Media and Internet Management

Transcription

Media and Internet Management
Lecture Material - Extract
Prof. Dr. Bernd W. Wirtz
Chair for Information and Communication Management, University of
of Speyer
FreiherrFreiherr-vomvom-SteinStein-Straß
Straße 2
67346 Speyer, Germany - email:
email: lsls-wirtz@[email protected]
Contents
Page
3
Chapter 1: Foundations of media management
Chapter 2: Newspaper and magazine management
65
Chapter 3: Book management
89
Chapter 4: Movie management
103
Chapter 5: TV management
127
Chapter 6: Radio management
151
Chapter 7: Music management
166
Chapter 8: Video and computer game management
186
Chapter 9: Internet management
204
Chapter 10: International media management
231
Chapter 11: Integrated media conglomerates and cross-media
243
© Bernd W. Wirtz | Media and Internet Management | July 2011 – Page 2
Chapter 1: Foundations of media management
Figure 1-1: Structure of media and internet management
Chap. 1: Foundations of
media management
Strategic
management
Procurement
management
Strategisches
Management
Production
management
Sales
management
Organization
Chap. 9: Internet management
Chap. 8: Video and computer
game management
Chap. 7: Music management
Chap. 6: Radio management
Chap. 5: TV management
Chap. 4: Movie management
Chap. 3: Book management
Chap. 2: Newspaper and
magazine management
Chap. 10: International media management
Chap. 11: Integrated media conglomerates and cross-media
Source: Wirtz (2011), p. 4.
Figure 1-2: Number of publications in media management & media economics
40,000
Number of
publications
30,000
Non-peer
reviewed
20,000
10,000
Peer
reviewed
0
1920-1970 1971-1975 1976-1980 1981-1985 1986-1990 1991-1995 1996-2000 2001-2005 2006-2010
Figure 1-3: Chronological development of media management &
media economics research fields
Video game economics
First management
articles
•
•
•
•
First books
Matsumura, Kurimoto (2000)
Cox (2008)
Liu (2010)
…
Internet economics
• Rayport, Sviokla (1995)
• Mathieu, Woodard (1996)
• …
•
•
•
•
Dickson (2000)
Yoo (2007)
Biczok et al. (2010)
…
Movie economics
•
•
•
•
Bluem (1972)
Moorhouse (1973)
Farber (1976)
…
•
•
•
•
Smith et al. (1986)
Gandal, Salant (1995)
Swami et al. (1999)
…
•
•
•
•
Luthe (1968)
Peterson, Berger (1975)
Shanahan (1978)
…
•
•
•
•
Colonna et al. (1993)
Crain, Tollison (1997)
Dolfsma (1999)
…
•
•
•
•
DeVany, McMillan (2004)
Gli (2009)
Chintagunta et al. (2010)
…
Music economics
•
•
•
•
Kwok, Lui (2002)
Brousseau (2008)
Cohendet et al. (2009)
…
•
•
•
•
Van Herpen (2000)
Depken (2004)
Oster, Scott Morton (2005)
…
•
•
•
•
Zigmond et al. (2009)
Bellman et al. (2010)
Chenghuan (2010)
…
Magazine economics
• Herron (1950)
• Buchan, Siegfried (1978)
• Rashid (1978)
•
•
•
•
•
•
•
•
• Amos et al. (1991)
• Danaher (1992)
• …
Television economics
Gibson (1946)
Levin (1958)
Bogart, Dunn (1959)
…
Winick (1966)
Levin (1971)
Owen et al. (1974)
Bowman (1976)
•
•
•
•
Ducey (1983)
Brody (1984)
Schwer, Daneshvary (1995)
…
Newspaper economics
• Graves (1937)
• Harris (1938)
•
•
•
•
Inglis (1952)
Currier (1960)
Rosse (1967)
…
•
•
•
•
Rosse (1967)
Lee (1973)
Reekie (1976)
…
•
•
•
•
Tillinghast (1981)
Ferguson (1983)
Slade (1998)
…
•
•
•
•
Logan, Sutter (2004)
Asplund et al. (2008)
Chiang et al. (2009)
…
•
•
•
•
Duncan (1985)
Borrell (1997)
Hargittai (2000)
…
•
•
•
•
Sweeting (2009)
Ting (2010)
Sweeting (2010)
…
•
•
•
•
Curwen (1985)
Haughey, Selsky (1990)
Greco (1999)
…
•
•
•
•
Benlian et al. (2006)
Fishwick (2008)
Trivedi (2010)
…
Radio economics
•
•
•
•
Childs (1924)
Karol (1938)
Beckman, Dameron (1938)
…
•
•
•
•
Nielsen (1942)
Dunn (1952)
Steiner (1952)
…
•
•
•
•
Levin (1966)
Quaal, Brown (1968)
Zufryden (1974)
…
Book economics
• Tosdal (1915)
1920
•
•
•
•
1940
1960
Cole (1966)
Grannis (1967)
Bingley (1972)
Levy (1978)
1980
2000
2010
Figure 1-4: Number of publications in media management/economics
(only peer reviewed articles)
8316
Number of
publications
8,000
Video game
Magazine
Newspaper
Book
Radio
7,000
6763
Television
6,000
Music
5,000
4,000
Movie
3241
3,000
2,000
Internet
948
1,000
8
22
36
46
40
95
145
257
19201930
19311940
19411950
19511960
19611965
19661970
19711975
19761980
490
315
19811985
0
19861990
19911995
19962000
20012005
20062010
Definition of media
Definition of media
Media encompasses all goal-oriented technical means or instruments for the procurement of
information in print, visual, or auditory forms as well as the organizational and institutional
entities behind them that generate and provide this information. The information is directed, in a
traditional manner, at a broad and public audience.
Figure 1-5: Definition of media enterprises
Definition of media enterprises
Media enterprises can be defined as systematically organized economic entities, in which the bundling of internally
and externally generated editorial content (informational and/or entertainment-related content), the conversion of the
content onto a storage medium and direct or indirect distribution is undertaken.
Bundling of internally and
externally generated editorial
content
Transfer of the content onto a
storage medium
• Compilation of different editorial
content aspects and categories
(e. g. informational and
entertaining content)
• Transferring the content onto a
storage medium which helps by its
distribution
• This content can be self-created or
external-created
• The carrier medium does not
necessarily have to be identical to
the medium used by the recipient
• There is a demarcation line
between editorial and advertising
content
Distribution of the content to the
recipients
• Direct transmission or indirect
transmission through intermediaries or sales support
Main features of the business model of media companies
No media companies in the sense of the demarcation
criterion
Examples of media companies
•
•
•
•
•
•
•
•
•
Radio stations
TV stations
Film studios
Newspaper publishers, Magazine publishers
Book publishers
Record producers
Video and computer game producers
Internet content provider
…
•
•
•
•
•
•
•
•
•
Printing houses
Pure retailers of media products
Logistics suppliers
Pure network operators
Storage medium manufacturers
Independent artists/authors/reporters
Advertising and media agencies
Rights agencies
…
Table 1-1: Overview of the definitions of media economics
Table 1-2: Overview of the definitions of media management
Definition of media and internet management
Definition of media and internet management
Media and internet management covers all the goal-oriented activities of planning, organization
and control within the framework of the creation and distribution processes for information or
entertainment content in media enterprises.
Figure 1-6: The development of a technological revolution
Industrialized
society
• Steam engine
• Railway
• Cotton
• Steel
Information
society
• Chemical
industry
• Petrochemistry
• Automobile
industry
• Electrical
engineering
1st Kondratieff
1800
2nd Kondratieff
1850
3rd Kondratieff
1900
4th Kondratieff
1950
• Information
technology
5th Kondratieff
1990
Time
Source: Wirtz (2011), p. 16/Nefiodow (2006), p. 3.
Figure 1-7: Evolution of the information society
% Employment by sector
(Share of the total number of employment in %)
Forecast
60
Information management
*
50
Production
40
30
20
Services
10
Agriculture
0
1882
1892
1902
1911
1921
1931
1941
1951
1961
1971
1981
1991
2001
2010
2020
Source: Wirtz (2011), p. 17/Dostal
17/Dostal (2006), p. 205.
Table 1-3: U.S.-employees in the media industry in 2009
Source: Wirtz (2011), p. 18/U.S.
18/U.S. Census Bureau (2010)
Figure 1-8: Development of media and communication applications
(prehistory to Middle Ages)
Development of media and communication applications (prehistory to Middle Ages)
In the Stone Age, messages
were left in the form of
cave-paintings
30,000 B.C.
The Egyptians used papyrus first as
clothes to be written on – Papyrus
served as clothes to be written on till
the 5th century A.D.
3,000 B.C.
2,500 B.C.
