have integrated themselves deeply in Google’s streaming ecosystem (Burgess & Green, 2018). In a business sense, this limits the agency of this specific group of entrepreneurs, as the video platform has a decidedly formalized (i.e., centralized, uniform) business model that incentivizes a rationalized mode of production (Bishop, 2020). That is to say, although the creative practices of YouTubers may be informal and diverse, their business practices are anything but. As we have seen in Chapter 1, individual creators have little say over YouTube’s business model, including advertising rates and pay-outs (Burgess & Green, 2018; Cunningham & Craig, 2019; Tomasena, 2019).
As the example of social media creators makes clear, platform markets vary widely, and relationships between platforms and complementors can change on a whim. The next section, then, examines platformization from a perspective that furnishes both a historical and a comparative context. We explore how platform companies compete in capitalist markets and how this competition, in turn, affects the ways in which they operate their own internal markets. The later sections of this chapter reflect on the challenges faced by cultural producers as they navigate the economic asymmetries, opportunities, and uneven power structures that are hallmarks of platform markets. To that end, we discuss a number of key economic concepts: network effects, pricing, and platform evolution.
Old and New Regimes of Economic Power
Untangling the rise of platforms from the reconfigured economies of cultural production requires a historically informed, macroeconomic approach. We take such a comparative approach because of the institutional entanglement and dependencies of companies active in different industry sectors. Most relevant to cultural production is competition between legacy media corporations and platform companies, which directly impacts the way in which the latter operate their internal markets. Competition among any of these businesses concerns vying not only for market share or customers, but also for the quest for “talent” (i.e., high-skilled workers) and access to finance capital. Broadening the institutional scope, the ascendance of both platform companies and the transformation of the cultural industries should be considered alongside “neighboring” industries: consumer electronics and telecommunications (Hesmondhalgh, 2019, 2020; see also Winseck, 2011).
To illustrate the latter point, consider the transformation of the music industry. For much of the twentieth century, the consumption of music was tied to technological innovations in consumer electronics – from radio, to vinyl records, to audio cassettes, to CDs (Hesmondhalgh & Meier, 2018). Consumer electronics behemoths, such as Sony and Philips, together with record labels that were often subsidiaries of these larger conglomerates, pushed these new technologies in earnest – often through concerted efforts to render their precursors obsolete. More recently, telecom companies and streaming platforms, such as Spotify and Apple Music, have taken a more central role in the distribution and monetization of music (Morris, 2020; Prey, 2020). The impact of streaming platforms on the political economy of the music industry, however, should not be overestimated; legacy actors and industry practices have not altogether disappeared, and in fact they continue to exert influence on systems of revenue, labor, and, ultimately, power (Hesmondhalgh, 2020).
Thus, a comparative institutional perspective is warranted because the cultural producers that decide to partner with platforms are typically active across the wider media economy and in various platform markets. It is precisely because cultural producers are not inherently dependent on platform companies for every aspect of cultural creation, distribution, marketing, or monetization that analyses of platformization should account for inter-industry relationships as well. Cultural producers may decide not to join a platform; they may “multi-home” (i.e., join several different platforms to reduce platform dependency); and/or they may seek out partnerships or arrangements with legacy (media) companies. At times, this bifurcation leads to a clash of different economic and regulatory paradigms; cultural producers who draw on a history of legacy business models and legal protections, for instance, may find themselves at odds with platform companies more than willing to “disrupt” entrenched institutions and longstanding economic routines. As we will see throughout this book, these institutional culture clashes can be a source of boundless creativity and technological innovation, but also of fierce competition, stark economic asymmetries, and of strong socioeconomic and political-cultural tensions.
All of this is to say that the transformation of the cultural industries has been markedly uneven. And, accordingly, one of the recurring arguments in this book is that continuities and changes in the cultural industries differ – at times, quite profoundly – across regions and industry segments (Hesmondhalgh, 2019; Havens & Lotz, 2017; Miège, 2011; Winseck, 2011). As well as each country being in a different state of economic development, changes in cultural production have shown stark regional variations in terms of “traditions, technological developments, regulations and industrial structure” (Bustamante, 2004: 805). How, then, do we make sense of these variations in institutional dependencies – be they historical, between companies (i.e., inter-industry relationships), or within markets (i.e., intra-industry relationships)? Drawing from (media) economics, critical political economy, and media industry studies, we argue that the consumer electronics industries, the telecommunications industries, platform companies, and legacy media companies are subject to and drivers of concentration and digitalization. Being attentive to these two processes allow us to draw out important political economic continuities by acknowledging that both processes easily predate the platform economy.
Concentration versus digitalization
On the surface, at least, platform Goliaths such as Google, Facebook, Tencent, Amazon, and ByteDance seem omnipotent, and their ever-increasing market capitalizations now total into the trillions. But despite platform companies’ ever-rising share prices and soaring profits, we should be careful not to overdetermine the impact of their financial prowess, nor should we consider the economic and financial position of platforms as either entrenched or unassailable. For instance, in most domestic markets, the revenue of telecom, internet, and media conglomerates is much higher than the revenue of, for instance, either Google or Facebook (Winseck, 2020).
Whether or not they choose to align their business models with platforms, at some point cultural producers are likely to be faced with globally operating conglomerates. And when that moment comes, they will notice how each of these industry sectors – telecom, consumer electronics, and media – is dominated by a handful of firms. For decades, critical political economists and media economists have attempted to measure the scope and impact of corporate concentration on cultural production (Bagdikian, 1983; Birkinbine et al., 2017; Noam, 2009). With these histories of capital accumulation in mind, such concentration is perhaps not surprising. After all, the economic principles that have propelled such instances of monetary accrual have not changed fundamentally.
Because of digitalization and globalization, transnationally operating conglomerates benefit from economies of scale – that is, the efficiencies derived from an increase in output. Likewise, by leveraging economies of scope – the efficiencies derived from product variety – corporate giants can capitalize on their access to finance capital by acquiring competitors or promising new start-ups. Indeed, the cultural industries have seen a rapid uptick in mergers and acquisitions – a fact that owes much to antitrust regulators stepping aside and trade agreements opening up domestic markets to foreign entrants. Together, these broader economic principles also help explain the current impact ascribed to platform companies. As we show in the next section, platform companies take economies of scope and scale to an unprecedented level. We should note that the financial prowess of platforms does have a historical precedent (Srnicek, 2017). Monopoly power or oligopoly competition – highly concentrated markets dominated by one or few firms – have existed since the dawn of the industrial age.
Next to corporate clustering, cultural producers are faced with socioeconomic drivers of concentration that are more specific to the
