Carin Holroyd, Ken S. Coates - The Global Digital Economy - A Comparative Policy Analysis (2015, Cambria Press)

The Global
Digital Economy
The Global
Digital Economy
A Comparative Policy Analysis
Carin Holroyd and Ken Coates

Copyright 2015 Cambria Press
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Includes bibliographical references and index.
ISBN 978-1-60497-891-9 (alk. paper)

Table of Contents
List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

List of Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Introduction: Government and the Realities of the New
Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 1: The Second Wave of the Digital Revolution . . . . . . . . . . . . . . . . 17
Chapter 2: The Contours of the Digital-Content Economy . . . . . . . . . . . . 63
Chapter 3: Government, National Innovation Strategies, and the
Emergence of the Digital-Content Sector . . . . . . . . . . . . . . . . . . 121
Chapter 4: Major Initiatives in the Content Revolution . . . . . . . . . . . . . . . 153
Chapter 5: Digital Futures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Chapter 6: Conclusion and Policy Recommendations . . . . . . . . . . . . . . . . . 219
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
List of Figures
Figure 1: Distribution of Internet users, 2000–2012 . . . . . . . . . . . . . . . . . . . . 47
Figure 2: Broadband prices versus speed, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . 48
Figure 3: Internet users by language, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 4: Internet users around the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 5: Internet users by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 6: Mobile-phone subscriptions around the world, 2004–

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 7: Internet users around the world, 2004–2013 . . . . . . . . . . . . . . . . . 51
Figure 8: US device ownership over time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Figure 9: Mobile share of noncomputer device traffic . . . . . . . . . . . . . . . . . 55
Figure 10: Noncomputer traffic share by devices . . . . . . . . . . . . . . . . . . . . . . . 57
Figure 11: App downloads and usage by country . . . . . . . . . . . . . . . . . . . . . . 58
Figure 12: Reasons for in-app purchases, 2011 . . . . . . . . . . . . . . . . . . . . . . . . 110
Figure 13: Mobile-game spending, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Figure 14: Countries’ wireless broadband subscriptions,

2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
viii The Global Digital Economy
Figure 15: Percentage of fiber connections in total broadband

subscriptions, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
List of Tables
Table 1: Mobile Internet services market, worldwide, 2009–

2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Table 2: The top twenty-five: Leading Internet nations . . . . . . . . . . . . . . . . 53
Table 3: The bottom twenty-five: Lagging Internet nations . . . . . . . . . . . 54
Table 4: Countries with the highest rate of mobile share of web

traffic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Table 5: Mobile share of web traffic worldwide . . . . . . . . . . . . . . . . . . . . . . . . 57
Table 6: Top ICT policies for the economic recovery . . . . . . . . . . . . . . . . . . 59
Table 7: The global games market, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Table 8: Market share for MMOGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Table 9: In-app revenue by country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Table 10: Features of “freemium” apps and their users . . . . . . . . . . . . . . . 109
Table 11: Features of mobile gaming, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Table 12: Mobile movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Table 13: Best-selling singles in Japan, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Table 14: Top twenty iTunes singles in Taiwan . . . . . . . . . . . . . . . . . . . . . . . 115

x The Global Digital Economy
Table 15: Best-selling singles in Germany, 2013 . . . . . . . . . . . . . . . . . . . . . . . 116
Table 16: Country rankings by number of fixed Internet

subscriptions, 2009–2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Table 17: Country rankings by percentage of fixed Internet

subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Table 18: Country rankings by mobile subscriptions . . . . . . . . . . . . . . . . . 146
Table 19: The Internet in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
Table 20: Top ten Internet countries in Africa . . . . . . . . . . . . . . . . . . . . . . . . . 187

Acknowledgements
This book emerged out a longer term series of studies on national

innovation and the emergence of the new economy. We spent six years
at the University of Waterloo, in Waterloo, Canada, which has been one
of the most important North American hubs for the commercialization
of science and technology. We learned a great deal from our academic,
commercial, and government partners, particularly those associated with
the development of the University of Waterloo's Stratford campus.
Our work on this project was greatly assisted by our graduate assistants,
Jacob Hrycak and Natasha Kikot. Their cheerful attention to the details
of a very complicated research assignment was truly appreciated. We are
especially appreciative of the heroic efforts of Sherilee Diebold-Cooze,
whose editorial and technical assistance was a great help with the final
draft. We are thankful, as well, to our colleagues in the Faculty of Arts,
University of Waterloo, Department of Political Science, University of
Waterloo, Department of Political Studies, University of Saskatchewan,
and the Johnson-Shoyama Graduate School of Public Policy, University
of Saskatchewan. The research was made possible by grants from the
Social Science Research Council of Canada, the Canada Research Chairs
program, and the International Centre for Northern Governance and
xii The Global Digital Economy
Development. Many thanks as well to the many people in various

countries––Scandinavia, across Europe, in Canada and the United States,
Brazil, Malaysia, Japan, Taiwan, China, Turkey, Hong Kong, New Zealand,
Vietnam, Qatar, among others––we interviewed in our attempts to learn
how government and industry are approaching the digital content sector.
Their willingness to share insights into national policies and program
innovations made this work possible. While we have acknowledged some
of their contributions in to the footnotes, we trust that they recognize
the important contributions that all of them made to the book. They are
not, of course, responsible for any errors remaining.
This is our second book with Toni Tan and her wonderful team at
Cambria Press. We particularly appreciate the efforts made by Toni Tan,
David Armstrong, and Michelle Wright to move the book to publication
in a timely fashion.
Family remains a source of inspiration. During the time that we

worked on this book, we welcomed three more grandchildren into the
fold, Christopher Coates, Victoria Griffin, and Hazel Coates, adding to
the joy that Katie Coates, Spencer Griffin and William Griffin were
already bringing to our lives. We were joined on some of our exploratory
expeditions by Les Holroyd, Carin’s father. His unexpected passing in
December 2013 was a shock and a great loss, of a father, a father-in-law,
and a true friend. Through 2011 to 2012, our daughter Hana, travelled with
us as we explored different manifestations of the global digital economy.
She inspired us, as well, by her creative (and unrelenting) engagement
with social media. It is truly amazing what one can learn from watching
a happy and digitally connected preteen! For her patience in travelling
far and wide in search of digital insights, we dedicate this book to Hana.
The Global
Digital Economy
Introduction
Government and the

Realities of the New Economy
Beginning with the dot-com meltdown in the late twentieth century,

then the rapid economic rise of China, and continuing through the
financial crisis of 2008–2009, the global economy has been in turmoil.
The most recent manifestations—staggeringly high levels of global youth
unemployment, the debt crisis in southern Europe, the scale of the United
States’ national debt, the continued erosion of traditional manufacturing—
illustrate the rapid transitions underway around the world. For national
and regional governments charged with maintaining jobs, creating and
sustaining prosperity, and financing needed social programs, responding
to the challenges of the twenty-first-century economy remains one of the
highest priorities. In the midst of this uncertainty, one economic sector—
information and communications technology (ICT), particularly digital
content (the preparation of value-added material for distribution via the
Internet or other digital means)—remains a significant bright spot in
terms of employment growth and business development. Governments,
however, have been slow to recognize the potential of digital content as
2 The Global Digital Economy
a commercial field and even slower to develop the policies and processes
necessary to capitalize on the emerging opportunities.
It is not that the world has ignored the potential of the digital-content
revolution. For over twenty years, public commentators have been
obsessed with the digital generation gap and the “digital divide” between
those with access to computers and the Internet and those without. As
personal computers became ubiquitous, particularly when smartphones
became the technology of choice for young people around the world,
global conversation focused on the idea of “growing up digital,” in Don
Tapscott’s words, and on the fundamental differences between members
of the predigital generation and their parents. The world embraced
the digital revolution, perhaps too enthusiastically and uncritically,
and certainly without much government attention or intervention. The
rapid and substantial commercial expansion based on the so-called new
economy focused initially on the dot-com boom, creating billions of
dollars in paper wealth. This was quickly followed by a dramatic stock
market crash that wiped out thousands of companies and hundreds of
thousands of overly enthusiastic investors.
The first stage of the digital transformation rested on the development

