New Media Economics
The Internet’s Effects on Media Economies
The challenge to media economics is one of production. When print media was the only widely available media, the concept was simple: Sell newspapers, magazines, and books. Sales of these goods could be gauged like any other product, although in media’s case, the good was intangible—information—rather than the physical paper and ink. The transition from physical media to broadcast media presented a new challenge, because consumers did not pay money for radio and, later, television programming; instead, the price was an interruption every so often by a “word from our sponsors.” However, even this practice hearkened back to the world of print media; just as newspapers and magazines sell advertising space, radio and television networks sell space on their airwaves.
The fundamental shift in Internet economics has been the miniscule price of online space compared to that in print or broadcast media. Combined with the instantaneous proliferation of information, the Internet seems to pose a grave threat to traditional media. Media outlets have responded by establishing themselves online, and it is now practically unheard of for any media company to lack an Internet presence. Companies’ archives have opened up, and aside from a few holdouts such as the Wall Street Journal, nearly every newspaper allows free online access, although some papers, like The New York Times, are going to experiment with a paid subscription model to solve the problem of dwindling revenues. Newspapers now offer video content online, and radio and television networks have published traditional text-and-photo stories. Through Internet portals, media companies have synergized their content; they are no longer merely television networks or local newspapers but instead are quickly moving to become a little bit of everything.
Online Synergy
Although the Internet has had many effects on media economics, ranging from media piracy to the lowered costs of distribution, arguably the greatest effect has been the synergy of different forms of media. For example, the front page of The New York Times website contains multiple short video clips, and the front page of Fox News’ website contains clips from the cable television network along with relevant articles written by FoxNews.com staff. Media outlets offer many of these services for free to consumers, if for no other reason than because consumers have become accustomed to getting this content for free elsewhere on the Internet.
The Internet has also drastically changed the way that companies’ advertising models operate. During the early years of the Internet, many web ads were geared toward sites such as Amazon and eBay, where consumers purchased products or services. Today, however, many ads—particularly on sites for high-profile media outlets such as Fox News and The New York Times—are for products that are not typically bought online, such as cars or major credit cards. However, another category of advertising that is tailored toward individual web pages has also gained prominence on the Internet. In this form of advertising, marketers match advertisers with particular keywords on particular web pages. For example, if the page is a how-to guide for fixing a refrigerator, some of the targeted ads might be for local refrigerator repair shops.
Internet by Google
Search-engine company Google has been working to perfect this type of targeted advertising search. Low-cost text ads may appear next to its search results, on various web pages, and in the sidebar of its free web-based email service, Gmail. More than just using algorithms to sort through massive amounts of data and matching advertising to content, Google has lowered the cost barrier to advertising, as well as the volume barrier to hosting advertising. Because Google automatically matches sites with advertisers, an independent site can sign up for its advertising service and get paid for each person who follows the text links. Likewise, relatively small companies can buy advertising space in specialized niches without having to go through a large-volume ad buyer. This business has proven extremely productive; the bulk of Google’s revenue comes from advertising even as it gives away services such as email and document
sharing.
Problems of Digital Delivery
Search engines like Google and video-sharing sites like YouTube (which is owned by Google) allow access to online information, but they do not actually produce that information themselves. Thus, the propensity of these sites to gather information and then make it available to consumers free of charge does not necessarily sit well with those who financially depend on the sale of this information.
Google News
One of Google’s more controversial projects is Google News, a news aggregator that automatically collects news stories from various sources on the Internet. This service allows users to view the latest news from many different sources conveniently in one location. However, the project has been met with opposition from a number of those news sources, who contend that Google has infringed on their copyrights and cost them revenue. The Wall Street Journal has been one of the more vocal critics of Google News. In April 2009, editor Robert Thomson said that news aggregators are “best described as parasites.” In December 2009, Google responded to these complaints by allowing publishers to set a limit on the number of articles per day a reader can view for free through Google.
