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How does the Nielsen system work?

Company has a monopoly on audience measurement
/ Source: The Associated Press

Some facts about Nielsen Media Research, the company that measure television viewership: The company was founded in 1923 by a 26-year-old engineer, Arthur C. Nielsen Sr., who tested products for manufacturers. In 1942, he began measuring radio listenership, and expanded into television as TV became widely used.

Nielsen Media Research is owned by the Dutch media company VNU NV. Arthur C. Nielsen’s son, the last family member to work at Nielsen Media Research, retired several years ago.

Nielsen has a monopoly on the measurement of television audiences; networks and advertising agencies pay for its data.

How important are Nielsen’s numbers? At least one broadcast entertainment president, Fox’s Gail Berman, admits she has a fax machine in her bedroom that beeps every morning when the previous night’s ratings come in.

There are 5,100 Nielsen households with measuring devices, known as “People Meters,” installed on their TV sets and VCRs. These report what a family is watching to Nielsen’s computers. Through a remote control, family members must tell the computer who is watching.

Nielsen conducts a separate study in homes in every one of the nation’s 210 TV markets, where participants are asked to fill out a diary outlining their viewing habits. This study, known as the “sweeps,” is conducted every February, May, July and November; that’s why most of the broadcast networks concentrate their big events in those months.

Nielsen offers gifts and a nominal fee — one participant said it was $25 every six months, others get more — for participation.