Online vs. Offline in the U.S.: Are the Media Shrinking?

Abstract:     
We find that combined revenues for 10 major media in the U.S. have steadily declined as a proportion of overall economic activity (GDP) from 1999 to at least 2009 (the latest year for which we have complete data). For individual media, we find a generally consistent pattern in which increasing revenues from Internet distribution are exceeded by declines in revenues from established distribution channels, with the exception of television and video games, whose revenues have so far kept pace with GDP. We also report a marked overall shift from advertiser to direct payment support for the media industries over this period. We consider 4 possible reasons for these revenue trends: shifts in consumer media usage; reduced appropriability due to more difficult copyright protection or to inadequate advertising business models, and reduced costs due to more efficient Internet distribution. A preliminary analysis of U.S. Census employment data for the media industries since the late 1990s corroborates the declining revenue trends, but offers suggestive evidence that media production has declined less than media distribution and exhibition functions.

Number of Pages in PDF File: 45

Accepted Paper Series