roundtable: Boutique and mass Media markets + On-Line Services
roundtable: Boutique & mass Media markets + On-Line Services
Boutique & mass Media markets + On-Line Services
Rob Kling (kling@ics.uci.edu)
Sat, 02 Sep 1995 11:22:41 -0700
To: roundtable@cni.org
Subject: Boutique & mass Media markets + On-Line Services
In-Reply-To: Your message of "Fri, 25 Aug 1995 09:08:07 EDT."
<9508251506.AA01661@a.cni.org>
Date: Sat, 02 Sep 1995 11:22:41 -0700
From: Rob Kling <kling@ics.uci.edu>
Message-Id: <9509021122.aa15243@q2.ics.uci.edu>
Boutique and Mass Media Markets,
Intermediation, and the Costs of On-Line Services
Rob Kling
Department of Information and Computer Science
University of California
Irvine, Ca 92717
kling@ics.uci.edu || http://www.ics.uci.edu/~kling
August 31, 1995 (v 3.7)
The Communication Review -- to appear.
Copyright: Rob Kling 1995
-------------------------------------
Do not distribute or quote from this draft without permission of
the author. (Please contact me for an updated version.)
-------------------------------------
MAGIC LINKS BETWEEN AUTHORS AND READERS
Eugene Volokh (in press) envisions an enchanting world in which
we can partake of a new information cornucopia. He heralds the
ways that new information technologies might so reduce the costs
of musicians distributing their music, authors distributing
their publications that we will not face the limitations imposed
by physical space and its economic relations. Related physical
embodiments, such as magazine stands and retail stores, will
either disappear or shrink in significance. Readers and listeners
won't suffer the costs and delays of traveling to a physical
store, be frustrated that it is out of stock on a key item -- or
worse yet, doesn't carry it because of limited shelf space and
inventory costs -- and have to wait until driving home to be
able to read the prose or let the music brighten our homes.
Volokh argues forcefully that an infobahn organized around high-
bandwidth fiber and expanded services based on a cable-TV or an
Internet model can bring a cultural cornucopia directly into our
homes with a minimum of complexity (something like using an ATM).
Volokh's argument has an intriguing twist by emphasizing the ways
that authors and musicians might earn larger incomes by directly
selling their words and music to listeners and readers without
having to rely upon profit-taking intermediaries, such as
publishers, distributors and retailers. His article is permeated
with interesting (and overly optimistic) calculations about the
possible profits that musicians and authors can reap through
direct sales on infobahns. Some of his examples come from gratis
resources on the Internet (such as Project Gutenberg's archives
of uncopywritten electronic books). But Volokh primarily
enthuses about the ways that networks and Capitalism can
stimulate a cultural Renaissance that would expand the range of
ideas and music being circulated by removing middlemen and
allowing many more creators to earn larger incomes (and maybe
even livelihoods).
I believe that some aspects of Volokh's informational cornucopia
are available today, and that new information technologies will
enable an even larger informational cornucopia to unfold for some
of us. But I differ with Volokh on many key points, such as the
nature of the likely information infrastructure, its
technological and social complexity, the details of actual costs
for consumers, the kinds of groups that will find it most
affordable and accessible, and the extent to which the changes
that he envisions will shift power from publishers to
readers/listeners.
Most significantly, we differ in the extent to which the emerging
information infrastructure organized under laissez-faire
capitalist principles will substantially alter the extent to
which media ownership is concentrated in North America. Volokh
argues that the organization of mass communications will shift from
one that is highly concentrated and aimed at mass audiences
to one in which is narrowcasted to numerous small audiences with
distinct tastes and interests. The claim that electronic media
are cheaper to distribute than physical media is central to his
argument, as is his focus on distribution costs as a major
structural cause of the concentration of the publishing and
music industries.
One important way of locating Volokh's seductive argument is
through a contrast that Steve Fuller (in press) has recently
drawn between CyberPlatonism and Cybermaterialism. Fuller
characterizes Platonism and CyberPlatonism in discussing the use
of computer networks to support scholarly communication:
Platonism -- The belief in a frictionless (i.e.
cost-free) medium of thought that would be the
ideal vehicle for conducting inquiry.
CyberPlatonism -- The belief of Platonists who claim
that said medium is the Internet.
Fuller's definitions can help us if we extend them to
communications, more broadly, including entertainment, and expand
his focus beyond the Internet to include other electronic
communication systems, such as cable TV. Fuller characterizes the
Cybermaterialist as
one who does not believe that the search for a
frictionless medium of thought is intelligible.
Instead, what happens is that one form of friction is
exchanged for another, as we pass from one medium to
another. In more concrete terms, the costs are merely
shifted around, sometimes from one aspect of our lives
to another, sometimes from one part of society to
another.
Volokh makes his case by focusing on the possible distribution
costs for authors, publishers, and readers who rely upon
electronic media, and by de-emphasizing other major costs, such
as production costs visually exciting books and magazines. The
Cybermaterialist alternative has to examine these cost arguments
head on, and indicate why they are not compelling for the broad
range of musical and written materials that Volokh discusses.
