The myth of a digital utopia

It is time we brought a little perspective to the euphoria around digital media

Earlier this year I attended a two-day workshop on digital marketing by afaqs!Campus. The workshop was good and I learnt a lot, not just about digital media but about digital attitudes to other media. The trainers, like most people in the digital media business, were scathing about all other media, including television and print. Many young people within the audience and outside in the industry mirror this feeling. Old media is for Luddites. Digital or new media will annihilate everything, so why bother with TV, print and other such dinosaurs. Many point to the Arab spring, led largely by social media, as an example of digital media's capability to move entire societies and economies.

There is no doubt about it. Digital media, or all the stuff born out of the affairs between evolving technology and content, is the biggest change sweeping across the world today. From platforms such as Facebook and Twitter to devices such as smartphones and tablets, it is changing the way we create, share, distribute or react to films, music, TV shows or our neighbour's pictures. Many people across the world believe that this is some kind of utopian ideal in media consumption and freedom. Note - this column discusses digital media purely from a media and entertainment point, irrespective of the platform (search engine, portal, and so on) or the device (smartphone, iPad, et al).

But by giving it this utopian position are we, as consumers and people dealing in the business of media and entertainment, setting ourselves up for a massive disappointment? Based on research for a chapter on digital media in my forthcoming book, I would say that there is cause for caution. There are four clear reasons why we need to introduce some perspective to this euphoria.

Firstly, digital media operates like any other medium. It needs large audiences, which are then monetised through pay or advertising revenues. Sure, there are differences. Digital technology allows you to interact, transact, share and do a host of things that other media platforms don't. However, the economic fundamentals of the business remain the same.

Secondly, four large companies - Apple, Amazon, Facebook and Google - dominate digital media globally. In other media segments large monopolies like these are almost impossible to build, thanks to well-established regulation, especially on cross-media investments. These four firms dominate both audiences and revenues. For instance, Google has a vice-like hold on the search market and therefore, on advertising. As its Android becomes the default operating system on mobile phones, it is set to dominate that device too.

Maybe at some point in the future another company may come up with a better search engine or a way to make more money on social media. But for now, the world's netizens are dangerously dependent on four companies when they want to hear a song, buy a film, talk to friends or just decide what refrigerator to buy among the millions of things they do online. The ability of these four firms to spread free speech and democracy and equally to block competition is scary. That is the reason regulators have started looking more carefully at them. What is dangerous is romanticising the medium and giving up too much privacy and power to digital platforms which may or may not handle it responsibly.

Thirdly, unless digital can deliver returns for professionally-generated content, there is a question mark on its viability. A newspaper in the US loses 16 ad dollars for every ad dollar it gains digitally, according to the latest Pew Research Center report on the state of the news media. Yet, during an election or a crisis, readers flock to the sites of known brands such as CNN or BBC. That means they trust them and want to follow them wherever they are. If it is their content that is generating traffic and advertising for, say Google, what will do the trick once all newspapers have died? Or all TV companies give up?

There is a new ray of hope here from pay revenues. Much of it is driven by the growth in video. Netflix, for instance, commissioned a $100 million series, House of Cards, which was 'aired' online earlier this year. From all accounts it made money on it through subscriptions. Eventually that is what, it seems, will happen. The digital majors will become what the old media majors were: supporters of original professionally-generated content.

Fourthly, both offline and online players could learn from each other. For instance, blending a good offline ad campaign with online marketing gets better results, as one of the trainers at this workshop pointed out. Besides, digital media could really do with some lessons on how to get more from advertisers. The cost per thousand for display advertising online is a fraction of what the smallest ads in print or TV would get.

Time, then, for the two worlds to meet, share ideas and get rid of the chips on their shoulders.
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