Media Management and Production II: The Definition and Concept of Media Management; the Economics and Commerce of Mass Media in India; and the Principles and Management of the Media Industry after Liberalisation
2. The economics of mass media
Robert Picard's Media Economics (1989) described the dual product market: a media firm sells one product, content, to audiences, and a second product, the attention of those audiences, to advertisers. The two markets are linked, because more readers or viewers raise advertising rates, and most commercial media earn more from advertisers than from audiences. Media goods also have unusual cost structures. The first copy of a newspaper edition, a film or a television programme is very expensive, while each additional copy or viewer costs little or, for broadcasting and digital, almost nothing; this produces strong economies of scale, which favour large firms. Economies of scope arise when the same content is reused across print, television and digital platforms. Content is also partly a public good: one person's viewing does not reduce another's, which makes it hard to charge for directly.
Indian newspapers illustrate the dual market clearly. Most sell for far less than the cost of producing and distributing a copy, a practice known as the invitation price, and make up the difference from advertising. If a copy costs 12 rupees to produce and distribute and sells for 4 rupees, advertising must cover 8 rupees per copy for the paper to break even, which is why advertising revenue shapes decisions about pagination, circulation areas and even content. Television channels earn from advertising and from subscription revenue collected through cable and DTH distributors, while paying carriage fees to reach viewers; TRAI's tariff framework for broadcasting, the New Tariff Order notified in 2017 and implemented in 2019, let subscribers choose and pay for individual channels. Film earns from theatrical box office and from satellite, digital streaming and music rights, and digital media earn from advertising, subscriptions and increasingly from platform deals.
3. The commerce of mass media in India
Media commerce is organised around audience measurement, because advertising is bought and sold on audience numbers. Television ratings in India are produced by the Broadcast Audience Research Council (BARC), an industry body of broadcasters, advertisers and agencies whose ratings began in 2015, replacing the earlier TAM system; print circulation is audited by the Audit Bureau of Circulations (1948) and readership estimated by the Indian Readership Survey; digital audiences are measured by platforms and third-party analytics. Measurement is a site of conflict: in 2020 allegations that ratings had been manipulated led to a pause in the publication of news ratings.
Some commercial practices raise ethical questions. In "private treaties", developed in the 2000s, a media group accepted equity in a company in exchange for advertising space, which gave the group a financial interest in the company it covered; the Securities and Exchange Board of India and the Press Council raised concerns about disclosure. Advertorials, paid content formatted like editorial matter, must be clearly labelled. Paid news, the sale of coverage itself, was documented by the Press Council in 2010. Each practice blurs the separation of editorial and business that media management is meant to protect.
4. Principles and management of the media industry after liberalisation
The economic reforms of 1991 changed the Indian media from a system of a state broadcasting monopoly beside a privately owned but protected press into a competitive, multi-platform industry. Satellite television arrived in 1991 and 1992; private FM radio and direct-to-home television followed in the 2000s; and the internet and smartphones created digital media. Foreign investment was opened in stages: news and current affairs print from 2002 up to 26 per cent, with caps of the same order for digital news (from 2019) and higher limits for television news and non-news broadcasting. Media companies were corporatised, many listed on the stock exchanges, formed foreign partnerships and diversified into events, education and digital ventures.
- Marketing orientation: readers and viewers treated as consumers, content shaped by research, price wars using low cover prices; the Times of India's strategy under Samir Jain, described by Ken Auletta in The New Yorker (2012), is the usual example.
- Consolidation and cross-media ownership: groups owning newspapers, channels, radio and digital outlets; TRAI has examined cross-media ownership and recommended safeguards, and large corporate groups entered media, as when Reliance Industries acquired control of Network18 in 2014.
- Professional management: MBA-trained managers, cost control, multi-skilled journalists, contract employment and digital-first workflows.
- Growth of Indian-language media and of regional channels, which captured most of the new audiences.
- The shift to streaming and platforms, which moves advertising and attention to global technology companies and reshapes the economics of every older medium.
The principles that good media management keeps under these pressures are the ones this unit has repeated: editorial independence from owners and advertisers, transparency about commercial arrangements, investment in reporting rather than only in distribution, and measurement that values trust and quality as well as reach. Critics of the post-liberalisation industry argue that commercial pressures produced sensationalism, paid news and concentration; its defenders point to the expansion of choice, the growth of Indian-language media and the investment that liberalisation made possible. A strong answer recognises both.
Key takeaways
- Media management applies the management functions (Fayol 1916; Gulick's POSDCORB 1937) to organisations whose products are creative and perishable, whose staff value autonomy, and which answer to audiences, advertisers, owners, regulators and the public; the separation of editorial and business ("church and state") is its core principle.
