Frith, 1997; White, 2001). Although the media landscape has been transformed drastically by new technologies, many countries have made policies to resist American cultural products, and some countries, such as China, have implemented aggressive strategies to challenge America’s culture hegemony, the dominance of American culture in the world market has not been changed fundamentally. Cultural imperialism is still a theoretical perspective for critical scholars to criticize “Americanized” media globalization and explore the negative impacts of American culture on the cultures of other parts of the world.

Soft Power and Discursive Power The critique of cultural imperialism is concerned with the balance of power in the world system (Athique, 2016). Nye (1990) proposed a competing conceptual framework—soft power—which was defined as “the ability to get what you want through attraction rather than coercion or payments. It arises from the attractiveness of a country’s culture, political ideals, and policies” (Nye, 2004, p. x).This concept has attracted the attention of scholars across multiple disciplines and political leaders across the world because of its significant implications for international relations. Like cultural imperialism, the wide spread of soft power has been accompanied by criticisms. For example, scholars noted that attractiveness is hard to define as it is subject to persuasion and threat (Mattern, 2005), is related to

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the context (Blanchard & Lu, 2012), and depends on what third parties say (Machida, 2010). Kaldor (2014) criticized the ambiguity of this concept in that the boundary between soft power and hard power is not clear. Soft power gained rapid popularity in some developing nations in which scholars have been formerly strident critics of cultural imperialism (Athique, 2016). For example, Chinese scholars have exhibited huge enthusiasm for soft power and embrace a broader conception than Nye’s initial effort (Lee, 2016). Chinese leaders have also showed huge passion for soft power. Enhancing China’s soft power has become one of its important national strategies in recent years (Feith, 2015). With the strong support of government, Chinese media and cultural institutions have built strength in the international arena, which began to challenge the cultural hegemony of the United States. India is another country where scholars and political leaders embrace the soft power paradigm enthusiastically. They view soft power as an important resource that can project India as a plural, multicultural society and achieve the goals of political diplomacy (Shukla, 2006). India’s film industry has become the biggest in the world. Bollywood produces the largest number of films in the world, with an annual output of over 1,000 movies (Confederation of Indian Industry/AT Kearney, 2007). And Bollywood movies have a global outreach that is competing with Hollywood (Wagner, 2010). Although Nye (1990) included a media system in the framework of soft power, other scholars developed a new concept—discursive power—which is more focused on media. Van Dijk (2008) defined discursive power as the production of effects through the mobilization of specific discourses—that is, “communicative event(s), in general, and a written or oral form of verbal interaction or language use, in particular” (p. 104). Scholars believed discourse power plays a similar role as the soft power in international politics. For example, Steele (2005) stated, “discursive representations can be just as powerful as physical representations of force—because they can compel other international actors to do what they otherwise would not do” (p. 539). The conceptual frameworks of soft power and discursive power provide alternative and competing perspectives to study media globalization and its implications.They are especially useful to understand the aggressive challenges of some countries, such as China, to American’s cultural hegemony, as these countries adopted these theories as the foundation of their national strategies.These challenges will have impacts on the landscapes of media globalization and international relations as well.

A Future Research Agenda on Media Globalization Like globalization, media globalization is also a complex process that deserves exploration from multiple perspectives. Although scholars conducted many studies on media globalization, there are still many gaps that need to be filled. The author suggests the following future research agenda on media globalization from a media economics perspective: 1. The conceptualization and measurement of media globalization. Scholars have proposed multiple definitions of globalization, and developed multiple measurements of globalization without consensus.Yet these competing definitions/measurements actually promote more in-depth explorations of globalization. Media scholars have not proposed comprehensive definitions and measurements of media globalization. Efforts in this direction would advance our theoretical and empirical research on media globalization, especially from a media economics perspective. 2. The relationship between globalization and the media economy. There are many studies investigating the relationship between globalization and national economy. But there are only a few studies investigating the relationship between globalization and the media economy. The media economy is an essential part of national economy. The media economy plays a more important role in developed economies than in developing economies. Of course, measurements of

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3.

4.

5.

6.

globalization would facilitate the investigation of this relationship. Further, many countries apply strict import quotas with the aim of protecting domestic media markets. Whether these policies achieved their goals needs to be studied. The investigation of the impacts of import quotas on domestic media markets will help evaluate the effectiveness of these policies. The impacts of media globalization on national economy. Cultural imperialism overlooks the positive impacts of media globalization on developing economies. New information and knowledge created in developed countries flow to developing countries in the process of media globalization. Future research needs to explore the positive impacts of this international flow of information and knowledge on developing economies. DIT provides a theoretical foundation for this investigation. Cultural discount and its strategic implications for TRMCs. TRMCs encounter the localism issue when they enter overseas markets.They need to formulate strategies to cater to the preference of local content. The study of cultural discount provides them an applicable instrument to make their strategies workable. Future research needs to make this concept more quantifiable and investigate different cultural discounts for various types of media products. This will help TRMCs evaluate the value losses of the content produced in their headquartered countries, and determine to what extent and in what kinds of media products they should produce local content. The digital divide and the media economy. The digital divide is an important issue of media globalization as the Internet becomes a fundamental platform for the flows of media content all over the world. Future research needs to explore the relationship between Internet penetration and the media economy across countries, as well as the relationship between Internet penetration and imports/exports of media products. Soft power strategies, TRMCs, and the media economy. Some developing countries, such as China, implement national strategies to build their soft power. Their governments make huge investments in their international media. However, U.S.TRMCs have grown up through market forces instead of government subsidies. Thus, future research needs to explore whether the soft power strategies of some countries are effective in building their TRMCs and promoting their media economies.

Media globalization is an ongoing process that shapes the global media landscape. It facilitates the flows of media products across borders and the expansions of TRMCs. The spread of American culture worldwide is the outcome of media globalization, which raised the concerns of many countries and became the target of the critique of cultural imperialism. DIT and soft power are two competing frameworks of cultural imperialism, which enable us to explore media globalization from a positive perspective. Media globalization is a relatively new research area in media economics and management, and there are many new research topics in this area that deserve further exploration. Future research on these topics would advance our understanding of the complex relationships among media globalization, media economy, national economy, and soft power.

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22 CHANGES IN JOURNALISM IN THE DIGITAL AGE The Evolution of News Angela Powers and Jingyan Zhao

Journalistic operations have dramatically changed with the advance of digital technology. Where there used to be distinct news formats of print, broadcast, and electronic, there is now a convergence of digital news. Where journalists used to cover beat stories or daily assignments by interviewing sources and meeting deadlines, they are now engaging with audiences, updating news as it happens, and producing content at a speed never before experienced. This chapter addresses news as it has evolved from linear distribution to digital delivery across platforms. Changes in content and audiences are addressed, as well as changes in organizational structure and source usage. Suggestions for theoretical approaches and future research in the area of cross-platform news are also provided. According to Alejandro (2010), the process of news, which remained virtually untouched since the 1800s, is revolutionized today. While most research on the news process is concerned with legacy news operations, this chapter focuses on the shift from an era of mass media to digital and social media and its impact on the nature of news work.

Shifting Environment of News Pavlik (2000) indicated early on that digital technology was transforming the nature of storytelling and content of news. For example, the once basic inverted pyramid news-writing style of placing the most important facts in the first paragraph is becoming obsolete and context is driving story organization. Also, newspaper journalists have traditionally written lengthy, in-depth stories on politics and business, while electronic media produced news stories with visual and/or audio elements, updating audiences with breaking information. Now newspapers and broadcasters do both. Furthermore, local and national television news programs were broadcast once or twice a day, in the early evening and after prime time, which gave producers a 24-hour span to cover hard news. Similarly, most major newspapers had established early morning or afternoon deadlines, and with printing technologies of the time, journalists filed their stories hours in advance. These hard deadlines are no more. With the advent of satellite and digital news, newspapers and television stations responded to increasing competition and declining news consumers by producing more and immediate content, including multimedia content eventually for online portals (Lacy, Atwater, & Powers, 1988a, 1988b). The emergence of immediate content was also supplanted by immersive and interactive reports that gave audiences a feeling of presence at news events like never before. For example, “social media editors seem to emphasize technology and human interest stories above all, which is contrary to typical journalistic interests that favor the economy and politics” (Pavlik, 2001, p. 1). 347

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Indeed, the function and content of digital news seem to have moved past simply the telling of official news (Lăzăroiu, 2011). Weldon (2008) states journalism is about highlighting and fully representing the voices of every person in the news. Readers and consumers of news are drawn to stories of ordinary individuals and their reactions to events (Lăzăroiu, 2011). Agarwal and Barthel (2015) also found that content for story ideas often comes from personal interest, other social networks, such as Facebook, or from colleagues. Editors rarely suggest stories anymore. Instead, writers make suggestions in one-on-one conversations that take place both online and offline. Editorial meetings with all staff in attendance appear to be less common than before, especially for online journalists. Rather, journalists are in constant contact with their editors, via email or instant messaging.The daily budget meeting to decide which content to cover on any particular news day has been replaced by what can be considered as a continual, virtual meeting with the editor, facilitated by email and chat tools. Additionally, according to Andrew Smith, a former sports director at a network affiliate for more than 30 years, press releases are no longer sent by mail or fax (personal communication, January 20, 2017). Social media is the de facto press release. Social media has also enabled impartiality, verification, contextualization, and openness in news (Bélair-Gagnon, 2013). For example, the BBC generates a structure for journalists where, before publishing news, their reporters can verify and analyze social media information through apps. Also, with social media, journalists can use links, photos, audios, and videos to add contextualization to news. Combining online information gathering with traditional journalistic practices contributes to contextualization of stories (Bélair-Gagnon, 2013). In addition, the usage of social media prompts the openness and transparency of journalism and makes the process of gathering news more visible. Additionally, journalists can clarify where the source came from and acknowledge mistakes immediately with social media when mistakes are made (Bélair-Gagnon, 2013). However, while newsrooms adopt social media, such as Twitter, there is much need of improvement. For example, newspapers may use automated feeds in social media that are the same as what is in the print edition. Some television stations use their websites mainly for promotional purposes (Lin & Jeffres, 2001). Compared to local outlets, national media have a long way to go to provide greater source diversity, more connections to audiences, raise public awareness, and enhance community involvement (Meyer & Tang, 2015). From the audiences’ perspective, social media are considered as the least reliable source of content compared to online and broadcast news. “Both newsmakers and news consumers fear that social media can jeopardize the credibility and objectivity of the journalist and journalistic work” (Opgenhaffen & D’Haenens, 2015, p. 203). Live streaming has the potential to invade privacy. Sydell (2015) notes that live streaming apps also eliminate editorial pauses or time for news reflection. This news environment may also produce tension concerning who is qualified to create journalistic content. Some reporters identified as journalists if they came to online media through established news organizations or print media. However, those who had worked in online news from the start had more difficulty identifying as journalists even though their work was similar (Opgenhaffen & D’Haenens, 2015). Deuze (2005) found one journalist who said he would not call himself a journalist. Rather, he considered himself a writer and an editor who was a journalist at times. This hesitance to identify as journalists was related to the fact that the online employees did not engage in regular reporting. Interestingly, such writers had high levels of respect for traditional journalism, which was one reason they may have distanced themselves from the profession of journalist. In addition, few online journalists had formal journalism training. Instead, they learned most of what they knew on the job. Deuze (2005) argued that definitions of digital journalists driven by the web have fundamentally altered the nature of journalism as a profession. As users become producers, they have challenged the rationale for professional control over content creation. Agarwal and Barthel (2015) also found it is uncomfortable for online journalists to claim professional membership. The skills required for social 348

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media journalists, including aggregation, scanning news and information, and creating a personal newswire, were journalistic in nature; however, they were different from enterprise reporting. While online journalists indicated they felt free to work on whatever they wanted, Agarwal and Barthel (2015) found they received almost no feedback on their work. As such, online and traditional journalists are concerned about making mistakes. Many journalists have also left the news business altogether because their lives have become too transparent or because they have not kept up with new technology. Without YouTube links, for example, they may not be hired. Security is also of concern. Journalists, while sometimes “famous,” are not often wealthy and lack protection in their everyday lives. They are required to ensure that audiences know them; so, instead of just creating good news, they must form relationships and communicate with audiences. This puts journalists at risk and creates a need for judicious disclosure in social media (A. Smith, personal communication, January 20, 2017). Overall, journalists indicate they want journalistic content standards, even though such standards presented more of a challenge in an online news environment.They are concerned that the need for page views, lower budgets, and shorter attention spans may decrease quality in terms of investigative reporting and nuanced content in news. Furthermore, while some journalists prized the need to be the first to break a story, many did not.This raises the question of whether the proper goal of reporting is to produce new information or to present existing information in novel ways. Content creators as well as content consumers are addressing this question together moving forward.

Audience Changes Consumers of news have splintered significantly since the 1980s as competition increased and later as Internet, print, television, and radio activities integrated in newsrooms, providing more choices for sources of information than ever before (Picard, 1989, 2009). Changes in technology made it possible for audiences to access information of interest from any location in the world, which allowed media organizations to attract specialized audiences on a global scale, covering not only business and government news but also human interest stories (Powers, Kristjansdottir & Sutton, 1994; Powers, 2012). These changes targeting the interests of everyday citizens, as well as business and government officials, preceded and evolved into “citizen journalism” or, more recently, as examples of “news engagement,” where journalists receive and distribute information via blogs, posts, and comment sections. Audiences are active news consumers who use their smartphones to consume and create news and information (Schmitz Weiss, 2013). Research also suggests that including online and social media, such as Twitter and Facebook, in the mix allows traditional news organizations to stay current, reaching audiences in new ways and providing a wider range of choices for connectivity (Meyer & Tang, 2015). Millennials, aged 18 to 34, are the highest percentage of connected individuals and spend the most time using media.The demographics of people who access news on social media vary, with ages 30–49 predominant on Facebook and Google, while the top age group for news is 18–29 on Twitter and YouTube. These “digital natives” have grown up with technology, and, as such, live TV viewing, for example, is declining because of online options and time shifting. In response, legacy news outlets, such as CBS, are targeting younger audiences by starting their own streaming services (Ferguson & Greer, 2016). They are also attracting social media users to share stories and contribute content with legacy media. TV stations have increasing options for social media and other tools to engage their viewers to make full use of interactive technologies (Ferguson & Greer, 2016). In fact, Meyer and Tang (2015) found that when comparing local TV and newspapers’ social media content, TV had significantly more followers, more tweets, and greater audience engagement than newspapers. TV stations used hashtags more often, while newspapers attached hyperlinks and posted photos/videos more frequently in their content. While both local TV and newspapers used 349

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few promotion strategies in their tweets,TV stations were more active in cross-promotion of content than were newspapers. Additionally, in spite of the ability of Twitter to provide content continuously, newspapers still tweeted more often in the morning and during the daytime, while TV stations tweeted more in the evening. In terms of content topics, both local TV and newspapers tweeted more crime stories than any other news content. Also, local TV tweeted breaking news, weather, traffic, and crime news more often, while newspapers tweeted business, politics, entertainment, and sports news. While these findings suggested some difference in local news organizations, they often used similar content strategies for their traditional and social media products. Meyer and Tang (2015) cautioned that when traditional newsrooms used social media as an additional news distribution channel, it competed with their print product and audiences. They suggested that newspapers tweet more on weather and traffic, while local TV promote non-news for branding purposes so as to differentiate old and new media sources and avoid content duplication (Meyer & Tang, 2015). This weighs well with audiences. Schmitz Weiss (2013) found people are using their smartphones to make calls, get information, find help in emergency situations, and even to combat boredom through entertainment. The popularity of news and location-based apps for feature information in particular is growing among young adults. News organizations have the ability to offer a mobile news app that geotags live events to an exact location on a map, including concerts and road blockages as well as crime stories, accidents, fires, and assaults. Using location-based news apps enhances a news consumer’s comprehension and visualization of local news by allowing the consumer to access news at a moment’s notice with a clear understanding of its location (Schmitz Weiss, 2013). Younger audiences are also using digital media because they can be accessed for free. Ferguson and Greer (2016) address whether it is possible to get millennials interested in watching the news or reading newspapers. They found that millennials are interested in news; however, their news consumption comes from digital platforms with different content. News apps and social media are making the biggest difference in the way news is consumed, with Facebook being the top social media source of news for millennials, followed by YouTube and Instagram. In fact, social media is seen as the “local TV” of this age group when it comes to following political news. On the positive side, social networks are exposing younger individuals to news, and traditional news organizations are finding ways to incorporate them into their communication mix in order to reach younger and specialized audiences on Instagram, Pinterest, and YouTube, alongside Facebook and Twitter (Ferguson & Greer, 2016). Furthermore, social media has created an ambient system where the user receives information in the periphery of his or her awareness 24/7. Twitter, in particular, according to Hermida (2010), does not require the concentrated attention of, for example, an email. Rather, its value lies in the portrait created by a number of messages over a period of time—namely, an ambient awareness system that offers a way to collect, communicate, share, and display news and information, serving diverse purposes. According to Smith (personal communication, January 20, 2017), for audiences, it’s more about how information affects them immediately. Audiences are able to experience a roller coaster–type experience. People become addicted to consuming news and monitoring social media not only for information purposes but also for the sake of catching mistakes in reporting. Smith adds that digital news has a footprint with time stamps that can be followed (personal communication, January 20, 2017). Another audience is the live streaming of events, which has lower entry barriers compared to TV broadcasts. For traditional media, technology, signal transmission, regulation, and licensing costs contribute to high barriers to entry, and made it difficult for everyday citizens to compete in traditional broadcast video. Now the cost of distribution has declined as technology keeps developing (Stewart & Littau, 2016). YouTube is increasingly popular for making available citizen-journalist videos. The compact mobility of smartphones offered a live streamer an ease of documentation that

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traditional methods of reportage were struggling to keep up with. A smartphone with a live streaming app, paired with the Internet, was found to be better than a video camera (Lenzner, 2014). As a result of audience engagement, mainstream media are also making use of live streaming to keep up with citizen journalists. It is not only because of the mobility and lower cost of live streaming but also because of the two-way communication it allows.Viewers can leave comments as they watch, and this feedback shows up on screen on the announcer desk. This creates a type of two-way interaction, in which a camera operator can read messages and the host can respond immediately (Stewart & Littau, 2016). The engagement that live streamers cultivate with audiences is critical to the new reporting techniques and the dissemination of news. Furthermore, using social media tools, such as Instagram,Vine, and YouTube, streaming is generated in real time and requires no upload. According to Pavlik (2000), digital news has created a dialog between the press and the public. Audiences have joined in online discussions and emails with journalists and editors to discuss coverage of events, often shaping journalists’ knowledge and attitudes. In this way, no one group dominates any process of persuasion. Instead all parties influence each other in the process of civic journalism. Live streaming technologies, like Meerkat and Periscope, allow smartphone users to broadcast realtime video directly to their followers, bypassing even YouTube. Compare this to “eyewitness news” of past decades, where once people saw something happen, they would supply the source or the tip to the media; their opinions might be cited in the news but would have to be filtered through mainstream media. Few platforms of news were available to broadly disseminate information from citizens (Lenzner, 2014). Now citizen journalists have the tools to do real-time broadcasting and share the information through the Internet. Understanding the changing boundaries between consumers, contributors, and content creators is important (Wilkinson, McClung, & Sherring, 2009). Some journalists benefit from comments or reader feedback, especially in traditional media organizations.There are online editors who are proud of the commenter communities their sites have built. Hermida (2010) described this ubiquitous social media as an awareness system where journalists and consumers can immediately communicate, identify trends, and share news. Using social media, they can find stories more easily than before and then make decisions concerning which stories to follow and release. The awareness system provides journalists with an increased understanding of a story, and enables citizens to instantly add to knowledge. Traditional journalists define fact as information and quotes from official sources, which have made up the majority of news and information content. Social media, like Twitter, provide information from official and unofficial sources over a variety of systems. Agarwal and Barthel (2015) found that while traditional media organizations are defined by particular geographic areas, online publications are not. Online organizations think of the audience as national or international, often targeting their writing to a specific audience. Online journalists also think of the audience more broadly. However, since their understanding of the characteristics of readers is less defined, journalists are unclear about for whom they are writing. This has created mixed feelings about interacting with audiences, leaving some journalists pessimistic and skeptical about engagement with commenters. Unfortunately, this ecosystem “suffers from data interception, information fraudulence, privacy spying, and copyright infringement from disorganized social organizational forms and non-friendly participation bodies” (Zhang & Gupta, 2016, p. 2). Journalistic use of social media may affect basic journalistic tenets, such as objectivity, gatekeeping, and transparency (Opgenhaffen & D’Haenens, 2015). Since 2009, while Twitter began with a focus on daily chatter, it has evolved into an event-tracking platform. More followers and more reporting exist through social media, increasing both readers and journalists (Opgenhaffen & D’Haenens, 2015). While Facebook and Twitter are often used for branding and promotion, conflicts can arise when journalists relax journalistic standards on social media platforms (Opgenhaffen & D’Haenens,

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2015). Therefore, social media must be managed as a source of news, as well as a platform for journalists’ own opinions.

Organizational Changes Klinenberg (2005) found that journalists and editors in digital environments have experienced powerful transformation in their workspaces, as well as out in the field. First, within the newsroom, online communication is affecting the hierarchical chain of command. Newsrooms are flatter in structure, especially in online-only editions.The distance between top and bottom in the newsroom is reduced. While most of the organizations still have some level of hierarchy, multi-skilled online journalists are more autonomous and rely less on editors than do those in traditional newsrooms. Traditionally the newspaper was top-down, with an editor or news director exerting powerful control over the news operation, followed by other officers in the chain of command. Journalists produced news on a deadline, and their work required adherence to defined journalistic standards. Top editors and producers often determined whether a story was released. Through the newsroom chain of command, news stories were sorted and checked before distribution. Print article timelines were much longer, so they were much more thorough in terms of fact-checking and editing for the print version. In fact, in the analog world, the limits of technology made it difficult to work close to deadline without risking a mistake in the process, so stories were often submitted well in advance (Agarwal & Barthel, 2015). In addition, unionized workers often constrained the production of news, performing production and editing adhering to union rules, especially in large markets. These rules are going by the wayside. In the new media newsroom, journalists have become more flexible as companies break down the division of news labor.The primary working relationship in the online newsroom is between the journalist and the editor, and the relationship is rarely hierarchical in the traditional sense. Online journalists often work independently and conduct much of their own newsgathering (Singer, 2004). Journalists also move freely between print, television, radio, and Internet outlets, changing the workflow throughout the news organization. Also, news must be produced much faster, and the number of stories produced each day is much higher. This fast pace of publishing involves a large amount of aggregation, especially in online and social media. Online journalists indicated that often their primary duty consisted of posting short, 150- to 300-word reports regularly throughout the day. To facilitate this workflow, journalists are required to produce continuous text, video, or multimedia coverage. Fortunately, the Internet provides journalists increased access to multiple sources and the ability to contribute new information instantaneously through platforms such as Twitter, YouTube, and Facebook. Social media provides journalists with access to multiple information sources they might never have been able to identify or access previously. Journalists are performing multiple editorial or production operations in the digital environment throughout the news day. Additionally, online tools make it possible to work right up to deadline (Pavlik, 2000). As such, Fisher (2009) identified changes in newsroom skills. Hiring qualifications include knowing how to use a smartphone to report, on-air abilities, cloud-based reporting, social media monitoring skills, and audience engagement skills, as well as the basics of writing, interviewing, and production. Some use smartphones, for example, and see them making a positive difference in news reporting. News apps on phones are becoming routine and enhance live reporting (Schmitz Weiss, 2013). Whereas journalists used to need a satellite truck, they can report immediately using their smartphones or notepads. Position descriptions are evolving as well, such as the newsflow editor, who ensures that each media platform is more than an afterthought, and the best ones are used to tell a story most effectively. The storybuilder manages a number of multimedia stories, filing those stories directly or making them

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available to other media-specific news desks. A news resourcer specializes in information, providing background, depth, and context to stories in any platform. A multi-skilled journalist looks at all elements of a story, from the written article in a newspaper to the photo essay on the web and crafts a story in the appropriate formats for the best delivery method (Fisher, 2009). Personnel in these positions must innovate as well as maintain existing operations in order to compete. Strategic planning includes increasing interactivity by forming communities among readers and viewers. New publishing formats are interactive, blurring the boundaries between production and consumption ( Järventie-Thesleff, Moisander, & Villi, 2014). Many services online are based on spontaneous initiatives and innovations from the editorial staff. Intuitive decision-making instead of lengthy analysis and planning is needed. The role of the editorial staff is to act as stimulators and inspirers that enable the organization to better recognize and meet new market demands. JärventieThesleff, Moisander, and Villi (2014) suggest newsrooms pursue incremental innovations, however, that let them operate more efficiently and deliver ever-greater value to their customers. At the same time, they must come up with radical innovations in order to compete. New media technologies have also changed the way journalists determine what consumers see and hear about society (Singer, 1998). There is more frequent communication between newsroom personnel and audience members, via emails, comment sections, and social media. This has also created a shift from individualistic to team-based, participatory multimedia journalism. Agarwal and Barthel (2015) found “multiskilling” to be an integral part of the newsroom. The work of journalists is platform-independent, and they are expected to work together to promote it (and themselves) through social media. With the rise of digital technology and social media, the industry is more obsessed than ever with speed, forcing journalists to publish content online quickly at the expense of accuracy (Reinardy, 2010). As such, the contemporary news cycle has become increasingly faster (Fisher, 2009). According to Smith (personal communication, January 20, 2017), breaking news follows an evolved and defined pattern: 1. Journalists post on Twitter while on the way to a story. Newsrooms fact-check the story and retweet the journalist’s post. 2. Observers at the scene with smartphones post and send video to news outlets. This video is put online immediately. 3. News journalists arrive on the scene and begin taking pictures, which are posted to the news outlet’s website, Twitter feed, Facebook, and so forth. Hundreds of “likes” appear on the Facebook feed. 4. Press conferences go directly on Facebook Live, and all can access as it takes place. There is no longer a need to interrupt regular programming. 5. Anchors/editors begin editing and putting teases on air, the website, and Facebook. 6. Before the televised newscast or newspaper comes out, already the following has been generated and posted: short videos, user-generated content, photo essays, and retweets. Journalists are doing all the heavy lifting of putting materials out through social media. 7. By the time of the newscast or newspaper delivery, people who don’t use social media will read or watch the story. 8. Follow-up occurs the next day and the story continues to live on Facebook and other social media. According to Murley (2009), the most important contribution of this digital process has been their ability to infuse new and different voices into news. More than 80% of American journalists now have a blog or a personal Twitter account that is part of their daily work routine. Lee (2015) found that Twitter is widely adopted in mainstream newsrooms for distributing breaking news

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events. Journalists indicated that Twitter was useful for eyewitness accounts, public meetings, courtroom talks, trials, natural disasters, and for finding potential sources. Smith (personal communication, January 20, 2017) cautions that journalists must treat social media like any other source, however, and get a second opinion. Unfortunately, news organizations have turned into single-source news organizations.While there is a need to follow tweets (e.g., those of a president), the legalities must be taken into consideration. While Twitter verifies tweets, it may not actually be known who is behind the words. When asked about their impression of how audiences use Twitter, many journalists did not know. However, they indicated their Twitter followers were mostly other journalists. Lee (2015) suggested that technological availability did not narrow the gap between news producers and audiences but did make audiences more useful as a source of quick information. In addition, respondents indicated they believed that Twitter made a news organization seem more trustworthy because they were reaching out to news audiences through social media. These changes have produced a different set of professional norms, where online journalists tend to be more focused on getting the story out quickly than they are on standards of objectivity (Agarwal & Barthel, 2015). They are less tied to the needs and perceptions of sources than they are to their audience. In general, online journalists are engaged in a balancing act: on the one hand, they are suspicious of the institutional prestige seized by traditional journalists; thus, they seek their own forms of credibility and legitimacy based more on the audience rather than long-standing norms. On the other hand, they draw from the established prestige and efficacy given to traditional journalists. Overall, journalists, and especially traditional journalists, are increasingly frustrated by the additional demands of the newsgathering process, according to Franklin (2014). Deuze (2005) adds that the operating environment of media companies is in a state of continuous change and turmoil, which increases the level of frustration. The new online platforms, devices and channels lead to increased workloads. While journalists have always worked on deadlines to meet demanding production and distribution schedules and have hastily written news stories, they were not on a 24/7 news cycle.This news cycle in the digital age has spun into an erratic and unending pattern Franklin (2014) calls a news cyclone. With 24-hour television news and Internet sites to fill, temporal borders in the news day have been eliminated, creating an environment where there is always breaking news to produce and consume. The leadership styles of news managers play a key role in motivating journalists to keep up with change. Managers who are able to equip journalists with new skills are better able to achieve organizational goals, including quality news, enterprise reporting, and ratings (Powers, 1991). However, little is known about how media organizations develop new strategies and manage in multi-platform environments ( Järventie-Thesleff, Moisander, & Villi, 2014). “For the organizations that we studied, this seems to mean that the speed with which they are investing in the online and mobile operations can sometimes surpass the speed with which customers are ready to adopt the new solutions” ( Järventie-Thesleff, Moisander, & Villi, 2014, p. 132). As such, management of continuous change becomes a major challenge for strategy development ( Järventie-Thesleff, Moisander, & Villi, 2014). Time compression additionally causes stress and pressure. Development of online and mobile operations certainly involves uncertainty. According to Powers (2006), overcoming resistance to these news production schedules, however, can lead to higher levels of quality content and media convergence in digital newsrooms. Furthermore, journalists in more advanced digital newsrooms can be more satisfied with their work, especially when they are involved in making decisions and learning new skills, such as reporting on air, aggregating news, engaging with audiences, and expanding their audience influence. Singer (1998) also found that journalists have adapted over time and are positive toward an agile news environment and flexibility in online journalism. They viewed frequent updates as a great strength and increasing opportunities of branding for media outlets. 354

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Source Changes Journalists have all the technology they need in their pockets to report from the news scene. Within thirty seconds, interviews, pictures, and the accompanying story can be on the web. Facebook is seen as a place to gather information and engage with readers. Journalists generate story sources by posting questions and asking people to respond with their own experiences. Online journalists also use Twitter as an instantaneous opportunity to participate in breaking news and have a continual presence (Agarwal & Barthel, 2015). Research also indicates that journalists obtain sources using a portfolio of channels, including face-to-face encounters, scheduled meetings, two-person telephone calls, emails to one person or several, as well as broader online discussion groups. Reich (2013) explored the role of technology in news reporting and sources and found that technologies are radically changing news resourcing.The three channels most valued by journalists from 11 European countries were face-to-face encounters, telephone conversations, and search engines (Reich, 2013). However, Reich’s findings also indicated a rising pattern of multichannel communication. Information from the same source was obtained through more than one communication technology. Despite the inroads of social media, however, television news reporting was found to be “particularly rich, involving more spatial coverage, more sources per item and less reliance on fixed sources” (Reich, 2016, p. 565). Pavlik (2000) found journalists first sought to reach sources for breaking stories; however, if unsuccessful, they usually turned to company websites next for information. During nonbusiness hours, or when live sources were not available, websites were playing a significant role as sources of information. While live sources remained journalists’ biggest source of story ideas, according to Hermida (2010), most journalists indicated they were using the web for gathering images and other materials that had to be delivered physically to the newsroom in past decades. The growth of online sources suggested that a future direction for journalism may be to help the public maneuver the collection and transmission of news and bring meaning to the data. Such systems rely on journalistic interpretations. Furthermore, third-party apps, for example, were found to be useful in narrowing social media, such as Twitter hashtag followings. Because of the time it took journalists to put together good Twitter lists, they often found it quicker to follow a list that someone else curated. Edge (2014) points to several that have become increasingly popular with journalists: Storyful provides public lists to cover breaking news. Electionista has Twitter lists for many countries in the world. Tweetminster addresses UK politics. Google is used to search for lists on specific topics. Hootsuite and Tweetdeck are used for monitoring Twitter feeds. Facebook Groups help journalists discover what is happening within a community. Banjo for Media Journalists organizes the world’s social and digital signals by location and provides mapping tools. 8. Signal, owned by Facebook, is useful for trending data and for searching Facebook and Instagram. 9. Instagram Search allows journalists to search by hashtag, location, or username.

1. 2. 3. 4. 5. 6. 7.

Secret (2016) also finds the following social media tools help journalists source information: 1. First Draft News is useful for verification and ethics. It provides articles, guides, case studies, and online training courses from many of the leading experts. 2. The EyeWitness Media Hub focuses on research and guidance to journalists using eyewitness reports from social media. 3. The NewsWhip blog provides examples of news organizations using social media. 355

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4. The Facebook group along with Facebook media page provides advice on best practices. 5. The Local Fix is an email of articles with a focus on local reporting. Opgenhaffen and D’Haenens (2015) analyzed social media guidelines and they found that some news organizations required journalists to differentiate their personal online accounts from their professional ones. Other news organizations required the use of one single account for both private and professional purposes but did not allow employees to tweet about personal opinions on their professional account. Rather, journalists had to clearly state whether they were speaking in their own name or on behalf of the organization (Lasorsa, 2012; Molyneux & Holton, 2015). The authors also found that some guidelines stated that a journalist must not express personal opinions on controversial topics or insult anyone, and must consider the way posts will reflect on their employer. At the same time, journalists were also expected to encourage the public to interact and contribute news (Opgenhaffen & D’Haenens, 2015). According to Smith (personal communication, January 20, 2017), most media outlets have a social media strategy, and these were identified online as a “one sheet,” a social media mission statement, or a social media filter. Some also have a social news manager or executive producer to address social media issues to ensure journalists are responsible and align with the mission. With unverified social media sources, the accuracy of news is of particular concern. As the time cycle for reporting news is sharply compressed, gatekeeping and filtering procedures are also decreased. Journalists at contemporary organizations rarely encountered situations in which their work was highly edited by others, as in the past. Rather, according to Weaver and Willnat (2016), only about 20% of journalists said they used social media to verify information and interview sources; 78.5% of journalists surveyed indicated they used social media merely to check what other news organizations were doing. This can have unfortunate consequences, including the rapid spread of fake news. Benton (2016) found fake news can generate twice the amount of exposure than does noting a story is fake.The author advocated hiring a team of journalists to separate the worst of the fake news from the stream. To further avoid publishing fake news, Jenkins (2017) indicated the need for journalists to identify experts with provable experience in the field. Jenkins also encouraged journalists to first look for whether a piece is quoting someone with few ties to the situation being discussed. Second, when stories are based on a different story, click through and read that source. Third, find the original report and original sources. Benton also suggests reporters be wary of using information from websites that have odd domain names and nonstandard domain extensions. In addition, use of all capital letters or generally odd use of language may be suspicious. Furthermore, when a site opens improperly or seems to be amateurish, it may be fake. According to Jenkins (2017), most newspapers, TV news sites, magazines, and online news brands are legitimate; however, constant vigilance is needed. One good way to combat misinformation, nevertheless, is by reading a range of sources, especially on the stories that seem too good, terrible, or amazing to be true. This media literacy is useful not only to identify any bias from one outlet or another but also to provide a fuller picture. Journalists are able to access different sources, thus getting a more complete story by seeing a variety of perspectives. Fortunately, with advances in social media, journalists are able to identify misinformation and fake news more promptly. With instantaneous access, along with curation tools, journalists have better sourcing and better story material (A. Smith, personal communication, January 20, 2017). In some cases, social media allow journalists to tell stories that would not otherwise be told. With Google Trends, for example, journalists can select a country from which to see a category of data, such as health or science, and explore any search term going back as far as 2004. Google graphs are embeddable, and the information is further broken down by country, region, and associated searches. Using sources such as Google Trends potentially makes for more detailed reporting on a greater variety of 356

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subjects of interest to the public. One guideline for erroneous information in BBC reporting is that, instead of deleting the wrong news, tweet another news story to acknowledge the mistake or add new information to the original one (Bélair-Gagnon, 2013). Agarwal and Barthel (2015) caution that in this environment, journalists can lose sight of the ideas of objectivity and neutrality. Some journalists, in fact, indicate that objectivity is phony and an old habit. They rejected the idea of credibility as being established through institutional routine and express less concern about information unreliability, a lack of objectivity, and privacy issues in return for the high immediacy of information that audiences desire.This calls for a reframing of journalistic theory.

Theoretical Approaches to Digital News Research In the digital age, better methods of understanding, along with an interdisciplinary approach, are needed to reassess mass communication theories in order to come to a greater understanding of the process of journalism. According to Steensen and Ahva (2015), journalism research can be divided into four areas. First, normative research is concerned with what journalism ought to be and how primarily individual journalists should do their job. Second, empirical research shifts the attention from the individual to the organizational, including Breed’s (1955) early study of social control in the newsroom. Third, sociology of news concerns the analysis of the conventions and professional cultures of journalism, including the economic organization of news, the political context of news making, the social organization of news work, and cultural approaches (Schudson, 2003). The fourth area concerns international research and the global and digital nature of information systems, including the dissolving of borders between local, national, and global markets. In addition, there is a blurring of lines between public and private organizations, along with mass and specialized communication. Drawing on these four areas, news research calls for refinement of theory to address a digital world. Theories including agenda setting, media systems, news values, and gatekeeping dominate theoretical approaches in mass communication research of news organizations; however, technology and economics are more often influencing journalism and call for more scholarly attention (Steensen, 2011). In addition, philosophical perspectives, such as ethics and objectivity, are becoming increasingly important. Schmitz Weiss (2013) suggests the theory of reasoned action helps identify behavior-based variables, such as beliefs, values, and attitudes, of performing a specific task. The theory of planned behavior relates these variables to the adoption of communication technologies, while the technology acceptance model examines how computer technology is adopted based on its perceived usefulness and the user’s intentions and attitudes. Schmitz Weiss (2013) also suggests the diffusion of innovations theory as another approach to examining innovation because it seeks to describe how, for example, the smartphone is being adopted by young adults and news organizations utilizing apps. Swasy (2016) adds it is helpful to look at what other scholars have done with the diffusion of innovation theory and the study of innovations in newsrooms. Scholars such as Singer (2004) have used the theory to judge the impact of technological changes, such as convergence between local newspapers and television stations and increased use of online databases. The author adds that diffusion theory could analyze how Twitter, for example, is viewed and used, how it is spread among colleagues, how long the process takes, and the role of opinion leaders in that process. Drawing from a theoretical underpinning, many questions arise related to digital news. Pavlik (2000) posed a number of research questions early on. How are journalists using feedback online? How is newsroom quality affected? Is the line between advertising and editorial further blurred? How is storytelling changing? Has international news interest increased? How are business models further changing? Such questions are as relevant today as they were in 2000.

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Lee (2015) and Corcoran (2017) ask whether implementing structured social media interactions encourages engagement of news consumers since videos on Facebook Live were increasingly used by publishers. Future research could also survey promotion managers regarding their use of free media to promote station programming and news talent. Other future research could measure viewers’ self-reported preferences for social media content and mobile apps downloaded from local stations. It would be interesting to compare the habits of millennials to more traditional viewers, similar to the work of Ferguson and Greer (2016). In fact, most of the research reviewed in this chapter warrants studies of replication. For example, Meyer and Tang’s (2015) comparison of the social media mix for purposes of promotion would be useful to review. Agarwal and Barthel’s (2015) findings of sources of story ideas in the digital age have no doubt evolved. Deuze’s (2005) definitions and qualifications of journalists are continuing to change. The possibilities of theoretical research of news in the digital age will continue to grow.

Conclusion Moving from analog to digital news has created an awareness system and a shift in the process, consumption, and understanding of news and information.Technology has become embedded and often invisible in people’s lives. Social media as an asynchronous awareness system informs, as well as misinforms, but does not hinder our ability to seek out and use news for more depth and understanding. This ambient journalism, as coined by Hermida (2010), allows for more awareness of news events and a greater need for analysis in the years ahead. This increased output of information along with social media and video not only has increased awareness but also is leading to higher levels of engagement, as well as increased workloads and routines for journalists. With Facebook and the likes heightening their own news profiles, while at the same time providing increased revenues to publishers, research on diversified news audiences becomes critical. Despite the fact that legacy media are still driving the most news traffic and creating impact, newer platforms are gaining importance while others are fading away. Clearly, as indicated in the chapter, the largest influence is from Facebook, followed by Instagram, Snapchat, and Twitter. Interestingly, Corcoran (2017) calls for future research on Facebook’s reasons to dominate as a media distribution platform along with its other subsidiaries, such as WhatsApp and Instagram. Clearly, more knowledge is needed concerning the extent to which traditional journalistic routines will hold relevance and impact society in the way they have for the past 200 years; therefore, future research in this area is critical to sustain a free press and robust flow of information. The progress of journalism studies will be based on new theories and modifications of older theories, toward the sustainability of a robust and free press in a digital age.

References Agarwal, S. D., & Barthel, M. L. (2015). The friendly barbarians: Professional norms and work routines of online journalists in the United States. Journalism, 16(3), 376–391. Alejandro, J. (2010). Journalism in the age of social media: Reuter Institute fellowship paper. Reuters Institute for the Study of Journalism. Retrieved from https://reutersinstitute.politics.ox.ac.uk Bélair-Gagnon, V. (2013). Revisiting impartiality: Social media and journalism at the BBC. Symbolic Interaction, 36(4), 478–492. Benton, J. (2016). Get serious about getting rid of fake news: Hiring editors at Facebook is key to the health of our information ecosystem. Nieman Reports, 70(4), 38(2). Breed, W. (1955). Social control in the newsroom: A functional analysis. Social Forces, 33(4), 326–335. Corcoran, L. (2017). Five charts that show where social publishing is going in 2017. NewsWhip. Retrieved from www.newswhip.com/2017/01/social-publishing-charts-2017.

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PART IV

Analytical Tools in MME Research

23 METHODOLOGICAL APPROACHES IN MEDIA MANAGEMENT AND ECONOMICS Michel Dupagne Background This book chapter will uncover key methodological features of media management and economics articles published in the International Journal on Media Management and the Journal of Media Economics from 2004 to 2016 and extend a similar content analysis that Beam (2006) and Hollifield and Coffey (2006) conducted from 1988 to 2003 for the first edition of the Handbook of Media Management and Economics (thereafter, Handbook). Specifically, it will investigate the units of analysis, data collection methods, sampling approaches, and statistical analyses used in these scholarly media management and economics studies. Thus, it is not the purpose of this chapter to review systematically all the qualitative and quantitative research procedures, including sampling, data collection, and analytical techniques, that could be used by media management and economics authors.This lengthy description is available in many research method textbooks (e.g., Babbie, 1986; Berg, 2007; Wimmer & Dominick, 2014) and in specialized methodological books (e.g., Fowler, 1993; Neuendorf, 2002;Yin, 2003). In fact, Doyle and Frith (2006) suggested that the quantitative tools used in media management and economics research are the same as in any other field, such as management, economics, marketing, sociology, and psychology, even though the topic of investigation focuses on the media business. But whenever appropriate, the importance and challenges of some methodological procedures will be highlighted. Furthermore, articles from the media management and economics literature will be selectively referenced in the text as exemplars of specific research practices. This additional content will amplify the results of the content analysis. It is common practice for many academic disciplines, including mass communication (see Cooper, Potter, & Dupagne, 1994; Kamhawi & Weaver, 2003; Potter, Cooper, & Dupagne, 1993; Trumbo, 2004), to investigate the methodological characteristics of research articles published in peer-reviewed journals. But beyond interesting statistics, what are the unique contributions of these periodic methodological self-examinations for the community of students, beginning researchers, and established scholars interested in media management and economics? Why should they pay attention to the research practices of their peer-reviewed literature? There are at least three reasons to be genuinely concerned about this issue. First, given the emergent and interdisciplinary nature of media management and economics research, in comparison with the more traditional and mature academic disciplines, it is vital to document the current methodological status of our scholarship to help us understand the primary methodological expectations and standards of published research in

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our field. Given the diversity of the mass communication literature, we could reasonably expect that such a variety would be reflected in the operational elements and epistemological traditions of media management and economics research. Moreover, it has yet to be determined whether the research practices of management and economics study have somehow influenced those in the narrower area of media management and economics. In other words, are methodological features of research articles in media management and economics journals similar to or different from those in management and economics journals? For instance, Scandura and Williams (2000) coded articles from three highly rated management journals in 1995–1997 and found that the most widely used research strategy was the qualitative field study with primary data (41%), followed by the qualitative field study with secondary data (27%) and the formal theory/literature review (19%). In addition, 86% of these articles were cross-sectional, and 42% used linear regression techniques for data analysis. With regard to peer-reviewed economics journals, rare are the studies that have analyzed the content of these journals beyond rankings and impacts. One notable exception has been Sutter and Pjesky’s (2007) study that examined the number of nonmathematical research articles in ten leading economics journals in 2003–2004. They concluded that only a fraction (1.5%) of the analyzed articles were really devoid of mathematics. Second, scholarship is not a static process, and the selection of the methodological procedures in media management and economics research may change over time. Such development, if documented in the content analysis ahead, would enable researchers in our field to recalibrate their expectations. Scandura and Williams (2000) pointed out that a content analysis of research practices “may inform us of whether methods are becoming more standardized or more diversified over time” (p. 1248). For instance, the percentage of experimental studies in the Journal of Personality and Social Psychology jumped from 30% in 1949 to 87% in 1969, affirming the methodological supremacy of experimental design in psychological research by the late 1960s, at least in this leading psychology journal (Higbee & Wells, 1972). On the other hand, in a recent content analysis of four advertising journals, the percentage of articles using quantitative methods remained at a high 90% from 2001–2005 to 2011–2015, but the percentage of experiments soared from 32% to 51% between the two time periods (Chang, 2017). In the Scandura and Williams (2000) study, the percentage of the sampled management research articles that relied on secondary field study data rose from 16% in 1985–1987 to 27% in 1995–1997, but the use of survey research and laboratory experiments dropped by about 50% within these ten years. In the same vein, noticeable changes occurred in the data analysis techniques of these management articles, with a statistically significant increase in the usage of linear regression, structural equation modeling, and time series analysis and with a statistically significant decrease in analysis of variance techniques (Scandura & Williams, 2000). Another study of advertising journal articles revealed that the percentage of descriptive statistics declined from 44% in the 1980s to 33% in 2010 while the percentage of regression-based articles grew from 10% to 14% during these 31 years (Yoo, Joo, Choi, Reid, & Kim, 2015). Given the major disruptive changes that the media industry has experienced in recent years (see Mierzejewska & Shaver, 2014), it would be reasonable to anticipate, for example, that more case studies of new media firms or more quantitative studies connected to financial and competition trends will be published in media management and economics journals. This chapter will refer to some methodological results from the content analysis of the 1988–2003 media management and economics research articles by Beam (2006) and Hollifield and Coffey (2006) in the first edition of the Handbook. Third, ideally, content analyses of published research studies should identify methodological shortcomings, if any, and perhaps recommend remedies for future research, or at least initiate a constructive dialogue between scholars about these issues. Admittedly, the latter expectation is a tall order in any field, including media management and economics. For instance, Potter et al. (1993) stated from their content analysis of eight communication journals between 1965 and 1989 that “[i]f the 364

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elements of that criterion [of success] are a theoretical orientation and quantitative data gathered in a probabilistic manner so as to insure representativeness, then very little (only 36 studies or 4.3%) of so-called ‘social science’ research [in mass communication] is scientific” (p. 332). This assertion was subsequently debated in both Communication Theory, the journal in which the article was originally published (e.g., Sparks, 1995), and the Journal of Broadcasting & Electronic Media (e.g., Courtright, 1996). Perhaps a better example of potential positive change involves the use and computation of intercoder reliability (i.e., percentage of agreement between coders) in content analyses published in communication journals. Of course, it would be inappropriate to draw any causal conclusion from the narrative ahead. Communication researchers found that intercoder reliability was reported in only half of the articles published in Journalism & Mass Communication Quarterly in the 1970s and 1980s, but that percentage rose to 75% by 2010–2014 (Lovejoy, Watson, Lacy, & Riffe, 2016; Riffe & Freitag, 1997). Furthermore, for the same journal, the percentage of content analyses using chanceadjusted reliability coefficients instead of simple agreement increased from 8% in 1985–1989 to 75% in 2010–2014—a rather impressive transformation in content analysis methodology.

