Chapter 7: Economics of print media
Print media such as newspapers, magazines, and books share some common economic features because of physical production and distribution, but each also has unique issues because of different demand characteristics and because they integrate or outsource elements in their value chains in various ways. They also operate with different business models that create economic incentives and constraints that differ among the print industries. Fundamental to understanding these factors and differences are comprehension of the differing cost structures, the role of economies of scale, and constraints on prices created by multi-sided markets in the print media industries. The most significant and common economic factor is that print media share a similar underlying technology – the printing press. Although the characteristics of presses used to produce the three main print media can differ, the manufacturing of copies on presses creates conditions in which all three operate in unit cost economies. In this type of economic setting, the costs of producing and distributing single units are important and efficiency is influenced by the number of copies printed. This creates economies of scale in production and distribution and transaction costs involved in individual unit sales and distribution. Daily newspapers encounter strong barriers to entry because of capital costs for printing presses and facilities (Busterna, 1988; Lacy and Simon, 1993; Picard and Brody, 1997), something not faced by most book and magazine publishers that typically outsource production (Dealy et al., 1997; Mogul, 1998; Greco, 2004).
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