of the personal computer, symbolized by the global power of Bill Gates
and Microsoft and the cult-like reach of Steve Jobs and Apple Computer.
Beginning in the mid-1980s, the spread of personal computers altered the
way people did business, changed the entertainment industry through
the advent of CDs, DVDs, MP3 players, and video-game consoles, and
brought many unanticipated and dramatic changes. The second major
shift, tied to the development of the Internet and web browsers, allowed
for the near-instantaneous transmission of huge quantities of data across
great distances. The emergence of the Internet-based economy made
multimillionaires out of teenage computer wizards. “Geek culture” turned
the standard approach to wealth creation on its head, building a different
order that bore little resemblance to the long-standing industrial and
natural-resource economy.
Government and the Realities of the New Economy 3
For national and regional governments, the parameters of economic

planning and business forecasting had also changed rapidly. While the
industrial order underwent transitions of its own—particularly related to
the rise of China and India, rapid technological change, and the restruc-
turing of work and business—the new economy presented governments
with formidable challenges. Even as dot-com millionaires became media
celebrities, lauded as much for their lifestyles as for their business acumen,
governments struggled to find policies and strategies that would culti-
vate and retain the companies, jobs, and wealth created by the digital
economy. Put simply, the digital revolution had changed economic rules,
undercutting elements of the old economy and creating unusual and
unpredictable models for the new order.
Mainframes soon gave way to desktop computers, which became

smaller, faster, and much more powerful. Computer memory expanded
dramatically, in accordance with Moore’s law, which anticipated that
memory capacity would double every eighteen to twenty-four months.
A seemingly endless array of new peripherals generated substantial
consumer interest. The advent of wireless Internet liberated digital users
from their computer desks, transferring speed and computing power to
handheld devices. Commercial innovations continued, most recently in
the form of tablet computers and progress in miniaturization, increased
computer power and faster Internet speeds. Businesses, even as they
pushed the technological frontiers, paid greater attention to pricing,
brand recognition, and aesthetics, the latter two underpinning Apple’s
rise to global digital dominance in mobile phones.
The computer revolution started in the industrial world, where

consumers could meet the initial high costs of entry into the sector (a
desktop computer followed by an expensive dial-up Internet connection)
and where large, prosperous populations in North America, northern
Europe, and Japan provided a foundation for the development of a global
industry. With each innovation, particularly those tied to smartphones
and wireless Internet, the reach of the digital revolution expanded. Speed
and capacity mattered, giving the leading nations a large advantage in

terms of connectivity and downloading abilities. That dramatic edge
started to decline in the early twenty-first century, again tied to the
spread of wireless Internet. Costs plunged, access and affordability spiked
upward, and consumers from rural China to Kenya, from the Pacific
Islands to South Asia came online via portable handheld devices. From a
rather limited launch in North America in the early 1990s, the Internet
spread faster than any technological advance in human history, becoming
a prominent foundation of the modern economy.
Scholars are now paying greater attention to the broadly transformative

potential of the digital revolution. There is a very large literature on the
business aspects of digital technologies, much of it hyperbolic and more
akin to commercial self-help books than to serious and sustained analysis
of the social and economic implications of digital content. This is now
changing. Works like Moises Naim’s The End of Power: From Boardrooms
to Battlefields and Churches to States; Why Being in Charge Isn’t What It
Used to Be explore the digital revolution’s implications for politics and
democracy, offering substantial and critical assessments of processes
like the Arab Spring uprisings in the Middle East and the long-term
effects of digital politics.1 Nicco Mele has made a similar point in The
End of Big: How the Internet Makes David the New Goliath, which offers
provocative commentary on the likely impact of digital technologies on
journalism, political organizations, recreation, government, the armed
forces, corporations, and postsecondary education.2 Perhaps the most
important of these studies is The Second Machine Age: Work, Progress,
and Prosperity in a Time of Brilliant Technologies, by Erik Brynjolfsson
and Andrew McAffee.3 In this highly original work, the authors have
moved beyond the standard business models to consider ways that this
new technological order—one based on digital communications—is likely
to disrupt the very foundations of contemporary society. Their study
drove them to three conclusions:
The first is that we’re living in a time of astonishing progress

with digital technologies—those that have computer hardware,
software and networks at their core.…
Our second conclusion is that the transformations brought about

by digital technology will be profoundly beneficial ones…
Our third conclusion is less optimistic: digitalization is going to

bring with it some thorny challenges.… Rapid and accelerating
digitization is likely to bring economic rather than environmental
disruption, stemming from the fact that as computers get more
powerful, companies have less need for some kinds of workers.
Technological progress is going to leave behind some people,
perhaps even a lot of people, as it races ahead.4
Futurists from Alvin Toffler on have written about the worrisome and
promising prospects of technological transformation for years. What
separates these works from previous commentaries is that they look more
systematically at the achievements, problems, and consequences of mass
digitalization on contemporary society. To summarize these three books
and the others that are starting to challenge normative assumptions
about technological change owing to digitalization, Brynjolfsson and
McAffee have asserted that governments should be profoundly attuned
to the disruptive capabilities of new technologies. They have also all
made the point that, to date, governments have been passive in the face
of digital transformations.
Beginning with the dot-com boom of the 1990s, politicians understood,

at the highest level, the economic importance of the new economy
and certainly appreciated the widespread enthusiasm for the latest
technologies. They soon learned to speak the language of the digital
revolution—with many famous fumbles, such as former Japanese prime
minister Yoshirō Mori’s laughable effort in the early 2000s to claim digital
chops before admitting he had never sent an e-mail message, American
vice president Al Gore’s alleged claims to have sparked the development
of the Internet, and a humorous 2013 contretemps involving Twitter, a

grammatical error by Aurelie Filippetti (the French minister of culture and
official guardian of the French language), and the response from French
linguistic purists along the way.5 Politicians spoke enthusiastically about
digital infrastructure, promised support for digital training programs,
and embraced digital entrepreneurs although they continued to favor
the hardware manufacturers and major service providers who looked
more familiar to them than animation studios and website designers did.
New terms—new economy, knowledge economy, digital natives, digital
innovation, and many others—flowed from their lips, demonstrating to the
electorate that political leaders and senior civil servants alike appreciated
the power and the potential of the digital revolution.
Time has shown that few national political leaders—Toomas Hendrik

Ilves, president of Estonia, standing as a key exception—truly understood
the transformative potential of the three key elements of the digital age:
computer technologies, Internet connectivity systems, and the design
and production of digital content. The production of digital devices
and the technological backbone of the Internet looked most familiar to
policy makers, who were comfortable with advanced manufacturing and
appreciated the opportunity to host or stimulate commercial development
in a field that seemed destined to replace a great deal of old-style
manufacturing. The Internet was not all that different, either, for it
replicated many of the same procedures and requirements of the earlier
development of radio and television. There was bandwidth to be regulated
and a wireless spectrum to be auctioned. Governments also had to
maintain traditional national efforts to control content delivery and
promote national culture through digital-content activities, and they used
national telecommunications regulators to manage Internet services. It
was content—from the largely invisible mobile-phone app producers
to the more prominent animation studios and website designers, e-
commerce and e-government service providers, e-health initiatives, and
e-education content producers—that perplexed most governments.
Governments are not uniformly excited about the Internet and its
sociopolitical possibilities. China monitors Internet usage carefully and
has intervened with both individuals and companies to control content.
Dictatorships like Myanmar and theocracies like Iran are similarly
concerned about the libertarian nature of the Internet. In September 2014,
Russian president Vladimir Putin mused openly about the need for Russia
to assume control over the Internet, giving the country the capacity
to disengage in times of crisis and to regulate the flow of Western or
American content into the country.6 Though the idea was ridiculed by
other government leaders and analysts, that the president would speak
so openly about government concerns regarding global connectivity and
the free flow of ideas and services over the Internet highlights both its
strength and vulnerabilities.
The digital-content industry did not follow traditional industrial lines.

