Media Content as a “Public Good”

Posted on | February 23, 2011 | No Comments

Media products are sometimes referred to as “public goods” because these products are not significantly “used up” in the process of consumption and each additional user incurs little additional (marginal) cost. Unlike traditional products like a hamburger that is bit into, chewed, swallowed, and digested, media content is not destroyed while consumed. Although the timeliness of media content is often an issue, the consumption of media does not deplete it.

With traditional public goods like a road or a park, the costs associated with the additional driver or a child enjoying the playground are minimal. With media content as well, additional consumers are included without incurring much expense. An additional radio listener for example would not impose even a negligible cost on the radio station. Likewise, one more click on a website would not cost very much.

This issue is debated however as the “nonexcludability” criteria of a public good takes into account the costs associated with keeping nonpayers out of the system. It is difficult to keep a car off a road or a kid out of park just as it was not feasible to keep a viewer from watching a TV show on broadcast TV.

A related issue concerns the costs of producing additional media content. In general, the marginal costs of producing an additional media item like a DVD is not very significant as are the costs of printing one more book, or adding an additional radio listener or television viewer. Almost all the costs associated with content creation are production and post-production expenditures involved in making the programs and then making sure it reaches an audience.

The costs associated with producing major films, for example, are mainly upfront and can climb into hundreds of millions of dollars. Salaries for major stars and other talent, camera and lighting costs, special effects and CG can drive the budgets of a major film way up. To recoup these costs, it is important to drive viewers into the theaters. Therefore, it often makes sense to spend a lot of money on advertising and other promotional activities.

Advertising media content can pay off significantly in reaching new audience members without incurring substantial production costs. While expensive, it often pays off because the costs of reaching each additional viewer is negligible. The calculation of advertising costs associated with films represent another important “microeconomic” calculation and can go awry if not planned carefully.

An interesting example of mass content model was in the case of software applications. Microsoft in particular became very rich by creating the standard operating system for the PC and then mass marketing it. While IBM had to compete in the competitive, low margin business of producing personal computers, Microsoft got nearly a free ride by providing original media content – the MS-DOS operating system – for each IBM PC and then the IBM-compatible clones like Dell and Compaq “portable” personal computer.

So this means that the “mass” in the mass media model is still important. Because the production costs are so high and costs of serving the additional audience member so low, it makes sense to reach as many customers as possible. I was tempted to write “consumer” there, but we have established that media content is not really consumed.

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Anthony J. Pennings, PhD has been on the NYU faculty since 2001 teaching digital media, information systems management, and global communications.

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