Media Economics in Austria: A Comparison to Germany on Print, Television, Radio and the Internet [1st ed. 2023] 3658421940, 9783658421946

Table of contents :
Preface
Contents
About the Author
1 A First Step Into the Subject
1.1 What are Media?
1.1.1 In the Beginning, There was the Book
1.1.2 The Mass Media
1.1.3 Different Interests
1.2 What is Information?
1.2.1 The Journalistic Forms of Presentation
1.2.2 The Informative Form of Presentation—Objective and Value-Free
1.2.2.1 The Short Message
1.2.2.2 The News Item
1.2.2.3 The Report
1.2.3 Informative Forms—Subjectively Evaluative
1.2.3.1 The Reportage
1.2.3.2 The Interview
1.2.3.3 The Portrait
1.2.3.4 The Feature
1.2.4 Opinion-Expressing Forms
1.2.4.1 The Leading Article
1.2.4.2 The Commentary
1.2.4.3 The Gloss
1.3 What is Media Economics?
1.3.1 What is a Market?
1.3.2 The Macroeconomic Level
1.3.3 The Microeconomic Level
1.3.4 Challenges of Media Economics
1.4 Supply and Demand
1.4.1 The Elasticity of Demand
1.4.2 Economies of Scale Industry
1.4.3 Costs and Profit in Perfect Competition
1.4.4 Costs and Profit in Monopoly
1.4.5 Essential Difference between Both Models
1.5 The Functions of Media
1.5.1 Core Functions in a Democratic Society
1.5.2 Functions for Core Areas in Society
1.6 Media & Politics
1.6.1 Politics Needs the Media
1.6.2 The Media Needs Politics
1.7 How Media is Financed
1.7.1 Financing Through Advertising
1.7.2 Funding from Subscribers
1.7.3 Funding from Fees
1.7.4 Funding from Donations
1.8 What is the Dual System?
1.8.1 Precise Definition of Terms
1.8.2 Structure of Public Service Broadcasters
1.8.3 Structure of Private Broadcasters
1.9 Media Criticism
1.9.1 The History of Media Criticism
1.9.2 Media Criticism in the Internet Age
References
2 Print Media
2.1 The Development of Newspapers
2.2 The Newspaper Market at a Glance
2.2.1 The Situation in Germany
2.2.2 The Situation in Austria
2.3 The Value Chain of Newspapers
2.4 The Separation Principle
2.4.1 Problem of Articles Disguised as Advertising
2.4.2 What Does This Mean for Journalistic Practice?
2.5 Challenges for Newspapers
2.5.1 Changed Media Usage
2.5.2 The Internet as a Solution Approach
2.6 Processes in Newspaper Production
2.6.1 Workflow in the Editorial Office
2.6.2 Workflow for Daily Newspapers
2.7 The Empirical Press Economy
2.8 The Competitive Situation
2.9 The Cost Structure
References
3 Television
3.1 The History of Television
3.2 Television Production
3.2.1 In-house Production
3.2.2 Contract Production
3.2.3 Third-Party Production
3.2.4 Co-Production
3.2.5 Special Case: User Generated Content
3.3 Television Advertising
3.3.1 History
3.3.2 The Placement of Advertising
3.3.3 The Cost of Television Advertising
3.3.4 Essential Elements of Media Planning
3.3.5 Development of the Advertising Market
3.3.6 The Relationship Between Media and Advertising
3.3.7 The Ad-Circulation Spiral
3.3.8 The Reach
3.3.9 How Is the Audience Rating Measured?
3.3.10 The CPM
3.3.11 Future Trend Addressable TV
3.4 The Value Chain for Films and Film Rights
3.4.1 The Value Chain for the Television Market
3.4.1.1 The Extended Value Chain for the Television Market
3.4.1.2 Program Production
3.4.1.3 Programming
3.4.1.4 The Distribution/Program Distribution
3.5 The Streaming Market
3.5.1 What Is Streaming?
3.5.2 Business Models
3.5.3 Ad-Supported Streaming
3.5.4 Paid Streaming
3.5.5 Digitalization of Television
3.5.6 The Role of Demographic Change
3.5.7 Individual Usage
3.5.8 Influence Factor Globalization
3.5.9 Television and Streaming Become One
3.5.10 The Competition in the Streaming Market
3.5.11 How the TV Industry Can Adapt to This Change
3.6 TV as an Economic Driver During the Pandemic
3.6.1 Competition Situation in Electronic Markets
3.6.2 The Future Development in the Sector
3.7 The Television License
3.7.1 The History
3.7.2 The GIS Fees Info Service GmbH (Austria)
3.7.2.1 The Procedure
3.7.2.2 The Bad Reputation of GIS
3.7.3 The Broadcasting Contribution in Germany
References
4 Radio
4.1 The History of Radio
4.2 An Overview of the Radio Market
4.2.1 Radio Market Germany
4.2.2 Radio Market Austria
4.3 The Value Chain in the Music Market
4.3.1 Common Practice
4.3.2 Basics of the Music Industry
4.3.3 The Music Labels
4.3.3.1 The Major Labels
4.3.3.2 Independent Labels
4.4 Radio Management
4.4.1 Strategic Objectives
4.4.2 The Program Formats
4.4.3 Basic Considerations for Positioning
4.4.4 Niche Positioning
4.4.5 Economic Framework Conditions
4.4.6 Market-relevant Data for Radio Stations
4.4.7 Criteria for Station Selection
4.4.8 The USP
4.5 Radio Advertising
4.5.1 History
4.5.2 The Placement of Advertising
4.5.3 What Radio Advertising Costs
4.5.4 Daily Progression of Advertising Costs
4.6 The Future of Radio
4.6.1 Current Threats to Radio
4.6.2 Radio Needs New Distribution Channels
4.6.3 The Future of Radio Remains Exciting
References
5 The Internet
5.1 The History
5.2 Digital Economy & Monopolies
5.3 Digital Media
5.3.1 What Types of Digital Media are There?
5.3.2 Three Types of Digital Media
5.4 Online Journalism
5.4.1 The Opportunities of the Internet
5.4.2 Online Displaces Print
5.4.3 Forms of Presentation in Online Journalism
5.4.4 Willingness to Pay for Online Journalism
5.4.4.1 The Young Ones Lead the Way
5.4.4.2 Quality Must Be Right
5.4.4.3 Paying with Data
5.5 Social Media
5.5.1 What Exactly is Social Media?
5.5.2 Types of Social Media
5.5.3 Social Media as an Opportunity for Journalists
5.5.4 Social Media as a Threat to Journalism
5.5.5 What the Research Says
5.6 Advertising on the Internet
5.6.1 The Website
5.6.2 Social Media and Online Marketing
5.6.3 Influencer Marketing
5.6.4 Advertising on Facebook
5.6.5 Advertising on YouTube
5.6.6 Videos as an Opportunity
5.6.7 Banner Advertising
5.6.8 Search Engine Advertising
5.6.9 Email Marketing
5.6.10 Affiliate Marketing
5.7 The Future of Online Media and Journalism
5.7.1 The Importance of Artificial Intelligence
5.7.2 The New Workplace
References
6 Conclusion

Citation preview

Markus Posset

Media Economics in Austria A Comparison to Germany on Print, Television, Radio and the Internet

Media Economics in Austria

Markus Posset

Media Economics in Austria A Comparison to Germany on Print, Television, Radio and the Internet

Markus Posset Wien, Austria

ISBN 978-3-658-42194-6 ISBN 978-3-658-42195-3  (eBook) https://doi.org/10.1007/978-3-658-42195-3 This book is a translation of the original German edition “Medienökonomie” by Posset, Markus, published by Springer Fachmedien Wiesbaden GmbH in 2022. The translation was done with the help of an artificial intelligence machine translation tool. A subsequent human revision was done primarily in terms of content, so that the book will read stylistically differently from a conventional translation. Springer Nature works continuously to further the development of tools for the production of books and on the related technologies to support the authors. Translation from the German language edition: “Medienökonomie” by Markus Posset, © Der/ die Herausgeber bzw. der/die Autor(en), exklusiv lizenziert an Springer Fachmedien Wiesbaden GmbH, ein Teil von Springer Nature 2022. Published by Springer Fachmedien Wiesbaden. All Rights Reserved. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH, part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

Preface

What are media? How do they work and why do we need them at all? These questions demand answers, especially in a time when the media and especially journalism face great challenges. Because one thing is clear: We all need the media and we all need independent journalism. And the better we understand the mechanisms, dependencies, and approaches of the media, the better we can classify information and gain a better and more comprehensive understanding of the media. This is important. During my time as a media manager, I worked for many leading print media and experienced the development of the media up close over the past years and decades. The conclusion of my activities: Media have never had it easy, neither on the market nor as a product that reaches consumers. Another point: Without the media, a world as we know it today would be unthinkable. Therefore, I have always considered it important to take a look behind the scenes of the media to better understand and classify their way of working. And that’s exactly what this book can be for you: A look behind the scenes of the media, and I guarantee you that in the end, you will have a better understanding of the work with and within the media. At the same time, this book has an educational mission. You will learn firsthand how newspapers, TV & radio programs, and online media work, how they are financed, and what efforts they have to make to survive in the market. Because especially in today’s times, between health and humanitarian crises, the media have an important mission in communicating and differentiating facts, while at the same time, they have a major problem; they have a trust issue. On the one hand, the media themselves are responsible for this, as they have to reduce editorial staff due to financial constraints, which often affects the quality. On the other hand, the internet and its social media play a decisive role. It creates the following problem: V

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Preface

With the internet and social media, the competition for information has gotten out of hand. Many people can no longer distinguish between serious journalism and untrustworthy sources. The range of information is so vast that everyone can piece together their own truth from often dubious information from the depths of the internet because there is a platform somewhere for every opinion that confirms it. Social media has become a collection of unfiltered information, making it difficult for us to distinguish facts from fake news. That's one aspect. The other aspect is that the media landscape must perceive the “new” medium of the internet as an opportunity to adapt high-quality journalism to technological conditions. Because if it does not, if it continues to view the internet as an enemy and uses it exclusively for reach, clicks, and interactions, as is largely the case today, it won't help. What can help is education. And that is a particular concern of mine because there can be no life without the media in a free democracy. Therefore, it can only help us all to better understand the media. Because just like the internet, every new medium that humanity has brought to the market initially faced strong criticism and had to earn people's favor. Both the book and the newspaper, as well as television and radio, were initially subject to strong criticism and had to work to gain people's trust. And just like that, the internet is fighting for its right to exist as a medium and part of journalism. The good news: The internet is here to stay, and journalism will have to find ways to use it sensibly, to recognize its advantages and possibilities, and to create an infrastructure that makes life easier for all of us. I wish you all an informative and exciting time with this book and hope that you can take a lot from it and gain a better and more comprehensive view of the media and journalism. Vienna, Austria

Markus Posset

Contents

1 A First Step Into the Subject. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 What are Media? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1.1 In the Beginning, There was the Book. . . . . . . . . . . . . . . . . 1 1.1.2 The Mass Media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.1.3 Different Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.2 What is Information?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.2.1 The Journalistic Forms of Presentation. . . . . . . . . . . . . . . . 5 1.2.2 The Informative Form of Presentation—Objective and Value-Free . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.2.3 Informative Forms—Subjectively Evaluative . . . . . . . . . . . 6 1.2.4 Opinion-Expressing Forms . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.3 What is Media Economics?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.3.1 What is a Market? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.3.2 The Macroeconomic Level . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.3.3 The Microeconomic Level. . . . . . . . . . . . . . . . . . . . . . . . . . 12 1.3.4 Challenges of Media Economics. . . . . . . . . . . . . . . . . . . . . 13 1.4 Supply and Demand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.4.1 The Elasticity of Demand . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1.4.2 Economies of Scale Industry. . . . . . . . . . . . . . . . . . . . . . . . 16 1.4.3 Costs and Profit in Perfect Competition. . . . . . . . . . . . . . . . 17 1.4.4 Costs and Profit in Monopoly . . . . . . . . . . . . . . . . . . . . . . . 18 1.4.5 Essential Difference between Both Models. . . . . . . . . . . . . 19 1.5 The Functions of Media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 1.5.1 Core Functions in a Democratic Society. . . . . . . . . . . . . . . 19 1.5.2 Functions for Core Areas in Society . . . . . . . . . . . . . . . . . . 21

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1.6 Media & Politics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.6.1 Politics Needs the Media. . . . . . . . . . . . . . . . . . . . . . . . . . . 22 1.6.2 The Media Needs Politics . . . . . . . . . . . . . . . . . . . . . . . . . . 23 1.7 How Media is Financed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 1.7.1 Financing Through Advertising. . . . . . . . . . . . . . . . . . . . . . 24 1.7.2 Funding from Subscribers. . . . . . . . . . . . . . . . . . . . . . . . . . 25 1.7.3 Funding from Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 1.7.4 Funding from Donations . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 1.8 What is the Dual System? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 1.8.1 Precise Definition of Terms. . . . . . . . . . . . . . . . . . . . . . . . . 26 1.8.2 Structure of Public Service Broadcasters. . . . . . . . . . . . . . . 28 1.8.3 Structure of Private Broadcasters. . . . . . . . . . . . . . . . . . . . . 29 1.9 Media Criticism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 1.9.1 The History of Media Criticism. . . . . . . . . . . . . . . . . . . . . . 30 1.9.2 Media Criticism in the Internet Age. . . . . . . . . . . . . . . . . . . 30 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 2 Print Media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.1 The Development of Newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.2 The Newspaper Market at a Glance. . . . . . . . . . . . . . . . . . . . . . . . . . 34 2.2.1 The Situation in Germany . . . . . . . . . . . . . . . . . . . . . . . . . . 36 2.2.2 The Situation in Austria. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.3 The Value Chain of Newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 2.4 The Separation Principle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 2.4.1 Problem of Articles Disguised as Advertising. . . . . . . . . . . 39 2.4.2 What Does This Mean for Journalistic Practice?. . . . . . . . . 40 2.5 Challenges for Newspapers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 2.5.1 Changed Media Usage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 2.5.2 The Internet as a Solution Approach. . . . . . . . . . . . . . . . . . 42 2.6 Processes in Newspaper Production . . . . . . . . . . . . . . . . . . . . . . . . . 42 2.6.1 Workflow in the Editorial Office. . . . . . . . . . . . . . . . . . . . . 43 2.6.2 Workflow for Daily Newspapers. . . . . . . . . . . . . . . . . . . . . 43 2.7 The Empirical Press Economy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2.8 The Competitive Situation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2.9 The Cost Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 3 Television. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.1 The History of Television. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 3.2 Television Production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

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3.2.1 In-house Production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 3.2.2 Contract Production. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 3.2.3 Third-Party Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.2.4 Co-Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 3.2.5 Special Case: User Generated Content . . . . . . . . . . . . . . . . 51 3.3 Television Advertising. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3.3.1 History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 3.3.2 The Placement of Advertising. . . . . . . . . . . . . . . . . . . . . . . 52 3.3.3 The Cost of Television Advertising. . . . . . . . . . . . . . . . . . . 53 3.3.4 Essential Elements of Media Planning. . . . . . . . . . . . . . . . . 55 3.3.5 Development of the Advertising Market. . . . . . . . . . . . . . . 56 3.3.6 The Relationship Between Media and Advertising. . . . . . . 56 3.3.7 The Ad-Circulation Spiral. . . . . . . . . . . . . . . . . . . . . . . . . . 57 3.3.8 The Reach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 3.3.9 How Is the Audience Rating Measured?. . . . . . . . . . . . . . . 58 3.3.10 The CPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 3.3.11 Future Trend Addressable TV . . . . . . . . . . . . . . . . . . . . . . . 59 3.4 The Value Chain for Films and Film Rights . . . . . . . . . . . . . . . . . . . 59 3.4.1 The Value Chain for the Television Market. . . . . . . . . . . . . 61 3.5 The Streaming Market. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3.5.1 What Is Streaming?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3.5.2 Business Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3.5.3 Ad-Supported Streaming. . . . . . . . . . . . . . . . . . . . . . . . . . . 68 3.5.4 Paid Streaming. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 3.5.5 Digitalization of Television. . . . . . . . . . . . . . . . . . . . . . . . . 69 3.5.6 The Role of Demographic Change. . . . . . . . . . . . . . . . . . . . 70 3.5.7 Individual Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 3.5.8 Influence Factor Globalization. . . . . . . . . . . . . . . . . . . . . . . 72 3.5.9 Television and Streaming Become One. . . . . . . . . . . . . . . . 72 3.5.10 The Competition in the Streaming Market . . . . . . . . . . . . . 73 3.5.11 How the TV Industry Can Adapt to This Change . . . . . . . . 74 3.6 TV as an Economic Driver During the Pandemic. . . . . . . . . . . . . . . 75 3.6.1 Competition Situation in Electronic Markets. . . . . . . . . . . . 76 3.6.2 The Future Development in the Sector . . . . . . . . . . . . . . . . 77 3.7 The Television License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 3.7.1 The History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 3.7.2 The GIS Fees Info Service GmbH (Austria). . . . . . . . . . . . 78 3.7.3 The Broadcasting Contribution in Germany . . . . . . . . . . . . 80 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

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4 Radio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.1 The History of Radio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.2 An Overview of the Radio Market. . . . . . . . . . . . . . . . . . . . . . . . . . . 84 4.2.1 Radio Market Germany. . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 4.2.2 Radio Market Austria. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 4.3 The Value Chain in the Music Market. . . . . . . . . . . . . . . . . . . . . . . . 87 4.3.1 Common Practice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 4.3.2 Basics of the Music Industry. . . . . . . . . . . . . . . . . . . . . . . . 89 4.3.3 The Music Labels. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 4.4 Radio Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 4.4.1 Strategic Objectives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 4.4.2 The Program Formats. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 4.4.3 Basic Considerations for Positioning. . . . . . . . . . . . . . . . . . 94 4.4.4 Niche Positioning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 4.4.5 Economic Framework Conditions. . . . . . . . . . . . . . . . . . . . 97 4.4.6 Market-relevant Data for Radio Stations. . . . . . . . . . . . . . . 98 4.4.7 Criteria for Station Selection. . . . . . . . . . . . . . . . . . . . . . . . 98 4.4.8 The USP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 4.5 Radio Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 4.5.1 History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 4.5.2 The Placement of Advertising. . . . . . . . . . . . . . . . . . . . . . . 101 4.5.3 What Radio Advertising Costs. . . . . . . . . . . . . . . . . . . . . . . 102 4.5.4 Daily Progression of Advertising Costs. . . . . . . . . . . . . . . . 102 4.6 The Future of Radio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 4.6.1 Current Threats to Radio. . . . . . . . . . . . . . . . . . . . . . . . . . . 103 4.6.2 Radio Needs New Distribution Channels. . . . . . . . . . . . . . 104 4.6.3 The Future of Radio Remains Exciting. . . . . . . . . . . . . . . . 105 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 5 The Internet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 5.1 The History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 5.2 Digital Economy & Monopolies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 5.3 Digital Media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 5.3.1 What Types of Digital Media are There?. . . . . . . . . . . . . . . 111 5.3.2 Three Types of Digital Media . . . . . . . . . . . . . . . . . . . . . . . 112 5.4 Online Journalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 5.4.1 The Opportunities of the Internet. . . . . . . . . . . . . . . . . . . . . 113 5.4.2 Online Displaces Print. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 5.4.3 Forms of Presentation in Online Journalism. . . . . . . . . . . . 115

Contents

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5.4.4 Willingness to Pay for Online Journalism. . . . . . . . . . . . . . 116 5.5 Social Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 5.5.1 What Exactly is Social Media? . . . . . . . . . . . . . . . . . . . . . . 118 5.5.2 Types of Social Media. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 5.5.3 Social Media as an Opportunity for Journalists. . . . . . . . . . 120 5.5.4 Social Media as a Threat to Journalism. . . . . . . . . . . . . . . . 121 5.5.5 What the Research Says. . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 5.6 Advertising on the Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 5.6.1 The Website. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 5.6.2 Social Media and Online Marketing . . . . . . . . . . . . . . . . . . 123 5.6.3 Influencer Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 5.6.4 Advertising on Facebook. . . . . . . . . . . . . . . . . . . . . . . . . . . 125 5.6.5 Advertising on YouTube. . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5.6.6 Videos as an Opportunity. . . . . . . . . . . . . . . . . . . . . . . . . . . 126 5.6.7 Banner Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 5.6.8 Search Engine Advertising. . . . . . . . . . . . . . . . . . . . . . . . . . 128 5.6.9 Email Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 5.6.10 Affiliate Marketing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 5.7 The Future of Online Media and Journalism. . . . . . . . . . . . . . . . . . . 129 5.7.1 The Importance of Artificial Intelligence. . . . . . . . . . . . . . . 130 5.7.2 The New Workplace. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 6 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

About the Author

Markus Posset  began his professional career at the age of 15 as an apprentice at the Austrian Federal Railways (ÖBB) as a telecommunications technician. Alongside his job, he completed three studies in economics (Magister), sales and marketing (Executive MBA), and work and process psychology (MSc). Since 2000, he has held various management and executive positions in the advertising, media, and publishing industries in Austria, Germany, and the Balkans. Posset was, among other things, COO of the ECHO Medienhaus Group, Managing Director of the Verlagsgruppe News (VGN) and thus also responsible for the two leading Austrian media “Profil” and “Trend”, as well as Managing Director of the Mediengruppe Österreich. During his time as COO of Echo Media House, Posset was also the founder and publisher of the first European start-up magazine “Seeds”. Currently, Posset works as a business consultant for media and publishing houses, in political consulting (Balkan region government), as a media and industry lobbyist, author, and as a lecturer for journalism and media management at the University of Applied Sciences Vienna of WKW. In addition, Posset is involved as an investor in several start-up companies in Austria, Germany, and the Balkan region.

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About the Author

As a supporter of the Anti-Corruption Popular Initiative, which is backed by many well-known personalities, Posset once again demonstrates his commitment to high-quality media and their responsible handling of political and economic actors. (www. antikorruptionsbegehren.at) Together with former Interwetten CEO and former Porsche France CFO Thomas Daubek, Markus Posset was also involved in the successful implementation and establishment of the mobility provider Car2Go (share now) in Austria. Markus Posset was awarded the “Golden Medal of Merit on behalf of the Republic of Austria” by resolution of the Federal President on January 14, 2021. With this award, Federal President Dr. Alexander van der Bellen honors the special achievements of Markus Posset in his capacity as a media manager and entrepreneur. With the appointment letter from the Albanian Prime Minister Edi Rama and the exequatur of the Austrian Federal President Dr. Alexander van der Bellen, Markus Posset was appointed the new “Honorary Consul of the Republic of Albania in Austria” on May 5, 2021. www.markusposset.com

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A First Step Into the Subject

1.1 What are Media? In their original meaning, media are intermediaries of information. Today, they also convey entertainment and education and are available in different forms for various target groups. The first form of mass medium was the book, the latest is the internet. And with each new medium, society has also changed a bit. Let us begin with a brief journey through the history of media and see where the journey takes us.

1.1.1 In the Beginning, There was the Book Johannes Gutenberg and modern book printing ushered in the modern media about 550 years ago and thus changed the world sustainably. Until then, reading and the associated access to information, knowledge, and education were reserved exclusively for the upper class. Knowledge meant power, and this power was already claimed by the rulers half a millennium ago. u

Book printing put an end to this rather selfishly motivated desire; it brought knowledge to the people and promoted public opinion formation to an unprecedented extent.

For the more knowledge and education a nation had, the less it could be controlled, and the more it questioned things. The book thus created transparency in the world and a significant increase in the literacy rate. In addition, it paved the way for journalism, which is considered the guardian of order in democratic © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 M. Posset, Media Economics in Austria, https://doi.org/10.1007/978-3-658-42195-3_1

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countries and has become an indispensable part of our society as the fourth estate. Journalism informs, controls, and explains complex issues in an understandable way. Therefore, many people regard the invention of modern book printing as the most important invention in human history. But before an idea becomes a whole book that later ends up on our bookshelves, a lot of work is necessary, which requires the involvement of many different people with many different fields of expertise. And that is, in simplified terms, what media economics is all about. Let us start with a very simple and superficial example. Example

Imagine you want to write a book. You have a great idea and just start with it. If you are not an experienced author, you usually need more than just a few weeks for this. In addition, you need perseverance, but eventually, you have completed your work and are looking for a publisher. Because you have contacts in the publishing industry and your manuscript is promising, it ends up with the editorial department of a publishing house and is actually read. Due to countless unsolicited manuscripts that reach the publishing houses daily, this step is not a matter of course. Most of the time, publishers simply lack the time to check all submitted manuscripts thoroughly. Since your manuscript convinces, the publisher wants to produce and distribute it. Before that, some people have thought about whether the topic fits the publisher’s program, whether it is contemporary, whether there is a target group for it, and how big the chances are in marketing. After all, the book business is not a romance but a tough business like any other. If your manuscript overcomes all hurdles, the real work begins internally at the publisher. Editors are responsible for content planning and design, they develop concepts and, if necessary, commission photographers, graphic designers, and authors if it is a specialist or non-fiction book. Once everything is ready, the sales department ensures that your book is visible and purchased. In the background, the administration works. It includes, for example, human resources, purchasing, or finance and accounting. Before the book ends up in the bookstore, the manuscript must go through the production loop. Only then will it become clear whether the book’s topic actually inspires and whether the publisher has done its homework. Because there is never a guarantee for the success of a book. Since the publisher does most of the work with book production, it also receives most of the income, except for the author’s fee. ◄

1.1  What are Media?

3

1.1.2 The Mass Media When we talk about media today, we primarily mean the mass media, which also includes the book mentioned earlier. In addition to the classic media, which we automatically think of when we talk about media genres, the music cassette or slide film, for example, are also considered media, but their functionality is differentiated from that of mass media. Why? Because music cassettes mainly served private entertainment, while the book as a knowledge transmitter has a much greater significance. Nevertheless, in this book we use the word media, even if it refers exclusively to mass media. We conclude: Media disseminate information in the form of texts, images, sounds, and films, enable entertainment and education, and contribute to opinion formation in democratic countries. This is important because freedom of expression, along with freedom of the press, is a crucial principle of democracy. It gives us freedom by allowing us to question things, developments, or decisions and share our thoughts about them with the public. For us in the West, this may be a matter of course. In authoritarian states such as the Russian Federation or the People’s Republic of China—to name two prime examples –, the situation is quite different. These states largely control the media and use them specifically for their own purposes. There is hardly anything like free media there; or their percentage is so low that they are not really worth mentioning. In Russia, there is mainly state television, which broadcasts exclusively government-friendly content and is consumed by about 90% of the Russian population. In China, on the other hand, censorship is rampant. Hardly any Western media service is allowed there. What authoritarian states practice is not independent journalism, but propaganda. u

In general, we must bear in mind that media are never merely neutral conveyors of a given reality. Media shape “reality” in a certain way. I would like to explain how and why using a brief example. Example

Somewhere in the world, an event occurs that certain media want to report on because they believe people need to know about it. The media houses thus decide on the importance of an event for the population right from the start. Since journalists can rarely mention every single detail of an event, it is the media houses or their journalists themselves who decide which pieces

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of information from this event are important and need to be published. Due to this “selection process,” media can portray the same event very differently. This is fundamentally a disadvantage, but it is balanced out in democratic countries by the diversity of media offerings. This way, we can compare different forms of presentation and ensure that we do not inform ourselves onesidedly. The keyword here is media diversity. ◄

1.1.3 Different Interests With the diversity of media offerings, the interests of media houses have also changed. They have become more diverse, and the internet has played a significant part in this, even though the interests of many media houses had already changed before the internet. Think of party- or business-affiliated media and think of advertising allocations. Like any other company, media companies also live on sales figures, which have been declining sharply for traditional publishing houses, especially with the advent of digital media. This, in turn, is bad for the quality of media and journalism, as the content of media in an economically disadvantageous situation is strongly oriented towards the audience, which is particularly seized upon by tabloid media as an opportunity. Sensational news and click numbers, reach and interactions bring in more money than high-quality information and news. This is a problem because this development damages people’s trust in the media. At the same time, online media are experiencing a strong upswing, regardless of whether they are journalistically serious or not. As you can see, the world of media has become a complex construct in the last two decades. It is all the more important to create clarity and promote media literacy and journalism in all its facets. Because especially in turbulent times and in an increasingly fastpaced world, we must be able to rely on the quality of information.

1.2 What is Information? Information always requires a sender, a channel that forwards the information, and a recipient. In our case, the sender is a media provider, such as a traditional publishing house. The information channel is any medium, for example, the traditional newspaper or a platform shared via social media. The recipients are all those who pick up the information. That much for the definition.

1.2  What is Information?

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1.2.1 The Journalistic Forms of Presentation When we talk about information in the context of journalism, we must distinguish between two fundamentally different forms of presentation. The informative form of presentation on the one hand, and the opinion-expressing form of presentation on the other. These journalistic forms of presentation apply to all media and “are not only desirable ideals, but real necessities in today’s Germany, where subjectivity, distortion addiction, and special interests are constantly seeking opportunities for expression,” as stated in the “Guide to Good Journalism” by the Allies, published in April 1947. German journalists and later journalists from all democratic countries adopted this “separation rule” between information and opinion from American journalism. It is one of the most important foundations on which objective and serious reporting is based.