It looked more like the cultural sector, with its emphasis on creativity
rather than standard manufacturing. Even as some websites signed up
hundreds of millions of users, the size of the content companies in
terms of employees and physical presence was tiny compared to their
geographic reach and market valuation. Many of the entrepreneurs,
sporting more tattoos and piercings than typical industrial business
leaders, seemed out of step with normal government-business networks.
Compared to even the most competitive industrial and commercial
sectors, the digital economy seemed anarchistic. Indeed, many of the
most successful digital innovations, particularly those associated with
downloading music and the sharing of digital torrents (tiny portions of
movies, television programs, and music designed to reassemble at the
point of downloading) were clearly illegal. As entire sectors emerged
around digital sharing—and as regulatory and policing efforts targeted the
Internet sites facilitating the transactions and not at the end-point devices
(computers and the phones) that made downloading possible—it was not
surprising that most governments viewed the digital entrepreneurs with
a mix of suspicion, disbelief, and misunderstanding.
Digital media has emerged in recent decades as an economic force at a

time when governments have been struggling with national and regional
economic policy. The guarantees of the past have faded. Confidence has
declined in government economic leadership and state ownership, save
in China and in the energy sector. The public has also questioned the
ability of nation-states to insulate themselves from the vagaries of global
markets and transnational economic forces. The combined effects of the
financial crises of 2008–2009 that forced governments into emergency
measures to stabilize slumping economies left the global economic system
vulnerable and undercut the resilience of the European Union and the
United States, in particular. Even the major petro-states, long able to rely
on steady demand for oil and gas, have been challenged by the rapid
growth of shale gas development and by the consequent downward
pressure on oil prices and demand. With the world relying more heavily
on economic growth from the BRICSAM nations (Brazil, Russia, India,
China, South Africa, and Mexico), and with activity in these countries
waning in the past few years, political leaders are genuinely perplexed
about the best means of expanding and sustaining their economies.
In this complex and fluid global economic order, digital-content devel-

opment represents one of the few areas ripe for continued expansion.
While traditional media companies—radio, television, movie production,
newspapers, and magazines—have suffered through competition with the
latest technologies, firms like Facebook, YouTube, China’s Alibaba, and
Japan’s Rakuten and Softbank have been experiencing significant, albeit
unpredictable, growth. As traditional industries from heavy manufac-
turing to retailing suffer from intense global competition, digital media
remains open, flexible, and creative. Digital firms regularly pop up in the
most unusual places, responding to local market conditions and consumer
needs and occasionally—like Skype, which was started in Estonia (by a
Dane, a Swede, and three Estonians) and is still substantially based there
—developing a global base within a few short years.
Governments have learned that digital connectivity—expanding and

promoting faster and cheaper Internet service—could quickly become an
electorate-pleasing staple with the potential to stimulate new digitally
based businesses. Nonetheless, governments have moved with widely
varying speeds in responding to the need for increased bandwidth, broader
coverage, and faster connections. The government of Japan, for example,
actively interfered with the early development of the Internet, which
was quickly bogged down in a morass of civic and national regulations,
before discovering the potential of the digital age immediately after the
1995 Kobe earthquake and moving quickly to put the country among the
world’s leading nations in terms of access, speed, and low cost. Canada,
conversely, was an early leader in widespread Internet connectivity, but
the promising start languished amid government regulation, the power of
the national telecommunications oligopoly, and the costs and complexities
of delivering high-quality, high-speed Internet services across the second-
largest country in the world. South Korea, at the opposite extreme from
Canada, emerged in the last decade as the most aggressive Internet
nation in the world, expanding fiber-optic connectivity and producing
some of the world’s fastest consumer Internet speeds and services at low
prices. Sub-Saharan African nations, without the government resources
to mount digital-media strategies of their own, have liberalized private
sector systems to permit companies to expand aggressively, particularly
in the wireless space.
Overall, governments responded surprisingly slowly to what was

obviously a promising opportunity. This did not hold for the entire digital
sector, however. National governments had been, from the late 1990s,
somewhat star-struck by the rise to prominence of California’s Silicon
Valley and sought to replicate its success. Silicon Valley emerged through
a unique combination of entrepreneurship (best represented by Hewlett
Packard), a world-class university (Stanford), military investments, and
access to large amounts of venture capital. The valley became synony-
mous with both the dot-com revolution and the dot-com crash. Later,
it reemerged with both hardware and software or digital-content firms.
Governments around the world—from Singapore and Taipei (Taiwan),

Seoul (South Korea), and Shanghai (China) to Lyon (France), Waterloo
(Canada), and Tallinn (Estonia)—spent literally billions of dollars trying
to reproduce the Silicon Valley experience, in some instances with
respectable success.
Digital media and digital content, it is fair to say, have not fit easily into
national economic strategies and government policy. Indeed, strategies
that respond to the potential of the digital revolution while also building
jobs, companies, and general prosperity remain elusive. There have
been successful companies in the digital-media space; indeed, the sector
continues to grow quickly. There are also significant problems with
corporate concentration, as the larger firms—Google, Microsoft, Face-
book, Yahoo, Rakuten, and Alibaba—buy emerging companies, patents,
and licenses and enhance their prominent places in the digital economy.
Softbank, led by the charismatic Masayoshi Son, exemplifies this pattern.
Softbank’s companies have the ambitious goal of attracting one billion
wireless subscribers globally, having purchased Sprint and making an
abortive attempt to purchase T-Mobile. Still, stories routinely surface
of independent programmers who create a “killer” app for the iPhone
(Kik Messenger and Snapchat), develop a new digital service (Insta-
gram, purchased by Facebook in 2012), or push the frontiers of digital
sharing (Pirate Bay). The core statistics—Internet usage, the number of
online consumers, the growth of the wireless Internet and smartphone
markets, continued hardware innovation, Internet advertising revenue, e-
commerce sales, and the like—all point to continued growth and sustained
consumer demand.
The challenge for national governments—and the central theme of

this book—is to identify the policies and economic strategies that align
with the trajectory and imperatives of digital media and digital content.
Some countries and regions are doing appreciably better than others.
East Asia has been more creative and intensively interested in digital
media as an economic sector. The European Union sees digital content
as playing a very specific role in the future. North America, particularly

the United States, sees the digital-content field as a new version of the
Wild West. Poorer parts of the world—South Asia, South America, and
Africa—have used the wireless Internet, in particular, as part of efforts at
poverty reduction and economic revitalization. The policies, investments,
strategies, and initiatives range widely, responding to local strengths,
perceived opportunities, and government priorities.
This study examines the surprising disconnect in government policies

between the evident potential of the Internet-based digital revolution and
the current reality of national and regional strategies. The commercial
cultures of the digital sector, particularly on the content side, do not
fit well with government priorities, planning processes, and political
imperatives. Equally, the digital-media field does not respond logically
to the standard strategies of state engagement with emerging economic
sectors. Digital-content production and delivery do not lend themselves
to typical regulatory or state investment strategies (although some of
both have been attempted), but they do require substantial investments
in infrastructure, education and development, and market cultivation.
In the end, digital content or digital media has become a symbol of

the challenges associated with adapting government economic planning
to the realities of twenty-first-century technology-based change. The
rapidity of technological development—with 3-D printing and other such
potentially transformative technologies standing in the wings—presents
policy makers and politicians with formidable difficulties. Governments
struggling to cope with intense contemporary issues, such as the rise of
China, economic globalization generally, and the combination of global
financial integration and the American-led fiscal crises in 2008–2009 have
devoted comparatively little of their economic development efforts to
figuring out the imperatives of the “next economy.” They have followed
a standard strategy of investing heavily in postsecondary education and
training, basic research through universities and research institutes, and
commercialization initiatives designed to transform laboratory discoveries
into commercially viable companies. To date, this approach has produced

uneven and disappointing results.
Economically and technologically, the twenty-first century is proving