The CyberPlatonist sees the costs of producing or distributing
some materials decrease, as new opportunities for diverse
services and new voices to reach new readers. This is an
interesting heuristic for identifying new businesses and
services. But it is a weak basis for actually estimating costs
and profits from such services, let alone predicting overall
economic or social change. A few years ago, some CyberPlatonists
were suggesting that desktop publishing could turn anyone with
$3000 for a computer and printer equipment into her own
publisher and thus democratize publishing. Today, I see
comparable promises made for publishing on the World Wide Web
(WWW). And Volokh, like George Gilder (1993, 1995), touts these
promises for a wider variety of electronic media. The
Cybermaterialst has seen unfulfilled extreme utopian promises
before (Kling and Lamb, in press), and tries to understand how
social forces beyond distribution costs work to limit the range
of social and cultural actualities even when increased social
diversity seems so easy to enhance.
BOUTIQUE and MASS MEDIA MARKETS
The markets that link the creators, publishers, distributors,
and readers/listeners of diverse media -- books, magazines, and
music -- are structured in complex ways. One key feature is the
dual worlds of publishing: a relatively offbeat world of small
(boutique) publishers and their lively authors, and a much larger
world of mainstream publication where relatively few owners,
editors, and authors sell to relatively large mass markets. These
two markets have co-existed for decades -- Time Magazine versus
Ramparts, Simon and Schuster versus Grove Press, Warner Brother
Records versus Alligator Records and Rounder Records, the
blockbuster movie that opens on 1,000 screens nationwide and the
art house film that opens on five screens. The boutique
publishers and their distribution channels are segmented from the
mass market publishers and their distributors in numerous ways.
Magazines and films rarely move from mass market to boutique, or
vice-versa (although authors and musicians sometimes move from
one to the other). Mass magazines that can't sustain large
readerships, like Colliers, close out rather than become small
boutique magazines. Small publishers rarely become mass market
publishers, although sometimes they are bought out by them.
The aesthetic and intellectual range of books, magazines, music
and films, has increased widely in North America in the last
three decades. The number and vitality of boutique market (niche)
tastes has increased. Some of this growth is attributable to a
more widely traveled and educated public, the spread of large
booksellers and music stores to regional cities, and the ease of
mail order expedited with credit cards. Simultaneously, the mass
media reign supreme for covering news. And the niche authors,
publishers, and readers seems to have done little to
fundamentally undermine the dominance of the few dozen
magazines that appear routinely the supermarket and airport
newsstands and lobbies of business firms.
Electronic media can enable some readers and listeners who are
"hooked up" to acquire some kinds of communications faster and
more rapidly than traditional physical distribution. Radio and TV
can broadcast some news more rapidly than news papers, and
computer networks can enable people to find documents that would
take days or weeks to obtain by paper and mail, if they ever saw
them at all. These possibilities for the rapid distribution of
some materials via computer networks can be especially important
to artists, authors, publishers and readers whose aesthetic and
political tastes run outside the mainstream and who depend upon
the boutique markets. But there seem to be significant limits on
the relative sizes of the mass and boutique markets. For example,
a mediocre pop album by Michael Jackson can sell more records in
a year than is sold on all of the folk music labels combined. A
Danielle Steele novel starts with press runs in the hundreds of
thousands -- far beyond the total annual sales of most boutique
publishing houses.
Volokh's core argument echoes Alvin Toffler's and George Gilder's
claims about the erosion of mass markets (demassification): new
electronic technologies, such as computer networks and fiber-
based cable-TV, will expand the relative size of the boutique
market segment at the expense of mass markets, and will -- in the
long run -- become the dominant market structure. This will be a
bloodless democratic revolution that will be forced by the
seemingly low costs, high speed, and vast information processing
capabilities of new electronic technologies.
MATERIAL GROUNDS
The long run does not come soon, or even ever. It helps to set
some concrete time frame in which to examine the relationship
between information technology and social change. I suggest that
a 15-20 year time frame is useful, although it is much shorter
than, say, the duration of the industrial revolutions in North
America and Western Europe. In 1980, some tens of thousands
academics, journalists, and computer hobbyists wrote or edited
with computerized text processors. Today, 15 years later, tens of
millions of North American academics, journalists, college
students, and diverse professionals routinely use them to write
or edit. Smith Corona, a company that has been fervently focused
on typewriters has filed for bankruptcy. This virtually universal
adoption of PCs for professional writing sets the stage for the
spread of electronic newspapers, magazines, journals and books
and creates a possible foundation for Volokh's cornucopic vision.
The concrete time frame helps us speculate more reliably about
emergence of new technologies, (such as his specialized
electronic books, or cbooks), their purchase and operating costs,
and their technical capabilities. I find Volokh to be too
optimistic about the extent to which computer vendors will be
able to market easy-to-read, convenient and inexpensive computer
books (cbooks), and when high-speed high-resolution color
printers will be so inexpensive that women can print out their
copies of Vogue and Ladies Home Journal at home rather than
subscribing at home or picking them up at the beauty parlor.
But most seriously, Volokh is too mind-boggled by some of the
computerized devices that could form parts of new systems for
distributing music CD and electronic materials that he misses key
architectural features of these socio-technical systems. He is
so fascinated by some possible internal cost-efficiencies and
important capabilities of these new media distribution systems,
that he ignores other central constituents, such as the operation
and organization of intermediary databases, that don't
necessarily result in cheaper overall costs for most authors and
their readers, or musicians and their listeners.