1.2.2 The Informative Form of Presentation—Objective and Value-Free 1.2.2.1 The Short Message The short message, as the name suggests, is not particularly long and focuses on the essentials in its preparation. In newspaper journalism, the message is only two to three sentences, on television we know it as short messages and parts of news blocks. Music-oriented radio programs also design news blocks almost exclusively with short messages, which are often only one to two minutes long. These short messages often serve to convey initial information about a current event that is not yet well known and usually draw attention to themselves under the heading “Breaking News” or “Urgent News.” In the case of the short message, speed is paramount. That’s why it often ends with the sentence: “No further details are known yet.” These short messages remain in place until the editor has completed the research and incorporated the collected information into a more detailed form of presentation. For example, in a news item.

1.2.2.2 The News Item The local editor of the American “Sun,” John B. Bogart, is said to have said in 1880: “When a dog bites a man, that’s not news, but when a man bites a dog, that’s news.” (La Roche, 2017, p. 64) This sentence is also known as the Manbites-dog formula and states that news demands the extraordinary. On the one hand, the news item communicates the “hard news”; these are current ­information

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from politics, economy, or society that have general importance for people. On the other hand, the “soft news”; these are entertaining information that is not really important for the general public but generates interest. The news item is therefore the central form of presentation in journalism. It is objective and, in the best case, always structured according to the same scheme. The rule is: The most important thing comes first. The lead or teaser text should answer as many “W-questions” as possible in advance. Who did what, when, where, how, why, and from which source does this information come? In print, the news item is usually no more than 20 lines long, and on the radio, it is hardly longer than a minute.

1.2.2.3 The Report The report is the more elaborate form of the news item. In addition to the actual event, it also sheds light on the background and provides more extensive information. Both in print and on TV, the report takes up much more space than the news item and uses various stylistic devices to emphasize the facts. Interviews, statements from witnesses or experts, or, as possible on TV, the illustration of the event with moving image material, ensure a high density of information and more trust among the audience. Live reports, in which foreign correspondents are onsite, convey the situation first-hand via radio, television, and the internet, making the transmitted information even more reliable. In this case, the correspondent is both the source and the eyewitness. The report, like the short message and the news item, is fact-based forms of presentation that aim for the greatest possible objectivity.

1.2.3 Informative Forms—Subjectively Evaluative 1.2.3.1 The Reportage Many print journalists consider reportage to be the supreme discipline of reporting, as it does not merely list the bare facts like a report or news item, but turns an event into an experience by using literary stylistic devices. In reportage, the journalist reports based on their sensory impressions, which subjectively colors the information conveyed. However, the formation of judgments is left to the readers and viewers. Another difference from conventional reports is the structure of the reportage; instead of listing the most important things first, the structure of the reportage follows a dramaturgy, as we know it from novels or short stories. Moreover, the reportage does not necessarily have to illuminate an event as a whole, but can focus on a detail that reflects the overall event. Due to the literary

1.2  What is Information?

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form, the reportage is not only informative but also has an entertaining function. Reportages are a popular form of presentation, especially in magazines.

1.2.3.2 The Interview “Interviews are indispensable methods of research as targeted questioning” (Schult & Buchholz, 2016, p. 121) and can be divided into three types according to La Roche (1999, p. 143), which seem quite reasonable to me: 1. The factual interview, which aims to convey information about facts. 2. The opinion interview, which asks a (usually prominent) person for their judgment on an event or a matter. 3. The personal interview, which aims to sketch a person through their answers. The interview is therefore considered both a basic tool and preliminary work for journalistic research, as well as an independent journalistic form of presentation (La Roche, 1999, p. 143). Example

As an example of a personal interview, I would like to mention Larry King’s interview series “Larry King Live.” The journalist Larry King, who passed away in 2021, spoke with politicians, musicians, actors, and entrepreneurs in his series, which was broadcast by the US news channel CNN from June 3, 1985, to December 16, 2010. His interview partners included names like Barack Obama, Marlon Brando, Madonna, or Vladimir Putin, making the interviews particularly successful due to the high-profile guests and broad interest they attracted. ◄

1.2.3.3 The Portrait “A portrait is an examination of a person who interests the media professionals and who can be assumed to interest others as well. The focus is on the journalistic preparation of an encounter. The guiding principle is the topic that is placed at the beginning of the portrait work. This is modified in the encounter.” (Egli von Matt et al., 2008, p. 43). Sometimes a quote is better than a paraphrase of the statement. After all, we don’t always have to reinvent the wheel. Journalists use the portrait primarily for the representation of famous personalities, as it is descriptive, reflective, and analytical in nature. It uses both key data of the person and described events and character traits. It tries to elicit interesting details from the interview partner to create tension for the recipient.

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1.2.3.4 The Feature “To feature something” still means today in the press and broadcasting to make something more attractive (Schult & Buchholz, 2000, p. 199). The feature is often a collective term for the large formats of report, reportage, or documentaries. In a narrower sense, however, it is a detailed analysis of a topic that does not necessarily have to be current and is reported comprehensively and reflectively. Characteristic is “the constant alternation between observation and abstraction, between description and conclusion” (La Roche, 1999, p. 139). The feature is not only at home in radio and TV but also in daily newspapers. However, it has lost importance in today’s times.

1.2.4 Opinion-Expressing Forms 1.2.4.1 The Leading Article The leading article reflects, in a broader sense, the political opinion of the entire editorial staff and is therefore something like the flagship of a newspaper. It is an extensive form of presentation, similar to the shorter commentary, which reflects the editor’s point of view on a specific topic and is therefore usually written in the first person. The leading article often occupies a fixed place in the newspaper and must be clearly marked for the reader that it is a leading article and thus an “opinion article.” The leading article takes a clear position, especially in times of crisis or delicate matters.

1.2.4.2 The Commentary The commentary is shorter than the leading article and usually takes a position on a current news item. According to the relevant analysis by La Roche (1999, p. 152), three forms of commentary can be distinguished. This classification is also observable in everyday journalistic practice and is therefore quite representative: 1. “Argumentation Commentary”—It aims to convince others by listing arguments and engaging with other relevant points of view. 2. “Straightforward Commentary”—Here, it is less about argumentation and more about the temperament of an author. This type of commentary can therefore have various faces and often comes across as somewhat blustering. 3. “On the one hand, on the other hand Commentary”—It carefully weighs various alternatives, puts the complexity of the matter to be assessed in the foreground, and at least temporarily refrains from deciding on an alternative.

1.3  What is Media Economics?

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In print media, the author of the commentary is often depicted, while on radio and television, the author usually speaks the commentary themselves.

1.2.4.3 The Gloss The gloss is related to the commentary but presents itself somewhat more playfully. On the one hand, it requires literary talent; on the other hand, a certain wit, as it usually confronts its subject ironically or reproachfully. The author of the gloss, therefore, needs quite a bit of talent to meet its requirements. Not every journalist can write a gloss. The following description of the gloss seems quite accurate. “The gloss is the well-observed moment between two eyelash beats … That means: The gloss can tell from a single step whether the person taking it practices an upright walk or is a crawler; the gloss sniffs out the feasts of an entire week from a little burp.” (La Roche & Buchholz, 1999, p. 169 f.) Other opinion-expressing forms are criticism, the column, the essay, and the feuilleton. In all these forms, the personal opinion is in the foreground to encourage the audience to adopt a differentiated way of thinking, to act, or to reflect.

1.3 What is Media Economics? Media economics deals with markets and the question of how scarce resources are used to produce information, entertainment, and advertising (see Fig. 1.1). Consumer behavior is also part of media economics, as well as the question of how competition and markets are created by, for, and through media. Media economics can be distinguished from media management in that media economics focuses on the market or macro perspective and deals with the distribution and consumption of goods. In contrast, media management focuses on the company or micro perspective and usually deals with well-founded scientific figures. But what exactly is a market, the micro and macro perspective?

1.3.1 What is a Market? u A market is a hypothetical place where supply and demand meet and are coordinated through prices and government interventions. Such an intervention can be a law, a directive, or a plan. The benefit for both parties is called “cooperative gain.” A market can thus be designed to be as fair as

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Communication Science Individual Comm.

Mass Comm.

Economics of Education

VWL Economics

Media Economics BWL

Health Economics

Environmental Economics

Media Media Media technology law Education Fig. 1.1   Graphical representation of media economics based on an illustration by University Professor DDr. Karmasin 1998

possible, or as efficient as possible, a combination is not possible. Moreover, market forms can be determined according to several criteria (see Fig. 1.2). • Perfect and imperfect markets: Depending on how strongly the homogeneity criteria are pronounced in a market, we speak of perfect or imperfect markets. • Organized and unorganized markets: In organized markets, the meeting and interaction of suppliers and demanders are based on certain, fixed rules. Examples of this are the organized stock exchanges or the conduct of auctions according to certain rules, such as with auction clocks for fruit and vegetable auctions. In unorganized markets, these rules are lacking. (Albers & Zottmann, 1983, p. 106)

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1.3  What is Media Economics?

one

few

many

one

bilateral monopoly

limited supply monopoly

Supply monopoly

few

limited monopoly of demand

Bilateral oligopoly

Supply oligopoly

many

Demand monopoly

Demand oligopoly

Polypol

Demand

Provider

Fig. 1.2   The market form schema

• Markets with restricted and unrestricted access: Restrictions can be purely legal in nature, such as investment, start-up, establishment, or branch establishment bans, and concessions. Legal-economic obstacles can be given by special taxes. Purely economic barriers are a lack of capital or qualifications. • Determination by the number of market participants Example

Selected market forms from the media sector can look as follows: • more monopoly: cable broadcasting, pay-TV, local/regional subscription newspapers • more oligopoly: free-TV, national newspapers, radio, music industry • more perfect competition: books, film industry, magazines ◄

1.3.2 The Macroeconomic Level The macroeconomic view of media economics deals with the description of companies and the representation of the reception level. Particularly important for this

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perspective is the question of financing and the financial viability of journalistic content. The main focus of macroeconomics is therefore on maximum returns, as is the case in any other company. In this context, advertising and distribution revenues are of particular importance. As the press market faces declining sales figures and reduced reach, there have been fundamental structural changes in recent years. Publishers and broadcasters usually respond to this by improving technology, increasing the use of the internet, laying off employees, and outsourcing in certain areas. All these measures serve to secure returns and counteract the deteriorating market environment. In addition, macroeconomics deals with the increasing concentration of companies—a process of consolidating market shares—both in publishing and in radio and television. This aspect affects the relationships between media companies on the one hand and the relationships between the companies and their stakeholders, the journalists, on the other hand. Another central field of the macroeconomic view of media is the often numerous and difficult-to-understand investments in individual companies—especially in Austria, we know this problem well. What suffers as a result is market transparency.

1.3.3 The Microeconomic Level The microeconomic level of analysis deals with the production, distribution, and consumption of information, entertainment, and advertising messages. At the same time, it takes into account the specific areas of action of journalists. It is therefore more about individual economic decisions of producers and consumers in the media industry and about the specific regulatory problems and questions of corporate governance in private and public companies in the media industry. The fundamental difference from general microeconomics is reflected in the fact that households produce direct goods from their indirect goods using a household production function. This is done using capital. These goods are sold to the “producing” household under opportunity cost expenditure. The households temporarily assume the role of entrepreneurs and sell the produced goods to themselves at opportunity costs. In simplified terms, opportunity costs are the foregone benefits of a non-realizable alternative course of action. Opportunity = possibility.

1.3  What is Media Economics?

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Example

Simple economic cycle • Households make consumption expenditures (monetary) that flow to companies and, in turn, provide labor services (real). • Companies, on the other hand, pay labor income (monetary) that flows to households and offer consumer goods (real). Through the paid labor income (wages), demand is created; we now have money with which we can buy something. This changes the supply; there are more suppliers for higher demand. Supply and demand, in turn, shape the price (first: higher demand, higher price, then: more suppliers, price drops again). This interaction allows wage policy to have a significant impact on the economy. For example, if wages are lower, employees have less money to buy the product. The result: sales decline. ◄

1.3.4 Challenges of Media Economics When we consider journalistic content as goods, it immediately becomes apparent that they differ from most other goods in terms of their degree of rivalry. In the case of journalistic media, this degree is zero. This means: u

We can use journalistic content simultaneously without the value of the content decreasing. This is also the case for all public goods.

So, if you read an article in the Frankfurter Allgemeine and thousands of others read it too, the value of the information remains the same for everyone. With consumer goods, such as a pear, it is different. If you buy a pear, no one else benefits from it because only you can eat the pear. • Public goods = a broadcast in freely accessible broadcasting, a newspaper article in print, a news broadcast on public-service broadcasters, and so on. • Club goods = Pay-TV, online articles with paywall, and so on.

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The Disadvantage of Public Goods Users of public goods do not reveal their preferences or consumption behavior. No one knows how important the consumption of the medium is to them or how much they would be willing to pay for it since they can consume the content for free. This also applies to club goods, even if someone has purchased the club good beforehand. Imagine you have subscribed to a pay-TV channel because you enjoy regularly watching football and other sports. You invite a few friends over every weekend, who also watch the program with you, but unlike you, they have not paid for it. This leads to financing problems, especially in mass media. In theory, private companies would have to use their own capital to produce more goods. In practice, however, this calculation does not work because these private companies are not adequately compensated by the users. The solution, as simple as it sounds, is advertising. Advertising within Editorial Content Advertising messages are private goods, which automatically leads to user rivalry. On the one hand, the company has to pay for the advertising. On the other hand, the space occupied by the advertising, for example in the newspaper, is no longer available to other advertisers. As Jürgen Heinrich correctly explains in his book “Medienökonomie Mediensystem, Zeitung, Zeitschrift, Anzeigenblatt” (2010. p. 129), media companies often market their products as so-called bundled products. These are editorial content including advertising messages. Therefore, such a bundled product serves two markets: the reader or recipient market and the advertising or ad market. The advantages of bundled products include tapping additional financing sources in the advertising market and reducing production costs. The problem with this financing method arises whenever the interests of consumers collide with those of advertisers. Example

Which media serve which market Newspapers and magazines, as well as radio and television, cater to a dual market (information and advertising). Book publishers, on the other hand, serve exclusively the recipient market, while most content on the internet is aimed solely at the advertising market. ◄

1.4  Supply and Demand

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1.4 Supply and Demand Supply and demand determine the price of goods by bringing buyers and sellers together in the market. This can happen directly, either physically in a store or online on the internet. The quantity traded in the market depends on sellers and buyers. This means: The higher the price, the more sellers are willing to offer, as they can generate higher profits in this way. The lower the price, on the other hand, the more buyers demand. When supply and demand match, the market is in equilibrium—consisting of equilibrium price and equilibrium quantity.

1.4.1 The Elasticity of Demand The elasticity of demand measures the effect of an independent variable (the price) on a dependent variable (the quantity) when both variables are in a functional relationship. By a functional relationship, we mean the ability to infer the value of one variable from the value of another variable that depends on it. The elasticity of demand thus indicates how strongly a price increase affects the quantity demanded. This means: The average quantity divided by the average price times price divided by quantity results in the elasticity. Or in simplified form:

E = dx/dp∗ p/x (x = Quantity/p = Price) • E > 1: if the price change causes a more than proportional change in quantity, we speak of elastic demand. Example: music market, books, internet providers, mobile phone tariffs. • 0 < E < 1: if the price change causes a less than proportional change in quantity, we speak of inelastic demand. Example: magazines (sometimes) • E = 1: if the price change causes a relatively equal change in quantity, we speak of isoelastic demand. • E = 0: if the price change does not cause any change in quantity, we speak of rigid demand. Example: (fictitious) monopoly on cigarettes

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For the media market, this means: • Elastic demand: a price increase for “Trend” would likely cause many customers to switch to “Profit,” resulting in a decrease in demand for Trend. • Inelastic demand: a price increase in broadcasting fees, on the other hand, would hardly have any effect on demand, as there are (almost) no alternatives.

1.4.2 Economies of Scale Industry An economies of scale industry, which also includes the media industry, is characterized by the following properties: • • • •

Advantages in the procurement market due to increased market power. Advantages in the sales market through additional distribution channels. Cost and know-how advantages of vertical integration. Reach and profit maximization through the phenomenon of the advertisingcirculation spiral.

This means: The larger a company is, the cheaper it can produce and the greater the profit. This cost advantage, which is caused by the size of the company, is the main reason for (horizontal) concentration. In the media industry, this looks as follows. As output increases, average costs approach zero. Examples of this are—due to the connection of several production levels and the resulting advantage— Mediaprint or Bertelsmann, which offer several media. Cost curve of an economies of scale industry The cost change resulting from the increased production quantity by an additional unit of a product benefits the company as long as the current capacity level is exhausted. This happens, for example, when a printing machine is fully utilized. In this case, we speak of “economies of scale”, the positive scale effect. From this point on, no additional production capacity is available. If a company were to increase production further, marginal costs and subsequently average costs would rise again. We then call this state “diseconomies of scale” (negative scale effect).

1.4  Supply and Demand

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As a rule, therefore: u With increasing scale returns (economies of scale), marginal costs decrease; with constant scale returns, marginal costs are also constant; and with decreasing scale returns (diseconomies of scale), marginal costs increase. If the curve of the marginal cost curve is flat, each additional piece costs only a fraction more. We know this from television, where each additional viewer costs the company nothing more. With newspapers, it is different. The curve is steep, as each additional copy incurs material costs.

1.4.3 Costs and Profit in Perfect Competition Perfect (complete) competition is an ideal-typical market form with a very large number of suppliers and demanders, so that the individual has an infinitesimally small and unknown influence on the market price. We are talking about a theoretical ideal state that leads to an efficient distribution of resources (see Fig. 1.3). Prerequisites for perfect competition: • Perfect homogeneity of goods • Large number of suppliers and demanders

Price

Equilibriumprice and quantity

Supply curve

Competitive price

Demand curve Quantity Competitive quantity

Fig. 1.3   Graphical representation of perfect competition

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• Complete market transparency • Free market entry

1.4.4 Costs and Profit in Monopoly The monopolistic market is the exact opposite of a market with perfect competition. While in a polypoly a fragmented market structure prevails, with many small suppliers and demanders, there is only a single supplier in a monopoly. We call this supplier the monopolist in economics. The goods in this market are unique, and high barriers make market entry difficult (see Fig. 1.4). Definition: Marginal Revenue = Marginal Sales = Marginal Revenue The marginal revenue, or marginal sales, is the additional revenue (in monetary units) that a company earns by selling one more unit of a product. In market theory, marginal revenue plays an important role in determining the sales quantity that yields the highest profit for a company, as it corresponds to the marginal costs. The Cournot point is the profit maximum of a monopoly company. It is defined by the profit-maximizing sales quantity (marginal revenue = marginal costs, where MR and MC intersect) and by the corresponding price.

Fig. 1.4   The Monopoly Curve

Demand

1.5  The Functions of Media

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1.4.5 Essential Difference between Both Models The most important difference between (perfect) competition and monopoly lies in the influence on price. While perfect competition has little or no influence on price and must be guided by the market price, the price in the case of monopoly is freely selectable due to the lack of competition (within the respective price elasticity of a product). Thus, the monopolist can combine price and quantity in such a way (Cournot point) that he achieves a maximum profit. In the case of monopoly, a large part of the consumer surplus is skimmed off, making it easier for the company to work profit-oriented than in a competitive situation.

1.5 The Functions of Media When we talk about the functions of media, we primarily mean the communicative tasks of media in a democratic society, including their services for the people of this society. Media, and especially mass media, therefore have a strong influence on our social system, at many different levels.

1.5.1 Core Functions in a Democratic Society The media is much more than just a provider of information and entertainment. Media has important functions within society and ensures that everything is done properly in the fields of economy and politics in democratic countries. The media is the guarantor of our democracy, and Fig. 1.4 shows how they work (Fig. 1.5). Information Function The information function is the core function of mass media. The information serves people as a knowledge mediator by better explaining economic, social, ecological, and political contexts and helping people understand democracy better. To do this, the media prepares complex contexts for mass consumption, works out the core information, and tries to explain it in a way that reaches all people equally. In doing so, the mass media must ensure that the information is complete and that all interest groups have their say in order to draw as objective a picture as possible of a situation. Because objectivity is the highest premise of classical journalism.

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Politics

Create public Articulating opinions Control and criticism Early warning function Participation and activism

Media

Economy

Consumption/ consumer information Circulation of goods Employment/ jobs Value creation in the media industry

Culture & Social

Orientation &Life Help Integration into society Education & cultural development Entertainment & Relaxation Fig. 1.6   Graphic on the core functions of the media

Opinion Formation Function In a modern society, there are many different interest groups whose opinions the mass media must reflect in an appropriate proportion. Therefore, the opinion formation function is just as essential a task area of mass media as the information function. In addition, journalism in a democracy has the claim to discuss all questions concerning public interest in an open discussion. Control Function Journalism uncovers grievances and is often the impetus for parliamentary inquiries, investigative committees, or research of any kind. It exposes corruption and ensures that everyone in both the economy and politics adheres to the given rules. This makes journalism the so-called fourth estate in democratic countries. In addition, the media determines which topics are important and also assesses the weighting of these topics.

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1.5.2 Functions for Core Areas in Society Among other things, media create public spheres, influence our purchasing decisions, and serve as an extended arm for unheard minorities. The ways in which media operate are diverse (see Fig. 1.6), making them crucial for our society. Political Function Creating a public sphere is one of the most important functions of media in a democracy. According to philosopher and public sphere theorist Jürgen Habermas, there is not just one “public sphere,” but rather the sum of various partial public spheres that form the public sphere. This difference becomes particularly clear when we compare the partial public spheres of daily newspapers and specialized newspapers. While high-quality daily newspapers serve a very broad partial public sphere, specialized newspapers are aimed at a small group of interested parties. This is why leading media are so important, as without them the “public sphere” would be limited to a small level of personal communication. By providing topics and statements, making them visible and linking them, a public opinion can form from a multitude of individual partial public spheres.

Information function

Information about content, e.g.: • political programs • Consumer Goods • cultural development

Media

Opinion-forming function

free and open argumentation for majorities and minorities

Control function

Control and criticism Detecting and reporting on grievances

Fig. 1.5   Graphic on the function of media for core areas in society

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Through mass media, a society can view itself in a mirror.

Economic Function Through their circulation function, mass media can even stimulate the economy by, for example, appearing as advertising carriers in the form of ads or editorial contributions, reporting on new trends in various areas. In addition, media influence consumers’ purchasing decisions by providing knowledge about specific products, services, or topics. As companies, they create jobs and contribute to the well-being of recipients by fulfilling their information and entertainment needs. We could also refer to this function as a regenerative function. Social Function As already mentioned, mass media play an important role in terms of entertainment and relaxation factors. At the same time, they often represent the only connection to the outside world for people who are restricted in their mobility due to illness or disability. In a cultural context, mass media serve as orientation and life assistance, convey values and norms, and help integrate certain groups into society. In general, cultural mediation is one of the essential functions of mass media.

1.6 Media & Politics A quote at the beginning: “Public opinion forces both the government and the individual member of society to respect it. If the government does not pay attention to public opinion, does nothing to win over a hostile public opinion, it threatens to fall, to lose power.” (NoelleNeumann et al., 2009, p. 368)The space in which this opinion formation takes place is the media. Accordingly, there is a dependency between both areas, as they need each other.

1.6.1 Politics Needs the Media The mass media, which in recent years also includes the online versions of newspapers in social media, are the most important source of information for the population. Accordingly, the dependence of politics on the media seems logical, as it is in the essential interest of politics that the mass media report positively about them. This dependency intensifies especially during elections, as journalists are also responsible for the selection of topics and thus have a lasting influence on

1.6  Media and Politics

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public opinion. Therefore, it is important for politicians to gain some “control” over the selection of topics, or as the German political scientist, Gerhard Wittkämper, put it: They want to “occupy topics, create political identity, demonstrate expertise, show closeness to citizens” (Wittkämper, 1992, p. 43). In addition to the transmission of facts, the mass media also have an interpretation and evaluation function, which also influences the opinion process. 2:0 for the mass media, one could say. But we must not oversimplify the matter. Because the fact is also that media do not have the same effect on all recipients, as there are many influencing factors that recipients perceive differently. Various influencing factors If we consider, for example, the type of media use, many questions arise immediately: Which media are consumed? How long are they consumed and how strong is the attention during this time? Do recipients consume the media actively or incidentally? What are the motives for media consumption? These questions particularly concern quality and quantity, which is why the core of information can arrive completely differently at recipients due to these factors. The same applies to the question of perception, which means that the media effect cannot be seen uniformly strong or weak for all recipients.

1.6.2 The Media Needs Politics The dependence of the media on politics varies regionally and is much more pronounced in Austria than in Germany, for example. The reasons for this lie in a partly questionable media promotion and in government advertisements, which plunge especially the free media into dependence. The problem: Particularly in economically bad times and with the influence of the internet and social media, newspapers can hardly be financed exclusively by advertising. In terms of numbers, this dependence in Austria was up to 40% for some free media. The Austrian advertising scandal at the beginning of the pandemic in 2020 was ruthlessly exposed by the then Austrian federal government. The consequences: Those newspapers that were benevolently supplied with advertisements by the federal government reported more government-friendly than others. In Germany, such allocations of advertisements are unthinkable on this scale. Another dependency exists especially in local reporting. A good relationship with political actors always means more information, an exclusive interview, or a “secret tip” that another editor, who has not earned the favor of a politician through benevolent reporting, does not get. It should be noted at this point that

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these relationships must be kept within a healthy framework and legal boundaries must be observed.

1.7 How Media is Financed It should actually be called: how independent media are financed, which raises the question of whether independent media exist at all. The answer is no. Purely independent media cannot exist, as otherwise external financing would not be possible. However, there are different dependencies that are not necessarily negative. The question is more: How do media deal with their respective dependencies in terms of financing, audience, and ownership, and how do they finance themselves? Roughly speaking, primarily through advertising and subscriptions, and secondarily through grants or fees (see Fig. 1.7).

1.7.1 Financing Through Advertising Journalistic media sell space for advertisements. These can be ads and advertorials in newspapers or their online editions, video advertising on TV, or audio advertising on the radio. On the internet, mixed forms are also possible. The advertorial or sponsored content is an advertisement that is not immediately recognizable as advertising due to its presentation. Therefore, advertisements of this type must be marked with an appropriate label. In general, we can note that there is a need for advertising-financed media to maximize reach. This goes hand in hand with a certain orientation towards majority opinions, which can be problematic for minority interests on the one hand, but at the same time keeps owner interests at least within limits. It makes a difference who owns private, primarily advertising-financed media. In Austria, these are mainly wealthy families, the church, or banks like Raiffeisen.

Advertising

Personal

Income

Media House

Subscriptions

Fig. 1.7   Graphic on media financing

Costs

Paper, Printing, Distribution IT, Marketing, Real Estate

1.7  How Media is Financed

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By the way, with around 41.9%, the internet held the largest advertising market share of media in Germany in 2020. According to the Central Association of the German Advertising Industry (ZAW), print advertising and television/moving image followed with the next largest shares of net advertising revenues (de. statista.com, 2022). Regulation of Advertising In most European countries, a dual system exists to limit advertising. It consists of legal regulations on the one hand and self-restriction guidelines on the other. The ethics code serves as a core area to protect users from abuse of advertising and to monitor and correct misdevelopments in advance and on the fringes of legal provisions. The more advanced the legal regulatory system concerning advertising and consumer protection in a country, the more the task of selfrestriction shifts to those areas of ethics that are subject to a societal development process.

1.7.2 Funding from Subscribers This type of funding has changed significantly in recent years. It was only due to the general decline in advertising revenues as a result of digitization that subscriptions regained importance. In 2021, the total circulation of daily newspapers in Germany was around 12.3 million copies. This is 200,000 copies below the previous year’s figure. In 1991, the total circulation was still 27.3 million copies (statista.com, 2021). Similar figures are available from Austria and Switzerland. In contrast, users’ willingness to pay for the content of online media is increasing. Therefore, according to statista.com, 104 out of 178 daily and weekly newspapers listed with the Federal Association of German Newspaper Publishers use a freemium model. This means that part of the articles remain free of charge, while the rest of the online offer has to be paid for in order to use it.

1.7.3 Funding from Fees Public broadcasters such as ORF, ARD, or ZDF are also financed through broadcasting fees such as the GIS in Austria or the broadcasting fee (GEZ) in Germany. The fees are paid by the operators of the receiving devices. In addition, the funds also finance the state media authorities.

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While there are always discussions about the broadcasting fee, its existence is indisputable. Public broadcasters guarantee an independent press in the country and, unlike private broadcasters, have an educational mandate in the form of news and documentaries. They do not exclude others by producing most programs barrier-free. Public broadcasters are a common good and therefore fully permissible as recipients of broadcasting fees. I will go into more detail on this in another chapter.

1.7.4 Funding from Donations There is currently a growing number of media outlets trying to finance themselves through donations. People seem to be more willing to pay donations for journalistic media on the internet than in print. For example, under every online article of the Austrian daily newspaper “Der Standard”, among other things, the following donation appeal can be read: “Support STANDARD as well and help ensure that independent quality journalism continues to exist in the future. Every contribution counts!”The advantage over paywalls is the greater reach that media can generate with the donation model.