to be a confusing and complex economic time. While some sectors,
such as digital media, are clearly on the rise, others (alternative energy,
quantum computing, biotechnology, and nanotechnology) hold consid-
erable commercial potential but have not yet matched their promoters’
promises. Natural-resource development, manufacturing, and services
(including tourism and travel) remain cornerstones of vibrant twenty-
first-century economies, but the reality is that the forward trajectory
of the global economy remains as unknown as at any time in history.
What is known is that the Internet is a key element in the modern
economy, that digital media is global in scope and impact, that the world
of work appears to be shifting from human-generated manufacturing to
machine-managed production, that producing jobs for workers displaced
by technological change is a global challenge, and that governments
must develop new approaches to managing work, business development,
and general economic performance.
Perhaps the best example of the digital confusion—an area that requires
far greater government and international attention than it has received
to date—is represented by illegal downloads and digital piracy. The
prominence of websites such as the Sweden-based Pirate Bay file-sharing
platform, the arrest in New Zealand of the cartoonish Kim Dotcom
(born Kim Schmitz, he officially changed his name) on charges of digital
piracy through his website Megaupload.com, the global attention given
to WikiLeaks and its founder, Julian Assange, and Edward Snowden’s
release of information about US and British mass-surveillance systems
all underscore the seamier and riskier side of the Internet-based society.
The theft and redistribution of digital content, Internet surveillance,
invasions of privacy, and other such activities speak to the fundamental
vulnerabilities of online society and the serious challenges it poses
to national and international intellectual property regimes. Different
governments have approached this very differently. There are authori-

tarian countries that spy routinely on their citizens, governments that
ignore mass copying of copyrighted material, and smaller and poorer
nations that offer themselves as digital safe havens for all manner of
online gaming, pornography, and file-sharing operations. In the middle
are a large number of “rule-of-law” nations that officially recognize
intellectual property rights and copyright provisions but do virtually
nothing to police or regulate illegal digital activities. This is but one
example of an area where government policy and regulation are essential
if the full commercial and employment potential of the digital-content
economy is to be realized.
The digital revolution has transformed the modern world in ways

that are only now becoming clear. Although the economic costs have
been considerable, there have been off-setting benefits, one of which
is the emergence of the digital-content and digital-media sector. This
high-profile economic area, fully embraced by contemporary youth and
increasingly important to older consumers, emerged from garages, dorm
rooms, and basement computer labs to produce some of the most dynamic
and fastest-growing companies in the world. It remains unclear precisely
to what degree digital media will rewrite the economic fundamentals
of the world, but that a transformation is underway is undeniable. For
national and regional governments, wrestling with the present and future
of digital media and digital content has been like struggling with a
cloud—it is easy to see, hard to comprehend, and impossible to grasp.
Thus, the digital-media and digital-content sector is an apt symbol for
the challenges facing governments attempting to create sustainable,
prosperous, and growing economies in the face of global forces for
economic reinvention and dislocation.
This volume describes and explains the depth and breadth of the digital-
media sector around the world. Though there is a general understanding
of digital technologies from computers to smartphones, awareness of the
emergence of digital content as a force for economic and social change is
just developing. Video games, online music, books, newspapers, and video
streaming have dismantled entire economic sectors and built up new
ones. The economic impact of the digital-content sector (there are over
1.9 billion mobile-phone subscribers worldwide) is enormous, yet some
countries and companies benefit much more than others do. Governments
struggle to make sense of the digital-content sector and to determine
how best to support its development within their own countries.
The Global Digital Economy: A Comparative Policy Analysis begins by

placing government policies in context. Chapter 1 provides an overview
of the evolution of the digital-content field around the world, looking
at such issues as connectivity, Internet speeds, and other structural
issues. Chapter 2 examines all of the various sectors—video games, e-
government, online multiplayer games, e-education, e-commerce, and the
like—that make up the digital-content sector. In chapter 3, we consider the
efforts (often minimal) of governments to situate digital content within
national innovation strategies, which are the primary means by which
states have been promoting science- and technology-based economic
activity. Chapter 4 looks in more detail at a variety of specific government
initiatives and investments in digital media, providing regional profiles of
the different ways in which Europe, North America, East Asia, and other
parts of the world have approached the digital-content sector. Following
the examination of the growth of the digital-content economy to date,
Chapter 5 explores forecasts about the world’s digital-content future,
suggesting ways in which continued change in work and employment,
manufacturing, and other areas will be driven by the imperatives of
information and communications technologies. The final part of the book
makes a series of recommendations related to government policy and
digital content, building upon our analysis of the current limitations of
national policy and the prognosis for continued, even more rapid change
in the digital-content economy.
The analysis in this book is organized around three major themes: (1)
that national governments have underestimated the economic potential
of the digital-content sector, in large measure because existing policy

frameworks and mindsets are built around the traditional industrial
economy; (2) that there are important regional and cultural patterns
in digital-content policy, and government initiatives reflect both the
significant variations in the manner the digital economy has developed
in specific countries and regions and the differential abilities of national
governments to see the possibilities of digital content; and (3) that
the fast-changing nature of the digital-content field means that the
need for continued innovation in policy, regulation, and government
investments will continue to grow, requiring greater government and
political understanding of the real nature and potential of the digital-
content economy.
Digital content has emerged as a powerful global economic force, as

demonstrated through business development, the expansion in employ-
ment, and the growing level of digital activity in many sectors. Although
business has learned—more slowly than is generally believed—to move
at the speed of the Internet, governments continue to lag well behind, in
large measure because the digital-content field is comparatively young
and focuses on youth culture. These governments, politicians, and civil
servants are in for a surprise. People who were young teenagers when
the Internet first emerged as a major social phenomenon in the mid-1990s
are now in their early thirties. They are already voters, they work in
business and government, and within a decade they will be moving
into positions of decision-making authority. Young people who have
grown up digital will expect society, government, business, and the work
force to be digitally rich and digitally enabled. They are already the
primary consumers of paid digital content and are a veritable generation
of digital kleptomaniacs (although not so much in East Asia), raised in a
world of illegal digital downloads. Digital content will, in all likelihood,
become even more influential in the years ahead; it remains to be seen
when, where, and how digital-content policy catches up. The Global
Digital Economy shows that the policy transformation is underway, if
only haphazardly.
Notes
1. Moises Naim, The End of Power: From Boardrooms to Battlefields and

Churches to States; Why Being in Charge Isn’t What It Used to Be (New
York: Basic Books, 2013).
2. Nicco Mele, The End of Big: How the Internet Makes David the New Goliath
(New York: Basic Books, 2013).
3. Erik Brynjolfsson and Andrew McAffee, The Second Machine Age: Work,
Progress, and Prosperity in a Time of Brilliant Technologies (New York:
W. W. Norton, 2014).
4. Ibid., chapter 1.
5. “Social Media and the French: Nous twitterons,” Economist, 10 August
2013.
6. Dina Gusovsky, “Putin Wants to Control Russia Web Access,” CNBC, 24
September 2014, http://www.cnbc.com/id/102029070#.
Chapter 1
The Second Wave of

the Digital Revolution
What are digital content and digital media? Any effort to understand
digital-content policy development must begin with an appreciation of
the complexity and reach of the digital-content sector. The technological
advances behind the digital revolution from the personal computer to
handheld devices and now tablets are well known. There is ample discus-
sion of the next wave of digital technologies from the Sony SmartWatch
(a wearable computer, in this case a digital watch) to Google Glass (an
eyeglass-type Internet interface) and there are many forecasts about
continued improvements in speed, storage, processing power, and general
functionality. But to what end? Digital technologies are platforms; they
are not, in any real sense, the final consumer product. A smartphone or
any digital device, as Blackberry discovered after largely ignoring the
rapid growth of the app market, is only as good as the things users can do
with it. An iPad is a fascinating piece of technology, but without iTunes,
e-readers, and hundreds of thousands of other applications, it is useful
only as a paperweight. Digital content and media represent, therefore,
the place where technology and users meet, where the potential of the
Internet is unlocked for the benefit of consumers.
There is a growing understanding of the extent and nature of the digital

economy and the potential for long-term growth. However, there is much
less appreciation of the precise nature of the commercial innovations, the
variation by nation and region in the digital economy, and the different
and often aggressive steps that national governments are taking to engage
this expanding commercial field. On the transactional side, there is the
emergence of micropayments, digital wallets, virtual money (Linden
dollars in Second Life and QQ coins in China’s QQ.com ), virtual coupons,
payment gateways, content downloads, touch-and-pay systems, mobile
banking, digital top-ups for payments, smart cards, and B2B (business to
business), C2C (consumer to consumer), and P2P (peer to peer) payment
arrangements, to cite examples from the burgeoning digital financial
sector alone. One such innovation promoted by ING allows consumers
to deposit a check by taking a picture of the document and e-mailing it
to the bank. The technology has been functioning for at least three years.
On the content side, the development of mass-digitization efforts, the
surprisingly large market for mobile video in unexpected places like the
Philippines and Indonesia, data-mining applications, and the explosion
in demand for video games and multiplayer games have created fast-
growing digital economies.1 This economy is more than a trend or a fad;
it is, instead, a global force for change and commercial expansion.
Digital media defies ready definition. It is the place where technology