Music and File Sharing
The recent confrontation between Google and the traditional news media is only one of many problems resulting from digital technology. Digital technology can create exact copies of data so that one copy cannot be distinguished from the other. In other words, although a printed book might be nicer than a photocopy of that book, a digitization of the book is exactly the same as all other digitized copies and can be transmitted almost instantly. Similarly, although cassette tape copies of recorded music offered lower sound fidelity than the originals, the emergence of writable CD technology during the 1990s allowed for the creation of a copy of a digital audio CD that was identical to the original.
As data storage and transmission costs dropped, CDs no longer had to be physically copied to other CDs. With the advent of MP3 digital encoding, the music information on a CD could be compressed into a relatively small, portable format that could be transmitted easily over the Internet, and music file sharing took off. Although these recordings were not exactly the same as their CD-quality counterparts, most listeners could not tell the difference—or they just didn’t care, because they were now able to share music files conveniently and for free. The practice of transmitting music over the Internet through services such as Napster quickly ballooned.
Video Streaming
As high-bandwidth Internet connections proliferated, video-sharing and streaming sites such as YouTube started up. Although these sites were supposedly intended for users to upload and share their own amateur videos, one of the big draws of the site was the high quantity of television show episodes, music videos, and other commercial content that has been posted illegally. The replication potential inherent in digital technology combined with online transmission has caused a sea change in media industries that rely on income directly from consumers, such as books and recorded music. However, as the next section will show, the shift of media and information to the Internet can pose the risk of a digital divide, where those without Internet access are at an even greater disadvantage than they were before.
Digital Millennium Copyright Act (DMCA)
Producers of content are not without protection under the law. In 1998, Congress enacted the Digital Millennium Copyright Act (DMCA) in an effort to stop the illegal copying and distribution of copyrighted material. The legislation defined many digital gray areas that previously may not have been explicitly covered, such as circumventing antipiracy measures in commercial software; requiring webcasters to pay licensing fees to record companies; and exempting libraries, archives, and some other nonprofit institutions from some of these rules under certain circumstances. Since 1998, this legislation has been the bedrock of a variety of claims against sites such as YouTube. Under the law, copyright holders may send letters to Internet hosts distributing their copyrighted material. Certifying that they have a good-faith belief that the host does not have prior permission to distribute the content, copyright holders may request a removal of that material from the site.
Although much of the law has to do with the rights of copyright holders to request the removal of their works from unlicensed sites, much of the DMCA also enacts protections for Internet service providers (ISPs). Although before there had been some question as to whether ISPs could be charged with copyright infringement merely for allowing reproductions to use their bandwidth, the DMCA made it clear that ISPs are not expected to police their own bandwidth for illegal use and are therefore not liable. Although the DMCA is not necessarily to everyone’s liking—requiring individual takedown notices is time-consuming for corporations, and the relative lack of safeguards can allow large companies to bully ISPs into shutting down smaller sites, given a good-faith notice—the protections and clarifications that it has created have cleared up some of the confusion surrounding digital media. However, as the price of bandwidth drastically drops and as more media goes digital, copyright laws will inevitably need to be amended again.
Information Economy
The modern theory of the information economy was expressed in the 1998 publication of Information Rules: A Strategic Guide to the Network Economy, written by Cal Shapiro, an economics professor at University of California, Berkeley, and Hal Varian, now chief economist at Google. Their fundamental argument was simple: “Technology changes. Economic laws do not.” [1] While economic laws may not change, the fundamentals of the business of information are far different from the fundamentals of most traditional businesses. For example, the cost of producing a single sandwich is relatively consistent, per sandwich, with the cost of producing multiple sandwiches but information works differently. With a newspaper, the first copy costs are far higher than the marginal costs of secondary copies. The high first costs and low marginal costs of the information economy contribute very heavily to the potential for large corporations gaining dominance. The confluence of these two costs creates a potential economy of scale, favoring the larger of the competitors.
In addition, information is what economists refer to as an experience good, meaning that consumers must actually experience the good to judge its value. The problem with information is that the experience is the good; how do you know, for example, that a movie has high-quality acting and an interesting plot before you’ve watched it? The solution to this is branding.