1.8 What is the Dual System? When we talk about the dual system of media, we mean the simultaneous existence of private and public-service media, which are organized and financed differently (see Fig. 1.8). Germany introduced private television in the 1980s. The dual system was thus established automatically.

1.8.1 Precise Definition of Terms In the television sector, for example, public service broadcasters such as ORF, ARD, or ZDF are responsible for fulfilling their public service broadcasting mandates. They are obliged to provide the public with a comprehensive range of programs in the areas of information, education, entertainment, and culture, thereby actively promoting opinion formation and political decision-making in the sense of the democratic state order. The terrestrial transmission path is intended to ensure that the complete program is fully broadcasted to reach as much of the

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1.8  What is the Dual System? Marketing

Below-the-Line Communication

Digitization Youth Services Home work

Economy

Advertising

Sponsoring

Youth protection Communication policy

Broadcasting system dual

Teenagers

Web 2.0

Three-step test

Telemedia

Interstate broadcasting agreements

Internet E-commerce Social media Big Data

Fig. 1.8   Graphic representation of the dual system

population as possible. It also guarantees the continuous presence and development of public service broadcasting, as it is necessary to remain open to new viewer interests, formats, and content. In addition, public service broadcasting stands in sharp contrast to commercial broadcasting, as it is primarily financed by fees and is an internal multidimensional organization that seeks to ensure a perfect balance of content, opinions, and interests. Private media are essentially financed by advertising revenues and therefore have to adapt more strongly to market competition by aligning the scope of the program exclusively to the size of the ratings. The goal is always profit maximization. The program should be as popular as possible and, by covering many genres, reach a broad, heterogeneous audience, thus addressing the interests of many viewers. At the same time, public service providers ensure basic services, which eases the performance requirements for journalism for private radio stations. The obligation of content completeness and balance, as well as the basic standard of

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balanced diversity, does not apply to individual private broadcasters but only to the overall offer of all private broadcasting programs.

1.8.2 Structure of Public Service Broadcasters Public service broadcasting is a non-profit, legally competent public corporation characterized by multiple supervisory bodies and societal self-control. They create programs based on state laws and contracts and essentially have the same organizational structure. We distinguish between the executive body of the director-general and the supervisory and control functions of the radio and television councils and boards. From the perspective of a monotonous single body, the director-general bears the sole responsibility of the broadcaster and is ultimately responsible for the editorial, content, and design of the program according to the principles of the program. With his comprehensive management and leadership competence, he is the sole responsible employer for organizational decisions and personnel matters, as he bears the ultimate responsibility for management, technology, and finances. He also represents the institution in judicial and extrajudicial matters and is elected by the broadcasting council for a term of usually four to six years, depending on the institution. The State-Political Model The state-political model, which no longer exists in its pure form, has a much greater influence on the composition of the control body of parliament and government, as the parliamentarians are elected by the legislature according to the proportional representation system. However, this will not prevail in German broadcasting in the long run, as it can lead to a political advantage for political parties. The television council of ZDF, which only produces television, is a mixture of both types, as its members are appointed by state and party politicians as well as by groups of public life. The central task of the broadcasting council, as stipulated in the broadcasting law and state contracts, is to be as objective and factual as possible in the sense of a liberal-democratic basic order in the field of broadcasting. The members of the council must ensure that they adhere to the principles of the legal program by influencing the design of the program.

1.8  What is the Dual System?

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1.8.3 Structure of Private Broadcasters Since 1984, Germany has established state media authorities in all federal states for the licensing and supervision of new private broadcasters. They are non-governmental legal entities of public law with autonomy privilege and are similar in structure to public broadcasting institutions. Therefore, each institution has two bodies. The committee as a multidimensional body, which is called the Broadcasting Commission or Media Council, and the President or Director as the executive body. Some state media authorities also have a board that operates in the economic sector. The executive body of the President as the head of employees is responsible for budget and annual financial statement preparation, ongoing administrative control, judicial and extrajudicial representation of the media authorities, and decides on measures such as the imposition of increasing fines and the processing of program complaints. The committee decides on licenses and allocations of transmission capacities, program guidelines and laws, and appoints heads of state. Similar to the Broadcasting Council of public broadcasting, it is composed of representatives of socially relevant groups as well as members of government and political parties to ensure diversity of opinion and the protection of many general interests. Within such organizations, for organizational reasons, individual specialized committees are formed for various management and decision-making areas. The main task of the state media authorities, in addition to the licensing of new private broadcasters, is their administration and regulation according to the guidelines and requirements of the state media laws and broadcasting agreements. As a non-broadcasting institution, following the model of the Public Broadcasting Council, it is not possible to influence the program of private broadcasters in terms of personnel and finances in a specific direction. The corresponding external program management standard should fundamentally respect general program principles such as truthful and fair reporting, constitutional obligation, youth protection, advertising and sponsorship regulation. Sanctions threaten each broadcaster in case of violations. Commercial broadcasters are modeled after private companies and corporations, as their goal is to maximize program revenues and the associated advertising revenues of a large number of viewers.

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1.9 Media Criticism Media criticism is (often mistakenly) currently on everyone’s lips and is a sociopolitical debate about content, acceptance, working methods, and organization of mass media. The subject of criticism includes violations of journalistic principles, organizational framework conditions, such as the lack of separation between advertising and editorial, violations of the principles of human dignity and good morals, and the integration into private law structures or dependence on advertising revenues and state structures. Media criticism guarantees the quality of media and can rightly be described as systematically related.

1.9.1 The History of Media Criticism Historically, the emergence and spread of new media have always been the triggers for media criticism. The Greek philosopher Plato bases his criticism of written media on the fact that external storage and transmission media impair human memory and lose the immediate presence of others. Historically, we can consider Plato’s resistance to writing, poetry, and painting as the beginning of a culturally pessimistic media criticism. After the Second World War, ideological and media-critical analyses emerged in the 1960s and 1970s against the backdrop of increasing media concentration and the growing popularity of television, radio, and records in West Germany. Especially in the 1970s and early 1980s, linking the experiences of the broad public with the issues was a central concern of the social protest movement. Based on the considerations of Sergei Mikhailovich Tretjakov, Walter Benjamin, Bertolt Brecht, Hans Magnus Enzensberger, Oskar Negt, and Alexander Kluge, the concepts and projects of operative and active media work were clarified. These were aimed at individuals who used the media to articulate and publish their needs and interests. Active media work has also become a central task of behavior-oriented media education, particularly in areas outside the curriculum (Schell, 1993).

1.9.2 Media Criticism in the Internet Age Nowadays, journalistic media are heavily criticized in social media, blogs, and alternative media. This is generally welcome, but it is important to distinguish between rational criticism and emotional knockout arguments.

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It is undisputed that we live in the golden age of media criticism today. Thanks to the internet and social media, the work of journalism is discussed and criticized more intensively than ever before. If the traditional mass media act as the guardian of the democratic proverb, the fourth estate, the fifth, as communication scientist Stephen Cooper explains in his book “Watch Dogs,” is the one that watches the watchdogs. In principle, this development is gratifying. The more focused the criticism of the societal role of the media and the result of a particular journalism is, the easier it is to identify and solve the problem. This means: A new wave of media criticism enriches the societal debate. The fact that we talk more than ever about journalism and the functioning of the media is basically a victory for democracy. But this beautiful new world of media criticism also has its dark sides. Especially during the Corona pandemic, we experience forms of media criticism that are primarily characterized by anger, mistrust, and total rejection of “mainstream media.” Often, vague manipulations and false accusations are made, sometimes with conspiracy-theoretical battle terms such as “lying press,” “system media,” and “adapted media.” This type of media criticism contributes little to democratic discourse and, in the worst case, spreads mistrust and anger. But what is the difference between these destructive forms and constructive media criticism? There is no clear boundary. However, we can ask ourselves a few questions to crystallize the difference. For example: • Is the media criticism specific or vague? A blanket accusation, without going into detail with the criticism, usually does not hold up. • How coherent is the argumentation? Genuine media criticism must be based on logical conclusions, not on emotional sensitivities. • How criticizable is the criticism? The quality of the criticism is at least questionable if it is formulated in such a way that it cannot be refuted. We can remember: Journalism is never neutral and objective. When a journalist looks at the world, he must inevitably take a perspective. Just as journalism is not neutral and objective, neither is media criticism. It always has a evaluative, ideological, and normative character. Good media criticism is therefore characterized by clearly showing and justifying its norm-serving character. Bad media criticism, on the other hand, conceals this character and declares it to be an “objective,” “rational,” and “undistorted” perspective.

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References Albers, W., & Zottmann, A. (1983). Handwörterbuch der Wirtschaftswissenschaft, p. 106. Egli von Matt, S., Peschke, H.-P. v., & Riniker, P. (2008). Das Porträt (2nd, überarb. und erw. edn., p. 43). UVK. Heinrich, J. (2010). Medienökonomie. Band 1: Mediensystem, Zeitung, Zeitschrift, Anzeigenblatt (3rd edn., p. 129). VS Verlag. La Roche, W. (1999). Einführung in den praktischen Journalismus (16th edn., p. 139). List Hardcover. La Roche, W., & Buchholz, A. (1999). Radio-Journalismus: Ein Handbuch für Ausbildung und Praxis im Hörfunk (p. 169 f). Springer VS. La Roche, W. (2017). Einführung in den praktischen Journalismus (p. 64). Springer VS. Noelle-Neumann, E., Schulz, W., & Wilke, J. (2009). Fischer Lexikon Publizistik Massenkommunikation (p. 368). FISCHER Taschenbuch. Schell, F. (1993). Aktive Medienarbeit mit Jugendlichen: Theorie und Praxis (Reihe Medienpädagogik, Bd. 5). KoPäd-Verl. Schult, A., & Buchholz, G. (2000). Fernseh-Journalismus Ein Handbuch für Ausbildung und Praxis (6th, aktualis. edn., p. 199). List Paul. Schult, A., & Buchholz, G. (2016). Fernseh-Journalismus Ein Handbuch für Ausbildung und Praxis (9th edn., p. 121). Springer VS. Statista. (2021). Bernhard Weidenbach: Entwicklung der verkauften Auflage der Tageszeitungen in Deutschland in ausgewählten Jahren von 1991 bis 2021. https://de.statista. com/statistik/daten/studie/72084/umfrage/verkaufte-auflage-von-tageszeitungen-indeutschland/. Accessed 20 June 2022. Statista. (2022). Bernhard Weidenbach: Entwicklung der Werbemarktanteile der Medien in Deutschland in den Jahren 2018 bis 2020. https://de.statista.com/statistik/daten/ studie/20086/umfrage/marktanteile-der-medien-an-der-werbung-seit-1994/. Accessed 20 June 2022. Wittkämper, G. W. (1992). Medien und Politik (p. 43). Wissenschaftliche Buchgemeinschaft.

2

Print Media

2.1 The Development of Newspapers Few people will know that the term “newspaper” originally referred to a new random piece of news and not to the printed medium as we know it today. This transformation only took place between the 17th and 18th centuries, to which Gutenberg’s printing press made a significant contribution. Between 1568 and 1605, the Fugger newspapers circulated as the first precursors of the newspaper. These were handwritten news items published by the Fugger trading house in Augsburg. Beginnings and World War II The “Wienerblättchen” was Austria’s first daily newspaper and provided people with constantly repeating information for the first time on August 3, 1783. A series of titles followed, which significantly changed the value of print media at that time and today. Accordingly, the variety in these early days was particularly large, characterized mainly by small, regional papers. It is hard to believe that between 1848 and 1918 there were about 2200 newspapers in 20 different languages in Austria. Just as today, the editions of a newspaper varied regionally back then, suggesting that the rapid transmission of information was already extremely important around the turn of the century. Today, only 34 daily newspapers are published in Austria. Until the beginning of World War II, the free press experienced the greatest upheaval of its time; from 1938, it practically ceased to exist. The first measures to shut down the still more or less free newspapers at that time began in Vienna on March 1, 1938. At that time, there were still 22 daily © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 M. Posset, Media Economics in Austria, https://doi.org/10.1007/978-3-658-42195-3_2

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newspapers in the Viennese press landscape, one year later only twelve, another year later nine, and on March 1, 1945 only four. The former Austrian journalist Kurt Skalnik commented on this decline in newspapers as follows: “National Socialism made a clean sweep. It was like Haydn’s Farewell Symphony, in which one instrument after another falls silent, one light after another is extinguished.” Accordingly, journalists during the Nazi regime served exclusively as instruments of dictatorship. They had degenerated into propaganda tools whose only task was to bring National Socialist information to the people. Because information meant power and power meant control; therefore, the National Socialists had the central concern of influencing and directing the population through control over information. This approach is best described by the word propaganda. A look at Russia or China shows that this media control is exactly what is still happening there today. The state controls the media. “Journalists” publicly denounce government-critical parties on TV, deliberately spread untruths, and are nothing more than the extended arms of the regime. Although there are also isolated small media houses in these dictatorial countries that orient themselves towards independent journalism and work critically of the system; since the reach of these media has no real relevance, the regime apparently shows leniency. In Austria, the propaganda machinery led by Joseph Goebbels ceased to exist only with Germany’s capitulation at the end of World War II. Publishing houses had to close, printing companies ceased operations, and editorial offices disbanded. After the total “blackout” of German media, the legal basis for the reconstruction of the press system followed on November 24, 1944, whereupon journalism as a whole recovered. Today, there are three major print titles in Austria that dominate the market: The Kronen Zeitung and the free newspapers Heute and Österreich. In Germany, the offer is much larger, but the history is similar.

2.2 The Newspaper Market at a Glance Newspapers are sold in a free, privately organized press system, as is the case in Germany and Austria, on two markets: the reader market and the advertising customer market (see Fig. 2.1). Therefore, the term “coupled product” is used in this context for newspapers. This type of market influences the economic profit orientation. Two goals are relevant: • Goal 1: As many readers as possible should buy the newspaper. • Goal 2: As many advertising customers as possible should use the newspaper as an advertising medium.

2.2  The Newspaper Market at a Glance

35

Sales (€ million)

Growth rate (%)

9,000

– 0.3

8,000 7,000

– 0.6

6,000 5,000

– 0.9

4,000 3,000

–1.2

2,000 1,000

–1.5

0 2013

2014

Sales revenues

2015

2016

2017

2018

Advertising revenues

2019

2020

2021

2022

Growth rate

Fig. 2.1   Overview of the newspaper market

Information, education, or entertainment are the journalistic goals that serve the reader market as a means of economic success. For the advertising market, however, these goals are of an advertising nature. The aim here is to sell the newspaper to businesses as an efficient advertising medium for advertising messages. This results in problems on both sides. In both Germany and Austria, the newspaper market is more or less stagnant. Reasons for this are, on the one hand, demographic developments that newspaper publishers have to adapt to time and again. On the other hand, society is constantly changing, and publishers, like other traditional media, are struggling with changing media usage behavior. In general, interest in daily newspapers is declining dramatically.

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Similar trends can be observed in the advertising market. According to a study by statista.com, advertising and insert revenues of newspapers in Germany have fallen for ten consecutive years. In 2020, daily newspapers generated around 1.71 billion € from advertising and inserts, while weekly and Sunday newspapers’ advertising revenues amounted to around 111 million €, according to the Federal Association of German Newspaper Publishers. In comparison, the advertising and insert revenues of daily newspapers in 2009 were still at almost 3.7 billion € and more than 208 million € for weekly and Sunday newspapers. For the relationship between the reader and advertising markets, the following applies: “Both markets are economically intertwined and dependent on each other. High advertising revenues require a large number of readers, as the advertising price largely depends on the general and specific reach of the press organ. A large volume of advertising enables low subscription prices or an improved editorial offering, which in turn can attract additional readers.” (Schütz, 1994, p. 452)

2.2.1 The Situation in Germany A look at the German newspaper market reveals a division into various newspaper categories. These include, for example: • • • •

local and regional newspapers national newspapers weekly and Sunday newspapers street sale newspapers

What we also see when we look more closely at the absolute numbers is a decline in circulation. The figures for the base year 2010 were significantly higher in the segments of local, national, and weekly newspapers than the figures for 2018. For example, the number of national newspapers has dropped from ten to seven, and the number of local and regional newspapers from 329 to 312. At the same time, the distribution volume has decreased more significantly. In 2010, the total number of prints in all segments was about 25 million per day, while in 2018 it was only 18.4 million newspapers. This corresponds to a circulation decline of around 25% in eight years, and that is certainly something that should not be ignored. Digitalization plays a central role in this, and there is ground to make up in both Germany and Austria. Other factors include the spread and lifespan of mobile devices.

2.2  The Newspaper Market at a Glance

37

In the course of this change, media companies sought ways to incorporate digitalization into the print media sector and introduced the e-paper as one of the first products. However, even this technical innovation cannot stop the circulation crash of daily newspapers, although the digital format has been included in the calculation of daily circulation since 2012. In addition to the declining variety of newspapers and falling circulations, revenues are also decreasing. They correlate, among other things, with a loss of circulation and the resulting decline in sales revenues. An important aspect of this is the massive increase in the availability of free content and information on the internet. Another reason for the decline in revenues for daily newspapers—estimates suggest it amounted to more than 1.1 billion € between 2011 and 2018—is the decline in advertising revenues.

2.2.2 The Situation in Austria In 2020, there were 284 different newspapers in Austria. The daily newspaper alone reached half of the Austrian population in 2020 with 4.39 million copies per issue. In a survey from 2021, 45% of respondents stated that they regularly consume printed newspapers and magazines. Only 12% said they had never read a newspaper. In addition, websites of newspapers and magazines were popular—75% of respondents used them occasionally (statista.com,2022). Since 2010, however, daily newspapers have lost 21% of their readers, which is particularly noticeable in the case of Austria’s highest-circulation newspaper, the Kronenzeitung. From 2010 to 2020, its reach has decreased from 38.9% to 25.0%. This is a decrease of 36%, which can be applied as an example to the entire Austrian newspaper market. In contrast, the online use of newspapers has increased significantly over the past ten years. In numbers, this means an increase across all age groups from 28% in 2010 to around 40% in 2020. We see: opportunities are generally available, media companies just need to seize them and invest in them. Admittedly, this is easier said than done. But it is not impossible.

2.3 The Value Chain of Newspapers The value chain represents the interconnected business activities of the operational goods creation process graphically. According to the well-known economist Michael Eugene Porter, there are five main activities that explain the actual

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value creation process: internal logistics, production, external logistics, marketing & sales, and service. In the publishing industry, content is created in the first two stages of the value chain by journalists collecting knowledge through journalistic research. Sources can include authors, news, news agencies, photo agencies, journalists, and government agencies. While editorial work is based on editorial concepts, the first two production stages also provide services for the advertising market. In this context, the advertising department is responsible for the acquisition and placement of advertisements. To acquire advertising partners, the advertising department approaches advertising clients or agencies directly. The sold distribution, reach, and editorial environment are part of the quality of the advertising medium and should be explained to the advertiser or the advertising agency representing them. For this reason, large publishers have built complex support systems that offer advertising clients a range of services related to real products, such as target group analyses, almost free of charge. The third step consists of combining content and advertising to create a product graphically. Printing, the actual production, is a specialty of the fourth level. For large publishers, printing houses are an integral part of the company. The fifth stage encompasses the entire sale of the finished printed product, with distribution taking place through wholesale and retail, subscriptions, or other distribution forms such as reading circles. The value chain shows that a newspaper is a complex product consisting of interlocking individual services. It provides information and entertainment content in the lead market and advertising space performance in the advertising market.

2.4 The Separation Principle It is important to know: All print products have a dual character, which creates tensions between editorial reports and commercial advertising. The reason for this is their different objectives. This, in turn, affects the recipients, as they can only rely on the correct selection, preparation, and presentation of information if the report is as independent as possible from external influences. Therefore, there is the so-called separation principle, the purpose of which is to prevent possible effects of relationships such as by-products on editorial reporting. The separation of editorial and advertising ensures that newspapers and magazines are independent of advertisers.

2.4  The Separation Principle

39

Due to the increasing dependence of print products on advertising companies, however, the contribution of editorial advertising is increasing. As newspapers are increasingly financed by advertising, they are more motivated to blur the line between editorial and advertising. This development is problematic, as it must be of utmost importance to make the media financially independent of advertising clients.

2.4.1 Problem of Articles Disguised as Advertising Translated from English, Native Advertising means native or natural advertising. In this case, newspapers place the advertisement in a natural, usually editorial environment, the content of which adapts to this editorial environment, making it not immediately apparent to readers that it is an advertisement. And that is the special feature of this form of advertising and at the same time the problem, as the publisher’s actual content is deliberately mixed with the advertiser’s advertising. Although proponents of this form of advertising say that native advertising is always clearly marked as an advertisement, experience shows that the placement of the word “advertisement” alone is often not sufficient to recognize the advertisement at first glance. Therefore, critics often refer to this form of advertising as surreptitious advertising. Because the media law clearly states: “Announcements, recommendations, and other contributions and reports for which a fee is paid must be marked as ‘advertisement’, ‘paid insertion’, or ‘advertising’ in periodic media, unless doubts about the payment can be excluded by design or arrangement.” Example

Approach in the Editorial Office Ad salespeople must never bring editorial services into play in their work to close a deal with a business. In practice, this often looks like this: The ad salesperson negotiates with a business person about the size and price of the ad and brings an additional editorial article into play as a last sales argument. Following the motto: “If we can agree on this price, there will be an editorial report for free.” This approach is prohibited by media law, as only the editorin-chief alone may decide on the selection, form, timing, and linguistic design of the content. However, in daily practice, it often looks different. ◄

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2.4.2 What Does This Mean for Journalistic Practice? 

The increasing merging of advertising and editorial content turns the journalist into a multimedia editor. It is becoming increasingly difficult to place content that is of high quality but only appeals to fringe groups in the mass media. Traditional jobs (especially permanent positions) in print/radio are becoming fewer, while the trend is significantly more positive in the online sector.

Due to lower advertising revenues and financing difficulties, editorial offices are shrinking. Only larger companies can withstand the pressure of the market. Many small media organizations can no longer finance themselves and leave the market. This leads to market concentration with a few larger enterprises. Different developments arise from this concentration and financing difficulty. In many media companies, journalism is no longer the main source of income (Example: Washington Post/Owner Amazon). Nevertheless, media companies must generate profits or cost little as subsidiaries. Therefore, hardly any new journalists are hired, and existing editorial offices are downsized. Many young journalists have to work as freelancers. For them, a side job is often obligatory, and a life as a journalist is hardly affordable. On the other hand, employed journalists work under greater time and publication pressure because the workload is increasing, while time resources naturally do not. As a result, journalists often cannot research thoroughly enough, which of course affects the quality. Another problem: If a media house works with fewer journalists, their opinion carries more weight. This is bad because the diversity of opinions is what makes journalism. Another disadvantage is a certain dependency on advertising companies, which, as mentioned above, increasingly interfere with editorial work and thus drive journalism into dependency. If there is no separation between editorial content and advertisements, this restricts journalistic freedom. The dependency of these two markets (advertising and audience market) and the associated conflicting goals are, by the way, one of the two main economic problems of newspapers. The second is the high fixed costs for the editorial office, which a media house cannot reduce without losing quality.

2.5 Challenges for Newspapers We can confidently assert that the newspaper market has been in the greatest crisis of its history since the turn of the millennium, while in earlier years and over a long period of time, it represented a successful business sector. Newspapers were

2.5  Challenges for Newspapers

41

considered a cultural institution of society and were indispensable in everyday life. Today, newspapers generate the majority of their revenues through the sale of advertising materials. How long this will continue to work is another question, as the internet, in particular, has a lot to offer in terms of advertising opportunities. Already, the internet claims the largest share of advertisements for itself. Especially in Austria, most media houses recognized the potential of the internet much too late and missed the point of developing an economic model. Newspapers tried for a long time to protect their business models against new web providers, instead of strategically shifting their strong brands to the internet (Rinsum, 2006, p. 15). This is probably the main problem and the reason why the largely saturated newspaper market is struggling so much with economic changes. An additional dependency on advertisers arises from the advertisement-circulation spiral. This means: The higher the circulation of a title and thus the reach, the more attractive the newspaper is for advertising companies. As a result, newspapers place more advertisements, leading to higher advertising revenues. Media companies can invest additional profits in measures to improve quality, such as expanding the editorial department. However, the advertisement-circulation spiral primarily has a positive effect on market leaders, as they are already more attractive to the advertising industry due to their high reach.

2.5.1 Changed Media Usage A trend that goes hand in hand with the loss of reach in the newspaper industry is the changed use of media. While media usage is generally increasing, it is decreasing for daily newspapers. In particular, young people between the ages of 14 and 29, who are often the target group of newspapers, are moving further and further away from newspaper media (Altmeppen et al., 1994, p. 78). According to a survey from 2021, around 39.74 million people in the German-speaking population read newspapers several times a week. In 2017, there were almost 6 million more. The number of people who have never read a newspaper has been steadily increasing in recent years and reached a record high of around 9.93 million in 2021. According to the Statista Global Consumer Survey, books are the most popular print medium and were purchased by around 38% of respondents last year. Magazines lag behind with a share of around 33% of respondents. Studies show that most media, including newspapers, have declined in recent years when considering the usage duration of specific print media. Many traditional media can now also be found in digital form. The availability of online newspapers has increased significantly with the advent of the internet

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around the turn of the millennium. In 2003, there were already 631 online offers. By 2019, another 67 were added. The pandemic has significantly accelerated this development, shifting user behavior even further towards the internet.

2.5.2 The Internet as a Solution Approach 

Media managers who still refuse to embrace any digital strategy are putting their publishers in mortal danger.

Even though paper enthusiasts swear by the tactile experience, it is continuously losing importance. If this continues, we can assume that the daily printed newspaper will soon become a niche product. The obvious advice for publishers is therefore to sell digital subscriptions and direct users to homepages and apps. This has also worked in print in the past. In fact, those media houses that have early adopted digital subscriptions based on the print loyalty model are the most successful in the new information world. They invest in quality journalism with research and strong authors to meet the needs of their readers, but look for new competitive situations. Spotify or Netflix subscriptions are considered benchmarks in terms of price and userfriendliness. On the other hand, more than two-thirds of people who use digital journalism do not go directly to offers or websites, but use third-party platforms. In 2020, 84% of young users chose this path, as documented by the Digital News Report 2020. However, at least in Germany, only about one in ten was willing to pay for online journalism. This proportion is significantly lower than that of Scandinavian media companies, but not significantly below the global average. But, and this is important, it is increasing.

2.6 Processes in Newspaper Production In the publishing industry, publication production refers to all steps associated with the physical production of a publication product. This also includes, in a broader sense, the planning, coordination, and control of manufacturing processes—after all, production refers to an area of a publishing house. The publisher’s production consists of six parts, which sometimes interact with each other.

2.6  Processes in Newspaper Production

43

2.6.1 Workflow in the Editorial Office At the beginning of each newspaper edition is the editorial conference, so that topics within the editorial office do not overlap and the various departments can coordinate with each other. In addition, the editors determine the scope of the upcoming edition and, if necessary, set a thematic focus. Often there is the socalled “sheet criticism”, in which the editors discuss the previous edition. Spelling mistakes, content deficiencies, or unfavorable layouts can be part of the sheet criticism. Usually, the editor-in-chief records all points raised and implements them into a page plan. The selection of images is usually done in a separate image session with the photo editor, graphic designer, department head, and editor-inchief. Today, the classic department boundaries are increasingly disappearing, as editorial offices increasingly work across departments. The heart of the modern newsroom is a common news desk where journalists collect news. Some editorial offices publish some articles online in advance, which is known as the first-online principle. The editor evaluates and selects the appropriate news, checks contributions from freelance journalists for facts, corrects style, spelling, and grammar errors, shortens or lengthens the contributions, and formats them according to media standards. In a small editorial office, the editor selects the images himself. Large magazines and daily newspapers often have their own photo editors who select photos for articles from databases or commission freelance photographers.

2.6.2 Workflow for Daily Newspapers First, editors categorize current events and accompanying materials, discuss them in editorial meetings, and make selections. They then focus on external contributions, primarily from news agencies, freelancers, or correspondents. The finished article ends up in the editorial system and goes through proofreading or final editing before printing. Immediately before approval, the journalist checks the page and article layout, page numbers, and whether all articles are in the correct sections. Editorial offices, especially daily newspapers, are often under time pressure because content and layouts must be available by the print deadline to avoid delays in delivery. The editorial deadline indicates when the finished publication is ready for printing and no further changes are possible. In the past, there were almost exclusively full-time editors who created all contributions themselves.

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Today, the trend, especially for regional newspapers for cost reasons, is towards shared editorial offices. In the German editorial office, editors are responsible for all activities from research to the print-ready article. In the United States and the United Kingdom, a distinction is made between “reporters” and “editors”. One takes care of research and writing, the other of reformatting the layout, editing, and meeting deadlines. Once everything is ready, it goes to print. The so-called web offset process is now the standard in newspaper printing. It usually takes place at night. In this process, the paper runs through a narrow gap between two rollers, which move against each other around their own axis and are responsible for the high print quality, including all images. These can be made of aluminum, polyester film, or paper. Therefore, a plate is required for each printing ink. This flat printing process offers very sharp image quality, and the individual pages are usually automatically cut and folded by the printing machine.