Methodological Characteristics of Media Management and Economics Research For this chapter, the author coded seven methodological variables in all research articles published in the International Journal on Media Management (IJMM) and the Journal of Media Economics (JME) from 2004 to 2016 (13 years): (1) unit of analysis; (2) methodological approach; (3) primary data collection method; (4) use of case study; (5) primary sampling approach; (6) highest level of statistical analysis; and (7) primary type of statistical analysis. The categories for these variables are listed in the result tables ahead. Therefore, the unit of analysis was the research article; book reviews, bibliographies, invited essays, and comments were excluded from the analysis. For all intents and purposes, the number of units (N = 336) represents a population. IJMM and JME were selected for this analysis because they are the primary dedicated peer-reviewed journals in media management and economics and have been published continuously from 1988 and 1999, respectively. The author accessed and printed the full text of all IJMM articles from EBSCOhost Communication & Mass Media Complete and Taylor & Francis Journals Complete. Nearly all coded JME articles originated from the author’s private collection; the missing issues were obtained and printed from EBSCOhost Communication & Mass Media Complete. The findings will be reported at both the aggregate (for both journals combined and for the entire 13-year period) and the semi-aggregate (for each journal and for each separate subperiod) levels to allow journal and time frame comparisons. The entire period of analysis was divided into two approximately equal subsets, 2004–2009 (six years) and 2010–2016 (seven years), to gain insights into possible methodological shifts.

Units of Analysis Most of the coded articles contained a single unit or level of analysis, but a few had more than one. In those cases, further determination based on the respective importance of each unit in the article was necessary to ascertain which one should be considered the primary unit. The same operational approach was used to determine the primary categories in the event of multiple sampling approaches, data collection methods, or types of statistical analysis. Among all research articles, the most recurrent unit of analysis was the individual (32%), followed by the content/product (22%) and the firm (22%; Table 23.1).There were noticeable differences between the two journals, with IJMM articles focusing mostly on individuals and firms and JME articles emphasizing individual and content-related issues.

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Michel Dupagne Table 23.1 Primary units of analysis used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2016. Unit

IJMM %

JME %

Total %

Individual Content/product Firm Market Industry Country Household Time N

41.2 13.0 29.4 6.8 7.9 1.1 0.6 0.0 177

22.0 32.7 13.8 11.3 8.8 7.5 1.9 1.9 159

32.1 22.3 22.0 8.9 8.3 4.2 1.2 0.9 336

Note:The percentages are ordered from the highest to the lowest based on the Total column results. N = number of research articles in the analyzed journals. Table 23.2 Primary units of analysis used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2009 and 2010–2016. Unit

2004–2009 %

2010–2016 %

2004–2016 %

Individual Content/product Firm Market Industry Country Household Time N

27.3 15.9 27.8 10.8 10.8 5.1 0.6 1.7 176

37.5 29.4 15.6 6.9 5.6 3.1 1.9 0.0 160

32.1 22.3 22.0 8.9 8.3 4.2 1.2 0.9 336

Note: The percentages are ordered from the highest to the lowest based on the 2004–2016 column results. N = number of research articles in the two analyzed journals for each period.

Table 23.2 shows that the percentages for all units of analysis varied across time. Media management and economics articles prioritized research at the individual and content level in 2010–2016 more than they did in 2004–2009. But the study of media issues at the firm level attracted more interest in 2004–2009 than in 2010–2016. In the first edition of the Handbook, Beam (2006) reported that, among all primarily quantitative research articles in the combined IJMM and JME from 1988 to 2003, the firm was the most favored unit of analysis (37%), followed by the market (18%) and the individual (12%). If we were to restrict the current content analysis to quantitative research articles only, the 2004–2016 dataset would indicate that the “individual” category (34%) was the most prevalent unit of analysis, followed by the “content” category (26%) and the “firm” category (19%). It should be noted, however, that, unlike Beam (2006)’s content analysis, the present content analysis used a single category for all forms of content. Therefore, these earlier and later results are not directly comparable.

Methodological Approaches As in the first edition of the Handbook, this section begins with a brief discussion to clarify the distinction between quantitative and qualitative inquiry or traditions in the context of media 366

Methodological Approaches

management and economics research. It is beyond the scope of this chapter to delve into the philosophical grounding and merits of different paradigms in communication or other social sciences (see Guba, 1990; Potter, 1996; Potter et al., 1993).Yet, despite some degree of abstraction, the assumptions listed in Table 23.3 remain valuable to delineate the parameters that have shaped the quantitative and qualitative schools and engendered the distinct empirical procedures that researchers use today. Perhaps it could be more useful to apply this basic framework to media management and economics through an example. For instance, let’s assume that a quantitative researcher is interested in investigating the predictors of job satisfaction among 500 social media managers. It is likely that she or he would follow a deductive reasoning by grounding the study into one or more theories about job satisfaction and formulating relevant hypotheses.The researcher would make the research process as objective as possible to prevent personal biases from influencing the research outcomes and derive explanations that could apply to different contexts. Thus, the survey questionnaire would likely be standardized, and the sample of social media managers would be randomly selected from an exhaustive (ideally) and representative population list to enhance external validity. Ontologically speaking, we would assume that any quantitative researcher could achieve the same results through replication because there is a single, independent reality about a phenomenon that is not observer-dependent. The results of the study would be reported in a statistical format. On the other hand, a qualitative researcher might seek to understand the reasons for positive or negative job satisfaction among the same social media managers by recruiting as few as eight respondents (McCracken, 1988) and asking them semi-structured questions punctuated by probes in a series of in-depth interviews. The relationship between theory and data would be largely inductive and would be guided by some research questions. She or he would not attempt to generalize the results beyond the selected interviewees and would accept the notion that different qualitative researchers could perceive different realities, influenced by their own background, about the study of job satisfaction. Thus, the qualitative researcher would argue that that reality exists only through the eyes of an observer and that its interpretation is inherently subjective. Unlike its quantitative counterpart, qualitative research posits no separation between the investigator and what is being investigated (e.g., individuals; see Smith, 1983). Charmaz (2014) explains: “If, instead, we start with the assumption that social reality is multiple, processual, and constructed, then we must take the researcher’s position, privileges, perspective, and interactions into account as an inherent part of the research reality” (p. 13). Lindlof and Taylor (2011) even go as far as saying that “[qualitative researchers] do not use

Table 23.3 Basic ontological, epistemological, and methodological assumptions of quantitative and qualitative inquiry. Assumption

Quantitative inquiry

Qualitative inquiry

1. Nature of reality 2. Research process 3. Role of values 4. Logical reasoning 5. Goals 6. Setting 7. Questions 8. Sampling 9. Generalization 10. Analysis

Single, independent reality Objective Value-free Deductive Explain and predict Artificial Closed-ended Probabilistic and large Yes Reductionistic and statistical

Multiple, socially constructed realities Subjective Value-bound Inductive Understand, interpret, and critique Naturalistic Open-ended Nonprobabilistic and small No Contextual and nonstatistical

Source: Adapted from various sources, including Lincoln and Guba (1985), Lindlof and Taylor (2011), Potter (1996), Smith (1983), and Wimmer and Dominick (2014).

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methodological instruments. They are the instrument” (p. 9). The findings about the job satisfaction of social media managers would be reported in a contextual narrative. Even though the quantitative-qualitative duality has the advantage of being relatively simple to operationalize, there exist other worldviews or epistemological traditions in social sciences (see Potter et al., 1993). For instance, Morgan (2007) has recently proposed an alternative approach to the dual quantitative-qualitative perspective: the pragmatic approach. For recall, the philosophy of pragmatism posits that “[t]he true is the name of whatever proves itself to be good in the way of belief ” (James, 1907, p. 24). Perhaps this latest methodological perspective might be particularly suitable to the needs and aspirations of media management and economics researchers who use triangulated methods for applied or theory-based contributions. Triangulated or mixed research usually involves the combination of both qualitative and quantitative methods in the same study or project (see Wimmer & Dominick, 2014). According to Morgan (2007), this “third way” would resolve the arbitrariness of choosing either a qualitative or quantitative approach based on the assumptions just mentioned (Table 23.3), whose values seem extreme (e.g., either objective or subjective), even though, in practice, they may often vary along a continuum (e.g., most artificial to most naturalistic). The pragmatic approach relies on three main characteristics: abduction, which emphasizes moving back and forth between induction and deduction instead of using an induction-deduction dichotomy; intersubjectivity, which emphasizes shared meanings instead of using a subjective-objective dichotomy; and transferability, which emphasizes applying knowledge to other settings instead of using a generalization-context dichotomy (Morgan, 2007). Despite good faith efforts, such a consolidated approach may satisfy neither quantitative nor qualitative media management and economics scholars who believe that the assumptions of quantitative and qualitative inquiry (Table 23.3) are distinct from one another (e.g., McCracken, 1988) and, therefore, cannot be reconciled through rapprochement. So what did the empirical results of the present content analysis reveal about methodological approaches? From 2004 to 2016, quantitative research/data remained the dominant methodological focus in the two analyzed journals, with 70% of all articles embracing this approach exclusively (Table 23.4). During the same period, 25% of the articles were purely qualitative. Mixed research accounted for the remaining 5% of this literature. If we consider the two journals separately, the methodological differences are even more striking: 91% of the JME articles were quantitative, whereas the IJMM articles were split 51%-41% between quantitative and qualitative methods. Table 23.5 shows that the percentage of quantitative articles in both journals rose from 65% in 2004–2009 to 76% in 2010–2016, while the percentage of qualitative articles dropped from 30% to 19% between the two subperiods. By comparison, Beam (2006) reported that about 46% of all articles published in IJMM and JME between 1988 and 2003 were quantitative, about 24% were qualitative, and about 12% relied on mixed methods.Thus, it is clear that published media management and economics research in these journals has become more quantitative in nature. Table 23.4 Methodological approaches used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2016. Approach

IJMM %

JME %

Total %

Quantitative Qualitative Both N

51.4 41.2 7.3 177

90.6 6.3 3.1 159

69.9 24.7 5.4 336

Note:The percentages are ordered from the highest to the lowest based on the Total column results. N = number of research articles in the analyzed journals.

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Methodological Approaches Table 23.5 Methodological approaches used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2009 and 2010–2016. Approach

2004–2009 %

2010–2016 %

2004–2016 %

Quantitative Qualitative Both N

64.8 30.1 5.1 176

75.6 18.8 5.6 160

69.9 24.7 5.4 336

Note: The percentages are ordered from the highest to the lowest based on the 2004–2016 column results. N = number of research articles in the two analyzed journals for each period.

It is also fair to say that, despite its obvious benefits, mixed (triangulated) research still fails to attract much interest on the part of the IJMM and JME authors, with a declining trend from 12% between 1988 and 2003 (Beam, 2006) to 5% between 2004 and 2016.This finding is not uncommon in the mass communication discipline (see Chang, 2017; Potter et al., 1993; Trumbo, 2004), but it deserves further explanatory discussion in the future. At a paradigmatic level, media management and economics researchers may not be ready or willing to embrace a merged tradition of inquiry, such as Morgan’s (2007) pragmatic approach. One of the few triangulated studies in the coded articles was Li, Liu, and Chen’s (2007) assessment of the cable industry’s performance in Taiwan. The three authors and their six research assistants first conducted intensive interviews with operators in each of the 51 franchise areas to explore the economic conditions of these cable television systems. Next, the authors with 12 research assistants administered a telephone survey to a national random sample of 2,642 respondents.

Data Collection Methods As reported in Table 23.6, the three most frequently used data collection methods at the aggregate level were secondary data (32%), survey (25%), and literature review (14%). Most of the other research methods (experiment, legal analysis, qualitative content analysis, field observation, focus group, and historical method) were scarce in these two journals from 2004 to 2016. Thus, diversity of data collection methods in these published studies was rather limited. In addition, there were, again, substantial differences between the two journals. IJMM articles relied on survey techniques, literature reviews, and field interviews more than on any other methods (Table 23.6). In contrast, about half of the JME articles depended on the use of secondary data. The “none” category, which was relatively important in JME, mostly referred to the formulation and description of mathematical economic models, including proofs, without empirical testing (e.g., Roger, 2009). From 2004–2009 to 2010–2016, the percentages of articles relying on secondary data and survey research increased by 7 and 4 percentage points, respectively, while the percentage of literature reviews fell by 9 percentage points (Table 23.7). In the first edition of the Handbook, secondary data (57%) was the preeminent quantitative data collection method recorded in the 1988–2003 IJMM and JME articles, followed by survey (24%) and content analysis (13%; Beam, 2006). If we consider only the quantitative research articles from 2004 to 2016 (n = 235) for the purpose of drawing a valid comparison, the three most frequent data collection categories were then secondary data (45%), survey (30%), and none (9%).These present results are somewhat consistent, or at least move in the same direction, with the earlier results. Among all research design/data collection methods recorded from the qualitative studies in IJMM and JME between 1988 and 2003, case study (28%), comparative case study (25%), and interviews (23%) were the most prevalent ones (Hollifield & Coffey, 2006). These 369

Michel Dupagne Table 23.6 Primary data collection methods used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2016. Method

IJMM %

JME %

Total %

Secondary data Survey Literature review/meta-analysis Field interview None Quantitative content analysis Experimental Legal/policy Qualitative content analysis Field observation Focus group Historical method Other N

13.6 31.6 26.0 14.7 1.7 5.1 1.7 1.7 1.7 1.1 1.1 0.0 0.0 177

52.2 17.0 1.3 2.5 12.6 8.2 2.5 1.9 0.6 0.0 0.0 0.6 0.6 159

31.8 24.7 14.3 8.9 6.8 6.5 2.1 1.8 1.2 0.6 0.6 0.3 0.3 336

Note:The percentages are ordered from the highest to the lowest based on the Total column results. N = number of research articles in the analyzed journals.

earlier statistics are based on different categories and, therefore, are cited for illustration purposes only. Case studies will be discussed in the next section. The following paragraphs will outline some of the methodological challenges that media management and economics researchers face when they rely on secondary data, survey methods, and field interviews to conduct their studies. First, because the use of secondary data is so prevalent in quantitative media management and economics articles, it is essential that researchers develop strategies to locate and evaluate relevant private and public data sources. To some extent, they must become “data retrieval experts” and acquire a solid and up-to-date knowledge of available governmental, commercial, academic, and industry data sources in the United States and abroad. Access to commercial databases, such as Nielsen and comScore, is generally available only at a charge, which can be considerably expensive and may require prior institutional funding. The ensuing list is by no means exhaustive, but covers some of the main free and pay data sources for media management and economics research: Association of American Publishers (pay); BIA/Kelsey (pay); Bloomberg (pay); Box Office Mojo (free); comScore (pay); Consumer Technology Association (pay); EDGAR (free); Eurobarometer (free); European Audiovisual Observatory (pay); Federal Communications Commission (free); Federation of European Publishers (free); IMDb (free/pay); Interactive Advertising Bureau (free/pay); International Federation of the Phonographic Industry (pay); International Telecommunication Union (free); MediaMark MRI (pay); News Media Alliance (free/pay); Nielsen (pay); Pew Research Center (free); Radio Advertising Bureau (free/pay); Recording Industry Association of America (free): SNL Kagan (pay); SRDS (Standard Rate & Data Service; pay); Statista (pay); Television Bureau of Advertising (free/pay); Thomson One Banker (pay); U.S. Bureau of Labor Statistics (free); U.S. Census Bureau (free); and Video Advertising Bureau (free/pay). It might be worthwhile to note that the Kilts Center for Marketing at the University of Chicago now offers researchers access to Nielsen’s Consumer Panel, Retail Scanner, and Ad Intel data for a subscription fee. After finding relevant statistics, researchers need to inspect their reliability and validity. Are the data available in a consistent manner across years? Do the data measure what the researcher intends them to measure (internal validity)? If not, is it reasonable to substitute proxy data? Furthermore, 370

Methodological Approaches Table 23.7 Primary data collection methods used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2009 and 2010–2016. Method

2004–2009 %

2010–2016 %

2004–2016 %

Secondary data Survey Literature review/meta-analysis Field interview None Quantitative content analysis Experimental Legal/policy Qualitative content analysis Field observation Focus group Historical method Other N

28.4 22.7 18.8 9.1 8.0 5.7 2.3 3.4 0.6 0.6 0.6 0.0 0.0 176

35.6 26.9 9.4 8.8 5.6 7.5 1.9 0.0 1.9 0.6 0.6 0.6 0.6 160

31.8 24.7 14.3 8.9 6.8 6.5 2.1 1.8 1.2 0.6 0.6 0.3 0.3 336

Note: The percentages are ordered from the highest to the lowest based on the 2004–2016 column results. N = number of research articles in the two analyzed journals for each period.

authors should not forget to state the exact sources of the data used to measure the variables under study in the method section of the article (see Lee, 2006, for a good example of data sources summary in a table). This point might seem trivial, but, anecdotally, data sources are not always reported as clearly as they should be in media management and economics research. Second, it is hardly news for any researcher, at least in the United States, that survey administration to a randomly selected and representative sample of respondents has become increasingly difficult (e.g., Nienstedt, Huber, & Seelmann, 2012). In the 2004–2016 dataset, many survey researchers relied on some form of online platform to conduct their studies. Internet-based panels are increasingly used to draw samples for research studies due to their cost-effectiveness, even though their representativeness is open to question (e.g., Stern, Bilgen, & Dillman, 2014). These panels can be either probability-based (e.g., GFK KnowledgePanel) or nonprobability-based (e.g., Amazon’s Mechanical Turk or MTurk). The nonprobability-based Internet panels are essentially convenience samples that are known to differ from the general population on a variety of sociodemographic characteristics (Hays, Liu, & Kapteyn, 2015). For instance, MTurk panelists “tend to be more politically liberal, younger, less religious, and less racially diverse” than respondents selected from the U.S. population (Clifford, Jewell, & Waggoner, 2015, p. 1). It is likely that Internet-based panels will continue to grow in popularity for sample selection, but researchers must recognize their intrinsic biases. Finally, even though the findings of the content analysis indicated that research methods were mainly quantitative, the use of field interviews remained common (15%, see Table 23.6) in IJMM. This method has been used effectively with such populations as journalists (Lee, 2015), audience research managers (Taneja, 2013), and media entrepreneurs “to elicit their experiences and the meanings they attach to those experiences” (Compaine & Hoag, 2012, p. 32). But like any method, field interviewing is not without problems. As Doyle and Frith (2006) pointed out, a key hurdle to conducting in-depth interviews within firms has been the lack of access to qualified individuals. Even when the researcher has preestablished contacts with management, there is no guarantee that management will authorize employees to participate in the interviews, lest the researcher tarnish the reputation of the media company or disclose sensitive information that could aid the competition. In that situation, field interviewing would be a nonstarter. For instance, several years ago, the author and 371

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one of his colleagues were unable to gain access to some managers of TV station groups to discuss their multicasting strategies, and they had to abandon this part of the project.

Use of Case Studies A case study “is an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident” (Yin, 2003, p. 13). As such, it is best viewed as a research strategy or design that often involves multiple qualitative methods, such as intensive interviews, participant observation, and literature review/archival records (see Hollifield & Coffey, 2006). For instance, when Andrews and Napoli (2006) evaluated the book publishing industry’s responses to the introduction of a new book sales tracking tool, BookScan, they relied on multiple qualitative sources of evidence, including archival data, field observation, and semi-structured interviews with book industry professionals. The purpose of a case study is often exploratory (what?), but contrary to popular wisdom, it can also be descriptive (who and where?) or explanatory (how and why?), depending on the types of research questions being investigated and the techniques used to analyze the data (e.g., pattern matching, explanation matching, time series analysis, logic models, and cross-case synthesis; see Yin, 2003). In addition, case study research could include more than one case in the same way as experimental research could involve more than one experiment in the same study. About 9% (n = 31; these results are not reported in a table) of all coded research articles in both IJMM and JME were case studies. There were more case studies in IJMM articles (14%, n = 25) than in JME articles (4%, n = 6). Surprisingly, the percentage of media management and economics articles relying on a case study approach fell by about 50% over time, from 12% (n = 21) in 2004–2009 to 6% (n = 10) in 2010–2016.

Sampling Approaches From 2004 to 2016, more than a majority (57%) of research articles published in IJMM and JME used nonprobability sampling, primarily convenience sampling, for selecting the units of analysis (Table 23.8). Of all quantitative research articles from 2004 to 2016 (n = 235), 58% relied on nonprobability samples and 19% on probability samples. Primary sampling strategies between the two journals were similar, with the exception of population studies that were more frequent in JME articles. The percentage of research articles that used nonrandom samples rose minimally from 2004–2009 to 2010–2016 (Table 23.9).

Table 23.8 Primary sampling approaches used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2016. Approach

IJMM %

JME %

Total %

Nonprobabilistic None Probabilistic Population (empirical) Unknown N

56.5 20.9 15.3 4.5 2.8 177

57.2 17.6 12.6 8.8 3.8 159

56.8 19.3 14.0 6.5 3.3 336

  he percentages are ordered from the highest to the lowest based on the Total column results. N = number Note: T of research articles in the analyzed journals.

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Methodological Approaches Table 23.9 Primary sampling approaches used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2009 and 2010–2016. Approach

2004–2009 %

2010–2016 %

2004–2016 %

Nonprobabilistic None Probabilistic Population (empirical) Unknown N

55.7 26.1 14.2 2.3 1.7 176

58.1 11.9 13.8 11.3 5.0 160

56.8 19.3 14.0 6.5 3.3 336

Note: The percentages are ordered from the highest to the lowest based on the 2004–2016 column results. N = number of research articles in the two analyzed journals for each period.

Table 23.10 Highest levels of statistical analysis used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2016. Level

IJMM %

JME %

Total %

Multivariate None Bivariate Univariate N

31.1 44.1 18.1 6.7 177

67.3 19.5 6.9 6.3 159

48.2 32.4 12.8 6.5 336

Note:The percentages are ordered from the highest to the lowest based on the Total column results. N = number of research articles in the analyzed journals.

Given the growing use of online surveys and secondary data, the widespread use of nonprobabilistic sampling techniques will probably continue in the years to come. Such studies as the telephone survey conducted by Li et al. (2007) with a systematic random sample of 2,642 respondents may become rarer. Some scholars may be disappointed by this trend toward fewer generalizable results, but perhaps the most realistic option for researchers is to explain in detail the reasons for the nonrandom selection of the units. For instance, Compaine and Hoag (2012) spent considerable time outlining the procedural differences between initial and theoretical sampling for selecting their interviewees in the field.

Levels of Statistical Analysis Of all coded research articles from 2004 to 2016, more than 60% used either multivariate (48%) or bivariate (13%) statistics as the highest level of statistical analysis (Table 23.10). Articles published in JME were more than twice as likely to rely on multivariate statistical analysis than those in IJMM. On the other hand, bivariate statistics were more prevalent in IJMM articles (18%) than in JME articles (7%). It is also clear from Table 23.11 that the level of statistical analysis in the two journals expanded in sophistication over time, with the percentage of multivariate statistical tests rising from 39% in 2004–2009 to 59% in 2010–2016.

Types of Statistical Analysis The dominant highest statistical test used in the journal articles from 2004 to 2016 was regression (38%), which encompassed all types of multiple regression techniques, but a substantial (32%) 373

Michel Dupagne Table 23.11 Highest levels of statistical analysis used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2009 and 2010–2016. Level

2004–2009 %

2010–2016 %

2004–2016 %

Multivariate None Bivariate Univariate N

38.6 38.6 15.3 7.4 176

58.8 25.6 10.0 5.6 160

48.2 32.4 12.8 6.5 336

Note: The percentages are ordered from the highest to the lowest based on the 2004–2016 column results. N = number of research articles in the two analyzed journals for each period.

Table 23.12 Primary types of statistical analysis used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2016. Type

IJMM%

JME %

Total %

Regression None T test/ANOVA Descriptive statistics Factor-analytic procedures Structural equation modeling Correlation Non-parametric statistics N

19.2 44.1 13.6 6.2 6.2 4.0 3.4 3.4 177

57.9 19.5 2.5 6.3 5.7 3.1 3.1 1.9 159

37.5 32.4 8.3 6.3 6.0 3.6 3.3 2.7 336

Note:  The percentages are ordered from the highest to the lowest based on the Total column results. N = number of research articles in the analyzed journals.

percentage of research articles did not use any statistical analysis at all (Table 23.12). Not unexpectedly, the Journal of Media Economics is a journal that is highly oriented toward predictive regression models and econometric analysis (e.g., Lee & Bae, 2004). We should also note that usage of regression and structural equation modeling (SEM) rose from 2004–2009 to 2010–2016, whereas use of factor analysis/classification procedures was less prevalent in the research articles during the second subperiod than during the first one (Table 23.13). In sum, for those readers who are interested in media management and economics research, but were not necessarily trained as academic economists and did not take multiple econometrics courses in graduate school, the importance of mastering regression techniques cannot be overstated. Part of this knowledge includes understanding the assumptions of the classical linear regression model (e.g., homoscedasticity, absence of autocorrelation, independence between the regressors and the residuals, unbiased specification, and absence of perfect multicollinearity) and checking them for violations through diagnostic tests. Fortunately, readers who seek an introduction, or a refresher, to this topic have various valuable resources at their disposal, such as Kahane (2008)’s Regression Basics, Gujarati (2003)’s Basic Econometrics, and Pickup (2015)’s Introduction to Time Series Analysis, that could help them transition to more specialized and advanced regression readings if needed.

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Methodological Approaches Table 23.13 Primary types of statistical analysis used in the International Journal on Media Management and the Journal of Media Economics articles, 2004–2009 and 2010–2016. Type

2004–2009 %

2010–2016 %

2004–2016 %

Regression None T test/ANOVA Descriptive statistics Factor-analytic procedures Structural equation modeling Correlation Non-parametric statistics N

28.4 38.6 9.1 6.8 7.4 1.7 5.7 2.3 176

47.5 25.6 7.5 5.6 4.4 5.6 0.6 3.1 160

37.5 32.4 8.3 6.3 6.0 3.6 3.3 2.7 336

Note: The percentages are ordered from the highest to the lowest based on the 2004–2016 column results. N = number of research articles in the two analyzed journals for each period.

Conclusions This chapter will end by highlighting six methodological points about the research articles published in the International Journal on Media Management (IJMM) and the Journal of Media Economics (JME) from 2004 to 2016. First, if we had to profile the typical media management and economics research article, we would have to conclude that it is grounded quantitatively and based on secondary data, nonprobabilistic sampling, and regression analysis. Therefore, with 70% of the coded research articles following a quantitative approach, the strong quantitative orientation of the published media management and economics literature cannot be in doubt. The pattern of research practices in media management and economics seems relatively uniform, dominated by a single empirical foundation and a few data collection methods. But these statistics do not tell the whole story when we disaggregate the data by journal. This chapter confirms that articles in media management and those in media economics differ from each other in their methodological approaches and data collection methods. Albarran (2013) has argued that “[t]he field needs to recognize that management and economics occur on different levels of an organization and are interdependent concepts” (pp. 14–15). At least at the methodological level, IJMM articles were far more qualitative (41%) and tended to rely on survey research (32%), literature reviews (26%), and field interviews (15%) more frequently than their JME counterparts (6%, 17%, 1%, and 3%, respectively). Thus, not only was JME (91%) as highly quantitative as the top advertising journals between 2001–2015 (90%, Chang, 2017), but also there was a receptive publishing outlet available to qualitative media management and economics researchers through the International Journal on Media Management. Third, in general, diversity of data collection methods used in media management and economics articles was rather limited, even though this finding could be consistent with the way media management and economics are traditionally perceived—heavily driven by data. But we should not forget that topics in media management can be examined compellingly from a policy or historical perspective (e.g., technology standardization). Furthermore, the fact that stand-alone focus group research was nearly invisible in academic media management and economics research was startling because this audience method is prominently used by the television industry to test new programs (see Flint, 2016). Fourth, media management and economics research was mostly conducted at the individual, content, or firm level. Albarran (2013) has recommended that this field of research “be based on these

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[management and economics involve different functions and activities] multiple levels and consider how the various levels impact one another” (p. 15). In practice, however, most media management and economics articles rely on a single unit of analysis. Fifth, Albarran (2013) has called upon researchers to test and apply new methodological tools to media management and economics data and problems. Even though the types of data collection methods used in media management and economics articles are relatively uniform, especially those published in JME, it is clear that published articles in the field have increased in analytical sophistication during the last 13 years, with a near majority of them employing various regression techniques. Finally, it would be difficult to compare these present findings with those in other fields because those content analyses tend to cover earlier periods. For instance, 65% of coded mass communication articles in 2000 were quantitative (Trumbo, 2004); 98.5% of coded economics articles in 2003–2004 contained some mathematics (Sutter & Pjesky, 2007); and an estimated 14% of coded management articles in 1995–1997 were clearly quantitative (Scandura & Williams, 2000). Two recent studies should be noted, though. Chang (2017) found that 90% of all coded advertising journal articles from 2001 to 2015 were quantitative and that the primary research method was experimental (41%), followed by survey (22%) and content analysis (7%). But Yoo et al. (2015) reported that only 25% of their coded articles in four advertising journals from 2000 to 2010 relied on multivariate statistics (multivariate analysis of [co]variance, regression, and classification). By comparison, of the 336 coded media management and economics articles in this current content analysis, 70% were quantitative, 48% used multivariate statistics, 32% employed secondary data, 25% relied on survey methods, and 14% were literature reviews. So perhaps it is most prudent to infer that the collective media management and economics literature shares both methodological similarities and dissimilarities with other disciplines. Of course, this content analysis is not without limitations because its coverage was confined to only two, albeit dedicated, journals. We know that other communication journals publish articles about the media industry on a regular basis (see Cooper et al., 1994; Trumbo, 2004). In addition, this chapter has investigated only seven methodological elements. There are many other aspects, methodological or not (e.g., authorship, focus), that deserve the scrutiny of a content analysis in future research to understand better the evolution of media management and economics research. Given today’s technological and content disruptions to the media business (Mierzejewska & Shaver, 2014), which are likely to continue and possibly accelerate, the future of media management and economics research appears promising. But it might be premature to anticipate methodological changes to the research practices of media management and economics scholars when the next technological innovations, such as the Internet of things, virtual reality, and artificial intelligence, become more diffused and researched during this and the next decade. In the last 20 years, the diffusion of high-definition television, broadband Internet service, smartphones, and over-the-top streaming services was studied with traditional data collection methods, primarily survey or secondary data, and conventional multiple regression models. In the age of big data, however, researchers may need to become more proficient at acquiring, structuring, and analyzing large datasets that could explain economic changes to the media space.

References Albarran, A. B. (2013). Media management and economics research: The first 75 years. In A. B. Albarran (Ed.), Media management and economics research in a transmedia environment (pp. 5–17). New York: Routledge. Andrews, K., & Napoli, P. M. (2006). Changing market information regimes: A case study of the transition to the BookScan audience measurement system in the U.S. book publishing industry. Journal of Media Economics, 19(1), 33–54. Babbie, E. (1986). The practice of social research (4th ed.). Belmont, CA: Wadsworth.

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Methodological Approaches Beam, R. A. (2006). Quantitative methods in media management and economics. In A. B. Albarran, S. M. ChanOlmsted, & M. O. Wirth (Eds.), Handbook of media management and economics (pp. 523–551). Mahwah, NJ: Lawrence Erlbaum. Berg, B. L. (2007). Qualitative research methods for the social sciences (6th ed.). Boston, MA: Allyn and Bacon. Chang, C. (2017). Methodological issues in advertising research: Current status, shifts, and trends. Journal of Advertising, 46(1), 2–20. doi:10.1080/00913367.2016.1274924 Charmaz, K. (2014). Constructing grounded theory (2nd ed.). Thousand Oaks, CA: Sage. Clifford, S., Jewell, R. M., & Waggoner, P. D. (2015). Are samples drawn from Mechanical Turk valid for research on political ideology? Research & Politics, 2(4), 1–9. doi:10.1177/2053168015622072 Compaine, B., & Hoag, A. (2012). Factors supporting and hindering new entry in media markets: A study of media entrepreneurs. The International Journal on Media Management, 14(1), 27–49. doi:10.1080/14241277.2011.627520 Cooper, R., Potter, W. J., & Dupagne, M. (1994). A status report on methods used in mass communication research. Journalism Educator, 48(4), 54–61. Courtright, J. A. (1996). Rationally thinking about nonprobability. Journal of Broadcasting & Electronic Media, 40(3), 414–421. Doyle, G., & Frith, S. (2006). Methodological approaches in media management and media economics research. In A. B. Albarran, S. M. Chan-Olmsted, & M. O. Wirth (Eds.), Handbook of media management and economics (pp. 553–572). Mahwah, NJ: Lawrence Erlbaum. Flint, J. (2016, May 15). Test audiences can make or break new TV series. The Wall Street Journal. Retrieved from www.wsj.com Fowler, F. J., Jr. (1993). Survey research methods (2nd ed.). Newbury Park, CA: Sage. Guba, E. G. (1990). The paradigm dialog. Newbury Park, CA: Sage. Gujarati, D. N. (2003). Basic econometrics (4th ed.). New York: McGraw-Hill. Hays, R. D., Liu, H., & Kapteyn, A. (2015). Use of Internet panels to conduct surveys. Behavior Research Methods, 47(3), 685–690. doi:10.3758/s13428-015-0617-9 Higbee, K. L., & Wells, M. G. (1972). Some research trends in social psychology during the 1960s. American Psychologist, 27(10), 963–966. Hollifield, C. A., & Coffey, A. J. (2006). Qualitative methods in media management and economics. In A. B. Albarran, S. M. Chan-Olmsted, & M. O. Wirth (Eds.), Handbook of media management and economics (pp. 573– 600). Mahwah, NJ: Lawrence Erlbaum. James, W. (1907). Pragmatism. Cambridge, MA: Harvard University. Kahane, L. H. (2008). Regression basics (2nd ed.). Thousand Oaks, CA: Sage. Kamhawi, R., & Weaver, D. (2003). Mass communication research trends from 1980 to 1999. Journalism & Mass Communication Quarterly, 80(1), 7–27. Lee, A. M. (2015). Social media and speed-driven journalism: Expectations and practices. The International Journal on Media Management, 17(4), 217–239. doi:10.1080/14241277.2015.1107566 Lee, B., & Bae, H. S. (2004). The effect of screen quotas on the self-sufficiency ratio in recent domestic film markets. Journal of Media Economics, 17(3), 163–176. Lee, S. (2006). Broadband deployment in the United States: Examining the impacts of platform competition. The International Journal on Media Management, 8(4), 173–181. doi:10.1207/s14241250ijmm0804_3 Li, S. S., Liu, Y. L., & Chen, C. H. (2007). Market competition and media performance: Reexamining the media performance of the cable television industry in Taiwan. Journal of Media Economics, 20(3), 189–210. doi:1080/08997760701290641 Lincoln,Y. S., & Guba, E. G. (1985). Naturalistic inquiry. Newbury Park, CA: Sage. Lindlof, T. R., & Taylor, B. C. (2011). Qualitative communication research methods (3rd ed.). Thousand Oaks, CA: Sage. Lovejoy, J., Watson, B. R., Lacy, S., & Riffe, D. (2016). Three decades of reliability in communication content analyses: Reporting of reliability statistics and coefficient levels in three top journals. Journalism & Mass Communication Quarterly, 93(4), 1135–1159. doi:10.1177/1077699016644558 McCracken, G. (1988). The long interview. Newbury Park, CA: Sage. Mierzejewska, B., & Shaver, D. (2014). Key changes impacting media management research. The International Journal on Media Management, 16(2), 47–54. doi:10.1080/14241277.2014.954439 Morgan, D. L. (2007). Paradigms lost and pragmatism regained: Methodological implications of combining qualitative and quantitative methods. Journal of Mixed Methods Research, 1(1), 48–76. doi:10.1177/2345678906292462 Neuendorf, K. A. (2002). The content analysis guidebook. Thousand Oaks, CA: Sage. Nienstedt, H. W., Huber, F., & Seelmann, C. (2012). The influence of the congruence between brand and consumer personality on the loyalty to print and online issues of magazine brands. The International Journal on Media Management, 14(1), 3–26. doi:10.1080/14241277.2011.602033

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Michel Dupagne Pickup, M. (2015). Introduction to time series analysis. Thousand Oaks, CA: Sage. Potter, W. J. (1996). An analysis of thinking and research about qualitative methods. Mahwah, NJ: Lawrence Erlbaum. Potter, W. J., Cooper, R., & Dupagne, M. (1993). The three paradigms of mass media research in mainstream communication journals. Communication Theory, 3(4), 317–335. Riffe, D., & Freitag, A. (1997). A content analysis of content analyses: Twenty-five years of Journalism Quarterly. Journalism & Mass Communication Quarterly, 74(3), 515–524. Roger, G. (2009). Media concentration with free entry. Journal of Media Economics, 22(3), 134–163. doi:10.1080/08997760903129366 Scandura, T. A., & Williams, E. A. (2000). Research methodology in management: Current practices, trends, and implications for future research. Academy of Management Journal, 43(6), 1248–1264. Smith, J. K. (1983). Quantitative versus qualitative research: An attempt to clarify the issue. Educational Researcher, 12(3), 6–13. Sparks, G. G. (1995). Comments concerning the claim that mass media research is “prescientific”: A response to Potter, Cooper, and Dupagne. Communication Theory, 5(3), 273–280. Stern, M. J., Bilgen, I., & Dillman, D. A. (2014).The state of survey methodology: Challenges, dilemmas, and new frontiers in the era of the tailored design. Field Methods, 26(3), 284–301. doi:10.1177/1525822X13519561 Sutter, D., & Pjesky, R. (2007).Where would Adam Smith publish today? The near-absence of math-free research in top journals. Econ Journal Watch, 4(2), 230–240. Taneja, H. (2013). Audience measurement and media fragmentation: Revisiting the monopoly question. Journal of Media Economics, 26(4), 203–219. doi:10.1080/08997764.2013.842919 Trumbo, C. W. (2004). Research methods in mass communication research: A census of eight journals, 1990– 2000. Journalism & Mass Communication Quarterly, 81(2), 417–436. Wimmer, R. D., & Dominick, J. R. (2014). Mass media research: An introduction (10th ed.). Boston: Wadsworth. Yin, R.Y. (2003). Case study research (3rd ed.). Thousand Oaks, CA: Sage. Yoo, K., Joo, E., Choi, H., Reid, L., & Kim, J. (2015). Trends in the use of statistics in major advertising journals over four decades. International Journal of Advertising, 34(3), 549–572. doi:10.1080/02650487.2015.1005513

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24 AUDIENCE MEASUREMENT AND ANALYSIS Su Jung Kim

Introduction It is the week when the NCAA basketball tournament (aka March Madness) begins. The first game will start in ten minutes. Jade rushes home and turns on the television in her living room. She also sets her DVR to record the game so that she can watch it later on with her husband, who cannot make it on time. While the live broadcast is on as background noise, Jade goes into her room and checks new updates on her Facebook newsfeed. Some of her friends are at the game, livestreaming the event using Facebook Live. She cannot miss the big moment and wants to experience the feeling of “being there.” She also searches for #MarchMadness on Twitter, quickly scans through the tweets, and retweets some fun ones. When there is nothing more to like, comment, share, or retweet, she opens Snapchat, and starts to follow up on the March Madness “stories.” This is a media scenario for someone who loves basketball. For readers, the event may be something other than basketball, such as the season premiere of The Walking Dead, the Oscars, the Super Bowl, or presidential speeches. The foregoing example shows the complexities we are currently facing when it comes to media consumption. For those who study media audiences, this is an interesting yet challenging time to analyze the pace and scope of changes happening in this media-saturated environment. Counting eyeballs has been at the heart of the audience measurement industry. Since the inception of mass media, estimating the number of readers, listeners, viewers, and users as well as establishing standard metrics for such measurement has called for collaborative efforts among audience measurement companies, media organizations, advertisers, advertising agencies, and regulatory institutions. In the first edition of this Handbook, the chapter on audience measurement and analysis ended with a call for setting a standard of user measurement for Internet audiences (Phalen, 2006). Much has changed since then. It may not even be an exaggeration to say that more changes have occurred in the audience measurement business within the past decade than changes made in the twentieth century since the inception of audience ratings in the radio industry. Digital traces on various interactive media platforms have enabled media companies to track individuals’ online presence and behavior seamlessly. The use of cookies and the built-in GPS functionality on mobile phones and tablets have given advertisers and marketers alike the ability to find audiences at the right place and at the right time (see Kaye, 2017, March 8). Media users can now share their television viewing experience on Twitter or Facebook while watching content (the so-called social TV phenomenon), which led the MIT Technology Review to list “social TV” as one of the ten most important emerging

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technologies (MIT Technology Review, 2010). The exponential growth of computing capabilities has encouraged (or forced) the industry and academia to embrace the era of big data, especially the use of text analytics in analyzing online buzz (Gandomi & Haider, 2015). The objective of this chapter is to provide an overview of the existing literature on audience measurement and analysis, and to suggest future research topics. This chapter starts with a review of scholarly discussions on how to conceive the concept of “audience” to help readers understand various approaches to studying it. The second section surveys the existing literature on audience measurement methods, focusing on quantitative audience research traditions in the United States. The final section provides an agenda for the future of audience measurement and research.To be sure, however, it is impossible to explain all of the existing methods of audience measurement or to project all future developments. Ideally, readers will get a good grasp of changes in audience measurement and how industry and academia are moving forward in this rapidly changing media environment.

