Digital age challenging the establishment

Read Duncan McLeod’s piece on his FM blog, “What the heck is going on?“. He sums up something I have been mulling for sometime but have been unable to articulate satisfactorily. The rise of digital communications and the information age (computers, cellphones, internet) is revolutionising society and putting more power into the hands of the individual.

Says Duncan:

How do information-based companies (media companies; music companies; Hollywood) compete in a world where millions of people create their their own content — words, music, video and software — and share it with others, free of charge? Why do people do this? What’s the motive? How do information-based companies compete in a world where anyone can produce anything they want, without having to work within the confines of traditional corporate entities?

I guess you could say its the rise of the individual and entrepreneur vs the establishment? To some extent a book which I read sometime ago, called Netocracy, (read my review), also expands on this. It’s written by two Swedes and although very interesting I do think their conclusions are a bit too strong — they say we are headed towards a world where the only currency is someone’s network and reputation and money will lose its lustre and nation states will fail. Rupert Mudoch also spoke about this phenomenon in the media context saying that power was being shifted away from the media elite, establishment and editors, which probably explains his thinking around the MySpace acquisition. (Anyone know of any good books on this very subject?)

Whether you buy these theories or not, for me it’s just significant that people are thinking in this way. Is this all overstated or is this a very paradigm shift that will change society as we know it?

Now who’s got the answer?

Comments (9)

  1. Izz wrote::

    My biggest worry, which I shouldn’t really fuss about, is who will teach the consumer/user the responsible ways of interacting with all these converged super-technologies. Who will say how much of is damaging and how much is good for improving the quality of society and its economoies.

    Sometimes technologies are created for the sake of creation itself – no real sustainable benefit but just kicks for having come up with the next big idea – think of MXiT and Reporo. Exciting chat technologies that are cheap – even free. But the cost paid through the erosion of long standing cultures (that are there for a damned good reason) is shocking. People don’t know how to strike a conversation anymore as they are glued to their mobile-techs and good brains washed down to sms-language and selfishness.

    But then again, I am pro-tech revolution and shifting of power to the consumer/entrepreneur, but somebody better start asking who watches the side-effects of this chip-infested pill.

    Wednesday, May 2, 2007 at 1:57 pm #
  2. Stuart wrote::


    I think both you and Duncan are going a bit far with “what the heck is going on”. Take a deep breath.

    The blogging phenomenon and citizen journalism generally is a typical disruption to an old technology. This phase was predicted with the advent of the internet. It is no less of a challenge to the status quo than the online media generally was to the offline media world. Call this phase 3.

    Make no mistake that Google has a revenue model for Youtube that justifies the price tag. Not even their inflated equity prices mean their shareholders will let them squander money. People haven’t forgotten 2001 that quickly.

    And we don’t need a whole new paradigm to analyse it. That’s -type talk. The tools to analyse it are pretty old. In fact, the economist Joseph Schumpeter figured it all out ages ago. If you want a good book on the subject, try find a copy of his 1942 essay, The Process of Creative Destruction.

    The idea that citizen journalism will somehow destroy media is simply wrong. Citizen journalists need to earn a living. There is a supply curve for their output. There is a limit to the resources they can devote to their journalism. They are not full time journalists, do not have access to the tools journalists have, and do not have the revenue generating capacities that media businesses have (like ad sales teams). That means there is a specific type of journalism they’d be willing to do, one which earns them utility at a reasonable cost. Their utility may be derived from the status their posting gives them or their sense of belonging to a community. They are not altruists. And the costs they can bare are quite small.

    Anyway, lets not get carried away.

    Wednesday, May 2, 2007 at 7:54 pm #
  3. matt wrote::


    So by your reckoning, is Murdoch getting carried away? Because those are his words and thoughts, not mine. He was the one who bought Myspace for a hefty sum… got carried away and splurged a billion or two…. I suppose it happens.

