Power under Pressure: Digital Capitalism in Crisis (3-3)

Massive and sustained corporate investment around ICTs developed in response to the economic downturn of the 1970s, within a multifaceted attempt to renew profitable growth. Five core components of this encompassing response were financialization, militarization, wage repression, transnationalization, and accelerated commodification.
Yet these axes of a developing digital capitalism eventually converged on a new and deeper financial-economic crisis. May we expect this sector to reprise its earlier role in renewing the accumulation process? How may geopolitical-economic forces be rebalanced?

The mythology of creative destruction overshadows a more fundamental feature: the unleashing of a rampant impulse to commodification. Consider fee–based cultural commodities. Here a small group of companies, led by Apple, Amazon, Google, and Facebook has muscled in on long–entrenched oligopolies over musical recording, books, games, and film. The interlopers have built new distribution systems around new software platforms and often proprietary equipment—iPhones, iPads, Kindles, XBoxes. As compact disc markets collapse, the handful of conglomerates whose music subsidiaries channel the lion’s share of global recording have had to cede profits to Apple. These conglomerates’ film subsidiaries still control traditional movie distribution, but now they must contend not only with dwindling DVD sales and illegal file sharing, but also Netflix’s streaming service. These conglomerates’ publishing subsidiaries dominate the U.S. book trade; but this staid industry is now witnessing especially vicious struggles. Traditional publishers and bookstores must try to contend not only with Walmart, but also with Amazon’s killingly low retail prices and bullying tactics.
Google’s cutthroat strategy (now facing an unexpected judicial reverse and a counter–offensive by way of a proposed digital public library of America) has been predicated on the plunder of millions of volumes tended on behalf of the public by academic libraries and librarians. Fee–based cultural commodities are recomposing as new products, sold via new distribution systems, as a new set of big owners emerges.
A similar phenomenon is evident around advertiser–dependent media services. YouTube, Google’s TV unit purchased five years ago for $1.65 billion, may be leading a transition away from conventional television, but it is distinctly not transcending advertiser patronage; indeed, YouTube has undergone an obsequious redesign in order to bring it more fully in line with advertisers’ expectations. Facebook, too, is hard at work rebuilding its hugely popular service around the sales function. Facebook, noted the Financial Times just last year, “is desperate to attract . . . brand advertisers”. That was then. Although uncertainties remain as to whether deeply engaged users will break the magic spell in order to absorb advertisements, marketers are stampeding onto Facebook reported in January that “Social networking sites, which now account for more than one–third of all display ad impressions, were a significant driver of growth in the display ad market in 2010.”
Market news fixes on these corporate struggles to master the commodity logic of a turbulent communications industry. The juggling of business models is intense as companies scurry to reorder and stabilize their revenue sources—a trend aggravated by the slump. The churn of new product announcements, and the endless effort to calculate how market changes will impact on share prices, crowd out other considerations. Will Amazon’s Kindle keep pace with Apple’s iPad? Will an iPhone– enabled Verizon overpower AT&T? Is Facebook led by a nice man?
We may take better measure of this recomposition process by remembering that there are essentially three private options for launching and financing communications products and services: investment capital, advertising, and direct fees—whether they be subscriptions, licenses or rental charges.
The rebuilding of the communications system around new technologies is overwhelmingly a story of how different enterprises and whole industries are casting about between these three models.

Commodification—often, recommodification—is, in one form or another, the common denominator.

There are casualties. The travails of print journalism, which have been building for decades, supply an instructive point of reference. Print ad revenue decreased by nearly half between 2000 and 2009, while newspapers’ online revenue makes up for just a fraction of the shortfall. As online competition intensified, the downturn hit; strategic planning then gave way to emergency measures (Bradshaw, 2009). Journalists were laid off in droves, and the overall investment in newsgathering was radically cut. A grave threat is posed to original reporting. During 2010, for example, a few dozen full–time U.S. foreign correspondents attempted to cover all of China. I dare not even ask how many of them speak Mandarin.
This is where we might remember that a fourth possible revenue model—government support— has been ubiquitously deployed throughout the crisis. The United States has thrown trillions of dollars at banks, insurance companies and auto makers; and it will spend billions more to underwrite broadband service nationwide. Yet it has spent nothing at all to try to ensure the functioning of effective journalism.
Why should it be a heresy to suggest that journalism merits public funding? An instinctual answer is that government financial support threatens press freedom. One must always take seriously the threat posed by executive power to civil liberties. But whose freedom of expression is endangered by
During the worst period to date—the first half of 2009—ad spending, a half–trillion dollar global outlay, fell by more than 10% in many developed countries. Sales of books by members of the Association of American Publishers dropped beneath their long–term sales trend line.
Newspapers consumed 8% of Americans’ collective media time in 2008, but received 20% of total advertising; the Internet garnered 29% of our media time, but attracted only 8% of advertising.
Commercial air is being let out of one section of the apparatus of selling, and pumped into another. Newspaper executives’ decisions to rely ever more on advertising support looks, in this context, to have been a fundamental error.
Accountability will attach to federal funding, and accountability in turn will encroach on the sanctity of proprietary accumulation by media conglomerates. In the historical source and current center of digital capitalism, such a transgression is deemed unacceptable.
As this discussion suggests, the commodity logic of a restructured communications industry ramifies far beyond the cut–and–thrust of clashing business strategies. There are also other ramifications.
Notably, does the crisis signify that the dynamism of digital capitalism is now exhausted?
Crises are, as it were, the irrational rationalisers of an always unstable capitalism.