Belleville, March 2011
The nature of digital communications media always means a constant change business model
by Tom Thorne
There was no hint in the middle to late 1960’s of the World Wide Web (WWW) when I was an undergraduate studying broadcasting and journalism at Toronto’s Ryerson University. We learned our journalism craft on ancient clunky Underwood typewriters. The Age of Gutenberg was still in ascendency and the upstart worlds of radio and television were still growing and developing. Most media had satisfactory market shares and could rely of the stability of their markets to make a reasonable living.
Then broadcast media companies began to build their first microwave networks and subsequently added satellite distribution of their signals. Later print publishers created satellite distributed national newspapers. In Canada The Globe and Mail took advantage of satellites to fully become Canada’s national newspaper of record. USA Today appeared in the United States also using satellites to distribute their newspaper. Satellites gave birth to the likes of Cable News Network (CNN) utilizing Ted Turner’s local Atlanta TV outlet which quickly became a national “super station”.
Super stations squeezed local market shares into more highly targeted specialty channels delivered by cable. This phenomenon created the first inkling of financial stress for local and regional media barons who were not as astute as Ted Turner. It meant less revenue for their local radio, TV, and newspaper businesses. The first layer of benefits went to cable companies who could provide more and more choices for ever increasing monthly fees. The economic model of broadcasting had been altered by innovative technological developments. Local financial stresses resulted in buyouts by chains of broadcasting stations and newspapers. Ownership became concentrated as local broadcasters and publishers fell to large media conglomerates often with centralized content services.
Enter personal computers: a radical idea
Layered on satellite distribution another technical innovation began to develop . Personal computers had not yet entered the popular experience. However in some minds the promise was a big one. Steve Jobs and Steve Wozniak were about to enter their urban legend garage and develop the Apple 1. Bill Gates was about to drop out and start Microsoft. The Information Age had not yet hatched but clearly the egg had been laid.
The birth of personal computers in the middle 1970s was due largely to the invention of relatively inexpensive large scale integration (LSI) and later very (VLSI) central processors and circuit boards spurred by the National Aeronautics and Space Administration’s (NASA) mammoth technological innovations needed to get them to the moon and back.
This technology provided the opportunity for stand alone desk top computers to appear for a reasonable cost. It was soon discovered that there was a rather unique economic formula that went with VSLI: it gets cheaper as it gets better. This led quickly to the development and marketing of commercial personal computers.
Stand alone desk top computers appeared and had the effect of lessening expert control over large corporate computing systems and networks. The first wave of personal computing was truly stand alone. Then when it was realized by managements and bureaucracies that this technology creates independence of thought and action, personal computers were quickly networked and wired into the mainframe world. Corporate information processing types viewed personal computers as a threat. Imagine someone actually capturing their own data on their desk top. Imagine what could happen if that “personal computer” was not hard wired into the mainframe so its processing could be controlled.
So it’s a wonder that personal computers even happened. Information systems experts working the large centralized installations didn’t endorse the concept of personal computing at all. It was considered risky and “without standards”. Today, personal computing is so normal and ubiquitous it goes unnoticed as normal but in the 1970s and throughout the 1980s it remained a very radical idea teetering on the edge of a notion.
The World Wide Web appears
There was little hint of what was to develop in the late 1970s and through to the 1990s when experiments in Videotex and Teletext edged us about 1985 towards the inevitable birth of the World Wide Web and platform independent HTML along with data transfer protocols which enabled all the delightfully uncontrolled development that has taken place over the past 20 years. The WWW is truly a freeform network that is difficult to tame. It is networked computing as a communications medium. The glue that holds it together is insatiable demand for useful content and knowledge. It is both tribal and inherently social.
When the WWW finally got rolling classic print and broadcast media company managements began to talk of Web “economic models” that could or might make money in the future. They wanted to corral the new medium into a traditional media revenue producing streams. Newspapers and many communications media companies began to “experiment” with this new medium.
In the worlds of newspapers and network television the fragmentation caused by the web based content services pressured old media into new forms also distributed digitally on the WWW. How could this make money they wondered? Give free access to the base pages and then sell subscriptions to get the detailed story. That was the current business model used by traditional media companies. Now we are seeing other web site traffic induced revenue streams develop from the inherent networking nature of the Web and the placement of promotions and advertising on sites that perform.
The telecoms and cable companies saw their business opportunities by remaining in their traditional roles as “common carriers” of the WWW as they had done for television’s fragmenting expansion. They always make money from the content of others and dabble in content production only as an experiment as the medium develops.
What is particularly interesting about current WWW developments is the pull to the centre by new web companies interested in mastering the new digital media for profit. The classic media companies that are trying to concentrate control and ownership. The real control that is emerging with the web-based organizations such as Google that understands the intense cross promotional nature of this medium and the tiny micro-markets that emerge to be cost effectively served by Google controlled advertising and other services that attach promotional messages to content websites.
New business models will be ones that fully grasp that good editorial content is what always drives new media development whether it is Gutenberg movable type technology in the fifteenth century that gave birth to affordable books, periodicals, new literary forms, and eventually led to mass print publications that developed through the eighteenth and nineteenth centuries and into our time. Print techniques only made sense because they enabled content to be distributed cost effectively. When radio and television developed it was also content driven for the same reason. All previous mass media have been supported by advertising revenues or direct purchases of content by consumers.
The digital media are probably no different. The WWW business models will develop because as usual good editorial work attracts readers, viewers and users. However, there is a main difference. Increasingly work on the WWW will come from individuals rather than organizations. The Great Fragmentation is now possible as the authors of content have the means of high quality editorial production and distribution on their desktop for low cost. Blogs are a manifestation of this phenomenon.
Google type companies main content comes largely from automated dynamic systems that massage data into maps, searches or place advertising on sites with popular or useful editorial content. The sites receiving this advertising revenue will see tangible dollar results for their work. However the bulk of the money generated will likely go to the Googles and other similar companies who really provide defining pathways into the WWW maze. However they are in a way the new common carrier with a difference over cable and telecom companies. They are also interested in controlling content.
The nature of personal computing and personal publishing is to fragment pyramid shaped organizations and create an opportunity where the individual with a computer and an internet connection can own the means of editorial production. The natural resistance of bloggers to central control may well define a new business model where writers commentators, educators and knowledge providers are compensated for the value of their knowledge and content by a yet to be defined business constantly changing models. The more likely scenario is that content will be filtered as useful or not useful by large automated search engine systems that are setup to ensure the success of the business plans of their masters.
© Copyright 2011, Tom Thorne, All Rights Reserved