Readers must be careful in accepting Volokh's optimistic cost and
revenue estimates. For example, in the case of computer
equipment, he describes high-end performance and cites the
possible prices of low-end equipment1. Like other
CyberPlatonists, he projects a world in which the costs of new
information technologies appear low and will only decrease. He
suggests that musicians can make their recordings available on-
line for free -- "there'll be no tangible copy production,
distribution or sales expenses." In this case, the musician
seems to have free computers to store her work, free high-speed
communications lines 24 hours per day so that people can download
the recordings, free advertising, and free sales support to
manage electronic purchases. It's a nice example of free
thinking, but not very plausible.
Volokh confuses an increasing diversity in the likely number of
publications and their enhanced visibility for eager, curious
connoisseurs with a restructuring of media markets from
oligopolistic mass markets to more competitive boutique markets.
Volokh's sweeping essay covers many aspects of publishing music,
newspapers, magazines and books, as well as advertising and
copyright. In this short article I can discuss only a few of the
key areas where I believe that his delightful vision misleads
us.
THE SHIFTING STRUCTURE OF NEW MEDIA DISTRIBUTION SYSTEMS
This is a period of significant experimentation by authors,
publishers, and firms like CompuServe, Dialog, and The On-line
Bookstore that organize electronic collections for consumers.
Volokh echoes the catchy rhetoric of "the Infobahn," and refers
to a single new distribution system, and argues that it will
reach every household via fiber-based conduits organized, in
part, by cable-TV providers. In the past 100 years, our
communication infrastructures have been diverse and seamed --
telegraph, telephone, radio, broadcast TV, computer networks,
fax, and cable TV running on different conduits or in
incompatible formats. Continuing competition between the
providers of diverse information services and communications
firms makes it likely that a seamless integrated Infobahn will
not develop within the next few decades.
Many of the new electronic newspaper, magazine, and books that
Volokh describes have been developing via on-line information
services such as Prodigy, CompuServe, and Dialog, or via the
World Wide Web (WWW) services on the Internet. Some of these
services, such as Dialog's resale of articles from numerous
newspapers, business magazines, and scientific journals have been
profitable for over a decade and give some strong clues about
their likely future character. But many of the new ventures are
experiments whose forms, pricing, and very future is uncertain.
For example, Volokh enthuses over on-line bookstores that enable
readers to download whole books. The On-line Bookstore
(http://marketplace.com/obs/obshome .html), which has been the
subject of several articles, lets customers browse a large
catalog, sample books electronically at $5.60 per hour, and even
download some complete books at a similar charge. It's had over
100,000 "web hits" per month since the Fall of 1994, but it ran
at a modest loss in 1994 and is projecting to double this loss in
1995 (Janah, 1995). Whether and when the On-line Bookstore and
similar ventures find ways of pricing, advertising, and offering
profitable services is an open question. But there are certainly
many firms trying similar forms of electronic commerce in which
they allow customers to place on-line orders for books, CDs and
other items that they ship by mail to the customer's home.
The experiences of Dialog (a division of Knight-Ridder
Publishing) and CompuServe (owned by H.R. Block) are also
instructive. Dialog, one of the oldest on-line information
services, provides access to several hundred distinct searchable
full-text databases, and also information-alerts that sends a
note when a new article is added that matches a customer's
specifications. Dialog charges between $15-$300/hour for
searching its databases, and between fifty cents and $5.00
(check) for downloading individual articles. Most of the
databases cost either $60 or $120/hr to search, and the typical
Dialog customer runs up charges that average $150/hr. Dialog
offers its customers, mostly professionals in "rich businesses,"
a one-stop shop that provided access to diverse databases through
a uniform interface. It also provides its customers with help in
using the services via special manuals and a knowledgeable
assistant available 24 hours a day at the end of an 800 phone
number. Dialog's pricing has not gone down in the last few
years, despite rapid decreases in the costs of computer
components, such as disk space. These technological economies are
offset by royalties to authors and publishers, and by increases
in skilled labor costs, such as providing help to customers,
developing new database formats, integrating new files into
Dialog's system. Dialog attracts customers by offering a uniform
interface and a large number of databases that are popular with
certain businesses.
CompuServe is a lower priced and more popular on-line information
service. It provides diverse discussion forums, e-mail, and
Internet access as well as on-line newspapers and magazines with
a fee structure that includes some free services, and (as of
September 1995), charges for all services that are used beyond a
five hours per month. CompuServe subscribers can read the
Associated Press wire, the current issue of US News and World
Report, and some other mainstream newslines and magazines.
Searching back issues of these magazines and newspapers, as well
as reading or downloading some popular files, such as AP's sports
news and detailed financial news costs an additional $15/hour.
(Phone charges for reaching CompuServe's access numbers are
extra, although it also offers toll-free 800 numbers for about $5
per hour.) CompuServe provides technical help 24 hours a day,
seven days a week to its customers via 800 phone numbers, a
uniform interface to hundreds of databases, and integrated
billing for items purchased from vendors who advertise and
provide their catalogs on CompuServe.
