Media Sector More Entrepreneurial than Other Industries

My research assistant, Sangho, and I have been measuring entrepreneurship across various industry sectors using census data. Seems that several media sectors are more entrepreneurial than almost all non-media sectors. The graph at right shows rates of industry turbulence, the degree of entry and exit in an industry. Turbulence has been linked to economic growth. This metric is particularly relevant to the study of media industries given the dramatic changes wrought by technological innovation. In theory, greater industry turbulence is associated with greater innovation. In media, the analogy is the marketplace of ideas concept -- media innovations (diverse voices, new technologies) compete in the marketplace to determine which products and services are superior (determine “truth”). Even when firms fail (exit), they have made a contribution to that marketplace simply by competing.

In 1990, the media sector experienced an average degree of turbulence in comparison to all U.S. industry sectors (24%). By 2001, it was a great deal more turbulent than average (35% vs. 22%). In fact, when the media sector was compared to all other major industry sectors (not shown), it was the most consistently turbulent industry sector over the entire 11 year period.

Building a Community of Media E-ship Researchers

Media e-ship research is attracting more scholars! I met two graduate students, Min Hang and Aldo van Weezel, last week at the Association for Education in Journalism and Mass Communication (AEJMC) conference. They've written a paper, "Media and Entrepreneurship: A Survey of the Literature Relating Both Concepts." Check it out!

Bush Policy Could Hurt Media E-ship in U.S.

Recently, the Bush Administration eliminated funding for the SBA's micro-loan program (see: "A Helping Hand Witheld"). Along the lines of the Grameen Bank, the SBA program was intended to promote entrepreneurship among the economically disadvantaged. Explaining the cut, an SBA spokesperson said the program was not cost effective and the administration wants to be 'judicious with taxpayer money' (What about today's $286 BILLION transportation bill, the biggest in history?). That's baloney. Grameen and its ilk actually have shown their investments in micro-economies around the world are cost effective.

Anyway, why is this bad for media entrepreneurship? After all, there is plenty of venture capital and other financing sources, including other SBA programs, available to the media entrepreneur with a solid business plan. It's a problem because most of that capital will go to entrepreneurs with big plans who need financing of more than a million dollars. There's not much out there, besides this SBA program, for the little media guy. Even small commercial lenders don't want to be bothered with micro-loans (up to $35,000) -- they can't make a profit for the cost of the paperwork.

It's these little guys who form an integral part of the media e-ship landscape and thereby assure the public a steady stream of innovation, diversity of viewpoints, quality and access. Sure, we need the bigger new entrants too, with their big ideas that need big money. But the little podcaster, newsletter publisher, tv producer or record label that wants to serve a small market or community, a micro-niche, is still going to need little loans to get going. You might say anyone can get into podcasting for the price of an iMac and some basic Radio Shack supplies. Yeah, but the most economically disadvantaged media entrepreneurs will lack the resources even for that small investment.

Bush says he's a friend of small business. If so, the SBA micro-loan program is the cheapest way I know to show it. I urge the Administration to reconsider.

Welcome to Media Entrepreneurship!

Welcome! And thank you for visiting my blog. This space is dedicated to media entrepreneurship and how to promote MORE of it as a means of keeping our media industry sector healthy, innovative, competitive and -- most importantly -- in the business of serving democracy and promoting civic participation. I'm going to post ideas, research and stories about media entrepreneurship and I welcome your responses. Let's get a conversation going...

About a year ago, I started to think about how research in media economics could provide a new frame for thinking about the media and its role in democracy. That's when I hit on entrepreneurship. I don't know why it took so long since I was myself an entrepreneur in the cable industry. Moreover, I launched a media entrepreneurship course in my college to help budding journalists, filmmakers, and telecom/IT students create their own small businesses (see Comm 493: Media Entrepreneurship).

Anyway, research has shown a theoretical and empirical link between the degree of entrepreneurship in an industry and how much innovation that industry and its customers enjoy. If that link holds for the media sector then more entrepreneurship would mean more innovation -- more media choices, better access and communication technologies, better quality.

There's a lot of concern over the apparent bigness of a few media corporations and an attendant decline in competition. I question the need for such concern...or at least, I question why the concern focuses on 8 or 10 firms, representing less than 1% of all media businesses, and completely ignores the burgeoning non-commercial, Internet-based media world. In 2003, there were over 110,000 media and communications companies operating in the U.S. and literally thousands of new entrants in publishing, broadcasting, film/video, recorded music, advertising/PR, videogaming and telecommunications -- and this doesn't even begin to count the legions of bloggers, podcasters and other "peercasters" as Ben Compaine calls them. Yes, 99% of them are quite small organizations, and yes, individually each has little impact on the media landscape and OK, many of them go out of business. But what I'm describing is a heretofore unexplored view of the media industry and possibly THE source of new ideas and innovations in media and communications. I invite you to read a paper recently presented on this topic Media Entrepreneurship: Definition, Theory and Context

Thanks again for tuning in. Come back again! --Anne Hoag