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The Media Industry's Structural Transformation in Capital- Ism and the Role of the State: Media Economics in the Age of Digita

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The Media Industry's Structural Transformation in Capital- Ism and the Role of the State: Media Economics in the Age of Digita tripleC 14(1): 18–47, 2015 http://www.triple-c.at The Media Industry’s Structural Transformation in Capital- ism and the Role of the State: Media Economics in the Age of Digital Communications Manfred Knoche University of Salzburg, Salzburg, Austria, [email protected], http://www.medienoekonomie.at, @MedOek Translation from German: Christian Fuchs and Marisol Sandoval Abstract: This paper discusses how the capitalist media industry has been structurally transformed in the age of digital communications. It takes an approach that is grounded in the Marxian critique of the political economy of the media. It draws a distinction between media capital, media-oriented capital, media infrastructure capital and media-external capital as the forms of capital in the media industry. The arti- cle identifies four capital strategies that media capital tends to use in order to try to maximise profits: a) The substitution of “old” by “new” media technology, b) the introduction of new transmission chan- nels for “old” media products, c) the definition of new property rights for media sectors and networks, d) the reduction of production and transaction costs. The drive to profit maximization is at the heart of the capitalist media industry’s structural transformation. This work also discusses the tendency to the universalization of the media system in the digital age and the economic contradictions arising from it. It identifies activity fields of the media industry’s structural transformation and shows how the concen- tration of the capitalist media markets is an essential, contradictory and inherent feature of the capital- ist media system and its structural transformation. The paper identifies six causes of why capital seeks to employ capital strategies that result in the me- dia industry’s structural transformation. They include market saturation, overaccumulation, the tenden- cy of the profit rate to fall, capital-concentration, competition pressure, and advertising. The paper finally discusses the role of the state as an agent of capital in general and media capital in particular. It discusses the role of the state in privatisations, neoliberal deregulation, the formation of national com- petitive states, and various benefits that the state provides for media capital. This contribution shows that capital and capitalism are the main structural transformers of the media and communications system. For understanding these transformations, we need an approach that is grounded in Marx’s critique of the political economy. Keywords: critique of the political economy of the media, capitalism, media industry, structural transformation, the state, media concentration Acknowledgement: Originally published in German: Knoche, Manfred. 1999. Das Kapital als Strukturwandler der Medienindustrie—und der Staat als sein Agent? Lehrstücke der Medienökonomie im Zeitalter digitaler Kommu- nikation. In Strukturwandel der Medienwirtschaft im Zeitalter digitaler Kommunikation, edited by Manfred Knoche and Gabriele Siegert, 149–193. München: Verlag Reinhard Fischer. Translation from German to English with permission by Nomos-Verlag. Translators’ Note Manfred Knoche is the most important Marxist political economist of the media in the Ger- man-speaking world (see Scheu 2012). He has been a close observer and critical analyst of the media in capitalism over five decades, which resulted in over 100 publications. His aca- demic work started with an analysis of the content of daily newspapers in Germany (Knoche 1968), reflected developments such as the rise of new social movements and neoliberalism, the globalisation of capitalism, and the digitisation of the media, and has most recently in- cluded an analysis of the political economy of open access online publishing and its poten- tials for the decapitalisation of the media and the liberation of the media from capital accumu- Accepted: November 19, 2015 Published: December 20, 2015 CC: Creative Commons License, 2015. 19 Manfred Knoche lation models (see Knoche 2014). He has emphasised the importance of approaching media economics as a Marxist political economy of social communication in order understand, cri- tique and confront 21st century challenges (see Knoche 1999d). We have both been colleagues of Manfred Knoche at the University of Salzburg until we left Salzburg in 2010 and during that time had the opportunity for many inspiring discussions with him about contemporary issues in Marxist theory and the critique of the political econo- my of the media. In the article we chose to translate form German into English, Manfred Knoche develops a highly anticipatory argument about the media, capitalism and the state in the early 21st centu- ry. The paper was published in 1999 and remains absolutely important in 2015. Reading it today shows that many of the tendencies that Knoche described in 1999, partly as mere po- tentials, have been exacerbated. The article argues that capitalism in general and media capitalism in particular are driven by capitalists’ compulsion to accumulate capital and there- by maximise profits. Manfred Knoche analyses the rational behaviour of media capitalists, i.e. how they develop, follow and apply various capital strategies in order to try to maximise profits, which is a structural matter of life-or-death for capital. This drive has brought about structural transformations of the capitalist media industry that Manfred Knoche analyses in detail. This rational behaviour of capital in the form of capital strategies however in a antago- nistic manner turns, as he shows, into its opposite, namely irrationalities such as crises, class inequalities, precariousness, and media monopolies and oligopolies that threaten democra- cy. In capitalism, rationality in a negative dialectic turns into irrationality because capitalism is an irrational system organised in a highly rational manner. The drive for universal commodification requires the development of the technical and therefore also the communicative productive forces. Knoche shows that the tendency for the creation of a universal media system that is associated with digital media and the Internet is a consequence of capital’s drive to accumulate, but at the same time contradicts this drive and creates potentials for non-commercial digital media use that render capitalist media po- tentially superfluous. Such a universal media system, in which the production, distribution and consumption of information converge and is achieved over one medium, has become partly a reality with the rise of digital media and the Internet. What is today called social me- dia enables the convergence of the production and consumption of information, of work time/leisure time, and of the private sphere and the public sphere. Within capitalism, these universalisation tendencies of the media advanced by the devel- opment of the communicative productive forces remain however, as Manfred Knoche shows, highly antagonistic. There is for example an antagonism between the traditional media indus- try and the openness industry of Google, Facebook, and other online companies that foster open distribution of content online and make profits with targeted advertising, which ques- tions the profits made by traditional advertising in the printed press and the commodification of cultural content that can easily be digitised and distributed globally online. Global advertis- ing revenue has in the years 2009–2013 increased on average per year by 18.9% on the Internet, whereas it has decreased on average annually by 1.3% in newspapers (Ofcom 2014, 22). The digital universalisation of data and information has resulted in an industry conflict between “old” and “new” media accumulation strategies. Also new forms of non-commercial media have emerged, as Knoche anticipated in this ar- ticle from 1999. This becomes for example today evident in the realm of online publishing: Non-commercial, non-profit open access journals such as tripleC question the capitalist pub- lishing industry’s capital strategy to use copyrights and sell contents via subscriptions. It has the potential to, as Knoche (2014) calls it, decapitalise the academic publishing system. The enemy does however not sleep: In the meantime, many capitalist open access publishers have emerged and used the very capital strategies that Knoche describes in order to charge authors or their institutions article and book processing charges so that they can accumulate capital. This is especially cynical at times of neoliberal austerity, in which public resources are drained and only rich universities and individuals can pay such fees, which advances academic inequality. CC: Creative Commons License, 2015. tripleC 14(1): 18–47, 2015 20 Knoche in his article argues that capitalism in general and therefore also the capitalist media industry is inherently crisis-prone. The new world economic crisis that started in 2008 has violently shown the importance of this assumption. Especially the traditional publishing industry’s crisis has in this context been deepened. Finally, Knoche also stresses the inter- connection of capitalist power and state power. Neoliberal austerity measures as reaction to the crisis have once more shown the importance of the state in capitalism. Privatisations of communications, such as of the Post Office in Britain or the (temporary) abolishment of pub- lic service broadcasting in Greece by a right-wing government, show the significant role of the state and once again illustrate its tendency to act in the interest
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