Although it may be difficult to judge a movie before watching, knowing that a given film was made by a certain director or stars an actor you like increases its value. Marketers use movie trailers, press coverage, and other marketing tools to communicate this branding message in the hopes of convincing you to watch the films they are promoting.
Another important facet of information technology is the associated switching costs. When economists consider switching costs, they take into account the difference between the cost of one technology and the cost of another. If this difference is less than the cost it would take to switch—for information, the cost of moving all of the relevant data to the new technology—then it is deemed possible to switch. A classic example is moving a music collection from vinyl LPs to CDs. For a consumer to switch systems—that is, to buy a CD player and stereo—that person would also have to rebuild his or her entire music collection with the new format. Luckily for the CD player, the increase in convenience and quality was great enough that most consumers were inclined to switch technologies; however, as is apparent to anyone going to a thrift store or garage sale, old technologies are still being used because the information on the records was important enough for some people to keep them around.
Regulation of the Information Economy
Public policy and governmental intervention exacerbate an already complicated system of information economics, but for good reason—unlike typical goods and services, the information economy has many significant side effects. The consequences of one hamburger chain outcompeting or buying up all other hamburger chains would surely be fairly drastic for the hamburger-loving world, but not altogether disastrous; there would be only one type of hamburger, but there would still be many other types of fast food remaining. On the contrary, the consequences of monopolization by one media company could be alarming. Because distributed information can influence public policy and public opinion, those in charge of the government have an interest in ensuring fair distribution of that information. The bias toward free markets has been mitigated—even in the United States—when it comes to the information economy.
The Federal Communications Commission (FCC) is largely responsible for this regulation. Established by the Communications Act of 1934, the FCC is charged with “regulating interstate and international communications” for nearly every medium except for print. The FCC also attempts to maintain a nonpartisan, or at least bipartisan, outlook, with a maximum of three of its five commissioners belonging to the same political party. Although the FCC controls many important things—making sure that electronic devices don’t emit radio waves that interfere with other important tools, for example—some of its most important and most contentious responsibilities relate to the media.
As the guardian of the public interest, the FCC has called for more competition among media companies; for example, the ongoing litigation of the merger between Comcast and NBC is not concerned with whether consumers will like streaming Hulu over the Internet, but rather whether one company should own both the content and the mode of distribution. The public good is not served if consumers’ ability to choose is taken away when a service provider like Comcast restricts access to only the content that the provider owns, especially if that service provider is the consumers’ only choice. In other words, the idea of public good is concerned not with the end result of competition, but with its process. The FCC protects consumers’ ability to choose from a wide variety of media products, and the competition among media producers hopefully results in better products for consumers. If the end result is that all customers choose Hulu anyway, either because it has the shows they like or because it offers the best video-streaming capability, then the process has worked to create the best possible model; there was a winner, and it was a fair fight.
A Brief History of Antitrust Legislation
The main tool that the government employs to keep healthy competition in the information marketplace is antitrust legislation. The seminal Sherman Antitrust Act of 1890 helped establish modern U.S. antitrust legislation. Although originally intended to dissolve the monopolistic enterprises of late-19th-century industrialists such as Andrew Carnegie and John D. Rockefeller, the law’s basic principles have applied to media companies as well. The antitrust office has also grown since the original Sherman Act; although the office of the attorney general originally brought antitrust lawsuits after the act’s passage, this responsibility shifted to its own Antitrust Division in 1933 under President Franklin D. Roosevelt.
The Sherman Antitrust Act of 1890 outlined many propositions and goals that legislators deemed necessary to foster a competitive marketplace. For example, Chapter 1, Section 2, of the act states that “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States … shall be deemed guilty of a felony.” This establishment of monopolization as a felony was remarkable; before, free-market capitalism was the rule regardless of the public good, making the Sherman Antitrust Act an early proponent of the welfare of people at large.
