Media economics is concerned with the relationship between the mass media and the economic environment, especially how changing economic forces and policies determine the choices of managers, practitioners and other decision-makers across the media. It is a specialized branch of mass communication which deals with income and expenditure activities of the media, including how macro and micro economic activities in the society influence media products. It is a branch of communication studies that focuses on the media as an economic unit involved with management of resources to generate income, determines cost effective way of avoiding cost ineffective expenditure, examines and packages media products to educate, entertain, and inform the audience while also generating income. Media economics sees media output as commodities that exist in an economic environment. Revenue generation activities of the media such as advertising, programmes marketing, sale of newspapers or magazines, receive attention here.
The micro economic environment refers to the immediate economic environment of individuals and businesses. This includes decisions they take that affect them directly such as how much to spend, who to employ, what they should produce, how much to sell. The macroeconomic environment talks about the larger economy, that is, policies and programmes that affect the economy. The word “micro” has to do with smaller units while “macro” refers to larger society. Micro media economics talks about the economic environment of individual media houses as it directly affects them. Macro media economics refers to the larger economic environment affecting the media sector, that is, how government policies, for instance, affect cost of newsprint, price of vehicles to be used in distribution of newspapers, cost of generating power in the absence of public electric power supply. Micro and macroeconomic environments play significant roles in the media business. Most decisions taken by media operators are oftentimes are influenced by available resource and financial issues, thereby giving priority to understanding dynamics of media economics.
Media economics theories consist of possible explanations on how economic policies are likely to affect media business. A theory is an explanation of how things are likely to happen or how they are the way they are. Media economics theories therefore consist of explanations on how changing economic environment could affect operations of media houses. You borrow economic theories in explaining media phenomena. The theories of demand and supply, for instance could be used in explaining operations of a media establishment.