Ownership and funding

Ownership concepts:


Public service broadcasting.

Public service broadcasting refers to Television programmes more for public benefit rather than commercial reasons. These are partly owned by the government and can include local news broadcasts, arts programmes and religious broadcasts. For this reason they do not contain any advertisements in between as they are not for profit An example of a public service broadcast would be the a local weather forecast. Here is a video from the local news programme Look East:

Commercial Broadcasting

Also known as private broadcasting of television and radio by privately owned corporate media as opposed to Public service broadcasting which would or could be state sponsored. The primary function of commercial broadcasting is to make profit through the showing of advertisements. Companies will pay a lot of money to air their adverts on the broadcasters channel. Again this contrasts to public broadcasting channels like the BBC who receive money from the government and TV licences. In the United states Channels such as HBO are funded through subscriptions rather than adverts. An example of a commercial broadcaster that uses advertisements would be channel 4.

Corporate and private ownership.

This refers to a company that is privately owned by share holders and exists purely for profit. These companies manage there own stock between the few share holders and do not sell there stock to the general public on the stock market but is instead exchanged privately. Though these companies are less heard of than publicly traded companies privately owned companies are an extremely important part of the economy. In 2008 the 441 biggest privately owned companies in the US accounted for $1.8 Trillion of the economy and employed 6.2 million people. An example of a large privately owned company would be Rolex the watch manufacturer. Forbes ranked Rolex as the 72nd most powerful global brand in 2014.

Global companies.

These are companies that operate on a global scale. To be considered a truly global company or multi national enterprise (MNE) it is said the company needs to have at least 20% of its sales in each of at least 3 continental markets. Global companies include Unilever and Walmart and they produce profits from countries all of the world, with Walmart being the third highest employer in the world coming closely behind the U.S defence department and the Chinese peoples liberation army.

Vertical integration.

This is when a company expands its business into areas that are at different points on the same production path, for example when a manufacturer owns its supplier and/or distributor. Vertical integration can help companies reduce costs and improve efficiency by decreasing transportation expenses and reducing turnaround time. However, sometimes it is more effective for a company to rely on the expertise and economies of scale of other vendors rather than be vertically integrated. An example of a company that uses this business model would be Apple. Apple has used vertical integration for the last 35 years helping minimize costs and maximize profits. They control the manufacturing, transportation and selling and as seen they have grown to become the leading smart phone company in the world.

Horizontal integration.

 Horizontal integration is a business strategy where a company creates or acquires other businesses which are either complementary or competitive. One example would be when a company acquires competitors in the same industry doing the same stage of production for the creation of a monopoly.Another example would be the owning of a group of products which are alike, yet at different price points and qualities. This strategy may reduce competition and increase market share such as owning two car companies which do exactly the same thing, but one does it at a cheaper rate. A recent example of horizontal integration taking place would be the recent merger of Heinz and Kraft foods making them one company. 

Funding types.

Licence fee.

In the UK any household watching or recording live television as they are being broadcast has to hold a television licence. Businesses, hospitals, schools and a range of other organisations also have to hold television licences to watch and record live TV broadcasts. Since the 1st April 2010 the annual licence fee has is £145 for each year. Income from the licence is mostly used to fund the television, radio and online services of the BBC. The total income from licence fees was £3.7261 billion in 2013–14 of which 607.8 million was provided by the Government through concessions for those over the age of 75. Thus, the licence fee made up the bulk of the BBC's total income of £5.066 billion in 2013–2014.

Subscription.

A subscription normally refers to a monthly payment which in turn allows the user to access the services provided by the company or service provider the payment has been made to. This method of paying for services was first pioneered by newspapers and magazines and is now commonly used by buisnesses within the media industry such as TV providers like SKY and Virgin, on demand viewing providers like Netflix and Now TV and BT sport. Buisnesses often opt for this model instead of selling individually as it allows them to charge more for periodic access to multiple media. Some companies like apple offer Subscription based contracts for the payment of phones, these will usually come to total to more than it would cost to buy the phone and service in one go however this option allows customers to pay in smaller installments and results in more profit for the company so everyone wins.

One off payment to own a product.

