When I visited University of Texas earlier this year, I found out that one of the foremost media economics texts is Canadian. It seems there is, or perhaps was, quite a concentration of media economists at the University of Alberta, resulting in this book.
It took a while before it even occurred to me to look for the book in Warsaw’s libraries. But then I found it, easily, in the reading room at the school of journalism — a brand new, crisp copy.
I’m speaking with one of the authors, Stuart McFadyen, this afternoon (or this morning, Alberta time).
More on that later; in the meantime, here are some interesting points from Media Economics: Applying Economics to New and Traditional Media.
- “Cultural objectives are considered important by most governments in broadcasting, film, book publishing, magazine publishing, and music recording. However, most private companies operating in such industries are commercial operations whose main motivation is profits. Typically they are not too impressed if the government, or a regulatory agency, tells them they should be pursuing cultural goals (at the expense of profits).” (page 176)
- In a perfectly competitive industry the companies would be unable to comply since that would result in negative economic profits and force the company to exit from the industry.
- Monopolies, though, are more amenable to such pressure. The reduction of economic profits can be seen as a small price, especially if the monopoly’s position depends on regulatory rules. For example if a regulator requires the organization to meet cultural goals in exchange for being a monopoly.
- Profit can still be a secondary goal in companies that operate as for-profit: eg. as a filmmaker Atom Egoyan’s primary aim is cultural expression, and public funding allows him to pursue those goals separate from aiming for profit. BUT it’s impossible to pursue non-profit goals at the expense of profit in a state of perfect competition.
- “Economic profits are necessary if firms are to be persuaded, or required, by a regulatory agency to further cultural goals at the expense of profits. Similarly, the opportunity to earn economic profits in the long run permits other goals to be pursued willingly.” (page 208)
- “If a television program is thought to have external benefits, a subsidy is appropriate. However, the level of subsidy should not exceed the level of external benefits.” That can be hard to measure, which is why governments often set standards instead, similar to pollution caps. (page 294)
- “For public goods, such as national defense, firefighting, lighthouses and basic research, it is the role of government to determine the optimal level of output and to finance the service from taxation (or, alternatively, for broadcasting, a television or radio license fee).” That involves a cost-benefit analysis, but benefits are hard to measure, so sometimes a government department can provide the service itself, eg the BBC. (page 297)