Economics and funding of media industries

Overview

Commercial and public funding, the licence fee, subscription against advertising, freemium and crowdfunding, and why first-copy costs dominate.

What you need to know

Answer each one before you reveal it.

Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What sources of revenue does commercial funding rely on?

   Model answer

   Commercial funding relies on advertising revenue, subscriptions and sales to finance media production.

2. 2

   What is not-for-profit public funding in media?

   Model answer

   It involves state or public funding to support media production without profit motive.

3. 3

   How do economic factors influence the types of media products created?

   Model answer

   Commercial pressures may prioritise profitable content over diverse or niche content.

4. 4

   What is the licence fee and which organisation does it fund?

   Model answer

   An annual charge paid by UK households watching or recording live television or using BBC iPlayer, which provides the principal funding for the BBC.

5. 5

   How does a subscription model differ from an advertising-funded model?

   Model answer

   Subscription revenue comes directly from audiences paying for access, which makes the subscriber the customer, whereas advertising funding comes from selling audience attention, which makes the advertiser the customer.

6. 6

   Why does advertising funding tend to push content towards larger audiences?

   Model answer

   Because revenue depends on the size and desirability of the audience delivered to advertisers, so content that attracts more viewers or a more valuable demographic generates more income.

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