2.7 The Empirical Press Economy A basic prerequisite for empirical news economics is the collection of relevant data. Such collections are available in Germany through well-developed press statistics and circulation and reach research. Circulations for print media have been audited and documented by the Informationsgemeinschaft zur Feststellung der Verbreitung von Werbeträgern (IVW) since 1949. Various media research institutes have been collecting data on the reach of newspapers since the mid-1950s. These include, for example, the Arbeitsgemeinschaft Media-Analyse (AG.MA) in Frankfurt or the Institut für Demoskopie in Allensbach with the Allensbacher Werbeträger-Analyse (AWA). Press-economically relevant data from the field of press statistics emerge from different sources. For example, the Bundesverband Deutscher Zeitungsverleger (BDZV) publishes such figures and information annually. The Bundeszentrale Zentralkommission (ZAW) of the advertising industry collects and publishes information about the scope of advertising and its delivery to individual advertising media (Pürer & Raabe, 1996, pp. 201–203).

2.8 The Competitive Situation The competition between media has both journalistic and economic aspects. Journalism incurs costs, so the concept of journalism must be marketed. In addition, economic framework conditions not only limit journalistic creativity but

2.9  The Cost Structure

45

also financial viability. The decisive factors for this are the market position of the medium on the one hand and the corporate policy on the other. This economic background ensures optimal work results when journalistic products are produced efficiently. This means: The lowest possible expenditure of overall economic resources should result in a production outcome that best meets the needs of the readers (Mast & Aigner, 1994, p. 130). As recent years have shown, marketing for newspapers is becoming increasingly important, as readers can no longer be convinced by editorial content alone. Publishing houses that have not yet recognized and used the potential of the internet are at a significant disadvantage in competition with other newspaper publishers that do use these potentials. As we can see, newspapers are not only in competition with other media but also with other newspapers among themselves.

2.9 The Cost Structure Daily newspapers have fixed and variable costs. The costs of producing a newspaper do not depend on circulation but on the scope. This pattern applies only to a limited extent for the advertising department. The variable cost factors are the number of editorial contents and their scope. For the advertising department, newspapers become more attractive as advertising media with increasing circulation, and the number of advertisements to be processed also increases slightly, so that the independence of production costs from circulation is limited, as the motivation of business people to advertise increases with a larger circulation. The scope of the newspaper does not play a role in this. The print preparation is independent of the circulation, while the printing itself depends on it. The costs for preparation and printing depend on the scope of the newspaper. In contrast, distribution costs are strongly dependent on the circulation of the newspaper. Dealer and shipping costs vary depending on the quantity, while the postal delivery service also includes the size of the newspaper in the cost calculation. In addition to the costs for creation, printing, and distribution, the publisher incurs cost centers for marketing, the building, and personnel. The costs for the editorial staff are covered by the creation costs.

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References Altmeppen, K.-D., Löffelholz, M., & Pater, M. (1994). Innovationen und Investitionen. In P. A. Bruck (Ed.), Print unter Druck. Zeitungsverlage auf Innovationskurs. Verlagsmanagement im internationalen Vergleich (pp. 37–195). Verlag Reinhard Fischer. Mast, C., & Aigner, W. (1994). ABC des Journalismus: Ein Leitfaden für die Redaktionsarbeit (7th edn.). Ölschläger. Pürer, H., & Raabe, J. (1996). Medien in Deutschland: Presse (pp. 200–230). UVK Medien. Rinsum, H. V. (2006). Wie weit lassen sich Printmarken dehnen? (Jahrgang 44, Nr. 18). Werben und Verkaufen. Schütz, W. J. (1994). Pressewirtschaft. In E. Noelle-Neumann, W. Schulz, & J. Wilke (Ed.), Fischer Lexikon Publizistik Massenkommunikation Fischer Taschenbuch. Statista. (2022). Anna-Sofie Turulski: Statistiken zu Zeitungen und Zeitschriften in Österreich. https://de.statista.com/themen/3515/zeitungen-in-oesterreich/. Accessed 20 June 2022.

3

Television

3.1 The History of Television In Austria, a first television test program started in 1955, although the technical prerequisites for television were already in place in the 19th century. In Germany, the first test images were broadcast around 1929, and the first proper television program was transmitted by the German Television Broadcasting Corporation in 1935 in Berlin Witzleben, even offering a regular program. The problem at that time: A television set was an expensive purchase, which led the German Reichspost to set up “television parlors” where several people could watch a program together. The main reason for this was the National Socialists’ realization that television had great propagandistic potential, and they accordingly drove developments forward quickly. The first major event that the Reichsfunk broadcast live on television was the 1936 Olympic Games. After the Second World War, however, it was initially radio that was used as the new mass medium. A similar approach was observed in Austria a few years later. Because even here, most people could not afford television sets in the mid-20th century. Therefore, provisional stations in Vienna, Graz, Linz, and Salzburg began broadcasting television programs three times a week for 30 minutes from August 1, 1955; specifically between 5 and 6 pm, so that interested citizens could watch the programs in the shop windows of radio stores on their way home from work. The first program broadcast on Austrian Radio was a twelve-minute concert recording of the Vienna Philharmonic from Belvedere Palace. This was followed by the broadcast of the opening of the rebuilt Vienna Burgtheater and the Vienna State Opera. Even the “Zeit im Bild” has existed since 1955, initially only as an irregular broadcast. It was not until the beginning of the 1960s that the popular news program received its fixed time slot at 7:30 pm. © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 M. Posset, Media Economics in Austria, https://doi.org/10.1007/978-3-658-42195-3_3

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3 Television

The program title “Zeit im Bild” goes back to television journalist and later ORF Director General Teddy Podgorski, who, according to his own statements, initially did not dare to suggest the title because “it sounds so old-fashioned.” Regular television operations began in Austria on January 1, 1957, with only one program, FS 1, and from 1959 on all weekdays, thus triggering the new mass medium’s successful run and even competing with the well-established cinema. Considering that a television set at that time cost about four times an average monthly income (for which we can buy a used car today) and that there were about 100,000 television sets in Austria by the end of 1959, these are quite impressive figures and evidence of people’s great interest in television as a medium in general. The second television program followed with FS 2 in 1961, which also introduced color television to the market. Since 1974, ORF has been a public service broadcaster with a program mandate. In addition to the “basic supply” mandate and a legally defined program mandate, maintaining political and economic independence is one of the other essential tasks of public service broadcasting. After public service broadcasting had held a monopoly position for decades, the introduction of private television and the emergence of the dual broadcasting system in the early 1980s led to a completely changed situation in the European broadcasting landscape. The dual broadcasting system is the simultaneous existence of private and public service broadcasting. As is often the case, Austria was somewhat slower with private broadcasters than other countries and remained the last country in Europe without free-to-air private television until June 1, 2003. On that day, ATVplus launched as Austria’s first terrestrial private broadcaster. A year later, Puls-TV followed in the greater Vienna area, which was renamed Puls 4 in 2008. The third private broadcaster in Austria went on air in December 2007 under the name Austria 9 TV. Today, TV channels such as Sky Austria, ProSieben Austria, Sat.1 Austria, Servus TV, or W24 complete the landscape of Austrian private broadcasters. As for usage, television had by far the largest share of all used moving image offerings in 2020, with 69 percent. The radiance of this number is clouded by the approaching and universally feared digitization. The forecast: By 2030, the minute volume of linear television is expected to shrink from 1.46 billion in 2019 to 1.38 billion minutes. At the same time, the minute volume of non-linear moving images is expected to increase significantly. By linear television, we mean the traditional television via the ongoing television program. Non-linear television is everything else, such as streaming, videos on social media channels, or media libraries.

3.2  Television Production

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3.2 Television Production TV or television productions are program contents that are produced for broadcast on television. This includes not only TV films and TV series but also formats that appear in various TV shows such as cultural programs, talk shows, and magazines. Television production is usually a multi-stage process, consisting of the following points: • Concept: Current events, trends, and ideas are transformed into a possible broadcast format. This concept is initiated by television broadcasters, authors, and producers. • Selection: The responsible staff members create an expose for the production project, which is subjected to a review for implementation. • Production in the proper sense: This includes the creation of a treatment, the writing of a screenplay, and the shooting. • Post-production: The editor cuts the material created during the shooting and processes it further. Special attention is paid to sound and image color in postproduction. Special effects are also part of this work step. In the end, a broadcast-ready version should be created from the raw material. • Broadcast handling: The show is broadcast. Different providers can take over the individual stages of the process. This determines whether it is an in-house production, a commissioned production, an external production, or a co-production.

3.2.1 In-house Production In the case of in-house production, all phases of the production process are the financial and administrative responsibility of the broadcaster. A typical example of in-house production is the news. The prerequisite for this is that the broadcaster has the complete infrastructure to create and broadcast the program. In-house produced formats are becoming increasingly popular with television broadcasters and are modeled on the American success stories—just think of Netflix productions. Therefore, German and Austrian television broadcasters also invest in formats of this kind. In-house production not only represents an important part of the program but also offers potential as an additional source of income for the broadcasters. For example, ORF invests around 100 million euros

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annually in the film and production location Austria. In numbers, this is 13,574 hours that ORF broadcasted in-house produced programs in 2015.

3.2.2 Contract Production In contract production, broadcasters outsource individual production steps to various external service providers. For example, a broadcaster can outsource the technical production while taking care of the editorial work themselves. Sometimes, a broadcaster outsources the entire production process. In such a case, a so-called full-service provider takes over the production process but can, in turn, outsource individual parts, such as post-production, to other service providers. By outsourcing production, broadcasters can save production costs, as they do not have to finance a production studio, for example. Task distribution is also not uncommon in this production variant, as different service providers specialize in different parts of the production. For example, there are service providers whose specialty is special effects or various genres. Service providers can thus better utilize production resources, especially when working for multiple clients. In addition, external service providers are generally more innovative, as they are more exposed to the market and must react more quickly to trends. The risk in outsourced production for a broadcaster lies in the loss of know-how, which can lead to a certain dependency on external service providers in the long term. Due to the price pressure created by the many different service providers on the market, it can happen that production companies save on editorial or technical quality. In the end, the broadcaster has little influence on the quality of the delivered contributions. Most broadcasters are involved in the production company itself or are the owners of it. In this way, they can use resources more effectively by producing services within their organization while also offering services to third parties. This model is particularly attractive for public broadcasters, as they can only operate to a limited extent in the market and want more control over the content of outsourced productions. Outsourced production is of different importance for private and public broadcasters. While in commercial broadcasting, only financial considerations play a role in outsourcing the production process, special rules apply to public broadcasting due to its legal form as a public-law institution. The limits for public broadcasters lie in the program area, which concerns the core of public broadcasting. Due to their basic supply mandate, ARD, ZDF, and ORF place high demands on the quality of culture and journalism.

3.2  Television Production

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The danger with outsourced productions is that increased contract productions can become a journalistic mass product. If, for example, only one service provider provides news for several broadcasters, diversity can be affected.

3.2.3 Third-Party Production Third-party productions are essentially complete television formats or films. In this case, a broadcaster receives a license from a rights dealer to broadcast a specific program. The broadcaster has no influence on the content of the programs, as they are not involved in the production process. Good examples of this are foreign television series and films. The acquisition of feature film licenses plays a particularly important role in the program design of private broadcasters such as ProSieben (Seidel & Libertus, 1993, p. 132). Germany and other countries mainly import television programs from the United States. Initially, the purchase of license programs was a relatively cost-effective alternative to in-house and contract production for broadcasters. With the introduction of private broadcasters in the 1980s, the situation changed, resulting in not only increased demand for licenses but also higher license prices.

3.2.4 Co-Production In a co-production, several broadcasters and service providers are involved in the production. Logistical or financial joint ventures can minimize production costs and risks. On the other hand, all parties involved benefit from the success of the program and have certain rights to the product. Collaborative production is common in complex documentaries, cinema, and television films. All collaborative production processes can also be created in-house or as outsourcing work, so they are, strictly speaking, a subset of in-house and outsourcing production.

3.2.5 Special Case: User Generated Content A special case is user-generated content. Accordingly, there are television channels that broadcast content created by viewers. Examples of this include individual contributions in home video shows. The Internet makes it easier for television channels to access user-generated content.

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3.3 Television Advertising 3.3.1 History Advertising films have existed since the 20th century. Initially only in cinemas, from the mid-1950s they were in almost all households. German television broadcasted the first commercial on November 3, 1956. Initially, only large companies could afford commercials, but this gradually changed. By the mid-1960s, more than half of West German households had a television. In the early 1970s, the number of households with a television had increased from 1.1 million to 1.4 million annually, leading to more and more commercials. Advertising films have always adapted to current situations and individual target groups. Therefore, we can now experience historical and sociocultural events through old commercials. In general, advertising has a significant influence on us humans. This was also recognized early on by the National Socialists, who used audiovisual media to convey their ideology since 1933. Many household and household appliances were advertised in the 1950s to tell the same storyline of a woman behind the stove. In 1969, Germany produced 4,000 TV and more than 250 cinema commercials. From the beginning, advertising with informative and entertaining content was the most popular. Advertising costs have steadily increased over the years; in 1971, the German economy invested more than five billion euros in advertising. Between 1979 and 1994, advertising costs rose from ten billion euros to 26 billion. In 2000, advertising investments reached 33 billion euros, and between 2000 and 2008, advertising investments amounted to 273 billion euros—four times as much as in the 1970s. Therefore, large sums are invested to bring products, services, and companies to the market and, in the best case, to eliminate competitors (Urbanuncut, 2021).

3.3.2 The Placement of Advertising In Germany and Austria, classical television advertising in public broadcasting began with the advertising blocks. These are several commercials that are broadcast within a fixed time slot in context. They are usually integrated into an attractive supporting program and are ideally broadcast between 5 pm and 8 pm. (Mayer, 1997, p. 270) The so-called block advertising is the basic advertising form of public and private broadcasting. The advantage of these advertising blocks lies in the protec-

3.3  Television Advertising

53

tion of program parts from excessive fragmentation by the interruption of several commercials. As a result, the viewer’s context is lost. Broadcasters only deviated from this principle with the introduction of private television (Pichinot, 2005, p. 164). The media law has changed the placement and format of commercials, as commercial television stations are granted more liberal advertising opportunities. The model was the “Commercial Breaks” in the USA and Great Britain. This so-called advertising interruption consists of at least one commercial within a program. In most cases, two or more spots run one after the other, and legal restrictions also apply. Private television has introduced several variants for advertising placement, some of which are also used in public broadcasting to respond to the viewer’s zapping behavior. In addition, time-shifted television allows advertising blocks to be easily skipped. The following advertising formats exist: • Countdown spots: The program continues when the countdown seconds, which show how long the advertisement will last, have run down. • Advertising in split screen: The advertisement runs simultaneously with the program through screen splitting. • Tandem spot: Consists of two related elements within an advertising block, separated by at least one commercial. • Flankers: They are placed before or after a broadcast.

3.3.3 The Cost of Television Advertising There are very different offers on the market. The following overview shows various slots on different channels. • • • •

100 spots on a niche channel, each spot 20 seconds—around 2500 Euros 100 spots on a private channel, each 20 seconds—around 4000 Euros 30 spots on a regional channel, each 20 seconds—around 12,000 Euros 7 spots on a public broadcaster, each 20 seconds—around 70,000 Euros

This (exemplary) overview shows how diverse the offer is in this sector. Advertising on public broadcasters rarely costs less than 100 Euros per second. If you want to place a 30-second spot on ARD or ZDF during prime time, 70,000 Euros are more the rule than the exception. Depending on the rating and placement, for example in close proximity to the main evening program, this price can quickly increase

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fivefold. If you advertise, for example, in close proximity to the final of the soccer World Cup in which Germany participates, the advertiser pays over 300,000 Euros for the commercial. If you want to pursue a multifaceted approach and advertise on several channels, you need a budget in the millions. Small businesses usually cannot afford large TV spots. Advertising on regional or extraordinary utility channels, on the other hand, makes sense with a legitimate cost-benefit ratio. Daily Progression of Advertising Costs The progression of advertising costs on television, using the example of ORF1, is characterized by a slow price increase from the morning hours. From 6:00 pm (beginning of prime time), the price then rises sharply and reaches its peak between 9:00 pm and 10:00 pm. On ORF2, this happens earlier, between ZIB and the weather forecast. Until shortly before midnight, the price remains relatively high, after which it quickly settles at the minimum (end of prime time). On weekends, prices are usually higher than on weekdays. According to the 2013 advertising schedule, ZDF starts its advertising slots between Monday and Friday at 4:15 pm with around 400 euros per second before the Heute news program and around 300 euros before the daily series. Around 6:00 pm, the price increases before the daily “SOKO” broadcasts to 450 to 600 euros. Before the “Heute” broadcast at 7:00 pm, an advertising slot per second costs between 700 and 1500 euros, depending on the season. Before 8:00 pm, the price level settles between 640 and 765 euros. Cost Development over the Year From September to June, advertising revenues, advertising expenses, and advertising prices are relatively constant, with particularly high advertising around Christmas, resulting in slightly higher prices. In July and especially in August, during the well-known summer slump, there is a total collapse of advertising revenues, and prices are correspondingly low. How Advertising Evaluation Models Work For the advertising company, the individual probability of use is particularly important. On the one hand, the advertising medium weight indicates the mediaweighted probability of use, i.e., the advertising contact chance. The contact per advertising medium or the combination of advertising media is determined (convolution, simulation). These are defined differently in each media category. In television, this is at least seven consecutive seconds of use per average advertising block of an average half-hour.

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In addition, the effect curve of an advertising slot or advertising content is taken into account. This shows whether the frequency of contact increases the memory capacity. However, if the two-factor theory is included, too frequent repetition can lead to decreasing sympathy values due to redundancy. It is therefore necessary to find the right calibration between over- and under-steering. To find out how often a program was consumed, the usage frequency is calculated. The sum of all individuals results in the performance of the advertising media combination and thus the person weight. This reflects the individual performance value.

3.3.4 Essential Elements of Media Planning A company engages in corporate communication in the areas of public relations, product publicity, advertising, sales promotion, sales/service, for which appropriate communication planning is required. As part of this communication planning, an appealing media mix is selected, roughly distinguishing between the categories of mass media (television, radio) and individual media (promotions, symposia, trade fairs). Advertising planning consists of several elements. At the beginning, you need to define the goals of the advertising campaign and specifically its content and advertising message. Another factor is advertising budgeting—the budget available for advertising placement. This is followed by the choice of advertising media (decision between print ads, TV spots, banners), as well as inter- and intramedia selection, where you have to decide between the individual media types. Finally, the schedule of the advertising campaign is also crucial, which is characterized by temporal and geographical distribution and the advertising rhythm (continuous or interrupted advertising placement). u

Every advertising company should create a corporate communication, a communication planning, and finally a media mix.

Communication planning is composed of different influences. On the one hand, from public relations, as well as from product publicity and sales promotion. In addition, advertising or the image and offer, but also the cooperation, sales, and service determine corporate communication. In a media mix, the company must distinguish between mass and individual media, with sponsorship and employee training being added.

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3.3.5 Development of the Advertising Market Advertising competition is increasing and product competition is increasingly being supplemented or replaced by communication competition. In addition, new advertising media, advertising materials, advertising forms, and advertising combinations are emerging. The number of products to be advertised is increasing as a result of the individualization of consumption. The importance of the added value of products is increasing and the number of advertisers will continue to grow. The spectrum is expanding from sales advertising to corporate advertising/ PR. This means the following for media development: • • • • • • • •

Market share of television advertising is increasing Market share of radio advertising remains constant (excluding local radio) Market share of newspaper advertising is declining Consumer magazines stagnate, but trade magazines are increasing Significant growth in new advertising formats (e.g., direct mail, internet, etc.) Coupling and cooperation deals (vertical and diagonal concentration) New target groups (children, elderly) Advertising “makes” program, which means:

u

Content that is not interesting for advertising, i.e., content that generates low ratings or low sales figures or addresses “wrong” (old) target groups, will increasingly rarely find its way into the media. This carries the risk that, in the end, journalistic quality will suffer as a result.

3.3.6 The Relationship Between Media and Advertising Media and advertising are interdependent systems, mainly because advertising revenues often make up the largest portion of total revenues for media companies. In addition, advertising and ads often flow into the content. Advertising, in turn, needs the media as a platform to gain the necessary public attention and awareness. The audience, therefore, assumes a dual role: as a recipient of media and as a consumer of advertising. The currency in which the relationships between media and advertising are regulated is usually the rating. The more viewers, the more attractive for advertisers—high ratings are therefore not only in the interest of the media (contact cost degression—decreasing costs with increasing quantity) but also in the interest of advertising.

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3.3.7 The Ad-Circulation Spiral The model of the “ad-circulation spiral” describes the dynamics of market development for media and reflects the mutual dependence of media and advertising, or the recipient and advertising market (see Fig. 3.1). High reach and good ratings result in a consistently high market share, which in turn leads to high advertising revenues. As a result, more money is available for production, which has a positive effect on the quality and quantity of content. Good content makes the product attractive to the audience, the reach or market share can be increased again, which in turn leads to high advertising revenues. The spiral is thus set in motion again and again.

High demand on the reader market

Investment in the quality of products

Volume effect:

High circulation = high reach

low CPM

Price effect:

Reduction of the sales price

More advertising revenue

Greater attractiveness for advertising customers

Fig. 3.1   Graphic representation of an ad-circulation spiral

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3.3.8 The Reach Reach is defined as the percentage of people who use a medium within a certain time interval. We can distinguish the different types of reach as follows: • Individual reach: This is the reach of a single placement in an advertising medium (readers per issue, listeners per time unit) • Net reach: The reach of one placement each in several advertising media (adjusts the value of the gross reach for double & multiple contacts) • Cumulative reach: The reach of multiple placements in one advertising medium • Combined reach: The reach of multiple placements in several advertising media • Gross reach: The total number of contacts with a medium • Qualitative reach: The target group share of the reached persons • Quantitative reach: The number of people reached by a medium

3.3.9 How Is the Audience Rating Measured? The audience rating of a radio or television program is the percentage of receiving households, checked by random sampling, that are following the program at a given time.

Total number viewed of measurement impulses/n× Total measurement impulses of the program × 100 = Audience rating in% n = Sample or number of persons 1 viewed minute = 2 measurement impulses (for example, 20 viewed minutes = 40 measurement impulses)

3.3.10 The CPM The cost per thousand (CPM) is a key figure used as a calculation basis for determining the performance of advertising media. It indicates how much it costs an advertising company to establish advertising contact with 1000 recipients. The calculation looks as follows:

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CPM Television =Price of 30-sec¨ond Spot × 1000/Number of Advertising¨contacts (Viewers) Older media consumers are not as flexible and dynamic in their purchasing behavior as younger consumers, which is why CPMs are reported for older media consumers. Most older media consumers are already focused on familiar brands. In addition, they save more in the area of consumer and leisure goods, so they are not as eager to buy as younger semesters. Sometimes, explicitly addressing older customers is even feared to damage the image. The target group of the media is therefore usually the “young generation” aged 14 to 49. Further indicators for advertising placement are: • The reach (qualitative and quantitative) • The advertising suitability (consonance of advertising message and medium, image, target group reference, design possibilities, etc.), • Price-performance ratio (CPM, but also production costs).

3.3.11 Future Trend Addressable TV The announcement: Advertising as we know it today will probably soon be obsolete. The so-called addressable TV combines traditional linear television with digital advertising. In this process, the habits of the viewers are used, and advertising banners are displayed even during the ongoing TV program. Viewers can open subpages with the remote control to get more information about the advertised products. The advantages sound logical: TV viewers are specifically selected according to individual target groups, while the advertising, or its benefits, become measurable. We already know this from social media. The more precisely the ads are adapted, the more specific and smaller the target group becomes. At the same time, the chances of success increase that a viewer will buy a product, as mainly TV viewers who are interested in the products are addressed.

3.4 The Value Chain for Films and Film Rights The production phases are expensive, while revenues are usually only generated relatively late. As a result, revenue flows do not develop parallel to expenses, which is why the production of a film is associated with a high risk: one can

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never be sure whether the film will achieve the expected result. Once the film is produced and promoted, it costs almost nothing more. The film can be exploited multiple times without incurring additional costs; popular films can also generate large profits through rights sales. Furthermore, we can consider film production as a typical project management or project business. Producers and actors work together towards a defined goal and within a limited time frame. The joint project is the film. The production phases: • Pre-Production (Producer: Financing, Collection/Review of Archive Material) • Production (Producer: Script, Direction, Recording, Controlling) • Post-Production (Service Provider: Editing, Effects, Titles, Prints, becoming increasingly important) • Rights Management, Library/Asset Management (Rights Holder: Rights Sales, Stock Management) • Packaging, Marketing, Distribution (Dealer: Advertising/Promotion, PR, Sales/Rental, Dubbing, etc.) • Delivery, Screening, Playback (Cinemas/Broadcasters: Cinema Screening, Television Broadcast, Video Release, and so on) Example using Lord of the Rings: Film production: • • • •

Preproduction: Engaging producer, actors, or in short: the staff, financing Production: Screenplay, film sets, shooting Postproduction: Editing, dubbing, film music, digital post-processing Rights Management-Library/Asset Mgmt: Sale of film rights, merchandise, who can advertise with the logo? Who can produce toys, clothing, swords, and the like? • Packaging, Marketing, Distribution: Advertising (trailers, making-ofs, premieres, interviews, and so on) • Delivery: Screening, premiere in the cinema Film rights: • Cinema screening: Launch in cinemas worldwide (time-delayed) • Sales and rental: DVDs (different versions, additional features), video stores • Pay-TV providers: Film is shown on pay-TV

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• Free-to-air television/Cable Syndication: Free-TV Archive exploitation: Film/scenes are shown again and again years later

3.4.1 The Value Chain for the Television Market Before viewers can watch their television shows on TV, they must first go through a multi-stage process. This process is also referred to as the value creation process or value chain. In this context, value creation is considered the sum of the multi-stage processes in which values are created. In our case, this is a media product or a TV program. The value chain is the path that this media product takes from the supplier through the producer to the consumer and consists of several stages. • Investment/Program production: Make-Or-Buy? • Programming/Broadcasting: Optimal broadcast time? • Distribution • End devices (Recipient/Consumer) At the production stage, content is created or purchased. At the second stage of the value chain, these individual programs are combined by the program organizers (television stations) into overall programs or program packages. The third stage of the chain is distribution or program dissemination. In this stage, content is transmitted to the recipient via various distribution channels. This can be done using terrestrial, broadband cable, satellite, internet, or mobile communication. At the end of this chain is the recipient or television viewer.

3.4.1.1 The Extended Value Chain for the Television Market • Procurement: Personnel (Trained personnel or do you train your own personnel?, Rights, Exchange (Synchronization market) • Production: In-house or co-production? (Creative personnel, production equipment, technical services) • Program(-ming): Planning, Broadcasting, Television (Market and media research, broadcasting technology) • Distribution: Terrestrial, Cable, Satellite (Operators) • End devices: (UE markets, antenna manufacturers/craftsmanship) • Recipient/Consumer: (scarce resources—time, money, attention)

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3.4.1.2 Program Production In program production, content is created or retrieved and later displayed on the recipient’s end device. The production process can generally be divided into three areas: • Content production • Content provision • Content marketing Content production, loosely translated, means the production of content, as content is equivalent to content. Content production can, as described in more detail in the chapter “Television Production,” take the form of commissioned or in-house production. In the case of outsourced production, the program organizer commissions the respective production company to produce various content or acquires the rights to existing individual broadcasts. These steps are particularly common for small TV companies, as this variant is cheaper than in-house production. Large television stations, on the other hand, also produce themselves. In addition, coproduction, co-financing, program acquisition, and pure program purchase can also be referred to as procurement of other types of program content. Content provision refers to the compilation of content into programs, which is also the actual task of television stations. The third type of production is called content marketing. This involves the marketing of television programs for the purpose of advertising financing. Production content can be divided into three types: • fictional entertainment • non-fictional entertainment • information After the content has been produced, the television stations must then put it into the correct form in the next step. A television program compiled for the viewer is created from several individual broadcasts.

