Media management is a business administration discipline that identifies and describes strategic and operational phenomena and problems in the leadership of media enterprises. Media management contains the functions strategic management, procurement management, production management, organizational management and marketing of media enterprises.
A uniform definition of the term media management does not yet exist, and "the field of media management in its present form is neither clearly defined nor cohesive." [1] Notwithstanding this fact, among existing definitions there is a shared base concerning the business administrative character of media management and the functional understanding of management. In the following a number of definitions are provided.
"Media Management consists of (1) the ability to supervise and motivate employees and (2) the ability to operate facilities and resources in a cost-effective (profitable) manner." [2]
"The core task of media management is to build a bridge between the general theoretical disciplines of management and the specifities of the media industry." [1]
"Media and internet management covers all the goal-oriented activities of planning, organization and control within the framework of the creation and distribution processes for information or entertainment content in media enterprises." [3]
Media enterprises are strategically organized economic entities whose central work is generating and marketing of media. The generation of media is the bundling of internally and externally generated content and its transformation into a medium. The marketing is the direct or indirect distribution of media. The term media in this connection is restricted to one-to-many-communication with one sender and a large number of consumers. More precisely, the focus is on newspapers, magazines, books, music, television, films, internet and games. More details can be drawn from the graphic illustrating the definition of media enterprises.
In order to understand management in media enterprises it is crucial to build a larger picture of the media marketplace. The characteristics of media markets differ from markets of other economic sectors in several ways.
One characteristic of media markets is the multidimensional competition. Media enterprises operate in three different markets. They sell their services in form of content like information and entertainment, as well as in form of advertising space. These services are offered for different business markets. The content is offered to the consumer markets which differ depending on the type of media and the way it is used by consumers. The advertising spaces are traded on advertisement markets.
The third markets are procurement markets. They are needed as media enterprises generally do not produce all their offered content themselves but buy service packages of both, information and entertainment, from procurement markets. For example, authors and artists contracts or license and copyright deals can be acquired. But procurement markets can turn to business markets if, for example, complete rights to an event are purchased and then resold by a media enterprise in the form of secondary utilization rights. The described market structure is shown in the second image.
In fact, the three described media markets each media enterprise can be active in are strongly interdependent. But the intensity of their relationships differs. For example, there is a strong relationship between advertisement and consumer markets as the success among consumers drives advertising revenues. All possible inter-dependencies are pictured in the third graphic.
Furthermore, there are geographic media markets. Media enterprises operate in specific geographic markets. Some firms operate in a national market while other companies, for example, local radio stations operate in a regional area. So the marketplace of a media enterprise consists of the product media markets (consumer market, advertisement market and procurement market) and the geographic media market.
The value chain analysis by Michael Porter [4] can be adapted for the analysis of value creation in media enterprises. Although the media sector is very heterogeneous and has different branch-specific features, the presented value chain of the media industry form the basic principles.
As for business companies in general, for media enterprises their core assets and core competencies are decisive for the long-term success. Core competencies considerably contribute to the perceived customer benefit of a product and ensure the competitive advantage of an enterprise. Competencies which are crucial to successful media management can be classified as technical skills, human skills, conceptual skills, financial skills and marketing skills. [5] Core competencies of media enterprises are, for example, an exceptional editorial ability or cross-media marketing competence. There are six subgroups of core competencies of media enterprises: content-sourcing competence, content-creation competence, product development competence, promotion competence, cross-media utilization competence and technology competence.