Two additional pieces of legislation, the Clayton Antitrust Act of 1911 and the Celler-Kefauver Act of 1950, refined the Sherman Antitrust Act in order to make the system of antitrust suits work more effectively. For instance, the Clayton Act makes it unlawful for one company to “acquire … the whole or any part of the stock” of another company when the result would encourage the development of a monopoly. More than just busting trusts, the Clayton Act thus seeks to stop anticompetitive practices before they take hold. The Celler-Kefauver Act made it more difficult for corporations to get around antitrust legislation; while the Clayton Act allowed the government to regulate the purchase of a competitor’s stock, the Celler- Kefauver Act extended this to include the competitor’s assets.
Deregulation and the Telecommunications Act of 1996
Although the early part of the 20th century seemed to be devoted to breaking up trusts and keeping monopolies in check, the media—particularly in the latter part of the century—was still able to move steadily toward conglomeration (companies joining together to form a larger, more diversified corporations). Widespread deregulation (the removal of legal regulations on an industry) took place during the 1980s, in large part through the efforts of free-market economists who argued that deregulation would foster more competition in the information marketplace. However, possibly due in large part to the media economy’s focus on economies of scale, this was not the case in practice. Companies became increasingly conglomerated, and corporations such as Comcast and Time Warner came to dominate the marketplace. The Telecommunications Act of 1996 helped solidify this trend. Although touted as a way to let “any communications business compete in any market against any other” and to foster competition, this act in practice sped up the conglomeration of media.
Media Conglomerates and Vertical Integration
The extension of the Telecommunications Act of 1996 of corporate abilities to vertically integrate was a primary driving factor behind this increased conglomeration. Vertical integration has proven particularly useful for media companies due to their high first costs and low marginal costs. For example, a television company that both produces and distributes content can run the same program on two different channels for nearly the same cost as only broadcasting it on one. Because of the localized nature of broadcast media, two broadcast television channels will likely reach different geographical areas. This results in cost savings for the company, but also somewhat decreases local diversity in media broadcasting. In fact, the Telecommunications Act made some changes in authority for these local markets. The concept of Section 253 is that no state may prohibit “the ability of any entity to provide any interstate or intrastate telecommunications service.” Thus, since state and local governments cannot prohibit any company from entering into a marketplace, there are checks on the amount of a local market that any one company can reach. In addition, the Telecommunications Act capped the share of U.S. television audience for any one company at 35 percent. However, the passage of additional legislation in 1999 allowing any one company to own two television stations in a single market greatly diluted the effect of this initial ruling. Although CBS, NBC, and ABC may be declining in popularity, they “still offer the only means of reaching a genuinely mass television audience” in the country.
Corporate Advantages of Vertical Integration
Almost all of the major media players in today’s market practice extensive vertical integration through either administrative management or content integration. Administrative management refers to the potential for divisions of a single company to share the same higher-level management structure, which presents opportunities for increased operational efficiency. For example, Disney manages theme parks and movie studios. Although these two industries are not very closely connected through content, both are large, multinational ventures. Placing both of these divisions under a single corporation allows them to share certain structural similarities, accounting practices, and any other administrative resources that may be helpful across multiple industries. Content integration—an important practice for media industries—is the ability of these companies to use the same content across multiple platforms. Disney’s theme parks would lose much of their charm and meaning without Mickey Mouse and Cinderella’s castle; the integration of these two industries—Disney’s theme parks and Disney’s animated characters—proves profitable for both. Behind the scenes, Disney is also able to reap some excellent benefits from their consolidation. For example, Disney could release a movie through its studio, and then immediately book the stars on news programs that air on Disney-owned broadcast television network ABC. Beyond just the ABC broadcast network, Disney also has many cable channels that it can use to directly market its movies and products to the targeted demographics.
Unlike a competitor that might be wary of promoting a Disney movie, Disney’s ownership of many different media outlets allows it to single-handedly reach a large audience.
Ethical Issues of Vertical Integration
However, this high level of vertical integration raises several ethical concerns. In the above situation, for example, Disney could entice reviewers on its television outlets to give positive reviews to a Disney studio movie. Therefore, this potential for misused trust and erroneous information could be harmful. In many ways, the conglomeration of media companies takes place behind the scenes, with only a minority of consumers aware of vertically integrated holdings. Media companies often try to foster a sense of independence from a larger corporation. Of course, there are exceptions to this rule; the NBC sitcom 30 Rock often delves into the troubles of running a satirical sketch-comedy show (a parody of NBC’s Saturday Night Live) under the ownership of GE, NBC’s real-life owner.
