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Relentless Upheaval in the Media
With new technology, industry faces unparalleled creative destruction
Ranjit Goswami (ranjit)     Print Article 
Published 2006-11-25 13:39 (KST)   
In an earlier article, "A Day in the life of OhmyNews Editor", Claire briefly touched on the evolution of the newspaper. The media are in the grip of "creative destruction," a term brought into the discourse of economics in 1942 by the Austrian-born Joseph A. Schumpeter, author of Capitalism, Socialism and Democracy. The term was generally associated with the core workings of capitalism in its prime. The present round of incessant revolution -- the unmaking and recreation of new media-channels -- however, puts one in awe of the real prime mover behind this frenzy, made practically feasible by the technology of broadband Internet access.

Capital flows eventually to where the market potential is. This time around, the process has more to do with democracy than unvarnished capitalism. For so long, the media was out ahead of their mass audiences, but now capital and the media's distribution channels are actively following consumers, who hold the reins of power.

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Creative destruction is a powerful economic concept that can account for the dynamics of any industrial upheaval. Today by multiple factors act together in favor of that creative destruction towards creation of e-media, starting with new markets (e.g., through the reach of the Internet and mobile networks); new equipment (e.g., Microsoft's XBox 360 console-TV connection/Live downloads and saves and new-age mobile handsets such as the IPod); new sources of inputs (e.g., blogs and user-generated content, in which citizen journalism is playing a role); new methods of distribution and communication (the when and how and what price the consumer wants it at); and, as to be expected, (the consumer wanting the best value for money) new methods of advertising and marketing over the Internet and mobile devices -- are the things emerging to track the elusive, prospective consumer.

Wikimedia classifies the media in multiple categories: electronic media, mass media, news media, multimedia, etc., where each is now experiencing the same process of creative destruction, because of an ongoing structural shift involving the channels by which customers consume the content of any medium. This would include any form of information or entertainment, from books to newspapers to banners to CDs to films to computer games to "www" to any form of publishing.

The media's journey began with the first printed work back in 868 A.D. in China (the Diamond Sutra); through the first book from Gutenberg's press in 1453, to newspapers that emerged in the early 17th century and proliferated in the 19th, attaining the status of a mass medium; to radio in the beginning of the last century; to TV by the middle of the last century; to mobile devices and the Internet at the end of the century. The rapid penetration of the latter has brought us to the present time of the media revolution. The stakes and the reach have only gotten higher at each stage of the transformational continuum in this eventful journey.

Wiktionary defines a medium as a format for presenting information. Accordingly, the impact of this disruption is even greater, because this definition keeps the generation of information or content in a separate compartment. With increased user-generated content in open, compatible, and convenient platforms, even content creators feel the heat, albeit perhaps to a lesser degree. The higher the barrier to that creation (a high-budget movie or music CD or the expertise needed to produce them), the less the heat at the moment; but there's no corner in all of media space isolated from this present bout of creative destruction.

As long as the consumer followed the limited media-delivery options, so could the content generator and distributor flex their muscles because of the lack of options for the consumer. Control of the industry now is shifting to the consumer in an unparalleled manner. Napster, the free music download site of the first dotcom wave, failed not because of a lack of consumer interest. Consumers wanted to send a strong signal of disapproval through it to music distributors about the inefficacy of their age-old and useless model of selling music as CDs at very high prices. The prices paid by consumers weren't high so that distributors could make exorbitant profits, but because of an unproductive supply chain (the high cost of retailing and production). Despite high consumer prices, there was no guarantee the purchaser could legally listen to the music s/he had legally bought anywhere or anytime or in any medium s/he wanted.

Napster lost to the legal world in violating copyright. The same battle over copyright was replayed in the Internet world within a few years between Universal, part of the world's largest media group, Vivendi of France and MySpace, owned by media giant Murdoch (News Corp), and also between Universal and Sony (Grouper.com, the online video-sharing site owned by Sony Pictures Entertainment). And unlike in the case of Napster, when advertising on the Net was still in its infancy and newborn Napster didn't have the support of any big corporate sugar daddy, the battle now was more among equals, if not in favor of the so-called violators.

