Handbook on the Economics of the Media

Handbook on the Economics of the Media

Edited by Robert G. Picard and Steve S. Wildman

This Handbook explores the economic features of the media and its infrastructure to provide readers with a sophisticated understanding of the critical issues and their influence on companies, audiences and regulators. The contributors explore and explain the impact of underlying factors such as multi-sided platforms, advertising and industry structure. They assess the unique economic factors affecting print, broadcast and broadband-based media, and highlight how the economics of the media can influence policy making. Each original chapter introduces the reader to a specific topic, reviews the literature on the development of knowledge in the field, explores critiques of the approach, and provides an understanding of applying this knowledge and the implications.

Chapter 1: Media as multi-sided platforms

Jean J. Gabszewicz, Joana Resende and Nathalie Sonnac

Subjects: economics and finance, cultural economics, industrial economics, innovation and technology, technology and ict


Media are among the most influential institutions in modern societies. Media outlets – press, TV, Internet, radio, cinema – have become the leading players in the production and diffusion of information. Universal access to information, knowledge and pluralism of opinions are fundamental vectors for promoting a democratic and free society. However, the production of information is costly and the survival of media outlets crucially depends on the possibility of financing their activities. To avoid overloading consumers with all the costs of information production and promote as much as possible a universal access to information, media outlets have long relied on the combination of circulation/subscription revenues and advertising revenues (sometimes complemented by public subsidies) to finance their activities. The conventional business model used by media firms exploits their role as platforms of interaction between two categories of users: audiences (consumers) and advertisers. Exchanges arising in media markets often generate cross network externalities (between advertisers and consumers, and vice versa), producing interactions between the demand for advertising and the demand for media content. Accordingly, traditional media outlets naturally appear as two-sided platforms. In light of all changes carried by the digital disruption and the convergence phenomenon, the frontiers of media markets are going through a process of deep transformation. The cost of information provision and diffusion has become much lower and the speed of information exchange has enormously increased. This process has immensely expanded the possibilities to create value.