While Dialog has relatively few competitors, CompuServe faces
aggressive competition from similar services such as America On-
Line, Genie, and Prodigy, as well as Internet service providers
such as PSI and Netcom. CompuServe and America On-Line each
report having about three million subscribers, while Prodigy
reports about two million. These eight million people who
subscribe to on-line services constitute a significant fraction
of the North American public that is routinely purchasing on-
line services from home. Consequently, the mix of services and
pricing should help us understand the shifting markets of the
electronic distribution of books, magazines, and newsletters in
a business profit-making context2. The major services, like
CompuServe, act like electronic shopping malls that offer the
more popular mass brands of information services. CompuServe
offers US News and World Report, and America On-Line offers
Sports Illustrated, while Prodigy offers up the Los Angeles Times
(via TimesLink). Each of these services offer many other mass
magazines and some major newspapers. But the major on-line
services don't offer little magazines. I suspect that marketing
staff for these services view small circulation magazines as
doing little to help attract hundreds of thousands or more new
subscribers each year. America On-line's offering Road and Track
or Car and Driver (that sell hundreds of thousands of paper
copies of each issue) may help bring in a comparable number of
subscribers.
More seriously, some of the on-line services have exclusive deals
and synergystic relationships with specific magazines. America On-
Line has carried Wired since 1994, and Wired recently published
an enthusiastic article up about America On-Line (Nollinger,
1995). With cozy business relationships between a major content
provider (Wired) and a major on-line service, the service is
unlikely to also carry a magazine that parodies Wired, say,
Mired. Companies that dislike a newspaper or TV station's
editorial policy threaten to go elsewhere. With similar
dependence on mass magazines, I would be surprised if the major
on-line services were willing to carry a magazine like Adbusters
that is critical of mainstream advertising practice. Cyberspace
may seem boundless, but many people will pay to access it through
only one service. I'm discouraged to find that the major on-line
services today have very much less social political diversity in
their magazine offerings than does a B. Dalton paper magazine
stand!
These business ventures in electronic publishing couple
electronic versions of paper publications and an on-line service
that manages interactions with readers/customers. Electronic and
paper publishing may be more synergistic than exclusive. I
believe that on-line services like CompuServe suggest some key
features of "the electronic databases" that Volokh mentions
periodically and casually. These databases are not just freebie
archives into which musicians and authors can toss their works
for broad public access.
An author can certainly self-publish -- in paper or today,
electronically, on the WWW. But working through intermediaries,
whether electronic or paper, offers authors the possibility of
enhanced visibility and the freedom of managing each individual
sale. However, the most visible, reliable and "user friendly" of
the major on-line services provide relatively small selections
of standard-brands.
None of these major on-line services carry alternative press
newspapers (e.g., LA Weekly, Village Voice, Boston Phoenix),
magazines (e.g., The Nation, Mother Jones, Adbusters), or
databases. The WWW is gaining popularity, as a medium for
boutique publications as well as for major newspapers to
experiment with electronic formats. The WWW is becoming an outlet
for the idiosyncratic array of small circulation magazines
called "zines." A paper magazine, Factsheet 5, lists thousands of
paper zines and a few dozen electronic zines (e-zines) for
interested readers3. Factsheet 5 provides one way to learn about
paper zines such as S.E.T. Free (published by the Society for
the Eradication of Television, "an organization of people
exposing the evils of television watching")4, or e-zines such as
Private Line: A Journal of Inquiry into the Telephone System5
(ftp via etext.archive.umich.edu/~pub/Zines/PrivateLine) and
geekgirl6 (http://www.next.com.au/spyfood/geekgirl/) "a hard copy
and webzine taking a unique blend of cyberfeminism, and
information and humor to geek girls and boys around the world.").
Electronic distribution might expand the audiences of these
labors of love from say 500 regular readers to 25,000 readers.
>From the viewpoint of their authors and editors, the expansion
can be enormous and exhilarating. But there is little chance that
offbeat tiny circulation slightly dissident magazines like these
will show up directly as directly supported services via
providers like CompuServe7.
Volokh is accurate in noting that on-line services are not
limited by disk space in a way that magazine stands are limited
by shelf space. But Volokh errs in thinking that cyberspace
imposes no resource bottlenecks for on-line services. The major
North American on-line services providers, like CompuServe or
America On-Line, face other bottlenecks based on their attempts
to economize on the time (costs) of skilled staff, and also an
interest in maintaining an image of reliability. They want
offerings that are relatively reliable (publish on a regular
schedule) with technically competent staff who will routinely
send them files in appropriate data formats. It is remarkable,
given the low cost of disk space, that their magazine offerings
are far more limited than that of, say, a Wallmart or Crown
bookstore's newsstand, let alone a magazine stand at more
metropolitan stores such as Barnes and Noble or Borders.
There certainly are ways to find offbeat books, magazines, and
music sources today. The aficionado can subscribe to specialty
paper magazines like Factsheet 5 for zines and Options for music
that briefly review thousands of sources in each issue. The
aficionado can visit specialty stores, and order by mail through
specialty services. In an electronic world, one can find some
specialty materials through special electronic catalogs (see, for
example http://yahoo.com). I share Volokh's hope that there would
be some way to bring musicians and their listeners, authors and
readers in more direct contact. But his vision simply
substitutes one set of intermediaries for another.