3.4.1.3 Programming On the second level of the value chain is programming; programming is at the center of the television market. The program organizer must assemble the previously produced individual programs under a corresponding program brand into a television program, as described by Viktor J.F. Berger (2008, p. 56). The program organizer is often referred to as a television broadcaster. The differences in television programs are as follows:

3.4  The Value Chain for Films and Film Rights

• • • •

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the full program the specialized program the window program the program package

The full program offers a comprehensive range of content, with a predominant part of the program consisting of information, education, advice, and entertainment. The specialized program, on the other hand, usually offers only similar program content, while window programs are broadcast programs that are inserted into separate broadcast programs. In the case of program packages, several programs are transmitted simultaneously. In Germany, there are more than 1000 programs, with one in five households being able to receive over 150 programs (SevenOne Media, 2010). As we already know, programs can be divided into public and private television broadcasters. All channels compete with each other. The number of viewers of a program and the duration of their viewing participation determine the viewing volume of a program, which is then related to the total viewing volume of the same period. This gives the market share of a program in the television market. Private broadcasters, in particular, must fight for their viewers, as the viewer share is an important metric in the advertising industry. Therefore, the program must be geared towards the viewer and tailored to their needs. Entertainment formats usually lead to good reviews. The more viewers a broadcaster has, the better it can compete in the advertising market. In 2008, the ProSiebenSat.1 Media AG channel family had a total advertising market share of 41.1 percent and total sales of 3,751.1 million euros. For comparison: The total advertising market share of the RTL Group was 43.2 percent and total sales were 3,929.6 million euros. ARD and ZDF have the highest values, with almost 100 percent, in terms of the number of people who can receive programs around the technical infrastructure. Larger private broadcasters show the same results for satellite and cable transmission, but for terrestrial transmission, the value is just under three-quarters, as they are not available nationwide (Berger, 2008, p. 124).

3.4.1.4 The Distribution/Program Distribution The third stage of the value chain is program distribution. The television programs previously compiled by the program organizer must be delivered to the viewer via the three classic transmission paths. These transmission paths are called terrestrial, broadband cable, and satellite (Schnitzler, 2008, p. 8).

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The oldest transmission path is terrestrial. Television signals are initially transmitted as analog or electromagnetic waves via electromagnetic carrier frequencies using the PAL method. (Berger, 2008, p. 65). Transmitting antennas convey information that arrives at an antenna receiver. The transmission medium for terrestrial distribution is air. From the receiver’s perspective, terrestrial transmission has the disadvantage that the number of programs is relatively low. Notable advantages are the one-time investment in a receiver and portability. The second transmission path is broadband cable, which was introduced in 1984 with four experimental cable projects. They are considered the starting point for the development of cable networks in Germany and initiated the privatization and commercialization of broadcasting. In comparison to terrestrial transmission, cable reception has a higher program capacity, and the use of triple broadcast, interactive, VOD, and pay-TV services is possible. The third classic transmission path is satellite. It has the largest program capacity and is superior to the two previously mentioned transmission paths in terms of program selection. In addition to technical services, cable network operators also offer content. The most important satellite operators are SES Astra and Eutelsat. Furthermore, new alternative distribution channels have emerged as a result of digitization. These include the transmission of television signals via the internet (IPTV/DSLTV) and mobile communications (DVBH). Example using Starmania

When planning a new show, it must first be decided whether to buy the broadcasting principle or develop it in-house. Subsequently, those responsible must clarify the legal situation and answer questions such as: Does the broadcaster violate copyrights, for example, of DSDS, by producing “Starmania”? In addition, the necessary personnel must be organized. Do the employees have the appropriate qualifications, or is external personnel required? Moreover, the broadcaster must cast presenters, find jury members, and raise the necessary capital. Once the modalities are clarified, production begins. A live format like Starmania is not produced all at once; the production process stretches over several weeks. During this time, sufficient technical equipment and know-how must be available (cameras, sound technology, etc.), and a suitable location must be rented. Programming, distribution, and the choice of the end device occur almost simultaneously with the production in live formats. Audience research, scheduling, the choice of transmission technology, and other decisions that usually only take place after production must therefore already be made during procurement. This is the only way to ensure that the scarce resources of time and attention of the recipient are optimally adapted. ◄

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3.5 The Streaming Market 3.5.1 What Is Streaming? Streaming refers to a method of data transmission that allows users to view content not only after the complete transmission but also during the transmission. This means that videos and audio recordings are played directly and usually almost in real-time from the provider’s server, depending on the performance of the existing network. Similar to on-demand content, streaming platforms provide digital content on demand. Content is available regardless of when the user wants to consume it. In contrast to pure streaming, on-demand content can also be made available for download. Streaming has become an indispensable part of our lives, as the quality of data connections has improved and the corresponding hardware (smartphones) has become more widespread. The GfK Moving Image Study 2019 states that around 57 percent of Austrians aged 14 and over consume videos via internet-enabled flatscreen TVs. In terms of media library usage in Austria, ORF is number one with 43 percent of users, followed by ZDF with just under 16 percent and ARD with 14 percent. More popular is the use of video portals such as YouTube (71 percent), Amazon Prime Video (33 percent), and Netflix (27 percent) (see Fig. 3.2). As demand increases, there is also more and more streaming content, from web-TV broadcasts (Internet-TV) and videos, to audiobooks, live streams of cultural and sports events and press conferences, to webcam transmissions (weather, traffic conditions, and so on) or streams for monitoring remote experiments—in other words, everything that can be transmitted through data flows with images and/or sound is available to us for direct consumption on mobile phones, tablets, PCs, or smart TVs. All of this affects not only our economy, for example in terms of new business models, but also our leisure behavior, for example when planning a series marathon, the environment and climate, concerning energy consumption, as well as legal framework conditions (Upper Austrian Future Academy, 2020).

3.5.2 Business Models In the European Union, the use of offers for watching videos and traditional television programs via the internet is gaining popularity. From 2016 to 2018, the proportion of 16- to 74-year-olds surveyed in a representative Eurostat survey in 28 EU countries increased from 56 percent to 61 percent in the three months prior

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100% 90%

Not known

80%

Known but never used

70%

Known, but longernot used

60% 50%

Used in the last 4 weeks

40%

Regular users (1 - 4 days/ week)

30% 20%

Strong users (5 - 7 days/ week)

10% 0%

YouTube

Netflix

Amazon Prime Video

Fig. 3.2   Graphical representation of the streaming market

to the survey. Even in the largest economy of the EU, utilization rates are steadily increasing. Of the countries studied, the increase was strongest in the United Kingdom. In 2016, 65 percent of respondents reported using online video services, compared to 80 percent in 2018. This is also the highest share within the major EU economies. With a value of 70 percent in 2018, Spain follows ahead of Germany with 68 percent. In these states, the usage share has also increased relatively strongly by seven and six percentage points, respectively, between 2016 and 2018. The use of video services via the internet in Germany is also above the EU average and has even increased more strongly in absolute terms during the period under review than on average. (IW-Report 31, Büchel & Rusche, 2020). Streaming services range from short video clips, which are mainly uploaded by private users, such as those found on YouTube, to professional productions of series and films, such as those offered by Netflix. Streaming providers use various financing models (see Fig. 3.3).

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SubscriptionTtansactionalVideo-on-Demand Video on Demand (SVoD) (TVoD)

ElectronicSell-Through (EST)

Advertisingsupported Video-on-Demand (AVoD)

Media libraries of the public broadcasters

YouTube Facebook Joyn TV Now, etc.

ARD Mediathek ZDFmediathek

Provider

Netflix Amazon Prime Maxdome Apple TV+ Sky Ticket, etc.

Amazon Prime RakutenTV Pantaflix, etc.

Amazon Prime Google Play iTunes, etc.

Financial instrument

Subscriptions

Payment per single row

Payment per single purchase

Professional series Professional series Professional series and films (from Video content external TV studios and movies (mostly and movies (mostly from external from external and in-house TV studios) TV studios) productions)

Advertising finance Broadcasting fees

Shorter video clips Movies, series from private users, and other TV shows series and movies from ARD and ZDF from TV channels

Fig. 3.3   Financing models in the video-on-demand market

For shorter video clips, advertising financing is often used, with operators using monthly subscriptions, virtual single rentals, or purchases alongside professional films and series. There are often mixed forms of advertising financing and paid subscriptions. In some countries, consumers also have access to online offers from public broadcasters (IW-Report 31, Büchel & Rusche, 2020). Models in which the customer pays directly for the service can be divided into three variants. • Subscription-Video-on-Demand (SVoD), used by Netflix, for example, allows providers to choose from a wide range of films, series, and documentaries, while users pay a regular fixed price as part of their subscription. They can watch the content as often as they like. In addition, streaming services are dynamic, as new video content is added and existing content may no longer be available after a certain time. Users can also download video content for offline viewing. • Transactional-Video-on-Demand (TVoD), as operated by Amazon Prime Video, differs from SVoD in terms of the payment model and the usage limited to a single video content. It offers a payment for each individual view of the watched video content. Unlike the SVoD subscription structure, TVoD users are not tied to a fixed monthly fee but pay for each video content per transaction. Streaming is limited to purchased video products. In many cases, TVoD offers early access to movies that have just been shown in theaters.

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• In contrast to one-time rentals, users can download video content unlimitedly via Electronic-Sell-Through (EST), as offered by Google Play, for example. Analogous to TVoD, however, the right of use refers exclusively to the purchased video content. In practice, these financing models are combined by providers.

3.5.3 Ad-Supported Streaming Companies like Netflix and Amazon Prime Video, which have high market shares in the paid VoD market, play a minor role in ad-supported streaming (AVoD) in Germany (Goldmedia, 2019). However, Amazon announced in June 2019 the entry of its streaming service IMDb TV into the Europe-wide AVoD market, which has so far only been offered in the US market (Focus.de, 2019). So far, the German market for ad-supported VoD has been dominated by YouTube. Additionally, the short-video provider TikTok entered the Germany-wide AVoD market. It recorded rapid growth with reaching one billion users worldwide after just three years, increasingly attracting the interest of advertisers (Brien, 2019) (IW-Report 31, Büchel & Rusche, 2020).

3.5.4 Paid Streaming Providers that dominate the VoD market with ad financing have no or significantly less share in the Paid-VoD market. Amazon Prime Video accounts for 66 percent of the market in the EST and TVOD segment, while Google Play accounts for 13 percent (boerse.ard, 2020). In terms of user numbers, the German SVOD market is dominated by Netflix and Amazon Prime Video (IW-Report 31, Büchel & Rusche, 2020). Amazon Prime Video had the highest share of subscriptions in Germany in 2019 with 47 percent, but ranked behind Netflix (59 percent) in terms of actual user numbers with a share of 36 percent (Goldmedia, 2019). However, it should be noted that some users primarily purchase the Amazon subscription not to use the SVoD offering, but because they want to take advantage of the shipping discounts (IW-Report 31, Büchel & Rusche, 2020). On the other hand, Netflix sells fewer subscriptions with 36 percent compared to Amazon Prime Video, the fact that it has the most users is due to the high

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number of users per subscription. Netflix is far ahead of Amazon Prime Video (2) with an average of 3 users per account (Goldmedia, 2019). Both providers offer customers the opportunity to use their subscription multiple times. In addition to increased flexibility and user-friendliness, which increase customer satisfaction and reduce the likelihood of subscription cancellation, streaming providers simultaneously serve different consumer groups. Families are encouraged to purchase a subscription as multiple family members can watch different video content at the same time. Furthermore, streaming providers target younger customer groups. Through multiple usage, they can share their subscription and thus the total costs with friends and acquaintances. Users are tied to their own networks, so multiple usage prevents consumers from switching. Leaving another streaming provider or switching to another streaming provider leads to externalities for other network members (IW-Report 31, Büchel & Rusche, 2020).

3.5.5 Digitalization of Television High-quality (live) streams would not be conceivable without powerful internet connections. The transmission of entire movies and series can appeal to a large number of people in both Austria and Germany, especially the younger generations enjoy uploading and downloading video clips, music, and computer games. An even higher relevance is given to a powerful internet connection by distributed streaming on multiple devices in a household, which often leads to transmission problems in rural areas, especially during the high-consumption evening hours. Evaluations by the Broadcasting and Telekom Regulatory Authority (RTR) show, for example, that in rural areas in Upper Austria, broadband coverage drops to an average of less than 12 Mbit/s during evening prime time (Upper Austrian Academy of the Future, 2020). With the spread of social media platforms, new business models have also developed beyond paid streaming services. Advertising-based content providers on the one hand, and the rise of influencers with a large public presence on the other. Many companies pay a lot of money to help influencers promote their products and maintain a credible image. One thing is clear: everything that can be visually or acoustically reproduced as digital data streams will sooner or later find its way to consumers as a stream (Upper Austrian Academy of the Future, 2020). When looking at the possible developments of streaming, it is worth taking a look at a study on the “Future of Consumer Technology” by the digital association Bitkom and the consulting firm Deloitte. They found that

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• consumers are willing to pay for streaming services, • digital networking is becoming established in the sense of the internet, especially in consumer electronics, and • the development is moving towards videos and audio from a single source. This means that consumers will no longer have to subscribe to two different providers in the future (Upper Austrian Academy of the Future, 2020). A further expression of the advancing networking is the formation of platforms on which users can participate in various ways. Many companies active in the streaming sector provide online platforms for sharing content. They often do not produce their own content but see themselves as a hub for uploading and downloading. These companies are financed either by displayed, mostly personalized advertising or through subscriptions. This means: users pay for using the platform for streaming. For reputable platform providers, it is a challenge to identify illegal, offensive, or data protection-sensitive content (Upper Austrian Academy of the Future, 2020). Personalized Advertising Digitalization significantly changes the production process and the provision of content. All-IP becomes the standard for television and video, high-speed fiber optic networks and 5G make media content more flexible and mobile. In addition, there are new intelligent recommendations to specifically address consumers, based on artificial intelligence and analytics. u

As a result, TV and video advertising will adapt to new formats and increasingly focus on the personalization of advertising content.

The evaluation of user data makes it possible to optimize ads and content, increase the benefits for potential customers, and ultimately convince them as consumers. To what extent this will happen, however, depends heavily on the willingness of consumers to share their data (Source: Deloitte).

3.5.6 The Role of Demographic Change Together with other trends, demographic change has led to changes in the social structure. Individual backgrounds are becoming more diverse, generations can no longer be easily separated, family structures are changing, and our leisure and consumption behavior is changing. Two points seem to be particularly relevant for

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the successful development of streaming services in view of demographic change: the tech-savvy young population group and the older ones who deal with it, if you will. The tech-savvy ones grew up with a computer and got to know the internet during their lives. The smartphone allows them access to streaming around the clock, many become producers of video and audio content themselves via social media channels. Keyword: Youtube. But also the older generation of the mid1950s to late 1960s have become accustomed to the internet and its use on various devices and do not want to miss this development, as the Upper Austrian Future Academy has found out. Accordingly, we now live in a society in which streaming has become a matter of course (Upper Austrian Future Academy, 2020). According to a survey conducted by Statistik Austria in 2018 on domestic internet usage, more than two-thirds of Austrian internet users consume free videos. 28 percent also used paid providers, especially in the group of 16- to 24-year-olds. While this age group has a higher proportion of women than male streamers, male users have used significantly more streaming offers in recent decades (Upper Austrian Future Academy, 2020). The average age of Twitch streamers in 2019 was 21 years. According to a video-on-demand analysis by GfK Germany, the average age of users of paid streaming providers increased in the same year from 35 to 37, with a significant increase in new subscribers over 50 years of age. The worldwide spread of the Corona virus has accelerated digitization in many areas. New online shops have emerged, e-learning platforms have been optimized, video conference software is booming, and leisure activities have shifted to the internet. Many new consumers of all ages have been reached and they will probably continue to use the beloved offers even after the Corona crisis (Upper Austrian Future Academy, 2020).

3.5.7 Individual Usage In contrast to traditional radio and television, where programs always run at fixed times, streaming allows each user to decide individually when they want to consume which content. Despite the usual trend of free access to content on the Internet, users are increasingly willing to pay for this enhanced customization in streaming. For example, the online channel Quibi launched a new streaming service specifically for smartphones in April 2020 to respond to the ever-shortening attention span on the Internet. Quibi offers bite-sized entertainment series, with a sequence often lasting no more than ten minutes. By targeted tracking of browsing behavior, personalized information and advertisements are displayed according to the identified interests. This often happens on

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the homepage of a streaming platform. This raises data protection concerns and can lead to so-called “filter bubbles,” as we already know from social media channels like Facebook. There, an algorithm provides users with information based on their interests. Applied to streaming, this means that someone, for example, is increasingly shown video clips, movies, and podcasts on topics they recently researched on the Internet. Individualization not only takes place on the consumer side but also on the upload side. Each content creator produces streams on topics that correspond to their own interests. In the competition among providers, individual or earlier available content is also an important differentiating feature. In addition to the high access numbers of streaming services in spring 2020 due to the lockdown restrictions of the global Corona crisis, there were also some new individual offers that “helped” people cope with these difficult times. Due to the lockdown restrictions, institutions such as municipal offices began streaming events like council meetings to provide people with content digitally despite the ban on gatherings during the crisis. Moreover, “personal” meetings with family members or friends also shifted to the Internet, and streaming providers like Zoom or Teams have enjoyed great popularity ever since (Upper Austrian Future Academy, 2020).

3.5.8 Influence Factor Globalization Streaming is available to around four billion people worldwide. This is the percentage of the world’s population that has access to the Internet. Music streaming revenue was around 10 billion euros in 2019, while video streaming provider Netflix alone generated revenue of over 18 billion euros in the same year. The streaming platform also scores particularly well in terms of in-house production. Amazon and Netflix won their first Oscars in 2017. As a result, they have established themselves as a serious alternative to traditional, artistic film studios, which further increases their user base. The lucrative streaming market was dominated by two more well-known and economically strong players in 2019. Apple and Disney began offering their streaming services in the first countries (Upper Austrian Future Academy, 2020).

3.5.9 Television and Streaming Become One The further spread and use of VoD services also raises the question of how media consumption will change as a result. Physical sales of films and series are declin-

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ing due to VoD. VoD also has a negative impact on video stores due to increasing competition (Demary et al., 2017, p. 52). So far, however, VoD offerings have not had a negative impact on cinema usage, as they have a time advantage with new films. Measures to contain the Corona outbreak, such as the temporary closure of cinemas, video stores, and electronics stores, have had a lasting negative impact on video store usage and overall sales. This is because, due to the shortterm advantages of using VoD services, other consumers will also switch to these formats (IW-Report 31, Büchel & Rusche, 2020). Streaming is increasingly influencing traditional (linear) television as well. On the one hand, the use of VoD is increasing overall, and the proportion of consumers who mainly consume VoD is also increasing (Deloitte, 2019). Deloitte’s Media Consumer Survey 2019 already found that 16 percent of consumers consume at least 50 percent of videos outside of traditional television. In 2015, this only applied to 10 percent of consumers (IW-Report 31, Büchel & Rusche, 2020). u

The popularity of VoD offerings is likely to lead to a merger of streaming and linear, traditional television. At least that’s what experts are saying.

Traditional television channels have long been making their content available in media libraries. This will increasingly apply to traditional television programming in the future as well. An example is the “Joyn” offering from ProSiebenSat.1 Media SE (Joyn, 2020). This merging of traditional television with online offerings will continue to increase with the popularity and expansion of the corresponding infrastructure. On the other hand, this means that there will not be a displacement of traditional television. However, the importance of platforms that bundle the content of several television channels, for example, and make it available to consumers on their mobile devices, could continue to grow. These platforms could be largely independent of the television channels (IW-Report 31, Büchel & Rusche, 2020).

3.5.10 The Competition in the Streaming Market “Streaming services are forced to identify and acquire new content, trends, and ideas as quickly as possible in order to survive in the fierce competition.”—This was said by MIP TV director Lucy Smith in an interview with the German Press (dpa) at the world’s largest television trade fair in April 2022. This is because Netflix and its competitors can only retain paying customers if the offering remains attractive. The great challenge, therefore, is to retain subscribers and

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continue to increase growth rates. According to Smith, however, the limits of what is feasible have come into sight (Der Standard, 2022). The Corona lockdown year 2020 brought record-breaking numbers. According to its own figures, Netflix was able to gain 37 million new subscribers, while newcomer Disney+ reached 100 million new customers in just 16 months, according to its balance sheet (Der Standard, 2022). According to many experts, the peak of the streaming boom seems to have been reached. The “NPAW Video Streaming Industry Report” states that the video-ondemand consumption of the surveyed streaming providers decreased by an average of 9 percent in 2021 compared to the previous year (Digitalfernsehen.de, 2022). Deloitte, a well-known consulting firm, published its forecast for 2022. According to this, over 150 million people worldwide are expected to cancel their paid subscriptions, with a global churn rate of 30 percent. Deloitte cites the reason as more and more providers entering the market and trying to steal each other’s audience. And even with the large number of consumers, large investments in expensive productions are not yet paying off. Netflix, for example, will release its most expensive film to date. “The Gray Man” starring Ryan Gosling and Chris Evans cost 200 million dollars. It is expected that in such fierce competition, many providers will fall by the wayside. In particular, the huge output of high-quality work raises the question of who has the time to watch it all?

3.5.11 How the TV Industry Can Adapt to This Change According to Deloitte (Article, Future Scenarios for the TV and Video Industry), broadcasters and content producers can no longer rely on their current market position but must engage in collaborations to secure their business models and future revenue streams. Joint production, distribution models, or even platforms are therefore suitable measures to counter the threat posed by digital platform providers such as Netflix, Amazon, Apple, and Google. In addition, established broadcasters and content producers must continuously invest in their digital competence. There is no way around it. It is crucial for them to be attractive to both digital talents and creative minds. Because even in the coming years, what Bill Gates said over 20 years ago still applies: “Content is King.” However, to produce attractive content in a future shaped by digitization and ultimately reach customers with it, first-class technological capabilities are essential (Deloitte, 2018).

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3.6  TV as an Economic Driver During the Pandemic

3.6 TV as an Economic Driver During the Pandemic During the COVID-19 pandemic, television usage numbers increased significantly, which also greatly boosted the advertising impact of TV. Statista.com reports in 2022: “According to the Arbeitsgemeinschaft Fernsehforschung (AGF), the average television viewing time per day in 2021 was 213 minutes” (see Fig. 3.4). This meant a decrease of seven minutes compared to 2020. However, the pandemic contributed significantly to the increased television viewing time in that year. The share of TV households with exclusively digital television reception has been 100 percent since 2019. For comparison: In 2005, the digital share was still 19.1 percent. In Germany in 2021, measured by market shares, the public broadcasters ZDF, the ARD-Dritten, and Das Erste were the most popular channels. In the advertising-relevant target group of 14- to 49-year-olds, the situation was slightly different, with private broadcasters RTL and ProSieben leading in this age group. In general, we can observe that the number of television channels is increasing significantly: Due to this fragmentation of the market, the importance of individual channels decreases and that of channel families increases. The channels of the Television

230

Internet content11

149

Radio total

100

Music2

46

Games

45

Book

25

Print

20

Other3

14

0

25

50

75

100

125

150

175

200

Daily usage time in minutes Fig. 3.4   Graphic on daily usage duration

225

250

275

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RTL media group or ProSiebenSat.1 have lost individually, but in total, the losses were partially compensated by the increase in the number of channels. The significance of private broadcasters for the television market is evident, among other things, in the gross advertising revenues of TV channels: In 2020, RTL ranked first with advertising revenues of almost 3.1 billion euros. ProSieben (more than 2.4 billion euros) and Sat.1 (around 2.05 billion euros) followed in second and third place. Pay television had around eight million subscribers in Germany in 2019. At the same time, the number of pay-TV channels in Germany reached a historical high of 98 channels. We can therefore conclude that the restrictions on public life and the increased need for information due to the coronavirus pandemic led to a renaissance of television in Germany, as well as in Austria, starting in early 2020. And this is good for the economy.

3.6.1 Competition Situation in Electronic Markets Competition in the field of electronic markets has intensified significantly over the past few years. The number of broadcasting companies is increasing, while the reach of individual channels is decreasing. Technical innovations, especially in the area of end devices, have strongly influenced consumer behavior (culture of “zapping”) and led to an individualization of usage behavior. Due to the so-called “parallel viewing,” audience segments are becoming smaller, and the costs for licenses and rights are increasing. The growing competition has led providers to auction their licenses to the highest bidders. It is becoming increasingly difficult for smaller channels or public broadcasters to acquire rights for major programs or events—for example, Champions League soccer matches. In view of this massive increase in program costs, it is becoming increasingly important to generate as much advertising revenue as possible. Therefore, the same applies to broadcasting: Advertising “creates programs.” What is shown is what appeals to the largest possible audience (large audience leads to more advertising), with less consideration given to interest groups outside the mainstream, and competing programs becoming increasingly similar to secure viewer ratings. Public broadcasters, in particular, are increasingly aligning their content with private competition to remain attractive to the advertising industry. The liberalization of the market (deregulation, licensing of private providers, lifting of advertising restrictions) has thus de facto brought about more similarities than differences.

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3.6.2 The Future Development in the Sector In the electronic market, a market with strong national structures, increasing competitive displacement has emerged in recent years. This trend will continue, and the competitive situation in the market will intensify further. u

While commercialization and concentration processes are emerging among public service providers, private providers will continue to expand their technical reach and try to gain further market shares through polarization in specialized and regional programs (including pay-TV!).

The main advantage of private providers is that they usually have a relatively clear program profile, while the focus of public service content providers is often not clearly recognizable. Think of Pro7 with the claim: “We love to entertain you” with a clear focus on entertainment. Public service providers are more crisis-resistant due to fees and a high proportion of in-house production, while private channels are one hundred percent dependent on the (possibly fluctuating) advertising industry. In principle, private providers will therefore benefit more from overall economic growth (more advertising money), while public service providers will benefit more from economic stagnation (provided that fee financing remains in place). Some experts also expect television to lose its function as the leading medium to the internet in the future. The daily routine of the average Austrian was significantly influenced by television in the past, with families gathering in the evening to watch the ZIB together, for example. Today, this influence is much less present, as each child often has their own television.

3.7 The Television License A television license is a payment required in many countries for receiving television broadcasts or owning a television set. Some broadcasts are partially or fully funded by the paid license fee. A TV license is effectively a hypothecated tax for the purpose of financing public service broadcasting, enabling public service broadcasters to transmit television programs without or with only additional funding from television advertising. In some cases, however, the balance between public funding and advertising is reversed: the Polish TVP channel, for example, receives more funds from advertising than from its TV tax.

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3.7.1 The History In the early years of broadcasting, broadcasters faced the problem of raising funds for their services. Some countries resorted to advertising models, but many others introduced a public subscription model, which in reality was a broadcasting license paid by households that owned a radio and later a television set. The United Kingdom was the first country to adopt this mandatory public subscription model. The license fee went to the BBC to produce publicly funded programs. However, they remained both administratively and financially independent of the government. With the advent of television, some countries introduced an additional television license, while others increased their radio license fee to cover the additional costs of television broadcasting. Today, most countries finance public service broadcasting from the same license fee used for television, although some still have separate radio licenses or charge a lower or no fee for consumers who only own a radio. Faced with the problem of license fee evasion, some countries opt to finance public service broadcasters directly from taxes or through other less avoidable methods such as a surcharge on electricity bills. In some countries, national public service broadcasters also carry additional advertising.

3.7.2 The GIS Fees Info Service GmbH (Austria) According to the Austrian Television and Radio License Act (RGG), all broadcasting receivers used or operational at a specific location must be registered. The location of the equipment is considered a residence or other facility with a uniform purpose of use. The GIS Tax Info Service GmbH is a 100-percent subsidiary of the Austrian Broadcasting Corporation (ORF) and is responsible for the administration of Austrian concessions and the performance of tasks related to national interests. In 2018, GIS’s revenue amounted to 922.4 million euros, with 620.1 million euros going to the ORF to finance its organization and programs. The federal government received 138.5 million and the federal states 146.8 million. GIS has around 210 employees and several freelance employees in the field. Approximately 3.6 million Austrian households are registered with GIS. The proportion of Austrian license evaders is around 4 percent. The main principle of GIS’s communication strategy is information. To achieve this goal, GIS uses a four-channel communication strategy:

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• Above-the-line activities (advertising campaigns in print media, radio, and television). • Direct advertising. • Distribution channels—sales outlets where individuals can obtain the forms required for registration (post offices, banks, tobacco dealers, and five GIS service centers throughout Austria). • Field service—customer advisors who visit households that are not yet registered. The annual television and radio license varies in price depending on which federal state someone lives in.

3.7.2.1 The Procedure GIS can compare the registered participant data with the reported data. If locations of private individuals and companies are not reported, they receive written inquiries as to whether broadcasting devices are present at the respective location. In public spaces, GIS follows the principle: “Inform rather than control,” yet GIS employees make unannounced house visits to households that have not registered broadcasting reception devices. If they receive information from the residents that there is indeed no reception device in the household, they regularly ask if they can convince themselves. However, GIS employees have no right of access. GIS can only initiate an inspection with the cooperation of the locally responsible district administrative authority if there is a justified suspicion of a false report or if it is refused despite a reminder. If GIS can prove false information to a homeowner, it is an administrative offense, for which the responsible district administrative authority can impose an administrative penalty of up to 2180 euros. GIS is a delegated authority and can therefore issue notices and arrears certificates. In addition, GIS relies primarily on deterrence through its house visits and campaigns on television, radio, and the internet. This approach has proven effective. If GIS employees uncover a “black viewer,” they receive a bonus, which is not supposed to be very high.

