the future of media
London, Nov 2016
This is an essay I wrote for my application to the Oxford Internet Institute (spoiler alert, I didn’t get in).
It was an early appraisal on how the media landscape is naturally evolving into a sustainable business model.
Defining new media
We first saw a widespread adoption of the term “new media” in 1980, when it was used to define what, for the first time, was a media not restricted to any sector or element of a particular industry. It is often related to a shift from modernity to postmodernity, intensifying process of globalisation, or replacement, in the West, of an industrial age of manufacturing by a post-industrial information age. However, the adoption of the Internet today is not a prerogative of the western world alone. Two thirds of the Internet user base is outside Europe and North America and three quarters of the Internet uses languages other than English. This suggests that the extent of new media, as described in this work, could potentially be applied elsewhere than in the western hemisphere where most research is from.
“Every media were once new media”, and new media in the digital age has been defined as “the translation of all existing media into numerical data accessible through computers”, or as the convergence of analogue media and digital technologies.
There is a fundamental difference between the evolution of the means of publication, and the revolution brought by the collaborative process between people and networks at the age of the triple revolution. A completely new aspect of new media is the flow of content across multiple media platforms, the cooperation across multiple media industries, and the migratory behaviour of media audiences.
An added feature to consider is the intrinsic value of digital databases and their primary quality of being immediately ready to be processed by algorithms.
Besides the technological dimension just mentioned, media convergence can operate also within the industrial, social and textual dimensions. Across these four it is important to highlight the distinctive feature of user-generated content. The extent of user-generated content is well represented in Yochai Benkler’s The Wealth of Networks:
“We are seeing the phenomenon of peer production scale to much larger sizes, performing more complex tasks than were possible in the past for non professional production”.
This is due to the very low and constantly falling transaction cost of finding and connecting people, which allows for a streamlined process of creation. New media content has very different attributes from traditional media content: data in digital environments can be richer and broader. Most importantly, information online is consumed horizontally through links, rather than vertically as when reading a newspaper. If we look at new media from the perspective described above it has a lot of the features of the so-called Web 2.0: harnessing the collective intelligence of the information, online delivery, user behaviour tracking etc.
Scholars argue that as a result this will lead to audiences losing capacity for deep reading, or foster the “the cult of the amateur”, or that this evolution will actually bring to a digression of human knowledge, generating an intellectual race to the bottom. Lastly, there are clear unexplored issues on the new capabilities for information control and manipulation of the media space by any affect, public or private.
A key argument in those critiques is user-generated content, which is vital to the positive connotations of new media. “Making is connecting” and user-generated content has been found to have emotional and ideological qualities usually lacking in traditional media. Furthermore, new media users are aware and more engaged with the topics of health care, political activities and news. New media play a significant role in enhancing domain-specific knowledge. As analysed by Tolbert and McNeal in their study National Election in the United States, the Internet may increase voter turnout by giving individuals greater access to political information. On the other hand, there is no evidence that traditional media has ever had any influence in the first place in forming knowledge through information.
In his book The 4th Revolution and briefly in this speech about Grey Power, Luciano Floridi elaborates on a philosophical Orwellian observation that
“those who control the questions shape the answers and those who shape the answers control reality”.
As long as the users control the questions, they control the answers and hence control reality. Floridi warns that in order to develop a sustainable infosphere, we need to have a proper understanding of creating, designing and managing information.
The mass consumption of digital content and services would have never been possible without the introduction of mass-market Internet browsers. Throughout history, we have witnessed an evolution within new media: from using the Internet to enhance the existing media publishing business model (i.e. digitalisation of newspapers and books), to the creation of completely new business models from scratch (i.e. social media). The latter require a high initial investment but a low marginal cost, making every additional custom increase revenues by much more than it would costs to serve it. Every new product sold can therefore contribute to decrease the average cost of running the business, making it more profitable.
Nevertheless, research shows that users are not prepared to pay for content and this is why most new media use a combination of “free” and “premium”. Exemplary adopters of the so called ‘freemium’ model within the industry are companies to the likes of the Financial Times or the Washington Post, from free to premium services are rumoured to be in the single digits. However, research shows that ad-based-only models for a large number of firms cannot be deemed viable in the light of the “long tail principle” associated to online-based products and services. To use a relevant analogy, a substantial 25% of amazon.com revenues come from long tail products. If we assume that a proportional share of new media content lies in the long tail and accounts for a directly proportional part of the total market available, we quickly understand why it is important to study these models.
Building on the long tail assumption, OII research argues that this dramatic growth in content production is exponentially linked to an abundance of advertising inventory and to the decline of consumer attention. Content quality can square the equilibrium between content quantity, advertising inventory and consumer attention. However, high quality content cost more money to produce. Publishers may therefore find increasingly more creative ways to generate revenues by which they can sustain the production of high-quality content in order to create consumer attention that can subsequently be sold to new advertisers.
Further studies have emphasised how despite being the primary source of revenue for most online media, advertising based business models do not guarantee substantive profits. The Washington Post lost 77 million USD in traditional advertising revenue while online advertising revenue only increased by a mere 6 million USD in 2008. Publishers might start using intrusive technologies such as pop-up ads or distort content which is damaging for advertisers, or even create ad-hoc content of the same quality and make to the publisher’s, exclusively for the advertiser.
Native advertising, or advertorial content, is a very prominent business model of our days, with an abundance of platforms — both traditional like the Wall street Journal and more recent ventures like BuzzFeed — which heavily rely on its profitability.
However, if we consider two-sided markets dynamics applied within the field of social networking platforms like YouTube, Instagram or Snapchat, another player comes into action. Aside from the big names and their business models, it is not uncommon to find on the aforementioned social platforms independent “third-party content-creators” who almost exclusively produce sponsored material.
The dynamics of business are very similar to, if not the same as, the ones analysed at the insurgence of the trend among traditional print publications. The main difference is that the long tail of online content creators allows for readers to focus on the particular things that interest them, no matter how small and quirky that niche is. This creates a market for so called “influencers” or “creators” that are able to satisfy the attention needs of advertisers while catering for the information needs of niche consumers, thus solving two problems of targeting consumers and retaining their attention at once. Unfortunately, there is very little research on the topic and no further analysis can be drawn at this stage.
The convergence of social networking platforms (who can bring the audiences), content creators (who can bring the high-quality content), and advertisers (who can bring the revenue needed), could be the answer to a twenty-year-long quest to understand the future of online information and its social and business sustainability.
Content produced by third-party content-creators can be: informative, transparent, traceable, targeted, collaborative and profitable. This can be interpreted as evidence that native advertising evolved to be the ultimate form of attention retention and targeting device ever created.
It is crucial to highlight that this model faces considerable challenges in setting the conversation’s agenda. However, if the research is accurate and online user engagement keeps consistent with the trends, the networked nature of the content, and its users, could constitute the backbone of accountability, and drive a conversation, while enforcing ethical standards of information.
👋🏼fabri here, former founder and consultant
working with startups, helping them grow