Redefining media economics in an era of participatory media

For class discussion Monday, I'm pulling out some key points made in the Economist chapter that asks, "So what is a media company?"

... unlike in television, say—“you don't need hits”. Many small audiences are as good for advertisers as few large audiences, and indeed may be better. This has huge implications for content, turning it into one long continuum—from professional to amateur, from blockbuster to subculture niche. Chris Anderson of Wired magazine calls this stretched statistical distribution “the long tail”. In his forthcoming book of the same title, Mr Anderson argues that old-media economics, which are biased toward the hits at the “head” of this distribution, are being replaced by new-media economics, which allow creation and consumption along the entirety of a much longer content tail.

(Speaking of Chris Anderson, he was quoted in this series talking about the importance of having "liquidity" in the marketplace of ideas online ... and in other places we saw hints of this notion of "liquid life" (think: Zygmunt Bauman) ... just found that interesting, that the defining way in which we talk about this era of participatory media is to emphasize its instability and uneasiness.

The analogy to marketplaces has another important implication: network effects. The value of networks (such as the telephone or postal systems) and exchanges (such as eBay or the New York Stock Exchange) increases dramatically as the number of participants rises. Once achieved, network effects also become barriers to entry by rivals. If they are looking for an exchange, for instance, both buyers and sellers will gravitate towards the market with the greatest liquidity in a given share or bond.

This is why a lot of new-media companies are now hurrying to create marketplaces with network effects before somebody else does. YouTube, a start-up launched about a year ago, lets people upload and share their own videos. It already transfers more data each day than the equivalent of an entire Blockbuster video-rental outlet. It goes without saying that Time Warner's AOL, Google, Yahoo!, Amazon and other internet companies are also working to exploit network effects.

This race to become the most liquid media marketplace has just started, and the winners are not yet obvious. But the giants, Yahoo! and Google, do have a head start. They already have network effects in their advertising, and emerging network effects in some types of media (text-based blogging, say) that can be transferred to other types (such as video). That is because the distinctions between different types of digital files are becoming increasingly unimportant (assuming a good broadband connection). To savvy teenagers, it's all just stuff passed around among friends.

Also, I thought this was an interesting concluding statement:

Some people worry about what the new media will do not only to democracy but also to brains, thoughts, grammar and attention spans. These concerns usually arise out of encounters with teenagers in their native habitat—ie, in front of screens with several simultaneous instant-messaging “threads” (“cu2nite bfz4evr”—“see you tonight and best friends forever”), besides iTunes and a video game running in the background, blogs in the foreground, and homework in the small window to the bottom right.

Other people are not worried at all. Steven Johnson, the author of “Everything Bad is Good for You”, argues that the very things about new-media culture that scare older generations actually make younger generations smarter, because participatory media train kids from an early age to sift through and discard clutter, thus “enhancing our cognitive abilities, not dumbing them down”.

Linda Stone, a former executive at both Apple Computer and Microsoft and now a consultant, argues that the affliction of “continuous partial attention” is in fact a hallmark of the era that is now ending, not the one that is starting. For the past two decades, Ms Stone thinks, many people have felt overwhelmed and anxious, constantly afraid that they could miss out on social opportunities if they concentrate on any one thing. This is now producing its own backlash, Ms Stone argues, because as people “long for protection and meaningful connections, quality over quantity”, they are “discovering the joy of focusing”.

Many new-media companies understand this, she says. Just as Google calms the chaos of the web with a clean white page, other companies are working on the filtering technologies that could—counter-intuitively, perhaps—make the era of participatory media more serene than the era of mass media.