Digital-Media-Market-Structure

Digital Convergence

Digital convergence is transforming the economy of some of the world's largest, fastest-growing industries. Although key aspects of a significant change in market structure are already visible, it is difficult to forecast the total impact of this change.

The forecast merger of existing media infrastructures into a single vertically integrated monopoly has fortunately not become a reality. In surprising contrast, rather than a vertical integration, and horizontal disintegration has occurred.

Specialisation along communications value chains are forming as successful organizations focus on specialised, horizontal segments of the market.
Devices, distribution channels, and applications are more diverse and interoperable, resulting in a radically new media ecology.

The Internet, the humble beginnings of a convergent media market structure is expanding to television, telephones, and other digital devices used to access and navigate the Net.

As major network operators and media broadcasters rapidly negotiate to secure their domain in this new horizontal economy, standards and commerce bodies are struggling to make sense of converging standards.

The Internet may be seen as a still bandwidth-constrained, immature version of our digital media future. Its economic features offer important insights into future market structures and policy problems created by digital convergence.

Key features of this market structure include:

Multimedia Capability

• The Internet delivers all modes of interactive content.
• Divisions between publishing, broadcasting, and telecommunications are meaningless on the Internet.
• Segmentation of voice, video, and data traffic is weakened.
• New forms of media such as chat rooms, MUDs, search engines, and browsers are emerging.
• The Internet's multimedia capabilities are still limited by congestion, last mile access, and outdated CPE. Over time, these barriers will greatly reduce.

Media Market Disintegration

The Internet is largely disintegrated in structure - TCP/IP is an open, non-proprietary standard.

Markets are clearly defined between equipment, browser software, local services, backbone services, service marketers, and content producers. Vendors are focussing on competence and market share in one or two of these horizontal segments.

Vertical disintegration is encouraging service innovation using unbundled components to create a product of ONE.

Internet service delivery architecture includes both "pull" and "push" interfaces. A vast contrast from the uni-directional push system of the past.

A Borderless IP Market

National boundaries are falling away as global transportability of IP services makes them less relevant.

Access service packaging is no longer defined in terms of distance and international interconnect settlement systems.

Financial markets are failing to keep pace as they desperately hold on to forex exchange fees in a largely single IP economy.

Governments are struggling to monitor and control the movement of bits. Free trade in information and telecommunication services and content seems inevitable.

The concept of copyright and broadcasting laws and regulations that restrict ownership to people and nationals cannot survive for long.

Reference: Milton Mueller, Associate Professor, School of Information Studies, Syracuse University ( Extracted from The Public Vol. 6/1999)

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