The three market party system is one that seems almost completely unnecessary to me. It works when one party (Advertisers) basically forces themselves into a realtionship between a network and its audience. They do this by paying the media industry to run one of their ads. From this the advertisers/ producers will charge a higher price for their product becasue the ad will bring more consumers to their product. So the consumers are eventually funding the ads which they then will see as ads in certain forms of media. This media (television) would otherwise be nearly free. So indirectly the audience is paying for the television networks even if they are not realizing it.

We are able then to see television networks such as NBC, CBS, Cw for "free" becasue we are enabling them to afford the ads by paying the higher price for the product because we saw the ads on television. "Free" is in quotation marks becasue it really is not free for us because we are paying higher prices in the stores, without the producers parying for ads on television we would be able to purchase their product at a cheaper price. This fact has never really struck me until reading this that television is funded by its audience paying inflated prices at stores. I feel the networks are getting the best end out of this deal; they are now receiving funds from a different arena than if they were not running the advertisements.

NBC and the Network Idea Reading Questions

Question 1: Balancing the Local and the National

In the early years of radio, people used the radio as a way to communicate to the community about varying concerns as well as sharing the airwaves with NBC programming. This then changed when the RCA offered Class A and Class B licenses to decide who could be on the air. This took away o a lot of individuals opportunity to use the radio. But as the NBC grew, more stations were created, and in turn those stations also made sure to focus on local needs as well as playing network programming as well. The strategy overall is to slowly let the larger commercial organizations cover more and more area, and while this got rid of citizen's radio, NBC tried to compensate by having their stations have a local focus.

The popularity with radios began due to local enthusiasm and it seems that the networks made sure to preserve its public service obligation because of this fact. By allowing the local stations determine programming, networks gave them the power and creativity to follow their public service obligations. Though it seems that as time went on the commercial mandate took over as networks pushed for network programming over local.

Hilmes, “NBC & the Network Idea" : Sponsored and Sustaining Programs and the Balance between Public Service and Generating Profit

In the early years of NBC, the network produced programming content with the hopes that it would eventually be picked up by a sponsor. Eventually, companies realized that it would be easier for them to just produce programming content in conjunction with the networks. At first, this strategy does not seem as though it would lead to an innovation of programming that would also serve the public interest, but the networks approached this in a very interesting way. While programming was heavily influenced by advertising, the network also gave great freedom to the creators and well known stars of the programming content. With greater artistic control, the network was able to produce acclaimed shows such as The Jack Benny Show and RKO Theater that served the public with new and unique programming as well as generating profit for the network. In addition to adding these types of programs that were both entertaining and generated profit for the networks, NBC and CBS aired political and informative shows that were often given free air-time rather than relying on sponsors to foot the bill.

NBC’s strategy works on two levels: first, they are able to profit from sponsored programming while maintaining a level of artistic creativity and freedom that allowed sponsored shows to flourish, and secondly, NBC separated the sponsored programming from the content that allowed them to better serve the public good. By giving free air time to organizations like the Smithsonian, the network was able to serve the public good without involving corporate sponsorships. This last part seems very interesting to me because I am not sure if this would work in today’s highly competitive television climate. Today, there is no such thing as a sustained programming on networks because they are always trying to make a profit. The only examples I can think of are public access broadcasts or some sort of large scale news program in which commercials would become suspended, but in today’s television, networks cannot afford to just hand out air-time if they have the opportunity to sell it at any point. This article from the Museum of Broadcast Communications discusses a recent case in 1990 when a large number of networks aired a cartoon special without advertisements, but this seems to be a rare occurrence.

Anderson - Three-Party Market

In his article "Free 101," Anderson confronts the idea of why/how consumers are able to be provided free content or materials and details how, in almost every format, money is changing hands.

The basic set-up of the three-party market includes, of course, three distinct players: the producer, the advertiser, and the consumer. According to the diagram on page 25, money switches hands twice. The producer develops the content, sells ad space to the advertiser (first exchange of money) and provides the content broken up by advertisements (commercials for tv and radio) to the consumer for "free." The assumption is that the consumers will purchase the goods or services that have been advertised (second exchange of money). And as the cycle continues, the ad space can become more or less valuable to the advertisers depending on the number of viewers.

It's a pretty logical system when you think about how the media works. There must be revenue coming to stations that broadcast over the air because of the capitalistic society in which we live. As advertising comes into the picture, the pieces fall into place. Companies pay the producer to "publicize" their product. And at the root of that is the idea that advertisements help the company to sell its product. So in essence, we can see the over-the-air channels for free, because the money is changing hands behind the scene.

