The Meaning and Implications of “Market Failure” in Relation to the Media

Subject: Media
Type: Expository Essay
Pages: 6
Word count: 1556
Topics: Mass Media, Marketing


Market failure is a situation in which a market failed to allocate the resources properly. “Market failure exists when market prices cannot reach a self-sustaining equilibrium” (Noam, 2004). Inefficient allocation of goods and services would cause price hikes and other problems in the market. The income gap between the rich and the poor will be more when market failure occurs. Market failure causes problems to many and it provides opportunities to few people. In a failed market, monopoly of companies exists in different forms. As a result of that ordinary people get goods and commodities at higher prices. 

Market failure can affect many areas of social life. It can cause problems not only in business but also in media activities. The market failure of the entire information sector is happening on a regular basis in recent times. The major reason for the market failure in the media sector is the fact that information products are characterized by high fixed costs and low marginal costs (Noam, 2004). In other words, news content production is highly expensive, but the reproduction of news content is extremely cheaper. As a result of that many of the media groups are currently concentrating more on the reproduction of news content. In other words, plagiarism or copying of other’s ideas and news contests is highly active in the media sector at present. 

The print media such as newspapers and magazines are facing a lot of problems related to market failure. The arrival of online media such as internet and social media helped people to get any information at their fingertips and that also without paying a single dollar. Many of the print media are on the verge of closing down because of the intrusion of online media. This paper analyses market failure in relation with media.

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Market failure in relation with media

There are two types of problems associated with market failure in relation with media: the public good problem and the Monopoly/ ownership/control problem. The public good problem is all about the ability of the public to consumer media without paying anything for it. It should be noted that media activities are very much expensive. For example, the collection of news for a newspaper or television media requires the services of many reporters and journalists. The media management should pay higher wages to these employees. As a result of that it will be difficult for them to supply news and information freely to their customers. In fact that money earned from the customers is used by the media groups for meeting their expenditure. The advertisement revenue will be very less for print media. 

On the other hand, television media and online media are providing news and information free of cost. Such media use advertising revenue for meeting their expenses and also to make profits. The rating of online media or television media depends on the number of viewership. When the viewership increases, such media gets higher rating and thereby more advertisements. In other words, online media and television media are running after the viewers or readers with free information, news and other entertaining programs in order to make more profit. People will normally like the free things they get. When information and news are freely available through online media, people will not pay money for print media. As a result of that print media business is facing a lot of problems in recent times. 

Restricting the access of online newspapers by monthly fees is a solution to save the print media. However, such activities can lead towards market failure at least in the online media sector. Such activities will limit the access of information only to the wealthy people and thereby cause many social problems. The right to know is a basic right for people. In most of the democratic societies, the right for information or the right to know is a basic right. For example, the Indian parliament has recently passed a law which allows people to know any information they want from the government sector except the secret information  such as the military information. “The Right to Information Act, 2005 got the assent of the President of India on 15.6.2005 and was published in The Gazette of India on 21.6.2005. It applies to whole of the country except the State of J&K w.e.f 15th June, 2005” (Legal Service India, 2015). Under the above circumstances, limiting the access of information only to the wealthy people may not be acceptable to the public at least in democratic societies. Such activities may create market failure. 

Another solution to save the mass media from market failure is to ask companies to sponsor mass media groups. In other words, if companies can assist media group in meeting their expenses, the public will continue to get free information. However, such activities can again lead towards market failure. When companies spend money for assisting media, the media will be forced to safeguard the interests of the companies. In other words, public will not get neutral information when companies sponsor media. It should be noted that most of the television channels available at present are transmitting programs to safeguard the interests of the political parties they support. It is possible for the media to twist the news and information in their own way in order to protect their interests. For example, American presidential election is coming closer at present. Republican Party channels are canvassing votes for Donald Trump whereas Democratic Party channels are canvassing votes for Hillary. While the Republican Party channels justify the anti-Muslim stands by Trump and ridiculing Hillary for the email scandal, the Democratic Party channels are justifying Hillary over the email scandal and ridiculing Trump for his anti-Muslim stands and sexual exploitations. Ordinary people need to see another channel or a neutral channel to get the exact information about what is right and what is wrong. In short, company sponsored or agency sponsored or party sponsored channels or media will be failed to supply impartial information to the public and thereby the possibility of the market failure increases. 

The second problem is Monopoly\ownership\control problem. Monopoly is a prominent microeconomic topic which is gaining grounds in this extremely competitive globalized market. It is a market condition in which a single firm controls avoids all types of competition and controls the entire market activities. In monopolistic markets, a single firm fixes the prices of the products and therefore they can exploit the market maximum. “In the absence of government intervention, a monopoly is free to set any price it chooses and will usually set the price that yields the largest possible profit” (Stigler, 2008).  Microsoft is one of the popular examples of monopoly.

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Monopoly problem occurs when companies or governments failed to control the media markets. In such cases, the media take full control over the market and propagate news and information at their will. For example, CNN has monopoly in American media market whereas BBC has monopoly in British news market. Both CNN and BBC enjoys absolute freedom and it is possible for them to publish any news as long as the information they collected are right. The solution for this problem is the free media press that mean free the media markets from any government regulation and control that would imply censorship or limits on freedom of publication’ (McQuail, 2010: 235) However, censoring of information by the government can also cause problems in the media market. For example Chinese media cannot publish any news without taking consent from the government. In other words, censoring exists in Chinese media industry. In short, both monopoly and censoring are not good for the public when it comes to their right to get free and impartial information. 

Governments have limitations in interfering into the activities of the media group. Any interference of government in media activities may attract many criticisms from the public. Governments are afraid of public criticism and hence they stay away from media activities as much as possible. In democratic societies, media is considered as the fourth estate. The other three are judiciary, executive and legislature. All these four pillars need to work in harmony for the protection of democracy in a country. Therefore, judiciary will never interfere in governmental activities and government will never interfere in judicial activities. Same way, governments have limitations in interfering in media activities. At the same time, it is possible for the governments to interfere in the information sector and help it to diversify the economy to a more balanced portfolio. 


Market failure is a big problem in the media sector at present. The intrusion of electronic media such as the television and internet is causing big problems to the mass media or print media. Since electronic media is capable of providing free news and information, most of the people rely such media for their information needs. As a result of that print media struggle to develop properly in recent times. In order to avoid market failure in the media sector, governmental intervention is necessary. Government and business groups should assist the print media or mass media to overcome the challenges raised by the electronic media. News or content reproduction should not be allowed freely.

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Did you like this sample?
  1. Legal Service India, (2015). – Right To Know And Right To Information. [Online] 
  2. McQuail, D. (2010) McQuail’s Mass Communication Theory, 6th edition, London: Sage.
  3. Noam, E. (2004). Market failure in the media sector. [Online] 
  4. Stigler, G. J. (2008). Monopoly.  [Online] 
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