In a landmark judgment in the U.S. in an apparently different area that could have repercussions over copyrighted content eventually, the California Supreme Court absolved any blogger or ISP for carrying any defamatory third-party posting and shifted the responsibility to the originator of the defamation. Though all these aggressive cases of Universal are sub judice, the responsibility for copyright violation may similarly be shifted to those behind the violation and not the site, which only provides a channel for expressing user-generated content. Universal, in its lawsuit filed against MySpace, has termed the site's content more "user-stolen" than "user-generated."

Billions of dollars are at stake -- not only the US$400 billion-plus ad revenues that track consumer tastes and preferences, but also global music and movie sales -- so the debate has probably just begun. According to the figures of the International Federation of the Phonographic Industry (IFPI), global music sales continued to fall in 2005 ($21 billion for companies and $33 billion at retail, which showcases the inefficiency), whereas online music sales tripled (to $1.1 billion). Online and offline piracy is cited as the major reason behind this declining music industry (markets like China are accused of having 85 percent pirated products).

It's to be expected that the debate over a fair and practicable copyright act in this revolution of new Internet and mobile channels will also become more robust. Governance in general comes with enabling laws that can anticipate diverse scenarios. In periods of rapid change, however, be it the Industrial Revolution in Europe or the days of the "muckrakers" in the U.S. at the beginning of last century, policies favoring the basic rights of employees were inadequate, and employers naturally exploited employees. Policies were eventually enacted that addressed the imbalance.

A similar trend can be found in the legal interpretations and rulings in cases of defamatory content, where European legal practice differs from that of the U.S. Whereas service providers in Europe are expected to expeditiously remove or block defamatory material they host once they are made aware of it, lest they be sued, court rulings in the U.S., follow a more pragmatic approach and probably show a better understanding of the near-impossibility of the burden on service providers like Google and Yahoo!.

The retailer of a faulty of harmful product can't be sued, but its manufacturer can be. A permissive policy, under which a retailer could continue selling (or even freely distributing) harmful products, would also need to be addressed. Much light could be shed on the issue by the outcome of these two high-profile lawsuits that would determine the rights and responsibilities of ISPs, subscribers and original content creators.

The 21st century is said to be driven by the knowledge economy, but there is as yet no comprehensive policy covering fair usage of a knowledge-based digital output's mass distribution. If the price of any product the consumer wants is beyond what the traffic will bear or the convenience offered by any legal product is less than that offered by a pirated product, consumers will side with what appears to be the better value.

Examples of first are pirated versions of software or counterfeited goods, as can be found in developing countries like China and India, and examples of second category are copyrighted music, video or audio on sites like MySpace, or even clippings from the New York Times copied and pasted on individual blogs, against which the paper took some aggressive action a while ago.

These things are essentially not for resale, as direct commercial revenue comes through advertisements. In the case of a MySpace (or a YouTube), benefits accrue to the site, whereas copyright violations may be traced to the user.

It would be interesting to see what position our upstart OMNI takes in this regard, as many of us citizen journalists have seen our articles being reproduced in blogs. As citizen journalists, we feel good about any kind of acknowledgment, but recognition by itself doesn't help pay the bills.

The struggle is really about the money power in the guise of concern for copyright and about how to implement fair practices. Freedom, or license, once won, can be lost only with considerable difficulty, as was seen in the Napster case. Napster didn't succeed in the long run, but the expectation of accessing music as part of the "commons" has lived on for many of us.

Nothing can be taken for granted as to where this present round of relentless upheaval, destruction, and recreation (as Schumpeter put it) in media-space is headed. Relative stability hopefully will be reached in which consumers and society benefit more, along with other stakeholders in a balanced manner. The older generation can tell the present stories about the availability of media in their early lives, with limited channels from old, large radio set-ups and newspapers to limited channels in television, to the present plethora of TV channels and radio channels combined with anytime, anywhere media features over the Internet and mobile devices.

This trailer of the media-movie in the 21st century is intriguing. The full movie can only be much more thrilling, with its winners, losers, heroes and villains yet to emerge. The characters, old and new alike, are all ready for the struggle of creative destruction, with billions of dollars at stake.
©2006 OhmyNews
Ranjit Goswami is a research scholar with the Indian Institute of Technology (IIT), Kharagpur, India; and is the author of the book "Wondering Man, Money & Go(l)d'".
Other articles by reporter Ranjit Goswami

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