Understanding Media Economics and Advertising

Information Economics Key terms: - Economies of scale – Serving many people at once so that

the cost per unit goes down, the bigger you get the cheaper it becomes to produce each

thing or serve each person. For example Spotify pays to license songs from labels,

which is a large cost, but once paid for Spotify can stream those songs without

having to pay extra each time, so the more subscribers they get, the cheaper the

fixed cost will be and it lowers the average cost. - Economies of scope – It is cheaper

to produce multiple things related to 1 thing, like Disney making multiple movies

about 1 character or shows or theme parks. - Network effect – Occurs when a