Global Communication Industry: Flows of Global Content

Flows of Global Content

Global News Providers

• Global news is a prominent product of the global communication industry.
• Understanding global news requires historical context:
  • 16th Century: European trading community developed cosmopolitan interests and created their own information systems.
  • 16th-17th Centuries: First European newspapers emerged, furthering cross-border communications.
  • 18th - Early 19th Centuries: Newspapers attempted to deliver foreign news but faced challenges due to wars and weather conditions causing delays and inaccuracies.
  • 19th Century: Collection and distribution of international news became a large-scale operation.

Developments in the Twentieth Century

• Global news is now a very competitive business.
• Major Global Agencies:
  • Associated Press (USA)
  • Reuters (UK)
  • AFP (France)
• The "Big Three" provide approximately 80% of the world's news.
• Reuters and APTV are major providers of global television news.
• Associated Press (AP):
  • Largest producer and distributor of text, audio, photo, and video.
  • Reaches over 1 billion people daily.
• Other important video news providers: BBC World and CNN.
• Political significance: Shared experiences of events through shared narrations (Appiah, 2002: 7).
• Today's world citizens participate in a common story (Appiah, 2002: 7).

CNN's Impact

• CNN described as the "sixteenth member of the UN Security Council" (Boutros Boutros-Ghali).
• Effect on global politics:
  • Direct effect on political actions (e.g., 1992 US intervention in Somalia).
  • Some effect, but no real impact on decision-making (e.g., non-intervention in the Bosnian conflict in 1991-92).
  • Agenda-setting without directly impacting decision-making (Jakobsen, 1996).
• The "CNN effect" theory: global TV as a controlling factor in foreign policy decisions.
• "Manufacturing consent" theory (Chomsky and Herman, 1988): media usually support government positions and reflect official policy.

Real-Time 24/7 News Coverage

• Political leaders use media for information on other countries.
• Global television news provides information in real time and in dramatic presentations.
• George Bush (senior) during the Gulf crisis of 1990-1991: "I learn more from CNN than from the CIA" (Friedland, 1992: 7-8).
• Global radio news stations: BBC World Service, Voice of America, Radio France International, and Deutsche Welle.
• Global financial news agencies: Associated Press-Dow Jones, Agence France Press, Financial Times, Bloomberg News, and CNBC.
• Inter Press Service (IPS) offered an alternative format for global news since the late 1960s.

The Global Entertainers

• Music
• Television entertainment
• Film
• Children's television

Global Entertainment Industry

• Encompasses production and distribution of films, books, music, TV programs, Internet entertainment, TV formats, and computer games.
• Content industry reached approximately US\$1.2 billion in sales in 2010.

Music Industry

• High level of uncertainty and volatility (Wikström, 2009: 22, 23).
• Difficult to predict successful products and consumer preferences.
• Copyright product evaluation occurs after "the first copy" is produced.
• Consumption of copyright products is highly volatile and unpredictable (Picard, 2002: 7).
• Decision-makers rely on intuition (Hesmondhalgh, 2002: 23).
• Portfolio theory: Reduce risk by investing in diverse markets and products (Picard, 2002: 200 et seq.; Reca, 2006).
• "Throwing mud" strategy (Hesmondhalgh, 2002: 23).
• Definition (Wikström, 2009: 49): Companies developing musical content and personalities communicable across multiple media.
• Three parts: recording, music publishing, and live performance.

Historical Context

• Live performance is the oldest segment.
• Sound-recording emerged in the late nineteenth century (Edison, Columbia, and Victor).
• Recording companies handled finding new talent, manufacturing, marketing, and distribution.
• Music publishers administered copyrights and collected royalties (Wikström, 2009: 63).
• Digital technology in the 1990s led to growth in the recording industry.
• Worldwide music sales peaked in 1998 (Wikström, 2009: 64).
• Early twenty-first century: decline of CD sales and rise of digital technology and the Internet.
• Piracy (unauthorized peer-to-peer sharing) emerged on a massive scale.
• Sales of recorded music declined from US\$26 billion in 2000 to US\$17 billion in 2009.
• Companies invested in online, subscription-based services.
• Examples: Apple's iTunes, Nokia's Comes with Music, Sony and Ericsson's PlayNow Plus.
• Television became important for record companies (e.g., Susan Boyle on Britain's Got Talent in 2009).
• Global music market exceeded revenues of US\$18 billion by 2010.
• Approximately 80% of revenue made by the five largest firms:
  • Universal Music Group (Vivendi, France)
  • Sony Music Entertainment (Sony Corporation, Japan)
  • Warner Music Group (USA)
  • EMI Group (Terra Firma Capital Partners, UK)
  • BMG Entertainment (Bertelsmann, Germany).