The “Audience” Concept Before delving into the topic of measurement, this chapter first introduces various approaches to conceptualizing audiences. Since different conceptualizations lead to different assumptions about audiences, which in turn instills a different set of research questions that are associated with different types of research methods, understanding these approaches is a critical first step. The approaches reviewed here are not an exhaustive list of audience research traditions, nor are they mutually exclusive categories. Readers who are interested in different paradigms of audience research are encouraged to see Ang (1991), Biocca (1988), Butsch (2008), Buzzard (2015b), Ettema and Whitney (1994a), Jensen and Rosengren (1990), McQuail (1997), Napoli (2011), Webster (1998), and Webster and Phalen (1997). As Webster (1998) pointed out, the term “audience” has been universally accepted without a clear definition of its meaning. Historically, audiences have been conceived as “crowds, publics or mass, even before these terms were specifically used to describe them” (Butsch, 2008, p. 2). Audiences are sometimes referred to as crowds gathered at live events, such as musical performances or sports games. From the lens of political scientists, audiences are viewed as publics who digest and deliberate salient issues of the day by consuming news media and discussing political agendas with other people. With the rise of mass media, audiences have become equated with a group of people consuming the same media outlets or content (e.g., cable television viewers, Facebook users). The discussion in this section follows the framework suggested by Webster (1998), who identified three basic models of audiences (see his Figure 24.1 on p. 191): audience-as-mass, audience-as-outcome, and audience-as-agents. The audience-as-mass model is the most common way of conceptualizing audiences. Under this approach, an audience is seen as a mass, “a large collection of people scattered across time and space who act autonomously and have little or no immediate knowledge of one another” (p. 192). The central question in conceiving an audience here is what media offerings catch people’s attention, thus emphasizing the need to measure media exposure. Moreover, this approach involves understanding patterns of mass audience behavior (Taneja,Webster, Malthouse, & Ksiazek, 2012;Webster & Ksiazek, 2012) and establishing models of media choice (Webster, Phalen, & Lichty, 2014; Webster & Wakshlag, 1983). Later approaches in this tradition view audiences as a network or networks of individuals, reenvisioning the notion that they are completely atomized (Webster, 2016). Mass audiences are sometimes connected by consuming the same content or following the same influencers or organizations on social media platforms. Research in this tradition focuses on identifying the factors that affect people’s preferences and tastes, from both audience and media perspectives, which can be used to predict media selection, media planning, and programming (Kim & Viswanathan, 2015). Common methods used in the audience-as-mass tradition are audience measurement data such as ratings data, 380

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log data, or social media data, which can usually be obtained from major audience research firms (Cooper, 1996; Taneja, 2016). The audience-as-outcome model originated from propaganda studies in the 1920s and 1930s. Given the powerful persuasive effects of media propaganda observed at that time, this tradition is more concerned with investigating the effects of media consumption on audiences. Oftentimes, media effects are seen as negative, such as violence committed after watching a criminal drama (Paik & Comstock, 1994) or playing an aggressive online game (Anderson & Bushman, 2001). Media effects can also be positive—for example, motivating people to become knowledgeable about politics (Graber, 2001). The central question here becomes “What do media do to people?” (Webster, 1998, p. 193). Popular research methods in the audience-as-outcome model are experiments and quasiexperimental designs, which help identify the causal relationship between media usage and some forms of outcomes (e.g., awareness, attitudes, intention, or behavior). Instead of focusing on media choice or effects, the audience-as-agents model emphasizes the meanings and interpretations generated while or after people consume media texts. Conceiving audiences as free agents allows us to see what gratifications people seek and gain from media (i.e., uses and gratification studies), or how texts are received and alternative interpretations are possible (i.e., reception studies). Thus, this perspective puts audiences at the center and asks what people do with media, and how they interact with media texts (Buzzard, 2015b; Jensen, 1987; Radway, 1988). Research on uses and gratifications usually employs surveys to ask individual media users about what media or media content they consume and what gratifications they seek or achieve. Reception studies and British cultural studies mainly use qualitative methods, focusing on analyzing texts or interviewing or observing individual media audiences (Livingstone, 1998).

The History of Audience Measurement: Constructing Institutionally Effective Audiences Among the models of audiences stated in the previous section, this chapter focuses on the audience-as-mass model because it is the model that commercial audience measurement methods are based on (i.e., measuring media exposure). To study media audiences as a mass, they first should become visible as an entity.To become visible, they need to be expressed as some forms of “agreed-upon” measures that are accessible to the market. According to Ettema and Whitney (1994b), By the idea of audiencemaking, we do not mean the assemblage of individual readers, viewers, or listeners who receive messages. Such actual receivers may exist in mass communication theory as Schramm understood it, but they do not exist in an institutional conception of mass communication—at least, they do not exist as individuals. In an institutional conception, actual receivers are constituted—or, perhaps, reconstituted—not merely as audiences but as institutionally effective audiences that have social meaning and/or economic value within the system. These include measured audiences that are generated by research services, sold by media channels, and bought by advertisers. They include specialized or segmented audiences whose particular interests are anticipated—or created—and then met by content producers. And they include hypothesized audiences whose interest, convenience, and necessity are, presumably, protected by regulators. (pp. 5–6) Thus, individual media audiences finally obtain social meaning and economic value once they are aggregated and conceived as a group-level entity—publics or markets (McQuail, 1997), fandom ( Jenkins, 2006), or “institutionally effective audiences” (Ettema & Whitney, 1994b, p. 5). In this context, the role of public measures that allow us to understand how audience attention takes shape and/or 381

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is shaped becomes critical (Webster, 2014). As media audiences gain more control over consumption practices with fewer constraints of time and location, audience research scholars and practitioners have had to improve measurement techniques so that they can monitor audiences’ footprints more thoroughly and precisely. At the same time, audience measurement has been a “social convention” that should meet the demands of all parties involved—media organizations that want comprehensive information about their consumers, advertising agencies that need a simple yet clear metric for media-buying business, regulatory and auditing organizations that require the transparency of all steps involved in measurement, and audiences themselves who prefer less obtrusive ways of being measured, not to mention the technical and financial affordances of the measurement techniques (Buzzard, 2012; Miller, 1994; Napoli, 2003). The history of the audience measurement industry reflects these tensions among those involved in developing and using audience measures, as well as constraints from social, political, technical, and economic factors. This section highlights the development of audience measurement in electronic media, from radio to TV, to the Internet, and to mobile media. More detailed historical accounts of the industry and a comparison of different audience measurement methods can be found in Balnaves, O’Regan, and Goldsmith (2011), Bermejo (2007), Beville (1988), Buzzard (2012), Webster, Phalen, and Lichty (2014), and Webster and Taneja (2015). For an international perspective, see Bourdon and Méadel (2014).

Audience Research Meets the Telephone: Telephone Recall and Telephone Coincidental After a period of experimentation in the 1920s, radio had become a major communication medium in the United States by the end of the decade. The emergence and growth of radio as a home entertainment system were seen as an exciting opportunity for advertisers. Accordingly, the need to estimate the size and composition of audiences followed. Some initial efforts to measure radio audiences included counting the amount of fan mail or conducting personal interviews (Beville, 1988;Webster et al., 2014).These primitive techniques gave some ideas about the coverage of radio signals or rough estimates of audience size or reactions, but were never considered as a scientific method. Archibald M. Crossley, head of the market research firm the Crossley Business Research Company, in support of the Association of National Advertisers (ANA), was the first to employ a systematic approach to radio audience measurement. In 1930, Crossley established the Cooperative Analysis of Broadcasting (CAB), which launched a series of telephone recall surveys that covered 17,000 radio listening households.The project spanned an entire year and resulted in three quarterly reports. Respondents of the surveys were asked to recall whether they had tuned in to their radio set on the previous night, which programs or stations they had listened to, and which programs they had preferred. The CAB reports, known as “the Crossley ratings,” set up the standards for audience research. Balnaves et al. (2011) pointed out that the Crossley ratings established the foundation of modern audience-rating conventions, including the following principles (p. 23): 1. 2. 3. 4. 5.

Exposure is the key measurement. The inherent correctness of that measurement must appeal to all parties. The ratings deliver a “single number.” A probability, statistical sample is used for data collection. Distortion of the ratings by the research provider or by subscribers is unacceptable and requires monitoring and control.

The subsequent development of audience measurement techniques has been guided by this set of conventions. As discussed later in this chapter, struggles to measure audiences for emerging media 382

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technologies are, in most cases, due to the violation of one or more of the conventional standards that had been set early on in the audience measurement industry. At first, the Crossley ratings were made available only to advertisers, but later to advertising agencies and radio networks. Although telephone recall was accepted as a sound audience measurement technique, it had two major problems: sampling bias and response error (Webster et al., 2014). Back in the day, households that owned a telephone were mostly of higher social status. The gap between radio penetration and telephone penetration had grown larger in the 1930s, exacerbating the problem of sampling bias. Even among those who participated in the telephone recall surveys, their inability to correctly remember what they had heard on the radio was another critical problem of telephone recall. Telephone coincidentals, employed by Claude Hooper and Montgomery Clark, became an alternative method of counting radio audiences. With the assistance of George Gallup, inventor of the telephone coincidental technique, Clark-Hooper Inc. conducted its first survey using the telephone coincidental method in the fall of 1934. Basically, the technique involved asking those answering the phone to report (1) whether they were listening to the radio at that moment, (2) if they were, what program or station they were listening to, and (3) what advertisers were included in that program. Although it did not overcome selection bias, telephone coincidentals significantly improved the memory problem since participants were asked about their radio listening behavior at the time they were answering the questions. In less than five years after the first survey, Hooper founded C. E. Hooper, Inc., in 1938 and started offering Hooperatings.These Hooperatings replaced the Crossley ratings in the 1940s because telephone coincidentals were considered a more accurate and reliable method for measuring radio audiences. With Hooper gradually gaining the upper hand, a deal was made, and Hooper acquired CAB in 1946, taking over its service to subscribers. Although telephone surveys were a pioneering technique in the history of audience measurement, what still remained problematic were the nature of self-reporting and the limitations of data collection inherent in telephone interviews. Respondents of telephone surveys showed a tendency to recall certain types of programs better (e.g., variety programs or regularly scheduled programs), which resulted in inaccurate estimates of audience ratings (Webster et al., 2014). In addition, there were only a certain number of questions that could be asked due to interviewee fatigue. To make matters worse, telephone surveys were allowed only during a certain time of day. When Arthur C. Nielsen, founder of AC Nielsen Co., entered the industry with a new technology called the “Audimeter,” the Hooperatings era came to an end in 1950.

Metering the Audience of Electronic Media: Audimeter, Household Meter, and Peoplemeter An audimeter, also known as “the (little) black box,” is an electronic device that can be attached to a radio set, recording when the set is on and which station is tuned in by having a stylus scratch the surface of tapes or cartridges. Nielsen, an engineer by training and a successful founder of a marketing research firm, quickly saw the potential of the audimeter as the future of audience measurement. Nielsen bought ownership of the audimeter from its inventors, Robert Elder and Louis Woodruff (Beville, 1988). After a few field tests, Nielsen fully implemented the device and began providing the Nielsen Radio Index (NRI) in 1942. Initially, the audimeter records were collected by Nielsen technicians every two weeks by visiting sample households, but more advanced versions of audimeters (e.g., mailable tape audimeter, storage instantaneous meter) were developed, which allowed household panels to mail the tapes or cartridges directly to Nielsen Media Research (Buzzard, 2015a). What set Nielsen apart from other audience researchers was the preference for a “metering” technique to measure media exposure. Nielsen still adhered to the convention of measuring the key metric (i.e., exposure), but was more interested in counting it by recording the set-tuning activity. 383

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This is a dramatic change from measuring exposure by asking people what they remembered about their media usage to recording exposure “behavior” electronically by monitoring the meter. Balnaves et al. (2011) used a quote from Gale Metzger, cofounder and president of Statistical Research, Inc. (SRI), to illustrate this point. The social research approach involved asking people what they did; what stations or programs they listened to. That was in contrast with an engineering perspective where a meter was used to record what was happening in the home. Art [Nielsen] believe [sic] the meter measurement was more precise and a superior technique. He sold that point of view effectively. (p. 25) Nielsen’s efforts to improve the audimeter and to expand coverage of service across the country made him a leading figure in the audience measurement industry. It also shaped the industry perception that electronically monitored media exposure is a more accurate and reliable audience measure. With the introduction and growth of television as a new national medium in the 1950s, Nielsen applied his metering service to television audience measurement. The Nielsen Television Index (NTI) provided audience estimates for national television markets and the Nielsen Station Index (NSI) for local markets. Despite its superiority, the audimeter and its advances also had problems. First, it was attached to a radio or television set, allowing data collection only at the household level. Nielsen had to collect information on individual household members using TV household diaries. For its national television sample, Nielsen installed meters and used them in conjunction with diaries to collect demographic information about the household panel members.The second problem was the cost involved in the production and maintenance of the meters. Due to their high cost, meters were used only in national television markets. Audience viewing records of local channels and programs were collected mainly by diaries in individual markets. Diaries had the advantages of being relatively inexpensive and providing a large amount of individual-level data, but relied heavily on individuals’ ability to recall and willingness to mail back the paper diaries. From the 1950s to the 1980s Nielsen operated a monopoly in the national television ratings industry. In local TV markets, Nielsen was in direct competition with Arbitron (previously the American Research Bureau, ARB), which ended in 1993 when Arbitron gave up its television measurement and decided to focus on radio measurement. The 1980s witnessed several structural changes in the television measurement industry (Buzzard, 2002). First, the era of mass marketing was ending, while targeting and market segmentation were on the horizon. This shift toward market segmentation created an urgent need to collect more individual-level data, which were not obtainable from household meters. Second, the deregulation of the broadcast industry led to a series of mergers and acquisitions of major media organizations, which resulted in the diversification of television programming. The ensuing fragmentation of television channels meant a burgeoning number of specialized channels and programs. Advertisers again needed to know the composition of television viewers for each of these channels to increase their advertising reach. It was at about this time when the Audits of Great Britain (AGB) entered the U.S. market to compete with Nielsen.The company had already successfully implemented its peoplemeters in Western European markets, a more advanced metering device that recorded both television set activity and demographic information. The device came with a remote control, which allowed household members to push buttons to identify themselves.The shortcomings of household meters were greatly reduced with the introduction of peoplemeters. According to Buzzard (2002), the period of the mid1980s to the end of the 1990s was known as the “Peoplemeter Wars” in the U.S. television measurement industry. It was not only AGB but also other rating services, such as Percy, Arbitron-Burke, and 384

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SMART (Systems for Measuring and Reporting Television), threatening the monopoly that Nielsen had enjoyed for the past 30 years. Each company brought its own version of peoplemeter technology.These internal dynamics prompted Nielsen to quickly develop, test, and advance its peoplemeter device (e.g., A/P meter; see Buzzard, 2002, and Webster et al., 2014, for more detailed descriptions of the development of peoplemeters in the United States). In the end, Nielsen became the sole survivor and winner of the Peoplemeter Wars, again regaining its monopoly. Nielsen has been producing television ratings using its national and local peoplemeter homes since the late 1980s. While viewership in national sample households is collected by peoplemeters, local sample households are measured in four different ways: local peoplemeters (peoplemeters only), set-meters (diaries + meters), code-readers (meters + viewer assignment model), and diaries (diaries only) (Television Bureau of Advertising [TVB], 2016). Nielsen has been replacing diaries with code readers to increase the accuracy of the data and has plans to continue reducing the number of diary markets. As of February 2016, electronic meters were used in 70 out of 210 DMAs (designated market areas). Diaries are still used in smaller markets during the “sweeps” rating periods (November, February, May, and July). Nielsen collects about 2 million paper diaries from these local markets during sweep months (The Nielsen Company, 2014). While Nielsen concentrated its business on television audience measurement, Arbitron (formerly the American Research Bureau, now Nielsen Audio) dominated the radio ratings market with its diary service. Arbitron used a paper-and-pencil diary approach for radio audience measurement, beginning in 1965 (Balnaves, O’Regan, & Goldsmith, 2011). It has attempted to replace the diary with the portable peoplemeter (PPM), a pager-like (or a wristwatch-like) device that picks up the audio signals of radio programs. Arbitron introduced PPM technology to its radio measurement service in 2007. Since Arbitron was acquired by Nielsen in 2013, it was renamed Nielsen Radio, which has made consistent efforts to expand its PPM service. In December 2016, Nielsen Radio announced that it would increase the PPM sample size by 10%, up to 65,000 panelists in its 48 PPM markets (The Nielsen Company, 2016, December 21). Nielsen also uses PPM technology to measure out-of-home (OOH) viewing for its national television clients (The Nielsen Company, 2016, October 24). The beauty of using peoplemeters for audience measurement lies in their speed and accuracy. There is no human labor involved in the data collection process other than the initial installment of the device. The peoplemeters automatically send panels’ viewing records electronically. They do not rely on self-reports, which reduces the memory error and potential for social desirability (Prior, 2009). However, the caveats of using peoplemeters include some level of obtrusiveness. Pushing buttons every time a television session begins can be quite cumbersome. Usually, children tend to forget, resulting in underreporting of children’s viewing in the ratings reports. Panel members’ level of fatigue is another problem. The fact that they are constantly being monitored creates a distortion of viewing behavior (i.e., abnormal viewing patterns) or sample attrition. Peoplemeters are costly to produce and maintain, which limits the number of sample households. PPMs are free from the pressure of pushing buttons because they are individual-bound, not device-bound. However, they still require respondents to carry the device.

From Meters to Software: Tracking Online and Mobile Audiences With the emergence of the World Wide Web and the fast evolution of Internet technologies, advertisers soon recognized its potential as an advertising medium, and the need to establish an accurate and reliable measurement system that could track online user behavior followed (Internet Advertising Bureau [IAB], 1998, June 29). Media Metrix and NetRatings were the two leading companies that provided online audience measurement in the late 1990s and early 2000s (Phalen, 2006). Both companies developed software that could be installed on the Internet panel’s computers. The computer meters electronically monitored Internet usage and automatically transmitted the data 385

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to a central office for data processing and tabulation (Coffey, 2001). Media Metrix and NetRatings were later acquired by comScore and Nielsen, respectively. These two are still major competitors in the Internet audience ratings market. comScore has approximately 2 million Internet panel members worldwide. Their PC meters record exposure to websites, ads placed on these sites, and other web-based activities, regardless of browser type (comScore, 2009, May 31). Nielsen manages more than 230,000 home- and work-based panel members and monitors over 30,000 sites in the United States (The Nielsen Company, 2010). Mobile audience measurement on smartphones or tablets is done in a similar manner as online measurement. A software-based application is installed in the mobile measurement panel’s mobile device and tracks mobile app usage behavior. Nielsen released its first smartphone analytics reports in 2011. Using the data collected from more than 5,000 metered mobile devices, the initial report provided standard audience metrics, such as ratings, frequency, reach, and total audience measures (The Nielsen Company, 2011, September 13). Software-based meters share similar advantages and disadvantages of peoplemeters, but are less obtrusive (i.e., no button-pushing) and less expensive (i.e., no physical device required). However, the risk of respondents altering their behavior remains. Privacy concerns are another disadvantage. Because of individuals’ reluctance to participate in the panel, existing audience measurement firms, such as Nielsen or comScore, recruit their current television household panels to become online or mobile panels, or they invite panelists by offering incentives, such as antivirus software, increased browsing speed, or sweepstakes. Oftentimes this leads to a trade-off between sample representativeness (i.e., random vs. nonrandom sample) and sample size (Napoli, Callegaro, & Lavrakas, 2014).

Alternative Approach to Audience Measurement: Server-Centric Approach An emerging alternative to television and Internet measurement is a “server-centric” (or site-centric) approach where audience data come from server logs. Digital publishers, such as Google, Facebook or Twitter, and cable/satellite TV service providers have the capability to collect information derived from their servers. For example, Facebook has all of the logs of users accessing the site. Cable or satellite service providers install a set-top box in every subscribing household, and they monitor the second-by-second viewing records of these households. Netflix has information on subscribers’ demographic data, audience profiles, and consumption of movies and TV shows. The Media Rating Council refers to server-centric measurement as “census-based” measurement due to the fact that those who employ the server-centric approach collect information from all users of a specific site or all subscribers of the particular service provider (Media Rating Council [MRC], 2007). The major characteristic of server-centric data is the sheer volume of the data gathered. As of December 2016, Facebook had more than 1.86 billion monthly active users (i.e., users who logged in to Facebook in the last 30 days). Netflix had more than 93 million subscribers as of January 2017. Suddenlink, one of the major cable broadband service providers, had approximately 1.5 million subscribers as of May 2015. Their servers or set-top boxes record second-by-second or click-by-click activities happening on the site or the television station, which amount to an enormous amount of data to process and compute. Media companies such as Rentrak provide audience measurement reports using set-top box data. Given that many cable or satellite television subscribers use television, Internet, and phone bundles, set-top box data can provide even more granular information that captures subscribers’ multiscreen usage behavior. The server-centric approach has flaws, as well. The issues are often related to who and what are measured (Webster et al., 2014). Server-centric measurement techniques generally lack the ability to track individuals. Because of this limitation, several counting biases can emerge when (1) multiple users use the same computer, (2) one person owns multiple computers, (3) cookies are deleted or not accepted, or (4) robots or spiders manipulate web activities (Media Rating Council [MRC], 2007). In terms of what is being measured, most server-derived measures are behavioral measures, such as 386

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frequency, duration, and page views. Although it is reasonable to say that behaviors reveal a great deal about our tastes and preferences, it may not always be the case. There are external factors that influence actions other than individuals’ interests or preferences (Webster, 2014). Thus, researchers should be more cautious about how to interpret the behavioral measures at hand, especially when other qualitative measures are unavailable.

Moving Forward: Persistence or Evolution of Convention? Phalen (2006) projected that the fragmentation of the media environment and the nonlinearity of the viewing experience (i.e., time-shifted viewing) would challenge the practice of audience measurement. There have been continuous efforts to overcome these challenges, as well as emerging challenges that did not exist back then. Audience research firms have expanded their sample sizes to be able to predict the size and composition of available media offerings with an acceptable level of reliability.The industry’s struggle with time-shifted viewing led to the adoption of new metrics, such as C3 ratings (i.e., ratings for average commercial minutes in live programming plus three days of playback on DVRs after the live or original broadcast). Despite these efforts, the “anytime anywhere” nature of media consumption in the era of smartphones has made the business of audience measurement even more complicated. This section highlights a few important future agenda items for those interested in studying and practicing audience measurement. Again, these highlights are not meant to be exhaustive, given the extent and pace of changes happening in the current media environment. Specifically, this section discusses three key changes that will impact the way audience ratings are measured and reported: (1) audience measures other than exposure, (2) verification (accreditation) of audience measures for emerging digital media, and (3) cross-platform and cross-device measurement. Finally, the chapter closes with a few state-of-the-art audience measurement techniques that have taken shape in recent years.

Audience Measures Beyond Exposure The most basic yet important convention of audience measurement is that it is exposure that is being measured and reported. From the Crossley ratings to Hooperatings, to meters and servers, this tenet has never been challenged. However, digital technologies have complicated this convention since it is possible to record virtually any type of audience behavior happening on digital platforms. For instance, we can count the number of likes, comments, and shares for a post or clip on Facebook. We can even go further and count different reactions (e.g., the number of different emotions, such as Like, Love, Wow, Sad, and Angry). On Twitter, a tweet can be measured by counting how many people replied to, liked, or re-tweeted it or what hashtags were most frequently attached to the tweet or retweet. YouTube gives us a sense of how popular a clip is by counting the number of views, thumb-ups, or thumb-downs, or comments. Napoli (2011) noted that any platform with an audience’s digital footprints has the capability of producing measures beyond exposure; as a result, he deconstructed the dimensions of audience behavior into a series of sequential units from awareness to exposure, to behavior. The most notable audience dimension is the concept of audience engagement. Despite numerous efforts to define and measure engagement, from both academia and industry (Advertising Research Foundation, 2006; Brodie, Hollebeek, Jurić, & Ilić, 2011; Oh, Bellur, & Sundar, 2015; van Doorn et al., 2010), there has not been consensus on its definition or measurement. If engagement is a multidimensional concept composed of the cognitive, affective, and behavioral dimensions (Brodie, Hollebeek, Jurić, & Ilić, 2011), the measures corresponding to each of these dimensions should be clarified. What digital traces of online users can be viewed as cognitive, affective, or behavioral engagement? To make things 387

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more complicated, existing audience measurement companies or social media outlets have already been providing their own versions of engagement metrics and dashboards, where subscribers can interact with these numbers (e.g., Nielsen’s BuzzMetrics, Fenton.com’s See-Say-Feel-Do metrics, Facebook Insights, and Google Analytics, to name a few). It would be interesting to see whether exposure would still be used as the audience currency or replaced by other measure(s) capturing different aspects of audience behavior beyond exposure (Nelson & Webster, 2016). It is also important to understand the definition and meaning of different metrics employed and the association between these metrics and various KPIs (Key Performance Index)—whether they be purchases, donations, membership, activism, or voting. By doing so, we can disentangle the relationship between different types of media engagement and behavior.

How to Secure the Transparency of Audience Measurement From Digital Enterprises Setting an audience currency is one thing, but getting it validated is another. For subscription-based media, such as newspapers, magazines, or premium cable channels, providing audience measurement is quite straightforward. It is just a matter of an external audit to verify the subscription data provided by the media organization (Phalen, 2006). In the early days of print media, the Audit Bureau of Circulations (ABC, predecessor to the Alliance for Audited Media [AAM]) worked as a third-party organization that guaranteed authenticated circulation numbers for print media. For advertising-supported media, more efforts are required from all involved in providing and using audience information. The Media Credit Council (MRC) is the equivalent to the AAM in the advertising-supported media industry, and serves as a “watchdog” to secure sound and ethical practices of measurement companies. Founded in 1966 as a result of an investigation into the quality of ratings services for television and radio, the MRC (formerly the Broadcast Rating Council and the Electronic Rating Council) is an industry-funded organization that evaluates audience-rating methodologies and accredits the procedures adopted by audience measurement service providers (Media Rating Council, n.d.-a). The MRC is made up of those impacted by media audience measurement, including media organizations (broadcast TV, radio, cable TV, print, Internet), advertising agencies, and advertisers (Media Rating Council, n.d.-b). Its main role is to bring credibility and accountability to those involved in providing audience measurement services. With more and more online and social media outlets gaining power as advertising media, advertisers have long demanded that these “digital enterprises” go through a thorough accreditation process by an independent third-party organization. The ANA refers to these digital companies as “walled gardens”—“a platform where the career or service provider has control over applications, content, and media, and restricts convenient access to non-approved applications or content” (Association of National Advertisers, 2017, March 17). The two biggest walled gardens, Facebook and YouTube (owned by Google), have recently announced that they would undergo audits by the MRC to show their commitment to the accuracy of audience information provided to those buying ad spots on their sites (Heath, 2017, February 10; Tan, 2017, February 21). At the time of this writing, the ANA has specifically asked Amazon, Foursquare, Instagram, LinkedIn, Pinterest, Snapchat, and Twitter to allow independent audits by the MRC. Citing a survey that was conducted with its 113 member organizations, the ANA emphasized that 89% of the respondents viewed the decision of Facebook and YouTube to break down their walled gardens as positive for the advertising industry. None of these companies have responded to the request from the ANA yet, and it remains to be seen what their next steps might be. If the history of the audience measurement industry has taught us anything, it is that securing the transparency and soundness of the audience measurement method employed is a necessary condition to make interested parties

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aware of any potential biases or errors involved in each method, so as to improve the overall quality of audience measurement techniques.

Cross-Platform, Cross-Device Audience Measurement The 2016–2017 TV season is another year of disaster for major networks. It is projected that all big four networks (ABC, CBS, NBC, and Fox) will end the season with an average rating below 2.0 (Crupi, 2017, March 6). It is no secret that many viewers, especially millennials, no longer watch television the way their parents did. Instead, they have migrated to streaming services, such as Netflix, Amazon Prime, HBO Now, or Hulu. To make matters worse, more and more households have adopted TV-connected devices, such as Roku, Amazon Fire TV, Apple TV, Google Chromecast, and game consoles, such as Microsoft Xbox, Nintendo Wii, or Sony PlayStation.These trends correspond to the two types of media fragmentation: intramedia fragmentation (i.e., expansion of a medium’s ability to deliver multiple content options) and intermedia fragmentation (i.e., the addition of new media technologies to the media system) (Napoli, 2003, pp. 136–137). Nielsen refers to the first as media fragmentation and to the second as device fragmentation (Ramaswamy, 2017). As we learned from the history of the audience measurement industry, most audience measurement firms have specialized in measuring a single medium (Webster et al., 2014). However, the fragmented media landscape and the convergence of digital media mean that audience measurement companies need to be able to track audiences across multiple platforms and devices. Currently, comScore and Nielsen are leading the way by employing a cross-platform measurement approach. Nielsen began a major initiative called “GTAM (Global Television Audience Metering),” which enables the measurement of cross-platform and cross-device viewing behavior (for a technical description of the GTAM approach, see Ramaswamy, 2017). Also, comScore acquired Rentrak to rebrand itself as a cross-platform measurement company (comScore, 2016, February 1). In addition to the “unified digital measurement” technique, which blends user- and server-centric approaches to online audience measurement, the merger with Rentrak enables comScore to encompass TV, movie screen, on-demand, and mobile devices. The next step for audience measurement is to be able to come up with comparable metrics across multiple platforms. Exposure-based metrics have been the audience measurement standards since the beginning of commercial audience ratings. For those involved in media buying and selling, these exposure-based metrics are the “coin-of-exchange”: simple, yet easy to understand (Nelson & Webster, 2016). Digital publishers are also following the same approach. Recently, Facebook announced that it would provide marketers with a data tool that can compare its metrics to TV metrics so that advertisers can easily understand how effective their ads are on different platforms (Sloane, 2017, January 31). More cross-platform industry reports have become available as well. Nielsen publishes a quarterly report, “Comparable Metrics Report,” which claims to help display an “apples to apples” view of media consumption across multiple screens. Similarly, comScore provides a yearly white paper, “U.S. Cross-Platform Future in Focus,” which summarizes cross-platform media consumption trends in the United States.

The Next Generation of Audience Measurement: Big Data and Neuroscience The past few years have witnessed a surge of the term “big data.” Although one can argue that the audience measurement industry has already been working with gigantic data sets originating from different types of meters, the explosion of audience data from digital media provides us with an opportunity to think deeply about how to make the best use of these big data sources. One way we

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can use big data is to predict future ratings (Sereday & Cui, 2017). Traditionally, audience behavior has been modeled by a combination of audience and media factors (Napoli, 2003; Webster et al., 2014). What can be improved from existing predictive models is to incorporate external sources, such as social media conversations on specific programs or channels, as an indicator of audience engagement (Napoli, 2012). Another way to use big data is to merge audience data with external behavioral data. For example, TV set-top box data can be merged with election records to show the effect of media consumption on political participation. Shopper panel data can be combined with ­peoplemeters or computer meters to estimate the effectiveness of advertising campaigns (LiuThompkins & Malthouse, 2017). Another emerging area is the application of neuroscience to audience measurement in order to detect emotional responses to media content or advertising. A growing body of research in behavioral economics, psychology, and neuromarketing has shown the importance of emotional responses in decision-making (Smith & Marci, 2016). For example, Pandora partnered with Neuro-Insights, a neuroscience-based market research firm, and conducted a study that measured their listeners’ brain responses by mixing audio ads to people’s personalized music lists (Pandora, 2017, March 10). The study revealed that ads served within people’s personalized music environment were more memorable than ads served on other media platforms, such as radio, television, or mobile phones. Pandora concluded that it is easier to tap into one’s emotions when content is served in a person’s personalized environment, resulting in a greater level of engagement. Although it is still in a nascent stage, understanding how to decode and interpret neural responses to media content and linking them to cognitive, affective, and behavioral measures will open a new avenue to audience measurement. In conclusion, historical accounts in the audience measurement industry have shown us the constant struggles between the persistence and evolution of convention. It will be interesting to see how emerging audience measurement methods influence or replace established practices. For audience scholars and professionals, clearly understanding and interpreting numerous audience metrics will become more important for their specific research or business purposes, not to mention understanding the advantages and disadvantages of different measurement approaches.

Acknowledgments The author thanks Drs. James Webster, Jay Newell, Michael Bugeja, and an anonymous reviewer for their comments on an earlier version of the manuscript. The author also thanks Su-Yeon Cho for her assistance with this project.

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New York: Columbia University Press. Napoli, P. M. (2011). Audience evolution: New technologies and the transformation of media audiences. New York: Columbia University Press. Napoli, P. M. (2012). Program value in the evolving television marketplace. Retrieved from www.twcresearchprogram. com/pdf/TWC_Napoli.pdf Napoli, P. M., Callegaro, M., & Lavrakas, P. J. (2014). Internet and mobile ratings panels. In M. Callegaro, R. P. Baker, J. Bethlehem, A. S. Göritz, J. A. Krosnick, & P. J. Lavrakas (Eds.), Online panel research: A data quality perspective (pp. 387–407). West Sussex: John Wiley & Sons, Ltd. Nelson, J. L., & Webster, J. G. (2016). Audience currencies in the age of big data. International Journal on Media Management, 18(1), 9–24. doi:10.1080/14241277.2016.1166430 The Nielsen Company. (2010). The industry benchmark for Internet audience measurement. Retrieved from www. nielsen.com/content/dam/nielsen/en_us/documents/pdf/Fact%20Sheets/NetView_US.pdf The Nielsen Company. (2011, September 13). Nielsen releases first mobile media rankings based on audience measurement data from android smartphone meters [Press release]. Retrieved from http://ir.nielsen.com/ investor-relations/shareholder-information/press-releases/Press-Release-Details/2011/Nielsen-ReleasesFirst-Mobile-Media-Rankings-Based-on-Audience-Measurement-Data-from-Android-SmartphoneMeters/default.aspx The Nielsen Company. (2014). Nielsen “sweeps” months. Retrieved from www.nielsen.com/content/dam/ corporate/us/en/docs/solutions/measurement/television/Nielsen-Sweeps-Periods-2013-2014.pdf The Nielsen Company. (2016, October 24). Nielsen announces launch of national television out-of-home measurement service [Press release]. Retrieved from www.nielsen.com/us/en/press-room/2016/nielsen-announceslaunch-of-national-television-out-of-home-measurement.html The Nielsen Company. (2016, December 21). Nielsen to increase portable people meter sample size by 10% across 48 radio metro areas [Press release]. Retrieved from www.nielsen.com/us/en/press-room/2016/nielsen-toincrease-portable-people-meter-sample-size-by-10-percent-across-48-radio-metro-areas.html Oh, J., Bellur, S., & Sundar, S. S. (2015). Clicking, assessing, immersing, and sharing: An empirical model of user engagement with interactive media. Communication Research, Advance online publication. doi:10.1177/0093650215600493 Paik, H., & Comstock, G. (1994).The effects of television violence on antisocial behavior: A meta-analysis. Communication Research, 21(4), 516–546. doi:10.1177/009365094021004004 Pandora. (2017, March 10). Neuroscience proves that adjacent content increases ad recall. Retrieved from http:// pandoraforbrands.com/insight/neuroscience-proves-that-adjacent-content-increases-ad-recall/ Phalen, P. F. (2006). Audience research and analysis. In A. B. Albarran, M. O.Wirth, & S. M. Chan-Olmsted (Eds.), The handbook of media management and economics (pp. 623–636). Mahwah, NJ: Erlbaum. Prior, M. (2009). The immensely inflated news audience: Assessing bias in self-reported news exposure. Public Opinion Quarterly, 73(1), 130–143. doi:10.1093/poq/nfp002 Radway, J. (1988). Reception study: Ethnography and the problems of dispersed audiences and nomadic subjects. Cultural Studies, 2(3), 359–376. doi:10.1080/09502388800490231 Ramaswamy, A. (2017). The big picture: Technology to meet the challenges of media fragmentation. Nielsen Journal of Measurement [Online], 1(3). Retrieved from www.nielsen.com/us/en/insights/reports/2017/thebig-picture-technology-to-meet-the-challenges-of-media-fragmentation.html Sereday, S., & Cui, J. (2017). Using machine learning to predict future TV ratings. Nielsen Journal of Measurement [Online], 1(3). Retrieved from www.nielsen.com/us/en/insights/reports/2017/using-machine-learning-topredict-future-tv-ratings.html Sloane, G. (2017, January 31). Facebook gives marketers new data tools to compare TV. 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25 THE TRANSFORMATION OF ADVERTISING AGENCIES IN A DIGITAL WORLD Jürg Kaufmann Argueta and Francisco J. Pérez-Latre

Introduction and Previous Research The Internet has changed advertising’s DNA (Bugge, 2009). Although it does not change agencies’ traditional reason for existence (work with clients to make them improve their business and sales), it certainly has transformed the path to reach that goal. The development of digital technologies has had a great impact in the advertising industry. Content digitization and the fact that the Internet became the essential communication network have probably led to one of the greatest challenges for the industry in its existence. As a matter of fact, the nature of the activity we call advertising today has changed drastically in the digital era: entire market segments, like mobile advertising, gaming or online video, did not even exist a decade ago. Digital breakthroughs have made a new media landscape possible, but many agencies still struggle to find out how to profit from it. Since the early advertising banners on the web, continuous advances have led to rich-media formats that could not be foreseen in the twentieth century. Some similarities could be drawn between the advent of TV and its impact on advertising agencies and the arrival of the Internet. Both took agencies by surprise and led to high expectations, but there was also a significant amount of confusion. What were they? What were they useful for? How could they be used? Those were some of the questions that both media raised once they got into the picture. As usually happens when innovations are adopted (Rogers, 1983), the first steps were timid. Conventional wisdom said that a new medium was going to enlarge the media landscape: advertisers would have a new channel to reach their customers. It turned out to be much more than that, as advertising agencies were forced to establish their business models around new media in order to guarantee their survival (Tungate, 2007). Beyond the similarities that can exist in the effects on advertising between the emergence of television and digital media, it is safe to say that digital technologies have led the advertising sector toward uncharted territory and prompted a true revolution. Television led the mass-media concept to its full expression, as audiences larger than ever before could be targeted. Nevertheless, as an advertising channel, it still relied on the advertising model of impact reach and frequency. Along the years, digital media have really put traditional advertising communication models in crisis.Therefore, it can be affirmed that the incessant fragmentation of audiences, the creative power of consumers and the new consumptions of advertising—less intrusive and more shared with its recipients—have substantially altered the communicative context in which advertising agencies work.

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In the following pages, we analyze the changes that the new digital communication is provoking at the structural level, which affects above all the agencies’ organizational aspects. Structural components correspond to aspects of organizational design, but they also include other related aspects. In his original model, Galbraith (1977) analyzed them independently, examining management structures or professional profile management. In our case, from an organizational point of view, the crucial axis for analysis will be the management and structure of agencies with their traditional departments: accounts, creativity and planning. At this point it is important to mention that a great variety of academic works have focused on studying the impact of the new digital technologies in the field of marketing and advertising, but not of its consequences on advertising agency management. One can therefore conclude that hardly a consistent scholarly effort has been made on this subject (Del Río & Kaufmann, 2014).

The Digital Transformation of Agency Structures Organizational structures can be analyzed from different perspectives (Mintzberg, 1979). We focused on two main aspects: (1) departmental organization and (2) professional structure, indicating the professional profiles that are needed to develop the agencies’ specific services. Historically, advertising agencies have had three main departments: accounts, strategic planning and creative (Takemura, 2012).The processes and activities that led to this structure can be described in a quite linear way: account management keeps the client business and tries to maximize it; strategic planning looks for the kind of valuable consumer insights1 that can increase the creation of useful strategies; the creative department generates the ideas that support communication activities to satisfy client needs. More technical and administrative tasks follow, like hiring production houses that can collaborate in the production of spots or final art (Takemura, 2012). This classic division of work has been transformed by the complexities that accompany digital technologies. Such technologies compel practitioners of different fields to think in a creative and strategic way under the same integrated multimedia solutions “umbrella” (Hackley & Tiwaskul, 2011, quoted in Takemura, 2012).

Changes in Account Management Account executives manage accounts for advertising agencies. In the sector’s terminology, an account is the client served by an agency with different communication outputs. This department has the responsibility of managing relationships with clients: it is the agency’s external face. Its role is to maintain a relationship of trust with clients, keep them satisfied and persuade them to be loyal to the agency services. The account management department is the interface that allows agencies and advertisers to work together in effective and efficient ways. To a certain extent, it is the bridge that allows information to flow from clients to agencies and the other way around. From the client’s perspective, the account management department is, in fact, the agency. In the same way, from an internal agency perspective, “account management people” represent the client’s point of view. According to Hameroff (1998), account management implies taking care of the client business. In order to achieve this goal, it needs to carry out certain tasks: 1. In-depth understanding of the client business. That means familiarity with its business portfolio, activity plans, sales goals, communication challenges, way of thinking, competition in its markets and so on. It is a responsibility that entails active listening and a permanent search of information. Understanding the client business is possible only if there is a lively and continuous contact

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2.

3.

4.

5.

with key people in the client’s organizational chart. Only that personal contact puts the agency in touch with the client’s real needs.This is one of the key functions of the account department, which depends on the quality of its information to produce outstanding work. Partner relationship building.The department has to strive to build and keep a collegial relationship where trust and transparency stand out. When each part keeps the other up to date about all its activities, it is more difficult for unpleasant surprises to undermine the relationship. Again, only personal contact can lead to a strong relationship. Such efficient interaction has the potential to elevate agencies from mere service providers to strategic consultants that actively share the client’s successes. Such partner relationships make agencies more likely to keep working with the client over longer periods of time. Designing communication proposals. The department has to work closely with the client to elaborate a communication plan with the activities that can satisfy client needs. Every plan should include goals, means to achieve them and indicators to evaluate that the initial objectives have been reached.The department has to be accountable about the effectiveness of the agency’s work. Mediation between professionals of both sides. Although the department is in charge of daily contact with the client and therefore is its main go-between, it also has the task of promoting other conversations and meetings between client and agency teams. In such a way, clients get to know the professionals who develop the daily work, leading to better mutual understanding. Monitoring different operating stages. Account management also fulfills an important control function. It is not enough to receive authorization for a communication strategy. It is also necessary to supervise the whole campaign in all its implementation stages: final art delivery, content production, performance indicators to assess effectiveness, final evaluation and so on.

The realization of the aforementioned tasks remains today as crucial as it was before, and appears to be relatively unchanged. Perhaps change is related to the way in which information and communication technologies facilitate interactions in working environments, leading to relationships that use digital platforms instead of personal contacts (Morgan, 2014). But there don’t appear to be essential changes. The key goal is to keep the client business and, if possible, increase it over time. Account managers act like a thermometer to calibrate the state of the client relationship. Clients leave agencies for three main reasons (Hameroff, 1998): lack of satisfaction with the service rendered; more economical offers from competing agencies; conflicts or misunderstandings. Account executives need to detect those problems at the start to take appropriate measures and keep the issues from deteriorating.They need skill to discover potential conflicts and assess the quality of relationships: they need to “smell the smoke and put out the fire” before it spreads. Agency’s works are constantly evaluated by clients. After all, a good client is always concerned about the value of its advertising expenditures. When the answer is negative, it is time to look for new service providers. Therefore, account people need to be alert and mindful of the fact that their success is fragile. The more proactive the department is about dealing with potential problems, the higher the likelihood of turning doubts and concerns into trust and security. In order to preserve its stability when offering services in advertising, agencies also need profits. The account management department is responsible for managing the bottom line effectively. This is a crucial management element, since it also affects client satisfaction. That is why agencies should not hesitate to show their fees or explain to clients the use of their billings (Hameroff, 1998). Good clients are not late paying agencies their services, provided they consider that the bills they have to pay are reasonable. But they need to understand well the elements that shape the service’s costs. That is why it doesn’t come as a surprise that the account department has a responsibility to explain and justify fees and commissions to the client with transparency. 396

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What has changed most in account management? Perhaps the way accounts are kept over time. There are profound changes in the time frames established for agency-client relationships. In the past, clients usually assigned work to agencies for established time periods, typically a year. Agencies were certain that clients were its partners for all the hired communication services at least during that time, which facilitated an environment of trust. Agencies were also able to forecast to some extent their activity levels and their structures were quite stable. In the last decade, the economic crisis and the cost reduction measures that were needed as a result have invited many clients to change their traditional way of assigning accounts for more project-based systems. The agencies’ situation becomes more uncertain, making trust and security a bit more difficult. A recent survey about advertising agencies’ challenges by the Spanish trade magazine Anuncios (Hernández, 2013) said that agencies need to adapt to new working dynamics. It showed that specific project assignments are commonplace as opposed to longer relationships: in the last two years, the traditional way of assigning accounts has changed. Although the economic crisis and budget cuts are the main drivers of change, most agencies understand the need for a type of relationship better suited to the communication demands of rapidly changing digital environments. The management of project-based relationships can be a driver of change in agencies’ departmental structures that will become more flexible and nimble to adapt to performance-based contractual commitments. Structures will need to be simplified, with a reduction of fixed costs as one of the more likely consequences.The way organizational charts are established around project teams—with freelance workers joining to solve ad hoc problems—will be ever more important.