The content-sourcing competence means acquisition of high-quality information and/or entertainment content for content production. Especially the production of exclusive content leads to unique competitive advantage. Content-creation competence is one of the most important core competences in most media enterprises. Media enterprises with content-creation competences are, for example, especially good at realizing social trends and implementing them into their media products, making them highly attractive for the customers. The product development competence is the qualification for a product portfolio with a steady flow of revenues. In order to achieve this, media enterprises have to be able to develop promising media products and to assess their marketability. The promotion competence is specifically relevant for media products belonging to the film, book or music categories as these are individual products. Here a different promotion strategy than promotion of brand identity is needed. Achieving public attention and thus a better market position for media products constitutes the promotion competence. Media enterprises with cross-media utilization competences can provide content to the recipients in a timely manner, in the desired amount and via the right channel. Finally the technology competence refers to the employment of modern information and communication technology for the creation and marketing of content. Core competences form the foundation for the strategy formation process in media enterprises. For their future success, the media enterprises have to analyze the current competence basis and compare them with the required, strategically important, core competences derived from an external market analysis. There is a range of different influences on the media management decisions and actions that have to be included in the external market analysis. The influences are "the licensee, competing media, the government, the labor force, the labor unions, the public, and advertisers, economic activity, the industry, social factor and technology." [6] In case some strategically important core competencies are not yet acquired by the media enterprise, they have to be developed.
The concept of the business model is not used uniformly in the literature. Compared to the concept of the value chain, it is not limited to a physical production process. It also includes service processes. According to Timmers, "a business model is defined as the organization (or architecture) of product, service and information flows, and the sources of revenues and benefits for suppliers and customers." [7] According to Wirtz, "a business model is a simplified and aggregated representation of the relevant activities of a company. It describes how marketable information, products and/or services are generated by means of a company's value-added component. In addition to the architecture of value creation, strategic as well as customer and market components are considered in order to realize the overriding objective of generating and preserving a competitive advantage." [8] The business model as an integrated management tool consists of further partial models: the revenue model, the consumer model, the procurement model, the production of goods and services model, the service offer model and the distribution model. Because a business model can strongly vary depending on the type of business, it can best be described using a sample. In the following the business model of a book publishing house is presented. Book publishers are companies that have two components to consider: profit-orientation and a cultural dimension. They usually publish titles which are produced by external authors. The sales of books in the receiver markets are the main part of the revenue model of a book publisher. Other revenues can be generated in the rights and licensing markets. Further sources for revenues are utilization rights generating revenue outside of the printing sector. For example, successful manuscripts are used for film, television, magazines and merchandising.
For book publishers, production and distribution are the main focuses of the economic activity. Here the cost structure of manufacturing is of high importance. The amount of first copy costs in relation to total revenue is around 41%. Marketing costs are about 12% and administrative costs average 14%, with a profit margin of approximately 5%. [9] The final product is delivered through existing distribution channels. With the rise of the internet, new distribution channels with direct delivery to book consumers have been developed. The business model of a book publishing house is shown in the graphic.
In commerce, supply chain management (SCM) deals with a system of procurement, operations management, logistics and marketing channels so that the raw materials can be converted into a finished product and delivered to the end customer. A more narrow definition of the supply chain management is the "design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronising supply with demand and measuring performance globally".This can include the movement and storage of raw materials, work-in-process inventory, finished goods, and end to end order fulfilment from the point of origin to the point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.
Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emphasize in advertising; operation of advertising campaigns; attendance at trade shows and public events; design of products and packaging attractive to buyers; defining the terms of sale, such as price, discounts, warranty, and return policy; product placement in media or with people believed to influence the buying habits of others; agreements with retailers, wholesale distributors, or resellers; and attempts to create awareness of, loyalty to, and positive feelings about a brand. Marketing is typically done by the seller, typically a retailer or manufacturer. Sometimes tasks are contracted to a dedicated marketing firm or advertising agency. More rarely, a trade association or government agency advertises on behalf of an entire industry or locality, often a specific type of food, food from a specific area, or a city or region as a tourism destination.
A business model describes how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts. The process of business model construction and modification is also called business model innovation and forms a part of business strategy.
In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's managers on behalf of stakeholders, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategic management provides overall direction to an enterprise and involves specifying the organization's objectives, developing policies and plans to achieve those objectives, and then allocating resources to implement the plans. Academics and practicing managers have developed numerous models and frameworks to assist in strategic decision-making in the context of complex environments and competitive dynamics. Strategic management is not static in nature; the models can include a feedback loop to monitor execution and to inform the next round of planning.
Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider, or using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.