About 3,000 years B.C., the first writing systems
developed, e. g. the cuneiform writing in Mesopotamia or
the hieroglyphs in Egypt
In Greece, the first basic
books were manufactured
in the codex form which is
common today
1,500 B.C.
300 B.C.
The Phoenician developed
the Phoenician writing in the
Eastern Mediterranean area
Structural collecting of knowledge
in libraries, e. g. the library of
Alexandria or the Celsus library in
Ephesos
285 B.C. till 1,400 A.D.
In the Middle Ages, writers and monks
transcribed books in order to duplicate
them
21.
Figure 1-9: Development of media and communication applications (1450 to 1930)
Development of media and communication applications (1450 to 1930)
Johannes Gutenberg
invents the printing
press with flexible metal
letters
1450
1605
Johann Carolus
founds the world‘s
first newspaper
called “Relation”
Denis de Sallo
publicizes the first
magazine of the world,
the “Journal des
Sçavans”
1665
1861
Invention of the telephone
and assembly of the first
functioning voice communication by Philipp Reis
Rasmus MallingHansen invents the
first typewriter
which is ready for
serial production
1865
1887
Louis Le Prince presents
the first motion picture
film named “Roundhay
Garden Scene”
1888
1895
First acceptable
First feature-length
transmission of a
sound film directed
picture via fax machine by Alan Crosland
by Arthur Korn
1904
Emil Berliner invents Invention of the technical
the gramophone and basics of the radio by Nikola
the disk record
Tesla, Guglielmo Marconi,
Alexander Popow
1906
1927
1929
Reginald Fessenden Broadcast of the
broadcasts the first first TV show by
radio program from the BBC
Brant Rock
23.
(1931 to 1985)
Eduard Schüller
invents the first
functioning tape
recorder
1935
Launch of the first
worldwide mobile
communications
network in the USA
1941
1946
Konrad Zuse creates the first
fully automatic, programcontrolled and freely
programmable computer
1951
A. Sandy Douglas
develops the first
graphical
computer game
1952
Charles Ginsberg
develops the first
video recorder to
work
1953
Philips presents the
tape cassette and the
related tape recorder
1963
Launch of the
color TV in the
United States
1967
Paul Baran and Donald
Watts Davies develop the
first decentralized
network called ARPANET
1969
Ralph Bear develops
the first game
console called
Magnavox Odyssey
1981
Presentation
of the first
“personal
computer” by
IBM
Philips und Sony
launch the CD and
the CD player
1982
1985
Microsoft
releases
Windows 1.0
25.
(1986 to 2010)
WXYC
As the first traditional radio
station WXYC (89.3 FM
Chapel Hill, NC USA)
transmits via internet
1989
Start of the
World Wide
Web
1994
1995
Nokia develops
and sells the first
smartphones
1996
Karlheinz Brandenburg
develops a standardized
method to store and to transmit
music (MP3)
Manx Telekom puts one
of the first of its kind
UMTS networks
worldwide into operation
1998
2001
Lawrence Edward Page
and Sergei Brin found
the internet service
provider Google Inc.
Zattoo first transmits
Startup of the first LTE
broadband applications like networks in Stockholm and
TV programs and films via Oslo by TeliaSonera
internet
2002
2006
2007
Establishment of the
Apple establishes
digital version of
the digital music
distribution with the books (e-books)
help of iTunes/iPod
2009
2010
Sale of the first TV
set with 3D
technology
27.
Figure 2-1: Media market definition
Readership markets
Newspaper markets
Advertisement markets
Procurement markets
Nonelectronic
media
markets:
print markets
Readership markets
Magazine markets
Procurement markets
Readership markets
Book markets
Procurement markets
Audience markets
Film markets
Media
markets
Procurement markets
Audience markets
TV markets
Procurement markets
Listener markets
Radio markets
Procurement markets
Electronic
media markets
Listener markets
Music markets
Procurement markets
User markets
Video and computer
game markets
Internet markets
Procurement markets
User markets
Source: Wirtz (2011), p. 29/Wirtz
29/Wirtz (1994), p. 26.
Procurement markets
Figure 2-2: Structure of interdependence in media markets
nu
es
Ad
ve
re rtis
ce em
pt
io en
n t
Money
Target
group
Ad
v
pr erti
i ce se
le m e
ve n t
l
Advertisement
market
Re
su cip
cc ien
es t
s
Re
ve
Media and internet
companies
M
ey
on
Content
procurement
market
At
t
en
t
n
Co
Procurement
success
Content
structure
Co
n
te
te
nt
nti
on
/m
on
ey
Recipient
market
30/Wirtz (1994), p. 19.
Figure 2-3: The four dimensions of competition among media enterprises
Dimensions of competition among media enterprises
1st dimension:
economic vs.
journalistic
competition
2nd dimension:
multimarket
competition
• The economic
competition is
expressed by
quantitative success
standards (e. g. profit,
market share, sales
and turnover figures)
• Submarket-specific
view of the competition
of media enterprises
(recipient markets,
advertisement
markets, procurement
markets)
• The journalistic
competition is
expressed by
qualitative success
standards (e. g.
currency and quality
of information,
diversity of opinion)
• Recipient markets are
particularly important
for media enterprises
because of its high
share of revenue and
therefore the influence
on the success on the
advertisement markets
is high
3rd dimension:
intermediary vs.
intramediary
competition
• The intermediary
competition describes
the competition of
media types, whereby
the intensity of
competition depends
on the interchangeability of the
particular media types
• The intramediary
competition describes
the competition of
different products of a
media category on all
relevant markets
4th dimension:
components of
demand competition
• Relevant for the
consumer markets
only
• There is a competition
about the expenses for
the purchase of media
products, about the
time budget and about
the recipients‘
attention
• Thereby, the
opportunity costs of
the recipients should
especially be
considered
Figure 2-4: Media products as combined products
Input actors
Product categories
Actors of the recipient
market
Combined products
Own editorial offices,
news agencies etc.
Content
Recipients
Advertising companies,
advertising market
Advertisement
Recipients
Figure 2-5: Quality assessment of tangible assets and services
Majority of the
material goods
Majority of the
services
Easy to
judge
Restaurants
Medical diagnoses
Cars
Car repairs
Houses
Legal advices
Furniture
-
Jewelry
-
Experience qualities
dominant
-
-
Media products
(newspaper, internet offer, TV
program, other)
-
-
-
-
-
-
-
-
Search qualities dominant
-
Clothing
Difficult
to judge
Credence qualities dominant
Source: Wirtz (2011), p. 37/Zeithaml (1991), p. 42.
Figure 2-6: Product specifications of media products
Product specifications of media products
Media products
as combined
products
• Media revenues
are made up of
sales revenues
and advertising
revenues
Media products
as public goods
• Non-exclusivity
of consume: no
recipient can be
restrained of
using public
goods, the use
is free
• The service on the
advertisement
market cannot be
• Non-rivalry
performed
concerning the
independently from consume: a
the service on the
recipient‘s
recipient market
consume does
not limit the other
• Both service
recipients‘
components have
consume
to be combined
within a final
product
Media products
as services
Media products
as meritoric
goods
• Media products fulfill • Meritoric goods
are characterized
the constitutive
by a lower
characteristics of
demand as
intangible services
socially desired
at the time of
production
• The demand has
to be adjusted
• These services are
with the help of
called refined
subsidization or
services because
compulsion to
most of the media
buy (e. g. lower
companies consider
VAT on print
a storage on a
products)
carrier medium as
necessary
Quality of media
products
• The influence of the
management on
the quality of media
products is limited
because the media
production normally
is a creative
process which is
difficult to
standardize
• Quality features
from the recipient’s
point of view are:
search qualities,
experience
qualities and
credence qualities
Figure 2-7: Economies of scale through first copy costs
Average
costs
Significant cost degression effects
First
copy
costs
Number of recipients
Source: Wirtz (2011), p. 40/Owen (1975), p. 18.
Figure 2-8: Overview of market entry barriers
Market entry barriers
Structural market entry
barriers
Strategical market entry
barriers
• Structural market entry barriers • Strategical market entry
barriers are used by the market
arise from the product
participants to complicate resp.
characteristics and the media
to prevent the entrance of new
production process
suppliers in the existing market
• Economies of scale and
• In the media branch, market
network effects, exchange
participants can strengthen
costs, increasing returns and
existing barriers, signal/
the spiral effect belong to
implement retaliations resp.
structural market entry barriers
react accordingly if a new
in the media economy
market participant appears
(e. g. price war or quality
reduction)
Institutional market entry
barriers
• Entry barriers justified by
legislative or administrative
measures: in particular tariff
and non-tariff trade barriers
• Institutional market entry
barriers in the media branch
can be located especially in
the TV and radio sector (e. g.
state-controlled issuing of
broadcasting licensing or the
fee financing of the public
service broadcasting in
different nations)
Figure 3-1: Development of information and communication
technology in the United States
120
User in million
(USA)
100
80
60
40
Radio
TV
Cable TV
Internet
(WWW)
20
Year
0
1920
1930
1940
1950
1960
1970
1980
1990
2000
Source: Wirtz (2011), p. 44/Morgan Stanley U.S. Investment Research (1996).
