FACULTY

OF ECONOMICS AND ADMINISTRATIVE SCIENCES DISSERTATION DEFENSE Madrid. May 2011

The poli)cs and economics of the new media: uncertain impact on democracy
Manuel Panizo Vanbossel Supervised by Dr. Pedro Schwartz

Table of Contents
1. 2. 3. 4. 5. Introduc)on New Media Economics Public Opinion ICTs as Helps and Hindrances for Democracy Conclusion

Introduc)on

Introduc)on

Conclusion: due to the existence of dierent forces tugging at democracy, it is not possible to rigorously assess the impact of the new media.
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New Media Economics

Characteris)cs of the new media Incen)ves to nd informa)on, and to form and express opinion Abundance economics and network eects The digital divide Social networks and web analy)cs

New Media Economics

Characteris*cs of the new media

Digitality Mul)media Hypertextuality

Dispersal Virtuality Interac)vity

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New Media Economics

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

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

New Media Economics

Abundance economics and network eects (1 of 5)

Network eects: as the number of users of a good or service increases, the more valuable that good or service becomes.

New Media Economics

Abundance economics and network eects (2 of 5)

Marginal u)lity for consumer i (Uim) increases as the number of other users (xj) increases.

New Media Economics

Abundance economics and network eects (3 of 5)
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

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New Media Economics

Abundance economics and network eects (4 of 5)
Outwards demand shi7 results in lower prices

Keeping prices constant, an increase in the number of other users shids consumer is demand outwards. Result: lower prices

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New Media Economics

Abundance economics and network eects (5 of 5)
Decreasing prices in new media industries

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

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New Media Economics

The digital divide

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

Source: Internet World Stats 2011 and World Bank 2011, data for 2010. 13

New Media Economics

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.
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New Media Economics

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

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Public Opinion
Why public opinion maJers

Condorcets 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.
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Public Opinion
Public opinion at the polling sta*on

The vote: imperfect cons)tu)onally backed measure of public opinion Ra)onal voter hypothesis

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ICTs as Helps and Hindrances for Democracy

Hindrances for democracy Helps for democracy

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ICTs as Helps and Hindrances for Democracy

Hindrances for democracy Decline in quality as par)cipa)on increases Class lters 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 oer new tools for measuring public opinion Online vo)ng Ac)vism

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Conclusion

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Conclusion
Dierent 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 oer for democracy.

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Thank You For Your Agen)on

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