meets commerce and consumers, where applications stand between
digital delivery systems and users, and where content is shared, made,
transmitted, and transformed through digital processes. It is, in sum,
the social, commercial, and technological space where people (and,
increasingly, machines) interact and share data, moving vast quantities
of information, images, data, and other digital creations across large
distances at extremely fast speeds. Digital media also involves the
development, transmission, sale, and use of information and content by
The Second Wave of the Digital Revolution 19
way of digital technologies. The economy is shifting from one led by

toolmakers, or those who produce digital technologies, to one led by tool
users, or those who produce digital content.
The digital economy, which is the focal point for government engage-
ment with this sector, contains several key subsectors: digital infrastruc-
ture, management systems, production, and creation. It is the last that is
of primary interest here. Digital creation is the production of content by
which people share, exchange, buy, and produce material for the explicit
purpose of distributing it, for free or for money, across the Internet. This
field has emerged as one of the fastest-growing sectors of the modern
economy, producing new companies, jobs, and economic opportunities
at a rapid pace around the world. The digital-media sector builds on
strengths and characteristics different from those of traditional industrial
activity, instead relying heavily on artistic, design, and creative workers
and expanding the cultural and entertainment industries. Digital content
—much more than manufactured items—capitalizes on language and
cultural understanding and often requires considerable localization in
order to be effective. The key challenges in the commercialization of
digital content are not technological but cultural and linguistic. A blogger
writing about national politics in New Zealand is unlikely to find much
of a market in Cambodia. A digital artist expressing dismay about rapid
industrialization in the Shanghai region can find thousands of potential
consumers within the region but smaller numbers in the rest of the world.
Literary content written in Croatian might cause a national sensation
and attract enormous attention in Croatia and neighboring states but is
not likely to draw an audience in India or Nigeria.
One of the profound ironies of digital content, then, is that it capitalizes

on a truly global distribution system to produce and share material
that, more often than not, is of largely regional or national interest.
There are significant exceptions, particularly in the fast-growing online-
gaming field, but the reality is that digital content primarily serves
regional and national markets. Some items—digital music downloads,
YouTube videos, funny photographs, and the like—“go viral” and spread
to millions of users in a few hours. Content is an easily transmitted and
shared commodity. Digitized content can be moved instantly around
the globe but often operates under the tight control of national cultural,
copyright, commercial, and legal regulations. Amazon.com, therefore,
has many outlets (Austria, Germany, Canada, the United States, China,
the UK, Japan, France), each adhering to national laws and commercial
restrictions, particularly those related to intellectual property rights
and book-distribution agreements. Digital content is, as noted, often
culture or language specific. Sites selling Chinese-, Japanese-, Punjabi-,
or Hebrew-language material will not be of much interest to those who
do not speak or read that particular language. Video games, movies,
television programs, and other digital content available online often target
domestic audiences (plus ex-pat markets and the growing international
fan base for certain cultural materials, such as Japanese anime). There
are platforms, such as the peer-to-peer digital-sharing site Pirate Bay,
based in Sweden but used around the world, that give users anywhere
access to pirated digital content.
In reality, however, most users operate within the parameters of

national cultures and linguistic abilities. New technologies allow anyone
with access to the Internet to download the Australian television series
Underbelly (about the Australian crime world), but one assumes that the
primary market remains Down Under. Similarly, scan through iTunes
or Netflix, two highly popular, North America–based content-delivery
systems, and look for foreign-made content. Beyond British television
shows and movies and a rather small number of foreign films, the
material is overwhelmingly American (and much of it low-brow, at that).
There are websites (Internetradio.com, Live365.com, Shoutcast.com, and
Pandora.com) that provide instant and live access (assuming a strong
and reliable Internet connection) to over fifteen thousand radio stations
around the world.2 While usage patterns remain little known, it is likely
that most people use the system to connect to regional radio stations
or to a handful of highly regarded international feeds, like the BBC
World Service. The system is a boon to expats eager to stay connected to

their home community or country of birth, ironically serving to reduce
connectivity to the new country of residence and strengthening ties with
diaspora communities. The Chinese and Middle Eastern diasporas in
their continued vitality are the two best examples of widely distributed
populations that remain well connected to their home regions and cultures
through Internet content.
Digital media is, at root, the ultimate technology and commercial

agent of globalization, much more than the telephone (still expensive
for international calls, except through Internet-enabled systems) or the
airplane (too slow and too expensive for the vast majority of people). As
crowdsourcing experiences during the Arab Spring of 2012 demonstrated,
the world could follow in real time rapidly unfolding political develop-
ments halfway around the world. Consulting firms in India compete
with North American accountants for business thanks to the instant
transferability of digital records. Animation projects conceived in the
United States are completed in China and South Korea. ICT research
initiatives, once centered in North America, have increasingly shifted
to Asia. Whereas Western nations once produced much of the world’s
leading ICT manufactured goods, the business and employment have
now shifted to East and South Asia, which sell finished products around
the planet. Countries leapfrog up and down the comparative rankings
as major investments in infrastructure permit nations to overcome long-
standing liabilities and, with new wireless technologies, allow developing
nations to move quickly to capitalize on emerging business models and
opportunities.
The viability of the digital-content sector hinges on access to a reliable

and inexpensive system. Despite unevenness in terms of Internet access
(see fig. 1), cost (see fig. 2), speed, and reliability, usage is growing
around the world. Europe has engaged enthusiastically in the Internet-
based economy; over 22 percent of the world’s users and more than 60
percent of the continent’s population have access to the Internet. The
Scandinavian nations have 90 percent or higher Internet usage, topped

only by other prosperous nations like Iceland and Luxembourg. Across
Europe, Internet service is strong and in global terms comparatively
inexpensive, and excellent mobile-phone systems support a strong mobile
Internet sector. From the consumer side, then, Europe has embraced the
Internet and, less dramatically, the Internet economy, governments and
community leaders alike being convinced of the need to stay engaged
with the growing digital economy. Even Africa, where only 11 percent of
the population had Internet access as of 2010, has seen its market grow
from slightly more than 4.5 million users in 2000 to over 24 million in 2013,
along with rapid development in the sub-Saharan region. Asia’s Internet
penetration, representing only 21.5 percent of the total online population,
has jumped more than 600 percent in ten years, reaching near-total
coverage in Japan, South Korea, and Taiwan and seeing rapid growth
in China and slower expansion in Southeast Asia. In North America,
where close to three-quarters of the population have Internet access,
growth in the last decade nonetheless exceeded 140 percent. Almost 3
billion of the 7.1 million people worldwide had Internet access as of
2013, a number that continues to expand rapidly and that is aided by the
availability of Internet-enabled mobile phones in the developing world.
The demographic and infrastructure foundation of the digital economy,
therefore, has been broadening rapidly, providing a more substantial
base for commercial operations and increasing economic opportunity.
At the same time, the global reach of the digital world has placed an
increased emphasis on culture and language, chipping away at the initial
dominance of English-language and North American systems and content
and giving rise to culturally based opportunities in countries around the
globe. Some scholars of contemporary culture have discussed the ways
in which digital media and digital content can increase national cultural
integration and make some nations more resistant to foreign influences
or more effective at extending their own cultural influences.3 East Asia
is particularly committed to digitizing national artifacts and heritage
materials, producing some extremely innovative digital museums and