Figure 3-2: Amount of time spent on various media from 1995 to 2015
Media usage per
day in minutes
700
10:13 h
600
9:30 h
9:01 h
500
400
300
13
13
6:28 h
162
58
+72.4%
100
+48.0%
148
Internet
8:03 h
+346.2%
21
+33.3%
28
+0.0%
28
+21.4%
34
Other
206
-4.9%
196
-5.1%
186
-7.0%
173
Radio
185
+9.2%
202
+0.5%
203
+3.0%
209
Television
58
-1.7%
57
-7.0%
53
-7.5%
49
Print media
+61.5%
+27.2%
200
158
+17.1%
100
55
+5.5%
0
1995
2000
2005
2010**
2015**
** Forecast
Source: Wirtz (2011), p. 45/Wirtz/Burda/Beaujean
45/Wirtz/Burda/Beaujean (2006).
Figure 3-3: U.S. advertising revenue by medium
300,000
in million U.S.-$
272,392
250,000
+7.7%
232,821
221,656
32,083
200,000
8,087
44,591
-4.2%
-25.7%
+3.3%
30,730
34,645
+12.7%
19,848
60,257
-2.2%
-3.1%
+75.3%
37,321
16,879
-7.3%
+38.9%
9,626
34,615
6,010
+13.3%
52,191
58,365
-12.0%
58,642
-0.9%
50,000
48,670
-13.4%
-9.4%
Miscellaneous
25,353
Internet
50,305
Direct mail
15,978
Radio
63,883
TV
11,846
Magazines
Newspaper
58,117
-13.4%
+10.3%
21,411
+1.2%
21,665
-9.5%
19,599
-18.5%
+16.2%
67,791
+6.1%
71,905
-1.7%
70,707
-9.7%
17,285
30,474
+8.1%
+12.4%
46,067
19,409
240,065
23,448
+60.2%
150,000
100,000
259,687
250,699
14,971
+9.0%
44,102
+5.9%
16,319
46,712
+6.4%
-0.2%
17,363
46,611
-5.2%
-25.5%
16,453
34,740
-28.0%
-32.5%
23,434
0
2000
2002
2004
2006
2008
2010*
* Forecast
Source: Wirtz (2011), p. 47/Business Insider (2010).
Figure 3-4: Convergence in the information and communication sector
Determinants of the convergence development
Technological innovations
Market deregulation
• Digitalization
• Higher broadcast capacity
• Intelligent network
structures
• New competitors
• Cross-sectoral competition
• Continuous deregulation
Change of the user
preferences
• Individualization of
customer relations
• Systemic solutions
Sectoral convergence
Telecommunications
Media
Multimedial
convergence
sector
Information
technology/
entertainment
electronics
Source: Wirtz (2011), p. 48/Wirtz (2001), p. 493.
high
Figure 3-5: Four-level convergence model
Level of aggregation
Sector convergence
Branchenkonvergenz
Anbieter-/UnternehmensSupplier-/company
convergence
konvergenz
Business segment convergence
low
Product convergence
• Convergence of a growing number of
companies within the involved sectors
finally leads to a convergence of these
sectors
• Convergences forces companies to
reassess their position within the value
chain
• Reconfiguration of the value chain leads
to the alignment of the company barrier
• Product convergence affects various
business units of a company or business
units of different companies
• Chances and risks through coordination
and cooperation
• Convergence of content (e. g. through
standardization of the formats)
• Convergence of distribution channels
• Convergence of end devices through
integration of functionalities
Figure 3-6: Rank of the convergence processes in the triad
Answers in
percent
Supplier
convergence
Technology
convergence
End devices
convergence
Product
convergence
24.2 %
20.9 %
40.4 %
40 %
4.1 % Very high
28.2 %
4.2 % Very high
High
36.3%
20 %
Very high
2.0 %
4.2 % Very high
High
24.0 %
High
22.2 %
High
16.7 %
0%
Low
21.9 %
Low
23.2%
20 %
1.0 %
Low
34.4 %
Very low
Very low
Low
41.7 %
3.1 %
24.2 %
25.0 %
40 %
60 %
Very low
3.0 %
37.4 %
7.3 % Very low
49.0 %
Source: Wirtz (2011), p. 53/Wirtz/Burda/Raizner (2006).
Figure 3-7: Preparation by media enterprises for convergence in various areas
Answers in
percent
Organizational
structure
Marketing
Business
strategies
M&A activities
40 %
28.6 %
19.0 %
20 %
9.5 %
High
19.0 %
High
9.5 %
0%
20 %
Low
52.4 %
Low
52.4 %
40 %
60 %
4.8 % Very high
14.3 %
4.8 % Very high
High
9.5 %
Low
38.1 %
Very low
14.3 %
9.5 %
Very low
61.9 %
4.8 %
Very low
57.2 %
High
23.8 %
Low
33.3 %
33.3 %
52.4 %
Source: Wirtz (2011), p. 54/Wirtz/Burda/Raizner
54/Wirtz/Burda/Raizner (2006).
Figure 3-8: Share of revenue for selected domestic/
foreign media enterprises in 2009
Time Warner
USA1: 72.6 %
27.4 %
Walt Disney
USA1: 76.1 %
23.9 %
USA1: 54.8 %
News Corp. Ltd.
Bertelsmann AG
G: 35.0 %
0%
20 %
65.0 %
40 %
Domestic revenue
1 Including
45.2 %
60 %
80 %
100 %
Foreign revenue
Canada
Table 3-1: Media enterprises according to size of revenue in 2009
Table 3-2: Selected examples for mergers and takeovers in the information
and communication sectors
57/Wirtz (2001).
Figure 3-9: Selected media enterprises according to market capitalization in 2010
61.56
Walt Disney
Comcast
51.94
Time Warner
35.41
News Corp.
35.24
Vivendi
25.76
Reuters
22.80
Yahoo!
22.26
Viacom
20.15
16.29
BSkyB
10.57
Pearson
CBS Corp.
9.36
Gannett
3.65
ProSiebenSat1
3.09
1.30
New York Times
0
Billion U.S.-$
10
20
30
40
50
60
70
Exchange rate 2010/05/26: 1 EUR = 1.22 U.S.-$
Source: Wirtz (2011), p. 59/Ariva (2010).
Figure 4-1: Service system of media enterprises
Core assets
Core competencies
Value added chain
Business model
Figure 4-2: Value chain of enterprise activities
Infrastructure
Human resources management
Procurement
Inbound logistics
Operations
(production)
Outbound
logistics
Marketing &
sales
Customer
service
Profit margin
Technology development
Customer
Source: Wirtz (2011), p. 61/Porter (2004), p. 33.
Figure 4-3: Value chain of the media industry
Procurement of
Information and content
Acquisition of
advertisement
Production and
aggregation of
content
Advertisement
placement
Product
packaging
• Purchase of film
contributions
• Production of text • Selection of the
contributions
product
components
• Production of film
contributions
• Editorial work
• Procurement of
advertisement
contributions
• Converting
advertisement
contributions
• Purchase of text
contributions
Technical
production
Distribution
• Print
• Sale
• Provision of
infrastructure and
transmissibility
• Transmission
Recipient
• Portals
• Allocations of
end devices
Definition of assets and core assets
Definition of assets and core assets
Assets are tangible and intangible resources that form the basis for the activities and the
competitiveness of an enterprise. Core assets concern company-specific assets that were
accumulated in-house or were at least refined and that have a special intrinsic value for an
enterprise’s value creation process. They are relatively scarce and do not lend themselves to
imitation or substitution by the competition. Core assets form the basis for a lasting competitive
advantage.
Definition of competence and core competence
Definition of competence and core competence
Competencies form the foundation for the collective action in an enterprise and facilitate the
service creation process in which assets and core assets are combined into marketable services.
Core competencies are a special form of competencies. They are relatively scarce and do not
lend themselves to imitation or substitution by the competition. Core competencies make a
significant contribution to the perceived customer benefits of an end product and provide
enterprises with a lasting competitive advantage.
