Page 146 - Critical Political Economy of the Media

Political economy of the Internet 125

The struggle to find a workable business model that will permit profitable
online operation is likely to result in the continued, or even increased,
domination of the supply of media artifacts by the same large corporations
that dominate offline media.

However, this account needs revision and updating to address how challenges
and risks for various media content businesses have increased. The Internet and
digitalisation ‘offers both significant advantages as well as challenges to traditional
media interests’ (Freedman 2006: 278).

Volatility and risk in markets
Formerly ‘mature’ media markets characterised by slow growth and competition
between a known group of players have become ‘emergent’ strategic environ-
ments that are considerably more volatile and uncertain (Küng et al. 2008: 127).
Market environments across digital media are characterised by high volatility in
which industry boundaries are unclear, business models evolve rapidly, con-
sumer preferences are uncertain and competition comes from hitherto unknown
players.

Realising economic value

Described as the world’s largest copying machine, the Internet reinforces the
public good characteristics of information. Commercial strategies rely heavily, if
to varying degrees, on monetising intellectual property by creating scarcity. This
includes:

the use of copyright, controlling access, promotion of obsolescence, creation
and sale of audiences and by favouring some kinds of new media over
others. In the case of the Internet, by bundling services and ‘walling off’
electronic spaces through the use of payment systems …
(Mansell 2004: 98)

The culture of free and the enormous inventory of content available without
direct charge have meant media firms have struggled to finance online activities
in several markets. Internet advertising, while growing, tends to be insufficient to
sustain media firms’ online activities. Above all, advertising revenues have
accrued to providers of search, online classified advertising and other services,
notably social networking. These beneficiaries lack the capacity, or incentive, to
reproduce the forms of content creation that are becoming unsustainable as
advertising revenues fall. As a UK government report, Digital Britain, puts it:

The increasingly easy and perfect digital replicability of content makes it
harder to monetise creative rights. The growth of Internet aggregators [such