art galleries.
Although European languages remain prominent on the Internet, the

rapid digital growth of Chinese-language materials threatens to displace
combined European-language usage within the decade. As of 2011, over
565 million English speakers—representing 43.4 percent of all English
speakers and 27 percent of all Internet users—were connected to the
Internet (fig. 3). Slightly more than 500 million Chinese speakers, or 37
percent of all Chinese speakers and 24 percent of all Internet users, were
likewise connected. Japanese (78 percent of all Japanese speakers) and
German (80 percent of all German speakers) topped the global charts
in terms of Internet usage by language group. Of the top ten language
groups, which collectively represent 82 percent of Internet users, French
(17 percent of all French speakers) and Arabic (19 percent of all Arabic
speakers) had the lowest connectivity rates. For the smaller language
groups—representing 2.4 billion people and over 350 million Internet
users—the Internet-penetration rate was less than 15 percent. Overall,
more than 39 percent of the world’s 7 billion people were, as of 2013,
connected to the Internet.
The geographic distribution of Internet users is not at all consistent with

popular-culture imaginings of the digital universe. For all the discussion
about the Facebooks, Amazons, and eBays of the world, the Internet
environment is far more complex and much more nation centered. Of the
2.4 billion Internet users in the world as of June 2012, more than 1 billion
were in Asia, and almost 540 million were in China alone. Latin America
accounted for another 250 million, and Africa a full 167 million (48
million in Nigeria alone and another 30 million in Egypt). Iran, a country
that imposes considerable constraints on freedom of expression, had 42
million Internet users, close to half of all those in the Middle East. North
America had 273 million Internet users, and Europe provided another 519
million.4 Though English-language ability is becoming ubiquitous—and
many Asian Internet users do surf English-language sites—the reality is
that most Internet usage takes place in one’s mother tongue. Given that
Asia is already dominant in terms of the total number of users and that
the region’s growth rate is still quite dramatic, it is likely that Asian and
other non-English-language content will come to dominate the Internet.
There are several reasons for the wide variation in Internet usage
around the world: the availability and cost of Internet service, government
controls on the Internet, individual and regional poverty, and the lack of
technological sophistication among the population. The result has been
the emergence of substantial digital divides; people in wealthy nations
have cheap and fast access to huge amounts of digital content, while those
in poor and poorly served areas have little if any connectivity. The advent
of wireless Internet and a variety of innovative delivery systems (such as
efforts in rural India to provide sporadic connectivity through regularly
scheduled wireless-data-transferring buses that drive around picking up
and sending messages) is expanding the reach of the Internet, bringing
millions more users into the fold each year. As digital services and digital
content expand globally, the economic and social consequences of being
left behind digitally are likely to grow, adding to the urgency behind
government efforts in the developing world to expand connectivity and
in the developed world to expand digital inclusion.
Many of the Arab states have relatively low usage rates, and the vast
majority of those using the Internet there are young. In North Africa,
Internet cafés are popular, whereas in the Arab states in the Middle
East public spaces with mobile hot spots are common.5 Not surprisingly,
Internet growth is fastest in the areas with the lowest historical rates,
but the expansion continues to be uneven and sporadic in many parts
of the world (see figs. 4 and 5).
It is worth noting that some countries have almost no Internet pene-

tration, largely because of political instability, poverty, internal conflict,
and dictatorships. In Afghanistan and Bangladesh only five people in
one hundred had an Internet connection as of 2012. Only 3.8 percent of
people have connectivity in Benin, and a minuscule 1.2 percent are online
in Burundi; 3 percent are connected in the Central African Republic,

2.1 percent in Chad, and 1.7 percent in the Democratic Republic of the
Congo. Africa still has uneven access, but it is not the only area of
the world with limited Internet capabilities. Only 7.1 percent of Iraqis
have Internet, 11 percent of the inhabitants of Kiribati (in the Pacific), 7
percent in the Solomon Islands, 11 percent of people in Laos, 1 percent in
Myanmar, 10 percent in Pakistan, 7 percent in Turkmenistan, 17 percent
in Yemen, and 2 percent in Papua New Guinea.6 On a global scale, there is
ample opportunity for continued growth in connectivity. As the Internet
expands, wireless Internet moving much more quickly than land-based
systems, the social, political, and economic changes that have followed
connectivity in other countries are likely to occur elsewhere. Put differ-
ently, more than 60 percent of the world does not currently have active
and regular Internet connections, providing a valuable area for future
economic development (see table 1).
At present, there is little global understanding of the interplay between

global sites (most of them are interactive platforms for social media,
business networking, or content sharing) and leading region-specific
digital-content sites and services. This corporate structure produces a
skewed vision of the contemporary Internet and the future of the digital-
media sector. Consider, for example, the patterns of Internet usage in
Southeast Asia, not generally viewed as a hotbed of Internet activity. In
Vietnam, the top entertainment sites are, in order, YouTube, Zing MP3,
24h Online Advertising JSC, Kenh14.vn, and Nhaccuatui.com. In Malaysia,
the list consists of YouTube, CBS Interactive, Vevo, Viacom Digital, and
Dailymotion. The Philippines’ rankings share much with Malaysia’s—
YouTube, Vevo, CBS Interactive, Viacom Digital, and iTunes. Some of
these sites are also popular in Thailand (YouTube, Vevo, Dailymotion,
and iTunes), alongside one that is unique to the country (Mthai.com).
There are strong regional connections in the online retailing sector as
well; AVG.com ranks among the top five in five of the six Southeast
Asian countries; Lazada and Amazon also popular in four of the six.
Most countries in the region also have sites that are popular in one
nation but not in others: in Vietnam, these are Vatgia.com, 5giay.vn,

Enbac.com, and Thegioididong.com; in Indonesia, Indonetwork.co.id;
in Singapore, Giosis Group; in the Philippines, Multiply; and in Thai-
land, Weloveshopping.com and Rakuten. In the social-network area,
Facebook and other global sites (Twitter, LinkedIn, Tumblr) dominate; in
the Philippines, Facebook accounts for over 92 percent of social-media
activity, slightly higher than Thailand’s 89 percent. In Singapore, repre-
senting the lowest level in the region, almost two-thirds of all social-
media users rely on Facebook. Vietnam, where almost three-quarters
of all social-media participants use Facebook, there are three popular
national sites (Zing.vn, Diendanbaclieu.net, and Kenhsinhvien.net).7 This
mix of global platforms—mostly systems for using locally generated
content and connecting local people—and local sites is quite common
around the world. It would, however, be a mistake to assume that the
use of a foreign or international site automatically indicates that users
are engaging with foreign or international content.
Brazil, one of the largest nations in the world both geographically and
demographically and an emerging economic force, is the seventh-largest
Internet market in the world, slightly behind Germany, with over 45
million unique Internet users. (For comparison, the United States has
almost 190 million unique users, and Germany has 52 million.) The nation
accounts for a full 35 percent of all the Internet users in Latin America.
There, as in Southeast Asia, Facebook dominates the market, its almost
44 million users outstripping Google-owned Orkut’s by more than three
times (12.3 million). YouTube is the dominant online-video site, followed
by Vevo (a global music-video site), Facebook, and Globo (a Brazilian
news and entertainment site); each of the last three sees less than 50
percent of the Google/YouTube traffic. In the shopping area, national
firms dominate, including Buscapé Company (almost 15 million users),
UOL Shopping (11 million), and Zoom.com.br (3.5 million).8 In Brazil, as
in Southeast Asia and other regions, the combination of international
platforms, local websites, and locally produced content has created a
fast-growing digital-content field that is responsive to regional cultures
and local markets while capitalizing on the global economies of scale

and access to rapid technological innovation.
Popular Websites by Country, 2013
An appreciation of the global diversity of Internet engagement and

participation is illuminating. A quick overview of the leading Internet
sites illustrates the dominance of the key platforms (Google, YouTube,
Facebook, and LinkedIn), all of which permit the loading of country-
and language-specific content and facilitate personal contact. In other
words, regardless of their ownership and management, these sites are
not inherently culture specific in nature and content. Beyond these
platform sites, the nation-specific character of the leading Internet sites
demonstrates the heterogeneity of the digital-content world and the
strong and sustained importance of language and culture.9 This is evident
in the lists of the most popular websites around the world.
China
Baidu.com (search engine)

QQ.com (a one-stop online hub offering many different services,
online shopping, payment systems, games, and content sites)
Taobao.com (consumer-to-consumer sale service)
Sina.com.cn (media)
163.com (web portal)
Google.com.hk (Chinese-language search engine)
Weibo.com (microblogging)
Hao123.com (connected to Baidu )
Tmall.com (online shopping site)
Sohu.com (Internet services)
The next ten are Soso.com, Ifeng.com, 360.cn, Alipay.com, Google.com,