He moves from a scenario like:
author --> publisher --> store --> customer-with-car
to an electronic distribution system like this:
author-->electronic database/mall --> customer with
PC/printer
The second scheme doesn't automatically bring the idiosyncratic
musician or author into mainstream access. Much depends upon the
structure of the electronic database or mall. If it is organized
like the WWW, the musician or author has to face some key costs
in setting up a little electronic sales shop (or renting space in
one through an Internet service provider). If the musician or
author prefers to work through an electronic middleman, such as
an on-line music store or a CompuServe, then the intermediary may
be selective in adding goods and charge additional fees for their
value-added services.
The electronically mediated schemes are not likely to be much
less expensive for readers or listeners than the material based
schemes. They can offer other advantages, especially for people
or organizations with moderate or large budgets who want to
quickly search, access, edit, mix, archive, reformat, or
integrate digital materials.
BIT PARTS: WHAT WILL BE ON-LINE
Volokh refers primarily to non-fiction books, and some of them
will have the greatest chance of being read electronically.
Pleasure reading, including most fiction, -- often read in bed or
out of doors - is the least likely candidate for widespread
electronic reading8. Many non-fiction works can be useful in an
electronic form, as well as in paper. For example, people can
search large instruction a book, repair manuals and other bulky
books for the few pages that they need and just print those on
demand. As a scholar, I find that electronic collections of full-
text articles are specially useful in searching for those that
discuss a specific topic. Others find variants of this kind of
service worthwhile; for they are willing to have their companies
pay DIALOG $150/hr for such searching and printing.
Even so, paper has many charms. Individual articles and small
books are relatively portable. They can be read without worrying
about losing expensive equipment, plugging into nearby electric
sockets, having batteries run dry, or wreaking havoc with an
airplane's navigational gear during takeoff and landing. In the
next 20 years, the costs of computers will continue to drop. But
when will Volokh's electronic book (his cbook that is light,
durable, small, book shaped with left and right high resolution
screens, easily readable in bright sunlight, fast processors and
huge memories, and a good handwriting recognition algorithm) with
20 hour batteries and priced like a Walkman become available? As
long as the truly usable notebook computer (not the least
expensive) is fragile, clumsy, limited in battery life, hard to
read for extended period, even in darker spaces, and relatively
expensive, it will not be a substitute for paper books and
articles, even though it can supplement, replace, and even be
more usable than some paper-printed reference works.
People read magazines for diverse purposes and under diverse
circumstances. Volokh doesn't sound like a reader who is likely
to casually browse a copy of GQ when he's in his barber's chair
or scan People magazine at his supermarket checkout counter.
Zines and other text magazines (like The Nation or The National
Review) could be turned into electronic versions with relative
ease. But magazines whose appeal is based on luring readers from
one page to another with large photographs, especially in lush
high-resolution colors, will have a much harder time developing
appealing inexpensive electronic formats. (Even scientific
magazines with numerous high-resolution color photographs and
diagrams such as Science, Nature and Scientific American will
have trouble). High-resolution high speed collating/binding color
printers, as well as on-line information services, would have to
be very cheap indeed for many people to be willing to print and
bind their copies of GQ or Elle at home when they can buy
subscribe for about $2 per issue and not worry about toner/ink or
continuing to feed paper. Similarly, art magazines such as Art-
Forum, with luscious reproductions on oversize pages seem to be
unlikely candidates for rapid electronic replacement. As long as
the cbook is not an item to be used so casually that it can be
used easily at the beach or in the barbershop, there will be
lots of life to colorful and advertiser-driven paper magazines.
Volokh treats magazines and news columns as informational media.
And some magazines, such as the Nation or the National Review
might appeal to similar audiences in electronic form as in print
form. But many people turn to certain magazines partly for their
entertainment value, even when that value is tacit. The
production values of the page layout, the lively artwork and
typography are part of the lure, as much as the plain-text
versions of the same articles. Wired, for example, caught
attention with its snazzy eye-popping graphics as much as with
its libertarian social analyses of electronic media.
It is, of course, an empirical question about which formats will
draw which readers to which magazines. Volokh hopes that the
lower costs of electronic distribution can help off-beat writers
reach larger audiences. But mass magazine publishers can compete
by offering a visually more attractive magazine -- a format that
seems to appeal to many more casual readers outside of academia.
Production values, such as eye appeal, influences a magazine's
readership as much as its text content. The production costs for
snazzier magazines increase with the salaries, equipment and
other overhead for the diverse artists and editors who have skill
in working with complex media. While equipment costs are
declining for a given level of aesthetic refinement, richer
publishers can escalate the stakes by hiring the more skillful
teams and more complex equipment for creating ever more refined
layouts and artwork to retain existing readers and lure new ones.
The richer publishers can also escalate the stakes in creating
stronger content -- by paying higher salaries for stronger
writers and use their money and cache to interview famous people
who may interest their readers.
The slick magazines also play important and mundane social roles
outside of the immediate use by individual subscribers and
purchasers. For example, they provide recognizable culturally
accessible (and thus reassuring) materials for the diverse
clients of various professional offices, such as doctors offices.
