Page 145 - Critical Political Economy of the Media

124 Critical investigations in political economy

source of greater, and more predictable, profitability. The Internet allows producers
to exploit ‘the millions of niche markets at the shallow end of the bitstream’, making
low-volume sales to specialist markets economically viable (Anderson 2004).
Online shops can overcome the scarcity of shop inventories to satisfy consumer
taste, but niche markets also involve a power shift from elite control of supply to
a demand-driven environment of expressive consumption, whose market signals
are celebrated as a form of ‘democratisation’.
However, the long tail is better at explaining retailing than content creation and
is irrelevant in markets where barriers to entry remain high (Hindman 2009).
Media companies are also well placed to exploit their own ‘long tail’, their back
catalogue inventory that could be marketed and digitally distributed at little cost
(McChesney 2000). Digitalisation expands opportunities to repurpose entertain-
ment and information, complementing strategies of multimedia consolidation
and using a web platform ‘perfectly matched’ for the media conglomerates
which have been assembled (D. Schiller 2000).
Large companies have greater economies of scale, reducing costs and enabling
more competitive pricing. They can also embark on strategies to undermine com-
petition by temporarily lowering prices and by exploiting marketing and other
advantages to disable under-resourced competition. Large firms have greater
economies of scope; they can optimise shared resources to reduce costs and can
exploit advantages of multimedia holdings, notably cross-promotion (Hardy 2010a).
Summing up, Küng et al. (2008: 133) identify the benefits stemming from:

the additional use of existing content that creates scale economies and better
average costs for their use, from transaction cost reductions arising from the
simplification and reduction of the costs of the acquisition of content and other
resources, and from economies of scope produced by leveraging the market
recognition of established firms so that lower marketing expenses are required
for new activities, by exploiting existing audience and advertiser relationships
and by creating opportunities for additional revenue without the concurrent
need for full resources required by independent creation and distribution.

The challenges of operating cross-media activities increase advantages for well-
established content providers. Taken together these advantages help to explain
the patterns of dominance of major media firms in general news publishing and
high cost audiovisual content. That presence challenges myths not only of a new
economics but also (pre-digital) myths of a dynamic, self-correcting capitalism,
both of which ignore or underestimate market and political strategies to maintain
dominance.

Challenges for mass media businesses

Based on the analysis above critical scholars predict the continuing dominance of
major media firms. For Sparks (2004: 325)