Comment: Why it matters when big tech firms extend their power into media content

Published: 08:00:00 on the 20th Nov 2017

Author: David Hesmondhalgh


Technology companies are investing millions to compete with the likes of Netflix (pic credit: Shutterstock) David Hesmondhalgh, professor of media, music and culture, University of Leeds, takes a look at the rise of media content being produced by technology companies.

A major shift is taking place in global media. Until recently, tech corporations were mainly involved in distribution rather than production. But now, instead of simply delivering TV shows, music and films onto our devices and screens, major firms are sinking huge amounts of money into the content itself.

The herald of this change was Netflix. Here was a tech company from the heart of Silicon Valley which in 2011 began to commission expensive middlebrow fare for its video streaming service. Amazon soon followed, and now Apple are poaching star TV executives, investing a billion dollars a year in production, and almost certainly planning a new video streaming site. Google and Facebook are developing content strategies, too.

However, this shift is not, as some would have it, a case of boring old “legacy” media companies giving way to smart, dynamic usurpers that will give the world better television.

It is better understood as a wholesale media power grab by the tech sector.

Blurred boundaries

There is a precedent for media being dominated by a bigger, neighbouring sector. In the 20th century, many key developments in media and culture were driven by electronics corporations. The recording and radio industries were essentially created in order to provide content to play on electronics devices – where initially the biggest profits lay.

Once content itself became sufficiently lucrative, electronics firms established themselves in production and distribution, forming the heart of vast media oligopolies. Key US broadcasting network NBC was an offshoot of General Electric, big record companies were often subsidiaries of electronics giants, and later, Japanese electronics group Sony became a massive media force.

Boundaries have blurred, but the electronics and tech sectors remain distinct, with their own cultures and industry bodies. And the new tech oligopoly has even more power than the electronics corporations and media giants.

It is important to understand where the now ubiquitous tech sector came from. In truth, it grew out of huge Cold War computing and communication state spending as much as through bootstrap entrepreneurialism. But enthusiasts fervently believed that computers could serve well-being by decentralising communication, and were suspicious of the state. The industry’s rapid growth in the 1990s came as global policy-making decisively moved to the view that markets rather than democratic institutions were best at determining how people’s needs and desires might be met.

In this neoliberal version of capitalism, the new breed of tech companies were, unlike their established media and telecommunications peers, very lightly regulated. This was the case not only in terms of competition, but also in terms of responsibility for what passed through their systems.

Under US and many Western legal systems, internet service providers, search engines and social media platforms have only very limited liability for the content they host and circulate. Compared with media companies, they have minimal obligations to prevent the circulation of problematic content such as hate speech. They also have considerable freedom to collect and sell data about their users.

What’s more, media companies have often been compelled by law and regulation to provide materials that serve the public interest. They have been required to make available information relevant to people’s lives as citizens, and diverse entertainment and cultural programming. Crucially, the new platforms have no such responsibilities.

This minimal burden helped nurture the growth of vast US tech corporations, including eventually the Big Five: Google, Apple, Facebook, Amazon, Microsoft.

Death sentence?

The recording industry was the first place where Big Tech disrupted media. Apple of course was crucial, but the key innovation wasn’t the iPod and iTunes, it was the launch of the iPhone and AppStore. These made possible the new music streaming services, most notably Spotify and later Apple Music. For all the criticism it has faced, music streaming did manage to stabilise a struggling business – and laid the basis for the normalisation of paid streaming.

Then Netflix arrived to begin the tech sector’s challenge to cable and satellite for monthly fees, ultimately with its own expensive content. Now television is transmuting into a system of rival subscription streaming services.

Like the electronics giants of the 20th century, the tech companies initially stayed away from media content. This is why recent developments are so significant. Companies like Apple and Amazon bring vast resources to the world of audio-visual production (though for now they are keeping away from the less profitable business of recording music).

The old media giants should not be mourned – partly because it’s not clear that they’re dying. Profits and revenues have diminished in music, publishing, and some parts of television, but vast businesses remain.

In the US, still the epicentre of global tech and media, there are now two oligopolies in place. Silicon Valley wields its might through software engineering, patents, start-ups and venture capital; Hollywood still deals in stories and images, copyright, and networks of talent management. Telecoms corporations too are increasingly active.

These sectors sometimes compete, and often cooperate. But tech will undoubtedly dominate because of their vast resources, international range and monopoly power.

Public service media have many failings, but were founded on principles of serving citizens with high quality information and entertainment. They will increasingly struggle against the vast budgets of Silicon Valley and their Big Media frenemies.

Regular regulation

But should you worry? Yes.

The “fake news” storms have shown how little tech corporations appear to consider their responsibility to society and democracy. They avoid tax. Like the electronics corporations, their business model involves creating cycles of obsolescence and replacement that are deeply wasteful.

The tech oligopoly is further extending its reach over our experience of the world, capturing huge amounts of data about us as it does so. For all the sumptuous content that will no doubt be offered, we should heed calls from commentators and policy-makers for careful critique and stronger regulation.

New laws and regulations appropriate for a new era are needed to control tech corporations’ operation of data about users, to make accountable the algorithmic processes by which the platforms operate, and to ensure that in this new communications world, people have access to truly diverse understandings of other lives, cultures and societies.

David Hesmondhalgh, is a professor of media, music and culture, University of Leeds. This article was originally published on The Conversation. Read the original article.

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