The Issues of the Internet
Although media companies are steadily turning into larger businesses than ever before, many of them have nevertheless fallen on hard times. The instant, free content of the Internet is largely blamed for this decline. From the shift of classified advertising from newspapers to free online services to the decline in physical music sales in favor of digital downloads, the Internet has transformed traditional media economics.
One of the main issues with an unregulated Internet is that it allows digital files to be replicated and sent anywhere else in the world. Large music companies, which traditionally made almost all of their money from selling physical music formats such as vinyl records or compact discs, find themselves at a disadvantage. Consumers can share and distribute music files to anyone, and Internet service providers are exempted from liability under the DMCA. With providers freed of liability and media consumption a driving factor in the rise of high-speed Internet services, ISPs have no incentive to deter illegal sharing along with legal downloads.
Digital Downloads and DRM
Although music companies have had some success selling music through digital outlets, they have not been pioneers in online music sales. Rather, technology companies such as Apple and Amazon.com, sensing a large market for digital downloads coupled with a sleek delivery system, have led the way. Already accustomed to downloading MP3s, consumers readily adopted the model. However, record companies believed that the lack of digital rights management (DRM) protection offered by MP3s represented a major downside.
Apple provided a way to strike a compromise between accessibility and rights control. Having already captured much of the personal digital audio player market with the iPod that uses other Apple products, Apple has also long prided itself on creating highly integrated systems of both software and hardware. Because so many people were already using the iPod, Apple had a huge potential market for a music store even if it offered DRM-locked tracks that would only play on Apple devices. This inflexibility even offered a small benefit for consumers; Apple succeeded in convincing companies to price their digital downloads lower than CDs.
This compromise may have sold a lot of iPods and MP3s, but it did not satisfy the record companies. When consumers started to download one hit single for 99 cents—rather than buying the whole album for $15 on CD—the music industry felt the pain. Still, huge monetary advances in digital music have taken place. Between 2004 and 2008, digital music sales increased from $187 million to $1.8 billion.
Piracy
The music industry has wasted no amount of firepower to blame piracy for the decline in album sales: “There’s no minimizing the impact of illegal file-sharing. It robs songwriters and recording artists of their livelihoods, and it ultimately undermines the future of music itself,” said Cary Sherman, president of the Recording Industry Association of America. [8] However, economists see the truth of the matter as significantly more ambiguous. Analyzing over 10,000 weeks of data distributed over many albums, a pair of economists at the Harvard Business School and University of North Carolina found that “Downloads have an effect on sales which is statistically indistinguishable from zero.” Either way, two things are clear: Consumers are willing to pay for digital music, and digital downloads are on the market to stay for the foreseeable future.
Globalization of Media
The media industry is, in many ways, perfect for globalization, or the spread of global trade without regard for traditional political borders. As discussed earlier, the low marginal costs of media mean that reaching a wider market creates much larger profit margins for media companies. Because information is not a physical good, shipping costs are generally inconsequential. Finally, the global reach of media allows it to be relevant in many different countries.
However, some have argued that media is actually a partial cause of globalization, rather than just another globalized industry. Media is largely a cultural product, and the transfer of such a product is likely to have an influence on the recipient’s culture. Increasingly, technology has also been propelling globalization. Technology allows for quick communication, fast and coordinated transport, and efficient mass marketing, all of which have allowed globalization—especially globalized media—to take hold.
Globalized Culture, Globalized Markets
Much globalized media content comes from the West, particularly from the United States. Driven by advertising, U.S. culture and media have a strong consumerist bent (meaning that the ever-increasing consumption of goods is encouraged as an economic virtue), thereby possibly causing foreign cultures to increasingly develop consumerist ideals. Therefore, the globalization of media could not only provide content to a foreign country but may also create demand for U.S. products. Some believe that this will “contribute to a one-way transmission of ideas and values that result in the displacement of indigenous cultures.”
