13.3 The Internet’s Effects on Media Economies
Learning Objectives
- Recognize the ways synergy is used on the Internet.
- Summarize the purpose and impact of the Digital Millennium Copyright Act.
The challenge to media economics deals with production. When print media had no competition, the concept was simple: Sell newspapers, magazines, and books. Companies could gauge the sales of these goods like any other product, although, in the media’s case, the good was intangible—information—rather than the physical paper and ink. The transition from physical media to broadcast media presented a new challenge because consumers did not pay money for radio and, later, television programming; instead, the “price” consisted of interruptions every so often by a “word from our sponsors.” However, even this practice hearkened back to the world of print media; just as newspapers and magazines sell advertising space, radio and television networks sell time on their airwaves.
The miniscule price of online space compared to that in print or broadcast media initiated a fundamental shift in media economics. Combined with the instantaneous proliferation of information, the Internet seems to pose a grave threat to traditional media. Media outlets have responded by establishing an Internet presence. Companies’ archives have opened up, and aside from a few holdouts such as The Wall Street Journal, nearly every newspaper allows free online access, although some papers, like The New York Times, have successfully integrated a paid subscription model to solve the problem of dwindling revenues. Newspapers now offer video content online, and radio and television networks have published traditional text-and-photo stories. Through Internet portals, media companies have synergized their content; they no longer merely act as television networks or local newspapers but instead have quickly moved to become a little bit of everything.
Online Synergy
Although the Internet has had many effects on media economics, ranging from media piracy to the lowered costs of distribution, the synergy of different forms of media arguably has had the most profound outcome. For example, the front page of The New York Times website contains multiple short video clips, and the front page of Fox News’ website contains clips from the cable television network along with relevant articles written its online staff. Media outlets offer many of these services for free to consumers, if for no other reason than because consumers have become accustomed to getting this content for free elsewhere on the Internet.
The Internet has also drastically changed the way that companies’ advertising models operate. During the early years of the Internet, many web ads directed traffic toward sites such as Amazon and eBay, where consumers purchased products or services. Today, however, many ads—particularly on sites for high-profile media outlets such as Fox News and The New York Times—highlight products original Internet purveyors would not typically purchase online, such as cars or major credit cards. However, another category of advertising tailors its results toward individual web pages and has also gained prominence on the Internet. In this form of advertising, marketers match advertisers with particular keywords on particular web pages. For example, if the page provides suggestions on how to fix a refrigerator, some of the targeted ads might would likely include local refrigerator repair shops.
Internet by Google
Search engine company Google has worked to perfect this type of targeted advertising search. Low-cost text ads may appear next to its search results, on various web pages, and in the sidebar of its free web-based e-mail service, Gmail. More than just using algorithms to sort through massive amounts of data and matching advertising to content, Google has lowered the cost barrier to advertising, as well as the volume barrier to hosting advertising. Because Google automatically matches sites with advertisers, an independent site can sign up for its advertising service and get paid for each person who follows the text links. Likewise, relatively small companies can buy advertising space in specialized niches without having to go through a large-volume ad buyer. This business has proven extremely productive; the bulk of Google’s revenue comes from advertising even as it gives away services such as e-mail and document sharing.
Problems of Digital Delivery
Search engines like Google and video-sharing sites like YouTube (which Google’s parent company Alphabet owns) allow access to online information, but they do not produce that information themselves. Thus, the propensity of these sites to gather information and then make it available to consumers free of charge does not necessarily sit well with those who financially depend on the sale of this information.
Google News
Google News, a news aggregator that automatically collects news stories from various sources on the Internet, has generated controversy for Alphabet. This service allows users to find and view the latest news from many different sources conveniently in one location. However, a number of those news sources oppose the project; they contend that Google has infringed on their copyrights and cost them revenue. The Wall Street Journal in particular has criticized Google News. In April 2009, editor Robert Thomson said that news aggregators are “best described as parasites (Schulze, 2009).” In December 2009, Google responded to these complaints by allowing publishers to set a limit on the number of articles per day a reader can view for free through Google.
Music and File Sharing
The confrontation between Google and the traditional news media constitutes only one of many problems resulting from digital technology. Digital technology can create exact copies of data without degradation, which increases the chances of piracy. The practice of transmitting music over the Internet through services such as Napster quickly ballooned.
Video Streaming
As high-bandwidth Internet connections proliferated, video-sharing and streaming sites such as YouTube started up. Although these sites intended to permit users to upload and share their amateur videos, some used the platform to post a high quantity of television show episodes, music videos, and other commercial content illegally. The replication potential inherent in digital technology combined with online transmission has caused a sea change in media industries that rely on income directly from consumers, such as books and recorded music. However, as the next section will show, the shift of media and information to the Internet can pose the risk of a digital divide, where those without Internet access have an even greater disadvantage in navigating everyday life.
Digital Millennium Copyright Act (DMCA)
Producers of content have protection under the law. In 1998, Congress enacted the Digital Millennium Copyright Act (DMCA) to stop the illegal copying and distribution of copyrighted material. The legislation defined many digital gray areas that previously lacked explicit coverage, such as circumventing antipiracy measures in commercial software; requiring webcasters to pay licensing fees to record companies; and exempting libraries, archives, and some other nonprofit institutions from some of these rules under certain circumstances. Since 1998 , this legislation provided the bedrock of a variety of claims against sites such as YouTube. Under the law, copyright holders may send letters to Internet hosts distributing their copyrighted material. Certifying that they have a good-faith belief that the host does not have prior permission to distribute the content, copyright holders may request a removal of that material from the site (U.S. Copyright Office, 1998).
Although much of the law has to do with the rights of copyright holders to request the removal of their works from unlicensed sites, much of the DMCA also enacts protections for Internet service providers (ISPs). Some have questioned whether ISPs could face copyright infringement changes merely for allowing reproducers to use their bandwidth, the DMCA made it clear that ISPs do not have to police their bandwidth for illegal use and therefore face no liability. Although the DMCA does not please everyone—corporations can find requiring individual takedown notices time-consuming, and the relative lack of safeguards can allow large companies to bully ISPs into shutting down smaller sites, given a good-faith notice—the protections and clarifications that it has created have cleared up some of the confusion surrounding digital media (Vance, 2003). However, as the price of bandwidth drastically drops and as more media goes digital, copyright laws will inevitably need future amending.