Youku.com, Jd.com, Sogou.com, Ku6.com, and Alibaba.co.
South Korea
Facebook.com (social networking)

YouTube.com (video sharing)
Baidu.com (Chinese-language search engine)
Google.com (English-language search engine)
QQ.com (a one-stop online hub offering many different services,
online shopping, payment systems, games, and content sites)
Google.co.kr (Korean-language search engine)
Naver.com (search portal)
Amazon.com (online consumer sales)
Taobao.com (Chinese consumer to consumer site)
Yahoo.com (search and service portal)
The next ten sites are Daum.net, Google.com.hk, Blogspot.kr, Hao123.com,

163.com, Soso.com, Sina.com.cn, Wikipedia.org, Warning.or.kr, and
Sogou.com.
United Arab Emirates

Google.ae (Arabic-language search engine)
Live.com (e-mail service)
Dubizzle.ca (Middle East and North Africa classified ads)
LinkedIn.com (professional networking)
Wikipedia.org (multilingual online encyclopedia)
The next ten sites are Souq.com, Twitter, Effdepo.com, Gulf News,
MSN.com, Ask.com, Delta-search.com, Goodleusercontent.com,
Bablyon.com, and BBC.co.uk.
Brazil

Google.com.br (Portuguese-language search engine)
Uol.com.br (retail)
Globo.com (Brazilian television portal)
Live.com (e-mail)
Yahoo.com (e-mail and search)
Mercardolivre.com.br (online auction)
The next ten listed are Wikipedia.org, Ig.com.br, Terra.com.br,

Twitter.com, Abril.com.br, LinkedIn.com, Wordpress.com, Xvideos.com,
Instagram.com, and Tumblr.com.
Russia
Yandex.ru (Internet services)

Vk.com (social networking)
Mail.ru (Internet services)
Google.ru (Russian-language search engine)
Odnoklassniki.ru (Russian reunion site)
Wikipedia.org (online encyclopedia)
LiveInternet.ru (web portal, social networking)
The next ten sites are LiveJournal.com, Avito.ru, Rambler.ru, Ocoz.ru,

Rutracker.org, Twitter.com, Blogspot.ru, Sberbank.ru, Narod.ru, and
Rbc.ru.
India
Google.co.in (Indian version of google.com focusing on Indian

content)
Blogspot.in (blogging)
LinkedIn.com (professional networking)
Indiatimes.com (Indian news sources)
Googleusercontent.com (Google partner site)
The next ten sites are Flipkart.com, Workpress.com, Amazon.com,

Twitter.com, Rediff.com, Blogger.com, Olx.in, Blogspot.com, Live.com,
and ESPNcricinfo.com.
Germany
Google.de (German-language search engine)

Amazon.de (online consumer sales)
eBay International (online consumer-to-consumer sales)
Web.de (e-mail)
GMX.net (e-mail)
The next ten are T-online.de, Bild.de, Uimserv.net, Spiegel.de,

xHmaster.com, Delta-search.com, Live.com, Bizcoaching.info,
Conduit.com, and Gutefrage.net.
Mexico

YouTube (video sharing)
Google.com.mx (Spanish-language search engine)
Live.com (e-mail)
Amazon.com (online consumer search)
Interbiz.me (information)
Twitter.com (social networking)
The next ranking sites are Mercadolibre.com.mx, MSN.com, Ask.com,

Tumblr.com, Xvideas.com, Softonic.com, Ihct.mx, Delta-search.com, and
LinkedIn.com.
Top-Ranked Mobile Internet Sites by Country, 2013
The following list identifies some of the most commonly used mobile
Internet sites in selected countries, representing a broad cross-section of
nations in terms of digital engagement. Many are platforms (like Tumblr)
and social-media sites (such as LinkedIn). A few major news sources
—as commonly from the United Kingdom as from the United States—
show up in several countries, as do gaming and digital-content sites like
DeviantArt.com. Some of the leading mobile Internet sites are nation
specific and are little known outside their nations of origin.
China: Hkgames.org, deviantArt.com, Tapastic.com, Bitedu.net,

Wwyw.com, Stackoverflow.com, Twitch.tv, 4shared.com. (Note,
by the way, that many of China’s top sites are listed in the data
as “hidden profile.”)
Japan: Worldpress.com, Tumblr.com, Youpouch.com, Veoh.com,

Wikia.com, Yfrog.com, Liveleak.com, LinkedIn.com, 4shared.com.
The Japanese list contains a significant number of English-

language-content sites.
United Kingdom: LinkedIn.com, Answers.com, Telegraph.co.uk,

Tumblr.com, Thesun.co.uk, Wikia.com, Channel4.com,
Digitalspy.co.uk, Huffingtonpost.com, Buzzfeed.com,
Urbandictionary.com.
Nigeria: Bleacherreport.com, LinkedIn.com, Givemesport.com,

Saharareporters.com, Express.co.uk, Thesun.co.uk, 4shared.com,
Topix.com, Clubcall.com.
Saudi Arabia: Twitlonger.com, Tumblr.com, Alyaum.com,

LinkedIn.com, Hexat.com, Yfrog.com, Twitpic.com,
Expartiates.com, Paltalk.com, Answers.com, Imgur.com.
United States: Facebook.com, MSN.com, Twitter.com, eBay.com,

Amazon.com, Yahoo.com, Bing.com, Microsoft.com, Pinterest.com,
Wikipedia.org.
The Moz Top 500 further highlights the global dominance of a small
number of platform services, each of which puts the user in control of
both the content submitted to the site and the usage of the site.10 The
top twenty global sites (as of 23 July 2013), with an indication of the
linking root domains (i.e., the number of other sites that link back to
the core site), are as follows:
• Facebook.com 9.8 million Social networking

• Twitter.com 6.5 million Social networking
• Google.com 6.2 million Search engine
• YouTube.com5.3 millionVideo sharing
• Wordpress.org 4.1 million Blogging
• Adobe.com 3.8 million Software applications
• Blogspot.com 3.3 million Blogging
• Godaddy.com 3.0 million Website production
• Wikipedia.org 3.0 million Online encyclopedia
• Wordpress.com 2.4 million Blogging

• LinkedIn.com 2.2 million Business networking
• Yahoo.com 2.1 million Search and service portal
• Amazon.com 1.5 million Online shopping
• Flickr.com 1.4 million Photograph hosting
• W3.org 1.3 million World Wide Web consortium
• Apple.com 1.2 million Apple services
• Myspace.com 1.2 million Social networking
• Tumblr.com1.1 millionSocial networking
• Pinterest.com 1.1 million Social networking
• Microsoft.com 1.0 million Microsoft services
The digital universe is a fluid space where companies rise and fall,
services come and go, trends wax and wane. People are spending more
time online but are shifting their use, for example, from e-mail to
social networking. As an economic sector, the digital world has more
in common with music and movie sales than with those of automobiles
and household products. It contains sharp generational differences. The
use of social networking, for example, is growing much faster among
those under thirty-four than among older people. Social media is much
more popular in North America and central and Eastern Europe than
it is in Africa (which records by far the lowest usage), the Middle East,
and Asia. Blogging, in contrast, is widely popular in East Asia, more
so even than in North America and Europe. The Twitter verse—the
enthusiastic sharing of news in 140-character bursts—produces some
fascinating results, highlighting the American-centric and pop-culture
orientation of this Internet service. In 2013, some of the top Twitter
events were the following:11
Second inauguration of Barack Obama

Super Bowl 47
Election of Pope Francis
Boston Marathon bombings
DOMA and Prop 8 rulings