Figure 4-4: Core assets and core competencies in media enterprises
Competitive
advantages
Core assets
Core competencies
• Employees
• Content sourcing competence
• Brand
• Content creation competence
• Networks
• Product development competence
• Customer base
• Promotion competence
• Cross-medial utilization competence
• Technology competence
Figure 4-5: Analysis and management of core assets and core competencies
Actual situation identification
• Value added chain analysis
• Identification of core assets and
core competencies which are
- valuable
- rare
- not imitable
- not acquirable
Handlungsbedarf
Need
for action
Target/actual
situation
comparison
Target
profile
Soll-Profil
• Market analysis
• Development of future scenarios
• Derivation of relevant future
assets and core competencies
Bedeutung
Zukünftige
Future significance
of core
Core
Assets
und core
Kernkompetenzen
assets and
competencies
Hoch
High
Gering
Low
Current
Derzeitige
forming
Ausprägung
of core assets
Core
Assets
and core
undcompetencies
Kernkompetenzen
Gering
Low
Hoch
High
Schneller
Fast build-up
Aufbau
by
durch
verstärkte
intensified
Investitionsinvestments
and
tätigkeit
und
learning
Lernprozesse
processes
Maintenance
Pflege und
andAusbau
upgrading
Access via
Zugriff durchor
cooperation
Kooperationen
additional
oder
Zukauf
purchase
Dismantling and
Abbau und
disinvestment:
Desinvestition;
access maybe
Zugriff ggf. über
via
cooperation
Kooperationen
or additional
oder
Zukauf
purchase
Definition of a business model
Definition of a business model
“A business model is a simplified and aggregated representation of the relevant activities of a
company. It describes how marketable information, products and/or services are generated by
means of a company’s value-added component. In addition to the architecture of value creation,
strategic as well as customer and market components are considered in order to realize the
overriding objective of generating and preserving a competitive advantage.”
Source: Wirtz (2011), p. 69/Wirtz (2011, Business Model Management), p. 65.
Figure 4-6: Partial models of an integrated business model
Competition model
Business
model
on
u ti
trib el
Dis mod
Service
offer
model
P ro
d
go uctio
o
se
rvi ds a n of
ce
s m nd
od
el
el
el
od
mo
d
nu
e
Re
ve
Ca
Fin
al m
an
ci n
gm
pit
od
Consumer model
t
en
re m
cu el
P r o mo d
el
Market model
Source: Wirtz (2011), p. 70/Wirtz (2001).
Figure 4-7: System of forms of revenue
Rights
Fees
Other
Licenses
Rights
markets
State
• Subsidies
• Tax
advantages
• etc.
Media
enterprises
Media
access
Recipient
markets
ntio t
ac
ns den
Tra pen
de
Media
usage
Tr
ind ans
ep ac
en tion
de nt
Other
• Service
• Merchandising
• etc.
Advertisement
Other
• Data mining
• Commissions
• etc.
Figure 4-8: Cost and revenue structure of manufacturing in media economics
9.5 %1
100 %
Advertisement
revenues
Trade margin
23.9 %1
Production/
distribution
1
42 %
Other
revenues
56 %1
First copy
costs
(sale
revenues)
58 %1
10.6 %1
Profit
Medium
Other Advertrevenues isement
Trade margin2
Production/
distribution3
First copy
costs4
Profit
Newspapers/
magazines
25 %
75 %
-
48 %
42 %
10 %
Book
100 %
-
29 %
47 %
41 %
5%
Movie
100 %
-
-
14 %
49 %
4%
TV
8%
92 %
-
12 %
78 %
10 %
Radio
13 %
87 %
-
7%
84 %
9%
Music
100 %
-
20 %
39 %
35 %
6%
Video/computer games
100 %
-
27 %
13 %
44 %
16 %
Internet
18 %
82 %
-
-
75 %
25 %
Average
58 %
42 %
9.5 %
23.9 %
56 %
10.6 %
1) Average of below mentioned media branches 2) Profit margin = Intermediation costs
3) Copy costs and delivery to the intermediaries 4) Including content production costs, licensing costs, advertisement acquisition costs,
marketing and administration costs
Figure 4-9: Overview of media business types
Procurement of
information and
content
Production and
aggregation
of content
contributions
contributions
contributions
contributions
Acquisition &
placing of
advertisement
Product
packaging
• Selection of the
product
components
• Editorial work
• Content
•
compilation/layout
•
• Placing of the
advertisement
Technical
Distribution
production
Print
Distribution
• Sale
Provision of
• Transmission
infrastructure and
• Portals
transmissibility
• Procurement of
end devices
Business typ “content integrator”
• High vertical depth of integration and high expenditure of resources
• High competitive differentiation potential
• Requires distinctive competences/assets at the creative/editorial refinement process
Business typ “content bundling”
• Average vertical depth of integration and average expenditure of resources
• Use of content from the public domain with slight editorial refinement
• Requires competencies/assets with editorial bundling
Business typ “content presentation”
• Little vertical depth of integration and little expenditure of
resources
• No distinctive competitive differentiation potential
• Requires little assets/competencies because content is either
part of the content partner or gets compiled of standardized
content from the public domain without any editorial refinement
Figure 5-1: System of strategy development
Corporate goals
• Corporate goals are
derived from the
corporate mission
and vision
• Formulation of
explicit goals as a
foundation for current
and future behaviors
Situation analysis
• External analysis:
environment and
competitors
• Internal analysis:
competencies and
resources
Strategy
formulation
• Formulation of
•
alternative courses of
action on the foundation
of the results of the
•
situation analysis
• Evaluation and choice
of a strategy
Strategy
implementation
Passed strategies are
transferred into
behavior guidelines
Allocation of the
required resources and
controlling of the
realization progress
Figure 5-2: Stages of the situation analysis
Corporate goals
Situation analysis
Strategy formulation
Environmental analysis
Environment
analysis
• Technical
surrounding
• Regulative
surrounding
• Economical
surrounding
Branch and
market analysis
• Market structure
• Consumer
behavior
Strategy implementation
Corporate analysis
Competitive
analysis
• Competitors‘
behavior
• Corporate
resources
Analysis of
competences/resources
• Core competencies
• Complementary
competencies
• Peripheral
competencies
• Social
surrounding
Analysis of opportunities
and risks
• Identification of opportunities
and risks through
environmental, branch and
market developments
Strategic fit analysis
• Alignment of the market side
opportunities and risks with
the corporate-specific
strengths and weaknesses
profile
Analysis of strengths
and weaknesses
• Alignment of the core and
complementary competencies
with those of the competitors
• Identification of advantages
and disadvantages compared
to the respective strongest
competitors
Figure 5-3: Strategies of media enterprises
Corporate strategies
Focus strategy
Integration strategy
Network strategy
• Concentration on one stage of
the medial value chain
• Extension of the medial range
of services
• Establishment of production
and marketing cooperations
• Goal: realization of cost or
differentiation advantages
• Goal: assurance of procurement • Goal: reduced expenditure of
and sales channels
resources and access to
complimentary competencies
Figure 5-4: Influencing factors in procurement management
R
ex eve
pe nu
ct a e
tio
ns
nt
me
er n
s
G o v u l a ti o n
reg
Procurement
management
Co n
co n t r a c t
ditio
ns
sts
o
C
Competitors
Source: Wirtz (2011), p. 84/Wirtz (1994).
Figure 5-5: Procurement strategies for media enterprises
Procurement strategies
Direct contracting strategy
Cooperation respectively
partnership strategy
Syndication strategy
• Use of a content intermediary/
• Direct contact between copyright • Establishment of cooperations
content broker
holder and demanding company for the exchange of existing
content
• Goal: reduction of the
• Goal: exclusive procurement of
expenditure of resources
attractive content
• Goal: reduction of the
compared to in-house
expenditure of resources
production
compared to external
procurement/in-house production
Figure 5-6: Media production process
Concept
Selection
• Events
• Concept evaluation
• Trends
• Evaluation of work
samples
(e. g. music, texts)
• Ideas
Production in the
narrower sense
• Creative period
(e. g. screenplay,
research)
• Technical period
(e. g. transcript,
recording)
Duplication/
distribution
• Distribution (e. g.
broadcasting, upload)
• Duplication (e. g.