Changes in Creative “Creativity is that indefinable aura or substance that is truly the heart and soul of the advertising agency.” (Hameroff, 1998, p. 159)

If we had to define the reason for advertising agencies’ existence we would probably say that this is the generation of ideas that make the client business grow. Needless to say, the creative department is at the heart of this activity. In the past, the main creative function was the creation of advertising messages, and its goal, the communication of product benefits. As media got flooded with advertising messages, ads’ creativity was the truly differential element that allowed content to stand out from the crowd. Creativity was what really made the impact on final consumers, and it was at the service of message creation. The creative revolution of the 1960s led to the merger of the copywriting department with artistic direction, giving birth to the well-known creative team (art+copy). Following Arens and Schaefer (2007), the basic functions that make up the team are described: (1) copywriter; (2) art director; (3) creative director. Copywriters draw up the verbal part of texts. Krieff (1993) says, Nothing is frailer or more delicate than an idea. Add something to it and it’s out of balance. Take something away from it and you may take away its effectiveness. Make even a slight change and the whole meaning can be changed. Coming up with a good idea, one that will attract an audience, is part of what writing copy is all about. Putting the idea into just the right words that will make the audience take action is what good copywriting is all about. (p. 125) 397

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Therefore, they have the difficult task of selecting the words so that ideas become relevant for the target audience.They have to use grammar well and be experts in wording.The ability to summarize a lot of information in a few words (Krieff, 1993) is one of their main skills. Attention to ads is very scarce and for that reason the most important information should be at the beginning. Copywriters also know the rules for writing the different elements that shape an ad: headline, body text, slogan and so on. They have a capacity to tailor copy to different media: it is not the same to write for a magazine, where the reader calmly flips through the pages, as it is for an out-of-home sign on the highway that is read at 120 km per hour. Art directors look after the ads’ nonverbal part, completing the copywriters’ task. They develop image and sound for the ads, which can be audio-based, image-based or print-based. Copywriting and art direction are separate functions because they often require a different set of skills: it is also difficult to find people who stand out in both. Nevertheless, each area’s specialists contribute to each other’s facilitating a seamless integration of images, words and sounds. According to Krieff (1993), the main quality of an art director is the ability to lay out the elements of an ad in an artistic and effective way. The objective is to prepare an outline or plan showing how the components of the ad are organized (including copy) and how images and illustrations are arranged to make attractive ads. In the same way that copywriters can adapt their copy to different media and formats, art directors have the ability to tailor visual design to different message platforms: print magazine ads, TV spots, radio jingles, online videos and so on. Art directors have a good artistic vision but do not have to produce final art: agencies hire production companies to fulfill that role. Creative directors are in charge of the creative team. They typically have worked as copywriters or art directors before. Their role is supervising the work of the creative team and they have responsibility for the creative product, the final form adopted by advertising messages. Usually, creative directors give a particular style to the department’s work and set the acceptable quality levels. They have the power to reject final creative products if they consider them below the agency standards. We can’t forget that creative design has traditionally been (and still is) the most important service an agency can offer to clients. It is also the skill that most differentiates one agency from the other, and often it has been the main cause of their success. Many agencies have grown from small boutiques to powerful advertising networks thanks to an excellent creative department (Tellis & Redondo, 2001). The digital transformation has impacted creative departments profoundly and has expanded them, as the meaning of creativity becomes wider and the creative team grows. As explained earlier, creativity played a key role in the growth of the advertising business, which, until recently, was basically in the creative department’s hands.The concept of creativity has expanded in two directions. On the one hand, it is not an exclusive property of the creative department anymore, as any agency employee can contribute with creative ideas (Khai Meng, 2013). On the other, agencies have discovered that their creativity’s potential is tied not just to the generation of messages but also to the generation of ideas that acquire their true meaning in the framework of marketing and commercial relations and not just in communications (Khai Meng, 2013). In this context, agencies have been transferring their creative know-how to idea generation as they introduce themselves in innovation company processes beyond their traditional activities, evolving to become innovation houses and idea factories. Such a trend is transforming creative departments in relevant ways, to the point that there is a need to rethink their structure and modus operandi. Big Spaceship is a pioneering company in adopting new models for creativity management. It defines itself as a combination of advertising agency and digital production house (www. bigspaceship.com/services). Its unique organization has received the attention of innovation experts, and Harvard Business School has written a case about its model (see Groysberg & Slind,

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2011). There are three factors that stand out in Big Spaceship’s way of managing the relationship of creativity and innovation: 1. Lack of a creative department. In Big Spaceship, there doesn’t exist a creative department as such, as all employees participate in the creative function. As a matter of fact, assigning the label or function of creative takes for granted that other agency people do not need to be creative: the rest of the team has a license to forget innovation. Ideas can come from any employee and there is a need for help and commitment from all of them so that ideas flow and innovation becomes a reality. 2. Participation is fostered. Innovation-oriented agencies are places where everybody is invited to contribute to any project. As any employee can be creative, there is a realization that ideas can come from anywhere, and that collaboration is one of the key ways to foster innovations. 3. Quiet and open working space. These ideas have influenced the way working spaces have been created at Big Spaceship, where there are no closed offices. Desks, halls, rooms and offices are laid out so that all can listen, participate, criticize and collaborate. In order to foster a creative climate, many innovation agencies have invested in quiet spaces.This is a strong breakaway from traditional agencies that had a hyperactive environment of noise and bustle with many phone calls and loud voices. That is one of the reasons why, according to many practitioners, agencies are stressful places. Innovative agencies, on the contrary, are quiet places, where phones ring very little, people do not scream and there are no meetings at unlikely hours. Technology facilitates all those goals. It allows people to speak without using the phone, through chats, Slack, WhatsApp, or other communication systems that are at our disposal. Big Spaceship defines itself as a company of introverts. The world of innovation is a world of thinking and reflection that requires a degree of isolation, concentration and more serenity. In environments of frantic movement, it is difficult to innovate. The bustle that comes with any entrepreneurial activity needs to be controlled and harnessed. In new innovative agencies, the classic paradigm copywriter+art director (copy + art) has lost part of its meaning and has evolved to teams that are structured around disciplines: strategy, production, design and programming. Big Spaceship changed its structure from work and function-based (traditional departments) to a structure of seven-person multidisciplinary teams in 2008 with the goal of improving the quality of final art. By creating autonomous teams that manage and supervise projects from beginning to end, the previous “cascading” work of departments was improved. Departments often tend to become self-contained areas, where a team sees only the small part of the project where they are involved. The big picture of the whole project is lost, and the lack of focus that leads to mistakes in the initial stages is inevitably transferred to the next stages. In order to avoid these mistakes and inefficiencies, Big Spaceship made an option for blurring the limits of functions and departments and involving the disciplines from beginning to end. Teams remain together from project to project and become mini-agencies able to work with a lot of autonomy (Lebowitz, quoted in Bryant, 2011). Such new practices are an excellent case study for understanding how departmental structures are changing in a quest to create more integrated work teams to create better-quality products. AKQA is another well-known digital agency. It also gives particular relevance to product and technology integration, to the point of proposing to replace “art & copy” with “code & copy”: copy+programming instead of copy+art direction. Rei Inamoto (2011), AKQA’s chief creative officer, has written about the need to embrace a culture of code to stay relevant. According to him, a large part of the industry still considers technology a form of execution. Technology is then set aside to the realm of production tasks and the strategic

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value behind the good use of programming is lost. Inamoto uses the great start-ups of the last decade as examples: YouTube, Facebook, Twitter, Instagram . . . Such companies have been able to profit from technology in a simple and creative way. Brands and agencies would be helped by following them to win consumers’ hearts and minds. Code has also been underlined by Google’s Art, Copy & Code project (www.artcopycode.com), integrated with Google Advertising Re-Imagined, a campaign to win credibility among advertisers and capture advertising talent. In the introductory part, Google states that technology has driven a second creative revolution. Code is added to the core of creative processes, allowing brands to create new forms of expression and commitment. Art, Copy & Code are the new creative team for a connected world. In a similar context, Takemura (2012) has interviewed advertising practitioners in Sweden, trying to detect agency change. That study showcased the development of a new professional profile: the technologist, an expert in computer programming who is aware of the different advertising digital formats’ possibilities and boundaries. That person gives advice to traditional creative teams so that the creative team becomes a triangle. The key for new creative breakthroughs is that creative teams add the talent of technologists to the beginning of the creative process. The relationship with technologists should be understood as a relation of equality and collaboration. Technologists are then considered an integral part of creative teams. In innovation-oriented agencies the classic structure for creativity management is transformed. New ways of organization are adopted, and technology, project management and strategy are ever more important, without forgetting that creativity also belongs to all those fields.

Changes in Strategic Planning The Strategic Planning Department is somewhat different to the previous one: its history is more recent. It was established around 40 years ago in the United Kingdom and traces its origin to strategic planning (Blanco, 2010). In its beginnings, strategic planning was known as account planning. It was born in two London agencies where its founders, Stephen King de J. Walter Thompson’s Stephen King and Boase Massimi Pollitt’s Stanley Pollitt, were disappointed with the capacity of advertising agencies to face the challenges of their time (Baskin & Pickton, 2003). Both were looking for ways to combine market research and consumer insights to produce more creative and effective advertising. Strategic planning brought the consumer voice to creative processes, leading to a new revolution in the history of advertising agencies (Blanco, 2010). Baskin (2007) explains the main job of planners: Agencies need to enhance their ability to produce outstanding creative solutions for brands that will be effective in the marketplace. It is the planner’s job to guide or facilitate this process via the astute application of knowledge, otherwise known as consumer and market understanding. (p. 4) With their deep experience, planners not just have a valuable knowledge of markets and consumers—they also know how to tie it to their client businesses. They build a bridge that allows consumers to connect with brands. Therefore, planners go beyond collecting data to becoming specialists to apply their learning (Baskin, 2007). Baskin and Pickton (2003) grouped planners’ tasks in five functions: (1) researcher; (2) consumer voice; (3) strategist; (4) creative catalyst; (5) activist and process facilitator. The growing complexity of advertising in digital environments has led to important transformations in planning departments.

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The main task of planners in the past was a deep consumer understanding that included brand and market perceptions. Such knowledge helps to find key consumer insights to produce more relevant creativity. But today planners carry out deeper market analysis: they have gone from consumer voice to market voice. They not only know the consumer but also are experts in brand macro and micro environments. Their knowledge area has grown from the consumer to all the factors that shape markets and influence brands. When account planners started, agencies were positioning themselves as advertising message creativity experts and planners were called to be key in improving creative processes, helping to create ads more relevant to consumers and more profitable for clients (Blanco, 2010). Today there is a new integrated marketing context and advertising agencies look beyond their specialization to a wider communications concept. Agencies do not limit themselves to creating ads as they carry out multidisciplinary communication work. They have moved from the creative process to a strategic process. The integrated marketing communications or IMC concept expresses the change very well (Baskin & Pickton, 2003). IMC is the development of creative campaigns and marketing strategies that combine multiple marketing disciplines (paid advertising, public relations, promotional actions, social media and so on). It is not just a matter of presenting coherent messages through all communication channels: IMC is designed to take advantage of each discipline’s capacity so that the whole achieves a deeper impact than the sum of its parts. Thus, planners do not focus only on creative processes but work more deeply, looking after the whole strategic process that integrated communication environments demand. Strategic planning has also extended beyond the field of advertising agencies as it takes care of the whole strategic process, taking a more global view. In such context, the planner’s work also influences media agencies and client marketing departments but does not stop there. Baskin and Pickton (2003) mention among their conclusions that strategic planning will reach its summit to the extent that it is performed in a media-neutral context and will tend to go outside advertising agencies to create new strategy agencies. In conclusion, we can say that the strategic department is experiencing the same trend to growth we saw in the creative department. Planners are now representing all the market players, becoming integrated communication strategists who work in a more neutral context. In order to describe the situation of advertising departments fully we have mentioned account management, creativity and strategic planning.We haven’t said anything about the media department, previously a part of the agencies’ structure that has been transformed. Media-buying services had a strong growth in Europe in the 1980s and media planning progressively separated from agencies to establish new companies specialized in the media function (Etxebarria, 2005; Pérez-Latre, 1995). In the 1990s the largest U.S. agency network or its holding companies unbundled their media planning services to create new business units in their conglomerates (Cappo, 2003). The business of planning and buying advertising spaces has evolved to become a separate industry within the big holding companies (Tungate, 2007). It would be very interesting to further analyze the big changes that have taken place in media agencies, but that is outside of this chapter’s object of study. However, it is worth mentioning that in a world of integration and converging media, it is rather paradoxical that the discipline of media planning has been separated from the advertising agency, because in today’s world both disciplines require a tighter partnership (Tungate, 2007). There are some other departments, like traffic (where times for delivering final projects are controlled), documentation, finance and administration departments and so on. Although their work is necessary to complete the agency work correctly, they exist to support the advertising process (Etxebarria, 2005).

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Changes in the Agency-Client Relationship Besides the changes that the three classic advertising agencies departments are undergoing, it is also worth mentioning that the digital age is challenging the agency-client relationship. In this much more complex communication environment, it seems that agencies operate within two opposite dimensions: to become a very specialized supplier in a very specific field of communication or to become a valid business partner that offers integrated solutions in all areas of service. This reality puts the agencies at a difficult crossroads. On the one hand, they may choose to leave aside their commitment as business associates, to limit themselves to work on very specific projects. This option leads them along the path of specialization of becoming the best of their kind. It is a simpler path for the agency, but at the cost of sacrificing its strategic role by becoming a mere provider of services. On the other hand, agencies may pursue their desire for greater strategic involvement with the advertiser and try to offer the majority of marketing services under one roof. In this way, all the advertising activities of the client are in the hands of a single intermediary, but faced with the impossible task of offering great talent on all fronts. More recently, the integrated services model has emerged, which seeks to combine the advantages of both sides: access to the widest variety of specialized talent without having to give up a single intermediary to ensure greater harmony and efficiency in the process (Williams, 2014). This current model is based on the concept of creating a new agency that integrates the best specialists from the network of agencies that are part of the same parent company. A company is established that specifically serves the needs of a single client.This type of organization is often called a “team agency” or “dedicated agency” (Parekh, 2012a) and seeks to combine the strengths of the two opposite sides: to bring the best talent by specialty and at the same time to allow the client to deal with a single interlocutor. In this way, the holding company offers an integrated marketing unit that fits the specific needs of the client. It is well worth mentioning that this integrated services model has been possible only through the strong consolidation of the advertising industry since the 1980s in the form of major communication holding groups, such as WPP, Omnicom, Interpublic and Publicis. In recent years, these “parent companies” have invested huge amounts of resources into developing digital competences and tools via acquisition or internal development so they can now offer this new acquired talent through their “dedicated agencies”. Publicis in 2003 and WPP in 2004 were the pioneering holding companies in implementing this new client-agency relationship, but today it is, above all, the WPP group that has established itself as the undisputed leader of the creation of “dedicated agencies” (Parekh, 2013). This type of company is made up of multiple specialists from WPP group agencies, such as advertising agencies, media agencies, public relations agencies and so forth. Examples are Team Detroit for Ford, Cavalry for MillerCoors or Red Fuse for Colgate-Palmolive. WPP ensures that it currently has more than 30 of these “team agencies”.The integrated services model has become the fashionable model and is increasingly being implemented in more companies (Parekh, 2012a). One of the key benefits that the holding company can bring to its customers is that it can take charge of the coordination and integration of the teams. Quality of work will always be the customer’s main argument, but integration and coordination are increasingly becoming the number two priority. You can have a key contact that is responsible for all projects, regardless of the disciplines or geographic territories that are involved. All the complications that arise from managing a myriad of disciplines and markets become the problem of the holding company and not the client (Sorrell, 2004, 2014). The fact that the holding company takes care of the complex coordination of all the specialists implies that the client itself requires a smaller organizational infrastructure, which also implies

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significant cost savings. If the client has only to contact an interlocutor who is always available, the interaction and management are obviously simpler than in the specialized multi-agency model. Easier management reduces costs, as fewer staff are needed to deal with agencies.This model fits well in the current times, where many advertisers live under great pressure to reduce costs. Another great advantage offered by this third model is that it offers a higher degree of cooperation among all its specialists. After all, these professionals operate under one roof and their only mission is to meet the needs of a single customer. The “dedicated agency” creates a collaborative environment, which reduces the danger of internal disputes that may adversely affect the quality of work. Within the “team agency” each member is assigned a specific role, so that everyone knows what is expected of them, which creates a more efficient working environment (Parekh, 2012c). Creating a new “dedicated agency” that works exclusively for a single customer also means that its members will gain a deep understanding of their business and will be able to establish closer relationships with the advertiser’s marketing team. Also, this new company can adopt the organizational structure that will fit the particularities of the client like a glove and offer a very personalized service. Despite presenting many advantages, this model does not lack critical voices in the advertising industry itself. According to Parekh (2013), an agency structured around a single client is a controversial subject in the sector, since the best talent prefers to work for a wide range of accounts, not for just one client. Working exclusively can reduce the creativity of professionals, while the opposite stimulates their creativity and allows them to create ideas of more quality. Advertising creatives prefer to move in a more varied work environment. Thus, following Parekh’s line of argument (2012b), the absence of a plurality of clients can undermine the creativity of the “dedicated agency”. Finally, another added challenge of the dedicated agency has to do with the progressive erosion of existing relationships between advertisers and networks of historical agencies. There is a suspicion that, with the increasing implementation of this new model, the networks of classic agencies, such as BBDO, DDB, McCann, Leo Burnett or JWT, are going to lose relevance. Many managers at these companies fear that the value of their work philosophies and their broad heritage of advertising excellence are fading (Parekh, 2013). In conclusion, this recent model tries to overcome the contrast of “strategic partner vs. specialized supplier” mentioned before. The client with the “team agency” has specialists who can execute very tactical actions. Nevertheless, at the same time the “dedicated agency” can play a strategic role because as the only intermediary they also have a vision of the whole business.These agencies do not try to impose one area of specialty over another, but first they study the requirements of the client, and later configure a customized team of talent that can satisfy those particular needs. This new type of agency-client relationship embodies very well some key concepts of the digital age. On the one hand “team agencies” have less hierarchical and flatter governance structures than traditional agencies. It leaves behind the bureaucracy of the big agency networks and establishes a team of professionals who will work for a single client. It seeks to build a horizontal work structure that facilitates the collaboration of its members.The key is to create a work environment where talent is merged for better integration of ideas. Collaboration is essential so that all members can participate in all phases of the creative process. It is also worth mentioning that the client, when working with a single multidisciplinary team, can expect more strategic support and more integrated services in the whole of the brand’s activity. On the other hand, these new companies can show greater flexibility to adjust to the projects that they work on. The holding company can at any time reconfigure the team to better manage the requirements of each project. In short, it can be said that “dedicated agencies” have incorporated key concepts such as flat structures, integration, collaboration and flexibility that allow them to compete better in the digital environment. Some might even argue that these new agency models could well be the new fullservice agency of the twenty-first century (Sorrell, 2014; Bullmore, 2004).

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Research Agenda Once we have analyzed the digital transformation’s profound impact in advertising management we look to the field’s future and suggest new research venues. The three classic professional profiles in the sector are now joined by new career profiles and new types of talent that deserve further research.

New Career Profiles Patricia Chávez (quoted in Ocaña, 2014), Grupo Consultores’ director, underlines the fact that, in any industry, the evolution of career profiles indicates its health, ability to adapt to new market demands and medium- and long-term vision and strategy.Therefore, career profiles need to evolve if the industry wants to grow. According to Chávez, The agencies’ value is in its teams. In professionals that every day give answers to client needs: they are ever more demanding and skeptical to agencies and the result of their actions. That is the reason why agency structures and professional profiles can’t remain static. (p. 32) Traditional advertising agencies were trapped “in the world of mass communication media” (Kemp & Kim, 2008). They used to be organized around a set of skills that allowed them to generate advertising campaigns for large agencies and big budgets. After digital change, clients are asking for services that go beyond what was expected from agencies: nurturing relationships in social media, content creation or data analysis. If the final product is not a traditional advertising campaign, the agencies’ organization needs to be transformed (Kemp & Kim, 2008). Agencies have thus evolved to offer new services and products. Account executives tend to become project managers. According to a survey published by the Spanish trade magazine Anuncios (Hernández, 2013), companies need to reduce their number of employees, and are often using more freelance work or establishing alliances with other specialists, looking for more flexibility.There is a trend of hiring ad hoc the talent needed for each project.Work on a project basis is becoming a new organizational model for agencies. The rationale for this model is not just economic. It also relates to “liquidity”, a term used by Daniel Solana in his book Postpublicidad (2010). Instead of the solid structure of traditional media, the Internet offers a “liquid” environment where content flows and moves from one place to the other like the molecules of a liquid. In the same way that “liquid” ideas need to be able to adapt to different formats or media, agencies need to increase their flexibility. We used to talk about 360-degree agencies. Now we are discussing a “liquid” agency that adapts to every client—in an integral or specialized way—and adapts its strategy and organization to each project’s characteristics (Ocaña, 2014). The future structure of agencies (Hipperson, 2012) says that advertising does not need account executives anymore. They require project managers who can assemble and manage teams of specialists adjusted to the needs of each project, schedule and budget. Rudder (2001) already said that clients were demanding more project management skills. According to Hipperson (2010) project managers, besides the management of resources, will also report on expenses to clients as project management is based on three concepts: time, cost and quality. A greater ability to control those three variables will increase levels of accountability, boosting the agency’s value to clients. The organizational model established around projects has invited comparisons with Hollywood (Williams, 2014). In its origins, Hollywood movie studios used to own all the elements of their films, from exclusive contracts with actors and directors to vast physical sets.This business model was

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replaced with its opposite. Currently everything starts with a project idea that leads to finding the right production teams, actors and directors. In the long list of final movie credits, everyone has been chosen for specific abilities. Following those lines, Omnicom created Galaxy, an experimental agency model to serve the needs of its client Pepsi (Williams, 2014). The idea behind Galaxy was the creation of specialized teams from Omnicom’s wide agency roster for specific projects. Teams are not built around brands or campaigns, but around projects.The client has the ability to bring on board the kind of talent that each project demands. It is a quite radical framework that demands a lot of flexibility from agencies. In this type of environment there will be a need for project managers who, like film producers, have the ability to assemble and guide to success teams for specific projects. The change from creative to content creator is another interesting research field. Creatives used to be responsible for advertising agencies’ “star” products: original and effective advertising messages (Lange, 2001). Ads used to be in the hands of copywriters and art directors. In the digital landscape, their profiles are evolving as new profiles join the fray. Creativity is not the creatives’ exclusive province, becoming a property of all the agency workers.The creative departments’ silo is broken, as ideas can come from anywhere. To indicate this kind of “generalization of creativity”, Ogilvy & Mather calls this phenomenon pervasive creativity (Khai Meng, 2013). Agencies survived their long 150-year history because clients have not been able to create and sustain creativity so far (Miln, 2004). However, creativity is not the same as yesterday. Creativity’s expansion brings it to the realm of innovation: the creation of new content, new communication channels and even new products to enable relationships with clients. The work of agencies is likely to focus on nurturing consumer communities, going from managing campaigns to facilitating conversations and listening to what people say in the digital space (Hipperson, 2012). Advertising companies become connected agencies in a connected world (Kemp & Kim, 2008). Content creation is key to becoming connected agencies. According to Hipperson (2012) “content is king” (p. 3). Branded content allows brands to connect with their communities. Before, people used their free time reading books or magazines. Today, many use it to surf the Internet, play video games or consume online news or videos. Behavioral changes (Hipperson, 2012) have generated a hunger for quality content that creates an opportunity for brands. However, access to quality content is not cheap. Media companies have built growing paywalls and consumers go to their favorite brands looking for news and entertainment. A YouGov report that was commissioned by the American Psychologists’ Association (Hipperson, 2012) indicated that 65% of consumers expect their brands to offer new content daily, either by social media, their own website or TV channel. The same consumers say they spend more time with brands that offer them more content. The generation of quality content is also stressed as a way to manage client communities by Edelman (2007). Advertisers are likely to need professionals able to create contagious and interactive content. In that environment, it makes a lot of sense to include creation and content management in the creative department. That also explains a new professional profile: the content manager, who is responsible for a brand’s content strategies and online presence from a long-term global standpoint (Ocaña, 2014). His or her main goal is to bring content to the core of a brand’s communication strategies. It is a new way to understand advertising’s creative output that deserves further research. There are also other new profiles. A key area is the introduction of the technology dimension in creative work. The technologist (Takemura, 2012) is familiar with different channels or digital formats and shares all that knowledge with creatives to enrich the final product. Creative teams that can combine traditional knowledge with emerging technologies are able to find holistic solutions (Hipperson, 2012).

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Another area that requires further exploration is the trend from planners to data analysts. Advertising agencies incorporated market research into their work 100 years ago, in the 1920s (Lange, 2001). After all that time in market studies, the information and data gathered were not still an integral part of the creative process. That changed with account planners and, more recently, with strategic planners. The planner’s task has not entirely changed, but the new digital landscape poses new challenges. One of them is the need for speed to get the data that users produce on the web. Hipperson (2012) talked about nowconomics, “the economy of now”. In the same way as users, clients hope that the information will be “one click away”, and expect their agencies to gather relevant data about the present. Agencies have to develop abilities to listen, analyze and interpret real-time data. Never before have they had the opportunity to find out consumer behavior live. Thus, analysis and interpretation of real-time data become key competences for advertising work (Hipperson, 2012), which also deserves further analysis. Edelman (2007) also underlines the responsibility of analyzing the information that consumer communities produce, which belongs to data analysts, a new breed of professionals. Agencies start to invest in profiles that go beyond mere experts in numbers (Chávez quoted in Ocaña, 2014). Planners, besides improving their background in this field, will increasingly work with data analysts who are mathematicians or statisticians, and will help them to get more value from data. The split of the media department is another matter to ponder in future research, as it has become a complication for the industry. In times when the convergence of media and integrated communication is common currency, it is very hard to separate media planning from creative strategy (Tungate, 2007). This fact is also mentioned by Chávez (quoted in Ocaña, 2014): Collaboration and unity between platforms and content was [sic] never more needed. We have been talking about it for years, but it has not materialized in agencies until very recently. Clients demand it ever more and agencies realize the strength of proposals that include clear recommendations about the contact points to act. Synergies and impact multiply exponentially. (p. 32) Channel planners are a result of this new need to marry creativity and media. It is not enough to become consumer voices: there is also a need to know the contact points between brands and target audiences. New advertising market demands are going to bring with themselves a need for new talent. But new career paths are not only influenced by the digital migration. The recent economic downturn, with its accompanying cost reductions, has caused what some call juniorization. There is a lack of senior talent, increasingly replaced by young professionals, that translates into a loss of know-how for agencies (de Luque, 2014). There is a sort of vicious cycle: clients reduce costs to lessen the effects of the crisis. Advertising budgets are early victims. Campaign advertising budgets are then reduced, and agencies lose part of their income. Agencies then lower their fixed costs to guarantee their survival. Like in other service sectors, advertising fixed costs come mainly from staff salaries, especially the most senior staff. Reducing the compensation of senior staff is a quick way to reduce costs. Junior staff are then expected to produce similar work at a lower price. Although this process could be understood as a way to solve short-term problems, it raises many new issues. Without the valuable work of senior talent, agency work becomes mediocre, uniform and uninspired. Clients realize that work does not have the same quality, thus eroding the relations of trust between clients and agencies.With time, clients lose faith in long-term relationships and hire

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agencies for very specific and isolated services. Agencies are no longer strategic partners (a position that took them years to achieve), becoming mere service providers. Taboada, a member of Cheil’s senior management in Spain, gives a good summary here: The crisis has provoked a jump forward, looking just short term and not much to the longer term. And that is pushing us away from our clients’ real needs, as clients need partners to grow. The more intellectual capital agencies lose, the farther away they will be from the partner clients need. (Quoted in de Luque, 2014, p. 26) The fight against the vicious cycle of weakened relationships requires agencies to increase their value to clients. Advertisers need their agencies to work on products and services beyond advertising campaigns, a wider portfolio that includes computer programming, data analysis, database management and consumer community building, which in turn requires new professionals. In order to do this, they face two main challenges: improving their employees’ salaries and creating real training and development programs. Regarding the first, Mónica Moro, general creative director at McCann Spain, is really blunt: Talent has always been scarce. But the big problem we have now is that as a profession we are not able to attract it or keep it. And that happens mainly because now, more than ever, to work in this industry is heroic. It is a wonderful kind of heroism, but it is an effort that does not usually find reward. Every day we work more, we do a double effort to get half the results, and fees and thus salaries of our talent are severely damaged. (Quoted in de Luque, 2014, p. 26) The advertising sector is less stimulating for talent, and many young people prefer to try other industries, like technologies that are more interesting and where salaries are higher. The second challenge is to develop training and development programs because many agencies lack a real career plan for their employees and are not investing enough resources in their employees’ training. According to Taboada, they are essential: It is our duty to offer and guarantee a part of annual budget to training. If we don’t invest in our people and ideas that are our key assets, where are we going to do it? In the latest gadget? Without good ideas and good people, we are nothing. (Quoted in de Luque, 2014, p. 2)

Integration vs. Specialization We will also need research that looks into more flat and integrated management structures. Flexibility, “liquidity” and integration apply fully to agency structures. Creatives, strategic planners and account executives have to work in a more integral way than they did previously, which calls for more flexible structures that can adapt to the pace of changing times (White, 2007). Although integration seems to be key in our digital era, it is not a very recent idea. Strategic planners added the term integrated marketing communications (IMC) in the 1990s, in an effort to take advantage of the strength of every channel to create better communication campaigns. Agencies quickly realized that their structures had to change to adapt to the new reality. Gronstedt and Thorson, for example, wrote an article with five keys to organize IMC agencies already in 1996 that underlines the dilemma between specialization and integration.

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An agency that specializes in a very specific area turns into a key player with its know-how and talent in its specialty. Such talent can be very attractive for clients. But that framework also has its downsides. On the one hand, neutrality in communications planning is lost as the agency specialty tends to be defended. On the other, Gronstedt and Thorson (1996) also warn that it is very difficult to understand the essence of a brand and coordinate its values through different specialists. Such strengths and weaknesses are inverted in integrated agencies. Integration allows one to have a single vision and respect the essence of the brand. It also guarantees neutral planning and fosters synergies between disciplines. However, this strength turns into weakness in the sense that it is more difficult to work with top talent in all disciplines. The integration model requires a strong employee commitment and significant investments in learning and development to make sure that employees are updated on the latest knowledge and skills. The creation of integrated agencies also calls for management changes. According to Friedman (2005, quoted in Hipperson, 2010), today we live in a flat world, where all the different actors work in the same conditions. Globalization has made historic and geographical distinctions less relevant. In a flatter context, agency structures become less hierarchical (Takemura, 2012). Work teams keep changing on a project basis (Rudaizky, 2012), which makes collaboration increasingly important. An environment of cooperation is also fostered with the elimination of layers to create more horizontal and flexible organizational charts. Competent managers rapidly assemble the best talent to create teams and lead projects from start to finish. In order to understand the value of teams, Rudaizky (2012) elaborated on the concept inteamgration. In his opinion the way to offer integrated marketing to clients is to pool talent and resources from different departments (even different specialist agencies), integrating them into a “dedicated agency”, a concept that has been previously explained.The key is talent fusion to reach a better integration of ideas, as demonstrated with Team Red, a team for WPP’s client Vodafone, shaped with people from more than 30 WPP firms, which was assembled to develop and execute campaigns around the world. In “team agencies” like that, clients have at their disposal expertise in all disciplines that collaborates in the same group. Real integration requires that different specialists share their insights from the beginning of the process. Teamwork in markets with constant evolution is a crucial research field, as getting diverse talent to work under the same umbrella is difficult. If agencies want to integrate their ideas in the future they will need outstanding professionals to lead their teams: people who have the ability to create an environment where work and collaboration in groups lead to reaching a common goal (Rudaizky, 2012). Like in other media management areas, leadership is also another interesting topic in advertising management research.

Note 1 Consumer insights are understood as human truths that appear as a consequence of the ways in which consumers think, feel or act.They generate opportunities for new products, strategies and communications for clients.

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26 BIG DATA AND MEDIA MANAGEMENT Philip M. Napoli and Axel Roepnack

Introduction Like many other sectors of economic, political, and cultural life, the media industries are rapidly embracing and exploring the range of analytic and strategic possibilities afforded by big data (see, e.g., Stone, 2014). Perhaps more so than many other industry sectors, the media industries are particularly well positioned to capture and harness the potential of big data. As an assessment in Forbes noted, “media companies may have better opportunities than most. . . [as] every song listened to, every minute of video viewed, every online page that is clicked contributes to the mountains of data that tell them what audiences want” (Kim & Wegener, 2014, p. 1). As industry sectors such as journalism and recorded music have found themselves facing financial hardships brought about by technological change, big data offer the potential to reverse—or at least diminish—this downward trend (see, e.g., Bell, 2012). The irony, of course, is that many of the same technological changes that have brought about these economic hardships have simultaneously facilitated the gathering of enormous quantities of data. Some accounts suggest that entire business models can be built on the foundation of big data (Bulger, Taylor, & Schroeder, 2014). For instance, the emergence of Netflix as a powerhouse content distributor and, subsequently, successful producer of original content has been attributed to the effective use of big data (see, e.g., Carr, 2013). The businesses of audience measurement and media buying are being transformed by the availability of big data. The notion of audience ratings being derived from small samples of the population seems increasingly quaint, as does the notion of placing advertisements within content on the basis of a few demographic variables that are, at best, weak proxies for actual consumer behavior (see Napoli, 2011). These are just some of the ways in which traditional industry practices and business models are being transformed. For scholars of media management, these developments herald an exciting—though challenging— time. As the dynamics of how decisions are made within media organizations are undergoing profound change, and as the nature of industry-relevant data being gathered is expanding in terms of size and scope, there arise a wide range of open questions about how big data is affecting the management of media organizations; how big data should (or should not) affect the management of media organizations; and what the long- and short-term implications of increasingly data-driven decisionmaking are for content creation, audience understanding, and professional roles and identities in the media sector.

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This chapter seeks to provide an overview—circa 2017—of what we know at this point about how big data is impacting media management.This is, needless to say, a very dynamic area of inquiry, so this chapter represents the state of affairs less than a decade into what some have termed the “big data revolution” (Mayer-Schönberger & Cukier, 2013). This chapter also seeks to put this ongoing transition into its broader historical and institutional context, and to identify areas of concern, as well as avenues for future research. In order to address these issues, the first section of this chapter provides historical and institutional context for the intersection of big data and media management. In particular, this section situates the embrace and utilization of big data within the long and ongoing process of rationalization within the media industries. The next section provides an overview of the various ways that big data are currently being employed in the management of media organizations. This section seeks to cast a wide net, exploring uses ranging from content personalization and advertisement targeting to content creation and audience measurement. The next section considers a number of concerns raised by the embracing of big data in media management. In recognition that there may be costs that accompany the benefits of big data, this section considers concerns such as consumer privacy, the potential impact of data-driven decision-making on content innovation, the facilitation of filter bubbles in content consumption, and the possibility of data divides impacting the competitive dynamics within the media sector. Finally, this chapter identifies key avenues for future media management research, such as the evolution of organizational cultures and professional roles in response to the availability of big data; exploring if and how the dynamics of audience behavior change when analyzed via big data; and, perhaps most important, if and how big data is affecting the type of content that is being created and how it is being disseminated. This section also highlights the challenges that academic researchers face in gaining access to big data for their research, and considers this challenge in light of the recognized disconnect that persists between academic media management research and the media industries (see, e.g., Kung, 2010).

Context The media industries have long been characterized by their need to cope with tremendous levels of uncertainty. Phrases such as “Nobody knows anything” (Goldman, 1983, p. 39) and “All hits are flukes” (Bielby & Bielby, 1994) have defined the unique challenges facing the media sector, in which audience demand for media products has been highly unpredictable, and in which the production process itself can produce uncertain outcomes, in terms of the perceived quality or appeal of the content. This uncertainty has been a key driver of an ongoing process of rationalization in the media sector. As articulated by Max Weber (1978), the process of rationalization is intended to bring greater stability and predictability to institutional processes. Rationalization is characterized by the following phenomena: (1) the refinement of techniques of calculation; (2) the enhancement of specialized knowledge; (3) the extension of technically rational control over natural and social processes; and (4) the depersonalization of social relationships (Brubaker, 1984). We see these processes at work in the media sector dating back at least to the 1930s, when communication researchers, such as George Gallup and Paul Lazarsfeld, began working with media industry stakeholders on more data-driven approaches to understanding and predicting audience tastes and preferences (Napoli, 2011, p. 11). And as, over time, the media environment has grown more complex and fragmented, while at the same time becoming more interactive—and thus facilitating unprecedented levels of data gathering—both the need and ability to advance this process of rationalization have become enhanced (see, e.g., Smith & Telang, 2016).

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Thus, it is not surprising that we see all of the phenomena related to the process of rationalization noted earlier at work today in the institutionalization of big data analytics in media management.We can, for instance, see the notion of the refinement of the techniques of calculation embedded in the increasing prominence and sophistication of the algorithms that are often being used to make sense of the enormous quantities of data being gathered (see Napoli, 2014a). These algorithms and the insights that they produce perfectly reflect the key refinement of the techniques of calculation that is central to the process of rationalization.The massive quantities of data being gathered today would be much less useful absent the increasingly sophisticated algorithms that can be employed to exploit these data and extract actionable insights from them. The enhancement of specialized knowledge can be seen in the growing importance of data scientists in the media sector (Duda, 2014).The media industries today, along with so many other industry sectors, are working hard to attract the inadequate supply of data scientists (Kantrowitz, 2015; Shields, 2015). At the same time, the ability to effectively analyze large quantities of data is spilling over into a wide range of media industry career paths that previously did not require this particular skill set (Duda, 2014; Shields, 2015). One could argue that the extension of technically rational control over natural and social processes again brings us back to the role that algorithms are playing in the contemporary dynamics of media consumption and, for that matter, media production. From both the production and the consumption standpoint, big data-fueled algorithms are increasingly dictating how media consumers navigate their media environment, while also increasingly dictating content production decisions (see Napoli, 2014a, 2014b). And then lastly, in terms of the depersonalization of social relationships, we can point to big data– and algorithmically driven phenomena, such as programmatic media buying (Albarda, n.d.), which essentially removes human interaction from a type of transaction that was once heavily dependent upon social relationships (see, e.g., Phalen, 1998). Similarly, we can point to an industry like book publishing, which traditionally has operated largely on the basis of personal relationships, which is being transformed from a “word-and-persuasion-driven lunch culture” to a much more data-driven culture, through the arrival of disruptive firms, such as Amazon (Smith & Telang, 2016, p. 139). In these ways, we can see the process of rationalization extending further into the realm of media management, building upon and extending earlier developments in what is an ongoing historical progression. Thus, many of the specific initiatives and organizational transformations discussed ahead will reflect one or more elements of the broader process of rationalization.

Uses These uses of big data in media management are wide-ranging and rapidly evolving. This discussion here in many ways represents only the tip of the iceberg, highlighting some of the most prominent ways in which big data are being used in contemporary media management.

Content Personalization One of the defining characteristics of the contemporary media environment is the extent to which certain media platforms are increasingly able to provide users with personalized content options/recommendations on the basis of large stores of data about user preferences and behaviors (Sunstein, 2017). Pioneers of this process include digital media companies, such as Amazon, Google, and Netflix, all of which leveraged their tremendous stores of user data to provide personalized recommendations in areas such as search returns, books, and movies/television programs (Smith & Telang, 2016).

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And in the realm of social media (which plays an increasingly central role in how users find and engage with other forms of media content, such as news and sports) content personalization has increasingly become the norm, as various platforms, such as Twitter and Snapchat, have followed the Facebook model and migrated away from providing chronological displays in users’ news feeds, embracing instead algorithmically curated feeds that select which items to present based on a host of largely proprietary factors (Napoli, forthcoming). Of course individual media users increasingly have the capacity to personalize their content consumption on their own, through the sources they choose to follow/subscribe to on their social media feeds, news aggregators, or streaming media platforms. The focus here, however, is on the additional layer of personalization that the content providers themselves engage in through the leveraging of the data gathered, maintained, and analyzed from every user interaction. All of these data points serve as feedback for delivering more personalized content, under the assumption that more personalized content leads to higher levels of user satisfaction, and thus increased usage. These individual and institutional levels of personalization are, of course, interconnected, with individual personalization decisions providing data points that feed into the institutional personalization process, and with outcomes of the institutional personalization process inevitably affecting personalization decisions made by individual users.

Targeted Advertising A related component of the process of content personalization discussed earlier is the process of targeted advertising, in which advertising messages are delivered in a more targeted manner on the basis of insights obtained through big data analysis. All of the media usage data discussed earlier can be combined with a range of additional data sources, including data on responsiveness to digital advertisements, as well as both online and offline product searching and purchasing information, to facilitate unprecedented levels of targeted advertising. With these various forms of behavioral (and, increasingly, psychometric [see Grassegger & Krogerus, 2017]) data, advertisers are able to move away from the increasingly outdated convention of relying on audience demographics as a proxy for product interest, purchase intentions, and purchasing behaviors. Such targeting is facilitated not only by the gathering and analysis of data but also by the development of increasingly interactive media platforms which facilitate the relatively easy delivery of targeted advertisements based on individual user characteristics, behaviors, and location (Sinclair, 2016). In this regard, targeted advertising is in many ways a natural and inevitable development within interactive digital contexts, such as search and social media. User profiling enables tailoring advertising in such a way that it increases response rates, as well as serves as a data source for predictive analytics (Trusov, Ma, & Jamal, 2016). Streaming music provider Pandora has just recently introduced targeted advertising on the basis of a user’s gender, age, and zip code, as well as the current weather where the individual is located (Seltzer, 2017). In traditional media contexts, such as print and broadcast television, the absence of an interactive component makes the delivery of targeted advertising much less viable, or, at the very least, much less granular. Newspapers, can, for instance, facilitate targeted advertising to the extent that they can produce slightly different editions (with different advertisements) in different geographic areas in which they distribute their papers. Cable television, which has some of the interactive capacity of digital media, has for years struggled to develop an effective system of targeted advertising, in which targeted ads would be delivered to individual set-top boxes on the basis of the media usage, behavioral, and demographic characteristics of individual households (see Napoli, 2011). However, recent years have seen a number of cable television services finally roll out targeted advertising services (Poggi, 2016).

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Audience Measurement Audience measurement services are also being transformed by big data (Hill, 2014). The traditional template for audience measurement involved the recruitment and maintenance of a relatively small—but statistically representative—sample of the population to participate in the measurement process. The sample was relatively small due primarily to the costs associated with recruiting and maintaining the sample, and with providing and maintaining the measurement technologies. Thus, for instance, Nielsen’s People Meter television audience measurement service, widely considered the gold standard for television audience measurement since the 1980s, has generally operated in a few thousand of the over 100 million television households in the United States (Napoli, 2011). While such a service certainly generates tremendous amounts of data, it probably doesn’t merit the “big data” label given the enormous amount of television viewing behavior that goes unmeasured, and given the developing alternatives that are characterized by the substantial increases in data that are being gathered and analyzed. So, for instance, newer approaches to television audience measurement pull viewing data from individual set-top boxes. Under this approach, specialized measurement boxes do not need to be manufactured, installed, and maintained. Rather, data are extracted from the set-top boxes already installed in the individual home (Hagey, 2016). Under this approach, every home with a set-top box is a candidate to be measured. As should be clear, this approach facilitates the migration away from a small sample of television viewers having their behaviors being measured to a much larger pool of participants in the measurement process, which facilitates providing data on the wide range of programs with audiences that are too small to be reliably measured under the traditional sample-based measurement system (Napoli, 2011). Similarly, in online audience measurement, panel data are being integrated with data derived from individual websites to produce audience estimates that combine the benefits of panel data (detailed demographics) with the benefits of site-centric data (the ability to gather data from every site) (see Napoli, Lavrakas, & Callegaro, 2014). The relatively lower costs of maintaining online audience panels (participants just need to download measurement software) compared to television audience panels means that these panels have typically been much larger than those maintained in television audience measurement (exceeding a million panelists in some cases). However, the exponentially larger number of content options (i.e., websites) needing to be measured online means that such large panels are equally inadequate on their own when it comes to capturing the full scope of audience activity online—thus the importance of site-centric measurement systems, in which individual sites install measurement software that keeps track of the number of unique visitors to the site, time spent on the site, and so forth (Napoli, Lavrakas, & Callegaro, 2014). It is also worth noting that a business such as audience measurement will often “follow the data,” so to speak. So, for instance, as social media developed as a widespread means by which individuals shared their thoughts about television programs, audience measurement firms, such as Nielsen, pounced upon this available trove of big data and have developed audience measurement services (e.g., Nielsen’s Twitter TV Ratings) that report on television program popularity on the basis of the volume and (in some cases) valence of the social media activity that these programs generate (Kosterich & Napoli, 2016). On open social media platforms, such as Twitter, this activity represents a massive data gathering opportunity for audience measurement firms, providing tremendous amounts of data that can be gathered relatively cheaply, without the need to recruit, train, or retain a sample to produce indicators of television program popularity and/or audience engagement (Kosterich, 2016). The key technical challenge, for such services, is the design of an algorithmic system that accurately and effectively identifies and classifies the social media activity related to individual television programs and that can effectively distinguish such television-focused social media activity from the larger pool of social media activity. Of course, given the scale of data gathering involved, this 414

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process of classification is inevitably algorithmically driven. Such “social TV” audience measurement services have essentially taken a position as a supplementary source of audience data and program performance in the television audience marketplace (Kosterich & Napoli, 2016).