    I’m not sure your assessment that this is a question of “getting carried away” quite encapsulates it. These are important questions and debates with empirical evidence all around us. I’m the one that handles the revenues of the online business, and I’ve seen a complete turnaround scenario, with online advertising growth rates y-on-y in online advertising of 60% at our business. Online advertising recently surpassed print in the UK. That’s no talk — that’s numbers on our balance sheet.

    You’d also be interested to know that some US bloggers pull in bigger audiences than the biggest online publications here combined — and you’re wrong — bloggers ARE monetising their sites via contextual search advertising models such as Google Adsense. (read up about it). That’s the key — they don’t need sales teams. It’s a scenario that lets the little guy both be the advertiser and carrier of advertising, where previously the barrier to entry as you rightly say was too high (but that was five years ago).

    And where do you see me saying that Cit J will “destroy” traditional journ? Don’t think I’ve ever said that.

    You’re about five years ago in your thinking. We’ve moved on from dot.bomb long time ago and online businesses are making revenues. Hey it’s 2007!!!

    Wednesday, May 2, 2007 at 9:19 pm #
  4. Tyler wrote::

    I can speak on behalf of a young generation, the new generation, gen y if you must. We are highly adapted to technology and continue to adapt to newer technologies at a rate that the older generations cannot.

    My generation is more assertive and will put its point of view across. We love to be seen and heard. Hence the success of MySpace. If we receive recognition for things we have done we will continue to do them. Each comment on a MySpace page is a form of recognition.

    Let me take this a step further by stating that this is no boom nor a phase. It is an evolution.

    How does the affect the future?
    News will become available sooner than it used to be. How many blogs report and comment on an event before it even hits mainstream media? Mainstream media will learn to adapt and keep up with blogs, even better collaborate with them. New and old do not need to compete, they can work together in harmony.

    Remember, not everyone starts a blog to compete with a big publication. Most blogs are started because people want to share their opinion, thoughts and knowledge on topics for recognition.

    Now that blogging is becoming more popular those voices are heard by larger audiences. Thus making an impact on big publications.

    Revenue? Wait! Online marketing in South Africa is on a steady increase. Marketers are starting to realise the importance of the internet as a marketing tool. Not just blogs, but relevant online services. A good example is Flickr, they advertise camera manufacturers when viewing a photo according to the camera is was taken with. Pretty smart if you ask me.

    Online shopping? Most people now research a product online before purchasing it offline. Companies who take the time to keep up-to-date and well documented inventories of stock will and make it available online will benefit tremendously.

    The new web is highly over rated at the moment, I agree with that. It is no dotcom boom though. It is paving the way for the future..

    Wednesday, May 2, 2007 at 10:21 pm #
  5. Paul Jacobson wrote::

    I agree with Tyler. The Web 2.0 thing may seem like a bubble in many respects but this is really just a sign of a deeper revolution. I see social networking tools becoming more commonplace and mainstream. Eventually people will be speaking out on the Web and whatever other platforms are available to us as a matter of course. It will become the norm. It is an evolution of our individual consciousness.

    Wednesday, May 2, 2007 at 11:04 pm #
  6. Stuart wrote::

    Hi Matt,

    We seem to have missed each other.

    I’m not criticising your desire/right to debate! I’m criticising your _argument_. That is, in fact, an essential component of a debate. Therefore, through my actions, I’m demonstrating the opposite of what you accuse me.

    I also did not say there wasn’t real money being made in blogging sites/myspace. In fact, that was the logical conclusion from what I did say – that this phenomenon follows the laws of normal economics. No one is going to run a blog/etc for free. At least, not for very long. I’m very glad M&G is one of them.