Globalization as a world economic trend generally refers to the lowering of economic trade borders, but it has much to do with culture as well. Just as transfer of industry and technology often encourages outside influence through the influx of foreign money into the economy, the transfer of culture opens up these same markets. As globalization takes hold and a particular community becomes more like the United States economically, this community may also come to adopt and personalize U.S. cultural values. The outcome of this spread can be homogenization (the local culture becomes more like the culture of the United States) or heterogenization (aspects of U.S. culture come to exist alongside local culture, causing the culture to become more diverse), or even both, depending on the specific situation.
Making sense of this range of possibilities can be difficult, but it helps to realize that a mix of many different factors is involved. Because of cultural differences, globalization of media follows a model unlike that of the globalization of other products. On the most basic level, much of media is language and culture based and, as such, does not necessarily translate well to foreign countries. Thus, media globalization often occurs on a more structural level, following broader “ways of organizing and creating media. In this sense, a media company can have many different culturally specific brands and still maintain an economically globalized corporate structure.
Vertical Integration and Globalization
Because globalization has as much to do with the corporate structure of a media company as with the products that a media company produces, vertical integration in multinational media companies becomes a necessary aspect of studying globalized media. Many large media companies practice vertical integration: Newspaper chains take care of their own reporting, printing, and distribution; television companies control their own production and broadcasting; and even small film studios often have parent companies that handle international distribution.
A media company often benefits greatly from vertical integration and globalization. Because of the proliferation of U.S. culture abroad, media outlets are able to use many of the same distribution structures with few changes. Because media rely on the speedy ability to react to current events and trends, a vertically integrated company can do all of this in a globalized rather than a localized marketplace; different branches of the company are readily able to handle different markets. Further, production values for single-country distribution are basically the same as those for multiple countries, so vertical integration allows, for example, a single film studio to make higher-budget movies than it may otherwise be able to produce without a distribution company that has as a global reach.
Foreign Markets and Titanic
Worth considering is the reciprocal influence of foreign culture on American culture. Certainly, American culture is increasingly exported around the world thanks to globalization, and many U.S. media outlets count strongly on their ability to sell their product in foreign markets. But what Americans consider their own culture has in fact been tailored to the tastes not only of U.S. citizens but also to those of worldwide audiences. The profit potential of foreign markets is enormous: If a movie does well abroad, for example, it might make up for a weak stateside showing, and may even drive interest in the movie in the United States.
One prime example of this phenomenon of global culture and marketing is James Cameron’s 1997 film Titanic. One of the most expensive movies ever produced up to that point, with an official budget of around $200 million, Titanic was not anticipated to perform particularly well at the U.S. box office. Rather, predictions of foreign box-office receipts allowed the movie to be made. Of the total box-office receipts of Titanic, only about one-third came from the domestic market. Although Titanic became the highest-grossing film up to that point, it grossed just $140 million more domestically than Star Wars did 20 years earlier. The difference was in the foreign market. While Star Wars made about the same amount—$300 million—in both the domestic and foreign markets, Titanic grossed $1.2 billion in foreign box-office receipts. In all, the movie came close to hitting the $2 billion mark, and now sits in the No. 2 position behind Cameron’s 2009 blockbuster, Avatar.
One reason that U.S. studios can make these kinds of arrangements is their well-developed ties with the worldwide movie industry. Hollywood studios have agreements with theaters all over the world to show their films. By contrast, the foreign market for French films is not nearly as established, as the industry tends to be partially subsidized by the French government. Theaters showing Hollywood studio films in France funnel portions of their box-office receipts to fund French films. However, Hollywood has lobbied the World Trade Organization—a largely pro-globalization group that pushes for fewer market restrictions—to rule that this French subsidy is an unfair restriction on trade. In many ways, globalization presents legitimate concerns about the endangerment of indigenous culture. Yet simple concerns over the transfer of culture are not the only or even the biggest worries caused by the spread of American culture and values.