Television Entertainment

• Key source for people's leisure worldwide.
• Strongly affected by developments in the world economy.
• Distribution is crucial, with increased distribution windows (theaters, home video, satellite, pay-TV, rentals).
• Differential pricing: products have different prices in different markets.
• Most countries are import-dependent, leading to regulatory restrictions (e.g., quotas).
• Contradiction: regulatory measures increase during deregulation and privatization.
• Export prices of TV programs are below average production costs (e.g., sometimes US\$1.5 million for one-hour episodes).

Film Industry

• Films, especially Hollywood feature films, are sold worldwide.
• High-risk industry.
• Buyers buy products before knowing if they like them.
• Highly concentrated, with economies of scale, thus with large barriers to new entrants.
• Few products account for total industry revenues.
• Distribution is essential and costly (e.g., US\$50 million in advertising and marketing for some films).
• Product placement is important.
• Merchandising is used (film-related products sold before the film is released.) For the film Jurassic Park, over 1,000 products were sold as related merchandise.
• Affected by changes in production, distribution, exhibition, and piracy.
• USA continues to be a leading exporter, and Europe is its largest importer.
• Growing demand for Hollywood films in China (Thussu, 2006: 158).

Children's Television

• Proliferation of children's television channels.
• Important networks: Nickelodeon, Cartoon Network, Disney Channel.
• "Global bide TV channels can provide schedules of new services at low cost - which local companies find hard to compete with" (Thussu, 2000: 149).

The Global Advertisers

• Advertising is a key link between the global communication industry and the global economy.
• Global advertising agency is indispensable.
• Advertising emerged as a North American phenomenon.
• Grew with the expansion of transnational corporations:
  • Procter & Gamble (largest global advertiser)
  • Coca-Cola
  • Ford
  • Shell
  • Unilever
  • Nestlé
• Factors in growth:
  • Globalization of major companies
  • Growth of free market economies
  • New communication technologies
  • Communication deregulation (since the 1980s).
• Rapid growth in the 1960s as TNCs wanted advertising agency services for foreign markets.
• Agencies (mainly from the USA) established offices worldwide.
• "What the agencies offer their transnational clients is now a total communication package, including product design, packaging, testing, and positioning in the market. This 'total communication package' represents the marketing experience gathered by the agency on a global basis over the past decade" (Janus, 1981: 306).
• Served the preference of the largest advertisers to work with one global agency.
• Merging between agencies took place through global expansion and consolidation.
• "Concentration produces more concen-tration. Fear of the competitor initiates a spiral of further rapprochements. This is what is revealed by the process of formation of specialized companies for the purchase of advertising space" (Mattelart, 1991: 17).
• Reasons for mergers (McPhail, 2002: 164):
  • Acquire creative talent
  • Acquire a strategic niche
  • Aggressive expansion
• Mergers can cause problems related to client confidentiality.
• Globalization of advertising also seen from increases worldwide in the proportions of GDP spent in advertising.
• Economic problems of the late 1990s slowed growth.
• "Even in thedeveloped markets of western Europe, for example, most nations still spend no more than one half the US amount on advertising per capita" (McChesney, 2000: 192).
• Rapidly emerging new markets in Brazil, Russia, India, and China (BRIC countries).
• Global advertising is visible through global brands (Moor, 2007; de Mooij, 2013):
  • Adidas
  • Apple
  • Coca-Cola
  • McDonalds
  • Nike
  • Ralph Lauren
  • IKEA
• These brands are linked with the global spread of modern ideas and lifestyles.
• The industry is structured so that the top tier is dominated by four global groups:
  • Omnicom
  • WPP
  • Interpublic
  • Publicis Groupe

Omnicom

• Key network: BBDO (known for creative products).
• DDB Worldwide is another important network.
• Acquired TBWA.
• Clients: BMW, Volkswagen, and Mercedes.

WPP

• Young & Rubicam Brands is a wholly-owned subsidiary since 2000.
• Ogilvy & Mather Worldwide is also part of WPP.
• Owns JWT (J. Walter Thompson) since 1987.
• Clients: Ford, IBM, Johnson & Johnson, Procter & Gamble, and Microsoft.

Interpublic Group of Companies

• Formerly called McCann-Erikson.
• Provides services in over 100 countries worldwide in consumer advertising, marketing, public relations, and media buying.
• In 2011, revenues totaled US\$7 billion.
• Clients: General Motors, Microsoft, and Unilever.

Publicis Groupe

• Acquired Bcom3 in 2003.
• Saatchi & Saatchi is also housed in Publicis Groupe since 2000.
• Clients: Toyota, Nestlé, and Coca-Cola.

Challenge: Regulation

• "While there is some statutory regulation governing advertising in the US… the UK … and Australia, the advertisers and agencies in these and many other countries, in the face of pressure from consumer, community and environment groups, have sought strenuously to keep statutory regulation to a minimum and to set up their own self-regulation arrangements instead" (Sinclair, 2012: 90).
• Self-regulation arrangements are more satisfactory to the industry than to consumers and their organizations (Sinclair, 2012: 91).