The future role of digital media

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. [...]