The Media Industry’s Structural Transformation in Capitalism and the Role of the State: Media Economics in the Age of Digital Communications

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 article 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 channels 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 concentration of the capitalist media markets is an essential, contradictory and inherent feature of the capitalist media system and its structural transformation. The paper identifies six causes of why capital seeks to employ capital strategies that result in the media industry’s structural transformation. They include market saturation, overaccumulation, the tendency 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 competitive 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.Translation from German: Christian Fuchs and Marisol Sandoval

Capitalisation of the Media Industry From a Political Economy Perspective

“…The fundamental significance of the progressive capitalisation of the media industry in close connection with the development of the capitalist economic system and system of society points to the necessity of a critical approach that is centred on capital and capitalism (see Knoche 2016, Prokop 2000 in communication studies that can be considered academically adequate to the subject matter. However, as long as in the East-West conflict after the Second World War the occupation with the critique of capitalism on the basis of a critique of the political economy in the West also led to 2 "marginalisation" in the academic field, or at worst to professional bans of academics, there was no favourable "climate" for the development and reception of critical political economy as approach for the study of the societal problem of the economisation or commercialisation of the media industry, which had long been recognisable.…”

“…But the political economy of communication in society undoubtedly belongs to the "forgotten theories" (Robes 1990, see also Knoche 1999b. Among the attempts to remember, revive and apply political economy approaches in German-language media and communication studies in the 1990s and around 2000 were the works by Holzer (1994), Meier (1996Meier ( /1997, Meier (1997), Knoche (2016[originally published in German as Knoche 1999a], 1999b), Prokop (2000), and Steininger (2000, 210ff).…”

The crisis-ridden capitalist mode of production as driving force for restructurations and transformations in and of the media industry : explanatory theoretical elements of a critique of the political economy of the media

“…Media enterprises conduct the transformation of the media formation via the universalisation of the media industry (Knoche 2016). This universalisation comes alongside a restructuration or dismantling of traditionally separate media sectors, in particular regarding carrier media.…”

The Crisis-Ridden Capitalist Mode of Production as Driving Force for Restructurations and Transformations in and of the Media Industry: Explanatory Theoretical Elements of a Critique of the Political Economy of the Media

“…In order to do so, the article takes a theoretical approach to the critique of the political economy of the media. Object of the analysis are not only traditional mass media, but also processes of change in an extended media and communications industry (see Knoche 2016).…”