Brand equity, in marketing, is the worth of a brand in and of itself – i.e., the social value of a well-known brand name. The owner of a well-known brand name can generate more revenue simply from brand recognition, as consumers perceive the products of well-known brands as better than those of lesser-known brands.
Marketing management is the organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of a firm's marketing resources and activities.
In business, a competitive advantage is an attribute that allows an organization to outperform its competitors.
A core competency is a concept in management theory introduced by C. K. Prahalad and Gary Hamel. It can be defined as "a harmonized combination of multiple resources and skills that distinguish a firm in the marketplace" and therefore are the foundation of companies' competitiveness.
Marketing strategy is an organization's promotional efforts to allocate its resources across a wide range of platforms, channels to increase its sales and achieve sustainable competitive advantage within its corresponding market.
A value chain is a progression of activities that a firm operating in a specific industry performs in order to deliver a valuable product to the end customer. The concept comes through business management and was first described by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.
The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing organization as a system, made up of subsystems each with inputs, transformation processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption of resources – money, labour, materials, equipment, buildings, land, administration and management. How value chain activities are carried out determines costs and affects profits.
A strategic alliance is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations.
Co-creation, in the context of a business, refers to a product or service design process in which input from consumers plays a central role from beginning to end. Less specifically, the term is also used for any way in which a business allows consumers to submit ideas, designs or content. This way, the firm will not run out of ideas regarding the design to be created and at the same time, it will further strengthen the business relationship between the firm and its customers. Another meaning is the creation of value by ordinary people, whether for a company or not.
A knowledge market is a mechanism for distributing knowledge resources. There are two views on knowledge and how knowledge markets can function. One view uses a legal construct of intellectual property to make knowledge a typical scarce resource, so the traditional commodity market mechanism can be applied directly to distribute it. An alternative model is based on treating knowledge as a public good and hence encouraging free sharing of knowledge. This is often referred to as attention economy. Currently there is no consensus among researchers on relative merits of these two approaches.
Hypercompetition, a term first coined in business strategy by Richard D’Aveni, describes a dynamic competitive world in which no action or advantage can be sustained for long. Hypercompetition is a key feature of the new global digital economy. Not only is there more competition, there is also tougher and smarter competition. It is a state in which the rate of change in the competitive rules of the game are in such flux that only the most adaptive, fleet, and nimble organizations will survive. Hypercompetitive markets are also characterized by a “quick-strike mentality” to disrupt, neutralize, or moot the competitive advantage of market leaders and important rivals.
Competence-based strategic management is a way of thinking about how organizations gain high performance for a significant period of time. Established as a theory in the early 1990s, competence-based strategic management theory explains how organizations can develop sustainable competitive advantage in a systematic and structural way. The theory of competence-based strategic management is an integrative strategy theory that incorporates economic, organizational and behavioural concerns in a framework that is dynamic, systemic, cognitive and holistic. This theory defines competence as: the ability to sustain the coordinated deployment of resources in ways that helps an organization achieve its goals, and how to initiate and manage change within an organization. The competency management definition also covers the core competencies of the organization itself. Every organization should have a competency framework, which consists of a set of four to six core competencies. This serves to strengthen and illustrate the core culture of the organization, while highlighting differences from competitors. Competence-based management can be found in areas other than strategic management, namely in human resource management.
In marketing, a company’s value proposition is the full mix of benefits or economic value which it promises to deliver to the current and future customers who will buy their products and/or services. It is part of a company's overall marketing strategy which differentiates its brand and fully positions it in the market. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.
Business Relationship Management (BRM) is viewed as a philosophy, capability, discipline, and role to evolve culture, build partnerships, drive value, and satisfy purpose.
A revenue model is a framework for generating financial income. It identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value. It is a key component of a company's business model. It primarily identifies what product or service will be created in order to generate revenues and the ways in which the product or service will be sold.
Capability management is the approach to the management of an organization, typically a business organization or firm, based on the "theory of the firm" as a collection of capabilities that may be exercised to earn revenues in the marketplace and compete with other firms in the industry. Capability management seeks to manage the stock of capabilities within the firm to ensure its position in the industry and its ongoing profitability and survival.