is the media industry doomed?

Filed in archive Global Economy on February 22, 2004

Eli Noam predicts in a FT article the failure of the media industry to adapt to the ongoing commodization in the industry.

"The basic structural reason for this problem is that information products are characterised by high fixed costs and low marginal costs. They are expensive to produce but cheap to reproduce and distribute, and therefore exhibit strong economies of scale with incentives to an over-supply. Second, more information products are continuously being offered to users. And information products and services are becoming more "commodified", open, and competitive."

While he rightly describes a trend ongoing, he dismisses that the market for information is growing in volume and in importance. Relevant, real-time information is now crucial too millions of business all over the world. The right piece at the right time now saves millions in many businesses not only in the financial sector. Volatility is likely to remain no doubt, but as media business models will considerably change with the information age, media as the business of information distribution will be even more a driving force with many new business models to evolve. Change or failure of some also means chances to many other entrepreneurs...

Jeff Jarvis adds many more good points to the discussion.