print, pressing)
Figure 5-7: Production strategies in media economics
Production strategies
In-house-production
Outside-production
Co-production
• Realization of the
production processes within
a media enterprise
• Participation of one or
multiple production
companies
• Outsourcing of the
production to an
independent company
• Goal: quality assurance and
contemporary content
procurement
• Goal: split-up of the
financing and diversification
of risk
• Goal: reduction of the fixed
costs and improvement of
the capital structure
Pr
o
qu duc
ali t
ty
l
si ca
Phy ution
rib
dist
s
le
Sa
Pro
inno duct
vati
on
Figure 5-8: Marketing instruments
t
uc
od icy
Pr pol
D
is
tr
po ibu
lic tio
y n
es
di
bo
Distribu
tion
channe
ls
rtm
o
s
As
t
en
er
Custom
service
Marketing
Mix
Public
relation
s
P
po rice
lic
y
Pric
e
t
un
co
is
D
ions of
Condit nt
payme
pr Sa
om le
ot s
io
n
n
io
at
ic
un y
m olic
om p
C
Adv
ent
m
e
s
erti
Figure 5-9: Customer relationship process
Attrition phase
• Avoidance of customer attrition by monitoring
customer satisfaction
N
e
as
Contact phase
• Identification of potential customers and
customers‘ needs
• Initial contact
•M
U
cu ain se
t
st en
om a ph
er nce as
e
dia o
lo f th
gu e
e
a
ph
f
n o
io ion es
at at ur
m liz as
la rea me
ec d n
R gete atio
ar lam
• T rec
5c
1
4
• In cqui ew o
si
te
rd
inte nsifica tion er
ph
rac
tion
tion
of t ase
wi t
h c he
ust
om
ers
5b
3
y
5a
Order acquisition
phase
2
• Creation of customer-specific service
offers
lit
e ent ilabi
s
ha illm ava s
c
r lf ct n
Pu /fu rodu actio
se e p ans
a
r
h
ph ng t nt t
e
i
ur ffici
c
e e
• S and
Table 5-1: Indicators of media use in comparison
Source: Wirtz (2011), p. 99/Prognos/BILD (1998), p. 7.
Figure 5-10: Typical functional organization of a cable television enterprise
Management board
Controlling
Accounting
Data
processing
Advertising
sales
Human
resources
Technical
operations
Marketing
Customer
service
Source: Wirtz (2011), p. 107/Pringle/Starr (2006), p. 265.
Figure 5-11: Profit center organization of the Walt Disney Company
President &
Chief Executive Officer
ILLUSTRATIVE EXAMPLE
Senior Executive Vice
President, General
Counsel and Secretary
Media networks
Parks and resorts
Studio entertainment
Consumer products
Interactive Media
ABC Television
Network
Walt Disney World
Resort
Walt Disney Pictures
Disney Merchandise
Licensing
Disney.com
ABC Daytime
Disneyland Resort
Touchstone Pictures
Disney Store
Disney Interactive
Studios
ESPN, Inc.
Disneyland Paris
Hollywood Records
Disney Publishing
Worldwide
DisneyXD
ESPN2
Tokyo Disney Resort
Marvel
Disney Baby Einstein
Playdom
Disney Cruise Line
Disney Blu-ray 3D
Disney Family Fun
Disney Channel
Adventures by Disney
Disney Theatrical
Productions
BabyZone
Etc.
Etc.
Etc.
Etc.
A&E
Human resources
Global security
Source: Wirtz (2011), p. 108/Disney (2011).
Corporate strategy,
business development
and technology group
Corporate finance and
real estate and
treasurer
Corporate
communications
Figure 5-12: Typical matrix organization of a book publishing house
Business management
Editorial
office/lectorate
Production
Business
department
Advertisements/sales
Product management 1
Product management 2
Review
1. How are the media markets delineated from each other and what
interdependence structures do they have?
2. How does the traditional use of the media differ from media use in the age
of the internet?
3. What does medial convergence mean and what repercussions does it have
for the media landscape?
4. What characteristics does the definition of media and internet management
include?
5. What is meant by a range of services? Describe the individual aspects of
the range of services of media enterprises!
6. Which system is shown in the strategy development in the media sector?
7. What individual steps are carried out in the production process for media?
Please give specific examples!
8. What sales policy instruments are of special importance in the media
sector?
Pages 65 to 88 are not part of this extract.
Chapter 3: Book management
Table 2-1: The ten largest U.S. trade publishers
Source: Wirtz (2011), p. 165/Hyatt (2010).
Figure 2-1: Interactions in the book market
Audience/recipients
Retail
Fee
Big online
traders
Book
clubs
B2B/B2C
direct sale
Antiquarian
bookshop
Book trade
Online trading
Department
stores
Communication measures/retail distribution
Wholesale
Book
E-book
Communication measures/wholesale distribution
Printing
Book publisher
Lectorate
Content
License processing
Binding measures/fee
Authors
License trading
Figure 2-2: Daily book use according to age 2007
80
67
Minutes spent reading
70
60
50
50
39
40
30
30
20
10
26
24
7
10
9 11
12
16
20
17
0
15 to 24 25 to 34 35 to 44 45 to 54 55 to 64
Weekdays
65 +
total
Age
Weekend and holidays
Source: Wirtz (2011), p. 169/National Endowment for the Arts (2007), p. 10.
Figure 2-3: Yearly turnover in the e-book sector in the United States
320,00
304,60
300,00
Wholesale revenues (in million U.S.-$)
180,00
165,80
160,00
140,00
120,00
100,00
80,00
53,50
60,00
40,00
20,00
31,80
20,00
5,79
7,34
9,62
2002
2003
2004
10,83
0,00
2005
2006
2007
2008
2009
2010* Year
*Q1 - Q3 2010
Source: Wirtz (2011), p. 171/IDPF (2011).
Figure 3-1: Products in the book sector
Products in the book sector
General
literature
Text books
Others
• Fiction book
• School books
• Cartographical products
• Non-fiction book
• Scientific text books
• Notes
• Children’s books and
books for young
people
•…
• Lexicons, encyclopedias
•…
• …
Figure 3-2: Value chain of the book industry
Content
procurement
Key tasks
• Manuscript
procurement
• Recruiting
authors
• Purchase of
license
Provider
• Publishers
• Agents
Lectorate
(editorial
office)/
editorial
department
Trade of
licenses and
rights
Print
• Planning, controlling and
completion of
the production
• Utilization of
rights and
licenses
• Editorial
departments
• Lectorates/
editorial office
of publishers
• Publishers
• Printing press
• Agents
• Bookbindery
• Authors
• Collective rights
agencies
• Technical
book
production
Distribution
Reader
• Direct sale
• Sale via intermediaries,
whole-sale and
retail
• Publishers
• Authors
• Book wholesaler‘s,
wholesaler, rack
jobber
• Book stores,
department stores
• Book club
Figure 3-3: Costs and revenue structure of the manufacturing
100 %
14 %
15 %
5%
20 %
Sales
revenues
15 %
12 %
14 %
5%
Revenue
per book
copy
Retail
margin
Wholesale
margin
Trade margin (29 %)
Sales
Print
Production/distribution
costs (25 %)
Content
Marketing Adminisproduction
tration
Profit
First copy costs (41 %)
Figure 3-4: Business model of a book publishing house
Cost and procurement
model
Book publishing house
Revenue and
distribution model
Range of services
Manufacturing process of goods and services
Books/hard-cover
Content delivery
• Fiction, non-fiction,
books for children and teenager,
guidebook, etc.
Screening and revision
(lectorate)
of external produced content
Paperbacks/soft-cover
Provision of
literature
Gratification for the
• Reference books, modern
antiquarian
content
Editorial creation
of own content
Digital/electronic
products
Offer of
advertising placements
Advertising partner
z.B.
License/rights
dealer
Transfer of the
advertising content
• CD-ROMs, audio books,
eBooks
Management of
advertising placements
Placement/
integration
Management of
licenses and rights
Integration in the
publisher‘s program
resp. resale
Licenses/rights
Fees
Other services
Advertising space
• Advertisements
• Imprints
• etc.
Licenses and rights
•
•
•
•
Paperback rights
Country licenses
Merchandising licenses
etc.
Integrated offer of products/services
Manuscript
provider, e. g.
- Authors
- Literature
agents
- Publishers
Distribution
revenues
Distribution
Direct sale
Reader/
recipient
e. g. via
The Club
Advertising
revenues
Advertising
space performance
Advertising
partner
Fees
Licenses/rights
Publisher/
film production
Figure 4-1: Book publishing production process
Concept
• Events
• Trends
• Ideas
Selection
Production in
the narrower
sense
• Evaluation of the • Creation of
attractiveness
manuscripts
• Cost evaluation
Packaging
Technical
production
• Layout
• Print
• Typesetting
• Binding
• Lectorate
Figure 4-2: Book life cycles
Sales
Fi
cti
on
Bestseller
ller
e
s
age
r
e
v
A
Fl
op
ork
w
rd
da
n
Sta
Flop
Time
Agenda:
Novels
Scientific books
Figure 4-3: Players and channels of direct book distribution
Publisher‘s shipping
• U.S. Postal Service
• Parcel service
Direct sales
• Online shops
Book club
• U.S. Postal Service
• Parcel service
Figure 5-1: Strategic alignment of Knopf Doubleday Publishing
Aspects
• Combination of quality and cost focusing concerning different target groups
• Building of star authors
Strategy
• Long-term commitment of established authors
• Use of Web 2.0 technologies to realize an active integration of the
customers into the communication measures
Business model
• Content aspect: collection, selection, systematization, compiling (packaging)
and provision of entertainment texts
• Staggered revenue model systematization
• Wide range of fiction
Range of services
• eBooks as an alternative for classic print products
• Licensing
• Search and research possibilities in the online field
• Historical publishing brand
Success factors
• Long-term experience & know-how in the marketing of books
• Long-term competences and experiences in the communication with
recipients
Review
1. What are the effects of changed consumer behavior on the development
prospects of the book industry?
