Sunday, February 6, 2011

Why does economics drive most media companies?

Many companies receive their funds through larger corporations which sponsor them, donations or advertisements. This funding method is extremely successful in a strong economy where donations are not cut out of individual budgets. When the economy is poor, donations are often cut from personal budgets as to monitor one’s spendings. Donations are not the only aspect which suffer in a poor economy, advertising is also effected. If the price of purchasing advertising space rises then smaller companies may not be able to afford the higher fee and decide not to buy. A good example of this would be the New York Times. In a poor economy the paper would sell less issues a day and would be forced to raise prices of advertisement. Many of the smaller companies which would typically place ads would not be able to. But this is an unbiased business decision of the New York Times (and other businesses alike) and therefore only raise the prices to get the necessary profit. Nevertheless advertisement is a huge market for companies to collect revenue. If their product appeals to most consumers and it is priced in an affordable bracket the product will sell. If economy is bad the large corporations which sponsor companies may be limited in their monetary contributions to the media companies. Media depends on the economy to survive. Without funding the media would cease to exist.


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