Content Creation Perhaps the most important, and potentially transformative, way in which big data are being utilized in media management is in the decision-making around content creation. Here, big data are being used in ways that range from making recommendations about the type of content to produce to actually being used in conjunction with algorithms to generate content. Netflix, of course, has been the poster child for data-driven decision-making related to content creation.The story of how the company analyzed its vast stores of audience data to make the decision to venture into original programming and produce the program House of Cards remains a staple of popular and trade press accounts, as well as industry scholarship, about the ongoing big data transformation affecting the media sector (see, e.g., Greenberg, 2016; Havens, 2014; Smith & Telang, 2016). It is important to emphasize, however, that for a company such as Netflix, the gathering and analysis of data do not begin and end with the relatively low-hanging fruit of available audience data. Less well known, but perhaps equally significant for the company going forward, has been its investment in detailed content analysis of the over 4,000 videos in its content library to facilitate the creation of over 75,000 “micro-genres” that facilitate a more detailed understanding of audience tastes and preferences and the likely performance of individual content options (Madrigal, 2014). Specifically, Netflix employs individual coders (no delegation of this process to algorithms—at least not yet) to watch each video in Netflix’s library and code the content across dozens of variables associated with content characteristics, such as plot, theme, genre, character traits, actors/directors, era, and so forth. According to Netflix, this additional layer of data gathering and analytics brought a level of analytical and predictive precision that they could not achieve by analyzing only audience consumption and rating data (Madrigal, 2014). In combination, these data sets can unlock more useful insights into audiences’ behavioral patterns and content preferences. Another example of content-centric big data in the media sector would be the Music Genome Project, developed and utilized by streaming music provider Pandora. This database categorizes each song in Pandora’s streaming library according to as many as 450 distinct musical characteristics, in order to facilitate more satisfying song recommendations for users. Similarly, the motion picture industry has begun to rely on predictive software packages, such as Epagogix, which employs algorithms to predict the success of prospective film projects based upon the plot elements contained within the individual film scripts, and linking these content characteristics with historical data on box office grosses (Davenport & Harris, 2009; Dormehl, 2014). In each of these examples, the underlying logic is that a full understanding of audiences’ content preferences cannot be achieved by analyzing audience behavior alone. Content characteristics need to be analyzed in minute detail as well, and, when layered with audience behavior data, can provide a deeper understanding of not just what content audiences are choosing to consume, but also why. Big data can also serve as the raw materials for content creation. In the realm of journalism, in particular, big data and algorithms are being employed to generate content directly, without the involvement of a writer. Firms such as Automated Insights and Narrative Science are facilitating story creation through the development of algorithms that are capable of taking large quantities of data and producing text-based news reports from those data (LeCompte, 2015). Thus, for instance, in areas such as corporate earnings reports and college sports results, an increasing percentage of the stories being produced are generated by algorithms that process the basic data and produce stories using rules, norms, and templates encoded within the algorithms (Podolny, 2015). The value here is in the fact that a larger number of stories can be produced more quickly and cheaply that if human 415

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journalists were assigned these tasks. Obviously, such developments raise questions about the future of a profession that is already in a troublingly precarious position.

Concerns Certainly, as has been noted earlier, the gathering and analysis of various forms of big data have the capacity to enhance media organization performance and/or reduce costs in a variety of ways. However, there are a range of concerns about possible detrimental effects associated with the use of big data in media management that need to be recognized as well.

Innovation Data are, by their very nature, historical. They represent past behaviors and preferences. And these past behaviors and preferences are reflective of the available options at those points in time, and thus also reflective of whatever constraints the limitations in those options may have imposed on those past behaviors and preferences. Even the most sophisticated algorithm must rely on historical data in conducting its analyses and making its recommendations. Thus, the greater the extent to which decision-making is data-driven, the more it is informed by past preferences and behavior patterns, and thus the less hospitable it may be to content that is legitimately new or innovative, and that doesn’t effectively fit into the categorization schemes established via historical data. This situation may place such innovative, hard-to-categorize content in an even more challenging position than it is already in, in terms of obtaining production and distribution support. And, as discussed in the later section on filter bubbles, consumption of such content (assuming it actually does get produced) may also be undermined by data-driven recommendations systems that point media consumers to content with proven appeal (which, of course, then circles back and potentially impacts production and distribution). Netflix famously struggled to improve its recommendation algorithm in the late 2000s (Hallinan & Striphas, 2016). While the algorithm was performing reasonably well, the company felt there was room for improvement. One thing the company’s assessment told them was that the algorithm was doing a particularly poor job of predicting audiences’ response to one specific film—Napoleon Dynamite (Thompson, 2008).This film is certainly an acquired taste and is surely a unique film that is hard to categorize. One can’t help but wonder how a movie studio relying on, say, the Epagogix software package, discussed earlier, to make its production decisions would have reacted to the prospect of producing Napoleon Dynamite. Would such a film have any chance of being made in a decisionmaking environment in which every new production is being evaluated against a historical database of past hits and their characteristics? This example is intended to illustrate the legitimate concern that, from a cultural production standpoint, decision-making around content creation could be affected by big data in ways that discourage innovation and risk-taking—characteristics that are, in many ways, an inherent part of what makes culture valuable and important. Such extensive knowledge and predictive data about audiences’ past preferences most likely disincentivize creating content that deviates from demonstrated preferences, which involves taking a risk on content that perhaps audiences don’t know—and thus haven’t yet demonstrated—that they want. Of course, most media sectors are already highly riskaverse, and employ decision-making processes that are already, to some extent, inhospitable to innovation and originality.The point here is that the increased reliance on big data analytics in managerial decision-making may, through the provision of more thorough historical data and analysis, discourage some of the risk-taking and investment in innovative content that a less information-rich environment may have produced. It is worth noting that the late 1960s and early 1970s—a time in the motion picture industry’s history when audiences were fleeing in droves to television, and in which 416

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movie studio executives felt that they had their weakest grasp on what audiences wanted—is precisely when executives chose to roll the dice on unusual films and unproven filmmakers who ended up producing what is widely considered one of the golden ages of American cinema (Kokonis, 2009).

Privacy As should be clear, a key driver of big data analysis in the media sector is the ability to gather an ever-increasing amount of data about audiences’ media usage behaviors, and to link those data with other forms of behavioral, demographic, and psychometric data (see earlier). This dynamic naturally raises concerns about privacy. Concerns about data privacy have been a defining characteristic of the digital media age (see, e.g., Tene & Polonetsky, 2012) and thus don’t require extensive revisiting here. What is important to emphasize is that the emerging dominant model of media industry decisionmaking is one that is increasingly reliant on these kinds of massive aggregations of personal data that some might find intrusive or troubling. The reality today (particularly in countries such as the United States), however, seems to be an increased acceptance (even enthusiasm) on the part of media users to provide various forms of personal data to the platforms and services that provide them with content and/or access to audiences, whether it be social media platforms, interactive television services, mobile applications (and devices), video games, or streaming media services. The contemporary participatory media environment, in which media users increasingly provide feedback on the content they consume and are increasingly empowered to share such content, and in which user-generated content in its various forms is increasingly embraced by content providers (see, e.g., Jenkins, Ford, & Green, 2013), is one in which media users are consistently generating what to them are forms of self-expression, but what are to audience measurement firms and media organizations important sources of audience data. The days of widespread consumer unease with the ever-increasing forms of data gathering that the media sector engages in (shown, e.g., by Andrejevic, 2014) seem to have passed. Even recent developments, such as the revelations that Internet-connected televisions have been—without user consent— gathering and uploading viewing data, melding those data with demographic data, and then selling those data to marketers to facilitate targeted advertising (Kastrenakas, 2017), have generated relatively little public outcry. User data seems to have become an established coin of the realm that users willingly exchange for services such as content personalization and access to large audience bases (e.g., essentially, exchanging personal data with social media platforms for distribution of their content). Nonetheless, it is important to acknowledge the privacy implications of a media environment in which managerial decision-making is increasingly dependent on the gathering and analysis of large quantities of personal data.

Filter Bubbles Recent election results in the UK and the United States have renewed concerns about the effects of filter bubbles (see, e.g., El-Bermawy, 2016). Of course, filter bubbles need not be purely political in their nature. They can be cultural as well. The term “filter bubbles”, coined by Eli Pariser (2011), refers to the extent to which the increasingly personalized media environment discussed earlier allows individuals to expose themselves to a narrower array of content that conforms with their established interests and political and cultural orientations. As has been well-documented, the potential negative effects of such filter bubbles are wide-ranging, and include increased political polarization and extremism, deficits in political knowledge, and increased political and cultural intolerance (see, e.g., Sunstein, 2017). To the extent that the contemporary media environment is increasingly oriented toward facilitating personalization (see earlier), big data play a central role in helping media platforms and media users collaboratively craft such filter 417

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bubbles. The larger question raised here, then, is whether the increased content personalization that appears to be appealing to media consumers, and that creates economic and strategic opportunities, is generating a range of negative externalities in the realms of cultural cohesion and political deliberation and decision-making.

Data Divides Big data are increasingly seen as a source of competitive advantage in the media industries (see, e.g., Prescott, 2014; Smith & Telang, 2016).The capacities to effectively gather and analyze large quantities of data are increasingly seen as a key point of differentiation between success and failure in the full range of media sectors. Not surprisingly, then, companies are resistant to sharing the data that they have gathered with other stakeholders in the marketplace—even those companies with which they have a business relationship (Smith & Telang, 2016). From this standpoint, data can be seen as an emergent barrier to entry to many media sectors. If the ability to effectively compete and negotiate with marketplace participants is increasingly a function of the quantity and quality of accessible data, then perhaps we need to begin paying attention to potential anticompetitive behaviors and anticompetitive effects that are oriented around data availability and access (Lohr, 2017). As data becomes increasingly central to effectively competing in the media marketplace, competitive media markets can potentially be undermined by asymmetries in access to data.

Research Directions One can think of media management research on the intersection of big data and media management as operating on two primary—though not mutually exclusive—tracks: (1) using big data to answer the kinds of questions of interest to media managers; and (2) analyzing how big data is being integrated into—and affecting—various dimensions of media management and media industry behavior. These tracks can be seen as reflecting the applied and the introspective dimensions of media management research. Looking first at the applied track, we are at the early stages of extracting strategic and managerial insights from the range of big data sources that are now available. Certainly, a key point of focus for research going forward can, and should, involve leveraging big data to advance our understanding of the dynamics of audience behavior. Audience behavior is certainly more visible now than it has ever been in its history, which invites the question of whether established theoretical perspectives and assumptions about audience behavior translate into contemporary contexts (see, e.g., Nelson & Webster, 2016), in which not only have the technological interfaces via which audiences engage with media changed, but also the very data via which such engagements are quantified have changed (expanded). The next few years should see a substantial growth in research that both tests established theories of audience behavior for their continued validity and develops new theories, derived from new data sources and that reflect the changing nature of how audiences interact with media technologies and services. It is important to note, however, that the extent to which media management scholars can meaningfully contribute big data–derived managerial insights is dependent upon being able to access these databases. Media management research has always, to some extent, been dependent on being granted access to industry data sources. Such access has often proved challenging to obtain, given: (a) the tremendous economic value of such data; (b) academic researchers’ typically limited financial resources; and (c) the potential for academic researchers’ desire to publish and disseminate their findings being incompatible with the interests of the providing media organization or commercial data provider. It seems reasonable to ask whether these challenges are likely to become magnified as the 418

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size and scope of the desired data sets increase, along with their economic value and the potential repercussions of the findings derived from such data. It is perhaps telling that a special issue of the International Journal on Media Management on the topic of big data and media management yielded very few submissions that actually employed data sets that could be confidently characterized as “big data” (see Napoli, 2016). Whether the nature of the incentives and disincentives of all stakeholders involved can be more successfully navigated in the future to facilitate better academic-industry interconnectivity on the topic of big data and media management remains to be seen. At some level, there would seem to be a mutually beneficial relationship that could be better cultivated, with academic researchers being able to contribute research skills that can yield insights from massive databases that are, in all likelihood, not yet being mined for their full analytical potential. Turning now to the second track (the integration and effect of big data on media management and media industries), there are a wide range of avenues of inquiry worthy of deeper investigation— many of which represent established lines of research that have enhanced our understanding of media industries and the dynamics of cultural production. As noted earlier, the continual process of rationalization in the media industries has been an ongoing focal point of scholarly research. In addition, as has also been noted earlier, there are a number of concerns that inevitably arise from the data-fication of organizational decision-making in the media sector. This combination of established research trajectories and emergent concerns points the way toward a number of important lines of inquiry. The establishment, maintenance, disruption, and evolution of organizational cultures have been a prominent line of management scholarship in general and media management scholarship in particular. As big data become a more integral part of the management of media organizations, it is important to develop a deeper understanding of how this is affecting organizational cultures in the media sector. To what extent does increasingly data-driven decision-making fit within—or conflict with—established organizational cultures, particularly as big data facilitates reliance on data-driven decision-making in decision-making realms that previously were the province of managerial judgment? As a growing body of research has illustrated, algorithmic decision-making emerges as a natural extension of the availability of big data, and has taken root in a wide range of contexts in the media sector (see, e.g., Napoli, 2014a, 2014b). In considering the broader implications of these altered decision-making dynamics, there are a number of additional questions that arise. For instance, are there any public service or culturally sensitive dimensions of media organizational cultures that are being affected either positively or negatively by the integration of big data–driven decision-making? How are the professional and educational backgrounds and training of those involved in media management changing to reflect the increased prominence of big data, and are there any broader social or cultural implications of these changes that we need to consider? And, perhaps most important, is the increased reliance on big data changing the nature of the content being produced? If so, how? Is it changing in ways that improve or undermine the extent to which the widest range of audience interests is being served? Is it favoring certain types of content providers in the media marketplace over others? Is it facilitating or undermining innovation and experimentation? These are just some of the broader sociocultural questions that scholars exploring the intersection of big data and media management need to investigate.

Conclusion This chapter has attempted to provide an overview of the opportunities, concerns, and future research directions generated by the increasing integration of big data into the management of media organizations. Needless to say, this is a highly dynamic area of inquiry, as technological change continues at a staggering pace, and as innovations in media platforms and services, data gathering and analysis, and audience measurement advance rapidly as well. As was noted at the outset this could not be a more 419

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exciting—or more challenging—time to be a scholar of media management.The goal here has been to provide a basic foundation upon which future research can build.

References Albarda, M. (n.d.). Can media buyers remain relevant in the age of automation? ScreenMedia Daily. Retrieved from http://screenmediadaily.com/can-media-buyers-remain-relevant- age-automation/ Andrejevic, M. (2014). Big data, big questions| the big data divide. International Journal of Communication, 8, 17. Bell, E. (2012, September/October). Journalism by the numbers. Columbia Journalism Review. Retrieved from www.cjr.org/cover_story/journalism_by_numbers.php. Bielby, W. T., & Bielby, D. D. (1994). “All hits are flukes”: Institutionalized decision making and the rhetoric of network prime-time program development. American Journal of Sociology, 99(5), 1287–1313. Bulger, M., Taylor, G., & Schroeder, R. (2014). Data-driven business models: Challenges and opportunities of big data. Report from the Oxford Internet Institute. Carr, D. (2013, February 24). Giving viewers what they want. New York Times. Retrieved from www.nytimes. com/2013/02/25/business/media/for-house-of-cards-using-big-data-to-guarantee-its-popularity.html?_r=0. Davenport, T. H., & Harris, J. G. (2009). What people want (and how to predict it). MIT Sloan Management Review, 50(2), 22–31. Dormehl, L. (2014, November 17). Can an algorithm be creative? Huffington Post. Retrieved from www.huffing tonpost.com/luke-dormehl/an-algorithm-be- creative_b_6161576.html Duda, J. (2014, October 23). How can the media industry attract much-needed data scientists? Mediashift. Retrieved from http://mediashift.org/2014/10/how-can-media-industry- attract-much-needed-data-scientists/ El-Bermawy, M. M. (2016, November 18). Your filter bubble is destroying democracy. Wired. Retrieved from www.wired.com/2016/11/filter-bubble-destroying-democracy/ Goldman, W. (1983). Adventures in the screen trade: A personal view of Hollywood and screenwriting. New York: Warner Books. Grassegger, H., & Krogerus, M. (2017, January 28). The data that turned the world upside down. Motherboard. Retrieved from https://motherboard.vice.com/en_us/article/mg9vvn/how-our-likes-helpedtrump-win Greenberg, D. (2016, September 14). For Amazon, Netflix, Google, it’s all about consumer data. The Street. Retrieved from www.thestreet.com/story/13733572/1/for-amazon- netflix-google-it-s-all-about-consumerdata.html Hagey, K. (2016,April 4). Nielsen to include set top box data in ratings for the first time. Wall Street Journal. Retrieved from www.wsj.com/articles/nielsen-to-include-set-top- box-data-in-ratings-for-first-time-1459764001 Hallinan, B., & Striphas, T. (2016). Recommended for you: The Netflix prize and the production of algorithmic culture. New Media & Society, 18(1), 117–137. Havens, T. (2014). Media programming in an era of big data. Media Industries Journal, 1(2). Hill, S. (2014, June). TV audience measurement with big data. Big Data, pp. BD76–BD86. Jenkins, H., Green, J., & Ford, S. (2013). Spreadable media: Creating value and meaning in a networked culture. New York: New York University Press. Kantrowitz, A. (2015, June 1). The math wizards who rule the murky world of programmatic buying. Advertising Age. Retrieved from http://adage.com/article/print-edition/inside- murky-world-programmatic/298822/ Kastrenakes, J. (2017, February 7). Most smart TVs are tracking you—Vizio just got caught. The Verge. Retrieved from www.theverge.com/2017/2/7/14527360/vizio-smart-tv- tracking-settlement-disable-settings Kim,C., &Wegener,R.(2014,September 18).Big data:Media’s blockbuster business tool.Forbes.Retrieved from www. forbes.com/sites/baininsights/2014/09/18/big-data-medias- blockbuster-business-tool/#2896e2d768f4 Kokonis, M. (2009). Hollywood’s major crisis and the American film “renaissance.” Retrieved from www.researchgate. net/profile/Michalis_Kokonis/publication/240623812_Hollywood’s_Major_Crisis_and_the_American_ Film_Renaissance/links/56b18a6108ae5ec4ed489 759.pdf Kosterich, A. (2016). Reconfiguring the “hits”: The new portrait of television program success in the era of big data. International Journal on Media Management, 18(1), 43–58. Kosterich, A., & Napoli, P. M. (2016). Reconfiguring the audience commodity:The institutionalization of social TV analytics as market information regime. Television & New Media, 17(3), 254–271. Kung, L. (2010). Why media managers are not interested in media management—and what we could do about it. International Journal on Media Management, 12, 55–57. LeCompte, C. (2015). Automation in the newsroom: How algorithms are helping reporters expand coverage, engage audiences, and respond to breaking news. Nieman Lab. Retrieved from http://niemanreports.org/ articles/automation-in-the-newsroom/

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Big Data and Media Management Lohr, S. (2017, January 8). Data could be the next tech hot button for regulators. New York Times. Retrieved from www.nytimes.com/2017/01/08/technology/data-regulators- google-facebook-monopoly.html?_r=1 Madrigal, A. C. (2014, January 2). How Netflix reverse-engineered Hollywood. The Atlantic. Retrieved from www.theatlantic.com/technology/archive/2014/01/how-netflix- reverse-engineered-hollywood/282679/ Mayer-Schönberger, V., & Cukier, K. (2013). Big data: A revolution that will transform how we live, work, and think. New York: Houghton Mifflin Harcourt. Napoli, P. M. (2011). Audience evolution: New technologies and the transformation of media audiences. New York: Columbia University Press. Napoli, P. M. (2014a). Automated media: An institutional theory perspective on algorithmic media production and consumption. Communication Theory, 24(3), 340–360. Napoli, P. M. (2014b). On automation in media industries: Integrating algorithmic media production into media industries scholarship. Media Industries, 1(1), 33–38. Napoli, P. M. (2016). Special issue introduction: Big data and media management. International Journal on Media Management, 18, 1–7. Napoli, P. M. (forthcoming). Media technocracy: Algorithmic media and the public interest. New York: Columbia University Press. Napoli, P. M., Lavrakas, P. J., & Callegaro, M. (2014). Internet and mobile ratings panels. In M. Callegaro et al. (Eds.), Online panel research: A data quality perspective (pp. 387–407). West Sussex: Wiley. Nelson, J., & Webster, J. G. (2016). Audience currencies in the age of big data. International Journal on Media Management, 18(1), 9–24. Pariser, E. (2011). The filter bubble:What the Internet is hiding from you. New York: Penguin. Phalen, P. F. (1998). The market information system and personalized exchange: Business practices in the market for television audiences. Journal of Media Economics, 11(4), 17–34. Podolny, S. (2015, March 7). If an algorithm wrote this, how would you even know? New York Times. Retrieved from https://www.nytimes.com/2015/03/08/opinion/sunday/if-an-algorithm-wrote-this-how-wouldyou-even-know.html Poggi, J. (2016, April 18). Dear TV:We love you.You’re perfect. Now change (but not too much). Advertising Age. Retrieved from http://adage.com/article/media/future-tv- advertising/303565/ Prescott, M. E. (2014). Big data and competitive advantage at Nielsen. Management Decision, 52(3), 573–601. Seltzer, L. A. (2017, February 27). New from Pandora, ads personalized to the listener. Medialife Magazine. Retrieved from www.medialifemagazine.com/new-pandora-ads- personalized-listener/ Shields,R.(2015,October 29).Meet the data scientist:What does it take to hold down the“sexiest job of the 21st century” and how can agencies attract talent? The Drum. Retrieved from www.thedrum.com/news/2015/10/29/ meet-data-scientist-what- does-it-take-hold-down-sexiest-job-21st-century-and-how-can Sinclair, J. (2016). Shift or stasis| Advertising and media in the age of the algorithm. International Journal of Communication, 10, 14. Smith, M. D., & Telang, R. (2016). Streaming, sharing, stealing: Big data and the future of entertainment. Cambridge, MA: MIT Press. Stone, M. L. (2014). Big data for media. Report from the Reuters Institute for the Study of Journalism. Retrieved from https://reutersinstitute.politics.ox.ac.uk/sites/default/files/Big%20Data%20For%20Media _0.pdf Sunstein, C. R. (2017). #Republic: Divided democracy in the age of social media. Princeton, NJ: Princeton University Press. Tene, O., & Polonetsky, J. (2012). Privacy in the age of big data: A time for big decisions. Stanford Law Review, 64, 63–69. Thompson, C. (2008). If you liked this, you’re sure to love that. New York Times Magazine. Retrieved from www. nytimes.com/2008/11/23/magazine/23Netflix-t.html Trusov, M., Ma, L., & Jamal, Z. (2016). Crumbs of the cookie: User profiling in customer-base analysis and behavioral targeting. Marketing Science, 35(3), 405–426. Weber, M. (1978). Economy and society. Berkeley, CA: University of California Press.

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PART V

Future Directions in MME Research

27 MEDIA MANAGEMENT RESEARCH IN THE TWENTY-FIRST CENTURY Ulrike Rohn

The media industry is rapidly undergoing fundamental changes in technology, infrastructure, and players. These shifts create a highly unstable environment, especially for legacy media facing the growth of digital media and the decline of mass-media demand from audiences and advertisers. These turbulent changes make for interesting times for media management research aimed at understanding how media firms experience these changes, how they behave in response, what influences their behavior, and how their behavior, in turn, influences industries and markets.There is an increasing need to study the processes of disruption and change in the media industry, which present rich research opportunities. Unsurprisingly, work in the field of media management has grown significantly and is likely to continue to do so. Media management research makes the important contribution of helping to sustain and improve the media industry so that it can fulfill its important social role (Picard & Lowe, 2016). In such turbulent times, media management research must adapt its research questions and approaches to this changing reality. This chapter suggests key research areas and questions for media management research over the next decade. In the three parts of this chapter, the author first proposes improved self-understanding and positioning of the field of media management in academia. Following the call for further development of media management as an academic field, the author next suggests that media management should adapt its object of study to better meet ongoing and future changes in the industry and its various markets. The chapter challenges the sector approach and the traditional understanding of media firms. Third, the author addresses research questions that will become increasingly important to the two main stakeholders in this academic field: industry players and policy makers.

Self-Concept and the Development of Media Management as an Academic Field Although a relatively new field, media management has moved beyond the first stage of scholarship characterized by great interest in the definitions, heuristics, and typologies framing the field (Hirsch & Levin, 1999; Picard & Lowe, 2016). Having passed this stage, media management research displays an increasing need for self-reflection, especially in the many writings on the self-identity of the field. This discussion was initiated by Küng (2007) and later taken up by, for instance, Wirtz, Pistoia, and Mory (2013); Mierzejewska and Shaver (2014); Ots, Nyilasy, Rohn, and Wikström (2015);

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Picard and Lowe (2016); Achtenhagen (2016); Küng (2016); Achtenhagen and Mierzejewska (2016); and Lowe (2016). The proliferation of self-reflective writing on media management arises not only from the need to adapt media management research to the changing realities in the media but also from the need to define the key questions and areas of media management scholarship, which itself remains neither clearly defined nor cohesive (Küng, 2017). Scholars in this field consequently seem to feel a continuing need for confirmation of their work. Much self-reflective writing questions whether media management research as conducted today is well equipped for the future and calls for further development of the field. In the following, this chapter discusses what the author finds especially important for the improved self-understanding, positioning, and development of media management scholarship in the future.

Need to Better Bridge Management Studies and Media and Communication Studies Media management scholarship lies at the intersection of general management studies and media and communication studies. Although general management research takes the media industry as a case industry for analysis, the need for a specific field of media management studies is rooted in the distinctive nature and characteristics of the media, which are specifically dealt with by media and communication studies. The media has a unique social and cultural role and a special connection to the technological and political spheres of life, so to best study its distinctiveness and complexity, media management research needs to fully consider the media’s uniqueness by combining management studies with media and communication studies. A close look at the current state of research, however, reveals that media management research needs to do a better job of bridging management studies and media and communication studies. So far, most research has applied general management theory to the media industry without reference to media and communication studies (see also Achtenhagen & Mierzejewska, 2016; Brown, 2016; Lowe, 2016). As Lowe (2016) points out, though, the perspective of media and communication studies is especially important when comparing and studying different kinds of media and when applying critical and cultural approaches. Even more so than today, future media management research needs to build on the richness and strength of its interdisciplinary heritage. Only when media management scholarship adopts an approach that also includes media and communication studies will it differentiate itself from general management research, which treats the media industry as a case industry. Interdisciplinary research projects can help media management research bridge general management studies and media and communication studies. In such projects, media management researchers should point to the special characteristics of the media and ensure that they receive due consideration. In addition to the media’s special connections to the political, technological, cultural, and social spheres of life, these characteristics include special economic features, such as exceptionally high economies of scale and scope, and the special challenges of managing potential tensions between the administrative and creative sections of media organizations. As well, media management scholars should present their findings at conferences and in journals in the field of general management, such as the Academy of Management Journal or the Strategic Management Journal, as well as media and communication studies, such as Media, Culture & Society and New Media & Society.The importance of our field depends on the awareness of scholars in related fields.

Need for Further Theory Development Symptomatic of the disjunction between management studies and communication and media studies in media management research is the failure, so far, to develop a meta-theory bridging these fields 426

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of study (Brown, 2016). Indeed, media management research lacks a unique, underpinning theory. The development of theories unique to the field and relevant to media practice, as well as both management studies and communication and media studies, is critically important for the advancement of media management scholarship (Albarran, 2013a; Picard & Lowe, 2016). Although a strength of media management scholarship is its high degree of orientation to media practice, it needs to present a unique set of theories to become an academic discipline. There is a shortage of theory-driven research in which theories inform research questions and hypotheses and present the grounds for empirical analysis. Most existing theory-driven research applies general management theory to the media industry instead of developing a body of theory unique to media management. The media industries, with their distinctive transformation processes, make an interesting case industry to test general management theory under such conditions, but the lack of work to build theories unique to the field has been criticized for a decade (Küng, 2007), without much progress (Achtenhagen & Mierzejewska, 2016). As Lowe (2016) claims, the media industries are sufficiently unique to justify a distinctive set of theories. To develop such theories, future media management research should emphasize and refine these unique characteristics, which can well be done in cooperation with scholars from general management studies and media and communication studies. As well, media management research needs to move beyond its predominantly descriptive mode. It should not merely identify the factors that influence behavior and consequences in media industries but also analyze the relations of these factors to each other. Achtenhagen and Mierzejewska (2016) argue that there is not sufficient research aimed at understanding the underlying social, economic, and psychological dynamics and at considering the temporal and contextual factors that might limit the generalizability of research findings. Moving beyond the descriptive mode is essential for any kind of rigorous research and a prerequisite for placing our findings within the wider issue of the sustainability of the media and their social responsibilities.

Need for Critical Media Management Research As much of media management research is descriptive, there is a lack of research that engages with the subject matter critically.The media has a unique social and cultural role, and how and what kinds of media are produced and distributed matter. Media management research, therefore, needs to identify questionable structures and practices in the media industries that work against public interests and the plurality of the media. Although concerned with the sustainability of the media, a critical approach does not address all that media firms do to survive and thrive as intrinsically desirable and naturally without alternatives. A critical approach can reveal troubling issues regarding media plurality, public value, power relations, context dependencies, and the ideologies underlying content production and distribution. Brown (2016, p. 94) argues a critical approach might also “suggest potential for new forms for critically informed media practice,” for which there might be high demand as traditional mass media has lost earlier certainties amid the ongoing market and industry changes. Much of media management research has been epistemologically positivistic, a perspective that if taken too strongly might overlook underlying assumptions and values that could be criticized. Media management research should not shy away from critically reflecting on behaviors and structures in markets and industries. Understanding these is vital to perceiving the full complexity of contemporary media (Brown, 2016). Media management research, therefore, should more frequently make references to existing critical approaches. Media production studies (e.g., Hesmondhalgh, Banks, Connor, & Mayer, 2016; Paterson, Lee, Saha, & Zoellner, 2015) and the rich and diverse tradition of political economy (e.g., Mansell, 2004; Srnicek, 2017; Winseck & Jin, 2012) within media studies rarely receive recognition from media management researchers. Likewise, Brown (2016) 427

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recommends referring to critical management studies when criticizing or denaturalizing media management behavior. Although digital technologies hold the promise of extraordinary progress, a critical approach in media management must also reflect upon their potential limitations and perils when used for media content distribution. For this purpose, media management studies may turn to, for instance, the humanities-based approaches, such as critical software studies (Fuller, 2008; Manovich, 2013) or media archaeology (Huhtamo & Parikka, 2011), that analyze the evolution of digital media technologies and their cultural effects. Questions that may justify such a critical approach include how standardization and other industry power struggles over media technologies eventually shape media designs, plurality in media, and access to content and media services. Incorporating critical approaches to the study of the media industries indicates the maturation of the field and helps bring management studies and communication and media studies together under the umbrella of media management scholarship. Although future media management research should critically scrutinize motivations, behavior, structures, and effects in the media industries, this does not mean that the field should criticize everything or neglect the positivistic, descriptive approach. Some publications and researchers will always have an empirical, descriptive focus, while others concentrate on an interpretative, critical, reflective approach. Scholars taking an empirical and descriptive approach, however, need to more deeply reflect on their findings and position them within the wider context of power relations and critically informed media practice.

Need to Become More International Disruptions in the media industries unleashed by changes in technology and audience behavior are a global phenomenon, but much research in media management consists of case studies in selected countries. This approach logically follows from the positioning of media industries and firms within the boundaries of national media policies and structures and the definition of audience markets by linguistic and cultural criteria. Despite these national boundaries, media firms increasingly operate internationally (Hollifield, 2001; Rohn, 2010), creating a need for more research of international scope. When countries serve as case studies, the questions of whether and to what extent the findings can be generalized need to be addressed. Findings focused on the external environment in which the media operate usually cannot be applied from one country or region to another. However, such findings can be compared, and the increase in research engaged in international comparison is pleasing.These studies help detect different and similar forms of transformation, adaptation, and resistance processes by companies and disseminate knowledge of best practices and examples. Future research, however, should treat the comparability of research results cautiously because more discussion of whether and to what extent findings from a single country can be generalized is needed. Such a critical reflection is often lacking. A significant problem in media management research has been that, with exceptions, most scholarly work circulating in the international community was conducted in North America and Europe. Other countries and regions, such as Latin America, Asia, or Africa, however, are seeing greater or different transformations of the media industries than North America and Europe, and Western models and understandings of how media industries and markets operate cannot be easily transferred to the contexts of these regions, if at all. The international community of media management scholarship is far from being global, although it studies issues of global relevance. In the future, more research conducted outside North America and Europe needs to reach international readerships. Even within Europe, an imbalance appears, with more research conducted in northern and western countries and less in Southern and Eastern Europe. There are, of course, exceptions, such as Spain or Portugal, for instance. When considering media from outside Europe and North America, much research has been conducted on the Chinese 428

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media industry (e.g., Cooper, 2017; Hang, 2010; Li & Dimmick, 2005; Rohn, 2011) but far less on the Indian media industry, another of the large so-called emerging media markets (e.g., Bakshi & Mishra, 2016; Rohn, 2010). The latter, however, has received a fair amount of attention from media studies (Thussu, 2013, 2016). A positive trend has been the encouragement and support of sharing research from less-studied parts of outside Europe and North America.This Handbook, for example, includes chapters on media management research in Asia and Latin America. Likewise, the Journal of Media Business Studies dedicated a special issue to news media development and sustainability in Africa (Dal Zotto & Mavhungu, 2017). Furthermore, the World Media Management and Economics Conference will take place in Africa in 2018.The International Media Management Association held its annual conference in Asia in 2016 and Latin America in 2017. Such gatherings of scholars from around the world are crucial to make media management a global scholarly field. The increased international dialogue helps mature scholarship and contributes to a more comprehensive understanding of how the media operates globally.

Need for More Longitudinal and Time Series Studies Media players, platforms, technology, and associated behaviors and practices are changing at an unprecedented speed. As media management scholarship struggles to keep up with these changes, there is always the danger that it will report on what is no longer relevant. Publishing research more quickly is not always possible because the review and publication of academic work take time. Although the slow pace of academic publishing might often feel unsuitable for the fastchanging media, the thoroughness of the procedures, including peer review, are necessary to ensure scientific quality. Especially in empirical and descriptive media management research, the status quo reported might not be relevant by the time of publication. Therefore, future media management research should include more longitudinal and time series studies. Unlike research that merely presents snapshots in time, these long-term studies enable detecting trends, are better suited for an interpretive, reflective approach, and support theory building (see Albarran, 2013a; Picard & Lowe, 2016).

Adapting the Object of Study When scholars started to develop an interest in media management issues roughly in the 1940s (Albarran, 2013a, pp. 9–10), the media industries and markets differed greatly from those today. Most importantly, they were characterized by a degree of stability and certainty that has disappeared. As the media industries change at a tremendous speed, media management research needs to constantly evaluate and, if necessary, adapt its object of study to accommodate contemporary realities.

Moving Away From a Sector Approach Much media management research follows an industry-sector approach, studying particular media sectors, such as newspaper publishing or television.This approach makes sense for researching the past development and key present-day challenges of sectors but is too narrow to understand the complexity of contemporary media. In the era of convergence and multiplatform environments, more firms follow approaches that cross the boundaries of formerly separate sectors (Albarran, 2013b; Doyle, 2015; Ibrus & Scolari, 2012;Vukanovic & Faustino, 2011). Media practitioners in both business and policy can no longer treat the various media sectors as separate, so media management researchers should not either. As an example, a study of newspaper publishers should always consider the newspapers’ online and social media activities. 429

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In a converged media environment, management processes in previously separate sectors are becoming increasingly similar, particularly in production means, marketing tools, distribution platforms, and customer interactions (Faustino & Ribeiro, 2016). For example, newspaper publishers also produce audiovisual content that they share online, and television news programs produce written text that they disseminate on their websites and social media. Key questions for future media management research, therefore, are how media firms master cross-sectorial product management and adapt to the changing requirements in skills and competencies for production, distribution, and marketing. A research approach that moves past sectorial divisions will closely analyze the standardization of processes and practices across industry sectors and study firm behavior and environmental forces without the narrow perspective of sectorial divisions.

Moving Away From the Traditional Definition of a Media Firm An aim of media management research is to understand media firms and their strategies and practices. Media firms are traditionally defined as enterprises “involved in the production and distribution of content intended for a mass audience” (Mierzejewska & Shaver, 2014, p. 48). As Hess (2014) points out, though, this understanding of a media firm based on the so-called publishingbroadcasting approach is outdated. The author instead proposes the platform approach that includes companies that do not necessarily produce content but operate platforms through which they aggregate, manage, and distribute content, including user-created content. Media firms thus become organizers of public, media-based communication (Hess, 2014, p. 6). With this new understanding of media firms, companies such as YouTube, Netflix, Facebook, Google, and Apple become as important to media management research as traditional mass-media firms. While media management research has been slow to expand its understanding of media firms to the platform model, they were comparatively slow in considering the social media as an industry. Media management scholarship has long looked at social media platforms primarily in the context of marketing platforms or competition for audiences’ attention (e.g., Rohn & Baumann, 2015) before it applied an industry perspective to social media that has enriched media management scholarship (Albarran, 2013c; Friedrichsen & Mühl-Benninghaus, 2013; Kaplan, 2015; Rohn, 2015b). Future research should further scrutinize other, related disciplines that have longer, stronger traditions of studying platforms as an industry. The so-called platform studies (e.g., Gawer, 2011), for instance, in media and communication studies could aid research and analysis. Interesting research questions regard the strategies of these platforms and the reasons why some survive and others do not. In fact, companies often mix the publishing-broadcasting approach and the platform approach. The division between legacy media and online media has faded. While online media was once a mere extension of the core business of a media company, it has become integrated into media operations (Küng, 2017). These developments pose a rich set of new research questions regarding the coexistence and competition of different models. These areas of inquiry also include new ways to boost cooperation, such as crowdfunding, open innovation, or user-created content. As it becomes increasingly difficult to classify media firms, and as value chains constantly change, the question will be which type of value chain and model is most relevant to each kind of service and content. Of particular interest are the new forms of distribution, and the new platforms and actors that contribute to the distribution of content deserve further attention from research. The economic role of freelancers,YouTubers, bloggers, and other actors beyond the rigid structure of media companies and conglomerates deserves more attention from media management scholarship. Lowe (2016) also recommends paying greater attention to community and alternative media neglected in media management research. The management dynamics underlying these media, with their unique financial characteristics and largely voluntary nature of work, are yet to be understood

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thoroughly. Moreover, Ots, Nyilasy, Rohn, and Wikström (2015) suggest that media business studies should study more than media firms. The authors suggest digital content strategies are becoming a key means of creating value for all kinds of firms, so media business studies can be applied to any kind of firm.This perspective arouses interest in research questions regarding the role of media and digital content in business models, content and communication strategies, and digital services. Expanding the study of media and content to relevant processes in all kinds of firms could contribute to a better understanding of the digital transformation of society in general.

Topics of Increasing Relevance to Stakeholders The media industry and policy makers, as the main stakeholders in media management scholarship, share a great interest in and need for a better understanding of the media landscape and the forces that influence media behavior and structures. As media industries undergo fundamental alterations (Küng, Picard, & Towse, 2008), their need for analysis, interpretation, and recommendations also changes. This chapter highlights some topics of increasing importance to media management research aimed at delivering value to these two stakeholders.The author does not claim that this list is complete or exhaustive. Future media management research should continue to be interested in any topic that helps understand organizational adaptation and resistance to changing conditions in media industries and their effects on industries and markets. However, the following selected topics represent issues that arise when media management research studies more than large-scale mass media and leaves behind the idea that market behavior is both rational and unquestioned. These issues include questions raised by the increasing opportunities for market behavior that shift the players and power structures in the global context. Even as media management research needs to be critical and to identify research questions independently, its dialogue with its stakeholders is also highly important. Küng (2016) points to the need for researchers to be in contact with media industry representatives to keep constantly up-to-date on industry insights and to cooperate in formulating relevant research questions.The industry, which is usually much more in touch with the latest developments than academia, is a crucial source for research questions. Conducting a feedback round with industry can ensure the relevance and reliability of research findings. For media management researchers, sharing research results with the media industry is of crucial importance, and researchers need to get better at convincing media managers of the value of their research. This is especially the case where they experience difficulties in accessing data and information from media companies for research purposes. Furthermore, a close connection with policy makers is important to ensure that media management can best inform them about the effects of past, current, and planned policies. The relevance of media management research is heavily dependent on its relevance to decision-makers in the policy and industry realms.

Topics of Increasing Relevance for the Industry Media firms operate in a highly volatile, competitive environment. Technological innovations result in the emergence of new industry players (both institutional and noninstitutional), the rise of new distribution opportunities, and changes in audience behavior. The challenge for media managers lies in how to best manage and use resources in this uncertain, ever-changing environment. For example, media managers increasingly need to master complex, cross-media product management, and technological awareness and capabilities are crucial in all stages of the value creation process.The competences, knowledge, and skills required to manage a media firm today are ever more diverse, ranging from digital storytelling via data analytics to relationship building with digital platforms (Küng, 2017). Indeed, due to the speed at which media businesses change and become more complex, far

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better management practices are demanded today than during the mass-media era. Therefore, future media management will need to constantly update and reflect on what is expected from media managers nowadays. Media managers often find little time to reflect upon and thoroughly understand these developments and the underlying forces. Caught in day-to-day business, managers often make ad hoc decisions without seeing or reflecting on the bigger picture. Therefore, it is even more important that media management scholarship not only describes but also explains the underlying dynamics to better explain the disruption processes and to support media firms to strive and thrive in an informed, reflective manner.

Understanding Entrepreneurial Venturing The contemporary dynamics and structure of the media industry call for and support innovative approaches in business models. Today’s media landscape, in which traditional boundaries between sectors no longer exist, presents many opportunities for innovative ventures (Gershon, 2017). It offers fertile ground for the formation of new media start-ups, especially small or micro-businesses that depend on innovation because they are less able to compete on economies of scale. Also, larger, established media firms increasingly need to innovate to meet today’s challenges (Pérez-Latre & Sánchez-Tabernero, 2014). In any innovation process, entrepreneurship is the key driver. Hence, understanding entrepreneurship is of great importance for success in today’s media environment; it is a topic of increasing relevance to media management research. The chapter by Min Hang in this Handbook is dedicated to entrepreneurship. Studying entrepreneurship in the media indicates the need to shift from the study of large massmedia companies in industrial silos to the study of smaller businesses—even micro-businesses—and initiatives whose innovative ventures may disrupt the media landscape as we know it. Studying media entrepreneurship helps identify processes, activities, and players in the media before they become significant enough to disrupt existing structures and routines. Facebook, for instance, began as a small start-up and has made tremendous changes in how content is created, noticed, and consumed. Of relevance is the analysis of not only factors that influence the launch of start-ups but also the factors that influence the development, management, and effectiveness of media clusters (Hitters & Richards, 2002; Komorowski, 2017; Porter, 1998;Virta & Lowe, 2017). Media entrepreneurship differs from mainstream entrepreneurship due to the special characteristics of the business practices, value chains, and products in the media industries. It can, therefore, be studied only with an intimate understanding of how the media industry operates (Achtenhagen, 2017; Compaine & Hoag, 2012;Will, Brüntje, & Gossel, 2016).The special context of understanding media entrepreneurship in the form of new media ventures lies in their potential to add additional voices to society and counteract possible media ownership concentration that could threaten democracy (Hoag, 2008; Noam, 2015). Adjusting policies to better promote entrepreneurial activities in the media is of central importance (Ibrus, 2015; van Kranenburg, 2017). For media strategists and executives, a central question is how to manage media ventures to satisfy their entrepreneurial intention. Studying entrepreneurship helps further the understanding not only of corporate strategy but also of the changing opportunities and demands for individual career development in the media. In journalism, for instance, where traditional career opportunities are diminishing, entrepreneurial journalism is becoming an important career opportunity. Entrepreneurial journalism may take the form of digital news start-ups; it also increasingly represents the work realities of freelance journalists (Achtenhagen, 2017; De Cock & de Smaele, 2016; Holton, 2016; Sparre & Färgemann, 2016). Changing work conditions for journalists are a topic of increasing relevance, and their study should also consider ethical concerns over the overlapping roles individuals may hold as journalists, publishers, and fundraisers (Porlezza & Splendore, 2016). 432

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The study of entrepreneurship in the media calls for and creates opportunities for cooperation with other academic fields. Media management research on media entrepreneurship connects classical entrepreneurship studies with media and communication studies, especially with respect to the special characteristics of media entrepreneurship. Also, future media management studies can build on a large base of existing innovation economics and innovation management studies (e.g., Potts, 2011; Dal Zotto & van Kranenburg, 2008; Küng, 2015; Storsul & Krumsvik, 2013), in which entrepreneurship plays a central role in understanding how changes take place in markets. Furthermore, scholarship may take a critical look at the relationships among classical management scholarship (e.g., Porter, 1985) and new business models (e.g., Chesbrough, 2007). Undertaking this line of study, media management research might reveal interesting insights into the changing economy of legacy media and the new media economy, in which innovation and entrepreneurship are key.

