Page 149 - Critical Political Economy of the Media

128 Critical investigations in political economy

Network value increases as more users participate. This creates ‘winner-takes-all’
markets where the gap between the number one and number two players
is typically large and growing, generating new concentrations. Apple’s iTunes
has some 70 per cent of the music download market; Google 70 per cent of
search; YouTube 73 per cent of online video; Facebook 52 per cent of social
networking traffic. Network effects result in demand-side economies of scale
(capture of customers) a opposed to supply-side economies of scale prevalent
in traditional media industries. What is most unclear is whether any of the
emerging systems, proprietary tending or more open, can provide the revenue
base to sustain a large amount of original cultural production. The entertain-
ment and news sectors are different in many ways but some insights can be
gained by focusing on a central topic for CPE: the crisis and future for news
media.

The crises for news media

The Internet will revitalise journalism and democracy by shifting control from
an elite cadre of gatekeepers to the dispersed interaction of bloggers, social net-
works and consumers, argues Rupert Murdoch (2006) and an array of left- and
right-wing commentators. For some the vision has been one of replacing old
forms of journalism with new, while others have highlighted collaboration
between paid professional journalists and ‘citizen journalist’ amateurs (Deuze
2009; Beckett 2008; Allan and Thorsen 2009). Another view is that the Internet has
precipitated a crisis for the still dominant commercial model without remedying the
losses for public-facing journalism (McChesney 2013). To evaluate solutions
requires analysis of the crisis for news. Financing news media through sales alone
has become increasingly challenging:

Hard news is perhaps the hardest to make profitable. It is increasingly
instant, constant and commoditised … With rare exceptions, making money
in news means publishing either the cheap kind that attracts a very large
audience, and making money from ads, or the expensive kind that is critical to
a small audience, and making money from subscription. Both are cut-throat
businesses.
(The Economist 2012)

That newspapers in many media systems are in crisis because of declining
revenues is generally agreed. There is much less agreement about the causes.
Printed newspapers have seen sales decline in most markets since the 1950s. It is
therefore important not to presume or exaggerate the impacts that may be
attributed to the Internet. The phenomenon is also far from worldwide;
while newspaper sales have declined in Euro-American media systems, the paid
newspapers market has grown more strongly in African and Asian markets,
notably India, with an estimated 37 per cent of the world’s adult population