Cultural Imperialism
Cultural imperialism was around long before the United States became a world power. In its broadest strokes, imperialism describes the ways that one nation asserts its power over another. Just as imperial Britain economically ruled the American colonists, so did Britain strongly influence the culture of the colonies. The culture was still a mix of nationalities—many Dutch and Germans settled as well—but the ruling majority of ex-Britons led British culture to generally take over. Today, cultural imperialism tends to describe the United States’ role as a cultural superpower throughout the world. American movie studios are generally much more successful than their foreign counterparts not only because of their business models but also because the concept of Hollywood has become one of the modern worldwide movie business’s defining traits. Multinational, nongovernmental corporations can now drive global culture. This is neither entirely good nor entirely bad. On one hand, foreign cultural institutions can adopt successful American business models, and corporations are largely willing to do whatever makes them the most money in a particular market—whether that means giving local people a shot at making movies or making multicultural films such as 2008’s Slumdog Millionaire. However, cultural imperialism has potential negative effects as well. From the spread of Western ideals of beauty to the possible decline of local cultures around the world, cultural imperialism can have a quick and devastating effect.
Cultural Hegemony
To begin discussing the topic of cultural imperialism, it is important to look at the ideas of one of its founding theorists, Antonio Gramsci. Strongly influenced by the theories and writings of Karl Marx, Italian philosopher and critic Gramsci originated the idea of cultural hegemony to describe the power of one group over another. Unlike Marx, who believed that the workers of the world would eventually unite and overthrow capitalism, Gramsci instead argued that culture and the media exert such a powerful influence on society that they can actually influence workers to buy into a system that is not economically advantageous to them. This argument that media can influence culture and politics is typified in the notion of the American Dream. In this rags-to-riches tale, hard work and talent can lead to a successful life no matter where one starts. Of course, there is some truth to this, but it is by far the exception rather than the rule.
Marx’s ideas remained at the heart of Gramsci’s beliefs. According to Gramsci’s notion, the hegemons of capitalism—those who control the capital—can assert economic power, while the hegemons of culture can assert cultural power. This concept of culture is rooted in Marxist class struggle, in which one group is dominated by another and conflict arises. Gramsci’s concept of cultural hegemony is pertinent in the modern day not because of the likelihood of a local property-owning class oppressing the poor, but because of concern that rising globalization will permit one culture to so completely assert its power that it drives out all competitors.
Spreading American Tastes Through McDonaldization
A key danger of cultural imperialism is the possibility that American tastes will crowd out local cultures around the globe. The McDonaldization of the globe applies not just to its namesake, McDonald’s, with its franchises in seemingly every country, but to any industry that applies the technique of McDonald’s on a large scale. Coined by George Ritzer in his book The McDonaldization of Society (1993), the concept is rooted in the process of rationalization. With McDonaldization, four aspects of the business are taken to the extreme: efficiency, calculability, predictability, and control. These four things are four of the main aspects of free markets. Applying the concepts of an optimized financial market to cultural and human items such as food, McDonaldization enforces general standards and consistency throughout a global industry.
Unsurprisingly, McDonald’s is the prime example of this concept. Although the fast-food restaurant is somewhat different in every country—for example, Indian restaurants offer a pork-free, beef-free menu to accommodate regional religious practices—the same fundamental principles apply in a culturally specific way. The branding of the company is the same wherever it is; the “I’m lovin’ it” slogan is inescapable, and the Golden Arches are, according to Eric Schlosser in Fast Food Nation, “more widely recognized than the Christian cross.” Yet, more importantly, the business model of McDonald’s stays relatively the same from country to country. Although culturally specific variations exist, any McDonald’s in a particular area has basically the same menu as any other. In other words, wherever a consumer is likely to travel within a reasonable range, the menu options and the resulting product remain consistent.