Understanding Decision-Making and Behavior A key aim of media management research is to observe, understand, and interpret media managerial decision-making and behavior. However, as Küng (2017) states, media management research attempting to understand media firms’ decision-making has focused on exogenous changes, such as technological developments and changing audience behavior, while the internal dynamics within media firms remain very much understudied. Moreover, media management research usually assumes the rationality of the media industry’s behavior and does not consider alternative processes and solutions. To better understand the contemporary media industry, a more nuanced treatment of managerial decision-making and behavior is highly important (Picard & Lowe, 2016). Future media management research needs to further develop the study of the cultural and cognitive perceptions that may influence decision-making and behavior. Decision-making should be seen not as an inevitable event but as a process that also has nonrational elements (Küng, 2017). Usefully for this approach, media production sociologists have demonstrated the complexity of media organizations and media work and the difficulties of working in media firms (e.g., Deuze, 2007). In a more nuanced approach to decision-making and behavior in the media industries, major questions are:Why do media managers behave and decide in the ways that they do? What are the alternatives? How do cultural contexts and individual personalities influence decision-making and behavior in the media?

Understanding Audiences and Big Data Media management research traditionally has focused on the organizational and production dimensions of the media. While the media technologies related to the Internet have led to an expansion of the role of the audience, future media management research needs to better understand the audience and how the audience’s growing role influences the management of media firms. Audiences are more powerful than ever. They not only have an ever-increasing array of media options but also operate alongside traditional media firms as content producers, competing for attention (Napoli, 2016a). The collapse of the traditional producer-consumer relationship has been much discussed (Bruns, 2008), and media management scholars should continue to study the possible opportunities and challenges for media firms presented by this development. This research should redefine what media audiences mean to media firms and explore how value creation processes and business models have or should change amid the so-called evolution of the audience (Napoli, 2011). Questions concerning the management of cocreation processes will arise (Banks & Humphreys, 2008; Potts, Cunningham, Hartley, & Ormerod, 2008). Audience members’ value not only as coproducers but also as distributors and promoters of content through sharing processes ( Jenkins, Ford, & Green, 2013; Krumsvik, 2017) will continue to be of great interest in media management 433

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research, and the topic should be constantly revisited and updated amid changing platforms and sharing opportunities. As media firms adapt their business models and operations to the development of audiences’ opportunities and roles, platform operators outside the traditional media industry may serve as role models, and the spillover effects from new market players to the traditional media industry present an interesting research area (Wikström, 2014). The emergence of new technologies for monitoring audiences and their consumption, recommendations, and feedback behavior increases the need for a reflective understanding of the nature of new ratings, ratings analysis, and the possibilities and challenges presented by audience data. Many media firms lack coherent, informed strategies to handle data to increase value for both firms and audiences (Napoli, 2003, 2011, 2012). The growth of audience data, generated by the shift from aggregated, standardized audience measurements to individual data (Napoli, 2003, 2011), is often discussed in the context of big data, which is an emerging research field on its own. Athique (2017), who discusses the potentials but also limits of big data for audience research, also warns that one must not forget that audiences are not data (see Chapter 26 for more on big data and MME research). Big data has increasing relevance in networked media (Borgman, 2015; Kitchin, 2014), warranting attention in media management research. Napoli (2016b) also advises media management researchers to conduct big data analysis themselves to better understand the media. In the media, big data sets include not only audience data but also content data (Ibrus, 2016b; Napoli, 2016b). Netflix, for example, designs all its offers based on data analytics and algorithms. Possible research questions then include: How can data be used for value creation and provision? What exchange relationships among firms influence industry structures and market behavior? In a critical approach, media management should look for ways to outline the value of human resources and creative work against the value of algorithms, and examine the relationship between journalism and the Internet of things (Greengard, 2015). Important concepts such as trust, authority, and knowledge are very relevant for guidance in the computer-mediated environments. In terms of building a further understanding of the audience, minority audiences and media targeted to immigrants are of increasing interest. Also of continuing relevance is the discussion of cross-cultural differences in audience demand and how they may result in varying strategies in terms of global standardization and local adaptation (e.g., Rohn, 2010, 2015a).

Understanding Leadership and Social Responsibility With few exceptions (Deslandes, 2016; Küng, 2006), leadership in the media unfortunately has not received sufficient scholarly attention (Küng, 2017). This is unfortunate for various reasons. First, leadership matters today more than ever. The disruptions in the industry call for strategic vision to handle the multitude of digital opportunities and challenges, many of which fundamentally challenge the whole industry. Second, leadership in the media differs from leadership in other industries and requires special considerations. Good media leaders consider the administrative and business as well as artistic and creative imperatives. A leadership challenge in the media, therefore, is aligning creative talent with organizational goals. Creative employers and freelancers usually enjoy a large degree of autonomy within organizations but tend to not have the same focus on the firm’s profitability as the managers and executives responsible for the firm’s financial results and sustainability. As the irreplaceable creative talent, opinion leaders, or faces of the organization, though, creative workers might have much more power than those accountable for the firm’s outcomes. Hence, more so than in other industries, the official hierarchical structure in media firms might not reflect the actual power relations (Deslandes, 2016). Media management research should more deeply investigate this division of power and the resulting leadership issue in the future.

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Studying leadership in the media is both important and special due to the role of media in society and the resulting expectations confronting media leaders. Irrespective of firms’ commercial goals, media leaders are expected to act in the public interest and promote social value. News and information media are especially expected to facilitate the civic functioning of democratic societies.Very often, media leaders face a conflict between offering what audiences desire and what helps achieve the firm’s business goals and offering what performs important social and democratic functions. As media management research needs to give more consideration to the cognitive, psychological, and cultural aspects of industry behavior, it also needs to pay more attention to the inner dilemma experienced by media leaders, including analysis of their identity formation processes (Müllern, 2006). In line with the need for more critical and reflective research, work on ethical leadership is also needed. Future media management research should point to and describe shortcomings and best practices for social responsibility in managerial behavior, including both editorial practices and business practices. Although sustainability and profit are crucial, the questions of how sustainability and profit are achieved are equally important. In business practices, media management also concerns equality and social justice in the management of workers. The working conditions in the media industry are a classic political economy critique of the cultural industries (e.g., Hesmondhalgh, 2016; McRobbie, 2005; Ross, 2009) but have been largely overlooked in media management research. Creative workers, due to the nature and characteristics of their work, are especially vulnerable to forms of “flexploitation” (Ross, 2009, p. 4), such as subcontracting and increased projectification (Lundin & Norbäck, 2016; Styhre & Borjesson, 2011). Deuze (2016) states media management scholarship has failed to warn against such exploitation. This can also affect audience members who provide free labor contributing to media firms’ value chain through user-created content and distribution and promotional activities. This has sparked a discourse on digital labor in critical media and communication studies (e.g., Arvidsson & Colleoni, 2012; Burston, Dyer-Witheford, & Hearn, 2010; Fuchs, 2010; Scholz, 2013), which has been mostly unnoticed in media management scholarship. As audiences contribute to organizations’ value creation, questions about audience rights and compensation are of relevance. Moreover, the growing free content provided by audiences poses questions regarding work and employment security of professional media producers, all of which are issues that media leaders and media management research need to look at. In editorial practices, the need for media leadership has become highly obvious. Despite the democratic value of the ability of all users to produce and distribute content, much lacks reliability and might contribute to public disinformation. In a time of so-called fake news, it is important that editorial practices follow ethical and journalistic professional standards. Content self-regulation is still a pending subject in the media industry. In line with the aforementioned need to study platform operators, the management of content and the relationship with content providers that do not follow a code of conduct and produce false content are increasingly important. This also includes working with third-party fact-checking organizations. Management of suppliers’ relations in the content market has become much more complex in the social media age, demanding ethical leadership. In sum, the media industry desperately needs strong leadership as radical changes challenge and question the media and its special status in society. In times of unrest and insecurity, media management research should help managers not only succeed and be profitable but also develop an understanding, orientation, and approach to socially beneficial managerial practices (Picard & Lowe, 2016). As much as social responsibility by media managers is crucial, media management researchers also have a social responsibility. In times of a fragmented and post-truth society, the role of the media needs to be defended again. This includes the defense of the public value of the media and their informative task, and it includes the analysis of fake news and their value chains. Furthermore, more reflections on what a free market means in the new digital environment are needed.

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Topics of Increasing Relevance for Policy Makers Media policy matters to media management, setting the framework within media firms operations and thereby heavily influencing their strategic options. Media policy and regulations quickly become outdated due to digital convergence and changing business opportunities and practices and, not uncommonly, are aimed at solving yesterday’s problems (Lund, 2016). International policy-making, which is greatly needed in today’s globalized media, presents difficulties staying abreast of industry changes due to the time that it takes to negotiate legislation across countries (Biggam, 2015). Under such conditions, the dialogue between media management scholars and policy makers, as mentioned, is critical. Media policies and regulations greatly influence the survival or failure of media firms, so media management research needs to inform policy makers about how these firms function and how current or planned policies might influence their operations. Media management research needs to point to policies and regulations that, given the logics of the media business, might threaten plurality and diversity in the media (Lowe, 2016). New measures of pluralism and the consequences of the new concentration of ideas and contents are needed (Valcke, 2015). The need for informed policy decision-making is amplified by the speed of changes in market conditions. Here are a few policy areas that warrant attention in media management research aimed at assisting informed, useful, effective policy-making. The Digital Single Market strategy initiated by the European Commission, for instance, appears to lack an understanding of the role of network effects in the media, where much of the content is made available by platform operators (Ibrus & Rohn, 2016). Online platforms, such as YouTube and Netflix, are global superplayers that increasingly act as intermediaries and content gatekeepers, even at the national level (Sjovaag, 2016). The larger and more international platforms are, the higher the network effects they enjoy. The problem with network effects, therefore, is that they eventually lead toward a concentration in favor of platforms from larger markets as most consumers tend to prefer the platforms that have most of the users. Market size matters in the media industry more than in many other industries as market dynamics are heavily influenced by network effects as well as economies of scale and scope that disadvantage small markets. A single market policy, therefore, might disadvantage smaller markets (Ibrus, 2016a; Ibrus & Rohn, 2016). Such co-regulation of national markets and the networked media infrastructure calls for informed policy decision-making that understands the business dynamics of how media firms operate and thrive. Future media management research needs to advise policy-making and monitor the effects of regulations and policies. Intellectual property presents another topic of increasing relevance to policy makers. A key challenge—if not the challenge—facing media firms today is finding ways to maximize the value of their intellectual property amid unprecedented piracy. The dialogue between media management scholars and policy makers should always examine whether existing copyright laws are still relevant given current market conditions and practices and how they can be adapted to mutually satisfy and enable media firms and the creative, remixing public (Lessig, 2008). The increasing cocreation and interactions between audiences and media providers also raise questions about the ownership of cocreated material. Green and Erickson (2014) claim the interactive age demands redefining digital property. This ongoing process requires that media management research continuously report on media practices because media firms are increasingly not only holders but also managers and curators of intellectual property. Media firms need as much guidance as media policy makers to find the best solutions for all involved in this period of adjustment. Another emerging topic which has implications for the media industry is artificial intelligence. Digital tools and algorithms increasingly facilitate the production and supply of media, and media management researchers need to pay attention to the emerging digital media ecosystem as they work to inform policy makers. Algorithms determine to what extent media audiences are exposed,

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and artificial intelligence systems generate news stories, directly influencing the nature of work and the labor market in journalism. Furthermore, big data enables journalists to work with and analyze unprecedented amounts of data. Although these developments promise increased efficiency and productivity, media management research needs to further study the opportunities and practices and to point to conditions that might raise issues regarding diversity, pluralism, and ethics, such as privacy (Nordicom, 2017). Media management research should ensure that policy makers do not overlook the special characteristics, economics, and operations of the media industries. This field of study needs to make itself heard, and its research findings need to inform the negotiations of the policies and regulations shaping the future of the media industry.

Summary This chapter has looked at the key challenges and research questions with which media management scholarship should be concerned over the course of the next decade. It argues that media management as an academic field needs to improve its self-understanding and positioning toward its disciplinary roots in management studies and media and communication studies. Although media management is not a discipline with its own theoretical framework, the media industry has a sufficiently distinctive nature to justify its own theories. The differentiation of media management research from general management studies particularly stems from its connection to media and communication studies, a relationship on which the field should rely more and to which it should more frequently refer. This chapter emphasized the need for future media management to move beyond the descriptive mode and to not shy away from critical discussions and discourses on current media practices and structures. The author pointed out that, in the context of the increasing internationalization of the industry and the global processes disrupting and challenging media industries, the international community of media management scholarship is not global enough. The field needs to do better to bring to international attention to scholarship from understudied countries and regions. The tremendous speed of change in the media industries and practices calls for conducting more longitudinal and time series studies to avoid seeing only screenshots of reality that do not capture all the trends and full complexity. Furthermore, media management research needs to move away from the sectorial approach toward a focus on the converged, multiplatform environment and operations. Also, more media management research needs to expand the traditional definition of media firms as only broadcasting and publishing firms to including firms that serve as platform operators. Regarding studying and informing media firms, media management research should give more attention to the management of innovative, smaller or micro-ventures for which entrepreneurial knowledge and skills are crucial. Furthermore, the field needs a more nuanced view of decision-making, including acceptance of irrationality in these processes. Given audiences’ increasing opportunities and roles in content production and distribution, this subject, particularly the growing amounts of audience data and new ratings options, should receive more attention in media management research.With the increasing opportunities in markets and the options of how a media firm may be managed and led, leadership becomes a research area of increasing importance. This includes forms of ethical leadership, both in business practice and editorial practice, and topics from exploitation of workers to identifying and working against fake news and setting a good example through high editorial and journalistic standards.The author also emphasized that media management researchers should inform policy makers about how media firms work and report on how policies and regulations influence market behavior. Topics of special interest in an increased dialogue between media management scholars and policy makers include intellectual

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property, increased co-regulation of international markets, and the use of artificial intelligence for content production and distribution. Media management is often recognized as a rather new field of scholarship, but it has already come a long way. Media management scholarship had to keep up with the changes in the media that started from an offline mass-media industry operating under fairly secure and mostly national market conditions and that has become a market of global, online, and networked-based media, in which platforms and audiences have new roles, and big data and fake news have become the new keywords. Media management research has kept abreast of all these changes; it has no reason to not celebrate its achievements. The field has perhaps neglected theory development while navigating these changes. As scholarship increases, and more people enter the fascinating field of media management research, though, there is hope that we will be able to keep on the pulse of the times and develop theories from our own reflections and informed, critical approaches.

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Ulrike Rohn Komorowski, M. (2017). A novel typology of media clusters. European Planning Studies, 1–22. Krumsvik, A. (2017, January 19). Redefining user involvement in digital news media Journalism Practice. Published online first. doi.org/10.1080/17512786.2017.1279025 Küng, L. (Ed.). (2006). Leadership in the media. Jönköping: Media Management and Transformation Centre. Küng, L. (2007). Does media management matter? Establishing the scope, rationale and future research agenda for the discipline. Journal of Media Business Studies, 4(1), 21–39. Küng, L. (2015). Innovators in digital news. Oxford: I.B. Tauris. Küng, L. (2016). Why is media management research so difficult—and what can scholars do to overcome the field’s intrinsic challenges? Journal of Media Business Studies, 13(4), 276–282. Küng, L. (2017). Strategic management in the media.Theory and practice (2nd ed.). London: Sage. Küng, L., Picard, R., & Towse, R. (2008). The Internet and the mass media. Los Angeles, CA: Sage. Lessig, L. (2008). Remix: Making art and commerce thrive in the hybrid economy. New York: Penguin. Li, Z., & Dimmick, J. (2005). Transnational media corporations’ strategies in post-WTO China: Approaches of three global leaders. Journal of Media Business Studies, 2(2), 35–59. Lowe, G. F. (2016). Introduction: What is so special about media management? In G. F. Lowe & C. Brown (Eds.), Managing media firms and industries: What is so special about media management? (pp. 1–20). Cham, Heidelberg, New York, Dordrecht, London: Springer. Lund, A. B. (2016). A stakeholder approach to media governance. In G. F. Lowe & C. Brown (Eds.), Managing media firms and industries.What’s so special about media management (pp. 103–119). Cham, Heidelberg, New York, Dordrecht, London: Springer. Lundin, R. A., & Norbäck, M. (2016). Projectification in the media industry. In G. F. Lowe & C. Brown (Eds.), Managing media firms and industries:What’s so special about media management? (pp. 367–382). Cham, Heidelberg, New York, Dordrecht, London: Springer. Manovich, L. (2013). Software takes command. New York: Bloomsbury Academic. Mansell, R. (2004). Political economy, power and new media. New Media & Society, 6(1), 96–105. McRobbie, A. (2005). Clubs to companies. In J. Hartley (Ed.), Creative industries (pp. 375–390). Malden, MA: Wiley-Blackwell. Mierzejewska, B., & Shaver, D. (2014). Key changes impacting media management research. The International Journal on Media Management, 16(2), 47–54. Müllern, T. (2006). Middle managers’ identity work in a media context. In L. Küng (Ed.), Leadership in the media industry (pp. 29–40). Jönköping: Media Management and Transformation Centre. Napoli, P. M. (2003). Audience economics: Media institutions and the audience marketplace. New York Columbia University Press. Napoli, P. M. (2011). Audience evolution: New technologies and the transformation of media audiences. New York: Columbia University Press. Napoli, P. M. (2012). Audience evolution and the future of audience research International Journal on Media Management, 14(2), 79–97. Napoli, P. M. (2016a). The audience as product, consumer, and producer in the contemporary market place. In G. F. Lowe & C. Brown (Eds.), Managing media firms and industries: What’s so special about media management? (pp. 261–275). Cham, Heidelberg, New York, Dordrecht London: Springer. Napoli, P. M. (2016b). Special issue introduction: Big data and media management. International Journal on Media Management, 18(1), 1–7. Noam, E. M. (Ed.). (2015). Who owns the world’s media? Media concentration and ownership around the world. New York: Oxford University Press. Nordicom. (2017, March). European media policy. A newsletter from Nordicom. No 1. Gothenburg: Nordicom Ots, M., Nyilasy, G., Rohn, U., & Wikström, P. (2015). Media business studies as we see it:Why does it matter, for whom, and how do we get published? Journal of Media Business Studies, 12(2), 103–106. Paterson, C., Lee, D., & Saha, A. (Eds.). (2015). Advancing media production research: Shifting sites, methods, and politics. Belgrade: Palgrave Macmillan. Pérez-Latre, F. J., & Sánchez-Tabernero, A. (2014). Innovation in the media:The road to change. Lisbon: Media XXI. Picard, R. G., & Lowe, G. F. (2016). Questioning media management scholarship: Four parables about how to better develop the field. Journal of Media Business Studies, 13(2), 61–72. Porlezza, C., & Splendore, S. (2016). Accountability and transparency of entrepreneurship journalism: Unsolved ethical issues in crowdfunded journalism projects. Journalism Practice, 10(2), 196–216. Porter, M. E. (1985). Competitive advantage: creating and sustaining superior performance. New York: Free Press. Porter, M. E. (1998). Clusters and the new economics of competition. Harvard Business Review, 76(6), 77–90. Potts, J. (2011). Creative industries and economic evolution. Cheltenham: Edward Elgar.

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28 FUTURE DIRECTIONS FOR MEDIA ECONOMICS RESEARCH Brendan M. Cunningham

Introduction Over many decades scholars have created a body of literature which offers valuable insights regarding many facets of media economics. These range from the behavior of broadcasters, publishers and advertisers to the impact of media on markets and politics. Scholars have employed theory to develop positive and normative conclusions—that is, predictions for what the industry tends to do and whether those choices are socially optimal. Moreover, scholars have employed empirical techniques to test the predictions of these theories, thereby pointing the direction for additional theoretical and empirical analysis. The future is bright for media economics scholars. There are many reasons. Foremost among these is the emergence of the Internet, which sent ripples through the industry which are still traveling and not yet fully considered by the literature. Second is the broader industrial organization literature’s recent adoption of a set of powerful and advanced techniques which have not been thoroughly deployed by media economists. Third is the opportunity to address open questions which past literature has yet to settle. Finally, there is the existence of data which thus far has not been extensively explored by scholars. The last of these opportunities may remain unrealized for a number of reasons further described ahead.The most insightful papers will blend more than one of these innovations in order to push the envelope of our understanding of media economics. This chapter begins by describing each of these opportunities, in turn. Where relevant the author will make reference to literature which may be helpful for scholars. Some of this literature will fall outside of the body of media economics. The author will also direct the reader to broader surveys of related literature which will provide a context for potential contributions by media scholars.

The Internet and Media: An Industry in Transition Schumpeter (1942) offers a compelling view of how innovations can alter an industry and markets. His work suggests that innovation can involve an immense, structural change to prevailing practice. As a consequence, incumbent firms may not be able to adjust quickly enough or they may make the wrong adjustments. Ultimately, those firms fail and they are replaced by upstart rivals who are practiced in emergent technology and techniques. This pattern of “creative destruction” can take a long time to unfold and it involves a significant redistribution of resources across industries.

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One can plausibly argue that media firms are following this pattern of Schumpeterian innovation due to the emergence of the Internet. For example, in January of 2000 there were 424,900 people employed in the U.S. newspaper industry. By January of 2016 employment dropped to 184,800, a decline of roughly 57% (see Bureau of Labor Statistics, 2016). Over the same period, Internet publishing and broadcasting saw employment increase from 103,400 to 196,900, an increase of roughly 90%. From this simple data alone one cannot infer causality running from the emergence of Internet publishing to a decline in the newspaper industry. In fact, the emergence of inexpensive and highly productive information technology could, and probably does, represent a labor-saving development for newspapers. But the overall decline in circulation for newspapers suggests that consumers are substituting online news for the “dead tree” variety they have historically purchased. Pew reports that daily newspaper circulation was 55.8 million in 2000 and collapsed to an estimated value of 37.7 million in 2015, a decline of 32% (see Barthel, 2017). This ongoing transition, and its end state, is fertile ground for future research. Traditionally media firms could be organized along a spectrum according to the nature of their interaction with consumers. This spectrum is depicted in Figure 28.1. On one end of the spectrum were firms such as book publishers, music producers, video and the movie industry. These products feature standard pricing. Consumers pay firms for their products. On the other end of the spectrum are industries such as broadcasting (both radio and television) in which consumers do not provide media firms with revenue in exchange for their output. In fact, the implicit, revenue-generating output of these industries is the audiences themselves and advertisers pay broadcasters in order to reach consumers. Between these two ends of the spectrum are industries such as newspaper and magazines, in which media firms receive dual revenue streams from both consumers and advertisers. The Internet has shifted the distribution of firms to the right along this spectrum. The prevailing trend involves firms moving toward the pure advertising model. Music is moving toward the center as consumers increasingly subscribe to streaming services. Initially, newspapers moved toward the pure advertising end of the spectrum by placing their content online for free and relying upon Internet advertising for revenue. A number of prominent newspapers, such as the New York Times, Wall Street Journal and Washington Post (among others), are attempting to establish a successful subscription model online and maintain their position on the spectrum. Firms such as Amazon, Netflix and Apple are producing original movies and video content which are available under a subscription model (alongside their traditional “pay” model for content produced by others). Product placement, a subtle form of advertising in which products are featured in movies, is an increasingly important source of revenue to the film industry. And completely new forms of media, such as Internet search and social media, have entered on the broadcast end of the spectrum.They offer their content free and generate revenue from advertising directed at those consumers who use their services. The full impact of this trend is still evolving and worthy of ongoing research. What is the impact on content creation as consumers become a secondary source of revenue? Will product variety

Movies, Music, Books

Cable Movie Channels

Newspapers, Magazines

Traditional Pricing

Pure Subscription

Subscription + Advertising

Figure 28.1 Revenue models. Source: Author.

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increase or decrease as firms seek to increase the base of subscribers/audience size? In the case of newspapers, radio and television there are broader social issues in play. Consumers rely upon media to obtain useful information about a wide range of topics, such as products, prices and, perhaps most importantly, political issues. Will media become more or less accurate as the “full freight” model declines (for a thorough discussion of bias in media see Gentzkow, Shapiro, & Stone, 2016)? A related issue pertains to the impact of new media on traditional firms. In general, the Internet and inexpensive information technology allow for profitable production of media at a much smaller scale.That is, barriers to entry and fixed costs have radically decreased. Other things equal, this should increase profits. For example, in 2010 an established radio personality was earning approximately $4–$5 million in advertising from the podcasts he produced and distributed from a small “studio” located in a cottage in Petaluma, California (Kalish, 2010). While this may be an outlier, estimates suggest that podcast revenues have tripled in the past three years to approximately $220 million in fiscal year 2017 (see Inside Radio, 2017). While podcasting is still a very small industry, its very high growth rate is noteworthy in contrast to the radio industry’s decline of revenue by 1% to $17.4 billion in 2016 (see McLane, 2016). In general this expansion of potential supply should increase the variety of information for consumers. And, given that most firms are turning away from consumers as a source of revenue, thereby decreasing its cost, consumers should have greater access to this information. However, advertising market entrants also significantly increase the supply of advertising and potentially reduce its price. Thus, while media firms are increasingly reliant upon indirect revenue from advertising, there is a real risk that such revenue will not be sufficient to replace traditional forms of revenue. For example, in 2013 newspaper advertising revenue declined to less than half of its peak value (Kaiser, 2014). This can induce a loss of quality in content production where quality is defined by measures such as original, in-depth, accurate reporting of a broad range of topics. For example, Pew reports that in the United States in 2016 there were 21 states in which local papers did not have a reporter in the nation’s capital. For a detailed analysis of the significant changes in newspaper industries, see Mierzejewska, Yim, Napoli, Lucas Jr. and Al-Hasan (2017). One of the most critical issues confronting researchers is predicting and estimating the path of quality in media industries. Media delivery is also undergoing significant upheaval. Almost every media segment, from print to broadcasting, has historically involved vertically integrated firms which produce content upstream and deliver content downstream. This requires ownership and management of some combination of manufacturing, shipping and broadcasting infrastructure. Digitization of media and standardized Internet protocols offer an opportunity for these industries to partially or completely shift distribution online. The magazine industry leads this transition, with prominent titles such as Newsweek and Life moving to online distribution only.The extent to which this trend will accelerate in other media segments, or perhaps not take hold, is worthy of additional analysis by scholars. Social media also represents a completely unprecedented mechanism for media distribution. Sharing and posting now allow for media discovery as a consequence of a consumer’s “social graph” of online network connections.There is an open debate regarding whether this leads to an expansion of the variety of content which a consumer encounters because material more frequently and effectively flows through the network. Alternatively, social media may yield inadvertent censoring of the media which a consumer encounters. A social graph will likely contain a group of consumers who are likable, or similar, to a given consumer. This could lead to a “filter bubble” or “echo chamber” in which consumers are not exposed to media that challenges their perceptions or preferences (Pariser, 2011). In addition, online comment systems allow consumers to create a new attribute of media through discussion with other consumers. The implications of social media for content production and consumers’ knowledge of the world are worthy of additional exploration. There are also a host of burgeoning technologies whose impacts are worthy of additional exploration.Virtual reality represents an opportunity and a challenge to the industry. Far more immersive 444

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experiences are possible and consumption of media and advertising is far less passive as a consequence of virtual reality. Artificial intelligence may allow media to follow an unpredictable script in which responses from consumers determine the nature of programming or advertising. Self-driving cars will create time for consumers which they might allocate to additional media consumption or creation. Each of these topics is worthy of discussion. New technologies have also radically changed the nature of advertising. The prevailing approach in the scholarly literature treats advertising as something which consumers dislike and tolerate only in order to obtain media which they value (for a comprehensive discussion of the economics of advertising, see Bagwell, 2007). Provided there is meaningful heterogeneity in consumer preferences it is fair to assume that a nontrivial portion of media consumers would rather not experience a particular advertisement. Internet advertising differs in that all consumers of a particular type of content need not consume the same advertisement. That is, advertisements can be targeted to particular consumers. The more information an advertising platform can gain about a consumer, the better it can match the consumer to relevant advertisements. This implies that, provided targeting does not mismatch consumers with advertisements at a higher rate than historical forms of advertising, targeted advertising will yield higher utility for consumers from advertising-supported media. It will also benefit firms since they will not pay for advertisements which are unappreciated by a consumer. The emergence of targeted advertising is a Pareto improvement, although Johnson (2013) provides a counterexample. An open question is the size of the benefit generated by the advent of targeted advertising. One caveat to these benefits involves the role of advertising in product discovery. It is conceivable that algorithms matching consumers to advertisements may miss an opportunity to inform a consumer of the existence of a product with which s/he is unfamiliar. In particular, this risk will emerge when consumer attributes which are known to an advertising platform serve as a poor indicator of a consumer’s interest in a new product. This “serendipity” aspect to advertising could disappear in the presence of targeting and result in low demand for innovative products. The extent of this possibility is worthy of additional exploration.

Advances in Analysis This section will review opportunities to further our understanding of media through the analysis of data and mathematical models. From the perspective of theory, researchers have an opportunity to expand the set of tools used to address the behavior of media firms and consumers. More traditional organization models have been extensively employed and new models which employ more advanced frameworks for strategic interaction and decision making over time are needed. There are also many opportunities for scholars to employ a variety of novel techniques for data analysis applied to media industry data, such as instrumental variables, panel data analysis, regression discontinuity and difference in difference estimation (for more information about these recent developments in econometrics see the Spring 2017 symposium in Journal of Economic Perspectives).There also a specific technique which is growing in importance to the field of media economics which will be detailed in the next subsection.

Econometrics Sims (1980) offered a new technique for econometric estimation: a vector autoregression (VAR). This “atheoretical” approach to estimation in macroeconomics had the advantage of parsimony and greater credibility than the massive multiequation “dinosaur” models which were then in vogue. However, scholars found that VAR systems were still unwieldy and began to employ structural VAR techniques, in which theory was employed to place a structure on the relationship between shocks in 445

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the system. Subsequently, Berry, Levinsohn and Pakes (1995) offered a similar extension in the field of industrial organization.This technique is now referred to as structural econometrics. Communications scholars also employ a technique which they refer to as structural estimation, but, in actuality, this is a latent variable technique which is subject to the critique of arbitrary conditions employed by the researcher in order to determine the latent variables (see Holbert & Stephenson, 2002). Lucas (1976) presents a groundbreaking observation that shook the foundations of econometrics. The subsequently labeled “Lucas critique” holds that policy makers cannot typically employ relationships uncovered through econometric estimation. Discovery of those relationships can change the behavior of agents, thereby rendering prior parameter estimates unreliable. However, given the behavioral model underlying structural estimation, the results obtained from this technique will not shift in response to policy choices. Consequently, structural estimation offers the advantage of empirical evidence which is more reliable in the presence of major shocks. Further, the welfare properties of policy changes can be more thoroughly characterized once structural estimates are obtained. Crawford (2000) is perhaps the first scholar to employ structural estimation to explore media economics. The author’s particular effort focuses upon the welfare effects of the 1992 Cable Act in the United States. A number of subsequent researchers have employed this approach to great effect. These include Goolsbee and Petrin (2004), Argentesi and Filistrucchi (2007), Gentzkow, Shapiro and Sinkinson (2014) and Boik (2016). While this represents a healthy collection of contributions, there are many open questions which are still in need of analysis through structural estimation. These include topics such as the impact of social media on quality and accuracy in media, the welfare effects of targeted advertising, and the response of innovation to network neutrality provisions.

Theory Related to the importance of more frequent structural analysis by media scholars is the need to adopt approximately general equilibrium approaches in theoretical analysis. It is increasingly untenable to employ partial equilibrium modeling in which, for example, only one market segment (e.g., broadcasting) is investigated in isolation. Digitization means media markets segments have converged so that developments in one segment are likely to spill over to others. Moreover, given the diminished role of consumer revenue described earlier, price effects from market concentration or changes in consumer behavior are mostly likely to transmit through content to advertising pricing and ultimately manifest in the price of final goods and services. The full welfare effects of this long chain of events are fertile ground for additional research. In the same vein, the intertemporal impact of media is worthy of additional investigation. If consumers of a particular product experience hyperbolic discounting (in which small rewards in the present are strongly preferred to larger rewards in the future) or habit formation then the impact of advertising on consumers will unfold over time (for more on these types of consumer behaviors, see Oshry, 2006). There is also some evidence in pharmaceutical markets that research and development are enhanced by advertising. In these settings theoretical analysis must employ dynamic tools in order to investigate the behavior of media industries and their social impact. Such tools are increasingly used within the broader industrial organization literature. Since media firms often engage in strategic entanglements with competitors, dynamic game theory will also play an important role in future research. Topics such as the interactions between advertisers and media firms, and how surplus is split between those two parties, are important. When a large number of actors are interacting in media markets, the analysis can quickly become challenging. Therefore, novel techniques for approaching heterogeneity in a tractable manner are in great demand. 446

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Policy Questions Perhaps one of the greatest unanswered questions in the field of media economics relates to differences across countries in the role of government. In many countries, media operate within a de minimus regulatory framework in which public assets, such as spectrum, are auctioned and antitrust regulations limit the potential for inefficiencies as a consequence of market power. In these more “free market” systems, information and entertainment are supplied largely through private enterprise with minimal public involvement. In other countries, media industries see a significant involvement by government. For example, Brüggemann, Engesser, Büchel, Humprecht and Castro (2014) report that media in Portugal, Greece, France, Italy and Spain are characterized by relatively strong state intervention. In certain cases, there is censorship. For example, Reports Sans Frontiers reports that North Korea, Eritrea and Turkmenistan have the lowest press freedom index values and details government interference in media. In other cases, there may be a public broadcaster providing the majority of media content or perhaps there are government subsidies for the production of media (newspapers, movies, etc.). For example, Benson and Powers (2011) report that Norway, Germany and Denmark engage in comparatively high levels of per capita funding of media. While Gehlbach and Sonin (2014) represent a valuable contribution, the literature is lacking a complete examination of why these differences exist and the circumstances under which a particular level of public involvement is optimal. Copyright law is meant to incentivize private production of media which would otherwise be underproduced as a consequence of unmetered duplication. Is public subsidization or production of media a substitute for copyright regimes? Globalization is an increasingly important factor in a wide variety of markets. While there is a compelling literature investigating the impact of international trade on movie industries, the impact of trade on other industry segments, such as news and/or music, is still developing. Internet platforms make it increasingly straightforward to consume media which is created in a language which a consumer may not understand well.This enhanced expansion of markets has potentially fascinating implications for media and advertising markets. Additional contributions in those areas are welcome and increasingly important in a more globalized and interconnected world. A related topic is the extent to which regulators are properly assessing the performance of media industries in terms of consumer and producer surplus. Turning from copyright law, antitrust law has often sought to address consumer harm from higher prices as a consequence of rising market concentration (e.g., a high portion of audiences receiving media from a single firm or a single firm receiving a high portion of advertising revenue). However, in many advertising-supported media industries consumers do not pay much, if anything, for the media they consume. Inevitably, antitrust will therefore find little direct consumer harm from increased concentration. Google is a prime example of this conundrum. Consumers do not typically pay for use of Google services. Instead, advertisers pay to access Google’s users. However, Google’s market power in advertising may result in consumers seeing a suboptimal amount of advertising in comparison to a more competitive advertising market. Alternatively, advertisers may pay high prices for advertising with Google and pass along those high prices to consumers through the market for final goods.Thus, market power in media has an impact on broader product markets. Whether traditional antitrust analysis sufficiently can or does address these issues is an open question. There are also many new ancillary implications from regulation in a digital media environment. For example, the advocates of network neutrality undoubtedly intended to improve consumer welfare. However, this regulatory policy has been used to prohibit at least one mobile telephone carrier (T-Mobile) from providing streaming video services to consumers for free (by not counting against a data cap) because doing so would advantage one stream of network traffic over others.Thus, network neutrality served to increase consumer media costs. Similarly, mobile broadband data caps imply that consumers face additional costs from mobile advertising beyond traditional “nuisance costs.” Each 447

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time a consumer’s mobile phone receives a spam email message or a browser-based advertisement the consumer gets closer to her or his data allowance. For any consumer who optimally uses almost all the data allowed under a plan this implies that s/he must either (1) reduce mobile broadband use in response to advertising or (2) pay for additional data. These costs are relatively unprecedented and also uncertain from a consumer’s perspective. Further, it can be challenging for consumers to even know how much of this mobile advertising is downloaded. Similarly, data caps by residential Internet service providers discourage the adoption of streaming for audiovisual consumption. Scholarship to investigate whether these issues are worthy of regulatory review is called for. Regulators have also sought to shape the manner in which children are exposed to advertising (“Cookie monster crumbles,” 2013). The optimal shape of this regulation and its long-run implications are topics in need of additional analysis. Further, it is unclear whether it is more or less necessary to regulate children’s online advertising given the opportunity to target advertising online. Similarly, more research should be conducted regarding whether online advertising has a differential impact on children vis-à-vis more traditional forms of advertising. While scholars have provided extremely compelling insights regarding the impact of media on politics and health, the broader consequences of media are relatively unexplored. What is the role of media in perpetuating or reducing inequality and/or social cohesion? To what extent does advertising induce innovation by firms in a host of markets and result in price changes for final goods and services? What is the welfare impact of outcomes which are far removed from media industries themselves? With Internet distribution of media is there need for duplicative allocation of scarce resources, such as spectrum, to radio and television broadcasters? These and many more questions are worthy of additional exploration.

Data Ecosystem and Scholarship Pipeline This section will highlight some of the many challenges which empirical media scholars have and will continue to face. Foremost among these challenges is barriers to data access. Data providers in media industries typically have corporate clients, such as advertising agencies or networks of media affiliates. For example, Nielsen provides audience data to both television networks and television advertisers. ComScore provides Internet traffic data to online advertisers and online service providers. Other clients include advertising agencies, media planners, national representative firms, and large advertisers who do their own campaigns in-house. These firms are accustomed to pricing for corporate clients. Scholarly researchers, though, do not necessarily have similar resources. It is likely that data prices in media markets are inefficiently high given that media scholars are providing a public good (pure or applied research) with little or no corresponding revenue. Whether granting agencies are adequately addressing this gap is unknown. The U.S. National Science Foundation grant database indicates that more than 3,000 grants have been awarded for economics research with a median value of $165,000 (please see www.nsf.gov/awardsearch). Of these grants 43 contain the keyword “media” and the median grant value was roughly $163,000. This suggests that grants to fund media economics are relatively infrequent but approximately the typical value for economics funding. Whether the NSF grants for media economics research reflect low application flow or low award rates is unknown. Solutions to this issue would include a data consortium to which data providers supply some version of their data, perhaps outdated, for free. Properly constituted these contributions could represent charitable activity. Alternatively, government agencies, such as the U.S. Federal Communications Commission or the UK Office of Communications, could embark upon collecting this data independently and supplying it to scholars without charge. A variety of agencies do likewise (the Food and Drug Administration, Department of Agriculture, etc.).

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Some of the most important data on media markets is very closely held by firms. This problem has long existed for media scholars. For example, very little is publicly known regarding the carriage contracts which cable operators enter into with television content creators. Estimates suggest that Google and Facebook jointly collect over half of online advertising expenditures (Molla, 2017). Without access to proprietary internal data on pricing, algorithms and the like it is very difficult for any researcher to empirically investigate online advertising markets. Similarly, the best data for online consumer behavior is held by Internet service providers, who have yet to provide this data, in any meaningful manner, to scholars. Audience measurement firms, such as Nielsen, Alexa and ComScore, have attempted to fill this gap through sampling of Internet users. But comparison of server logs measuring actual web page traffic with indirect online audience measurement reveals a great deal of mismeasurement (see Fishkin, 2015; Dean, 2017). Scholars who rely upon these sources should proceed with a great deal of caution. Further complicating this issue is the fact that consumers employ multiple techniques for accessing media and there is not yet a reliable means to measure this full range of activity. Equally critical to the future of media economics is the curriculum which is available at the undergraduate and graduate levels. There are opportunities at many institutions to cross-list media economics courses between communications, economics, journalism and/or business school programs. Particularly at the graduate level, curricular cross-listing can encourage mutually beneficial information flow between the different disciplines. These same disciplines should seek to collaborate on dissertation committees. Media economics could readily supplement industrial organization as a course of study at the graduate level in economics programs. Introduction of media economics society prizes for research by junior scholars would also help ensure a steady flow of scholarship into the future. Societies could also incubate scholarship-informed policy developments by inviting policy makers to collaborate on panels during workshops and conferences.

Conclusion The coming decade will represent a unique time for media scholars. Significant innovations will no doubt continue. But enough time has passed since the Internet took hold in media industries that scholars can now begin to develop a full picture of its implications. As is typically the case, progress in our understanding will not be straightforward or predictable. But provided researchers employ a full array of novel analytical tools and gain access to previously unexplored data they will generate insightful contributions for many years to come.

References Argentesi, E., & Filistrucchi, L. (2007). Estimating market power in a two-sided market: The case of newspapers. Journal of Applied Econometrics, 22(7), 1247–1266. doi:10.1002/jae.997 Bagwell, K. (2007).The economic analysis of advertising. In M. Armstrong & R. Porter (Eds.), Handbook of industrial organization (Vol. 3, pp. 1701–1844). Amsterdam: North Holland. Barthel, M. (2017, June 1). Newspapers fact sheet. Retrieved from www.journalism.org/fact-sheet/newspapers/ Benson, R., & Powers, M. (2011, February). Public media and political independence: Lessons for the future of journalism from around the world. Retrieved from www.freepress.net/blog/11/02/10/public-media-and-politicalindependence-lessons-future-journalism-around-world Berry, S., Levinsohn, J., & Pakes, A. (1995). Automobile prices in market equilibrium. Econometrica, 63(4), 841– 890. doi:10.2307/2171802 Boik, A. (2016). Intermediaries in two-sided markets: An empirical analysis of the US cable television industry. American Economic Journal: Microeconomics, 8(1), 256–282. doi:10.1257/mic.20140167 Brüggemann, M., Engesser, S., Büchel, F., Humprecht, E., & Castro, L. (2014). Hallin and Mancini revisited: Four empirical types of western media systems. Journal of Communication, 64(6), 1037–1065. doi:10.1111/ jcom.12127

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Brendan M. Cunningham Bureau of Labor Statistics. (2016, June 2). Employment trends in newspaper publishing and other media, 1990– 2016. The Economics Daily. Retrieved from www.bls.gov/opub/ted/2016/employment-trends-in-newspaperpublishing-and-other-media-1990-2016.htm Cookie monster crumbles. (2013, November 23). The Economist. Retrieved from www.economist.com/news/ international/21590489-are-children-fair-game-sophisticated-and-relentless-marketing-techniques-many Crawford, G. S. (2000). The impact of the 1999 Cable Act on household demand and welfare. Rand Journal of Economics, 31(3), 422–450. Dean, S. (2017, June 29). It’s 2015—You’d think we’d have figured out how to measure Web traffic by now. Retrieved from https://fivethirtyeight.com/features/why-we-still-cant-agree-on-web-metrics/ Fishkin, R. (2015, June 2). The traffic prediction accuracy of 12 metrics from Compete, Alexa, SimilarWeb, & more. Retrieved from https://moz.com/rand/traffic-prediction-accuracy-12-metrics-compete-alexa-similarweb/ Gehlbach, S., & Sonin, K. (2014). Government control of the media. Journal of Public Economics, 118, 163–171. https://doi.org/10.1016/j.jpubeco.2014.06.004 Gentzkow, M., Shapiro, J. M., & Sinkinson, M. (2014). Competition and ideological diversity: Historical evidence from us newspapers. American Economic Review, 104(10), 3073–3114. http://dx.doi.org/10.1257/ aer.104.10.3073 Gentzkow, M., Shapiro, J., & Stone, D. (2016). Media bias in the marketplace: Theory. In S. Anderson, J. Waldfogel., & D. Strömberg (Eds.), Handbook of media economics (pp. 623–645). Amsterdam: North Holland. Goolsbee, A., & Petrin, A. (2004). The consumer gains from direct broadcast satellites and the competition with cable TV. Econometrica, 72(2), 351–381. doi:10.1111/j.1468-0262.2004.00494.x Holbert, R. L., & Stephenson, M. T. (2002). Structural equation modeling in the communication sciences, 1995–2000. Human Communication Research, 28(4), 531–551. doi:10.1111/j.1468–2958.2002.tb00822.x Inside Radio. (2017, June 27). IAB Study: Podcast ad revenues are skyrocketing. Insideradio.com. Retrieved from www.insideradio.com/iab-study-podcast-ad-revenues-are-skyrocketing/article_bbde2032-5b06-11e7b2b6-bb8ccb1d3349.html Johnson, J. P. (2013). Targeted advertising and advertising avoidance. RAND Journal of Economics, 44(1), 128–144. doi:10.1111/1756-2171.12014 Kaiser, R. G. (2014, October 16).The bad news about the news. The Brookings Institution. Retrieved from http:// csweb.brookings.edu/content/research/essays/2014/bad-news.html# Kalish, J. (2010, December 26). Talking tech and building an empire from Podcasts. New York Times. Retrieved from www.nytimes.com/2010/12/27/technology/27podcast.html Lucas, R. E. (1976). Econometric policy evaluation: A critique. Carnegie-Rochester Conference Series on Public Policy, 1, 19–46. McLane, P. (2016, March 3). U.S. radio revenue: $17.4 billion, down 1% last year. Retrieved from www.radioworld. com/business-and-law/0009/us-radio-revenue-174-billion-down-1-last-year/336865 Mierzejewska, B. I.,Yim, D., Napoli, P. M., Lucas Jr, H. C., & Al-Hasan, A. (2017). Evaluating strategic approaches to competitive displacement:The case of the US newspaper industry. Journal of Media Economics, 30(1), 19–30. http://dx.doi.org/10.1080/08997764.2017.1281817 Molla, R. (2017, May 2). Google and Facebook are driving nearly all growth in the global ad market. Recode. Retrieved from www.recode.net/2017/5/2/15516674/global-ad-spending-chart Oshry, B. (2006). Behavioral economics comes of age: A review essay on advances in behavioral economics. Journal of Economic Literature, 44(3), 712–721. Pariser, E. (2011). The filter bubble:What the Internet is hiding from you. London:Viking, Penguin Press. Schumpeter, J. A. (1942). Capitalism, socialism and democracy. New York: Hamper Brother. Sims, C. (1980). Macroeconomics and reality. Econometrica, 48(1), 1–48. doi:10.2307/1912017

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AFTERWORD Jaemin Jung, Bozena I. Mierzejewska, and Alan B. Albarran

The afterword is a new addition to the second edition of the MME Handbook. In this section, the idea was to allow the editors an opportunity to share some thoughts as to what they observed about the field from this experience of both writing and editing this massive project. We’ll begin with coeditor Jaemin Jung.