2. What different types of products exist in the book industry?
3. What are the core assets and core competencies that book publishers must
have in order to secure long‐term success? Put the value‐chain of book
publishers into order!
4. What factors are crucial in the cost and revenue structure of the book
industry?
5. How are the first copy costs and distribution costs comprised?
6. What is the typical life cycle of a book like? What characterizes a flop?
7. What are the differences between direct and indirect book distribution?
8. What role does the internet play in this context?
Chapter 5: TV management
Figure 2-1: U.S. television market overview
Network TV
Cable TV
Key facts
Key facts
• Terrestrial television using radio
waves through transmitting and
receiving antennas
• Since 1948 (commercial TV)
• Today 100 % digital in the U.S.
(since February 2009)
• Infrastructure through network‘s
O&Os and affiliates
Spanish
• ABC
• CBS
• Fox
• NBC
• CW
• Univision
• Telemundo
• TBS
• Discovery
• USA
• TNT
• Disney Channel
Important network
• Weather Channel
• Nickelodeon
• CNN
• Food Network
•…
Revenue streams
• Revenue through advertisement
and/or donation
• Public endorsement
Diffusion
Diffusion
• 67 %
• PBS
Revenue streams
• Basic: free channels, payment only for infrastructure (cable
provider)
• Premium: additional pay-TV channels
Diffusion
• Nearly 100 %
• Terrestrial television using radio
waves through transmitting and
receiving antennas
• Since 1948 (commercial TV)
• Today 100 % digital in the U.S.
(since Feb. 2009)
• Infrastructure through independent
stations
Important networks and channels
Revenue streams
• Free of charge
• Revenue through advertisement
Key facts
• Radio frequency signals
• Radio frequency signals
transmitted through coaxial cables transmitted from communications
or digital light pulses through
satellite and received by a satellite
optical fibers
dish and set-top box
• Early distribution via community
• Possible since 1975 (first TV
antennas (CATV)
satellites)
• Effective since 1975 (through first • Infrastructure provided by public
TV satellites)
companies DISH Network and
• Infrastructure provided by cable
direcTV
companies, esp. multiple system
operators (MSOs) like Comcast
Important networks
Engish
Independend
broadcasting
Satellite TV
• 21 %
• Nearly 100 %
Figure 2-2: Foundation of important TV networks
CNN
1980
ESPN
1979
Nickelodeon
1977
Cable networks
TBS
1976
HBO
1972
USA Network
1971
1920
1930
NBC
1926
CBS
1927
1940
1950
1960
1970
1980
ABC
1943
HGTV
1994
Discovery
1985
TNT
1988
1990
FOX
1986
Broadcasting networks
2000
CW
2006
Univision
1986
Figure 2-3: TV advertising revenues 1970-2009
Expenditures
in U.S.-$ billions
25,000
20,000
Network TV*
15,000
Cable networks
10,000
5,000
0
1970
1980
1990
1995
2000
2005
2006
2007
2008
2009
* Three networks prior to 1990 (ABC, CBS, NBC)
Four networks from 1990 to 2005 (+ Fox)
Six networks since 2005 (+ CW, myNetworkTV)
Source: Wirtz (2011), p. 253/Vogel
253/Vogel (2007), p. 274/National Cable & Communication Association (2011)/Kantar
(2011)/Kantar Media (2011).
(2011).
Figure 2-4: Development of the TV-viewer’s share from 2000 to 2009
Viewers
in million
16
Network TV
14
12
CBS
10
FOX
ABC
8
NBC
6
4
Cable TV
USA
TNT
ESPN
2
NICK
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Source: Wirtz (2011), p. 254/Newsweek Magazine (2009), p. 23.
Figure 2-5: Market of TV viewers in 2009
CBS
11.8
FOX
9.9
ABC
Top 4
broadcast
9
NBC
7.8
USA
3.57
TNT
2.44
Fox News
2.16
Nick at Nite
1.78
TBS
1.59
ESPN
Top 10
cable
1.41
ABC Family
1.4
Discovery
1.35
FX
1.32
HGTV
1.27
0
2
4
6
8
10
12
14
Million viewers
Source: Wirtz (2011), p. 255/National Cable & Communication Association (2011)/Newsweek
(2011)/Newsweek Magazine (2009)/Nation(2009)/Nation-Master (2011).
Figure 2-6: Cable TV subscriber in 2009
101.9
TBS
The Weather Channel
101.7
Discovery
101.5
Nickelodeon
101.4
101.2
USA Network
TNT
101.1
Food Network
101
CNN
101
TLC
100.9
Lifetime Television
100.9
HGTV
100.9
100.8
Spike TV
100.7
ESPN
100.6
Cartoon
100.5
Disney Channel
99.5
100
100.5
101
101.5
102
102.5
Million subscribers
Source: Wirtz (2011), p. 256/National
256/National Cable & Communication Association (2011).
(2011).
Table 2-1: Media conglomerates on the U.S. television market
Figure 2-7: Top 10 of U.S. multiple-system operators (MSOs)
23.55
Comcast Corporation
18.87
DirecTV
14.31
Dish Network Corporation
12.85
Time Warner Cable, Inc.
5.19
Cox Communications, Inc.
4.82
Charter Communications, Inc.
Verizon Communications, Inc.
3.20
Cablevision Systems Corporation
3.06
AT&T, Inc.
2.50
Bright House Networks LLC1
2.26
0
5
10
Source: Wirtz (2011), p. 259/National
259/National Cable & Communication Association (2011).
(2011).
15
20
25
Million subscribers
Figure 2-8: Interactions in the TV market
Technical distribution
Fee
Brand management
Attention/contacts
Recipient/audience
Cable network
provider
(e .g. Comcast)
Satellite provider
(e. g. DirecTV)
Terrestrial
broadcasting
Internet
(e. g. DSLprovider)
Cable-/satellite TV-networks
Premium-cable
(additional fees)
Basic-cable
(free of charge)
Fee
Broadcasting networks
Advertising
space
Resources
Advertising
revenues
Procurement resources
Human resources
(e. g. actors, authors)
Program content
(e. g. news material)
Rights
(e. g. film/sport rights)
Advertising companies/
advertising agencies
Figure 2-9: Media usage pattern of U.S. citizens
hours per
month
250
196
200
174
158
145
150
130
114
104
100
50
16
26
20
6
10
7
2 - 11
12 - 17
18 - 24
29
29
29
13
12
11
25 - 34
35 - 49
50 - 64
24
6
0
Watching TV at home
Watching timeshifted TV
65 + age
DVR playback
Source: Wirtz (2011), p. 264/Nielsen Company (2010c).
Figure 2-10: TV usage of certain ethnic groups
hours per
month
250
199
200
150
138
126
92
100
50
0
White
Black
Hispanic
Asian-American
Source: Wirtz (2011), p. 165/Nielsen Company (2010c).
Figure 2-11: TV usage pattern during the course of a day in the United States
Reach
70
60
Live television
50
40
30
20
10
0
7:00 8:00 9:00 10:00 11:00 12:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00 10:00 11:00
a.m. a.m. a.m. a.m. a.m. a.m. p.m. p.m. p.m. p.m. p.m. p.m. p.m. p.m. p.m. p.m. p.m.
Source: Wirtz (2011), p. 266/Nielsen Company (2009), p. 37.
Figure 2-12: Top 10 internet video content properties (September 2010)
144.166
Google Sites
54.356
Yahoo! Sites
52.174
Facebook
Microsoft Sites
45.49
Fox Interactive Media
43.851
43.65
VEVO
Viacom Digital
33.57
NBC Universial
29.961
Hulu
29.89
Turner Network
27.195
0
20
40
60
80
100
120
140
160
Total unique viewers (millions)
Source: Wirtz (2011), p. 268/Nielsen Company (2010b).