There is a large mass market for the various places that people
will consume readily identified and culturally acceptable
materials. Some of this mass market resides in fashion, and brand
labels. But the women who wears Calvin Klein tee-shirts with its
distinctive C-K logo are unlikely to be reading quirky offbeat
magazines like geekgirl, in paper or online.
The concept of cultural legitimacy is important in helping
understand the spread of electronic materials, such as electronic
scholarly journals. Despite Volokh's passing claim that many
scientific journals are moving to electronic distribution, it is
no major scientific journals is distributed exclusively in
electronic form. In fact, in 1995, virtually all of the major
scientific journals are distributed in paper form to their
subscribers. Today, electronic scholarly journals circulate in a
separate netherworld, and they are not routinely archived by
university libraries, unless they purchase them on CDs or in
printed volumes. The nuances of this topic go beyond this brief
commentary. The key idea is that most scholars seem to treat
electronic publication as transient and insubstantial -- a value
that is at variance with their beliefs in the durability of
sound scientific research (Kling and Covi, in press). Volokh's
passing comments about the likely popularity of scientific
electronic journals focus on direct costs, and miss deeper
cultural processes that shape people's preferences.
LET THEM SPIT BITS: WHO WON'T BE ON
Many people are served well by printed materials. Many people
who obtain electronic materials today, seem to prefer to
carefully read those that are more than a few screens in length
by first printing them on paper. Electronic materials offer
certain virtues, such as compact storage, searchability, and
merging with other materials. Paper forms are often more
portable, can be read during landing and takeoff, don't require
special technical skills to operate the computer medium, and
don't require one to use costly high-speed telecommunications
services.
People can pass older paper books to friends and donate them to
libraries. Those people with little money are particularly well
served by the relatively inexpensive ways of sharing paper
copies. They can use public libraries, share copies of newspapers
in coffee shops and so on.
Like Volokh, I would like to see inexpensive, easy to use, and
highly flexible computerized media. But I am less optimistic than
Volokh that the kind of equipment that will turn electronic book
reading into a pleasure will be priced like a Walkman and nearly
as simple to operate. Of course, vendors are likely to hype new
products as "finally easy to use" and to focus on the narrowest
set of skills and costs that people need to use them.
One of the things that makes projections tricky are the unknown
tacit costs of future software and services. In the last decade,
the cost of computer hardware such as processors, hard drives and
RAM, has plummeted by factors of 10 to 100. However, new software
seems to drain many of these savings. For example Microsoft is
releasing Windows'95, an operating system heralded for ease of
use and adequate speed on fast and hefty computers. It won't
work well with the computer power that most consumers were
buying two years ago (eg., low-end 80486 processors with 4MB of
RAM). While the cheapest PC may have declined by a factor of 10
in the last decade, the price of usable computing declines much
more slowly. And reliance on on-line services can add additional
hourly charges, phone line costs, and so on.
These expenses may be modest for North American households with
middle class and higher incomes. However, those who live in
poverty may find these continuing costs to be overwhelming. It's
worth remembering that poverty rates have been rising in the
United States. In 1989, 12.8 per cent of the population was
officially counted as living in poverty, and that nummber had
grown to 15.1 per cent (39.3 million people), by 1993 (Civille,
1995:176). Electronic books and journals are unlikely to be a
wise or even plausible expenditure by people who are living from
one pay check to the next, struggling to pay for necessities such
as housing, food, and clothing. They may not simply be badly
served; they will most likely be largely excluded from these
electronic media worlds. In fact, Civille (1995) found ownership
of home computers rose with income and education, but the
relatioships were very skewed. In particular, high school
dropouts and households that reported less than $15,000 incomes
in 1993 were markedly unwilling to acquire computers for their
homes. Civille notes ruefully that the number of Internet users
in the U.S. will probably exceed the number of people living in
poverty, and that pair of numbers may be a potent indicator of
the of a divided society!
HOW ECONOMIES OF SCALE AND SCOPE FAVOR LARGE MEDIA AND
COMMUNICATIONS FIRMS
The last 20 years have also been a period with some paradoxical
social and economic changes. For example, the United States'
economy went through a novel period of stagflation -- high
inflation and recession -- in the late 1970s. In the early 1990s,
we have been seeing "jobless economic growth." I suggest that we
are likely to see yet another paradoxical process: concentrated
demassification9.
The arguments that computerization leads to the disappearance of
mass audiences ("demassification") focus on certain economies of
scale, such as the ways that authors who distribute a notice by
computer networks can send out 1000 copies almost as easily as
sending out one copy. In this view, advocated by Volokh, the
reduced costs of electronic distribution should automatically
favor small producers. This view is given some additional weight
by the continual closing of daily newspapers in the United
States, the decline of national magazines, such as Life, and the
growth in the number of specialty magazines10.