Jaemin Jung Traditionally, media studies have emphasized the role of media as social institutions and have examined the political, social, cultural or psychological impacts of media. As an academic discipline, the assumptions of media management and economics added new perspectives that traditional media studies overlooked. It considers the audience not only as users but also as consumers, media content not only as social output but also as goods, and a media company not only as a social institution but also as an entity pursuing profit maximization. Although media management and economics started with a small community, it has grown rapidly and published the first Handbook of Media Management and Economics in 2006. In any academic discipline, the publication of a handbook implies that the field has matured in terms of theoretical approaches and methodologies. I still cherish a vivid memory of my excitement when I participated in the project as an editorial review board member. I also translated the first Handbook into Korean and received recognition with the academic translation award from the Korean Association for Broadcasting & Telecommunications Studies. More than ten years have passed since the first Handbook was published. We have witnessed drastic changes in the media industry. Most noticeably, the rise of the Internet and the advancement of digital technology have changed not only how news, information and entertainment content are distributed but also how they are consumed. The Internet has become the main platform of news consumption and streaming is prosperous in music listening and video watching. Moreover, the smartphone and social media, which did not exist at the time of the first Handbook publication, now dominate the largest part of our media consumption in daily life. While new media start-ups are emerging and IT-based media platforms such as Google and Facebook are attracting more users and advertisers, traditional media companies are struggling to survive. Following these changes, scholars have published numerous studies to disentangle the complicated phenomena in the media industry. As we face these changes, there is no doubt that publishing a new Handbook of Media Management and Economics which updates the field and provides future directions for scholars and practitioners 451

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is an imperative mission for scholars. In fact, a couple of handbooks on media management and economics have been published in recent years. However, they are written by economists, mostly in Europe, and are limited as a critical resource for media scholars and practitioners who want to examine managerial and economic issues in every media sector around the world. In this context, I believe that this new Handbook of Media Management and Economics will provide grounds for thought to educators, researchers and media practitioners. I feel honored to have had an opportunity to join the project of the new MME Handbook as one of the editors. I relied on Alan and Bozena’s profound knowledge and experience as journal editors from start to finish. It was challenging to organize topics of whole chapters given the evolution and convergence of media. Respecting the structure of the first Handbook, the new Handbook consists of five parts with 28 chapters, excluding a foreword and an afterword. We added MME research conducted in Europe, Asia and Latin America respectively in the new Handbook. Emerging issues such as media innovation, entrepreneurship, social media, mobile media, distribution and consumption in a multiplatform environment, the transformation of advertising agencies, and the evolution of news are new topics which were not covered in the first Handbook. Regarding analytics, a chapter on big data was added. Overall, more than half of the chapters are new issues in MME research. We devoted a considerable amount of time to combining rising stars who are active in the newly added emerging issues and established scholars in MME research. The global expansion of authors and the makeup of the editorial review board were another challenging task. We asked the authors to assess the state of knowledge in each issue and propose agendas for research for the next decade. Personally, I have been involved in all parts of the new Handbook as an author and an editor. Particularly, I edited most of the issues which were not presented in the first edition of the Handbook. It was a great pleasure to communicate with the authors and review board, and complete final versions through the revision process. I would like to provide some of my observations and learning throughout the whole process, particularly editing the chapters that I took charge of. Brendan Cunningham wrote the evolving research and theories in media economics chapter. As an economist who served as coeditor of the Journal of Media Economics, he approached the topics of advertising, content, politics and regulation from a variety of perspectives. Cunningham also wrote the chapter on future directions for media economics research, which provides valuable theoretical and methodological suggestions for scholars. Nabyla Daidj tackled one of the fundamental issues in MME research. The author reviewed the evolution of strategic management and its application to the media industry with illustration of concrete cases. Four chapters covered newly emerging and fascinating topics. Min Hang well described the relationship between media and entrepreneurship and how ‘media entrepreneurship’ research differs from ‘entrepreneurship’ research. Given the rapid evolution and presence of social media in society, Andreas Kaplan and Grzegorz Mazurek explained its classification, performance measurement, and research agenda for business practices and academia. Sangwon Lee reviewed diverse issues in mobile media economics, management and policy. Research themes such as competition, substitutes/complements, diffusion, strategy, marketing, spectrum management policy, standardization policy and MVNOs in the mobile industry are discussed in detail. Sylvia Chan-Olmsted and Min Xiao investigated the patterns of multiplatform media consumption and reviewed empirical studies exploring factors affecting media multitasking behaviors. Impacts of multimedia media consumption on advertising and media firms’ strategy are also reviewed. Along with the distribution perspective chapter by Xiaoqun Zhang and Alan Albarran, it will be beneficial to understand the media industry in this cross-media multiplatform age. In the analytical tools section, Michel Dupagne analyzed key methodological features, such as the units of analysis, data collection methods, sampling approaches, and statistical analyses of media management and economics articles published in the International Journal on Media Management and the Journal of Media Economics from 2004 to 2016. It is a detailed extension of the similar content analysis 452

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conducted from 1988 to 2003 for the first edition of the MME Handbook. Su Jung Kim wrote about the evolution and the future of audience measurement and analytics. The detailed and thorough review of the media industry’s struggle and researchers’ efforts to measure audiences will be beneficial to scholars and practitioners in the era of smartphones. Overall, the authors emphasized the changing landscape of the media industry and paid attention to media consumption anytime and anywhere. Because the Internet becomes a commodity in daily life including media consumption, the power of old media companies, which controlled distribution, has decreased. Social networking service platforms are used as powerful media consumption platforms and mobile devices, such as smartphones and tablets, have freed users from the limitation of media use both in time and in space. Consumers prefer online and mobile platforms to traditional ways of media platforms. Advertisers are also moving toward social and mobile media, following the consumers. These unprecedented phenomena will be continued and will make research of media management and economics more challenging and meaningful. As expected, authors of the chapters frequently cited articles from the Journal of Media Economics, International Journal on Media Management and Journal of Media Business Studies, which focus on the field of media management and economics.There were also plenty of references examining management and economic issues from general communication and media journals. Moreover, the authors cited many articles from economics, management, marketing, information system and multidisciplinary journals. Owing to digital technology and convergence among media, IT and telecommunications, it reflects that the research scope of the media industry has expanded and scholars from diverse fields have growing interests in media management and economics. There are some common suggestions from the authors of the chapters. The authors of the chapters pointed out how media management and economics substantially differs from traditional management and economics. Scholars should take the necessary step to build a more solid foundation of theory for MME research not only in the emerging issues, such as entrepreneurship, multiplatform consumption, and social and mobile media, but also in fundamental issues, such as human resource management, financial management and marketing. Authors of the chapters mentioned the necessity of new methodological approaches in the age of big data.The anytime and anywhere nature of media consumption has made the business of audience measurement even more complicated than ever. Authors also pay attention to opportunities for new research owing to emerging technologies, such as cloud computing,VR, AR, AI, wearable, business analytics, drones and self-driving cars. The impact of new technologies on the media and advertising industry will remain a focal issue in the field of media management and economics research In closing, I would like to suggest a few things for the further development of MME research in the future. First, numerous studies on MME have been conducted to understand the audience, while research on the production side is limited.The Internet has drawn more people and organizations into content production. Beyond journalists in traditional news companies, there are professional bloggers and online news start-ups. Even news companies have started to publish robot-generated articles without the intervention of human journalists. Does a robot replace a human journalist? What are the impacts of robots on journalists, journalism and the media industry (Clerwall, 2014; Jung, Song, Kim, Im, & Oh, 2017)? There are a host of burgeoning technologies, such as robot, artificial intelligence or drones, in media production whose impacts are worthy of additional exploration. Likewise, it is necessary to pay attention to the process and impacts of newly emerged media production systems to heighten the practical implications of media management and economics research beyond academia. Second, we entered the age of media platform agnostic. As technology gives us more options, how media firms display information and entertainment to readers, viewers, listeners and surfers has changed over time. Now, everything in our daily life is becoming a media platform. Even voice assistants, such as the Amazon Echo, Google Home and Apple HomePod, provide information such as news and weather. As media content runs equally well across more than one platform, people are 453

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not confined to any specific platform to consume media content. Although there is less consumption of newspapers and broadcasting news, people consume more news than ever throughout online and mobile platforms. Cross-media, transmedia or multiplatform consumption is a common phenomenon. Competition is becoming fiercer and is not only happening within a single industry. In the age platform agnostic, traditional demarcation of the media industry must be redefined and revenue models including advertising also should be revisited. Third, the Internet of things (IoT) is expected to encompass every aspect of our lives and generate a paradigm shift toward a hyper-connected society. As more things are connected to the Internet, larger amounts of data on media consumption are generated and stored. It will change the relationship with media, entertainment and information, and has tremendous impacts on individuals, media industry and society at large. With technological development in artificial intelligence, business analytics, wearables and even in-vehicle infotainment, every individual’s behavior regarding media consumption will be tracked. After all, media players have the opportunity for personalized recommendations with the stored data on users’ preferences. Advertising, which has been perceived as noise and interruption, might work as an efficient means of acquiring preferred products and services. While the personalized recommendation is useful not only to individuals but also to media firms, it also encounters problems such as filter bubbles and privacy concerns in society. It is of critical importance that media players understand and evaluate the different values consumers may place on enjoying various types of personalization in media consumption. Lastly, there is no boundary between analog and digital in this post-digital age. Particularly, the post-millennial “digital natives” born and brought up with high-tech digital technology are active in creating, sharing and disseminating content throughout social media and are more accustomed to using streaming media rather than traditional legacy media. Given today’s technological and content disruptions, and the ambient intelligent environments in the media industry, which are likely to continue and possibly accelerate, the future of media management and economics research appears more promising.

Borena I. Mierzejewska When looking back at the process and outcome of the collective work of many authors contributing to this second edition of the Handbook, one may feel overwhelmed with so many new developments that transformed the media industry in the period of one decade. Usually, second editions are slightly updated works of the first original work, but this edition of the Handbook is a completely new collection of material. This collection illustrates that the field of media management and economics has a tremendous amount to offer in terms of contributing to understanding the changes that happened in media over the last decade, and to structure the tremendous amount of knowledge developed by scholars around the world. My maiden journey of being a coeditor of a major book project was truly an amazing experience. Authors of the chapters I edited have all taken up the challenge to provide innovative, well-researched pieces that will affect the evolution of our field. Among the chapters I edited, three focus on providing an overview of where we are coming from as a discipline. Alan Albarran provides a very interesting historical look at our field, while Juan Pablo Artero with Alfonso Sánchez-Tabernero and Jaemin Jung with Youngju Kim take a look at the growth of our field in Europe and Asia respectively. They all illustrate how media management and economics has evolved and extended its scope, transcending boundaries of scholarly theoretical interest to questions of practical relevance to managers and policy makers around the world. Chapters featuring fundamental issues of the field showcase current debates and contain original research material. Joyce Costello and John Oliver discuss the critical components of strategic human resources management in media organizations, and offer insights into how media management practices should adapt and evolve over time. 454

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The role of advertising as a source of revenues for media organizations is insightfully discussed by Louisa Ha, raising important questions about relationships about advertising and editorial content. Besides generating revenues from offering space and time of media offerings as vehicles of promoting products of others, media organizations need to differentiate and establish recognition of their own products as brands. Juliane A. Lischka, Gabriele Siegert and Isabelle Krebs offer broad assessment of the state of media marketing and branding research, and map current debates in this area. The chapter on transformation of advertising agencies by Jürg Kaufmann Argueta and Francisco J. Pérez-Latre lays foundations for the understanding of the structural changes happening within the advertising sector. Finally, the chapter on big data and media management authored by Philip M. Napoli and Axel Roepnack shares their insights and asks important questions about how big data is impacting media management. This book is an outcome of the collaborative effort of many individuals, and I am grateful and proud to be part of it. As a member of the editorial team—with Alan and Jaemin—I hope that the Handbook’s content will inform and inspire the next generation of scholars and, obviously, I already look forward to the third edition.

Alan B. Albarran When the work was completed on the first MME Handbook, I never thought about the possibility of a second edition, nor that I would have the opportunity to again serve as editor of the project. Like Moses in the book of Exodus, I originally balked at the idea of being the editor a second time around. It was not because I didn’t believe in the project, or the need. When I edited the first Handbook, I was also editing the Journal of Media Economics, and on the editorial board for the International Journal on Media Management. Back then I had a great feel for the research being conducted in the field, and where the trends were leading. Roll the clock forward a decade and I was still active in the field, but limited to being an editorial board member for several journals and contributing an occasional book chapter or paper for a conference while working on other books. Nevertheless, Linda and Bozena both convinced me that my previous experience more than made up for my perceived shortcomings. It has been a wonderful experience. When I look back at the process of editing this second edition, it is amazing to see how the MME field is expanding and growing in stature. That is reflected in the many different chapter topics that are new to this edition. The chapters I edited all tended to discuss in part the evolution or migration, if you want to think of it that way, from traditional or analog media to the Internet and the digital age.Two good examples are the chapter on content/program distribution by Doug Ferguson and the media policy chapter by Krishna Jayakar. Both authors do a fine job with their topics, illustrating how the move to a digital world affected distribution and media policy respectively. The editors worked very hard to establish a strong international flavor to the second edition, and that was reflected in most of the chapters I edited. A new addition was the inclusion of chapters detailing MME research in Europe, Asia and Latin America respectively. This was very important to the field, because these three regions all have different backgrounds, different traditions, different epistemological orientations and different media systems that have impacted their scholarly output. María Elena Gutiérrez’s chapter on Latin America presents a solid overview of the media industries in the region and their challenges and opportunities. My UNT college Xiaoqun Zhang took on the challenging topic of media globalization, and offers new insights and directions for research that will benefit scholars interested in the topic. Innovation from a media perspective is a new addition as well. Richard Gershon’s chapter is informative and will no doubt introduce scholars to the exciting work being done in this sector of 455

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the field. Powers and Zhao look at the evolution of news and video and its impact on journalism, and the challenges presented by the digital age—including the issue of “fake news.” Zhang and Albarran author a chapter on the multiplatform environment for the media industries with a focus on distribution, which also touches on innovation in the sense of new ways to interact with audiences. You will want to take a close look at the chapters authored by Mierzejewska and Rohn found near the beginning and end of the Handbook. Bozena offers a nice update on the evolution of theory in media management research, while Ulrike takes an expansive look at where and how media management research may evolve moving forward, including theoretical perspectives. One finds a unity expressed by both authors in terms of progress and hope for the media management field. Finally, the chapters on financial management and mergers and acquisitions remind us that the media industries operate in a business environment and represent economic institutions. Ron Rizzuto returns to lead the discussion on financial management, joined by Mike Wirth and Tracy Xu. If you know little about financial management this chapter will be a good place to start. Hans van Kranenburg and Gerritt Ziggers share their insights on media mergers and acquisitions, offering a detailed analysis of tools MME scholars can use to evaluate M&A activity. Overall, I’m very pleased with the second edition of this Handbook. Bozena and Jaemin and I have worked very hard to make this a work the field will not only use but also appreciate for the next decade or so. I will look forward to someday seeing a third edition of the Handbook of Media Management and Economics.

References Clerwall, C. (2014). Enter the robot journalist. Journalism Practice, 8(5), 519–531. doi:10.1080/17512786.2014. 883116 Jung, J., Song, H., Kim,Y., Im, H., & Oh, S. (2017). Intrusion of software robots into Journalism:The public’s and journalists’ perception of news written by algorithms and human journalists. Computers in Human Behavior, 71, 291–298. doi:10.1016/j.chb.2017.02.022

456

INDEX

Page numbers in italics indicate figures and in bold indicate tables on the corresponding pages. Abbasi, D. 268 Academy of Management Journal 426 Academy of Management Review 260 Accenture 326 accounting-based measures of mergers and acquisitions performance 210 Achtenhagen, L. 9, 19, 28, 96, 107, 265, 268, 426 – 427 A. C. Milan 107 actual receivers 381 Adams, J. W. 8 Adams, W. J. 227, 231 Adams-Bloom, T. 96 advertising 37, 454, 455; account management changes in 395 – 397; agency-client relationship changes in 402 – 404; in Asia 69; audience receptiveness to new forms of 154; benefits beyond competition 39; cluttered 151 – 152, 155; creativity changes in 397 – 400, 405; defined 144 – 145; digital platform 310; digital transformation of agency structures in 395; and economic nature of media as goods 145 – 147; fundamental issues and new developments in 40 – 42; future of 445; importance to different media 147 – 149; influence on editorial content diversity and independence 150 – 151, 153 – 154; integration vs. specialization 407 – 408; Internet changes to 394 – 395; in Latin America 84; media policy and 183 – 184; mixed with editorial content 153; multiplatform media consumption and 323 – 324; new career profiles in 404 – 407; new content distribution strategies and 233; research agenda for the next decade 152 – 155; revenue models of media and 148 – 149, 154 – 155; strategic planning changes in 400 – 401; targeted 413; variations of 149 – 150; see also marketing and branding

457

Advertising Standards Authority (ASA), United Kingdom 183 Africa, media management research in 428 – 429 Agarwal, S. D. 348 – 349, 351, 353, 357, 358 agency-client relationship changes in advertising 402 – 404 Aggerholm, H. K. 100 Agirdas, C. 45 Agostini, C. A. 10 Aguado, G. 57 Ahern, K. R. 132 Ahva, L. 357 AKQA 399 – 400 Albarran, A. B. 6, 7, 53, 58, 88, 452, 454, 456; on alliances 229; on attention economics 230 – 231; on comparative cross-country studies in Latin America 86; on free content 233; on globalization 334; on integrating Latin American studies with global perspective 87; macroeconomic and microeconomic variables in media industries 84; on media concentration strategy 23; on media value chain 227; on methodological approaches in MME research 375 – 376; on multiplatform enterprises 302; on radio station value 133; on technology as disruptive force 229; on theory of the firm and disintermediation 225; on transnational media corporations 336; on value chains 303 Alejandro, J. 347 Alexander, A. 8, 131, 133 Alexander, P. J. 43 Alexandridis, G. 132 Alfes, K. 105 Al-Hasan, A. 219, 444 Alliance for Audited Media (AAM) 388

Index alliances 203, 203 – 204, 229 Almeida, H. 137 Alphabet (Google) 206 – 207 Alvarado Group 83 Amazon 4, 43; business model innovation by 244, 244 – 245; cloud services 125; data protection by 192; founding of 274; MTurk platform 371; new content distribution strategies 232; supply and demand considerations 229; video service 5, 312 Ambrose, M. L. 192 América Móvil 84, 87 American Marketing Association (AMA) 282 Amit, R. 119 An, S. 151 Anand, B. N. 41 Andersen, S. E. 100 Anderson, C. 149 Anderson, E. T. 41 Anderson, S. 6, 8 Anderson, S. P. 42 Andrews, K. 372 Ang, I. 380 Anghelcev, G. 319 Angwin, D. 212, 214 Ansoff, I. 112 antitrust policy 46 Anuncios 397, 404 AnyTime, AnyWhere, AnyDevice (ATAWAD)/ ATAWADAC (ATAWAD + AnyContent) 125, 220 AOL 5 Apple 43, 121, 122 – 123; business model innovation by 244; data protection by 192; innovation by 243; iPhone 5, 246; iPod 226, 246; iTunes 246, 311, 312; Music 5; new content distribution strategies 232; product innovation by 245, 245 – 246 Arango-Forero, C. 86 Arens, W. F. 397 Argentina 81, 83; see also Latin America, media management and economics research in Argueta, J. K. 455 Aris, A. 57 Arrow, K. J. 36 art directors 398 Artero, J. P. 7, 454 artificial intelligence (AI) 4, 75, 268, 445 Art of War,The 111 – 112 Asia, media management and economics research in 428 – 429; analysis of 66 – 73; by applied theory of analytical framework 69 – 70; Asian media market environment and 64 – 65; by author nationality 72 – 73; building the Asian scholars’ research community and 76 – 77; case study research design in 71 – 72, 76; on content 74 – 75; by country or region 68 – 69; on cultural values and nonmarket factors 75 – 76; on disciplinary fragmentation 75; future of 74 – 77; by industry 69; lessons from meta-review of 73 – 74; by level of analysis 69;

by methodology 70; qualitative research by data collection method in 71; quantitative research by data collection methods in 70 – 71; selection of articles from 66 – 67; technology and 75; by time frame approach 72; trends in 65 – 66; volume of 67, 67 – 68 Association for Education in Journalism and Mass Communication (AEJMC) 6, 54 Association of National Advertisers (ANA) 382 Athey, S. 40 Athique, A. 434 ATK Globalization Index 334 Atlantic 150 AT&T 5 attention economics 230 – 231, 326 – 327 audience-as-agents model 381 audience-as-mass model 380 – 381 audience-as-outcome model 381 audience-centered perspective 166 – 169 audience(s) 9, 25 – 26; attention of, as commodity in multitasking life 326 – 327; audimeter, household meter, and peoplemeter use with 383 – 385; big data and neuroscience in measuring 389 – 390, 433 – 434; concept of 380 – 381; cross-platform, cross-device measurement of 389; digital platforms and 310 – 311; history of measurement of 381 – 387; how to secure transparency of measurement of 388 – 389; introduction to 379 – 380; measurement using big data 414 – 415; measures beyond exposure 387 – 388; media bias and 44 – 45; persistence or evolution of convention in measuring 387 – 389; server-centric approach to measuring 386 – 387; shifting environment of news and 348, 349 – 352; telephone research on 382 – 383; tracking online and mobile 385 – 386 audience-side economics and content 230 – 231 audimeters 383 – 385 Audits of Great Britain (AGB) 384 augmented reality (AR) 4, 5, 9, 268 Ausloos, J. 192 Autor, D. H. 39 Baarsma, B. 47 Bächlin, P. 53 Backhaus, K. 280 Baden-Fuller, C. 124 Bagwell, K. 40 Baidu 64 Bakshi, M. 168 Balnaves, M. 382, 384 Bancel, F. 133 – 134, 139 Banerjee, A.V. 41, 293 Barber, B. M. 39 Bardoel, J. 57 Barigozzi, F. 41 Barnes, B. 336 Barnes, S. J. 295 Barney, J. B. 112

458

Index Baron, D. P. 45 Baron, R. A. 260 Barrón, L. 85 – 86 Barthel, M. L. 348 – 349, 351, 353, 357, 358 Bartroli, M. 184 Basic Econometrics 374 Baskin, M. 400 Basuroy, S. 151 Batlivala, R. B. D. 43 Bauer, H. H. 295 Bauer, J. M. 46 Bauer, M. 192 Baumann, S. 267 BBC (British Broadcasting Corporation) 53, 146, 348 Beam, R. A. 363, 364, 366 Becker, G. S. 39 Becker, J. 277 Becker, L. B. 27, 96 Beebe, J. H. 43 Bellman, S. 152 Bena, J. 133 Benavides, C. 86 Benson, R. 447 Benton, J. 356 Berg, N. 9 Bergan, D. 44 Bergées, L. 57 Bergemann, D. 40 Bergen, L. 151 Berlin wall, fall of the 56 Bermejo, F. 382 Berry, S. T. 43, 44, 446 Bertrand, M. 41 Besen, S. M. 45 Besley, T. 44 Beveridge Report 53 Beville, H. M. 382 Bezos, J. 253 bias, media 44 – 45, 46 big data 5, 389 – 390; audience measurement using 414 – 415, 433 – 434; concerns with 416 – 418; content creation using 415 – 416; for content personalization 412 – 413; context in media industries 411 – 412; data divides and 418; filter bubbles and 417 – 418; introduction to 410 – 411; privacy and 417; research directions in 418 – 419; targeted advertising using 413; uses of 412 – 416 Big Spaceship 398 – 399 Biocca, F. A. 324, 380 Biswas, M. 100 bite-sized learning (BSL) 103, 106 Blasco, A. 150 Blecher, E. 42 Blechschmidt, B. 280 Bleyen,V. A. 146 Block, S. 139 blogs 275, 276 – 277

Blue Ocean Strategy 244, 293 Bohley, K. T. 71 Bohlin, A. 290, 291 Bohlin, E. 296 Bolivia 81, 83; see also Latin America, media management and economics research in Bollywood 341 Bonaimé, A. 136 Bonatti, A. 40 Bonfield, E. 322 BookScan 372 Boon, C. L. 260 Bordwell, D. 55 Bosqueprous, M. 184 Bourdon, J. 382 Bourreau, M. 43 Bouwman, C. H. S. 132 Bowman, E. H. 124 Bozdag, E. 45 Bracker, J. 112 Bradford, A. 193 brand awareness 162 branded content 405 Brandenburger, A. M. 118 brand image 162 branding see marketing and branding brand loyalty 162 Brav, A. 136 Brazil 81, 82, 84; see also Latin America, media management and economics research in Breed, W. 357 Brekke, K. A. 41 Briggs-Bunting, J. 266 Bright House 5 broadcast and mobile spectrum allocation 186 – 187 broadcast content 181 – 183 Broadcast Education Association 6 Broadrick, A. 266 Brooke, H. 281 Brown, C. 7, 57, 58, 427 – 428 Brugal, M. T. 184 Brüggemann, M. 447 Bruner, G. 295 Brynjolfsson, E. 41 BSkyB 100 Buchanan, J. M. 261 Büchel, F. 447 Bughin, J. 57 Bui, H. 101 Burgess, R. 44 Burke, R. J. 105 Business Insider 150 business models 24; of digital platforms 309 – 311; evolution in context of digital transformation 121 – 124, 122 – 123; innovation in 243 – 245, 244; multiplatform enterprises 303, 309 – 311 Business Policy:Text and Cases 112 business process innovation 246 – 248, 247

459

Index Butsch, R. 380 Buzeta, C. 277 Buzzard, K. 380, 382, 384 Cable, J. 187 Cable Act, 1992 178 – 179 Cabral, L. M. B. 296 Cadena Capriles 83 Calvano, E. 40 Cantillon, R. 260 Capital 333 capital asset pricing model (CAPM) 133 – 134 capital structure and leverage 135 – 136, 139 – 140 Carlson, M. 150 Carlyle, T. 44 Caro, F. J. 57 Carroll, A. B. 100 Casero-Ripollés, A. 267 case studies 372; Asian 71 – 72, 76; Latin American 86 – 87 Casson, M. 260 Castro, L. 447 Cawley, A. 266 CBS News 151 Centre National de la Recherche Scientifique 54 Chakrabarti, S. 41 Chan, K. 152 Chandler, A. D. 112 Chandra, A. 41 Chang, B.-H. 120, 130, 323, 334 Chang, C. 376 Chang, S. C. 293 Chang,Y. 324 channel planners 406 Chan-Olmsted, S. 9, 24, 58, 452; on blogging 276; on financial management 130; on globalization and advertising spending 334; on media branding 162, 163, 167, 169; on mobile news consumption 292; on mobile value chain systems 294; on multiplatform media consumption 319 – 322; on strategic management 119, 120, 124 Charmaz, K. 367 Chávez, P. 404, 406 Chen, C. H. 369 Chen, S. 334 Chen, S.-W. 121 Cheng,Y. M. 137 Chesbrough, W. 252 Chiang, C. F. 45 Chicago school 54 Chile 81, 83; see also Latin America, media management and economics research in China 64, 335; cultural imperialism and 340; MME research in 66; resistance to American’s cultural hegemony in 338; soft power paradigm in 341; see also Asia Chinese Committee for Media Economics and Management Research (CCMEMR) 66 Chivukula, R. 138

Cho,Y. S. 152 Choi, C. J. 334 Choi, J. P. 182 Choi, M. 321 Chou, S.Y. 42 Chou, T.-C. 121 Christensen, C. M. 112, 114, 115, 248 Chyi, H. I. 146, 311 Cieply, M. 336 Ciliberto, F. 42 Cincinnati Post 10 Cisco 274 citizen journalists 351 Clark, M. 383 Clausewitz, C. von 112 Clement, M. 277 Clerwall, C. 453 cloud computing 125 clusters, innovation 252 – 253 clutter, advertising 151 – 152, 155 Coase, R. H. 53 – 54 Coffey, A. J. 363, 364 Colapinto, C. 9 Cole, J. 153 Colistra, R. 151 collaborative projects 275 – 276 Collins, J. 248 Colombia 81, 83; see also Latin America, media management and economics research in Columbia Graduate School of Journalism 52 Comanor, W. S. 38 Comcast 5 Communications Group El Comercio 83 Communications Theory 365 Compaine, B. 9, 130, 267, 373 Compare, D. 6 competence-based view (CBV) 119 competitive, ambiguous, aggregative and participatory (CAAP) media marketing and branding environment 170 – 172 competitive advantage 112 – 114; internal growth for 202 Competitive Strategy 112 compilations and edited volumes in MME 6 – 7 ComScore 320 Congressional Budget Office, U. S. 187 consumer spending and new content distribution strategies 232 – 233 content personalization 412 – 413 content/program distribution 42 – 44, 219 – 220; Asia as originator and distributor of 74 – 75; audienceside economics and 230 – 231; bias in 44 – 45, 46; big data and creation of 415 – 416; branded 405; broadcast 181 – 183; consumer spending and 232 – 233; diversity 181 – 182; function of content and 221 – 223; international media policy and 191 – 192; media exhibitors in 225 – 226; media policy and 180 – 186; mediated 226; modern era

460

Index of 220 – 230; old scheduling strategies and new realities for 231 – 232; research agenda for the next decade 234; self-regulation of 435; sequence of creation 227; social media communities for 277 – 278; sources of 223 – 224; strategic alliances and 229; strategic considerations for distributors and exhibitors 229 – 230; structure of content and 220 – 221; supply and demand considerations in 228 – 229; using big data for personalization of 412 – 413; valuation of content and 227 – 228 Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) Act of 2003 184 convergence, media 120 – 121, 302, 304 Cook, D. O. 136 Cook, T. 246 Cooper, C. 383 Cooperative Analysis of Broadcasting (CAB) 382 copyright 184 – 185; international media policy and 191 copywriters 397 – 398 Corcoran, L. 358 corporate boards 8 corporate entrepreneurship 263, 267 corporate restructuring 130 – 131, 138 corporate social responsibility (CSR) 99 – 101, 434 – 435 Corporate Strategy 112 cost analysis of choice of platforms 304 – 309, 305 – 308 Costatini, M. 134 Costello, J. 454 Cowling, K. 42 Coyne, K. P. 116 Craig, R. L. 151 Crampes, C. 41 Crampton, P. 46 Crane, D. 338 Crawford, G. S. 446 creative destruction 249 creative directors 398 creative work space 250 creativity 27 – 28; changes in advertising 397 – 400, 405 Cricelli, L. 297 Crisafi, N. 81 critical media management research 427 – 428 Crossley ratings 382 – 383 cross-platform advertising campaigns 323 – 324 CSGR Globalization Index 334 cultural discount 337 cultural imperialism 339 – 340 culture of innovation 249 – 250 cumulative abnormal returns (CAR) 131 Cunningham, B. M. 43, 452 Cunningham, S. 7 Cuny, C. J. 137 Curseu, P. L. 105

Dahlén, M. 324 Dai, S. 291 Daidj, N. 8, 46, 160 Dal Zotto, C. 6 data analytics 98 – 99 data collection methods, MME 369 – 372, 370 – 371 data ecosystem 448 – 449 data localization 192 data protection and international media policy 191 – 192 Dave, D. 42 Davenport, T. 246 Davidson, T. 138 Davidsson, P. 260 DeAngelo, H. 136, 139 DeAngelo, L. 136, 139 Debrosse, R. 105 De Corniere, A. 40 dedicated agencies 403 Deimler, M. 96 De Jong, J. P. 105 Dekoulou, P. 96 Dellarocas, C. 278 DellaVigna, S. 44 Dell computers 242; business process innovation by 247 De Mateo, R. 57 Denegri-Knott, J. 280 De Nijs, R. 40 dependency theory 340 Depken II, C. A. 147 Der, M. F. 193 Der film: wirtschaftlich, gesellschaftlich, kunstlerisch 53 Deslandes, G. 7, 57, 58 Deuze, M. 6, 348, 354, 358, 435 Devos, E. 133 Dew, N. 261 Dewenter, R. 45, 46 D’Haenens, L. 9, 356 Diamond, W. D. 152 Diaz, F. 151 – 152 Díez, E. A. P. 7 diffusion, mobile 291 – 292 diffusions of innovations theory 338 – 339 digital divide 337 – 338 Digital Journalism 6 digital natives 349, 454 digital news research 357 – 358; see also journalism digital video recorders (DVRs) 176 Dippon, C. A. 293 direct satellite broadcasts (DBS) 183 discounted cash flow (DCF) 133 – 134 discursive power 340 – 341 disintermediation 225 disrupted business models 121, 123 – 124 disruptive technology 242; challenges of 249 disturbance theory 208, 209 – 210 Dittmar, A. K. 137

461

Index Dittmar, R. F. 137 diversity, program and content 181 – 182 divestitures 131 dividends and stock repurchases 136 – 137, 140 Dogruel, L. 265 domain name system (DNS) 192 – 193 Domingo, D. 266 Donders, K. 220 Doraszelski, U. 41 downsizing 97 Doyle, G. 9, 24, 45, 57, 58; on methodological approaches in MME research 363, 371; on multiplatform media consumption 319; on survival of television channels 220 Drucker, P. 112, 261 Du, T. C. 277 Dubini, P. 266 Ducey, R.V. 9 Ducoffe, R. H. 147 Duff, B. R. 319 Dukes, A. 43 Dunnett, P. 55 Dupagne, M. 452 Durante, R. 45 Eastman, G. 114 Eastman, S. T. 227, 231 eBay 274 Ebina, T. 220 echo chambers 444 Eckbo, B. E. 130 École Superieure de Journalisme de Lille 52 École Superieure de Journalisme de Paris 52 ecological niche theory 24 – 25 econometrics 445 – 446 economics, media 36 – 38; advertising and 40 – 42; attention economics 230 – 231, 326 – 327; econometrics in 445 – 446; and economic nature of media as goods 145 – 147; economic role of media and 38 – 39; future directions for research 46 – 47; government policy in media markets and 45 – 46; impacts of globalization on 334 – 335; mobile 288 – 292; multiplatform enterprises and 302 – 304; politics and 44 – 45; recent theories and evidence in 42 – 44 economics of scope 302 Economides, N. 46 economies of scale 208, 302 Ecuador 81, 83; see also Latin America, media management and economics research in Edelman, B. 40 Edelman, D. C. 405, 406 Edge, M. 251 efficiency theory 208 Egan, B. D. 324 Einstein, M. 150 Eisenbeiss, M. 280 Eizenberg, A. 44

Ekstrand-Abueg, M. 151 – 152 Elder, R. 383 Electronic News 6 Elkin-Koren, N. 185 Ellonen, H. K. 46 empire-building theory 209 employees see strategic human resource management (SHRM) engagement: audience 387 – 388; employee 104 – 106 Engels, F. 333 Engesser, S. 447 entrepreneurship 9, 259; ambiguities in defining 260; corporate 263, 267; discussion and future research agenda 268 – 269; education 267; hierarchy of terminology in 262 – 263, 263; individual 262, 267; innovation and 266; in journalism 267; in media startups, small businesses and family firms 266; news production and newsroom 266; opportunities in 260 – 261, 267; progress on concept clarification and framework building in researching 265 – 266; promoted via social media 267 – 268; recent observation on research of media 265 – 268, 268; rising interests and diverse topics for research in 265; special relationship between media and 264; understanding 259 – 264, 432 – 433; understanding the nature of media and 263 – 264 equity-based alliances 204 Erdem, T. 39 Erickson, K. 436 Espelt, A. 184 Ettema, J. 380, 381 Europe, media management and economics in 428 – 429; content and program distribution studies 219; growth period, 1960 – 1989 54 – 55; introduction to 52 – 53; introductory period, 1930 – 1959 53 – 54; maturity period, 1990 – 2015 56 – 58; research agenda for the next decade 58 – 61 European Institute for the Media (EIM) 57 European Media Management Association (EMMA) 6, 58 Evans, D. S. 40, 147 Evans, E. 215 Evans, N. J. 150 Evens, T. 220 Expedia 138 external analysis of companies 116 – 118 Facebook 4, 5, 37, 234, 273, 282, 449; advertising on 147; audience measurement 386; data protection by 192; founding of 274; media branding on 161, 169; news on 312; politics and 283; shifting environment of news and 349 – 358 fake news 4, 281 Faraj, S. 277 Færgemann, H. 267 Faroq, O. 100 Faustino, P. 6, 57

462

Index Federal Communication Commission (FCC) 189 – 190, 301 Federal Trade Commission (FTC) 184, 188 Feldhaus, F. 277 Ferguson, D. A. 10, 350 Fernández Alonso, I. 57 Fernández-Beaumont, J. 57 Ferreira, F. 44 Ferrier, M. B. 267 Fidel Egas Group 83 Fiksenbaum, L. 105 filter bubbles 45, 417 – 418, 444 financial management: capital structure and leverage and 135 – 136, 139 – 140; corporate restructuring and 130 – 131, 138; cost analysis of choice of platforms 304 – 309, 305 – 308; dividends and stock repurchases 136 – 137, 140; future research 138 – 140; introduction to 130; literature review on 130 – 137; mergers and acquisitions and 8, 23, 131 – 133, 138; valuation and 133 – 134, 139 Fishbein, M. 321 Five Forces model 116 – 118 fixed-to-mobile substitution (FMS) 290 Flew, T. 7 Flickr 275 fluidity, technology 320 – 321 Fooks, G. 184 Foros, Ø. 9 Förster, K. 10 Fos,V. 137 Fossen, B. L. 282 Foster, I. 193 Foursquare 283 Fourth Estate 44 Fox, E. 336 Fox News 44 Frankfurt School 54 Franklin, B. 354 freelance workers 97 freemium model 149 free newspapers, advertising in 146 free speech 180 – 181 Freund, P. A. 280 Friedrich, N. 133, 139 Friedrichsen, M. 6 Frith, S. 363, 371 Fritz, B. 43 Fu, F. 137 Fu, T. T. 46 Fuller, K. 132 Furrer, O. 111 future media economics research: advertising 152 – 155; in Asia 74 – 77; audience measurement 389 – 390; big data 418 – 419; content and program distribution 234; digital news 357 – 358; entrepreneurship 268 – 269; in Europe 58 – 61; innovation 253 – 254; on the Internet and media in transition 442 – 445, 443; introduction to

442; marketing and branding 170 – 171; media economics 46 – 47; media globalization 341 – 342; media industry finance 138 – 140; media policy 193 – 194, 447 – 448; mergers and acquisitions 214 – 215; mobile media 297 – 298; multiplatform enterprises 313 – 314; multiplatform media consumption 327; strategic management 124 – 125 Gabszewicz, J. J. 43 Gade, P. 9, 23, 27, 28, 98 Galán, J. 57 Galaxy agency 405 Galbraith, J. R. 395 Galik, M. 56, 57 Gallup, G. 411 Gal-Or, E. 43 Ganahl, R. 148 Gans, J. S. 40 García, L. J. 57 García-Alonso, P. 57 Garcia-Murillo, M. 183 Garcia-Perdomo,V. 326 Garcia Pires, A. J. 182 Garella, P. G. 41 Garrido, M. 10 Gartner, W. B. 260 Gatenby, M. 105 Gates, B. 120 Gehlbach, S. 447 Geho, P. 268 General Agreement on Trade in Services (GATS) architecture 334, 338 Gentzkow, M. 43, 45 Georgakarakou, C. 96 George, J. F. 280 George, L. M. 43 Georgiades, S. 7 Gerber, A. S. 44 German-language research on media branding 165 – 166, 166 German School of Journalism 52 Gershon, R. A. 7, 68, 130 Gerth, M. A. 10 Ghezzi, A. 293 Ghiron, N. L. 297 Gholamali, A. 268 Gianelli, E. 54 Gibens, G. 83 Giddens, A. 333 Gil de Zúñiga, H. 326 Gilly, M. C. 277 Gilmore, A. B. 184 Gimpel, G. 9, 220 Glaum, M. 133, 139 globalization 333 – 334, 447; cultural imperialism and 339 – 340; defined 333 – 334; diffusions of innovations theory and 338 – 339; digital divide and 337 – 338; driving forces of media 335 – 337;

463

Index flows of media products/services across countries in 335; future research agenda on media 341 – 342; impacts on the media economy 334 – 335; indexes of 334; liberalization and 336; localism and 337; and need to become more international in media management research 428 – 429; resistance to American’s cultural hegemony and 338; soft power and discursive power in 340 – 341; three major theoretical frameworks for studying media 338 – 341; transnational media corporations and 336 – 337 global project teams 252 – 253 Glover, D. R. 147 Godes, D. 278 Godoy, S. 83 Goffman, E. 105 Goldfarb, A. 40 Goldsmith, B. 382 Goldstein, D. G. 151 – 152 Golubov, A. 132 Gomery, D. 130 González-Bernal, M. 86 Goodwin, P. 58, 107 Google 3, 38, 64, 121, 122 – 123, 318, 447, 449; advertising on 147, 152; Alphabet ownership of 206 – 207; audience measurement 386; big data used by 98; business model innovation by 244; data protection by 192; founding of 274; new content distribution strategies 232; shifting environment of news and 349 Google Advertising Re-Imagined 400 Google News 310, 312, 336 GooglePlus 274 Google Trends 356 Gordon, R. 184 Gourlay, S. 106 Goussevskaia, A. 111 government policy in media markets 45 – 46; mobile media and 295 – 297 Goyanes, M. 267 Graham, J. R. 135, 136 Grajek, M. 291 – 292 Graybeal, G. M. 267 Great Recession 4 Green, T. 436 Greer, C. F. 10, 350 Greer, G. 153 Gressgärd, L. J. 293 Grierson, J. 53 Grimaldi, M. 297 Groene, N. 152 Gronstedt, A. 408 Groseclose, T. 45 Grossman, M. 42 Grossman,V. 42 Grove, A. 243 Grove, A. S. 118 Gruber, H. 290, 291, 296

