Monday, September 21, 2009

New Media Demands a New Kind of Media Company

(Posted by Yael Caspi-Scwartzberg)

This article seems relevant to our class discussions since it discusses the economics of the online media vs. the traditional media businesses, including barriers to entry, economies of scope and possible business models.

1 comment:

  1. In the article author set an example that traditional media companies enjoys "Economy of Scope". For me his argumentation is not convincing enough. If I'm TimeWarner what would be my synergies of owning cable network? Author says "production companies... benefit from predictable demand from TV networks owned by the same company". What is the reason for cable network to buy TV show? If the show is competitive then cable company would buy it anyway. If not then conglomerate does favor for production company by expense of cable provider making latter to buy overpriced and non-competitive product they wouldn't buy otherwise. Since both belong to the same shareholders it's just putting money from one pocket to another.