Volokh assumes that demassification is a relatively automatic
process that is driven by the economics of electronic
transmission. The advocates of "automatic demassification"
sidestep the key question of who pays to build the electronic
networks. Volokh, for example, is enthusiastic about the possible
use of fiber cable because it might offer exceptionally high
bandwidths and uses many interesting examples based on the
Internet. The Internet was built at major public expense,
although the privatization of the Internet will shift the costs
of expanded developments to the private firms and their
customers. Fiber networks have been the province of private
firms, and have developed rather slowly. In the Spring of 1995,
Time Warner CEO Gerald Levin claimed that the infobahn will
consist of:
" powerful servers to store all the content,
ATM switching, fiber-optic distribution
networks to neighborhood nodes followed by
hybrid fiber-coax lines into consumer homes,
set-top boxes to translate the digital signal
for TV viewing and, finally, a vast morass of
applications software to run the whole system
(quoted in Krantz, 1995)."
Network architectures like these are not inexpensive and both
consumers and communications firms are sensitive to their costs.
Wiring a home with traditional coaxial cable costs about $500,
while wiring the same home with fiber can cost about $3000
(Foster, 1994). Consequently, communications entrepreneurs like
Time Warner's Levin suggest using hybrids of coax and fiber for
residential use. But these cable costs are a small part of the
underlying communication system which includes new higher-speed
switches, huge file servers, and new custom software to
integrate it all. Some of these development costs are admit good
economies of scale, and thus favor larger firms.
The costs for designing, building, operating and continually
upgrading the computer systems that serve millions of people are
also high, but they also support economies of scope as well as
economies of scale. Economies of scope allow a firm to add more
diverse or customized goods and services at lower marginal cost
than starting them from scratch. In the case of on-line services
such as CompuServe, economies of scope enable it to provide new
services, such as simple access to on-line books to its millions
of subscribers world-wide, than would a new on-line bookstore11.
The combination of economies of scale in the networks and
economies of scope in the diversity of services favor large firms
as electronic intermediaries for audiences of millions of
subscribers.
In a fully privatized economy, people who use a communications
network will have to pay for its development, and not just the
marginal costs of using it. The economies of scale and scope in
building the computer and network infrastructures favors a few
huge media firms such as Time Warner or large on-line services,
such as America On-Line, as becoming the dominant providers of
household electronic services during the next decades. I refer to
this scenario as concentrated demassification.
We can get a feel for concentrated demassification by viewing the
way that major chain stores such as Walden Books, B. Dalton,
Crown, and Barnes and Noble dominate the bookstore industry by
emphasizing best sellers and large publishing houses. Unlike
these dominant chains, the larger independent and university
bookstores sell works from more diverse publishers, including
some very small presses. There may be a decline in the sales of
the best-sellers, and the major chains will still limit the
range of available titles. In a concentrated demassified market
for electronic materials, such as on-line magazines, a few large
intermediaries can similarly limit the range of choices available
to their customers.
Volokh assumes that physical bookstores offer limited selections
because of their costly shelf-space. I have indicated that on-
line services seem to face other bottlenecks beside the costs of
storage, such as skilled staff time to manage relations with
diverse publishers. The large services are appeal to national
(and international) subscribers, and thus share some key features
with mass media. They may refuse to carry electronic materials
whose contributors frequently criticize their business practices
or that offend a significant number of their subscribers or
cooperating businesses. In fact, at least one major on-line
service, Prodigy, has tried to make a selling point of
restricting the range of materials that it carries so that they
will not offend many mainstream families (and their children).
Despite my criticisms of Volokh's hope that inexpensive
electronic distribution of music, magazines, and books will
automatically erode mass markets, I am generally optimistic that
new electronic networks will enhance the vitality of boutique
markets. The ability of authors and small publishers and others
to publish electronically is not automatic. Much will depend upon
the Internet (and its successors) to be organized in ways that
allow open access to anyone who wishes to make their materials
available, and upon keeping the costs of open access to be
relatively low.
POWER SHIFTS on THE INFOBAHNS
I have indicated how Volokh's CyberPlatonic arguments about
electronic distribution undermining mass media are wildly
exaggerated. I do expect that many of the services that Volokh
describes to develop, including more electronic magazines and
customized newspapers. Some of these will develop in the boutique
market segment, and can help substantially expand the visibility
of tiny magazines. Others will be electronic versions of mass
media, such as searchable back issues of Sports Illustrated or
customized daily versions of the Wall Street Journal. Many
publishers are experimenting with diverse electronic formats, and
there is a lot of uncertainty about which formats, distribution
arrangements, and pricing systems will prove to be most
sustainable and popular.
Despite the excitement of the new in the diversity of electronic
publishing formats, we have much to learn from the last few years
of electronic publishing and decades of experience with
computerization. On-line publications lead people to rely upon
intermediaries for electronic services. North American on-line
services operate free of the regulatory requirements that require
television to open access to certain content providers or
requirements to provide inexpensive basic services (like phone
companies). Analysts like Linda Garcia (1995) and Richard
Civille (1995) observe that guaranteed low cost access and even
subsidies for poor people will be required to make on-line
services accessible to all. Otherwise, if on-line services
become the dominant media for political discussion, the poor will
be cut out. I am less worried about this prospect in the next two
decades primarily because paper media will continue to be viable
by virtue of versatility, portability, and low effective costs.