Grupo Caracol 86 Grupo Cisneros 83, 87 Grupo Consultores 404 Grupo Globo 84, 87 Grupo Televisa 84, 85, 87 Gu, Q. 42 Guerrero, M. 82 Guitart, A. M. 184 Gujarati, D. N. 374 Guo, M. 168 Guo, W. C. 45 Gutiérrez-Rentería, M. E. 7, 85, 455 Gynnild, A. 266 Ha, I. 222, 321 Ha, L. 146, 148, 152, 155, 310, 455 Hackbarth, D. 133 Häckner, J. 8 Halbheer, D. 148 Hall, W. 43 Haller, H. 41 Halvorson, T. 193 Ham, C. 149 – 150 Hamburg Media School 58 Hamel, G. 119 Hameroff, E. J. 395, 397 Handke, C. 6 Hang, M. 9, 266, 267, 269, 452 Hankins, K. W. 136 Hanssens, D. M. 42 Harbaugh, R. 45, 191 Harford, J. 132, 136, 137 Hargrove, T. 311 Harper, J. 138 Harris, J. G. 98 – 99, 107 Harris, L. 268 Hartmann, B. J. 167 Harvard Business Review 116 Harvey, C. R. 136 Hasenpusch, T. C. 267 Hass, B. H. 266, 267 Hastings, R. 247 – 248 hate speech 181 Hayek, F. A. 261 HBO 222 – 223; business model innovation by 244; business process innovation by 247 Head, S. W. 336 health and advertising 42 Hean, T. K. 260 Heimeshoff, U. 45 Heinrich, J. 57, 58 Henley, A. 187 Hennig-Thurau, T. 47, 277 Heo, E. 266 Herfindahl-Hirschman Index (HHI) 188, 296 Hermida, A. 350, 355, 358 Herscovici, A. 57 Hess, T. 8, 160

464

Index Hetland, K. L. 147 high-performance work organizations (HPWO) 96 Hindle, K. 267 – 268 Hipperson, T. 404, 405 Ho, S. J. 71 Hoag, A. 9, 267, 373 Hoberg, G. 133 Hoefflinger, M. 224 Hoffman, N. 134 Holland, K. 187 Hollifield, C. A. 17, 22, 363, 364 Hong Kong 64; see also Asia hosting network operators (HNOs) 297 Hou, J. 168 Houngbonon, G.V. 290 household meters 383 – 385 Hu,Y. J. 41 Huang, J. S. 8 Huang, M.Y. 46 Huang, R. 137 Huber, S. 56 Huffington Post 5, 310, 336 Hughes, S. 82 Hulu 5, 229 human resources management see strategic human resource management (SHRM) Humphrey, A. 115 Humprecht, E. 447 hypothesized audiences 381 Iansiti, M. 114 Iglesias, F. 86 iHeart Radio 225 – 226 Iizuka, T. 42 Im, H. 453 imperalism, cultural 339 – 340 Inamoto, R. 399 – 400 incitements to violence 181 India 64; soft power paradigm in 341; see also Asia individual corporate social responsibility (iCSR) 101 Indonesia 64; see also Asia industrial organizational (IO) model 85, 293 industry, media: antitrust policy and 46; changes since 2006 4 – 5; concentration 23, 56; consolidation of 3 – 4, 23; the Internet and transition of the 442 – 445, 443; mergers and acquisitions 8, 23, 131 – 133; politics and 44 – 45; RBV application to 120 – 121; revenue models of 148 – 149, 154 – 155; synergy 324 – 325; topics of increasing relevance for the 431 – 435 information and communication technologies (ICT) 120 – 121, 301 – 302; digital divide and 337 – 338 infrastructure 186 – 190; broadcast and mobile spectrum allocation 186 – 187; international media policy and 192 – 193; spectrum management 186 innovation 27 – 28; big data and 416 – 417; business model 243 – 245, 244; business process 246 – 248, 247; challenges of 248 – 249; creating a culture of 249 – 250; defined 241 – 243, 243; diffusions of

innovations theory and 338 – 339; early adopters of 323; entrepreneurship and 266; future of newspapers and 250 – 251; future research on 253 – 254; importance of 242 – 243; introduction to 241; labor market and 97; leadership and 250; networks, clusters, and global project teams for 252 – 253; production 245, 245 – 246; social influence and 103 – 104; sustaining vs. disruptive technologies 242; see also technology innovation diffusion theory (IDT) 294 Innovator’s Dilemma,The 114, 248 Instagram 5, 274, 282, 325; shifting environment of news and 351 institutionally effective audiences 381 Instituto de Periodismo 52 integrated marketing communications (IMC) 401, 407 – 408 Intel Corporation 118 intellectual property rights (IPR) 191, 436 internal analysis of companies 118 – 121 International Association for Media and Communication Research (IAMCR) 54 – 55 International Communication Association (ICA) 54 International Journal on Media Management 6, 7, 18, 58, 65 – 74, 363, 375, 419, 452, 453, 455; on content and program distribution 219; data collection methods 369 – 372, 370 – 371; human resources management covered in 96; levels of statistical analysis in 373; on marketing and branding 162; on media entrepreneurship 269; methodological characteristics in 365 – 374, 366 – 375; sampling approaches 372 – 373, 372 – 373; types of statistical analysis in 373 – 374, 374 – 375; units of analysis 365 – 366, 366; use of case studies 372 international level media policy 190 – 193 International Media Management Association (IMMA) 6 International Telecommunications Union (ITU) 190 Internet, the 453; access, interconnection and net neutrality and 189 – 190; advertising on 40, 147; in Asia 64 – 65; as cause of destabilization of traditional function of media firms 37 – 38; changes to advertising resulting from growth of 394 – 395; digital divide and 337 – 338; economic impact of 39; future of media and 442 – 445, 443; giants of 121, 122 – 123; in Latin America 82, 84; media globalization and 336; online tracking of audiences using 385 – 386; strategic management and 120 – 121; see also mobile media Internet Architecture Board (IAB) 192 – 193 Internet Assigned Numbers Authority (IANA) 193 Internet Corporation for Assigned Names and Numbers (ICANN) 193 Internet of things (IoT) 75, 124 – 125, 253, 287, 454 Internet Research Task Force (IRTF) 192 – 193 Internet Society (ISOC) 192 – 193 Introduction to Time Series Analysis 374 iPhone 5

465

Index Ippolito, P. M. 39 Isaías Group, El Universo Group 83 Istituto Superiore di Giornalismo di Palermo 52 Iwasaki, N. 184 Izquierdo-Castillo, J. 267 Jackson, L. 252 Jakubowicz, K. 56 Jang, S. 290 – 291 Japan 64; content and program distribution studies 220; importance of advertising income in 145; see also Asia Järventie-Thesleff, R. 9, 353 Jasko, S. 253 Jayakar, K. 455 Jeanjean, F. 290 Jefferson, T. 44 Jenkins, H. 46 Jenkins, M. 356 Jensen, K. B. 380 Jensen, R. 39 Ji, S. W. 148 Jin, G. Z. 42 Jobs, S. 245 – 246, 253 Johnson, D. 6 Johnson, S. 245, 250 Jones, H. D. 185 Jones, J. P. 40 Jones, R. 167 Jones, S. C. 184 Jonköping International Business School 57 Jordan, R. 83 Joshi, A. 42 Journal Economica 53 journalism: audience changes and 349 – 352; citizen 351; entrepreneurial 267, 432; entrepreneurial activities in 266; organizational changes in 352 – 354; shifting environment of 347 – 349; shifting environment of news and 347 – 349; source changes in 355 – 357; theoretical approaches to digital news research in 357 – 358 Journalism and Mass Communications Quarterly 20, 219, 365 Journal of Broadcasting & Electronic Media 219, 365 Journal of Digital Media Management 6 Journal of Economic Perspectives 39 Journal of Media Business Studies 6, 7, 18, 58, 429, 453; in Asia 65 – 74; on content and program distribution 219; human resources management covered in 96; on marketing and branding 162; on media entrepreneurship 269 Journal of Media Economics 6, 7, 18, 29, 363, 375, 452, 453, 455; in Asia 65 – 74; data collection methods 369 – 372, 370 – 371; European MME and 54, 57; human resources management covered in 96; levels of statistical analysis in 373; on marketing and branding 162; on media entrepreneurship 269; methodological characteristics in 365 – 374, 366 – 375;

sampling approaches 372 – 373, 372 – 373; types of statistical analysis in 373 – 374, 374 – 375; units of analysis 365 – 366, 366; use of case studies 372 Journal of Media Economics & Culture 66 – 74 Journal of Media Innovation 20, 253 Journal of Media Law 6 Journal of Personality and Social Psychology 364 Journal of Social Media Studies 6 Judd, K. 71 Junek, E. 138 Jung, J. 8, 46, 98, 160, 453, 454 – 455 just-in-time training (JITT) 103, 106 Kadapakkam, P. R. 133 Kahane, L. H. 374 Kahn, W. A. 105 Kaiser, H. 42 KakaoTalk 64 Kaldor, M. 341 Kalita, J. K. 147 Kalmus, P. 297 Kanayama, T. 68 Kanter, R. 249 Kaplan, A. 452 Kaplan, E. 44 Karanicolas, M. 182 Karlan, D. 41, 44 Karlsson, C. 252 Karnowski,V. 292 Karp, H. 43 Katz, M. L. 193 Katz, R. 84 Keane, M. P. 39 Keil, T. 210 Keller, K. L. 161 Kelley, T. 250, 254 Kerr, A. 266 Kesenne, S. 148 Khajeheian, D. 265, 266 Khemka, R. 45, 191 Khorana, A. 138 Kim, D. 292 Kim, H. 266 Kim, J. 297 Kim, S. J. 220, 453 Kim, W. 244, 293 Kim,Y. 98, 453, 454 Kim,Y-G, 321 Kind, H. J. 9, 147 King, S. 400 Kinjo, K. 220 Kinnucan, H. 42 Klinenberg, E. 352 Klingender, F. D. 53 Klopfenstein, B. C. 10 Klyver, K. 267 – 268 Knapp, A. K. 47 Knight, B. 45

466

Index Knight, F. H. 261 Knippen, C. 266 knowledge-based view (KBV) 119 – 120 Kodak company 114 Koenigsberg, O. 148 KOF Index of Globalization 334 Königbauer, I. 42 Kopper, G. G. 58 Korea Media Management Association 65 Korean Association for Broadcasting & Telecommunications Studies 65 – 66 Korean Society for Journalism & Communication Studies 65 Koski, H. 188, 296 Koutroumpis, P. 290, 291 Kranenburg, H. van 456 Krebs, I. 10, 161, 163, 168, 170, 455 Kretschmer, T. 188, 296 Krieff, A. 397 – 398 Krishnamurthy, S. 133 Kronlund, M. 137 Ksiazek, T. B. 9, 220 Kuivalainen, O. 46 Kujur, F. 279 Kulchania, M. 136 Kumar, A. 295 Küng, L. 6, 7, 8, 57, 58, 425 – 426; definition of media industries 160; on importance of media management 111; on need for researchers to be in contact with media industry representatives 431; on tech giants as disruptive force 121; on understanding decision-making 433 Kutaragi, K. 242 Kweon, S. 187 Kwong, W. J. 42 Laamanen, T. 210 Lai, F. C. 45 Lakdawalla, D. 42 Lamberton, C. 281, 282 Lan, J. 68 Landers, D. E. 131 Lange, M. 290 Lanterman, J. 134 Latin America, media management and economics research in 428 – 429; examples of 84 – 86; introduction to 80; macroeconomic environment in Latin America and 80 – 82; on media and telecommunications industry in Latin America 82 – 84; research agenda for scholars of 86 – 88 Latin American dependency theory 340 Latin American Media Management Association (LAMMA) 6, 42 Laussel, D. 43 Lawson, C. 82 Lazarsfeld, P. 411 LCAG model 115

leadership: innovation and 250; understanding social responsibility and 434 – 435 Learned, E. P. 112, 115 Leary, M. T. 135 Lee, A. M. 353, 354, 358 Lee, C. C. 340 Lee, H. 187, 222, 292 Lee, M. 71 Lee, S. 188, 290 – 291, 292, 293, 296 Lee, S.Y. 152 Lee-Makiyama, H. 192 Leenders, R. T. A. J. 105 Leeson, P. T. 44 Legendary Entertainment 64 Legg, S. 53 Lehmann, D. R. 148 Leiva, R. 86 Levien, R. 114 Levin, G. 222 Levinsohn, J. 446 Lewis, S. 311 Lewis, S. D. 268 Li, F. 277 Li, K. 133 Li, S. S. 369, 373 Liaukonyte, J. 42 liberalization and globalization 336 Liberty Global 138 Liberty Media 138, 205 licensing of media and telecommunications firms 178 – 179 Liebowitz, S. J. 46 Lillie, J. 266 Lim, J. S. 324 Lin, C. A. 321 Lin, P. 43 Lin, T. C. 72 Lin,Y. M. 46 Lindlof, T. R. 367 – 368 LinkedIn 5, 274, 282 Lischka, J. A. 9, 150, 168, 455 Litman, B. 152, 155 Littleton, C. 227 Liu, D.-Y. 121 Liu,Y-L. 72, 369 local exchange carriers (LECs) 179 localism 337 local/state level media policy-making 177 – 180 Lokshin, B. 266 London School of Economics 53 longitudinal studies 429 Lorre, C. 227 Love, C. 96 Lowe, G. F. 7, 17, 57, 58, 426, 427; on SRHM studies 106 – 107; on VUCA media environment 167 Lowrey, W. 98, 266 Lucas, H. C. 219, 444, 446

467

Index M&A see mergers and acquisitions (M&A) Ma, W. 40 Macinnes, I. 183 Mackie-Mason, J. K. 189 Mackley, J. R. 187 macroeconomic phenomena, mergers and acquisitions as 208, 209 – 210 Madden, G. 296 Malaysia 64 Malmelin, N. 8, 161 – 164, 170 Malone, J. 138, 205 management studies 8, 426 – 429 management theories 22 – 23; strategic 23 – 25 managers’ assessment of mergers and acquisitions performance 211 Managing Media Firms and Industries 58 Manfredi, J. L. 57 Mangematin,V. 124 Marcu, M. 290 – 291, 292, 296 Marken, G. 276 market exchange 203 marketing and branding: competitive, ambiguous, aggregative and participatory (CAAP) media marketing and branding environment 170 – 172; complex and audience-centered media environment and 166 – 169; introduction to 159 – 160; map of research on traditional and contemporary 170, 170; mobile media 294 – 295; network analysis of research on 163 – 166, 164, 166; research agenda for the next decade 170 – 171; role for media 160 – 161; state of research on traditional 161 – 163; syndication and 230; see also advertising Markovich, S. 41 Márquez-Ramírez, M. 82 Marshall, J. 234 Martens, B. 219 Martin, C. 310 Martin, G. S. 137 Martin, H. J. 27, 96 Martin, L. 134 Marty, L. 168 Marvel Entertainment 5 Marx, K. 333 Mathios, A. D. 39 Mathur, N. 96 Matsa, D. A. 136 Mauborgne, R. 244, 293 Mavrovitis, C. F. 132 Maw, D. F. 260 Mayzlin, D. 278 Mazur, M. 138 Mazurek, G. 452 McAfee, R. P. 40, 151 – 152 McCann, K. 152 McChesney, R. W. 7, 336, 338 McDowell, W. 25, 159, 160, 162, 163, 168 McGrath, R. G. 114

McGregor, M. A. 336 McGregor, S. C. 326 McKelvie, A. 266 McKenzie, J. 10, 186 McLuhan, H. M. 336, 337 McQuail, D. 380 Méadel, C. 382 measured audiences 381 media consumer behavior theories 25 – 26 Media Credit Council (MRC) 388 Media, Culture & Society 426 media dependency theory 320 Media Economics: Concepts and Issues 57 Media Economics in Europe 58 media exhibitors 225 – 226 Media Industries Journal 6, 20 media management and economics (MME) research: adapting the object of study in 429 – 431; advances in analysis in 445 – 446; areas of study guiding the future agenda of 11 – 13; in Asia (see Asia, media management and economics research in); assessing the current state of knowledge in 10 – 11, 17; challenges in 3 – 4; data collection methods 369 – 372, 370 – 371; data ecosystem and scholarship pipeline 448 – 449; development as an academic field 425 – 426; in Europe (see Europe, media management and economics in); in Latin America (see Latin America, media management and economics research in); levels of statistical analysis in 373; methodological approaches in published studies in 363 – 365; methodological characteristics of 365 – 374, 366 – 375; MME Handbook contributions to 451 – 454; need for critical media management research and 427 – 428; need for more longitudinal and time series studies in 429; need to become more international in 428 – 429; need to bridge management studies and media and communication studies in 426 – 429; research questions in 4; sampling approaches 372 – 373, 372 – 373; significant publications published since 2006 5 – 10; topics of increasing relevance for the industry 431 – 435; topics of increasing relevance to stakeholders in 431 – 437; types of statistical analysis in 373 – 374, 374 – 375; understanding decisionmaking and behavior in 433; understanding leadership and social responsibility in 434 – 435; units of analysis 365 – 366, 366; use of case studies in 372 Media Metrix 385 – 386 Mediaset 9 mediated content 226 Media Watch 6 Medina, D. 134 Medina, M. 85 Meerkat 351 Meglio, O. 211 Meier, K. 266 Mercillon, H. 54

468

Index mergers and acquisitions (M&A) 8, 23, 131 – 133, 138; classical type 212; contextual consonant, future value-creating type 213; contextual dissonant, classical type 212; contextual dissonant, management self-interest type 213; contextual dissonant, non-value-maximizing, self-interest type 213; contextual dissonant, non-value-maximizing type 213; future research agenda 214 – 215; introduction to 201 – 202; as macroeconomic phenomena 208, 209 – 210; management selfinterest type 213; market exchange, alliances, and 202 – 205, 203; media policy and 187 – 188; motives 207 – 210, 208; non-value-maximizing, selfinterest type 213 – 214; performance 210 – 214; as process outcome 208, 209; as rational choice 208, 208 – 209; waves 205 – 206, 206 – 207 Messerli, M. 168 Methlie, L. B. 293 Metzger, G. 384 Mexico 81, 82, 84; see also Latin America, media management and economics research in Meyer, K. M. 349 – 350, 358 MGI Globalization Index 334 Michaely, R. 136 Michel, E. 96 Mickle, T. 43 Microsoft 121, 122 – 123 Mierzejewska, B. I. 17, 19, 22, 96, 219, 425 – 427, 455 – 456; on key changes impacting MME research 425; on shift in the newspaper industry 444 Millar, C. 334 Miller, D. 120 Milyo, J. 45 Mishra, P. 168 Missouri School of Journalism 52 Mittoo, U. R. 133 – 134, 139 MME see media management and economics (MME) research mobile diffusion 291 – 292 mobile media 287, 447 – 448; audience tracking 385 – 386; competition 288, 290; issues in economics of 288 – 292; literature review 287, 288, 289; management issues in 292 – 295; marketing 294 – 295; mobile diffusion 291 – 292; mobile virtual network operators (MVNOs) 293 – 294, 296 – 297; policy and regulation 295 – 297; strategic management of 292 – 294; substitutes/complements 290 – 291; suggestions for future research on 297 – 298; see also Internet, the Mobile Media and Communication 6 mobile network operators (MNOs) 293 – 294 mobile termination rates (MTRs) 297 mobile virtual network operators (MVNOs) 293 – 294, 296 – 297 model of personal computer utilization (MPCU) 294 Moe, W. W. 282 Moellinger, T. 88

Moisander, J. 8, 9, 161 – 164, 170, 353 Molesworth, M. 280 monopoly theory 209 Montgomery, D. B. 324 Moon, J. 321 Mooney, C. T. 44 Moragas, M. de 57 moral hazard 36 – 37 Morellec, W. 133 Morey, A. 296 Morgan, D. L. 368, 369 Morita, A. 253 Moro, M. 407 Mory, L. 425 Mosco,V. 7 motion picture industry studies 10 MTurk 371 Muehlfeld, K. 8 Mühl-Benninghaus, W. H. 6 Mullainathan, S. 41, 44 multichannel video program distributors (MVPDs) 222 – 223, 224 multiplatform enterprises 8 – 9, 160, 169, 301 – 302, 453 – 454; audience measurement in 389; business models of 303, 309 – 311; cost analysis of choice of platforms by 304 – 309, 305 – 308; economic concepts for analyzing 302 – 304; economies of scale and economics of scope 302; future research agenda for 313 – 314; public goods and 302 – 303; relationships between/among platforms and optimization strategy 311 – 313; substitutes and complements in 303 – 304; value chain 303 multiplatform media consumption 317; attention as commodity in multitasking life and 326 – 327; consumer characteristics and 323; empirical studies exploring factors influencing 319; factors affecting media multitasking behaviors in 319 – 323; future of 327; impacts of 323 – 327; industry synergy and 324 – 325; media dependency and 320; onlineoffline media affinity and 322 – 323; patterns of 318 – 319; relevancy of 318; social TV and 325 – 326; subjective norm in 321 – 322; technology acceptance model (TAM) and 321; technology fluidity and 320 – 321 multi-skilled journalists 353 multitasking behaviors 319 – 323, 326 – 327 Munk, N. 130 Murdoch, R. 262 Murdock, G. 6 Murley, B. 353 Murphy, K. M. 39 Murray, M. 324 Music Genome Project 415 music industry 5, 44 Mutter, P. 83 Naik, P. A. 324 Nain, A. S. 132

469

Index Naldi, L. 266 Nalebuff, B. J. 118 Napoli, P. M. 5, 219, 372, 380, 387, 434, 444, 455 Napster 44 Nardi, B. 275 national level media policy-making 180 – 190 national origin programming 185 – 186 National Telecommunications and Information Administration (NTIA) 337 native ads 150 Naver 64 NBC Universal 5 Negroponte, N. 282 Neijens, P. C. 324 Netflix 5, 43, 125, 168, 222 – 223, 312; alliances 204; big data and 415, 416; business model innovation by 244; business process innovation by 247, 247 – 248; supply and demand considerations 229 net neutrality 189 – 190 NetRatings 385 – 386 network analysis of media marketing and branding research 163 – 166, 164, 166 networks, innovation 252 – 253 Netz, J. S. 189 Neumann, M. M. 295 Neuro-Insights 390 neuroscience in audience measurement 389 – 390, 433 – 434 New Media & Society 426 news and news management 9; digital 357 – 358; see also journalism News Corp 262 newsflow editors 352 – 353 newspapers 10, 226, 303, 356; advertising and 146 – 147; decline of 232; future of 250 – 251, 443; innovation and 250 – 251; online and print 311 – 312; shifting environment of news and 349 – 350; see also journalism news resourcers 353 Newsweek 444 New World Information and Communication Order (NWICO) 338 New York Times 39, 43, 147, 309, 336, 443 Nguyen, H. T. 214 niche programs 228 niche theory 24 – 25 Nielsen, A. C. 383 Nielsen Company 9, 383 – 384, 414 Nielsen Radio Index (NRI) 383, 385 Nielsen Station Index (NSI) 384 Nielsen Television Index (NTI) 384 Nienstedt, H.-W. 58 Nieto, A. 55, 57, 86 Nilssen, T. 43, 147 Nintendo 117 Noam, E. M. 6, 7, 83 non-equity alliances 204 Nordenstam, S. 324

normative theories 18 North, S. 8 North America, media management research in 428 – 429; see also United States, the Norton, E. C. 42 Nowak, B. 134 nowconomics 406 Nyberg, S. 8 Nye, J. S. 340, 341 Nygren, G. 27 Nyilasy, G. 425 Oba, G. 9, 24 Obama, B. 283 Obar, J. A. 46 Oberholzer-Gee, F. 44 obscenity 181 Odean, T. 39 Oh, S. 453 Oliver, J. 8, 102, 454 Omnicom 405 Ongena, G. 290 online-offline media affinity 322 – 323 On War 112 Open Internet Order 189 – 190 Opgenhaffen, M. 9, 356 O’Regan, T. 382 organizational culture theories 26 – 27 Ostrovsky, M. 40 Ots, M. 167, 425 over-the-top (OTT) video 176, 182, 222 – 223, 225, 297; future of 253 – 254; syndication and 230 Owen, B. M. 43, 46 Owers, J. 8, 131, 133 Oyedeji, T. 168 Ozanich, G. 130, 133 Page, L. 207 Pakes, A. 446 Palladino,V. 224 Panchana, A. 83 Pandora 5, 226, 390; big data use by 415 Panico, M. 96 Pantea, S. 219 Papadakis,V. M. 211 Papies, D. 226 Paraguay 81; see also Latin America, media management and economics research in Pardo, A. 10 Parekh, R. 403 Pariser, E. 417 Park, J. S. 149 – 150 Park, M. 290 – 291 Park, S. 149 – 150 Patrick, W. L. 133 Pauwels, K. 149 Pavlik, J.V. 347, 351, 355, 357 pay-per-use 311, 312

470

Index PBS (Public Broadcasting System) 57 PCCW 65 Peitz, M. 41, 147 Peliter, S. 120, 133 Pelz, R. 147 Penrose, E. G. 118 peoplemeters 384 – 385, 414 Pérez-Latre, F. J. 455 performance: employee 101 – 104, 102; mergers and acquisitions 210 – 214 Periscope 351 Peru 81; see also Latin America, media management and economics research in PESTEL model 115 Peteraf, M. A. 118 Petmezas, D. 132 Pew Research Center 304, 310 Phalen, P. F. 9, 380, 382, 387 Phelps-Granier 83 Philips Corporation 253 Phillips, A. 27 Phillips, G. M. 133 Picard, R. G. 6, 7, 17, 53, 57, 84, 252, 426; on adaptation to changing market conditions 23; on challenges for newspapers 251; on entrepreneurship 266; European MME research and 57; on piracy losses 191; on SRHM studies 106 – 107; on VUCA media environment 167 Pickton, D. 400 Pickup, M. 374 Pike, R. 335 Pilotta, J. 253 Pinterest 5 Pires, A. J. G. 150 Pis, E. 86 Pistoia, A. 425 Pjesky, R. 364 platform competition 290 Población, J. I. 57 policy, media 176 – 177, 177; access, interconnection and net neutrality in 189 – 190; advertising and 183 – 184; content and 180 – 186; copyright and 184 – 185; infrastructure and 186 – 190; at the international level 190 – 193; licensing of media and telecommunications firms and 178 – 179; local/ state level 177 – 180; mergers and acquisitions and 187 – 188; mobile 295 – 297; national level 180 – 190; national origin programming and 185 – 186; price regulation and 179 – 180; standard setting in 188 – 189, 193; summary and directions for future research 193 – 194, 447 – 448; topics of increasing relevance for 436 – 437; universal access and 180 politics: and government policy in media markets 45 – 46; media and 44 – 45; social media and 283 Pollitt, S. 400 Poolsombat, R. 42 Poort, J. 47 Pope, D. G. 39

Porras, J. 248 Porter, M. E. 24, 112, 116, 293, 303 positivist theories 18 Postpublicidad 404 Potter, W. J. 364 – 365 power, soft and discursive 340 – 341 Powers, A. 266, 354 Powers, M. 447 Prabhala, N. 136 Prado, E. 57 Prahalad, C. K. 119 Prat, A. 44 Preston, P. 266 price 151; regulation of 179 – 180 prices and advertising 40 privacy and big data 417 process outcome, mergers and acquisitions as 208, 209 process theory 208, 209 product innovation 245, 245 – 246 productivity, employee 101 – 104, 102 product placements 149 propaganda studies 381 publications, media management 5 – 10; theoretical body of knowledge and a decade of major advances in 19 – 20, 19 – 23, 20 – 22 public goods 302 – 303 public utility commissions (PUC) 179 – 180 Pühringer, K. 96 Puthenpurackal, J. J. 137 PWC 201 qualitative methods 28 – 29, 71 quantitative methods 28 – 29, 70 – 71 radio: markets for 43, 44; as media exhibitor 225 – 226; mediated content on 226; spectrum issues in 187; structure of content on 221; supply and demand considerations with digital 229 Radio Cadena Nacional 86 Rae, A. 268 raider theory 209 Raithel, S. 96 Raman, K. 324 Rashad, I. 42 Raskin, L. J. 45 rational choice, mergers and acquisitions as 208, 208 – 209 rationalization 411 Raviola, E. 9, 266 recruitment: CSR and socially aware recruits and 99 – 101; rise of data analytics in 98 – 99 Redmond, J. W. 95 red oceans 244 Rees, C. 105 Reeves, M. 96 Rege, M. 41 Regression Basics 374

471

Index Reich, Z. 355 Reichardt, T. 295 Reig, R. 82 Reimers, I. 39 Reisinger, M. 41 relative valuation/market multiples (RV) approach 133 – 134 Renault, R. 42 renewal, strategic 263 Renko, M. 260 resistance to American’s cultural hegemony 338 Resource-Based View (RBV) approach 23, 24, 25, 118 – 121; mobile media management and 293 Ressner, L. 41 retention, employee 104 – 106 retraining of employees 101 – 104 Reuter, J. 45 Ri, S.Y. 324 rights of way 177 – 178 right to oblivion 192 Rinallo, D. 151 Risberg, A. 211 risk-averse culture 249 Rizzuto, R. 456 Roberts, M. R. 135 Rochet, J. C. 37 Roepnack, A. 455 Rogers, E. M. 242, 323, 339 Rogers, R. 276 Rogers, R. P. 43 Rohn, U. 425 Rosengren, K. E. 380 Roson, R. 8 Rosston, G. L. 193 Rubin, A. M. 322 Rudaizky, J. 408 Rudder, S. 404 Rupp, D. E. 100 Russi, L. 10 Russian Federation 335 Ryan, M. J. 322 Ryu, J. 292 Saak, A. E. 41 Saavedra, E. H. 10 Sabater, M. 57 Sablonnière, É. d. l. 105 Sablonnière, R. d. l. 105 Saffer, H. 42 Sahib, P. R. 8 sampling approaches in MME 372 – 373, 372 – 373 Samuelson, P. A. 302 Sánchez-Tabernero, A. 10, 57, 82, 88, 454 Santana, F. 57 Santana, J. 85 Sanzhar, S. 138 Sarasvathy, S. D. 261 Saric, A. 290

Sattelberger, F. 9 Saul, L. K. 193 Savage, S. 193 Savell, E. 184 Scandura, T. A. 364 Schaedel, U. 277 Schaefer, D. H. 397 Schau, H. J. 277 Schiller, H. I. 339 – 340 Schjelderup, G. 9 Schmalenbach, W. 53 Schmidt, G. 53 Schmidtke, R. 41 Schmitz, W. A. 266 Schmitz Weiss, A. 357 Schoemaker, P. 119 Schoenberg, R. 211 scholarly journal articles on MME 7 Scholte, J. A. 333 Scholtz, C. 57 Schramm, W. 335, 339, 381 Schulhofer-Wohl, S. 10 Schumann, J. H. 152, 155 Schumpeter, J. 249, 260, 442 Schwartz, J. 98 Schwarz, M. 40 Schweidel, D. A. 282 Secchi, D. 101 Secret, K. 355 Seetharaman, D. 234 Sega video games 117 Seinfeld 228 self-reflective writing on management 426 Seol, S. 187 SEP model of innovation adoption 294 – 295 serendipitous connections and innovation 250 server-centric approach to audience measurement 386 – 387 Shachar, R. 41 Shafir, E. 41 Shamsie, J. 120 Shanahan, J. 334 Shane, S. 260 Shapiro, J. M. 43, 45 Sharma, R. S. 8 Shaver, D. 425 Shay, R. 119, 124, 169 Shivdasani, A. 138 Shleifer, A. 44 Short, J. 246 Shrader, R. C. 260 Shrivastava, P. 214 Siegert, G. 10, 58, 161, 162, 163, 170, 455 Silk, A. J. 324 Simester, D. 41 Simon, M. 260 Sims, C. 445 Sindik, A. 267

472

Index Singapore 64; see also Asia Singer, J. B. 27, 267, 354 Singh, H. 124 Singh, S. 279 Singh, T. 277 single-authors works on MME 7 Sinkinson, M. 43 Sirbu, M. 296 sitcoms 227 Six Degrees 274 60 Minutes 151 Sjovaag, H. 182 smartphones 5, 318 – 319, 447 – 448; content on 222; media dependency 320; shifting environment of news and 350 – 351 Smit, E. G. 324 Smith, A. 348, 350, 353, 356 Smith, S. 268 Snapchat 274, 282, 325, 358 Soane, E. 105 Sobbrio, F. 150 social cognitive theory (SCT) 294 socially aware recruits 99 – 101 social media 5, 273, 283; advertising 147; advertising agencies and 400; in Asia 64; audience measurement 386 – 387; bias in content on 46; big data audience measurement and 414 – 415; classification 274 – 275, 275; content communities for 277 – 278; entrepreneurship promoted via 267 – 268; future of the media industry and 444 – 445; growth of 302; history of 273 – 274; in Latin America 84; literature review 275 – 281; politics and 283; research agenda 281 – 282; shifting environment of news and 348 – 358; social networking sites 278 – 279; stickiness 45; used by employers 37; virtual gaming worlds in 275, 279 – 280; virtual social worlds in 280 – 281 Social Media + Society 6 social TV 325 – 326, 379 – 380 soft power 340 – 341 Solana, D. 404 Soley, L. C. 151 Sommer, C. 168 Song, H. 453 Sonin, K. 447 Sonnac, N. 43 Sony 253; PlayStation 117, 242 Sood, N. 42 Sorensen, A. T. 39 Sørgard, L. 43, 147 Sousa, H. 6 South Korea 64; content and program distribution studies 220; importance of advertising income in 145; MME research in 65 – 66; see also Asia Soviet Union, fall of the 56 Spann, T. 336 Sparre, K. 267 spectrum management 186 – 187; mobile media 295 – 296

speed of adjustment (SOA) of capital structure 135 Spence, M. 43 Spiegel, B. 232 spin-offs/separations 138 sponsored messages 149 – 150 sports content 222 Spotify 5, 226, 312 Sprint Nextel 5 Stahl, F. 148 Staiger, J. 55 stakeholders, corporate 8; CSR and 100; social voice of 97; topics of increasing relevance to 431 – 437 standard setting in media policy 188 – 189; international 193 Statista 182, 232 statistical analysis: levels of 373; types of 373 – 374, 374 – 375 Steele, B. J. 341 Steensen, S. 357 Steiner, P. O. 38, 43 Stempel, G. H. 311 Stendevad, C. 138 Stephen, A. 281, 282 Steward, B. 6 Steyn, E. 9 Steyn, T. F. J. 9 stock market-based measures of mergers and acquisitions performance 210 – 211 stock repurchases and dividends 136 – 137, 140 Stomberg, D. 6 strategic human resource management (SHRM) 95; conclusions on 106 – 107; corporate social responsibility (CSR) and 99 – 101; decade of advancement in studies of 95 – 96; introduction to 95; need for media companies and employees to remain adaptive and 96 – 97; performance and productivity in 101 – 104, 102; recruitment in 98 – 101; retention in 104 – 106; themes from dynamic media environment 97 strategic inflection point 243 strategic management 23 – 25, 111; business models evolution in context of digital transformation 121 – 124, 122 – 123; evolution of concepts in 111 – 114, 113; external and internal approaches to 114 – 121; future research agenda 124 – 125; in mobile media 292 – 294; Resource-Based View (RBV) approach 23, 24, 25, 118 – 121 Strategic Management Journal 426 strategic planning changes in advertising 400 – 401 strategic renewal 263 streaming, music and video 5, 44, 125, 154 – 155, 169; content and program distribution issues and 222 – 223, 226, 232; future of 253 – 254; shifting environment of news and 348, 351 Strube, M. 9, 19, 24, 25 Struckmann, S. 292 structural equation modeling (SEM) 374

473

Index structure-conduct-performance (SCP) framework 23, 25, 293 Suar, D. 100 subjective norm 321 – 322 Subramaniam, S. 116 substitutes and complements in multiplatform enterprises 303 – 304 succession planning 97 Sükösd, M. 56 Sullivan, T. 193 Sun, B. 39 Sun, M. 151 Sun, M. P. 71 Sun, Q. 214 Sung, S. 291 Sun Tzu 112 Suri, S. 151 – 152 Surowiecki, J. 252 Sussman, G. 67 sustainable versus transient competitive advantage 112 – 114 sustaining technology 242 Sutter, D. 364 Swasy, A. 357 Sweeting, A. 44 Swift, A. 7 SWOT model 115 Sylvie, G. 9, 17, 27, 28 syndication 230 synergies 208 – 209, 324 – 325 Taboada 407 Tadayoni, R. 266 Tag, J. 46, 149 Taiwan 64, 68; see also Asia Takemura, A. 400 TAM model 115 Tan,Y. 105 Taneja, H. 9, 382 Tang, T. 136, 349 – 350, 358 targeted advertising 413 Tarkiainen, A. 46 Tarute, A. 292 Taylor, B. C. 367 – 368 Tchernev, J. M. 319 team agencies 403, 408 technology 4; in Asia 75; business models evolution in context of digital transformation and 121 – 124, 122 – 123; challenges of disruptive 249; changes since 2006 4 – 5; content distribution issues and 229; and digital transformation of agency structures 395; entrepreneurship and 268; fluidity 320 – 321; innovation and creativity concepts 27 – 28; media globalization and 335 – 336; social influence and 103 – 104; strategic management and 120 – 121; sustaining vs. disruptive 242; unified theory of acceptance and use of technology (UTAUT) 103; see also innovation

technology acceptance model (TAM) 25, 294, 321 Teece, D. 116 telephone research 382 – 383 television 10; in Asia 69; broadcast and mobile spectrum allocation 186 – 187; broadcast content and media policy 181 – 183; content creation sequence for 227; in Latin America 85 – 86; media dependency 320; as media exhibitor 225; media globalization and 335 – 336; mobile 292; modern era of content distribution 220 – 230; old scheduling strategies and new realities for 231; patterns of multiplatform media consumption 318 – 319; satellite 229; shifting environment of news and 349 – 350; social 325 – 326, 379 – 380; syndication 230; see also advertising Telser, L. G. 38 Thanos, I. C. 211 theoretical approaches in media management research 17 – 19; on content 42 – 44; media consumer behavior theories 25 – 26; organizational culture theories 26 – 27; technology, innovation, and creativity concepts in 27 – 28; theoretical body of knowledge and a decade of major advances in media management publications and 19 – 20, 19 – 23, 20 – 22; and working towards a theoretical research agenda 28 – 29 theory 18 – 19, 446; dependency 340; development of, in bridging management studies with media and communication studies 426 – 427; diffusions of innovations 338 – 339; framework building and 265 – 266 theory of planned behavior (TPB) 294 theory of reasoned action (TRA) 294, 321 – 322 Thomas, H. 111, 124 Thomke, S. 254 Thompson, K. 55 Thomsen, C. 100 Thorburn, K. S. 130 Thorson, E. 151, 324, 408 time series studies 429 Time Warner Cable 5, 96 – 97, 100, 262 Tinder 274 Tirole, J. 37 T-Mobile 5 Toker, A. 295 Tomlinson, P. R. 42 Tougas, F. 105 tower placement, communication 177 – 178 Towse, R. 6 Trade Related Aspects of Intellectual Property (TRIPS) 191 transient competitive advantage 112 – 114 transnational media corporations (TRMCs) 252 – 253, 302, 336 – 337; localism and 337 Trautwein, F. 207, 209 Travlos, N. G. 132 Tremblay,V. J. 184

474

Index Trump, D. 283 Truss, C. 105 Tsourvakas, G. 96 Tucker, C. E. 279 Tudor,V. 27 Turku School of Economics 57 Turner, T. 262 TV Azteca 87 Twitch 228 Twitter 5, 268, 273, 275, 282; audience measurement 386; founding of 274; as microblog 276 – 277; news on 312; politics and 283; shifting environment of news and 348 – 358; social TV and 325 – 326 tyranny of success 248 – 249 Ulin, J. C. 223, 226, 227, 228, 232 Ullrich, S. 147 unified theory of acceptance and use of technology (UTAUT) 103 – 104 United Nations 190; Conference on Trade and Development (UNCTAD) 335; Development Programme (UNDP) 335; on the digital divide 337; Educational, Scientific and Cultural Organization (UNESCO) 335, 338 United States, the: content and program distribution studies 219; Federal Communication Commission (FCC) 189 – 190, 301; Federal Trade Commission (FTC) 184, 188; importance of advertising income in 145; net neutrality in 189 – 190; radio spectrum in 187; resistance to American’s cultural hegemony and 338 universal access 180 universal service 190 University of Central Lancashire 52 University of Navarra 52, 57 University of Westminster 58 University of Zurich 58 Uribe, R. 277 user-generated content (UGC) 4, 36, 221, 277 – 278 uses and gratification (U&G) approach 319 Valletti, T. M. 41, 147 valuation 133 – 134, 139; of content 227 – 228 valuation theory 209 value chains 24, 227, 303 Vanberg,V. J. 261 Van der Marel, E. 192 Van der Wurff, R. 9 Van Dijk, T. A. 341 Van Es, K. 167 – 168 Van Hove, L. 146 Vankataraman, S. 261 van Kranenburg, H. 6, 251 Van Weezel, A. 9, 86, 269 van Witteloostuijn, A. 8 Varnali, K. 295 vector autoregression (VAR) 445

Velamuri, S. R. 261 Velásquez, M. 277 Venezuela 81, 83; see also Latin America, media management and economics research in Venkataraman, S. 260 Verboven, F. 296 Verizon 5 video games 117 video on demand (VOD) 176, 182, 232 Vienna circle 54 Vietnam 64; see also Asia Vijayasarathy, L. R. 321 Villalbi, J. R. 184 Villi, M. 9, 353 Vimeo 4 Vine, shifting environment of news and 351 violence, incitements to 181 virtual gaming worlds (MMORPGs) 275, 279 – 280 virtual reality (VR) 268, 327, 444 – 445 virtual social worlds 280 – 281 Vitale, C. 250 Vlad, T. 27, 96 Voelker, G. M. 193 Vogel, H. L. 7 Vogelsang, I. 290 Voice,The 168 voice over Internet protocol (VoIP) 176, 290 Von Rimscha, M. B. 149 von Wangenheim, F. 152 Voorveld, H. A. 324 Vos, T. P. 267 VRIN-scheme 114 Vukanovic, Z. 6, 8, 57 Vverschelde, B. 192 Waisbord, S. 336 Waldfogel, J. 6, 39, 43, 44 Walls, W. D. 10, 186 Wall Street Journal 146, 303, 309, 443 Walt Disney Co. 5, 71, 97; alliances 204 Wanamaker, J. 40 Wanda Group 64, 338 Wang, W. 8 Wang, Z. 319 Washington Post 443 Wasko, J. 6 Wasko, M. 277 Waterman, D. 148, 191 Weaver, D. H. 105, 356 Weber, M. 411 Webster, J. G. 380, 382 WeChat 64 Wedell, G. 57 Weinacht, S. 161, 162 Weiss, A. 149

475

Index Weiss, A. S. 9 Weldon, M. 348 Wernerfelt, B. 118, 119 Werner Friedmann Institute 52 WhatsApp 358 Whinston, A. B. 276 Whited, T. 136, 139 Whitney, D. C. 380, 381 Widman, T. 253 Wiertz, C. 277 Wiethaus, L. 297 Wi-Fi networks 5 Wikipedia 274 Wikström, P. 9, 425 Wildman, S. S. 6, 8, 40 Williams, E. A. 364 Williams,V. 37 Willnat, L. 356 Wilson, D. P. 147 Wilson, T. A. 38 Winnipeg Free Press 311 Winseck, D. 335 Wirth, M. O. 58, 130, 456 Wirtz, B. W. 7, 57, 147, 425 Witschge, T. 27 Wlömert, N. 226 Wojdynski, B. W. 150 Woodbury, J. R. 43 Woodruff, L. 383 word of mouth (WOM) 278 work space, creative 250 World Film News 53 World Intellectual Property Organization (WIPO) 190, 191 World Media Management and Economics Conference 6, 429 World Trade Organization (WTO) 190, 191, 334 Wozniak, S. 246 Writer’s Guild of America (WGA) 227 Wyatt, E. 336 Wysochanski, J. 37

Xiao, M. 319 – 322, 452 Xu, T. 456 Xu,Y. 68 Yahoo News 310, 312, 336 Yang, D. 266 Yang, F. 334 Yang, J. 137 Yang, M. 311 Yeh, P. 46 Yim, D. 219, 444 Yoo, C. 266 Yoo, C. S. 46, 188 Yoo, K. 376 Yoon, G. 319 Yoon, T. E.Y. 280 Yoon,Y. 321 Young, S. 137 YouTube 4, 149, 273, 275, 326; founding of 274; politics and 283; shifting environment of news and 349 – 351, 352 Yu, J. 222 Yung, K. 214 Zaber, M. 296 Zanjani, S. H. A. 152 Zanjani, S. S. 268 Zboralska, E. 267 Zenner, M. 138 Zentner, A. 41, 46 Zhang, T. M. 137 Zhang, X. 146, 151, 310, 334, 339, 452, 455 – 456 Zhao, F. 276 Zhao,Y. 7 Zheng, N. 311 Zheng,Y. 42 Zhu, F. 151 Ziggers, G. 456 Zinman, J. 41 Zitzewitz, E. 45 Zo, H. 222 zoning laws 177 – 178

476