3.7.2.2 The Bad Reputation of GIS Naturally, most people have no joy with GIS. One of the main reasons for this is the accusation of customer-unfriendly behavior. It is also criticized that people who do not have a radio or television, or who do not consume ORF programs despite owning such a device, must pay broadcasting fees. However, Austrian law is clear in its statement: Anyone who operates or even just keeps one or

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more broadcasting reception devices in buildings must pay the fees if the location is supplied terrestrially with ORF programs. The only legal option for private households to avoid paying a fee is to completely renounce radio reception in closed rooms. In addition, there is a fee exemption for people in need. No fees have to be paid for reception in vehicles or outdoors. According to a decision by the Administrative Court in 2015, no fees are due for internet-capable computers or TV monitors. As a result, several providers have started to bring so-called “GIS-free” TV devices to the market. Further points of criticism concern data protection: For example, ARGE Daten repeatedly deals critically with GIS due to the comprehensive query options in the central registration register and the processing of the social security number. In 2005, the Austrian Bar Association Day expressed massive criticism of GIS: Although the Constitutional Court had repealed parts of the Viennese Cultural Promotion Contribution Act as unconstitutional, GIS announced that it would continue to collect the fees and possibly repay them later. In addition, GIS is said to pass on its outstanding debts to third-party debt collection agencies, even though it has the right of an administrative authority to issue arrears certificates—the detour via debt collection agencies causes unnecessary additional costs for the “customer”. Other administrative authorities of the municipalities, states, and the federal government must commission the Financial Procuratorate for legal actions for which a lawyer is required. Thus, different costs arise for citizens in the case of arrears with administrative authorities. This practice was criticized again during the parliamentary procedure to amend the Broadcasting Fee Act.

3.7.3 The Broadcasting Contribution in Germany Since 2013, broadcasting contributions have financed the German public broadcasting system and, according to the Interstate Broadcasting Agreement, operate in the public interest. They are managed by the ARD ZDF Deutschlandradio Beitragsservice. Previously, this central office was called the Central Fee Collection Center of Public Broadcasting in the Federal Republic of Germany, or GEZ for short. Eight billion euros was the contribution revenue in 2018, which financed 22 television and 67 radio stations and many online platforms. The funds also went to the supervisory authorities of private broadcasting. The obligation to contribute is subject to the Interstate Broadcasting Contribution Agreement. This was declared applicable law in the respective federal state by approval laws of all 16 state parliaments. The amount of the contributions is

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regulated in the Interstate Broadcasting Financing Agreement (RFinStV). First, the commission determines the financial requirements of the broadcasting institutions that they need. The amount of the contributions is determined by the Conference of Minister Presidents. A change in the broadcasting contribution requires the approval of all state parliaments. The broadcasting fees are charged flat-rate to all liable payers of the apartment owner. It does not matter how many radios or television sets are available. The owner of the apartment is an adult living in the apartment. The owner of an apartment is considered to be someone who is registered there according to the Federal Registration Act or is referred to as a tenant in a rental agreement. The obligation to contribute arises if radio reception is possible, even if the receiving device is not available in the apartment. Since August 2021, the broadcasting contribution has been 18.36 € per month.

References Berger, V. J. F. (2008). Der deutsche Fernsehmarkt. UTB GmbH. boerse.ard.de. (2020). Auch Youtube tritt auf die Bremse. https://boerse.ard.de/aktien/auchyoutube-tritt-auf-die-bremse100.html. Accessed 20 June 2022. Brien, J. (2019). Social-Network-Rekord: Tiktok brauchte nur drei Jahre bis zur Nutzermilliarde. https://t3n.de/news/social-network-rekord-tiktok-nur-1219360/. Accessed 20 June 2022. Büchel, J., & Rusche, C. (2020). IW-Report 31. Status quo und Perspektiven von Videoon-Demand in Deutschland. https://www.iwkoeln.de/fileadmin/user_upload/Studien/ Report/PDF/2020/IW-Report_2020_Streaming.pdf. Accessed 20 June 2022. Deloitte. (2019). Media Consumer Survey 2019, Lineare Lebenszeichen, o. O. Deloitte. (2018). Zukunftsszenarien für die TV- und Video-Branche 2030. https://www2. deloitte.com/de/de/pages/technology-media-and-telecommunications/articles/zukunftsszenarien-tv-video-branche.html. Accessed 20 June 2022. Demary, V., Barbara, E., & Christian, R. (2017). Qualitative und quantitative Auswirkungen der Sharing Economy in Nordrhein-Westfalen, Endbericht für Vergabe-Nr. 40/2016. Kurzstudie für das Ministerium für Wirtschaft, Energie, Industrie, Mittelstand und Handwerk des Landes Nordrhein-Westfalen. Der Standard. (2022). Streamingszene nach Corona-Boom in hartem Wettbewerb. https:// www.derstandard.at/story/2000134638409/streaming-szene-nach-corona-boom-in-hartem-wettbewerb. Accessed 20 June 2022. Digitalfernsehen.de. (2022). Streaming-Markt: Sind die goldenen Zeiten schon vorbei? https://www.digitalfernsehen.de/news/medien-news/maerkte/streaming-markt-sind-diegoldenen-bereits-zeiten-vorbei-592621/. Accessed 20 June 2022. Focus.de. (2019). Amazon startet sein Gratis-Video-Streaming. https://www.focus.de/shopping/service/freedive-imdb-amazon-startet-sein-gratis-video-streaming_id_10859069. html. Accessed 20 June 2022.

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Goldmedia VoD-Ratings. (2019). Der Abo-Streamingmarkt in Deutschland: Netflix liegt bei der täglichen Nutzung klar vorne. https://kress.de/news/detail/beitrag/143852-derabo-streamingmarkt-in-deutschland-netflix-liegt-bei-der-taeglichen-nutzung-klar-vorne. html. Accessed 20 June 2022. Joyn. (2020). Über uns. https://www.joyn.de/ueber-joyn. Accessed 20 June 2022. Mayer, T. (1997). Medienrecht im Kontext standortrelevanter Faktoren (p. 270). Herbert Utz. Oberösterreichische Zukunftsakademie. (2020). Streaming Everything. Immer und überall. https://www.ooe-zukunftsakademie.at/Mediendateien/StreamingEverything_2020_final. pdf. Accessed 20 June 2022. Pichinot, C. (2005). Konvergenz der Medien in Europa (p. 164). Cuvillier. Schnitzler, D. J. (2008). Digitaler Fernsehmarkt Chancen und Potenziale für Spartensender (p. 8). Diplomica Verlag GmbH. Seidel, N., & Libertus, M. (1993). Rundfunkökonomie: Organisation, Finanzierung und Management von Rundfunkunternehmen (p. 131). Gabler. SevenOne Media.(2010). Relevant Set—Sendervielfalt—Sendernutzung (p. 4, p. 7 & p. 13). http://www.sevenonemedia.de/imperia/md/content/content/TopThemen/Research/ Downloads/RelevantSet2010.pdf. Accessed 15 July 2010. Urbanuncut. (2021). Die Geschichte der Werbefilme. https://www.urbanuncut.de/diegeschichte-der-werbefilme/. Accessed 20 June 2022.

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4.1 The History of Radio The radio, as a typical “accompanying medium,” celebrated its first successes before World War II but only gained reach during the war when Nazi Germany used it as a propaganda tool. In 1924, only about 1,600 people in Germany owned a radio, but by 1941, it was already 65% of the total population. In Austria, Oskar Czeija re-established Radio Vienna in 1945 (after the end of the Battle of Vienna and the victory of the Red Army). The first broadcast after the war was the reading of the Austrian Declaration of Independence by the SPÖ, ÖVP (CVP), and KPÖ. Radio Vienna was located in the Soviet occupation zone at that time, but the three Western occupying powers soon founded their radio companies. The Americans were particularly well-prepared for this step, establishing both a civilian station and an English-speaking military station, which was especially popular among Austrian youth due to its music orientation. The British also operated two stations, and the French followed suit later, leading to a kind of competitive situation, especially between Americans and Soviets. The result was a diverse radio landscape for that time in Central Europe. In 1953/54, people in Vienna could choose between seven different radio programs. This variety shrank to three stations with Austria’s regained sovereignty, and around 1965, there were only two different programs. In 1964, the Radio Referendum (the first referendum in Austria) aimed to separate Austrian Broadcasting from politics by law and make radio an independent medium. The ÖVP single-party government then passed the first Broadcasting Act in 1966, which enabled the re-establishment of Austrian Broadcasting (ORF) in 1967 and the introduction of the “structure programs” Ö1, Ö3, and Ö2. The introduction of Ö3 was a real innovation for Austria; from the beginning, it had the task of broadcasting youth content and pop music. © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 M. Posset, Media Economics in Austria, https://doi.org/10.1007/978-3-658-42195-3_4

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What is somewhat surprising today is the extraordinary quality of the Ö3 program over the first two years of its existence. Even German radio stations, such as Sender Freies Berlin, adopted the content, and Ö3 played a special role in the spread of Austropop in the 1970s. Individual radio makers like Evamaria Kaiser or André Heller promoted Austropop despite the “Schnulzenerlass” (sentimental song decree) of the then ORF Director-General Gerd Bacher. The “Schnulzenerlass” was a directive issued in July 1968 to the radio makers of Ö3, which had only started in October 1967. The directive stated that instead of playing German-language “sentimental songs,” international pop music should be played. The first private radios, on the other hand, only went “on air” from neighboring countries in the mid-1980s, as private stations were prohibited in Austria at that time. In general, Austria was one of the last European countries to allow private stations. The first private radio station in Austria was Antenne Steiermark, which started broadcasting in September 1995. In January 2001, the National Council finally passed the new Private Radio Act; the first amendment came into force on August 1, 2004, and “KroneHit” received the first and so far only nationwide private radio license, which for the first time enabled a private station to operate on an equal footing with public-service broadcasting. Today, Austrians listen to the radio for an average of about three hours a day. The most popular times of day to listen to the radio are in the morning right after waking up and during breakfast, as well as on the way to work. Overall, about three-quarters of the population use traditional radio, with only 11% not listening to the radio in 2021. Radio is particularly popular as the main news source among 45- to 55-year-olds, with around 15% of them using radio for this purpose. What is noticeable, however, is that the gap between ORF and private stations is still large. While ORF stations enjoyed a daily reach of around 60% in 2021, private stations only reached 27.7%. The revenue of radio broadcasters amounted to around 95 million € in 2020. Nonetheless, radio has enjoyed great popularity since its invention and is still used by a large part of the population today. Around the same time as the invention of radio, the first test images of television also began to circulate. However, it took quite a while for television to become established in Austria.

4.2 An Overview of the Radio Market The radio market (see Fig. 4.1) follows different principles than the television market, as user behavior is different and thus the advertising market also behaves differently. Nevertheless, the world of broadcasting is always exciting.

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4.2.1 Radio Market Germany According to Pricewaterhouse Coopers GmbH auditing and consulting company (PWC), in 2017, radio was the “by far the fastest growing mass medium.” As a result, 77.6% of all German-speaking individuals aged 14 and older are said to listen to the radio daily. And not only that: The listening duration of the audience is also consistently high at over four hours, which continues to make radio particularly interesting for the advertising industry. In 2017, revenues in the German radio market increased by 1% compared to the previous year, reaching 3.5 billion €. Advertising revenues, in particular, developed positively. Their share of the total turnover of the radio industry increased by 0.5% to 23.1%. In total, it increased by 3.2% in 2017 to 8.13

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­million €. Revenues from traditional radio advertising also increased by 2.2% year-on-year. As the trend of the previous year already showed, online advertising revenues continued to develop positively, increasing by 38.1% to 29 million €. Although advertising revenues are still relatively low overall, they are steadily growing, rising from 2.7% in 2016 to 3.7% in 2017 (PWC, 2018). Development Factors According to the 2017 annual report of the Association of Private Media e.V. (VAUNET), ultra-shortwave (FM) remains the most important transmission method for radio in Germany. A total of 92.9% of households use analog terrestrial for their radio reception. Although Digital Audio Broadcasting (DAB+) promises better sound quality, better reception reliability, multimedia additional information, and more cost-effective distribution with low energy consumption, only 15.7% of households use it. For more than two-thirds (48.5 million) of German radio listeners, FM continues to be the most used radio reception method. Of the approximately 11 million people who have access to DAB+ devices, less than one-third (3.5 million) use DAB+ as their preferred reception mode. The use of DAB+ has increased slightly compared to the previous year but did not reach the expected range (see Fig. 4.2). (PWC, 2018).

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According to PWC’s forecasts, everything will remain the same for the time being. Because even though some providers have already established themselves in digital radio and are used by owners of digital receivers, the dominance of FM station brands remains unbroken. Many providers are therefore hesitant to switch to digital radio. The FM offering is still large, so there is no need for digital program availability. The strength of the station brand will be decisive for success or failure in the future (PWC, 2018). In addition, a committee of the European Parliament has decided to introduce a DAB/DAB+ requirement for new cars. In the future, every vehicle sold in the EU should have access to DAB/DAB+ as standard. Analog FM receivers will continue to be offered in the market. However, if the European Parliament approves this directive, it would be an important step for the enforcement of digital radio (PWC, 2018).

4.2.2 Radio Market Austria In Austria, as in Germany, radio is still widely listened to. In numbers, this was 196 minutes per day in 2020. This represents a decrease of five minutes compared to the previous year. The decline was more pronounced among 14- to 49-year-olds, with 170 minutes compared to 185 minutes in the previous year. According to the Radiotest 2020, the daily reach was 75.7% in total and thus declining. Among the national stations, only FM4 and Radio Austria, Antenne Salzburg, and Tirol remained stable, while for the 14- to 49-year-olds, it was FM4 and Ö1. The latter is the only national station according to the current Radiotest that was able to gain ground. Market conditions are hardly influenced by changing reach. In the total population, ORF radio dominates with around 74% market share. The “RMS Top Kombi” as a bookable private counterpart is at 24%. The public broadcaster has around 30% market share, and Ö1 has nine percent. Among the 14- to 49-yearolds, the RMS Top Kombi has a 35% market share, while ORF has “only” 63%. Ö3 has a 40% market share in this age group.

4.3 The Value Chain in the Music Market When we hear a music title on the radio, it is not new. Many others have already heard it in clubs or at discos, and it was already available in stores as part of the initial exploitation. Radio only provides secondary exploitation, so a large part of the actual value has already been tapped.

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Furthermore, the radio market is increasingly affected by the new possibilities of digitization and, above all, by private duplication. Youth culture is becoming more differentiated – there are fewer and fewer “real” stars, and everyone can operate their own radio on their smartphone and with podcasts. Spotify, in particular, could bring about far-reaching changes. 

As a result, a large part of the financing is handled through advertising, with music often being just a means to an end. Many stations cater to mass taste to maximize advertising revenue. Therefore, radio typically distributes mainstream content.

The value chain: • • • • •

Authors/Artists: financial security/remuneration Economic production: linking creativity, financing, and production Distribution: logistics, marketing, advertising Initial exploitation: sales through trade and clubs Secondary exploitation on radio and television

Since the radio market in Austria is dominated by public broadcasting and Austria is not suitable for permanently successful niche stations due to its small size, diversity in the Austrian radio landscape is rather limited. The result: mainstream on almost all stations, as mainstream is synonymous with economically successful marketing of music. The market is short-lived, and its artists are just as transient in today’s world. Only a few artists manage to establish themselves permanently and be played regularly on the radio.

4.3.1 Common Practice First, the creation represents the initial component in the entire process. A musician/songwriter or artist is responsible for this creative process. This means: artists and authors create content for music tracks to represent their brand. Subsequently, they process and sell the brand along the music value chain. For new artists who are not tied to a label, there are two options here: 1. They can send their track in the form of a demo tape to the record company, or 2. upload the song to their website.

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A major role is played by the label-internal artist and repertoire department (A&R), which is responsible for discovering and pursuing new talents. If the record company is interested in a song or artist, they sign a record contract that licenses the song. Production is the second stage. Here, artists, recording studios, producers, artist management, publishers, and labels work together to bring the emerging music to market maturity. The marketing department is activated before the product reaches the release stage. This is the third stage with the task of promoting the artist through marketing campaigns. This advertising is intended to ensure an initial distribution that drives the sale of sound carriers. Exploitation and sales are on the penultimate stage of the value chain and are divided into primary and secondary exploitation. Early exploitation includes the sale of physical and digital sound carriers through various distribution channels, such as department stores, supermarkets, or online retail. The exploitation of music through various channels such as radio, TV, and other online media is referred to as secondary exploitation. The consumer with traditional usage is at the end of the value chain. The customer, therefore, has no influence on the value creation of the music industry and is merely considered a recipient of the sound carrier. Music companies do not use direct communication channels to consumers; the only communication takes place through advertising and indirect sales promotion. However, this will change significantly due to digitization and the widespread dissemination of the internet.

4.3.2 Basics of the Music Industry The music industry is a group of companies with a particular focus on music production, marketing, and distribution. The concept of the music industry can be divided into two areas: 1. the recorded music market and 2. the live music market. Both areas are closed markets with specific similarities. The core tasks of the recorded music market are recording, duplicating, and distributing music. These activities are carried out by recording studios and record companies. Concert organizers, agencies, and ticket sellers are now active in the live music market.

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The music market is closely linked to other markets, with upstream, downstream, secondary, and complementary markets. • Upstream markets: These markets presuppose the recorded music and live music market. For example, a music publisher cannot publish music without the recording market. • Downstream markets: In contrast to upstream markets, downstream markets are not dependent on the concert and recorded music industry but benefit from the resulting goods. For example, the mood of visitors in a nightclub is heavily dependent on the music played there. • Complementary markets: These markets form synergies with the music industry. The sale of fan merchandise in merchandising can make the artist more well-known. This, in turn, has the effect that the more well-known he is, the more revenue he will generate. • Secondary markets: These markets have little influence on the music industry. For example, while a catering business benefits from the event market, a concert can be realized without catering.

4.3.3 The Music Labels The music industry is made up of various production companies, known as labels. These labels are divided into two groups: 1. The major labels and 2. the independent labels. Comparable to the publishing and film industry, the music industry is characterized by the dominance of a small number of very large, international music companies, the majors, and a large number of medium-sized and small companies, the so-called indies. According to various sources, the major labels dominate 70% of the global market and 80% of the US music market. The rest of the market is covered by the independent labels.

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4.3.3.1 The Major Labels The currently largest international music corporations, which are each composed of many small companies and labels, are referred to as major labels or simply “majors.” Their complete integration within the value chain is an essential characteristic. In this way, majors integrate all marketing stages from artist development to distribution under one roof. There are also various small sublabels that are specific to a particular music style. The three largest record companies are: • Warner Music Group • Universal Music Group • Sony Music Entertainment EMI Group used to be one of the majors, but it was acquired by Universal. • Universal Music Group: The Universal Music Group (UMG) is considered the market leader and belongs to the international media group Vivendi. UMG has established artists such as Elton John, Sting, or U2 under contract. To maintain its market leadership, Universal was relatively open to digital music in the early days of digitization. In Germany, for example, it operates the platform Popfile, from which only music by “Universal artists” can be downloaded. • Sony Music Group: Sony Music Entertainment (SMG) is the second-largest music company in the world and holds about 22% of the global music market. The company was founded in 2004 as a 50/50 merger between Sony Music Entertainment and Bertelsmann (BMG). Bertelsmann had the largest European television corporation with the RTL Group. This merger led to formats such as “Deutschland sucht den Superstar” (Germany searches for the superstar). • Warner Music Group: Like the Universal Music Group (WMG), the Warner Music Group also started as an industrial film studio. In 1958, the studio Warner Bros. Pictures founded its own music label to release soundtracks. The timing for starting a label was wisely chosen thanks to the increasing popularity of rock’n’roll music and pop music radio. It didn’t take long for the Warner record label to achieve success. The Warner Music Group owns some of the world’s most famous record companies, including Atlantic Records with artists such as Ray Charles, Led Zeppelin, and The Rolling Stones. Measured by music revenues, the three major labels achieved a total turnover of 11 billion US dollars in 2016.

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4.3.3.2 Independent Labels Indie labels are independent record companies that are not owned by majors. These music companies range from small one-person businesses to multi-milliondollar corporations. They are not interested in generating the highest possible revenue but often serve specialized genres through independent productions while maintaining artistic qualities. Therefore, “indie” covers only a limited part of the value chain. Often it is necessary to cooperate with large labels to ensure that all services and sales remain available. There are also collaborations with economically independent companies that specialize in the production, marketing, and distribution of music. “Indies” play an important role in the record industry. They are the development area of a large record company. Some of today’s major labels started as indie labels, such as Warner Bros. Indie labels have the advantage of being flexible and closely connected to the creative music scene, thus generating new market trends more quickly. Many well-known music styles such as rap and jazz began on independent labels and were later taken over by larger labels.

4.4 Radio Management The primary objective of a commercial radio station is economic success, as only achieving this objective guarantees the company long-term survival and thus a secure existence. The foundation for the economic success of a radio station is the sale of advertising time, which is strongly linked to the survey values of the radio stations. Therefore, positive survey values are so important for broadcasters. In addition, radio products, as well as TV and print products, operate in two markets: 1. the advertising market and 2. the recipient market. For radio companies, the advertising market is of particular importance.

4.4.1 Strategic Objectives Radio stations, like other companies, follow strategic objectives and planning guidelines. A corporate strategy is indispensable, especially when positioning a radio station. The main problem with positioning and format determination is the

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discrepancy between the two main target groups. On the one hand, radio stations should recognize the needs of the audience in order to meet them permanently. On the other hand, a radio station cannot exist without income from the advertising industry. In general, we can distinguish programs according to their temporal and content scope as well as their reach. This results in the following classification. The full program: A full program is a broadcast program with diverse content, composed of the four basic categories • information, • entertainment, • education and • advice which must all be recognizable in the program. Many experts believe that no basic category should have a time share of more than 50%. Conversely, each basic category should have a share of at least ten percent. In addition to the full program, there are specialized programs, which industry insiders often refer to as broadcast programs with “essentially similar content,” while they define window programs as time-limited broadcast programs that are “regionally limited in distribution within the framework of a spatially more extensive broadcast program.” Thus, there can be regional window programs within national programs or local window programs within regional programs. The fourth category consists of local programs, which are produced, editorially designed, or independently editorially produced in a locally limited distribution area. They are intended for this distribution area or at least for a part of it.

4.4.2 The Program Formats As in any other economically operating company, differentiation from the competition is extremely important. In radio, this is achieved through formatting. LaRoche and Bucholz (2000) define a format as the type of radio program “determined by its musical ‘color’, the text-music mix, the information content, and the style of presentation.” Formats follow strict rules. In their external impact, they leave nothing to chance.

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Haas, Frigge, and Zimmermann (1991), on the other hand, see it a little differently. They understand a formatted radio program as “the targeted, marketspecific selection of structure, content, and presentation.” This means: Every program has a format. Therefore, each station chooses a program structure with a specific content orientation and a specific form of presentation. Whether a station is successful depends on choosing the right format for the specific market. Sturm and Zirbik (1996) in turn see the focus in defining the term “program format” on the music: “Formats are target group-oriented programs that are strongly determined by the music selection and its composition.” There are thus different views on the formatting of radio stations, which, depending on the perspective, have different priorities. Each radio station must find out for itself what the most individually successful approach is.

4.4.3 Basic Considerations for Positioning The central objectives of a format decision can be summarized, for example, as follows (Haas et al., 1991, p. 233 f.): • Customer analysis: The existing needs in the market are explored. • Competitor analysis: The aim here is to find out which needs are satisfied by which competitor. • Own situation analysis: After the needs to be satisfied have been identified, it is examined how they can actually be satisfied. • Environmental analysis: What legal and economic framework conditions is the radio station exposed to? • The positioning of the radio station. • The definition of the program format • Concentration of available resources in the implementation to create a better problem solution. • Visible competence for this better problem solution can be built up through internal and external measures. Need in the Radio Sector If you want to position a radio program or a radio station as a good or service, you first need to think about the terms “need and demand.” Because how are needs satisfied? Through the production and provision of goods. Since the purchase of new goods satisfies a need, this purchase awakens new needs – hence the number of needs is unlimited (Sturm & Zirbik, 1996, p. 114).

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If we look at this more closely and follow Sturm/Zibrik, only a part of the existing needs can be satisfied in principle, since, for example, the available financial resources are limited or there is a lack of corresponding offers on the market. Therefore, market effectiveness is not always present. A need only becomes a demand when all three factors (need, purchasing power, and market effectiveness) are present. It thus becomes effective on the market. Applied to a private radio station, this means: The wishes and needs of potential listeners and advertising customers must be recognized and, if necessary, awakened anew (Sturm & Zirbik, 1996, p. 115). A similar perspective is found in Scherer. The listener sets the expectations and thus decides on the acceptance. At this point, the question arises whether and to what extent the radio or individual programs are suitable for fulfilling the audience’s wishes. Expectations in this case are based on the consumers’ ideas about individual broadcasts. These perspectives, in turn, are based on experiences with the media. The acquisition and processing of market-related information are prerequisites for making decisions about the development of radio companies and thus meeting the needs of the listeners. With the help of market observation, the basic and further development of a specific decision must already take place in the development phase of the radio station (Sturm & Zirbik, 1996, p. 115 f.): • • • • • •

Who or what is the competition? Which target group should be addressed? How large is the target group? What criteria can be used to segment the target group? How large should the radio station be? What price level can be enforced in the broadcasting area?

4.4.4 Niche Positioning Fundamentally, the choice of target audience and the competitive situation in a listener market form the most significant decision-making bases when it comes to choosing a narrow or wide formatting. The narrower the format, the more precisely the defined target group can be reached. With a narrow format, listeners on the edge of the target group are usually not addressed. Target groups that are treated in a narrow format have a small absolute number compared to potential target groups, but a uniform demand structure. Radio stations can treat them more appropriately through a clearly

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defined, tailor-made program format. In this case, you can expect high listener loyalty, as you can precisely meet the preferences of your target group. According to Sturm/Zirbik, narrow format boundaries are only conditionally applicable. The associated potential narrowing of reach, particularly in small market situations, carries the risk that the potential contacts achieved (acceptance, reach size) are unattractive for the advertising industry (Sturm & Zirbik, 1996, p. 204). However, the question of whether niche programs can be enforced is answered differently in the literature. If we follow Haas/Frigge/Zimmermann, it is not sufficient for the orientation of a commercial radio station to go exclusively in breadth, as “even smaller niche program offerings must be taken into account.” If the niche remains free in the market, many of the previous programs supplement the offer or switch to another area. If not, there is no chance of survival. Many experts believe that in the future, program integration and thus areas with more diverse courses of study or areas with a tendency towards understaffed personnel will be in focus. In any case, these are primarily assumptions and tend to change (Haas et al., 1991, p. 268 f.). 

Just because a product has low acceptance does not mean that the product is bad. The goal must be to provide economically viable products, taking market conditions into account.

In the real world, addressing the largest possible audience is, in most cases, unavoidable if you want to achieve the largest possible listener potential. What often poses a problem in this context is that individual music formats are often not sufficient to achieve economically justifiable reach. Therefore, program creators often have to combine several music genres to be successful (Haas et al., 1991, p. 272). If there are no promising niches in the market, a displacement competition occurs. In this case, radio makers try to place their own station next to an existing one. Not surprisingly, short broadcasting times cannot occupy the target market. Depending on the competitive situation, this can be a process that takes years. Therefore, the set goals must be consistently pursued. Thus, the success of a program depends heavily on the patience and perseverance of the program manager (Haas et al., 1991, p. 270 f.). Niche programs are generally easier and cheaper to implement than a broad program offering, but the resulting reach is not always perceived as successful or is often not sellable (Haas et al., 1991, p. 272).

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4.4.5 Economic Framework Conditions The radio market is characterized by a dual provider structure, with public-law institutions being financed through advertising revenues and broadcasting fees, while private providers primarily rely on revenues from the advertising industry (Wirtz, 2005, p. 407). The dual broadcasting system has led to new program models in the radio world. Financing private radio solely through advertising revenues requires efficient management and marketing (Sturm & Zirbik, 1996, p. 11). Thus, private providers tend to focus on mass appeal in case of doubt to guarantee audience success. Therefore, market criteria (listener and advertising market) are preferably included as determinants of product and program development. Unlike feefinanced public broadcasting, not all radio program providers can have the same economic framework conditions (Sturm & Zirbik, 1996, p. 11). The commercialization of radio through private radio is an inevitable development of the dual broadcasting system. Commercial radio programs must function commercially, as there are no revenues like broadcasting fees to cover the deficit. Ultimately, this commercialization led to the further development of so-called mass programs and the creation of target group-specific program formats. With larger offerings, listeners can individually select their program. The desire for accompanying or targeted information and entertainment can be met in a broader spectrum (Sturm & Zirbik, 1996, p. 39). The one-sided market orientation of private radio therefore also required the development of new standards, particularly in production and personnel development. For example, self-driving studios are the norm at private radio stations. The requirements for employees have also changed. Employees of private radio stations must be versatile and able to work independently (Sturm & Zirbik, 1996, p. 11 f.). Especially in the German-speaking area, radio stations strive to reach as many listeners as possible. A more differentiated target group approach is therefore difficult. This large-scale orientation of the program also affects the design of the German format. In contrast to the American market, the format restrictions are broadly defined. They deal with a rather heterogeneous target group characterized by a relatively large age difference and diverse interests and preferences. This is also reflected in the composition and design of the music format. A wide range of music programs offers a selection and use of various music titles and styles from different eras (Sturm & Zirbik, 1996, p. 204 f.).