I have laid out some elements of a Cybermaterialist analysis of
the likely structures of electronic media markets in the next two
decades. This analysis suggests that at best we can expect a form
of concentrated demassification, rather than the complete
replacement of mass media markets by a vast number of small
boutique publishers. High quality intermediaries are costly and
those with millions of subscribers will be owned or operated by
large firms whose interests do not always support lively critical
magazines and newsletters circulating widely. The boutique and
mass media magazines will circulate through different electronic
distribution channels that will maintain the segmentation of
these media markets. It is possible that some power will
shift from publishers to on-line information services, but
the economics of these services do not require a major shift of
power from publishers to readers.
Cheaper speech transmission can facilitate many interesting
services, and it can enable people outside of the mainstream to
reach many more readers. But it won't automatically give us a
bloodless democratic revolution.
------------------------------------------
Acknowledgments: I appreciate Robert Horowitz's invitation to
write this article, and discussions with Phil Agre, Steve
Fuller, Mitzi Lewison and Mark Poster that helped deepen its
content.
REFERENCES
Civille, Richard. 1995. The Internet and the poor. Public Access
to the Internet. pp. 175-207 in Brian Kahin and James
Keller (Eds). Public Access to the Internet. Cambridge, Ma:
MIT Press.
Foster, S Ronald. 1994. CATV systems are evolving to support a
wide range of services. Telecommunications (Americas
Edition) 28(1) (Jan):95-98.
Fuller, Steve. (In Press). "Cybermaterialism, or why there is no
free lunch in cyberspace." The Information Society. 11(4):
Garcia, D Linda. 1995. Common carriage: Access to the network in
a knowledge-based economy. Telecommunications (Americas
Edition) 29(1)(Jan):51-52.
Gilder, George. 1993. Dark fibers and free bandwidth.Regulation
16(2):18-24.
Gilder, George. 1995. Mike Milken & the two trillion dollar
opportunity: Telecosm. Forbes, ASAP Supplement (Apr 10):104-116.
Janah, Monua. 1995. I-way entrepreneurs. (information
superhighway) (Forbes ASAP) Forbes 155(5) (Feb 27):90-91.
Kling, Rob. 1992. "Behind the Terminal: The Critical Role of
Computing Infrastructure In Effective Information Systems'
Development and Use." Chapter 10 (pp: 153-201) in Challenges
and Strategies for Research in Systems Development. William
Cotterman and James Senn (Eds.) New York, John Wiley.
Kling, Rob and Lisa Covi. (in press). Electronic journals and
legitimate media in the systems of scholarly
communication. The Information Society. 11(4):
Kling, Rob and Roberta Lamb. (in press). "Analyzing Visions of
Electronic Publishing and Digital Libraries." in Scholarly
Publishing: The Electronic Frontier. Gregory B. Newby and
Robin M. Peek (Eds.) Cambridge Ma: The MIT Press.
Krantz, Michael. 1995. These gizmos really do work. Mediaweek v5,
n20 (May 15):28-32.
Nollinger, Mark. 1995. America, Online! Wired 3.09 (September)
158-161, 199-204.
Schement, Jorge Reina and Terry Curtis. 1995. Tendencies and
tensions of the information age : the production and
distribution of information in the United States. New
Brunswick, N.J. : Transaction Publishers.
Underwood, Bill. 1995. Personal printers get professional. PC
World 13(8)(August):211-212, 215-220, 224, 228-230,232
Volokh, Eugene. (in press). Cheap Speech and What it Will Do.
The Communication Review.
_______________________________
1 The prices of computer equipment have declined steadily in
the last decades, while performance has improved and new
capabilities have been introduced. Even so, today there are no
commercial notebook computer -- at any price -- that offer the
ease, flexibility, and convenience that Volokh attributes to
electronic books. Further, costs have not declined as quickly,
for high end performance, as Volokh suggests. Even such
mundane activities, as printing, still seem to cost 2-4 cents
per page for paper and toners rather than Volokh's penny a
page estimate (Underwood, 1995:215). These differences seem
minor, except that even his estimates for a routine task are
off by a factor of two to four! The logic of his estimatates of
printing costs reflect the CyberPlatonic instinct to ignore the
systematic material conditions of human activities -- in this
case, the costs of printer ribbons, ink jets or laser toner.
2 Many people use these services for just one capability, such
as e-mail.
3 Factsheet 5 is also available on WWW
(http://www.nitv.net/mich/F5/f5index.html).
4 Factsheet 5, #56 page 37.
5 FactSheet 5 #56, page 11.
6 FactSheet 5 #56, page 10. 6
7 They would be available through WWW on CompuServe, but a reader
would have no help from CompuServe in finding them.
8 I have a hard time imagining that most of the people who read
novels like James Waller's "Bridges of Madison County" (102
weeks on the NY Times best seller list) turn to it for
information about rural bridge work's.
9 I don't like the term "demassification" because its poetic
clumsiness doesn't suggest a market of highly variety (
boutique) products that it identifies.
10 For example, in addition to general magazines about
huntin, there are sistinct speclty magzines for turkey
hunters and elek and moose hunters.
11 In 1995, a new on-line bookstore can open up on the WWW for
a few hundred thousand dollars, but the costs of effectively
advertising its presence so that hundreds of thousands of
people will use it routinely can be much higher.
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