The Internet and the Value Chains of the Media Industry

Hess, T; Matt, C (2013). The Internet and the Value Chains of the Media Industry. In: Media and Convergence Management (pp. 37-55). Berlin: Springer 10.1007/978-3-642-36163-0_4

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This article provides an overview of the changes in media companies’ value
chains that occurred due to the development of the Internet. In the following, we explain the technological and economic backgrounds and point out various key
aspects, which we link to three trends. Each of the trends is further illustrated by practical examples from industry to enable a better understanding of the key issues. Throughout the article, our focus is on content of media products and services that are provided in digital format.

The Internet has had a significant influence on value creation processes of companies. This applies not only to the electronic communication with suppliers and sales partners, but also to the Internet as a new channel to directly address consumers. While this development has led to more efficient forms of business processes, it has also had an impact on companies’ business models. This is particularly true for the media industry, in which these technology-driven changes have, on the one hand, sometimes led to declining revenues that have threatened the existence of many traditional players. Also the Internet has led to a convergence of media, since in the digital format all media types can be distributed and consumed over the Internet. Conversely, this has also enabled a long list of new ventures and business models. In addition, this development has caused changed market conditions and power proportions between certain players, which have an impact on competition as well as on potential collaborations between different firms. Overall, all of these recent changes fall into three categories that differ in the underlying drivers as well as in their potential impact. For the time being, none of these developments seems to have fully developed its potential yet, so media markets are likely to undergo further changes.

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