Abundance and scarcity in new and old media

Written by Dr. Hugh J. Martin Monday, 12 September 2011 20:00 PDF Print E-mail
Speakers at last week’s conference clarified what the exponential increase in production of digital media content means for different kinds of media firms.
Steve Wildman of Michigan State University explained the negligible cost of storing content on a digital server removes an important constraint on the production of media content. This very low cost allows companies to open up their servers to anyone who wants to upload a video, photo, text or other content.  If someone does want to access a particular file, the company that owns the server doesn’t pay the cost of producing a copy – the person who accesses the content pays that cost.
The result is sites like YouTube, where millions of videos are stored and most are never viewed.

Wildman said, digital servers act as if there is an almost unlimited number of channels for delivering media content.  Each channel is created when someone actually requests a copy of the content stored on a server.

Traditional media companies own and must pay for a limited number of channels, they could never afford to act this way. Traditional companies must instead ensure revenue generated from each piece of content in a channel pays for the cost of producing and distributing that content. (Wildman has detailed this analysis here).
This has been a boon for all of us because it dramatically reduces the cost of exercising our apparently limitless desire to create and distribute messages, photos, videos and other content.

Non-media companies benefit from unlimited media channels

When server based content is combined with modern search tools – such as Google or Bing or twitter – it becomes cheap for companies to find and communicate with customers.

This makes possible new marketing strategies such as Open Branding, discussed by Nita Rollins of Resource Interactive.  Open Branding calls for companies to engage in a dialog, building online communities where customers have a voice in the creation of the company brand.
Of course, companies will only do this if the cost is less than or equal to the return in the form of increased sales or revenues.  But digital tools have dramatically lowered those costs, so companies that sell non-media products can take advantage of Open Branding.

But media companies face increased competition

But what about companies that are actually in the business of creating and distributing media content? 

Media companies must compete for attention with the huge amounts of content generated by individuals and organizations using free server space.  An example is information – like the time of a city council meeting, or a call for volunteers to help a civic organization – that can now be published directly by the council or the civic organization.

Stephen Lacy of Michigan State said the central problem facing media companies is how to create content that is both scarce and valuable to potential audiences.  One way to do that is by offering content that has special quality to set it apart. 

But for now I want to focus on the channel part of the scarcity issue.  Another way to make your content scarce is by controlling channels people use to access the content.  That can mean controlling the hardware – computers, smart phones, tablets- used to access all of those servers.

Competition to control access to unlimited content

In this competition, companies that can limit consumers to a single device or related set of devices can win.  Apple is the highest-profile example of how this works.
I’ve written before about how Apple limits access to music and video downloads by requiring that customers use Itunes.  The company's recent effort to seamlessly link Apple devices with one another and with Apple’s servers is another step in this direction.
Meanwhile, the company knows it can increase the range of content and functions available to customers by allowing more apps on its devices.

Of course, this also means anyone who wants to provide content to Apple customers – such as a media company struggling to compete in a server-based market – must design an app that allows Apple to keep a substantial share of revenue the app generates from Apple customers.

For now, companies like Apple appear to be ahead of the game when it comes to creating scarcity in the digital media world.

Source http://feedproxy.google.com/~r/EconomicsOfMedia/~3/IXHdOh0MOgM/abundance-and-scarcity-in-new-and-old.html