McDonaldizing Media
Media works in an uncannily similar way to fast food. Just as the automation of fast food—from freeze-dried french fries to prewrapped salads—attempts to lower a product’s marginal costs, thus increasing profits, media outlets seek to achieve a certain degree of consistency that allows them to broadcast and sell the same product throughout the world with minimal changes. The idea that media actually spreads a culture, however, is controversial. In his book Cultural Imperialism, John Tomlinson argues that exported American culture is not necessarily imperialist because it does not push a cultural agenda; it seeks to make money from whatever cultural elements it can throughout the world. According to Tomlinson, “no one really disputes the dominant presence of Western multinational, and particularly American, media in the world: what is doubted is the cultural implications of this presence.”
There are, of course, by-products of American cultural exports throughout the world. American cultural mores, such as the Western standard of beauty, have increasingly made it into global media. As early as 1987, Nicholas Kristof wrote in The New York Times about a young Chinese woman who was planning to have an operation to make her eyes look rounder, more like the eyes of Caucasian women. Western styles—“newfangled delights like nylon stockings, pierced ears and eye shadow”—also began to replace the austere blue tunics of Mao-era China. The pervasiveness of cultural influence is difficult to track, however, as the young Chinese woman says that she wanted to have the surgery not because of Western looks but because “she thinks they are pretty.”
Cultural Imperialism, Resentment, and Terrorism
Not everyone views the spread of American tastes as a negative occurrence. During the early 21st century, much of the United States’ foreign policy stemmed from the idea that spreading freedom, democracy, and free-market capitalism through cultural influence around the world could cause hostile countries such as Iraq to adopt American ways of living and join the United States in the fight against global terrorism and tyranny. Although this plan did not succeed as hoped, it raises the question of whether Americans should truly be concerned about spreading their cultural system if they believe that it is an ideal one.
Speaking after the attacks of September 11, 2001, then-President George W. Bush presented two simple ideas to the U.S. populace: “They [terrorists] hate our freedoms,” and “Go shopping.” These twin ideals of personal freedom and economic activity are often held up as the prime exports of American culture. However, the idea that other local beliefs need to change may threaten people of other cultures.
Freedom, Democracy, and Rock ’n’ Roll
The spread of culture works in mysterious ways. Hollywood probably does not actually have a master plan to export the American way of life around the globe and displace local culture, just as American music may not necessarily be a progenitor of democratic government and economic cooperation. Rather, local cultures respond to the outside culture of U.S. media and democracy in many different ways. First of all, media are often much more flexible than believed; the successful exportation of the film Titanic was not an accident in which everyone in the world suddenly wanted to experience movies like an American. Rather, the film’s producers had judged that it would succeed on a world stage just as on a domestic stage.
Therefore, in some ways, U.S. media have become more widespread, and also more worldwide in focus. It could even be argued that American cultural exports promote intercultural understanding; after all, to sell to a culture, a business must first understand that culture.
By contrast, some local cultures around the world have taken to Western-style business models so greatly that they have created their own hybrid cultures. One well-known example of this is India’s Bollywood film industry. Combining traditional Indian music and dance with American-style filmmaking, Bollywood studios release around 700 major films each year, three times the rate of the major Hollywood studios. India’s largest film industry mixes melodrama with musical interludes, lip-synced by actors but sung by pop stars. These pop songs are disseminated well before a movie’s release, both to build up hype and to enter multiple media markets. Although similar marketing tactics have been employed in the United States, Bollywood seems to have mastered the art of cross-media integration. The music and dance numbers are essentially cinematic forms of music videos, both promoting the soundtrack and adding variety to the film. The numbers also feature many different Indian national languages and a hybrid of Western dance music and Indian classical singing, a certain departure from conventional Western media.
While cultural imperialism might cause resentment in many parts of the world, the idea that local cultures are helpless under the crushing power of American cultural imposition is clearly too simplistic to hold water. Instead, local cultures seem to adopt American-style media models, changing their methods to fit the corporate structures rather than just the aesthetics of U.S. media. These two economic and cultural aspects are clearly intertwined, but the idea of a foreign power unilaterally crushing a native culture does not seem to be entirely true.[1]
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This chapter is adapted from The Saylor Foundation Media and Culture which is adapted without attribution ↑