- Economics: Picard's dual product market (1989); high first-copy and low marginal costs give economies of scale; economies of scope across platforms; content as a partly public good; the invitation price, with advertising covering the gap between cost and cover price.
- Revenue: advertising and circulation for print; advertising, subscription and carriage for television under TRAI's New Tariff Order (2017, implemented 2019); box office and rights for film; ads, subscriptions and platform deals for digital.
- Commerce runs on measurement (BARC from 2015, ABC 1948, IRS) and raises ethical issues: private treaties, advertorials and paid news blur editorial independence.
- After 1991: satellite television, FM, DTH and digital; FDI in news print up to 26 per cent from 2002, similar caps for digital news from 2019; corporatisation, listing, consolidation and cross-media ownership (Reliance and Network18, 2014); marketing orientation; regional-language growth; the shift to platforms.
Practice questions (10)
Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.
The idea that media firms operate in a "dual product market", selling content to audiences and audiences to advertisers, is associated with:
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Answer: C — Robert Picard
Robert Picard's Media Economics (1989) set out the dual product market. Gulick coined POSDCORB, Drucker proposed management by objectives, and Fayol listed the classic functions of management; none of them wrote specifically on media economics.The "invitation price" of an Indian newspaper refers to:
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Answer: A — A cover price set below the cost of producing a copy, with advertising making up the difference
The invitation price is a deliberately low cover price that attracts readers and so raises the circulation that advertisers pay for. It is not an advertising rate, a free trial or a subscription price, though it serves the same goal of building readership.POSDCORB, a summary of the functions of an executive, was coined in 1937 by:
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Answer: B — Luther Gulick
Luther Gulick's POSDCORB stands for planning, organising, staffing, directing, co-ordinating, reporting and budgeting. Fayol's functions (1916) came earlier, Taylor founded scientific management, and Picard wrote on media economics.Which of the following are characteristic of the economics of media products? Select all that apply.
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Answer: B — Strong economies of scale; C — Low marginal cost of serving an additional reader or viewer; D — High first-copy costs
Media goods cost a great deal to make once and little to copy or distribute to one more person, so average cost falls as audiences grow, giving economies of scale. A steeply rising marginal cost is the opposite of the media pattern.In the "private treaties" practised by some Indian media groups, the media company:
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Answer: D — Accepted equity in a company in exchange for advertising space
Private treaties exchanged advertising for a shareholding, giving the media group a financial stake in companies it might report on, which raised disclosure and conflict-of-interest concerns. The other options describe ordinary business arrangements.Assertion (A): Many Indian newspapers are sold for less than the cost of producing a copy. Reason (R): The Audit Bureau of Circulations certifies the circulation figures of member publications. Choose the correct option.
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Answer: B — Both A and R are true, but R is not the correct explanation of A
Both are true, but R does not explain A. Newspapers can be priced below cost because advertising subsidises the cover price; audited circulation matters to advertisers, but certifying figures is not the reason copies are sold cheaply.Television audience ratings in India are produced by BARC, whose ratings began in:
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Answer: A — 2015
The Broadcast Audience Research Council, an industry body, began publishing ratings in 2015, replacing the TAM system. 1976 is the year Doordarshan separated from AIR, and the other years are distractors.A newspaper copy costs 12 rupees to produce and distribute and is sold for 4 rupees. How much advertising revenue per copy, in rupees, is needed to break even? Type the number.
Numerical answer — type the value.
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Answer: 8
Break-even requires revenue per copy to equal cost per copy: 12 − 4 = 8 rupees must come from advertising. Two-thirds of the cost is therefore carried by advertisers, which shows how the dual product market works.Management by objectives (MBO) was set out by Peter Drucker in:
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Answer: C — The Practice of Management (1954)
Drucker introduced MBO in The Practice of Management (1954). Media Economics is Picard's, the 1937 Papers, edited by Gulick and Urwick, contain POSDCORB, and Taylor wrote The Principles of Scientific Management.Which of the following statements about foreign direct investment in Indian news media are correct? Select all that apply.
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Answer: A — News and current affairs print was opened to foreign investment of up to 26 per cent in 2002; D — Digital news media were subjected to a comparable cap from 2019
Print news was opened to 26 per cent foreign investment in 2002, reversing the 1955 policy, and a comparable cap was applied to digital news in 2019. News media are open to limited foreign investment, not closed; and news channels are not open to full foreign ownership through the automatic route, because news is capped more tightly than entertainment.