    My point was actually that there is no paradigm shift, which I thought was your point. What we are seeing is classic creative destruction – the life blood of capitalism. Old media behemoths will be challenged by younger upstarts who have a new technology on their side. But there’s not going to be a tribe of bloggers providing value for free to the world. Instead, they’ll supply according to demand, and evolve into normal media professionals like the rest of us. Only the technology will be different. (And they may survive on AdSense, but it’s Google’s sales team that cracks the big numbers – AdSense is pretty passive. There are returns to active selling – Google well knows that). All of these things can be analysed using pretty old terms. My lesson from dot.bomb was that one should be very sceptical about those who claim a new paradigm is needed. I remember with disgust analysts telling investors you can value companies on a present-value of forecast future cash flows!

    (And I may be five years out of date, but at least it’s your blog that’s dragged me into the 21st century. Or, to be fair, yours and Duncan’s!).

    Wednesday, May 2, 2007 at 11:16 pm #
  7. Vincent Maher wrote::

    This debate is getting more and more tired. No-one seems to be taking into account the fact that traditional media is changing very rapidly – isn’t it notable that most of the citizen journalism is being done on mainstream media web sites these days? Most of the traditional media have web sites, are adopting the very thing that is supposed to be killing them – this is a healthy adjustment to changing market conditions .

    Murdoch has a penchant for overstatement – he is, after all, the guy who owns FOX News and uses his media to promote the republican agenda. How can we divorce the ideological function of his media, and decisions like buying MySpace, from their business successes and then use the latter to justify or validate the former?

    Is it not obvious that one of the best ways to put nails in the coffins of the liberal media, traditionally newspapers in the US, is to become evangelical about a new medium that does not have the same social imperatives but, instead, operates on the principle that whoever has the loudest voice can and should drown out others who may be a little more rational in the long term?

    What we need in this debate is a little bit more nuance and sophistication in political and ideological terms because, ultimately, you cannot summarise the complexity of life by assuming that whoever has the most money must be right.

    The media has had to reinvent itself every time a new technology has come around, there is nothing new here. Talk radio gave the citizens a voice ages ago, DTP gave people the ability to do the same with print in the 80s. And raising one’s hands in the air after 14 years of this is nothing more than melodrama. No-one debates the changing business model, its the sense that changes in the media environment are new that is so irksome.

    Wednesday, May 2, 2007 at 11:42 pm #
  8. matt wrote::

    stuart — who knows if its a paradigm shift, which was my question as opposed to proclamation. i’m no fan of murdoch, but think it’s significant that a traditional media baron is speaking of paradigm shifts and then putting his money — lots of it — where his mouth is.

    This is what he said: ““To find something comparable [internet], you have to go back 500 years to the printing press, the birth of mass media – which, incidentally, is what really destroyed the old world of kings and aristocracies. Technology is shifting power away from the editors, the publishers, the establishment, the media elite. Now it’s the people who are taking control.”

    Vince is right. It’s overstated, but still I find it interesting that he is thinking in this way.

    re: networked advertising models such as adsense etc. who cares that a big corp is behind it. its significant that via this micropublishers are joining both the advertising and publishing game in a very significant way and challenging the establishment.

    Give this a read:

    PS: welcome to the blogosphere.

    Thursday, May 3, 2007 at 12:00 am #
  9. Duncan McLeod wrote::

    Coming back to you, Stuart, on your first post. Sorry about the delay. It’s been one of those days today.

    I think the point I was making was not so much around citizen journalism but around Web 2.0 sites such as Wikipedia and operating systems and free software such as Linux and People contribute to these things for recognition rather than for any financial reward. Thousands of people spend their spare time editing Wikipedia pages, yet they know there’s no financial value in it for them. Why?

    Or what about the people who contribute their code to the open-source community. Most of them will never make money but they seem content in the knowledge that their work will somehow have contributed to the betterment of humanity. These things can’t be explained in classical economic theory, or can they? Does Schumpeter have an explanation about why people would spend so much time doing things that have no economic value to them?

    Fact is, when millions contribute to such projects, it can change industries.

    Thursday, May 3, 2007 at 9:04 pm #

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