The Changing Supply Side of Media

Economic theory is based on supply and demand. A change in supply, which could be a change in the value of any key determinants such as the price of inputs, the state of technology, and the number of suppliers, causes the equilibrium price to change (Media Economics, 48-50). In the case if digital media, those elements are very much related; technology clearly changed the number of suppliers as well as the price of inputs.

What surprised me the most is the relatively little attention to consumer’s direct participation in the supply side, which appears to be among the most disruptive forces. Wikipedia is such an example. In the old days, dictionaries were the work of a group of respected scholars, who often work for years behind closed doors. Wikipedia is so successful because in many cases, the speed and wisdom of the crowd is far more dynamic and superior to limited scope offered by a few professionals. And it is hard to distinguish supply from demand – consumers are acting as suppliers at the same time.

That is not to say, consumer participation will necessarily fully replace all forms of supply in media. As the saying goes, content is king. Technology typically does not replace content; it threatens distribution. Consumer generated content can be more disruptive to the supply side.

So what makes “new media” successful? Facebook is a prime example here; it combines a technology platform with user generated content. Technology wise, it is very easy to create a similar distribution platform. But it is really the combination of supply and demand that makes its first mover advantage so powerful. Twitter is much the same way. The changing supply side of media also has a non-economical dimension which is a game changer. I hope to explore that with the learning ahead.