The aggregate demand of published material, both online and offline, is a fixed number. Publishers in today's mass media market face fierce competition; each customer that an online publisher wins comes at the expense of its offline counterpart. To illustrate, imagine the unequal slicing of a pumpkin pie representing market shares that vary in size. The sum of all shares, or 'slices,' adds up to the total client base. Although each publisher already owns a portion of the pie, it still covets those who have a bigger slice. In this zero-sum game, with each new slice that a publisher gains, its pie becomes incrementally larger, while the competition's becomes incrementally smaller. Statistics have shown an upward trend in e-journal subscriptions in recent years, mainly because online periodicals are more frequently updated, cheaper to produce, and accessible everywhere (Greco 2). To that end, the internet has helped many web-based media business increase their market share while simultaneously decrementing those owned by their offline competition. Given their inferiority in cost, channeling, and time-to-market, how do traditional publishers stay in business? In the same way opposing forces in nature result in a state of equilibrium, there is a single overarching mechanism in the publishing industry that is designed to buffer short-term market gains and resist long-term change.
This built-in mechanism in the media business consists of a multitude of socioeconomic factors. We will first explore the economics behind the publishing industry, which includes the horizontal integration of ownership and realizing specific market segmentation, such as textbooks. Then, we will scrutinize the social implications such as conventions, content censorship, and government regulation, and finally, delve in on a specific case of value-added books.
In assessing the economics of the media business, it is helpful to first examine the ways in which publishing companies are owned and financed. Broadly speaking, media systems can be owned by the state, by private corporations, or by a mixture of both, all of which are financed through advertising (McCullagh 75). As with any other business, the publishing industry is profit-oriented, and the premise for all strategies deployed and actions taken is ultimately a means to achieve financial rewards.
Many major national periodicals and magazines have developed web versions in the past two to three years, a move that helps strengthen media ownership (van dur Wurff 217). Large media companies buy into or merge with other media companies that serve the same market, a process known as horizontal integration (McCullagh 75). For example: the merger of America Online and Time Warner in 2000 brought together CNN, Netscape, Warner Brothers, and Time Magazine.
It is very common to find well-known magazines such as TIME, Fortune, or Newsweek that offer full access to the same published content online. This requires some initial cash outlay to setup the proper web-hosting infrastructure, but once the host servers are in place, no additional capital is required to run the internet operation. Web versioning transfers ready-to-go material onto the World Wide Web, which compared to the original paper content, is simply an alternative mode of display. For example: TIME magazine invests some initial capital to create www.time.com. Once the website is operational, it then attracts new readership and advertisers and generates more revenue.