Figure 3-1: Products in the TV sector
Products in the TV sector
Free-TV
Teleshopping/
call-in-TV
Pay-TV
• Regular programs
• Pay-per-channel
• Direct response TV
• Specialized programs
• Pay-per-view
• Local programs
• Pay-video-on-demand
• Infomercials/
documercials
• Free-video-on-demand
• Pay-near-video-ondemand
• Free-near-video-ondemand
• Free-IP-TV
• Pay-IP-TV
• Video-malls
• Shopping shows
• Interactive teleshopping
• Call-in-shows
Figure 3-2: Value chain of the TV industry
Procurement
Program
production
Program
trading
Program
design/
packaging
Technical
production and
distribution
Recipient
Key tasks
• Procurement of • Planning,
control and
screenplays,
execution of
moderators,
production
actors, editors,
technology and
other input
factors as well as
ad space
• Trading in
movie or sports
rights
• Program planning • Transmission
and prepackaging technology
• Ad placement
• Use of telecommunications
infrastructure
• Rights agents
• Program
traders
• Program director
• Program editors
Provider
• News agencies
• Authors
• Actors
(agencies)
• Advertising
agencies
• Editorial staff
• Production
firms
• Cable provider
• Satellite
provider
Figure 3-3: Forms of TV advertising
TV-network
TV-advertising
Commercial
Sponsorship
Teleshopping
Advertising
shows
Product
placement
Commercial
block
Bartering
Cut-in
commercial
Merchandising
Source: Wirtz (2011), p. 276/Wirtz (1994), p. 140.
Figure 3-4: Cost and revenue structure of manufacturing (free-TV)
12 %
100 %
61 %
Advertising
revenues
92 %
8%
9%
10 %
Other
revenues
8%
Revenue
Distribution
Contentproduction
Distribution costs (12 %)
Marketing/
sales
Administration
Earnings
Figure 3-5: Business model of an advertising-financed private television station
Cost and
procurement model
Information
Agencies,
companies
Advertising-financed
private television station
Content
In house production
Selection of
external content
Rights and content
In house production
rights
Rights + Licenses
Management
of rights and
licenses
Brokerage
Management
of advertising
cooperations
Placement/
integration
Advertising space
Suppliers,
producers,
contentprovider
• Movies
• Sports
• ...
Advertising space
• TV-spots
• Sponsorships
• ...
Contentdistribution
Recipient
Purchase
Distribution
Revenues
Trader,
channel
Advertising
customer
Advertising
space
Goods
T-Commerce
Purchase
Infrastructure
Telcocompanies
Information
Movies/shows
Live-events
...
Purchase
Advertising
content
Advertisers,
agents
•
•
•
•
Salary
Utilization of
external productions
Producers,
trader,
other networks
Content
packaging
Integrated offer of goods and services
Hosts, actors
Range of services
Manufacturing process of goods and services
Compensation
Input
Revenue and
distribution
model
In house production
Selection of
external content
Placement/
integration
•
•
•
•
Teleshopping
Merchandising
Call-in TV
Online services
Transaction
revenues
Recipient
Products/
services
Compensation
Figure 4-1: Television pieces production process
Selection
Concept
Production
Post production
• Events
• Exposé
• Treatment
• Cut
• Trends
• Rating
• Screenplay
• Sound on vision
• Ideas
• Cost appraisal
• Shoot
• Special effects
Phaseout
• Production of
transmision
signals
• Broadcasting
Figure 5-1: Clipping of the Hulu homepage
Description and rating of the video
Possibility to share
content (social media)
Companion banner
Main video screen
Possibility to adjust the player
Source: Wirtz (2011), p. 297/Hulu (2011b).
Figure 5-2: Top 10 video sites by ad impressions
Hulu
1,109,899
Tremor Media
533,201
ADAP.TV
434,839
BrightRoll
374,394
CBS Interactive
270,346
227,398
Microsoft Sites
CWTV.com
202,842
SpotXchange
193,765
AOL
172,327
Google Sites
170,509
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
Ads viewed (thousands)
(
)
Source: Wirtz (2011), p. 198/comScore (2010).
Figure 5-3: Strategic alignment of Hulu
Aspects
• Integration and convergence strategy
Strategy
• Legal and (mostly) free content
• High quality online video experience
• Content aggregation, allocation and syndication
Business model
• Revenue model: generates revenue from advertising sales and (recently)
subscription fees from recipients (premium service)
• Professional produced content from over 225 content providers
Range of services
• Clear and easy-to-use webdesign
• High advertising effectiveness through interactive features (e.g.
individualization)
• Free and legal content
Success factors
• Strong partnerships with the most important content producers
• Strong media and internet competencies
Review
1. Which share of the viewer’s market do the different TV television stations have
in the United States? Are there significant differences between cable TV and
broadcasting?
2. Which roll plays the internet in the development prospects of the TV sector
(IPTV)?
3. What are the TV industry’s product types? Give examples of pay-per-view and
direct-response-television!
4. Name the essential market entry barriers in the TV market?
5. What are the TV suppliers’ cost structure and revenue structure? Give reasons
for the high content production costs!
6. Which different structures are to be recognized within the internal production
and contract production of TV contributions?
7. Which different brand-political variations are conceivable in the TV
sector?Name an example of a family brand strategy!
8. How do you evaluate the continuous shifting of TV providers to the internet?
Which risks arise out of this for the traditional business models?
Chapter 9: Internet management
Figure 2-1: Development of the internet hosts worldwide
Number of hosts
in million
* Compound annual growth rate
CAGR*
29.3 %
800
732
700
625
600
541
500
433
394
400
317
300
233
200
147
171
109
100
72
43
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: Wirtz (2011), p. 431/Internet Systems Consortium (2010).
Figure 2-2: Internet hosts per 1,000 inhabitants in selected countries
848
Iceland
767
Finland
699
Netherlands
692
Denmark
663
Norway
532
Australia
474
Switzerland
Sweden
420
New Zealand
414
340
Japan
329
Italy
284
Germany
220
France
196
Canada
147
Great Britain
Total average worldwide*: 93
73
Spain
43
Russia
China
11
United States 7
India 3
Source: Wirtz (2011), p. 432/Graumann/Speich (2009), p. 156.
Figure 2-3: The largest U.S. internet content providers
Facebook
10.31 %
Google
7.30 %
YouTube
3.49 %
Yahoo! Mail
2.90 %
Yahoo!
2.32 %
Yahoo! Search
1.41 %
Bing
1.16 %
Windows Live Mail
0.97 %
Gmail
0.88 %
msn
0.87 %
eBay
0.81 %
MySpace
0.62 %
AOL Mail
0.62 %
Amazon.com
0.58 %
Yahoo! News
0.49 %
Walmart
0.49 %
AOL
0.47 %
Wikipedia
0.46 %
Pogo
0.36 %
Target
0.29 %
0%
2%
Source: Wirtz (2011), p. 433/Hitwise (2010).
4%
6%
8%
10 %
12 %
Visits (in %)
Figure 2-4: Interactions in the internet media market
User
Fee
(optional)
User generated content
Fee
Content provider
Information/products/
services
Internet media provider
License
Fee
Rights
Fee
Franchisor
•
•
•
•
•
Information provider
Entertainment provider
Education provider
Infotainment provider
…
Rights
Feedback/
advertising
effectiveness
Advertising
companies
Fee
User
Fee
Internet service
provider
Fee
Technical
infrastructure
Internet
access
Access to
backbone
networks
Infrastructure
provider
Fee
Know-how/
hardware
Fee
Fee
Software developers/
programmers
Fee
Know-how/
hardware
Technology
providers
Table 2-1: Classification of key services on the internet
Source: Wirtz (2011), p. 438/Laudon/Traver (2010), p. 3.
Table 2-2: Usage share based on population groups
Source: Wirtz (2011), p. 440/PewInternet (2010).
Figure 2-5: Necessary bandwidth for a convenient internet-content-use
Supported
content
Modem
ISDN
Efficient
browsing
Image
download
Broadband
Onlinegaming
Full-screenvideo
Video in
DVD-quality
Half-screenMusic
video
download
Video in
HD-quality
(1080i50)
Bandwidth (MBit/s)
0.064
0.125
0.25
0.5
1
2
4
8
10
27
Service exchange provider
Figure 3-1: Actor structures on the internet
Administration
to
business
Administration
to
consumer
Administration
to
administration
Consumer
Consumer
to
business
Consumer
to
consumer
Consumer
to
administration
Business
Business
to
business
Business
to
consumer
Business
to
administration
Intra
business
Business
Consumer
Administration
Intra
Administration
Intra
administration
Service exchange receiver
Figure 3-2: Value chain of the internet media industry
Procurement
of online
content
Key tasks
• Generation of
content/services
Provider
Creation of
online
content
• Production
of input
Packaging
of content
and
services
• Aggregation
and bundling
of content/
services
• Editorial
• Traditional content • Editorial
departments departments
providers such as
news agencies,
newspapers,
music publisher,
TV stations
Technical
production
Distribution
Recipient
• Programming
• Content disof the websites tribution via
internet
• Graphic artists, • Web-hostingserviceprogrammer,
provider
web designer
Source: Wirtz (2011), p. 444/Denger/Wirtz
444/Denger/Wirtz (1995), p. 23/Wirtz (1999), p. 18.
