A Tale of Two Monopolies

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I originally thought of titling this post “Will new media kill the old?” but realized that it would be hard to add value to a debate which prominent bloggers such as Jeff Jarvis, Dan Conover and Nick Carr have already committed their braincells and bytes to.

So I thought instead to share the true story of how two traditional media monopolies in one medium-sized city entered the Internet age.  (The firms referred to are real, but pseudonyms are used so that I can take some liberty with the details).

With few exceptions, the first firm – let’s call it A – monopolizes the newspaper and magazine industry. The second firm – B – was the only free-to-air television broadcaster and also occupies most of the radio spectrum.

Now, while journalism is a core function of both firms, the differences between print and broadcast media meant that there was largely no real competition between them except perhaps when it came to hiring reporters.  [This said, A and B have dabbled in each others yard; in the 1990s, A started two television channels while B began publishing a free news tabloid.  A’s broadcast experiment failed but B continues to publish its daily newspaper.]

As the city’s population flocked online, each firm set up news websites to attract online audiences.

Firm A was first to market in 1995.  It had a natural advantage in that print news could be easily transferred to the web; as such, providing content for the website did not require significant additional resources.  But there was also concern that publishing news online for free would cannibalize sales of its newspapers; on the other hand, given that alternative online content was mostly free, there would be relatively few individuals who would pay for online news.

Firm B’s website, which started in 1999, used an advertising-funded model, which was consistent with its heritage as a broadcaster.  Its news was updated several times a day, but usually in short snippets, and often a simply transcript of what had been read out on air.  Its other advantage was that they had ready video content; broadband penetration had rapidly increased and most local viewers could stream news videos quite smoothly.  Today, B has the city’s top rated news site, drawing about 280,000 unique visits each day, and a Google Pagerank of 7.

Firm A has a different story.  For ten years, it offered the daily news (along with a three-day archive) to its registered users online for free.  In 2005, however, it announced that it would charge readers because it was “not a tenable business model to charge for the print edition of the newspaper and not for its online edition.”  Firm A still hosts a free news sites, but this one offers mainly brief news snippets, with links to the full articles on the paid site.  Still, this free site attracts 240,000 unique visitors a day and its Google Pagerank is 6.

Blogs and aggregator sites do provide an alternative source of information, but it seems that many of this city’s residents still rely on traditional mainstream media – whether online or off – for the news.  Notably, issues typically gain traction in the blogosphere only after they have first been reported in the mainstream media.

The lesson from this (true) tale is that the Internet need not spell death for old media monopolies for this city.  I think Jeff Jarvis said it best:

From a business perspective, we need to stop whining about readers moving online. If that’s what they want to do, then go with them, damnit! The biggest challenge is to train advertisers that online is more valuable than print because more people are there and they are more engaged in getting what they want, and so advertising there is more efficient and should be worth more.


Digital Diplomacy and the American Advantge

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Heartiest congrats to Nicco & family on their new baby 🙂

While Nicco was attending to his paternal duties, we had the opportunity to hear from Alec Ross, Senior Adviser for Innovation at the State Department.

Wikipedia describes Ross as Secretary Clinton’s tech guru who is “leading the State Department’s efforts to find practical technology solutions for some of the globe’s most vexing problems on health care, poverty, human rights and ethnic conflict.”  (That, admittedly, is a fuzzy job description, but this NYT article by Jesse Lichtenstein titled Digital Diplomacy sheds a lot more  light on what Ross does).

Ross shared a cogent description of the world as he saw it.  Changing demographics – viz. the youth bulge and growing Diaspora – and the end of the Cold War signaled the need to shift from closed – economies, societies and governments – to open ones.  He shared some examples of his work with State (many already mentioned in Lichtenstein’s article) as well as an interesting anecdote  also how a app-development contest in Africa revealed needs that State department officials would never come up with on their own.  (The winner was an application that enabled farmers to track menstruation cycles of their cows for breeding purposes).

But what is digital diplomacy, really?  Diplomacy is defined as the conduct by government officials of negotiations and other relations between nations.  Is digital diplomacy just the same thing but using Nintendo Wii instead of golf clubs?

Apparently not.  Examples of what Secretary Clinton calls “21st century statecraft” include: the State Department’s role in helping to raise more than $40 million for the Red Cross via a text messaging drive in the wake of the 2010 Haiti earthquake, and Secretary Clinton’s Jan 2010 speech on Internet Freedom following Google’s brouhaha in China.

Most notable, and perhaps controversial, was the email from Jared Cohen (then working with Ross in the State Department) to Twitter’s co-founder/chairman Jack Dorsey asking the latter to postpone the site’s scheduled maintenance during post-election protests in Iran in June 2009 (later dubbed the “Twitter Revolution”).

Dorsey obliged, sparking debate as to whether Cohen’s move to keep Twitter running contradicted the US stated policy of nonintervention in the Iranian election.  In her article, Lichtenstein quotes Ross as saying “There’s no casework. There’s no legal statecraft precedent for such things.”

Perhaps not.  But broadly speaking, the sine qua non of diplomacy is to secure ones national interests. (For some countries, the specific goal of diplomacy is the avoidance of war, but this probably does not apply to the US today).

In the context of digital diplomacy, the fact is that US State Department — with its growing fraternal links to Google, Facebook, Microsoft and Twitter — enjoys a significant advantage.  In 2009, Twitter was asked to reschedule its maintenance, hoping to facilitate a revolution in Iran.  Could Google be similarly persuaded to modify its search engine optimization algorithms, or Yahoo! convinced to reveal emails sent by a diplomat in a developing country?

In her Internet Freedom speech, Secretary Clinton recognizes that it will not be easy for the State Department to realign its policies and priorities.  But this will have to be done … and quickly.  Because such attempts to leverage on its digital advantage will almost certainly be viewed as selling out on the values — of freedom, equality, human rights — which the US  espouses.