Page 140 - Critical Political Economy of the Media

Political economy of the Internet 119

conditions – resulting in different patterns of change that are not merely imminent
in the technology. Digitalisation has connected media such as print to other
media platforms making them less distinctive and less independent. In business
practices too, Küng et al. (2008: 146) discern the abandonment of ‘violent new
strategic directions … in favour of a gentler path of adaption, absorption and
combination of old and new media activities’.

Innovation and entrants
According to Schumpeter, capitalism develops through a process of ‘creative
destruction’ and this trope has been incessantly invoked to describe the disruptive
nature of the Internet and allied digital technologies. For Schumpeter (1942: 83)
technological innovation, not capitalism, is the key driver of business innovation,
blowing ‘a perennial gale of creative destruction’ that ‘incessantly revolutionizes
the economic structure from within, incessantly destroying the old one, incessantly
creating a new one’. This echoes, but narrows, the ‘affirmative’ part of Marx
and Engels’s critical analysis of capitalism’s revolutionary dynamism whereby the
‘[c]onstant revolutionising of production, uninterrupted disturbance of all social
conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch
from all earlier ones’ (Marx and Engels 2013 [1848]).
Dynamic, expanding markets provide opportunities for new entrants to challenge
incumbents. Superficially at least, this seems to offer the most accurate and per-
suasive general account of the Internet today. With an advanced search engine,
Google has overtaken other firms in that emergent market to become one of the
most powerful information corporations, with Google’s search advertising now
accounting for half of US Internet advertising revenues. Facebook has grown
from a bedroom start-up to become the most used social media service in the West.
Digital service companies from ISPs and search engines to social media and data
management, in China, Japan, India and elsewhere, have seen phenomenal
growth. Yet, for all their persuasive authority and evidence, dynamic market
openings do not provide a satisfactory account of developments. Competition
between incumbents and newcomers is a staple of management literature, yet it
is highly misleading when applied across all media sectors. It originates in man-
agement theories that posit that incumbents will tend to be slow to innovate and
instead seek to shore up existing markets, processes and advantages, including
regulatory support. Newcomers are innovators who shake up markets and force
changes amongst all market suppliers for the ultimate benefit of consumers.
Incumbents who fail to adapt successfully are destined to exit the market. This
account approximates to perceptions about the way media markets are being
transformed but is a morality tale rather than a suitably accurate description.
The presumptions of mass media decline in the first phase of Internet studies
(1995–2000) have been challenged by actual developments. First mover advan-
tages tended to be exaggerated by failing to account for the advantages existing
firms enjoyed, for instance in migrating existing consumers to new services. This