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4.4.6 Market-relevant Data for Radio Stations If you want to research market-related data for the establishment of a radio station or radio format, you can either obtain partial data related to the broadcast area or make a special decision for this purpose. This way, you can directly evaluate data on the demographic structure or listening behavior on site. To do this, radio stations usually have to research the needs analysis of the audience or the advertising industry. In Austria, for example, this is done through radio tests and data from Statistik Austria. This data provides important basic knowledge for business and program-oriented decisions. Sturm/Zirbik suggest data collection according to the following scheme: Program-relevant Data: • Population structure in the broadcast area (age distribution, income, character, rural, urban, etc.) • Listening behavior • existing competition Sales-relevant Data: • • • • •

Net advertising potential in the broadcast area Distribution of advertising expenditures among existing advertising media Company and industry analysis Attitude towards radio as an advertising medium Demand potential for radio advertising (Sturm & Zirbik, 1996, p. 116)

However, in the opinion of many industry experts, in addition to the already mentioned program-related data, researching listener needs can also be helpful. An example of this is whether the viewer actually uses the planned program or whether there is a desire for such a program.

4.4.7 Criteria for Station Selection In the opinion of many industry experts, in addition to the already mentioned program-related data, researching listener needs can also be helpful. An example of this is whether the viewer actually uses the planned program or whether there is a desire for such a program.

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In contrast to the classic consumer goods of the branded goods industry, choosing your favorite radio station is not just a matter of product quality. In this context, we can speak of emotional factors that play a decisive role in the choice of radio station and thus also define quality in the broadest sense (Vowe & Wolling, 2001). In this context, it is not the actual objective quality of reports, topicality, professional quality, content, etc. that is in the foreground, but the subjective impression. These elements in connection with positioning are never independent of each other. A brand image consists of a series of associations that can be structured differently for each listener. However, strategic components tie the brand into a specific predefined environment. The value of a brand name is therefore composed of a multitude of image associations. Associations are specific ideas that relate to images. This should be taken into account in the radio sector, as radio is initially received audibly. Image ideas that are acoustically initiated by the listener should harmonize with the visual appearance. The media user never decides on just one medium, but uses the media mix. This usually includes all media currently available on the market: they buy newspapers, magazines, television programs, and they buy radio programs. In contrast to television, consumers do not choose individual broadcasts on the radio, but entire programs. Within the personal media mix, individual media types rarely compete with each other. Rather, they are used complementarily. In this way, each consumer covers their personal needs for print, online, or audiovisual media use individually. Although the individual media types complement each other, radio stations compete directly with each other (Haas et al., 1991, p. 58). Many experts cite the emotional component of program selection as a decisive selection criterion in station choice. Ultimately, what matters is how the listener perceives the selected radio station compared to other radio stations. With this subjective approach, it is not about consumers comparing radio media with television or, for example, print media. Rather, comparisons are made within the market to select the right radio station. In summary, it can be said that radio program decisions are primarily based on instinct and the subjective perception of the respective radio station plays an important role (Haas et al., 1991, p. 58).

4.4.8 The USP When it comes to deciding on a format, the industry usually defines the main task as follows: Differentiation from competitors, emphasizing a unique selling point or a USP, a Unique Selling Proposition.

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The characteristics that concern the USP are based on the expected needs of the main target group. When designing a radio program, the radio station focuses on a specific target group. This target group could look like this: A man between 29 and 45 years old. However, if this target group has already been addressed by a competitor, you must define your own selling points to differentiate your program from the competitor’s program (Koidl, 1995, p. 34). In the radio sector, you can search for and find unique selling points at different levels. The image and location of the station should be reflected not only in the program but also in the visual appearance. The goal is to quickly and clearly convey the essence, personality, and content of the program, using three elements: name, logo, and slogan (Koidl, 1995, pp. 31 ff.). The development of a USP is therefore based on central competitive advantages. Competitive advantages in the radio sector In general, positioning and formatting (at least theoretically) are achieved by differentiating from competitors. As the following overview shows, this can be done in different ways: • • • • • • • • • • •

Advantages regarding kilowatt. Advantages regarding financing Advantages regarding market positioning Advantages regarding personnel Advantages regarding media policy Advantages regarding experience Advantages regarding listening habits Advantages regarding awareness. Advantages regarding market economy Advantage regarding cooperations Advantages regarding image

4.5 Radio Advertising 4.5.1 History The “Funkstunde Breslau” broadcasted the first radio advertisement on July 1, 1924. At that time, statistics recorded only 100,000 radio participants. However, radio advertising remained insignificant for a long time due to its limited reach. In 1930, it accounted for just 0.3% of total revenue (Main-Post, 2009).

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In the fall of 1949, Bayerischer Rundfunk broadcasted the first German radio commercial after the war. Subsequently, all public broadcasters – with the exception of NWDR – introduced radio advertising between 1948 and 1950, before the Arbeitsgemeinschaft Rundfunkwerbung (ARW) was founded in May 1954. It took care of the advertising interests of the ARD radio stations and represented them (Conrad, 2011). However, the advertising share in public radio remained low. As a result, most people were unfamiliar with intensive and long advertising blocks for a long time. This changed when Radio Luxembourg began broadcasting German programs with advertising inserts in April 1958. NDR and WDR had previously rejected and prevented any type of advertising broadcasts in their programs, considering the “educational and popular educational tasks of broadcasting.” NDR only started in January 1981, and WDR not until November 1987 as the last ARD station to introduce radio advertising. In contrast, the nationwide programs of the also public Deutschlandradio are still advertising-free (Der Spiegel, 1958).

4.5.2 The Placement of Advertising We can say that targeted and professional marketing or management determines the success or failure of a private radio station. The decisive factor for this success is the sale of advertising time, which also serves as a benchmark for success. The goal of advertisers is essentially to reach as many consumers as possible with their advertising message, who are relevant for the purchase of their products, or in other words: the right target group. In this case, qualitative target group characteristics such as needs or purchasing power coincide with quantitative characteristics such as reach. A large listener reach, which expresses the acceptance of the respective radio station, determines listener success and, subsequently, sales success. In addition, a large reach, alongside professional distribution, ensures economic success (Sturm & Zirbik, 1996, p. 48). 

Especially in highly competitive markets, such as in metropolitan areas with many stations, the more differentiated targeting of audiences becomes more important. Why? Because focusing on reach alone reaches many consumers who have no interest in the advertised product, which increases scatter loss. In contrast, target group-specific advertising, especially in metropolitan areas, has the advantage of allocating the available budget where most potential customers are located.

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This scatter loss occurs, for example, when an advertiser primarily builds its potential customers from the urban area but broadcasts radio advertising nationwide. Here we are talking about quantitative advertising. Or when an expensive product is advertised, but listeners who fall below the required income level are also included and paid for as part of the reach. The goal of professional and radiospecific marketing must therefore be to find acceptance among both advertisers and listeners in order to optimally coordinate products, distribution, contracting, and communication (Sturm & Zirbik, 1996, pp. 48 f.).

4.5.3 What Radio Advertising Costs Both small and medium-sized as well as large companies benefit from radio advertising, as it can reach potential customers as part of a well-thought-out media mix. The costs for radio advertising depend on the needs, ideas, and goals of a company. The decisive factors for the costs of radio advertising are the price per second and the reach. The price per second, which is mainly based on the number of listeners (which are surveyed twice a year by the Arbeitsgemeinschaft Mediaanalyse), forms the basis for calculating the costs of traditional advertising on the radio. In this way, the costs for radio advertising remain largely fair and transparent. In addition to the price per second, the costs for radio advertising depend on the frequency and time of day. The so-called “Prime Time” in the morning and the “Drive Time” in the afternoon, when many people commute by car and later return home, usually have a higher radio usage, which increases the price per second. In most cases, your advertising messages reach as many potential customers at this time as at no other time. (funkhaus-halle.de, 2022)

4.5.4 Daily Progression of Advertising Costs Radio advertising costs are highest in the morning (on Ö3 between 8:00 and 9:00 am: up to 140 € per second) and decrease continuously until 5:00 pm, then drop drastically until they reach their minimum at 10:00 pm (on Ö3 4 € per second). Contrary to television, radio usually records higher prices during the week than on weekends. From September to June, advertising revenues, advertising expenses, and advertising prices are relatively constant, with particularly high advertising around Christmas. The prices are therefore somewhat higher. In contrast, there is a total collapse of advertising revenues in July and especially in

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August (summer slump), and the prices are correspondingly low. On the radio, the prices as an accompanying medium are similar to constant throughout the year.

4.6 The Future of Radio So far, it does not seem that radio stations are suffering from the rapid digital development. To keep it that way, those responsible must adapt their offerings so that radio does not lose its appeal. If we take a closer look, it becomes clear that clever radio makers are already reacting very flexibly and not only changing their programs but also adapting to the constantly changing usage behavior. Nevertheless, there are many threats to radio.

4.6.1 Current Threats to Radio • Internet access in the car: With internet access in the car, radio has faced strong competition, as many switch to streaming services or listen to podcasts and audiobooks. The competition for advertising clients has also become fierce. This forces radio to think about changes, which is why many stations are already in the midst of a transformation. • Spotify and Co: In contrast to newspapers, which have been struggling for survival for years, radio seems to be relatively unaffected by the impact of digitalization. At least discussions about a digital roadmap for radio are far less pronounced than for newspapers, even though competitors like Spotify, Deezer, SoundCloud, Google Play Music, or Apple Music are already knocking on the door. Radio stations should take this competition seriously, even if the data from the Media Analysis Radio, which is updated every six months, looks positive for many radio stations. So far, the internet has had relatively little impact on the radio industry. However, the internet is now also present in cars, and it has been available on smartphones for a long time. Users are discovering new ways to use it and finding attractive alternatives to traditional radio. What can radio stations do to retain their listeners in the future? The battle for audience share will continue to intensify, while small stations that do not respond effectively enough will likely be most affected by the digital development.

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• Competing offers on the internet: A great radio program is no longer sufficient to guarantee a radio station’s success. Listeners need to find radio stations and are familiar with different media. Some primarily use tablets, others their smart TVs, and still others their smartphones. The smartphone tariffs offered are already so affordable that there is no reason for users not to use them. In addition, users have access to numerous competing offers on the internet, which are perfectly positioned in the digital world and reach their internet-savvy users with tailor-made offers. The central question radio stations must ask themselves is: Can listeners easily and quickly find radio broadcasts on all relevant internet platforms, and are the broadcasts well received? This will become increasingly important in the future. • No FM in smartphones: FM is a valuable distribution channel that will probably be available for some time. However, traditional FM receivers are no longer being integrated into smartphones. Apple devices have never had FM receivers built in. Customer satisfaction is particularly high among customers of this brand. This raises the question of whether smartphone owners even miss the missing FM reception capability – and thus access to numerous radio programs. (Radiowoche.de, 2020)

4.6.2 Radio Needs New Distribution Channels If a radio station mainly broadcasts on FM, its findability is practically nonexistent, as smartphones cannot receive it. Radio listeners not only turn on the radio and set the station via the FM frequency, but also search for it online. Internet availability in vehicles can pose a major problem for radio stations, as listening (co)drivers can access the entire listening world of the internet. Against this background, it is helpful to know how car manufacturers will technically equip new models in the future. Will traditional radio continue to exist? Or will other listening experiences be offered? In the United States, for example, new vehicles do not have a radio installed, but a console with an integrated Pandora streaming service. Pandora is a personalized internet radio that offers users personalized music suggestions. Like Pandora, the growth of the interactive and customized market in the United States was around 8% in 2019. It is probably only a matter of time before this or another provider revolutionizes the European market as a game changer. In general, it can be expected that personalized programs will eventually replace today’s radio (and today’s television and newspapers) (radiowoche.de, 2020).

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4.6.3 The Future of Radio Remains Exciting In addition to the aspects just mentioned that influence the radio industry and bring about lasting change, there are other areas to which the same applies. For example, the question of future employees, their qualifications, and requirements. How does a radio station become an attractive employer that attracts young talent, and how can young talent produce modern content? Media libraries and content hubs on the right platform are also essential for conducting conversations with broadcasters. Radio stations that have not developed a future-oriented strategy will likely disappear without a trace in the digital world (radiowoche.de, 2020).

References Conrad, H. G. (2011). Markenwerbung von Dr. Oetker. tredition. Der Spiegel. (1958). Näher ans Ruhrgebiet. https://www.spiegel.de/politik/naeher-ansruhrgebiet-a-34308d4f-0002-0001-0000-000032216298?context=issue. Accessed 20 June 2022. Funkhaus-halle.de. (2022). Wie viel kostet Radiowerbung? https://www.funkhaus-halle.de/ werbeformen/radiowerbung-kosten/. Accessed 20 June 2022. Haas, M. H., Frigge, U., & Zimmer, G. (1991). Radiomanagement. Ein Handbuch für Radio-Journalisten (2nd edn.). UVK. Koidl, R. M. (1995). Radio Business. Das Unternehmen Radiostation erfolgreich führen. Manz. Main-Post. (2009). Seit 85 Jahren gibt es Rundfunkwerbung: Inserate aus der Luft in die Wohnstuben. https://www.mainpost.de/ueberregional/kulturwelt/kultur/seit-85-jahren-gibtes-rundfunkwerbung-inserate-aus-der-luft-in-die-wohnstuben-art-5180362. Accessed 20 June 2022. PWC. (2018). Radiomarkt – German Entertainment & Media Outlook 2018–2022. https:// www.pwc.de/de/technologie-medien-und-telekommunikation/german-entertainmentand-media-outlook-2018-2022/radiomarkt.html. Accessed 20 June 2022. Radiowoche.de. (2020). Digitalisierung meets Radio: So entwickelt sich das Radio der Zukunft. https://www.radiowoche.de/digitalisierung-meets-radio-so-entwickelt-sichdas-radio-der-zukunft/. Accessed 20 June 2022. Sturm, R., & Zirbik, J. (1996). Die Radio-Station. Ein Leitfaden für den privaten Hörfunk, Reihe Praktischer Journalismus. UVK. von La Roche, W., & Buchholz, A. (2000). Radio-Journalismus: Ein Handbuch für Ausbildung und Praxis im Hörfunk (p. 169 f). List. Vowe, G., & Wolling, J. (2001). Die Kunst der Balance. Ergebnisse einer explorativen Studie zu Qualitätskriterien für das Regionalradio. In P. Rössler, G. Vowe & V. Henle (Eds.), Das Geräusch der Provinz- Radio in der Region (pp. 215–239). kopaed. Wirtz, Bernd W. (2005). Medien-und Internetmanagement (4., überarb. edn., p. 407). Springer Gabler.

5

The Internet

5.1 The History The precursor of today’s Internet was called Arpanet. It was developed in the USA in 1964, but was not introduced to the public until 1969. At that time, four computers from the universities of Stanford, Los Angeles, Salt Lake City, and Santa Barbara were connected. The first data transmission was successful on October 29, 1969. The invention of the World Wide Web came several years later. The idea was conceived by computer expert Tim Berners-Lee around 1990, and since April 30, 1993, it has been practically available for everyone to use. The terms Internet and World Wide Web are often mistakenly used synonymously. While the Internet is a global network that connects individual computer networks, the World Wide Web is a service within the framework of the Internet. It enables the creation and visiting of websites. In addition, there are many other services on the Internet, such as email and radio. In 1957, the Soviet Union sent its first satellite into space, causing the USA to fear the destruction of their communication system by the Soviet Union. They were therefore looking for a way to control their networks in a decentralized manner in the future. Even if one network location failed, other locations should be able to continue working normally and without restrictions. For this reason, among others, the Advances Research Project Agency was founded in 1958. It researched military knowledge and information exchange, which led to the development of Arpanet. After the first successful transmission of a message in 1969, the number of computers connected to the network grew slowly. By 1971, 23 computers were finally connected to Arpanet. In the same year, computer engineer Ray Tomlinson introduced a messaging system he had © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 M. Posset, Media Economics in Austria, https://doi.org/10.1007/978-3-658-42195-3_5

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d­ eveloped, which we know today as “email.” He also introduced the @ symbol, which is still in use today. Another major milestone followed in the summer of 1973 when scientists Vinton Cerf and Robert Kahn developed the technical Internet protocol TCP. This Internet protocol enabled the transmission of data in small packets. Cerf was also the first to use the term “Internet.” It stands for “Interconnected Networks.” In 1974, Arpanet expanded beyond the borders of the USA and extended to other countries. The first computers in Norway, England, and Hawaii joined the network. In the following years, the number of computers on the network continued to grow steadily. In 1983, it exceeded the 4000-computer mark. A year later, the Domain Name System, or DNS, was developed. Users could now address computers worldwide with easy-to-remember names instead of IP addresses. Tim Berners-Lee played a crucial role in the further expansion of the Internet. From 1989 to the 1990s, he gradually presented the concept of the World Wide Web, as well as initial drafts for the markup language HTML. In addition, he invented URLs, browsers, and web servers. The HTTP protocol and the associated linking of different websites were also Berners-Lee’s idea. In 1990, the National Science Foundation of the USA decided to open the Internet for commercial purposes. From this point on, private individuals could also use it. Shortly thereafter, Arpanet was completely replaced by the WWW and shut down. In 1993, the first mass-market Internet browser “Mosaic” was developed. A year later, search engines Lycos and Yahoo began operations. Google went online in 1997. In the following years, the Internet was used more and more intensively. It also gained rapid popularity in Germany. This development can still be observed today.

5.2 Digital Economy & Monopolies The advent of the Internet has already given rise to many illusions. One of these illusions was the assumption that the market would become more transparent and function more efficiently as a result. However, this remained an illusion. The digital economy offers large companies great opportunities to conquer their dominant market position and make market transparency more difficult. A perfectly functioning market, in which many providers offer the same good in complete competition with each other, has never been attractive for companies. One could even speak of a characteristic of economic development that such markets gradually disappear. They are most likely still present in developing countries, where small traders offer the same product, such as baskets, side

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by side. The individual trader cannot offer the baskets at a higher price than the market price, as they would otherwise be left with the goods. Market competition ensures a basket price that is just high enough to cover the costs of the providers and make the sale of baskets worthwhile. The share of labor income in the gross domestic product (GDP) of such a “basket economy” would be very high, as hardly any profits are made and almost all income is paid out as wages. No trader will become rich if many of them offer the same product in a market with functioning competition. However, if there are only a few providers and competition is limited, it becomes economically more interesting because one can dictate the market conditions themselves. Basket traders in developing countries, however, usually lack the financial resources needed to decimate the competition. Only when one has the opportunity to invest can one also be innovative and try to push the competition off the market with cheaper production or decoy offers. The fewer providers there are in a market, the better it is for the remaining ones. Companies understand “market competition,” “free market,” or “free competition” not as complete competition, but as the opportunity to achieve market dominance and, ideally, even a monopoly position. Only in this way can high profits be achieved in the long term. The state must then ensure, through monopoly and antitrust legislation, that competition survives permanently. The development towards a digital economy means that the chances of establishing global market dominance are getting better and better, enabling profits on a previously unprecedented scale. For example, Google has a worldwide market share of around 90% in search engines. In 2016, the company generated a net profit of almost 20 billion dollars, which corresponds to a profit per employee of 335,000 dollars. But how did Google and Co. manage to build such dominance in such a short time? This is crucially related to the scale effects of the digital network economy. The more people use Google or Facebook, the more the benefits of the offered services increase, which in turn leads to more users and makes advertising on Google increasingly valuable. Once such companies have reached a critical size, their dominance continues to grow, while the share of wages in GDP continues to decline, as they generate very high profits with relatively little work. According to a study, wages as a share of GDP fell from 66 to 60% in the USA between 1980 and 2010 and from 72 to 66% in Germany. There are laws designed to prevent market power, but competition authorities are likely to struggle with the digital economy. On the one hand, there is not only an increasing number of dominant corporations, but also an increase in opacity. Due to the data on customers and their behavior, products and prices can be tailored to the individual user, making price and product comparisons between

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c­ orporations more difficult. In the digital economy, the textbook model of a perfect market with complete competition finally becomes fiction (Zeit.de, 2017). Digital Marketplaces Digitalization has changed economic activity. Almost every transaction today involves a digital process to reduce costs, collect and analyze data, and personalize offers. The potential for economic activity has been significantly expanded, while the reduction of costs has intensified competition in many areas. While digitalization is the driving force for the dynamic development of markets and competition, there is also concern about the market power of some companies. Many of these companies offer services as intermediaries on multi-sided platforms. These platforms have some general characteristics that have important implications for the behavior of companies, for competition, and thus for competition policy. Appropriate economic analyses are very complex. For competition policy, the special characteristics of multi-sided platforms pose a challenge. The fundamental relationships and complexity of multi-sided platforms must be taken into account by competition authorities and courts when assessing specific cases under competition law.

5.3 Digital Media Digital media are communication media that operate on the basis of information and communication technology (Reinmann & Epple, 2008). They refer to technical devices for digitization, calculation, recording, storage, data processing, distribution, and display of digital media content. The digitization of media began in the second half of the 20th century. Both in production and in use, digital media represent a multitude of changes compared to previous analog media. Computer technology forms their basis, while computer systems primarily rely on binary systems. In this case, “digital” refers to the states of “0” and “1” to represent arbitrary data. A computer is a machine that interprets binary data as digital information. Recording and storing media content as digital data, such as music and video sequences, is often a very complex technical process and belongs to the field of digital signal processing. Advanced mathematical methods such as the Fast Fourier Transformation play a central role in modern data compression methods for digital processing of image, video, or audio signals like JPEG, MPEG4, and

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MP3. When digital media are published on the internet, i.e., available online, we also speak of online media.

5.3.1 What Types of Digital Media are There? The spectrum of digital media ranges from e-books to social media to computer games. The following list is intended to serve as an example of the most common online media. Video Digital media includes all types of videos that are recorded on a computer or machine system. There are many different video files that currently exist in digital format. And this number is constantly growing, especially on websites like YouTube and Instagram, which promote the uploading of videos. As mobile devices become increasingly popular, more and more videos are being created using the camera functions of mobile phones. Audio Music and audio files on your computer are also part of digital media. This includes all different audio formats such as MP3 or WAV. Audio files are usually compressed and adjusted from their original size so that they can be used on the target system. Images Any image that has been created for use on an end device, such as a computer, is considered digital media. This is often confusing, as there are many well-known images in digital format that have only existed in physical form for centuries. When we now look at these images in digital representation, we do not know whether they can really be classified as digital media. In this case, however, it is indeed digital. Software Software programs are another good example of digital media. The operating system also contributes to the development, creation, and editing of other digital media formats, so we do not automatically consider it an integral part of digital media. For example, various software systems can be responsible for creating thousands of other digital media files.

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5.3.2 Three Types of Digital Media Keep in mind that there are different categories of digital media, each with its own unique characteristics. Let’s take a quick look at the three types and their properties. Owned Digital Media Owned media are digital media content that you publish yourself using your own resources. These are usually elements such as articles, blog posts, and social media posts. Owned media allows you to determine the value and ideals you want to present. You can also use this content to promote your image, depending on the goal you are pursuing. Earned Media Earned media, also known as “Earned Media,” refers to the fact that other sources have created content about you or your company. The key point is that there were no benefits, no financial compensation, or remuneration involved. This type of digital media is usually the most sought after, as it is free, you don’t have to spend time creating it, and it is usually positively received by others. Paid Media Paid media (Paid Media) are similar to earned media in that an independent agency creates content about you or your company. This also saves time, as no own resources have to be invested in the creation or conception. This type of digital media involves the purchase of content or digital space to promote your business. Keep in mind that digital media essentially refers to all types of media that exist in digital form, but there are a variety of subcategories that you need to consider. The more you engage with digital media, the better you will understand the subtle nuances and different forms.

5.4 Online Journalism With the establishment of the internet, journalism has also changed. On the one hand, the new possibilities on the net make the conditions more difficult for journalists, who now no longer only produce content for traditional newspapers or magazines but also for their online presence. On the other hand, they create new opportunities. Especially weekly newspapers now have the chance to pick up daily news.

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The biggest challenge for journalism is the great competition that exists today not only between newspaper publishers but especially between new entertainment portals on the internet. In particular, the goal of achieving the largest possible reach has become a decisive factor in online journalism, which is not least relevant for the survival of newspapers. In addition to the more difficult economic conditions, it is still necessary to produce high-quality journalism. The question that arises is: To what extent is it possible to reconcile economic interests with the goal of ensuring the quality of journalism.

5.4.1 The Opportunities of the Internet Thanks to technological innovations, the internet surpasses the possibilities of print media journalism in many ways. The development and widespread use of the internet, along with its digitalization, has not only increased the speed of content delivery but also its enormous volume, creating a completely new opportunity for consumers to participate. With the global spread of the internet, around 3.5 billion people have access to this rapidly evolving virtual public sphere. New media have changed the game. Among other reasons, this is because users can not only consume information but also create it themselves (user-generated content). They can now switch flexibly between positions and participate in interaction (Neuberger et al., 2009, p. 23 ff.; 169). The basis for this is the so-called Web 2.0, which represents a changed use of the internet, where the focus is no longer on the mere dissemination of information, but on user participation in the web and the generation of additional benefits. A fitting example of this is the online encyclopedia Wikipedia, which allows every user to create and upload content on all subject areas. The question is how high-quality this information actually is in the end. However, the internet offers even more possibilities. For the recipient, in addition to the accessibility of the internet, the main focus is on using various media on one device, which is also referred to as multimedia. The accompanying media convergence, the merging of media into multimedia allrounders, makes it easier for users to cross offer boundaries and thus exploit the entire repertoire of text, photo, graphic, audio, and video. For the journalist, the rapid dissemination of content through another channel is probably the biggest advantage. However, the acceleration of information research and production can also be identified as important factors. The opportunities of the internet can thus be named as follows (Neuberger et al., 2009, p. 23 ff.; 169):

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• the participation opportunities • the multimedia nature and • the easy and fast dissemination, research, and production. The difficulty for media publishers now lies in being able to deal with this as well.

5.4.2 Online Displaces Print Media houses are increasingly living with the fear of being displaced, as more and more media types are on the market that can take over the work of new and old media. German daily newspapers in particular have had to accept significant losses in recent years due to the displacement effects of internet services. In 1991, the German daily newspaper still had a circulation of around 27.3 million. By 2016, this had dropped to just 15.3 million units (Statista.com, 2021). This is mainly due to the possibilities of the internet to disseminate information to publishers and other organizations as well as advertising and announcements through other distribution channels. In this way, however, journalists were able to give up their role as gatekeepers and have a prevailing voice over what was announced in the media. This substitution effect of the internet can, as with traditional daily newspapers, also have a negative impact on supply and especially demand, as not only do the online versions become more interesting, but many other providers also have the opportunity to publish content. For some time now, many publishers have been undertaking the transformation from newspaper publishers to media houses in order to counteract the displacement of the newspaper medium. To achieve this, it is worthwhile for many to enter cross-media, the use of several media at the same time. Publishers offer their readers content not only in print versions but also online. The question is whether this is enough to keep the newspaper and magazine market alive. According to the “Riepl’s Law,” this should be the case. It states that no new communication medium replaces the previously existing media, as media development is not substitutive but cumulative. Only the communication functions of the media need to be reorganized and exchanged among each other. Therefore, the pressure on the internet must be reconsidered.

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5.4.3 Forms of Presentation in Online Journalism When searching for news on online portals, one can find all the classic journalistic forms of presentation. In addition, there are also some exclusive genres. Moreover, the articles often look different here. 

Online articles are generally shorter and sometimes simpler than traditional newspaper articles, as online users spend significantly less time per text than traditional newspaper readers. Articles taken from print are usually divided by inserting subheadings. Furthermore, they are now available in multimedia format. This includes images, graphics, animations, audio files, and videos, as well as links.

Many news reports are now provided with or as video. Some of the videos found on online portals come from news agencies, while others are self-produced. For example, editorial video blogs are widespread today. Videos from tabloid media such as Bild play a particularly important role. Due to the exponential growth in the number and quality of videos on publisher portals, they must be included in the scope of the authorities responsible for broadcasting and delivery, such as broadcasting. This has some restrictive effects. However, the proposed amendment to the “Audiovisual Media Services” directive, which the EU Commission has been using since May 2016, explicitly excludes digital press offers. This is because the “main purpose” of digital press is not the dissemination of video content. A relatively new form of online journalism is so-called data journalism. Publicly accessible information is researched, collected, analyzed, and processed for quick understanding. Presentations preferably use the interactive possibilities of the internet. With sliders, users can, for example, move to different times and places to find their own striking differences. Well-known and popular is the blog. Weblogs are digital magazines and are usually created by just one author. The term blog is a combination of the words “web” and “log (book).” Blogs are often “endless.” That is, a long list of entries (reader comments), with the latest entry at the top. Old posts are often only accessible via archive links. Blog pages usually have only one content level and are easy to navigate. There are many personal blogs, but also blogs on specific topics. Blogs by individual editors are now widespread on traditional media online platforms. A sign that a blog works well is many interactions and dialogues between the blogger and the readership.