To look at who gets the best deal, I first think it's important to see if any of components are being exploited. On the surface, I basically think that each party is gaining something from the deal, whether it be entertainment for the viewers, profit for the producers, or exposure that leads to profit for the advertiser. However, when I look at it, the audience is being subconsciously subjected to the advertisements which could be a form of exploitation. But maybe that's the price we pay for something "free."

Group B Reading Response: "NBC and the Network Idea"

Hilmes, “NBC and the Network Idea: Defining the ‘American System’”

Question 1: Balancing the Local and the National

The strategy to balance the local and national broadcasts in America stems back to the early 1920s when General Electric formed national companies, such as RCA and Westinghouse, that brought together major businesses involved in radio to coordinate radio in the United States. It was an early attempt to utilize a national presence at the helm of radio broadcasting. This “Class A” broadcasting license dominated the air waves until a plethora of individuals, non-profit organizations and small companies began using the same air waves. With the addition of these broadcasts, it forced the U.S. Department of Commerce to create a “Class B” license, which allowed approved broadcasters to operate on less crowded frequencies with the promise of having good quality performance. Those who obtained the Class B license included RCA and Westinghouse. As a result, amateur broadcasts were banished from the main airwaves and sent to the opposite end of the spectrum. This forced government and big business to come up with improved broadcasting methods that could work for everyone. Class B licenses became readily available by 1922.

The two types of licenses established not only a national but also a local principle that European nations lacked at the time. Larger U.S. cities offered several locally operated radio stations that were unaffiliated with a major network and they offered a diverse range of programming. Because the two licenses were available and the airwaves were balanced, it allowed the United States to meet its commercial mandate as well as its public service obligations. For example, it still had major corporations like NBC and RCA to uphold its commercial standard by broadcasting most of the day and garnering most of the national attention while the local station focused on community-originated news and information. The new system resulted in a productive tension between the local and the national, which differed from most other nations that had a predominantly national presence in its broadcasting industries.

The Three-Party Market

In "Free 101," Chris Anderson did a wonderful job of explaining and revealing the truth behind the advertising campaign of "free" that most of us encounter on a daily basis.

Crucial to the idea of "free" in the media industry is the Three-Party Market, which helps to explain why many media texts are available to consumers at free or very low costs. At its basic level, the Three Party Market is an exchange between two parties where goods are offered for free, and a third pays its way into the equation and receives money back as a result (24).

It doesn't seem like this would ever work, but Anderson points out that this is a market we encounter all the time in the media industry. Much of television may be free to consumers, so there is a free exchange occurring between the producers of the television shows and those who watch it from their homes.

However, advertisers enter in as the third party. They pay the producer for advertising time or space, so the producer receives their share. This is done in the expectation that consumers, receiving the media text for free, will be influenced by the advertising and pay the advertiser for their product.

If I watch the ABC news for free every night, but I've begun to buy an abundance of "As-seen-on-Tv" products as a result of viewing their commercials regularly, then the system worked. The advertisers gain money and recognition, and the producers are paid by the advertisers, who are paid by the consumers.

Ultimately, this is not a real "free" exchange - both the producer and the advertiser are gaining money, and the consumer is likely to end up paying as a result of interacting with the media text. In the end, this may not be the worst deal for any party involved; the consumer gets to watch their shows at no up-front cost and may find more products that interest them than ever before. Consumers have a right to know, however, that they are the ones ultimately paying to support their "free" television viewing.

Anderson was certainly right when quoting the phrase, "there's no such thing as a free lunch" (20).

A Framework For the Critical Study Of Media Industries

Timothy Havens, Amanda Lotz, and Serra Tinic assert their belief for the need of a more encompassing and grounded framework for the examination of the business of media in their article “Critical Media Industry Studies: A Research Approach”. In arguing the need of an improved framework for the critical study of media industries, Havens et al. outline the core infrastructure of three traditional approaches; the political economy approach, production of culture perspective, and Joseph Turow’s “power roles framework. While the authors find faults with all three approaches (generally due to their constricting perspectives) they believe the Turow’s “power roles” model to be the most encompassing and thusly the best model to base the evolution of the field. I agree. The Turow’s model conceptualizes the power roles found within the industries of media as “the use of resources by one organization to gain the compliance by another organization. In other words, Turow asserts a simple yet successful perspective that examines the wide array of power roles, power sharing, and cooperation that is necessary for these industries to produce and disseminate media at all levels of the media industry. Like Havens et al. I find myself applauding the all encompassing nature of the “power roles” framework while taking into account its inability to provide many theoretical tools to make conclusive arguments on the ways in which humans affect and influence the media industry. It is my belief that a framework this broad needs to serve as a foundation for the establishment of newer approaches in order to properly understand an industry that is so complex, ambivalent, contested, and contradictory.