The future role of digital media (PDF)

Seminar paper from the year 2006 in the subject Communications - Media Economics, Media Management, grade: 1,0, Fresenius University of Applied Sciences Köln (Medienmanagement), course: Management of Media Companies, language: English, abstract: The previous chapters of the book "Managing Media Companies: harnessing creative Value" by Annet Aris and Jaques Bughin will show, that the digitization of media "(...) will fundamentally influence the way ¿traditional¿ media are managed". The chapter summed up in this work will describe digital media and its influences. The future role of digital media: After a short introduction acout the history of digital media or "New Media" and the reasons for the genesis of the internet-bubble and its explosion, this assignment will show the development of "New Media" after the explosion. Then a short overview about the beginning of broadband-technology and promising business models is subject of this work. After that I will provide two case-studies to show the practical relevance of the chapter. 2.1 A brief history of the digital media bubble The new media experienced its first hype in the 1990s. The dial-up internet, a key innovation, made it possible to change the internet to a mass medium. Many existing media companies but also a lot of start-ups discerned the possibilities of this key innovation. Low entry barriers, high expectations and faith into the advertising market made it possible that within only a few years a big new industry came into being. This was mostly financed by venture capital. And actually the internet was received so well as a new medium, that there were 600 milion users by the year 2002. A situation of excess supply developed in the new media market. In trust of a further rise investors invested more and more in stocks and shares of this companies. Within one and a half year, beginning in the middle of 1999, this brought a multiplication of rates to a few companies, and therefore an uncontrolled overvaluation of the rates appeared. This effect was intensified by a lot of companies and their mostly blind urge of expansion. The liquidity received by IPOs was invested into further purchases of companies but without any regard to their balances - they quite often were in the red. [...]