The impact of digital media on traditional media

2021-07-19

The radio interview was focused on the impact of digital media on traditional media. The interview was released on 25 06 2021 as the podcast on news server INFO.CZ in the section Welcome to the Future. The interview was in Czech language. For the english summary please click here.

Summary

The ever-growing digital world affects almost every aspect of our lives. A growing number of digital communication platforms, such as social media, blogs and websites, are quickly and easily accessible. We’re beginning to be dependent on them in business, education, personal lives and other areas.

Local media now compete at a global level, and domestic consumers have access to international content and services. Convergence is changing established investment patterns, as well as competition in, and the structure of, the media market. Media distribution is no longer tied to one specific network, which increases the availability of these services and products.

This changes the relationship between content creator and content distributor. Content creators have more opportunities to distribute their content, and can contact readers and viewers via various platforms. Distribution therefore ceases to be a barrier for the content creator. Traditional distributors have less influence on media consumers’ habits, because these consumers can choose between various distribution methods.

The manner in which content is created is also changing. Audiovisual content is no longer produced only by large professional media companies. Platforms such as YouTube and Stream are gaining popularity, which means that everyone can create and share content very easily and quickly. 300 hours of content are added every minute on YouTube alone.

Another change is that jurisdictional boundaries also play a smaller and smaller role, because digital data is potentially accessible anywhere.

If we look at the Czech media landscape, we’ll find that the Czech media market is a relatively small one. According to the Herfindahl–Hirschman Index, the television market is moderately concentrated, while according to this index the newspaper market is highly concentrated. Nevertheless, the market is stabilized, and it also appears to be saturated. Therefore, the question is whether there is more permanent room here for digital media, or whether it is a momentary fad and media consumers will return to newspapers, magazines, radio and television.

Digital media combine the advantages of tertiary media, i.e. mass media, with those of secondary media, meaning everything that multiplies the possibilities of interpersonal communication, because they can also serve as a social network.

Moreover, no serious newspapers such as Frankfurter Allgemeine Zeitung have ever appeared in the Czech Republic. This is due to market size and language, as well as the small size of the middle class and its need to still devote most of its time to maintaining its social status. News websites that are not linked to large publishing houses do not exist, or have little reach. The role of serious newspapers is therefore replaced by niche websites.

For a long time, the idea reigned that the internet is an extra legem environment, and that it is therefore a kind of shield against legal regulation. Cyberspace is a social space, and therefore subject to the same rules as any other social space, including legal rules. Conduct in cyberspace is no different from conduct that we are familiar with from other media. There is no reason why cyberspace should be immune from classic regulation. However, the difference from other media is evident and undeniable.

Rapid technological development in information technologies has also introduced new topics within the area of copyright. A digital file that contains a copyright work can be very easily copies and immediately distributed worldwide, which reduces the copyright holder’s income from royalties. The question is therefore whether copyright is finding the right balance between the interests of creative activity, and the social benefits that the dissemination of these works brings. Where copyright goes will have a major effect on the sector of the economy that deals with hardware manufacturing.

Copyright is based on territoriality, while the internet is a global media environment, and this causes an incompatibility of law with technology. Also, because it is outdated, it is an obstacle to customer choice.

The economic efficiency of copyright works is an illusion. Efficiency in the market requires that the cost of producing the last unit be equal to its social value. But if a copyright work has been created, its reproduction and distribution involves relatively low costs, particularly in the case of works in digital form. In order to support authors’ activity, copyright traditionally enabled licensing, which allowed for prices above the cost of reproduction and set limits for the number and duration of the licenses. Therefore, copyright accepted static inefficiency in favor of dynamic efficiency.

The digitization of copyright content poses more challenges for copyright than previous episodes of technological progress. Existing copyright is not an absolute, untouchable set of rights that cannot be discussed. Changes must be made with the interests of business and consumer groups in mind. The copyright enforcement system cannot be more costly than the potential benefits of this regimen. It is not possible to find the level of economic efficiency of copyright protection, as it applies to a very diverse area of copyright works with various degrees of authorial and artistic creativity – from journalism, through literature, music, films etc., to works of a more technical nature such as software.

In principle, three approaches are possible when considering current copyright in relation to digital technologies.

The first option is to not make any changes, and let the market forces do their work. Although digitization of creative content is a source of considerable conflict between copyright owners and users, this conflict can result in a solution based on the operation of the market.

The development of digital technologies also means the development of “digital rights management” (DRM), which enables the collection of royalties for various types of use of digitized works. Customers therefore pay for rights that they choose and exercise. DRM technology prevents a customer who purchased the right to listen from availing of the right to copy; this is permitted for a customer who pays more. DRM technology will increase copyright holders’ incomes, while at the same time reducing minimum royalties for lower usage. Rights holders and consumers would benefit together, which increases the efficiency of the copyright market.

The second option is the introduction of mandatory licensing for certain types of works. The revenue from this licensing would be distributed according to the use of the works. However, a uniform flat rate will definitely not be the right one in terms of economic efficiency, and fee collection administration will be costly. A fee will be imposed on the acquisition of computers and other devices that enable access to the works, which means a tax on equipment that does not relate to the works in question.

The third option is the revision of copyright in favor of one of the groups that have an interest in changing it, being either rights owners or rights users. If we prioritize copyright holders, the cost of enforcing protection will probably outweigh the benefits of profits. It could also mean a restriction of the development of the internet. The potential costs borne by copyright holders arising from a change of legislation in favor of users would have to be mitigated by revenues from new business models.

Moreover, relatively little is known about people’s motives for engaging in creative activity, and about how these motives differ from a monetary incentive to acquire rights for the purpose of reproduction and distribution. This does not mean that the financial issue is not important for authors, and we can state, with a certain degree of accuracy, that the abolishment of copyright protection would lead to a reduction in production quality. Nevertheless, it is very uncertain how a less dramatic change in authorial remuneration, consisting for example of a change of remuneration models, would affect this quality, including production and distribution quality. Content creators rather than distributors are more motivated by non-monetary factors, striving for publicity and recognition, while distributors are more motivated by the financial aspect.