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Social media is also a form of presentation in online journalism. Social media, i.e., the media used by social groups such as Twitter, Facebook, and other social networks for internal communication, are open to both companies and individuals. A special role is played by the news portal, which supplies the network with current journalistic information. Interactivity is important here. Comments on (linked) articles often take up the most space on network websites. Finally, the image gallery should be mentioned. It has established itself as a term for a thematic collection of image files. Usually, photos of a specific subject area are combined into longer image sequences. This makes information websites more interesting and also increases the click numbers relevant for calculating advertising revenues.

5.4.4 Willingness to Pay for Online Journalism PWC has found that younger users are willing to pay for digital content, provided the quality of reporting is right. This means that digital, paid journalism is very likely the future business of newspaper and magazine publishers. However, there are some questions that need to be clarified beforehand. To what extent are users willing to pay for online journalism? Under what conditions can the media enforce a paywall? What type of journalism do people value the most? What do publishers focus on? A study by PWC provides answers and paints a picture of what journalism will look like in the future (PWC, 2019).

5.4.4.1 The Young Ones Lead the Way As the survey revealed, it is primarily the 18- to 29-year-olds who are most willing to accept a paywall and pay for the work of journalists. 39% of users in this age group confirmed that they have already spent money on online content from newspapers and magazines. The willingness to do so is also comparatively high among the target group of 30- to 39-year-olds, with 34% approval. Older generations, on the other hand, have little understanding of the new digital business models of editorial offices with a paywall: Among the 40- to 49-year-olds and the 50- to 59-year-olds, only 16 and 17%, respectively, have invested in paid content offers so far. These age groups experienced free online journalism shortly after the turn of the millennium, making it probably more difficult to get them used to paid reporting on the internet. In general, older target groups are more skeptical about the internet and, as traditional newspaper readers, focus more

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on ­journalistic print content. The so-called smartphone generation, today’s 18to 29-year-olds, on the other hand, grew up paying for online content, such as a streaming subscription. This target group therefore offers newspaper and magazine publishers a particularly large potential for a paywall and thus the paid work of journalists (PWC, 2019).

5.4.4.2 Quality Must Be Right Those who pay for online journalism expect high quality in reporting. Then, an additional 19% of Germans would be “in principle” willing to pay for an online topic. What is particularly important to them is that they are offered exclusive journalism and that journalists protect them from fake news by writing serious reports. Potential users also value the fact that no advertising is displayed in paid reporting with a paywall and that their personal data is protected. The potential willingness to accept a paywall is roughly equally pronounced among all age groups, with a slight tendency to be strongest among the 40- to 49-year-olds at 22%. However, and we must not disregard this either, 40% of citizens also state that they do not want to spend money on online reports. The most frequently mentioned reason is a lack of interest in content, as confirmed by 54% of survey participants. Another group bypasses the payment barriers of editors—46% confirm that they receive content from other websites for free. On the other hand, the payment process does not seem to be a major hurdle. This shows that payment methods are becoming increasingly user-friendly. Only 6% cite it as an argument for a lack of willingness to pay (PWC, 2019).

5.4.4.3 Paying with Data Instead of paywalls, some publishers require readers to register with their personal data before they can access digital content. This allows newspaper and magazine publishers to get to know their users better in order to display personalized advertising. For 43% of respondents, this is a good option. They will be willing to disclose personal data in exchange for free journalism. The motivation is particularly pronounced in the group of 30–39-year-olds, with 58%. Many people in Germany do not want to do without online journalism in general. Online dictionaries such as Wikipedia, the video portal YouTube, news apps, newspaper and magazine websites play a particularly important role. They access these online offers almost every second. Readers under 40 years of age obtain information more frequently than average via social media channels such as YouTube, Facebook, and Twitter (PWC, 2019).

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5.5 Social Media The birth of social media dates back to 1978 when the two American software developers Randy Suess and Ward Christensen developed the Bulletin Board System. The network was already able to share data in public forums with others. However, it took another 26 years until 2004 when Facebook, the largest social network in the world today, went online. The video portal YouTube followed in 2005, and the short message service Twitter a year later. Today, Facebook has around 3 billion users per year and is ranked fourth behind Google, YouTube, and Baidu (the Chinese answer to Google) among the most visited websites worldwide. Social media allows not only private individuals but also celebrities and politicians to post articles and information online, reaching a large following and regularly sharing information with them. In addition, social networks stand for freedom of expression and give even the unknown average citizen a voice. At the same time, they also provide a stage for journalism, as events such as accidents, crimes, or natural disasters find their way into social media. Today, it is not uncommon for events of this kind to become public on social media before traditional media report on them. The problem with this is that information disseminated via social media requires thorough verification, as it is often erroneous. For journalists who increasingly use social media in their daily work, this poses a major problem, as it is often not apparent to users where the information comes from and how trustworthy it is.

5.5.1 What Exactly is Social Media? The term social media refers to platforms that serve the exchange of experiences, information, and opinions on the Internet. Depending on the medium, users can share this content as texts, images, or videos. The functionality of these platforms is similar to that of traditional media. Individual transmitters convey information to many recipients. This is the basic principle. Like television, radio, and newspapers, social media offers both news and entertainment. In contrast to traditional media, however, social media is not a one-way street, as recipients can react and interact via comments, likes, or other functions. People who are not registered with the network or have not disclosed their information may still have full access to the messages of others, as is the case, for example, with the short message service Twitter. Through interaction,

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the platform creates new connections between senders and recipients, allowing people with similar interests to form new groups.

5.5.2 Types of Social Media “Network platforms” or “online communities” such as Facebook are based on the storage of personal information. Examples include photos, contact information, professional skills, personal interests, and preferences. Using this profile, the user establishes relationships with other members, who can confirm them as contacts to expand their network. On multimedia platforms like YouTube, user-generated content in the form of audio and video is the main focus. Users can not only consume, comment on, and “like” videos from well-known artists, but also upload their own contributions and achieve a certain level of fame. Another type of social media is the weblog, or simply: blog. Initially, users used blogs primarily as online diaries, describing their experiences. Today, there are blog articles on a wide variety of topics, which journalists also use, as we already know, to pursue their journalistic activities. There is hardly any topic that has not already been covered in some blog. A variation of the classic weblog is so-called microblogging. In this case, the length of the entry is limited to a certain number of characters. Twitter is probably the most well-known microblogging service, currently allowing 140 characters. Users can supplement messages, also known as “tweets,” with links and photos, as well as follow or subscribe to other users. In this way, they automatically receive updates and news. As an additional useful mechanism, Twitter has established “hashtags.” This term refers to the hash symbol preceding a word or phrase, such as “#fakenews.” The marked term becomes a searchable category, and the reader can access a list of the latest posts containing this hashtag with a single click. If the “@” symbol precedes the username (for example, “@ Markus Posset”), the message is not only publicly accessible but is also sent directly to the respective user. By clicking on a name, the reader is taken to the profile of the mentioned person. Finally, another type of social media worth mentioning is the so-called wikis. These are knowledge-sharing platforms that users can collaboratively edit and expand. Perhaps the most prominent and widely used example of this genre is the online encyclopedia Wikipedia. Organizations also use such networks to better collect and disseminate know-how within the company.

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In summary, there are two characteristics that all social media share. They provide users with better ways to edit and publish their content and facilitate sharing with others. Knowledge, but also misinformation in the worst case, can be transported more quickly than ever before.

5.5.3 Social Media as an Opportunity for Journalists Nowhere do information spread faster than on social networks. Therefore, they have the potential to improve journalism as well, as social media expand the range of sources, which in turn increases journalistic possibilities. By observing discussions and trends on platforms such as Twitter or Facebook, current developments can be captured more quickly. User contributions can provide a basis for research and serve as valuable backup for reporters who cannot be on site directly. The rapid (“viral”) dissemination of information in social media can be explained in principle by the so-called “snowball principle”. Many users forward interesting news using the “Retweet” function on Twitter or share it on Facebook with their friends, who in turn send the post to their own contacts. This triggers a chain reaction that can spread across continents or even worldwide due to the international orientation of the platforms. If a member has 300 contacts who share a message with all their friends, reach of several million users can be achieved. There are countless examples of journalists using these opportunities for their own reporting. Journalists who professionally use social media can access more and often better material than if they did not. The networks allow for listening to a larger number of people on a topic and including more voices than would be possible through other channels. Information that would otherwise require extensive research is often presented on a silver platter by social media. Thus, it can be useful to search for contacts for case studies on platforms such as Facebook or Twitter. Example

When a car bomb exploded in the Oslo government district on July 22, 2011, it took only about 13 min for the first images and videos to appear on the internet, documenting the events on site. Until the first reporters arrived on site, these initial amateur recordings were used.

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Shortly thereafter, teenager Adrian Pracon reported numerous deaths on Twitter after shots were fired on the Norwegian island of Utøya. He was probably the first to draw attention to the rampage of terrorist Anders Behring Breivik and provided journalists with first-hand information. ◄

5.5.4 Social Media as a Threat to Journalism Despite all the advantages that social media theoretically offers to journalism, on the other hand, it makes life quite difficult for it. Suddenly, the competition is much larger, as journalistic media no longer only have to compete with their peers, but with private individuals and organizations that operate countless pages with countless pieces of information, the sources and truthfulness of which are often not apparent and flawed. This is particularly a big and not to be underestimated problem in a time when people distrust traditional journalism, which in turn is partly due to social media. Think of networks like Telegram, where people with similar interests and opinions join together and spread misinformation to reach even more people with the same mindset. Conspiracy theories would lack substance without social media, and the aversion to traditional journalism would be far less present (journalistikon.de, 2020). Another not to be underestimated problem is caused by the algorithms, as social media, along with search engines and instant messaging services, act as intermediaries that algorithmically access, filter, and ultimately compile content from a variety of sources into personalized information packages for users. From a user’s perspective, they thus have a significant influence on their management in terms of identity and relationship (journalistikon.de, 2020). Journalism finds itself in an involuntary state of change, which is also evident in the adaptation of public service broadcasting. “With the ‘ARD/ZDF Content Network funk,’ for example, journalistic content for the target group aged between 14 and 29 is specifically designed for third-party social media platforms” (Stollfuß, 2020; journalistikon.de, 2020).

5.5.5 What the Research Says Research on social media platforms has rapidly changed in recent years with the structural changes in online-based communication methods in social networks. Central aspects in communication science are still questions about establishing

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and maintaining contacts, the presentation of personal content, and the selection, evaluation, and circulation of information (journalistikon.de, 2020). Important for journalism are the possibilities and media practices of content creation and publication, the logically following aspects of subsequent communication, and the different characteristics of digital networks. And finally, it is always about a differentiated view of different forms of social formation. For example, social media platforms or personal networks in collective form such as communities and their visibility and navigation possibilities. It takes into account different forms of agencies, organizational/coordinating patterns, and decisionmaking modes (journalistikon.de, 2020). In addition, questions arise about the effects on editorial practices, a partially associated work with smartphones, and the changing requirements and professional profile. And finally, the transformations brought about by social media also lead to reflections on changed forms of representation for different platforms (journalistikon.de, 2020).

5.6 Advertising on the Internet The magic word that sums up advertising on the internet is “onlinemarketing,” as it encompasses all variations of advertising on the internet. This includes social media marketing in various networks from Facebook to YouTube, TikTok, and LinkedIn, as well as the vast field surrounding search engine marketing. A central component is also one’s own website or email marketing. The advertising formats on the internet are diverse and generally often cheaper than advertising in other media. Above all, target groups can be reached much more precisely (see Fig. 5.1).

5.6.1 The Website For media companies, as well as for any other company, having their own website is indispensable. It serves as both a business card and a sales channel, through which additional integrated webshops can process orders. Moreover, visitors who are to be attracted with other marketing activities will sooner or later also be directed to the website. In this respect, it is an anchor point for online marketing and advertising on the internet. For this purpose, websites must take into account aspects such as design, layout, programming, legal aspects, and of course sales-related transformations.

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Fig. 5.1   Graphical representation of online advertising figures

These topics are extensive and usually require experts when it comes to creating websites. Especially if the website plays an important role in the marketing concept (für-gruender.de).

5.6.2 Social Media and Online Marketing The world of social media channels now consists of more than just Facebook, Instagram, and Twitter. Companies are therefore faced with the question: Where and how do I advertise on the internet in relation to social media? What is the right channel for my product or service, how do I prepare the advertising according to the selected channel, or how do I reach my target group? The advertising world in social media is complex, but those who understand it gain a decisive advantage over the competition because they produce suitable content and reach target groups precisely (für-gruender.de). Leveraging the Power of Users In Germany, around 40 million internet users use social networks. The majority of these people find it useful to receive recommendations and tips from their environment. There are groups and forums on almost every topic on the platforms, and depending on the size, we are talking about an institution that expresses opinions on services and products.

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Therefore, companies should use social networks to interact with the so-called users. Only with active social media marketing is it possible to observe how one’s own offer is evaluated by consumers and to continuously work on a positive reputation. In addition to advertising opportunities, the further development of one’s own offer through a constructive feedback culture on the internet is also possible. This is particularly efficient and cost-effective for start-ups to increase or initiate the awareness of the start-up and its offers. However, this can only be achieved if a credible and trustworthy channel is created in social media that does not only communicate in one direction—or even worse—only plays advertising. Various Areas of Application Companies can use social media to influence the public perception of the company, and they can also be used for customer service and market research. Social media is also used in the personnel area to find new employees or to present job offers in an interesting way. Another area of application is internal communication. In addition to the already mentioned channels such as Facebook, companies can also use corporate blogs, microblogging platforms like Twitter, or so-called wikis. Web blogs, online magazines, webinars, video tutorials, and podcasts improve the interaction between companies and their potential customers. Furthermore, social media marketing activities improve the placement in popular search engines.

5.6.3 Influencer Marketing The word influencer comes from English and means something like an influence maker. In the marketing context, these are people who build up large reach on social media platforms and use them for advertising purposes. Influencer marketing is particularly widespread on YouTube, Facebook, SnapChat, and Instagram. However, influencers are also active on Twitter and blogs, and the idea is anything but new. Even before the advent of social networks, celebrities were outfitted by fashion designers to draw attention to new collections. We remember the relationship between Thomas Gottschalk and Haribo. Social media gave influencer marketing a new boost. On the one hand, many studies have shown that they can demonstrate a positive effect on consumer purchasing power. On the other hand, influencer marketing campaigns are particularly reliable. Also important: influencer marketing cannot be stopped by any ad blocker (für-gruender.de).

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5.6.4 Advertising on Facebook In general, the company profile on the Facebook page is already considered advertising. It is not about customer acquisition, but about direct contact and general interaction with existing customers and partners. Fans receive company posts and reports from friends via a general timeline. In this way, companies can focus on new products and services, report on news from the industry, and hire employees. When creating a Facebook profile, you must ensure that the Facebook profile is set up as a fan page and not as a private profile. Only in this way can it access important statistics from Facebook and set up social plugins such as the Like button on its website. Paid advertising on Facebook plays an important role in gaining new fans. However, so-called posts on fan pages should be coordinated with Facebook Ads. This, however, is a science in itself, which is why most companies work with agencies. Regularity and topicality are important factors in looking after the fan community, which is why it makes sense for companies with fan pages to outsource these extensive tasks to at least one full-time employee or an external agency (fuer-gruender.de, n. d.a). Facebook Ads are explicit forms of advertising on Facebook and are divided into Self-Service Ads and Engagement Ads. With Self-Service Advertisement, you create the ad on your own. Payment is made per click—Cost per Click—or per thousand contact price—Cost per Mile. The length of the advertising text is limited to 130 characters, and image material can also be integrated. In addition, it is possible to precisely determine the target group for the delivery of the ad. In this way, you can precisely define the region from which the recipients come and their gender or age. This makes advertising on Facebook a tailor-made approach for the advertised product or service. With Engagement Ads, the entrepreneur chooses a form of advertising that is booked through Facebook’s sales department. This route is comparatively very expensive but also offers various advantages. For example, you can include a Like button directly in the ad with Engagement Ads on Facebook. In addition, with this variant, you can distribute films via the Video Ad and generate market and/or opinion surveys, and with the Event Engagement Ad, you can draw users’ attention to an event in advertising form and invite them. All variants of advertising on Facebook can be “liked”, shared, and commented on and appear in the so-called Activity Stream of the users. In this way, companies not only get the necessary attention for the product or service but also continuously increase their fan community (für-gruender.de).

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5.6.5 Advertising on YouTube With around 4 billion video views per month, YouTube is the world’s most successful video portal and, measured by this number of visitors, the second largest search engine. This marketing potential alone makes it interesting for companies to deal with the topic of advertising on YouTube. The main arguments for placing ads on YouTube are the direct targeting of audiences and the unique billing model. In this case, advertisers only pay for played videos. This way, entrepreneurs can build their own channels, watch promotional videos specifically, and optimize their campaigns. The Formats Whether someone produces commercials or image films depends on the defined goal. Therefore, you should ask yourself some questions before starting the film production. These would be: Do I want to advertise a new product or increase my awareness? How big is my budget? Or: Could I use guerrilla marketing for myself? The answers to the strategy and budget questions ultimately provide information about whether you should organize advertising on YouTube on your own or with the help of an advertising agency. Since the possibilities are often as complex as they are large, it is advisable in many cases to consult an agency in order to fully exploit the potential of YouTube as an advertising medium. An integral part of advertising on YouTube is setting up a well-designed YouTube channel. Here we distinguish between a regular channel, partner channel, and brand channel. The difference lies primarily in the extended functions and possibilities for the various advertising formats on YouTube. The uploaded videos not only serve for advertising purposes but also contribute to the company’s awareness. YouTube videos automatically appear in Google’s search engine, thus improving visibility. Therefore, the description of the film should also be search engine optimized. This format is generally free of charge—only the production costs of the video are incurred. In addition, you can have an advertisement specifically played before a video is called up. This form of advertising on YouTube is called TrueView in Stream. This allows relevant target groups to be reached directly (fuer-gruender.de, n. d.b).

5.6.6 Videos as an Opportunity Videos convey emotions and have a strong impact. Who created the video is ultimately irrelevant. What’s more important are originality and creativity, as well

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as a well-formulated message of the moment. This is especially true for creating videos for your YouTube channel. Anyone who wants to make a video should look at the film messages and spots of other companies in the industry. What is attractive to the target audience? Are other people advertising in stories and commentary videos? An example of this is cooking, photographing, and uploading a special dish when you want to advertise for a new restaurant. Or a film interview with a satisfied guest. Your imagination has no limits. Those who want to work with commercials in the TrueView family must pay attention to clear messages in the spots. It should be short and snappy because potential customers are particularly addressed in the first seconds of the advertisement. The entire spot should not last longer than 60 seconds. Those with a high budget for advertising on YouTube should rely on professional help for the production of the clip. Important for search engine ranking is the number of people who watch the video. In addition, comments and ratings are valuable accompanying phenomena when advertising on YouTube. These elements decide on the placement or visibility of the advertising and image films. To boost the advertising machinery, you should develop a strategy in advance and implement it using all available tools. This includes, in particular, linking from forums, blogs, and websites directly to the YouTube video. Spread the YouTube links with your films via Facebook, Twitter, and Google+. Cross-promotion with other video platforms is also important to spread the advertising. Measuring the success of advertising on YouTube is a breeze thanks to the possible integration of the YouTube account with the Google Ads account and helps you control the campaign (für-gruender.de). Example: For Advertising

A hobby photographer from your area wants to watch a film about tips and tricks for beginner photographers. If you are a photographer and want to promote your workshop on YouTube, you can place the ad before the hobby photographer’s film. The person then decides within five seconds whether they want to see this advertisement or click on “Continue.” You only pay if the commercial runs for 30 s. When advertising on YouTube, this is billed as Cost-per-View. In addition, you can display your video on the right side as a preview image, the so-called thumbnail, when advertising on YouTube. You also only pay when the video is viewed. This form of advertising on YouTube is called TrueView In Display. Furthermore, you can target the

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a­ udience in advertising on YouTube through the advertising video using video ­remarketing, placement targeting, or interest categories. The individual functionalities of these tools are described directly on the YouTube website. ◄

5.6.7 Banner Advertising For advertising on the internet, there are several banner formats that differ, such as Medium Rectangles, Halfpage Ads, Wallpaper, Skyscraper. In addition, there are website overlays, which should be familiar to everyone. Banner ads are meant to help you build an image in online marketing and generate clicks at the same time. You can book banner advertising on your website through various channels. • Directly through the website operator • Marketers and media agencies • Through Google Ads As with ads in traditional media, you should also make sure that your target audience is present on the websites where you place your advertising when it comes to banner advertising. Otherwise, the scatter losses in internet advertising and online marketing are as high as in traditional marketing (für-gruender.de).

5.6.8 Search Engine Advertising SEO, SEA, and SEM are the three most important abbreviations when it comes to advertising in search engines, in this case, on Google. The abbreviations stand for the following aspects of advertising on the internet: • SEO (Search Engine Optimization): The so-called search engine optimization aims to list organic search engine results as high up on the page as possible. Those who achieve this have significant advantages in online marketing compared to their competitors. • SEA (Search Engine Advertising): Search engine advertising refers to the placement of paid text ads on search results pages. The most important provider of this type of advertising is Google Ads. • SEM (Search Engine Marketing): Search engine marketing serves as an umbrella term for the first two points mentioned in online marketing.

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At the center of SEO, SEA, and SEM is Google, as Google, particularly in Europe, has a very high market share as a search engine and thus combines a large part of advertising on the internet. Therefore, we present more information on search engine marketing with Google on another page. By the way, local businesses should take a look at the free Google My Business (for-gruender.de).

5.6.9 Email Marketing Newsletters have long had their place in marketing concepts under the keyword advertising on the internet—especially before social media existed. Although the rise of social media also predicted the demise of newsletters in online marketing, email continues to enjoy great popularity in internet advertising. However, challenges exist in building a distribution circle and delivering relevant offers to customers (for-gruender.de).

5.6.10 Affiliate Marketing Affiliate marketing is a form of advertising on the internet that can be compared to sales by field staff in the offline world. Your affiliate partner contributes to the sale of your offer on a commission basis. To do this, they integrate various advertising formats from you into their own website and direct visitors to you and your webshop. Payment models can vary greatly. Payments are often tied to actual sales (fuer-gruender.de).

5.7 The Future of Online Media and Journalism The British Reuters Institute believes that both journalists and the audience are “burned out” to some extent due to the intensity of the news agenda and the polarizing debates about politics, identity, and culture. After the news media boom almost two years ago with the beginning of the pandemic due to the great need for information, news media ratings have declined again in many parts of the world in 2021. The generational change in editorial offices will also continue to be a central issue, it says. This goes hand in hand with questions about diversity and integration in media houses, new topics such as climate change and mental health, and the behavior of journalists on social media. Another challenge will

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be to compensate for the rising costs of paper and energy in the print sector by accelerating digital transformation towards digital offerings (MTM22, 2022). In addition, the Reuters Institute sees a great opportunity for trusted media brands in the revenue area, after digital advertising revenues have previously migrated to the major platforms. In the researchers’ view, stricter data protection regulations that restrict third-party data and concerns about fake news could bring advertisers back to traditional quality media. Speculations about the regulation of platforms will also become a reality, as the EU and some national governments try to exert more control over BigTech companies. However, “advertising remains a fiercely competitive and difficult business, and not every publisher will be successful,” the report cautions. The annual survey points to the importance of media and technological innovations on society. Next-generation technologies such as artificial intelligence (AI), cryptocurrencies, and the metaverse (virtual or semi-virtual worlds) already pose new challenges to people but also offer new opportunities for networking, information, and entertainment. A “central challenge for news media” is to re-engage those who have turned away from the news and build closer relationships with regular news consumers (MTM22, 2022).

5.7.1 The Importance of Artificial Intelligence The study also shows that artificial intelligence, which enables personalized experiences and higher production efficiency, remains very popular among media companies. 85% say that these technologies are important for improving content recommendations and editorial automation. 69% believe that AI is essential for acquiring and retaining customers (MTM22, 2022). AI is one of the innovations that publishers use to stay relevant in the face of changing audience behavior. However, half of the surveyed publishers (51%) report not having generated enough money this year to invest in innovations, partly due to budget cuts during the Corona phase (MTM22, 2022). In addition, the study suggests that a lack of coordination (41%) between different departments such as editorial, sales, and marketing is slowing down innovations, alongside the shortage of skilled workers (MTM22, 2022). Regarding future topics such as Web3, cryptocurrencies, and NFTs, Reuters reports currently see “more questions than answers.” The Web3 technology making the first wave is NFT (Non-Fungible Token). The term refers to a unique

References

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certificate that seals ownership of digital objects such as artworks, photographs, and even the original message. The certificate is stored in a decentralized public blockchain, which serves as proof of ownership. These potentially unadulterated proofs paved the way for unlocking the enormous value of digital artworks. The study states: “This process is a good example of the Web3 principle that authors can bypass traditional gatekeepers and sell directly to the public.” This principle has also been tested by the press. For example, “The New York Times”: A wellknown US media brand auctioned off a voice message from a variety of daily podcasts and the opportunity to publish the winner’s name in the newspaper. The proceeds were donated to charity (MTM22, 2022) (https://blog.medientage.de/ wie-es-mit-medien-und-journalismus-weitergeht). According to the report, the use of NFTs is expected to increase beyond art speculation this year. Publishers can try to monetize the archive. The downsides: Similar to cryptocurrencies, Oxford research authors expect more controversies about the environmental impact of NFTs, which use the same energy-intensive blockchain technology (MTM22, 2022).

5.7.2 The New Workplace In the working world of media companies, Reuters reports predict that hybrid working could become the norm after the forced remote work during Corona and on-site. Literally: “You can expect that most employees will spend a few days in the office and the rest at home next year.” There are many advantages. Remote work breaks the hierarchy and commits a new wave of editors. For a more positive and diverse agenda (MTM22, 2022).

References Fuer-gruender.de, René Klein. (n. d.a). Werbung im Internet: Facebook, YouTube, Google und Co. https://www.fuer-gruender.de/wissen/unternehmen-fuehren/marketing/onlinemarketing/social-media-marketing/facebook/. Accessed 20 June 2022. Fuer-gruender.de, René Klein. (n. d.b). Mit Werbung auf YouTube den eigenen Bekanntheitsgrad steigern. https://www.fuer-gruender.de/wissen/unternehmen-fuehren/marketing/ onlinemarketing/social-media-marketing/youtube/#:~:text=Bewegtbilder%20transportieren%20Emotionen%20und%20erzielen,klar%20formulierte%20Botschaft%20des%20 Spots/. Accessed 20 June 2022. Journalistikon.de, Sven Stollfuß. (2020). Social media. https://journalistikon.de/socialmedia/. Accessed 20 June 2022.

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MTM22, Petra Schwegler. (2022). Wie es mit Medien und Journalismus weitergeht. https:// blog.medientage.de/wie-es-mit-medien-und-journalismus-weitergeht. Accessed 20 June 2022. Neuberger, C., Nuernbergk, C., & Rischke, M. (Hrsg.). (2009). Journalismus im Internet, Profession – Partizipation – Technisierung. VS Verlag. PWC. (2019). Zahlungsbereitschaft für Online-Journalismus. https://www.pwc.de/de/technologie-medien-und-telekommunikation/zahlungsbereitschaft-fuer-online-journalismus. html. Accessed 20 June 2022. Reinmann, G., & Eppler, M. J. (2008). Wissenswege. Hogrefe, vorm. Huber. Statista.com, Bernhard Weidenbach. (2021). Entwicklung der verkauften Auflage der Tageszeitungen in Deutschland in ausgewählten Jahren von 1991 bis 2021. https:// de.statista.com/statistik/daten/studie/72084/umfrage/verkaufte-auflage-von-tageszeitungen-in-deutschland/. Accessed 20 June 2022. Stollfuß, S. (2020). Social Media. journalistikon.de. Zeit.de. (2017). Internet frisst Wettbewerb. https://www.zeit.de/2017/25/digitale-oekonomie-wettbewerb-monopole. Accessed 20 June 2022.

6

Conclusion

The world of media has always changed and will continue to change and evolve in the future. The challenge for media companies remains to recognize these challenges early, respond correctly to them, and think in a future-oriented way. Media must invest in these future trends and hire experts to make the best possible use of the opportunities offered by the Internet. It is not enough to simply transfer print articles one-to-one to the web and then hope to stand out from the crowd. Online contributions must be newly and specifically prepared for the Internet because people read differently on the web and perceive contributions differently. In addition, media companies must also ensure the quality of their articles on the web— because quantity alone does not make a medium more successful. Whatever the future may bring, it is likely that both print and radio and television will shift to the Internet and compete for people’s attention with personalized media offerings. What will play a major role in this context is technology. Those who invest in it will help shape the future. As for the loss of trust in the media, some media houses need to take a look at themselves and return to serious journalism on the Internet. Provoking interactions with sensational headlines may generate a lot of activity under a contribution for the moment, but this tactic will not benefit anyone in the long run because people will increasingly turn away from journalism if it is not solely the quality with which the media try to stand out from the swamp of information. Because what a world without serious journalism looks like can be observed in those parts of the world where people’s freedom is severely restricted.

© The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 M. Posset, Media Economics in Austria, https://doi.org/10.1007/978-3-658-42195-3_6

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