This is probably the oldest form of payment and is pretty self explanatory involving paying once for a product and then owning it. Many products within the media industry operate through this way. For example purchasing a film off of the sky movies store in which you pay via the debit card associated with the sky subscription and you download the film onto your sky box which is then stored there permanently. Sky also then send a hard copy of the film to your residence allowing the film to then be removed from your hard drive so not to fill it up. This way of purchasing films online has now become far more common than purchasing hard copies from stores which again is another method of one off payment. iTunes would be another example of a service which utilities the one time payment method for the purchasing of products such as singles and albums which are then uploaded to your media device.

Pay per view.

This is a service in which subscribers to television providers such as Sky can can buy the privilege to watch events broadcast via private telecast. A recent example would be the Mayweather and Pacquio boxing fight which grossed over £410 million from pay per view purchases in the US alone. These events can be purchased through an on screen guide using a remote, via telephone or through a live customer service representative. These events are usually considerable significant or rare to warrant a method of to as to be financially viable enough people have to be willing to pay extra on top of there monthly subscriptions to watch the content.

Sponsorship.

This within media is when a company pays to be associated with or sponsor a particular event, product or person. On television the sponsor of a TV programme will feature before and the after the adverts. An example of this would be Talk Talk sponsoring The Xfactor and Morrisons sponsoring Britain's got talent. Companies like this will sponsor popular TV shows and events as it allows them to exploit the the commercial potential with it, in this case the fact that both of these programmes pull is massive ratings. Sponsors can even sponsor non profit organisation like charities for which the commercial benefit would be appearing like a "kind" company rather than a faceless enterprise.

Advertising

This is the method of paying broadcasters or media outlets like TV channels to feature your product or brand within there broadcasting. Companies will pay a lot of money to feature adverts on TV channels for short amounts of time and this in the primary source of funding for many TV channels. How much an advert costs depends on how long the advert is, what channel it is on and at what time the advert is aired. For example an avert that airs on ITV at peak viewing time will cost a lot more than and advert that airs on channel five during the middle of the day. Websites also feature advertisements which again are usually their primary source of income unless the website is associated with an established business. These work much in the same way advertisements shown on Television do with companies paying the owners of the website money to feature their ads. Another site which utilises advertisements it YouTube. Popular YouTube creators will enable YouTube to feature ads on their videos thus creating profit for both YouTube and the user who will receive payment related to the number of the views said video gets.

Product placement.

This is the featuring of products within television or films. Companies will offer to contribute to the developing of a film or TV programme in return for said programme or film featuring their brand or product. An example of this can be found in the Netflix original series House of Cards in which Sony would have paid a certain amount to have there product, or in this case several products feature within the series. This benefits both the production as it helps fund its creation, and also the product as it gives it exposure.This is a somewhat shameless example. 

Private capital.

Often with films individuals of substantial worth will put there own money in to developing a film. Many established film stars such as Tom Cruise will often feature in the credits of films under the title of producer meaning they have done exactly that. For doing so the producer will hope to make money back from the selling of the film at cinema and on DVD/blu-ray copies. Some example include the aforementioned Tom Cruise whose first time producing a film was the well known Mission Impossible (1996, Brian De Palma). Sometimes people who originally don't have anything to do with the film industry but have a keen interest will help finance films. An example of such a person would be Megan Ellison, daughter of billionaire Larry Ellison who has produced films like Zero Dark Thirty (2012, Kathryn Bigelow) which have earned her Oscar nominations.

Crowd Funding.

This is the method of proposing your idea to the public an asking for donations as to implement your idea. The most famous example of such a method would be the website kick starter which allows people to do exactly that, setting a target for you idea allowing people to contribute. If you reach your target you get to keep the money and if you don't reach the target you get nothing. An example would be the kick starter by Zach Braff who was trying to gain funding for his potential film Wish you were here. His video can be seen below.

Development Funds.

These are specially set up organisations that aid certain films with there development and funding. An example of such an organisation would be the British Film Institute which invest £26m of lottery funds to aid film development, production and distribution in the UK every year. To obtain such funding from the BFI movie creators will have to apply for the funding they need. If the application is successful then the funding will be received. Recent films the BFI have helped fund include Frank (2014, Lenny Abrahamson) and Mr Turner (2014, Mike Leigh).