Businesses in the Internet

How to earn money in the landscape of new media?

As in every market, the business model need some time to get maturation. This is even a more determinant factor in the context of new media, where the constant evolution and the changes are the engine of progress. Internet embraces two main business challenges, the ones related to the enterprises that emerge after the apparation of the Net and inside this medium, and the entrance of old communications companies which try to diversify their services and adapt themselves to the new media environment.

In many aspects, not only in the economic one but also in the social and creative, and in all the sides concerning the ways of production (creation of contents), distribution and consumption, old models usually doesn't work, is the case, for instance of the newspapers that tried to make the users to subscribe to their websites as the only way of reading their news and articles. Internet brings a new paradigm, where the citizen participation is farther bigger than in previous media. Manifestos about this topic like Wikinomics (Trapscott and Williams, 2006) and We-Think (Leadbeater, 2007) talk about the importance of collectivism, creativity (added value in production in a crowded market) and participation like the keys of business in the Internet. Van Dijck explains the economical theories of these two books: "these mantras (collectivism, creativity and participation) not only inform the new business models of the digital economy, but their declared cultural roots suggest and ideological paradigm shift that is about to restructure postindustrial societies and post-service economies."

The main problem in the business of new media is the huge expectations about the possible profits on it; these expectations don't use to become true, so the investment of the producers become big monetary losses. During the first and second year of the current decade, many businesses, result of the merging of 'traditional' media companies with new media enterprises, failed. This phenomenon was called the popping of the dot-com bubble: in a few years the valuation of the stock market of these enterprises increased enormously, producing a great overvaluation; as a result the value of the shares was unbalanced.

One of the best exaples of the collapse of dot-com enterprises is represented by the telecommunications company, Time Warner, with businesses in television broadcasting, filmed entertainment and publishing, which after two years of merging with the Internet service enterprise, America online (AOL), in 2002 had to face the greatest economic losses in the history of the company.

The failure of the management in the businesses on the Net caused a radical change on the speech of many academics about the possibilities of a great social and economical shift due to the digital technologyes of communication. Henry Jenkins points out in his essay, Convergence Culture, that after the general disappointment caused by the dot-com crash and the first reaction of skepticism avout the possibilities of digital revolution is based on the cooperation and interaction of old and new media in more complex ways than was supposed to be at the beginning, that is simply the absorption and displacement of old media by new media. "The digital revolution paradigm claimed that new media was to change everything. After the dot-com crash, the tendency was to imagine that new media had chenged nothing. As with so many things about the current media environment, the truth lay somewhere in between".

Most of the current successful businesses have to do with the collectivity and the participation of users. This is for instance, the case of Youtube or social networks like Facebook, whose young creators are now multimillionaire. In many ocassions this websites don't have a particular business model, apart from the value that are used for millions of people, and even if they have advertisements (banners or any other kind of publicity) obtain the greater profits, when they are acquired by bigger groups. The aforementioned firm Youtube, was bought in 2006 by Google for 1.650 millions of dollars.

On the other hand, we are doomed to repeat past mistakes, and some sectors of the industry of new media still has to crash in order to improve the management. Some analysts have predicted the popping of the Tablet bubble for this year. Maybe Apple with the iPad will not be really who lose out, because it has a preminent position in this market. However, the fact that the supply will be propably much greater than the demand (almost the double according to the predictions) means that other companies like Motorola or RIM will have to face important losses.

As Pierre Lévy says referring to Collective Intelligence, "the more we are able to form intelligent communities, as open-minded, cognitive subjects capable of initiative, imagination and rapid response, the more we will be able to ensure our success in a highly competitive environment", and this is completely applicable to the new media. The possibilities of success are greater here than in old media, make a business is accessible to anyone who has an idea.

Henri Jenkins, Convergence Culture

Pierre Lévy, Collective Intelligence

VanDijck and Nieborg, Wikinomiks and its discontents: a critical analysis of Web 2.0 business manifestos.