18.
Figure 3-3: Basis of the classification of business models on the internet
Content
•
•
•
•
Compilation (packaging)
Depiction and
Provision of content
on a domestic platform
Commerce
• Initiation,
• Negotiation and/or
• Settlement of business transactions
Connection
Context
• Classification and
• Systematization of the information
that is available over the internet
• Creation of the possibility to
exchange information in networks
446/Wirtz (2000), p. 87/Wirtz/Lihotzky (2003), p. 31.
31.
Table 3-1: Revenue scheme in the Content segment
Figure 3-4: Costs and revenue structure of the manufacturing
100 %
Advertising
revenues
42 %
26 %
82 %
7%
25 %
Sales
18 %
Revenues
Content-production
Marketing/
sales
Administration
costs
Profit
Figure 3-5: The Content business model
• Compilation (Packaging)
• Depiction and
• Provision of content
• on a domestic platform
Content
E-entertainment
E-education
• E-politics
- state.gov
• E-games
- partypoker.com
• Virtual university
- vu.org
• E-society
- thesun.co.uk
• E-movies
• Public education
E-information
- gutenberg.us
- movies.go.com
• E-prints
- worldlibrary.net
• E-economics
- wsj.com
• ...
- onlinelearning.com
- salto-youth.net
• ...
• E-music
- apple.com/itunes
• ...
E-infotainment
- nba.com
- sportsline.com
- ...
Figure 3-6: Illustrative content business model
model
Content business model
Production of goods and services
Communication
of content
Gratification
of content
Internetcommunity
z.B.
e. g.
Bank of America
Coordination
of external
communication
Offer of advertising
cooperation
Transfer of
advertising content
Supply of
content
Editorial
creation of own
online content
Administration of
the communication
services
Management
of advertising
cooperation
User
interaction
Positioning/
integration
Range of services
Content
• Individualized content
• Public-interest
content
• Special-interest
content
• Ad-hoc advices
• Data bases
•…
Connection
• Discussion forums
• Recommendation service
•…
Advertisement space
• Banner advertisement
•…
Integrated offer of products/services
Absorption of
content
e. g.
AP
Reuters
Collection,
selection,
systematization
and
compilation of
content
Revenue and
distribution model
Presentation
Recipient
Distribution
Advertisement
revenues
e. g.
Target group Bank of America
contatcs
Figure 3-7: The Commerce business model
• Initiation,
• Negotiation and/or
• Settlement of business transactions
Commerce
E-attraction
• Banner placement
- google.com/adsense
• Provision of market
places
- firststopshops.com
• ...
E-Bargaining/
E-bargaining/
E-negotiation
E-Negotiation
E-transaction
E-Transaction
• Auction
- ebay.com
- ubid.com
• Price seeking
- pricegrabber.com
• ...
• Payment
- paypal.com
- paybox.net
• Delivery
- fedex.com
- ups.com
• ...
E-tailing
E- amazon.com
- …
Figure 3-8: The Context business model
• Classification and
• Systematization of the information that
is available over the internet
Context
Search engines
• General search
- google.com
- bing.com
• Special search
- technorati.com
- ...
Web directories
• Web directories/lists
- yellow.com
- yahoo.com
- sharelook.com
- ...
Bookmarking services
• Social tagging
- del.icio.us
- dmoz.org
- citeulike.org
- ...
• Meta search
- dogpile.com
- ...
• Desktop search
- Google desktop
- Yahoo! desktop
- ...
Figure 3-9: The Connection business model
• Creation of the possibility to
exchange information in networks
Connection
Intra-connection
• Community
- Customer networks
- myspace.com
- facebook.com
- Customer messages
- skype.com
- icq.com
- twitter.com
- Customer exchanges
- rapidshare.com
- flickr.com
- Customer opinion portal
- ciao.com
- epinions.com
• Mailing services
- gmail.com
• ...
Inter-connection
• Fix connection
- aol.com
- att.com
• M-connection
- att.com
- t-mobile.com
• ...
Table 3-2: Overview of current Web 2.0-applications
Source: Wirtz (2011), p. 459/Enderle/Wirtz (2008), p. 37.
Figure 3-10: The Web 2.0 – 4 factors model
Figure 4-1: Development trends in the internet and multimedia sector
Competition
Intensification through:
• Rise of market
transparency
• Decreasing entry barriers
• Drecreasing change
barriers
• Disintermediation
Customers
Virtualization
Modified customer behavior
through:
• Higher standard of
information and rise of the
consumer power
• Declining consumer loyalty
and problems with
customer loyalty
Virtualization of:
• Products
(Internet)
companies
• Organizations
• Alliances/networks
Complexity
Increasing complexity
through:
• Rise of the innovation rate
• Market fragmentation
Figure 4-2: Internet content production process
Conception
• Development
of ideas
• Definition of
the target
group
• Concept
(content,
design,
technology)
• Determination
of sequence,
budget and
schedule
Content
Design
• Choice of
• Visual procontent quality cessing of the
and quantity
content
• Determination • Creation of a
of content
congruence of
suppliers
content and
graphic-visual
presentation
Technology
• Hardware and
software determination
Production
Quality
assurance
• Permanent
• Setup of
hardware and update of
the content
software
architecture
• Quality
monitoring
• Securing the
compatibility of and asthe system
surance
architectures
• Creating the
offer
Figure 4-3: Price determination of the content provider
Additional value for the user
78
Competition-orientated
56
Costs plus profit margin
41
Gut feeling
38
Validation through
market research
35
0
15
30
45
60
75 Mentions in %
Source: Wirtz (2011), p. 476/Association of German magazine publishers/Sapient/
EFOplan (2003), p. 13.
publishers/Sapient/EFOplan
Figure 5-1: Functions of MySpace
Profile photo
Sign up possibility
Videos
Menu
Top Friends
Blog Entries
Source: Wirtz (2011), p. 477/MySpace (2011).
Figure 5-2: Business model of a social network company
Social network
company
model
Production
Produktions-of
- und
goods
Leistungserstellungsprozess
and services
Coordination of
communication
Verwaltung
der
Administration
Kommunikation
of the
communication
s-dienste
NutzerUser
interaktion
interaction
services
User/internet
Nutzer/internetCommunity
community
Range of Services
Connection
• Information exchange
between users
• Mail function
• Discussion forums
• Groups
• …
Presentation
Nutzer
User
Provision of the
online platform
Setting up
content
Absorption of
content
z.B.
Advertising
Werbekunden
clients
Revenue and
distribution model
Offer of advertising
placements
Transfer of
advertising content
User generated Generated
Content
content
Creation/
Erstellung
adoption of own/
eigener Inhalte
external content
Management
ofvon
advertising
Werbe cooperations
kooperationen
Bereithaltung
Content
von Inhalten
provision
Positioning/
Platzierung/
Einbindung
integration
Content
• Personalized content
• Special-interest content
• Entertainment
•…
Advertisement space
• Banner advertisement
•…
Distribution
Advertisement
revenues
Target group
contacts
Advertising
Werbekunden
clients
Figure 5-3: Strategic alignment of MySpace
Aspects
• Networking in a social network; linking people with similar passions
Strategy
• Integration of content in a social network, such as music, videos
• Integration strategy: from multimedia offers to bundled products
• Use of the multimedia products offered by News corporation
• Connection issue: creating the possibility to exchange information through
social web applications/intra community
Business model
• Partial content issue: collection, selection, systematization, compilation
(packaging) and provision of user-generated content (music, music videos,
information in the audiovisual entertainment segment) on a single platform
• Transaction-independent generation of indirect revenues (e. g. advertising
revenues)
• Free user profile with the option of network building
• MySpaceTV
Range of services
• Music channels
• Music and video charts
• Music contributions
• Free online community
Success factors
• Network effects/economies of scale
• Authentic connection between artists (musicians, actors, etc.) and fans
Review
1. Sketch the various structures of the actors on the internet! Which examples can you
provide for each category?
2. What constitutes the value chain of the internet media? Please state examples for
each stage!
3. What are the basic business models on the internet and how are their revenues
systematized on the internet?
4. Which basic business model does the E-entertainment special business model
pertain to?
5. Please elaborate on some differences between the different business models of the
Commerce basic business model! Which examples can you name?
6. The Connection basic business model is increasingly gaining importance! Which are
the major Web 2.0 platforms that can hereby be mentioned as examples?
7. How is content produced on the internet? Please state the individual stages of the
production process!
8. How do you assess the willingness of users to pay for services offered over the
internet?
9. How do internet companies succeed in maintaining a long-term customer
relationship?

Media and Internet Management

Transcription

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