The Politics and Economics of the New Media: Uncertain Impact on Democracy (slides)

The poli)cs and economics of the new media: uncertain impact on democracy

FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES

DISSERTATION DEFENSE

Madrid. May 2011

Manuel Panizo Vanbossel Supervised by Dr. Pedro Schwartz

Table of Contents

1.  Introduc)on 2.  New Media Economics

3.  Public Opinion 4.  ICTs as Helps and Hindrances for Democracy

5.  Conclusion

2

Introduc)on

3

Introduc)on

•  Conclusion: due to the existence of different forces tugging at democracy, it is not possible to rigorously assess the impact of the new media.

4

New Media Economics

Characteris)cs of the new media Incen)ves to find informa)on, and to form and express opinion

Abundance economics and network effects The digital divide

Social networks and web analy)cs

5

6

Dispersal

Virtuality Interac)vity

Digitality

Mul)media Hypertextuality

New Media Economics Characteris*cs of the new media

New Media Economics

7

Incen*ves to find informa*on, and to form and express opinion

ICTs allow for such low cost, high quality produc)on that many online communicators find incen)ves enough to remain open even when monetary returns are lower than costs.

‘Network effects’: as the number of users of a good or service increases, the more valuable

that good or service becomes.

8

Abundance economics and network effects (1 of 5)

New Media Economics

9


New Media Economics

Marginal u)lity for consumer i (Ui

m) increases as the number of other users (xj) increases.

10


New Media Economics

Demand and supply curves for the new media •  Consumers of new media

respond to price changes exactly as any other ra)onal consumer.

•  Economies of scale average costs in the long-‐run are decreasing

11


New Media Economics

•  Keeping prices constant, an increase in the number of other users shids consumer i’s demand outwards.

•  Result: lower prices

Outwards demand shi7 results in lower prices

12


New Media Economics

Decreasing prices in new media industries

In reality, technological improvements have allowed a higher output for given prices, but the demand’s shid has been larger than that of the supply, resul)ng in lower prices.

New Media Economics

‘Digital Divide’ refers to inequali)es in access to ICTs and their social consequences.

13

The digital divide

Source: Internet World Stats 2011 and World Bank 2011, data for 2010.

New Media Economics

14

Social networks and web analy*cs

Web analy)cs: collec)on, processing and analysis of data for understanding and op)mizing website usage.

Social networks: capable of gathering large groups of people on the web and on the streets.

New Media Economics

15

Public Opinion

Why public opinion magers Public opinion at the polling sta)on

16

Condorcet’s Jury Theorem 1) The decision of a group is more likely to be correct than the decision of one single person.

2) The competency of the group will increase as the number of competent individuals increases.

17

Why public opinion maJers

Public Opinion

18

•  The vote: imperfect cons)tu)onally backed measure of public opinion

•  Ra)onal voter hypothesis

Public Opinion Public opinion at the polling sta*on

ICTs as Helps and Hindrances for Democracy

Hindrances for democracy Helps for democracy

19

Hindrances for democracy

•  Decline in quality as par)cipa)on increases

•  Class filters and biases •  Ra)onal voter hypotheses

Helps for democracy

•  Low entry costs to the public sphere and dispersal

•  Interac)vity and incen)ves •  New media offer new tools

for measuring public opinion

•  Online vo)ng •  Ac)vism

20

ICTs as Helps and Hindrances for Democracy

Conclusion

21

Conclusion

•  Different forces tugging at democracy not possible to rigorously assess the impact of the new media.

•  The hindrances cited hint at the issues that must be solved in order to take advantage of the full poten)al that ICTs and new media offer for democracy.

22

Thank You For Your Agen)on

23

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The Politics and Economics of the New Media: Uncertain Impact on Democracy (slides)