Birth of the royal baby
Australian election
US government shutdown
Philippines typhoon
World Cup draw
At the same time as youthful Western users are tweeting away about
irrelevancies and transitory phenomena, the digital economy has been
growing rapidly in other areas, from online gaming to online university
courses, from government services to business-to-business e-commerce
operations. Even the kinds of devices (and the number of devices) people
use to access the Internet vary dramatically by country, as does app usage
and whether people pay to download apps (see figure 13).
The modern economy is increasingly defined by the activities, services,

reach, and potential of the Internet. It follows logically, therefore, that the
comparative wealth, prosperity, and security of individual nations will be
shaped by the capacity to install, maintain, and utilize the Internet. Indeed,
with good justification most government effort has focused on encour-
aging the development of high-speed, high-quality Internet services via
landlines, fiber-optic cabling, or wireless transmission services. In this
new Internet arms race, not surprisingly, some countries and regions
are rapidly pulling ahead, former leading nations are stagnating, and
developing upstarts are capitalizing on the comparatively low costs of
installing mobile Internet in order to leap forward.
The Economist’s Digital Economy Ranking provides a useful introduc-

tion to the general receptiveness of individual economies to digital-
media initiatives, for it evaluates the “e-readiness” of various countries
by looking at both the infrastructure in place and the nation’s capacity to
capitalize on the technology. The results, which do not speak specifically
to accomplishment and capacity in digital media and digital content,
highlight significant trends in the global digital ecosystem. Nordic coun-
tries remain among the leaders, exhibiting substantial performance in
all the areas covered by the survey. Finland’s sharp rise is attributed
to a rapid jump in the use of online services in recent years. Asia’s
leading economies dominate in several key infrastructure areas, including
broadband services and the quality of mobile telephone and Internet
services. The widespread use of fiber-optic cabling—Japan accounts for
one-quarter of the world’s subscribers to such services—has provided
a foundation for even more extensive digital-content delivery, in turn
potentially laying the basis for globally important content production
and commercialization.12
The digital economy continues to be dominated by telecommunication

technology companies, particularly in terms of larger enterprises. In 2010
close to 30 percent of the top 250 ICT firms in the world were in the
field of telecommunication services, and 27 percent produced electronic
manufactured goods. Only ten of the top 250 companies were software
firms, and only six were Internet companies. The United States dominated
the national list of top ICT companies, with seventy-five (30 percent of
the total); Japan had fifty-two firms, and Taiwan had eighteen. Canada
had seven companies among the leading 250 firms globally, the same
number as the United Kingdom.13 Digital-content firms are generally
small to medium-size companies, often heavily reliant on designers or
design teams and subject to substantial fluctuations in the marketplace.
Furthermore, the appetite of the largest digital-content firms (Apple,
Facebook, Google, Amazon, and others) is such that many of the small
firms have been quickly purchased by the major companies, often for
remarkable prices, allowing the latter to maintain their market position
and keep competitors at bay. Facebook’s decision to buy photo-sharing
firm Instagram for the striking sum of $1 billion is an excellent illustration
of this broader trend of corporate concentration at the top end of the
digital-content system.
The reach and impact of digital media can be seen in many areas,
including the continued expansion of the video-game sector, improved
revenues in e-commerce, and the growth of e-government and informa-
tion websites. Consider the impact of a single web service, Facebook—

the fast-growing and now ubiquitous social-media site. According to the
company’s website, the service had more than 1.31 billion active users as
of 1 July 2014, a scale unprecedented in the content industry. The service
is available in seventy languages, and 70 percent of users are located
outside the United States. The Facebook system has also attracted over
one million business users in 180 countries and provides access to more
than half a million Facebook applications. Over five hundred million
people use mobile phones and personal digital assistants (PDAs) to access
the Facebook system, a number that is starting to grow rapidly as the
company responds to the commercial importance of mobile phones. The
statistics are impressive for any company; that they represent the returns
for a firm founded in 2004 is a remarkable testament to the global reach
and transformative impact of the Internet.14
The possibilities on the content side are equally if not more striking.
There are growing signs of a rapid shift to online video consumption,
attesting some fascinating trends in the adoption of new technologies.
A 2010 survey of usage patterns completed by the Nielsen Company
revealed that the strongest markets for online video were in China,
Indonesia, the Philippines, India, and Mexico, areas without the kind
of ubiquitous cable-television systems available in North America and
much of Europe. Much the same held for mobile video, where the leading
countries (Philippines, Indonesia, China, India, Singapore, Egypt, Brazil,
United Arab Emirates, Vietnam, Thailand, and Saudi Arabia, with ratings
from 182 hours watched to 136) ranked well ahead of the United States
(55) and Canada (27). That many of the leading nations enforce strict
censorship of television broadcasting speaks to the politically and socially
disruptive potential of the Internet—and explains why some of the same
countries are investing heavily in Internet-control mechanisms in an
attempt to clamp down on the importation of foreign content. Over half of
all Internet users watch video regularly. North Americans, who continue
to see themselves as innovators in the digital space, and Europeans sit
well behind other regions in the use of online video. In total, 11 percent
of online consumers in 2010 watched video by way of a mobile phone,

albeit with wide variations between regions.15 The emergence of online
video as a major market force, representing a significant challenge to
regulated broadcasting and satellite television systems, creates major
opportunities for global content firms and encourages content companies
to identify effective payment and micropayment systems while raising
serious issues for governments regarding intellectual property rights,
digital piracy, and Internet security.
As noted, the Internet economy is not unfolding uniformly around

the world. For a variety of reasons, ranging from the wealth of the
population and the quality of national infrastructure to regional cultures
and consumer preferences, substantial variations have emerged in the use
of new technologies and the consumption of digital content. There are
countries, including most of those in Europe, the United States, Australia,
Colombia, and Chile, which have been called “digital hotspots” by the
Global Digital Media Trendbook, for they are home to over 75 percent
mobile penetration and to land-based Internet usage by over 40 percent
of the population.16 In Africa, Asia, and Latin America, mobile is much
more common than land-based Internet, whereas Canada’s land-based
systems are stronger than its mobile ones, which tend to be expensive
and inconsistent in that country (see figs. 9–13).
The same range of tastes and usage patterns holds for technology.
Argentinians prefer Android phones and other smartphones. Canadians
like Apple products, including iPod Touch, iPhones, and iPods. The United
States consumer market is dominated by Android phones, and iPhones
and iPads follow in popularity. The downloading of apps for smartphones,
computers, and tablets likewise has nation-specific attributes. South
Koreans are the most committed to apps: 70 percent of all users have
downloaded at least one free app, and 35 percent have purchased at least
one app. In Sweden, another “hot” Internet country, the numbers are
65 percent and 23 percent, respectively. In contrast, only 11 percent of
Spanish users have paid for an app. Half of all Japanese and American
connected consumers have downloaded a free app, and a slightly greater

proportion of Americans (23 percent) than Japanese (20 percent) have
paid for an app. The downloading or purchase of an application is, in
many instances, only the start of the commercial relationship. Many apps,
particularly in the gaming sector but increasingly on the information side
as well, charge for incremental content or services. “In-app purchases”
constituted an industry grossing almost $1 billion (US) in 2011 and are
predicted to increase more than five-fold by 2015. E-commerce sales are
expected to top $1.5 trillion by the end of 2014. Mobile and online payment
systems are expanding rapidly, particularly in the developing world. M-
Pesa, an African peer-to-peer payment system, has expanded rapidly,
playing a prominent role in countries like Kenya, where people have little
connection to formal banking institutions. Social media similarly shows
some important and perhaps unexpected patterns. Over 80 percent of
Internet users in China, Russia, India, and Brazil are engaged in social
media. Fewer than half the Internet users in the United States, Canada,
and Western Europe participate. Data indicates that in countries with
state-controlled or inefficient news systems, people use social media as
a replacement. Social media provides a means of working around official
or semiofficial forms of censorship, much to the chagrin of governments
in many instances.
The likely next wave of Internet development—the “Internet of Things,”

or ubiquitous computing—has substantial transformative potential. The
phrase Internet of Things refers to machine-to-machine connectivity, or
device-to-device connections, in the words of Bill Joy, to the develop-
ment of data, and to decision actions managed by computers.17 To date,
most Internet content has been human generated, relying on extensive
and often expensive data-creation and data-analysis systems. Via the
Internet of Things, tiny transmitters are imbedded in items, allowing
for massive quantities of data to be generated and shared globally. The
tagging of physical objects using a variety of technologies such as bar
codes, QR codes, and near-field communication devices would permit the
automated monitoring of all connected items. The ambitious aspirations
of this new Internet’s proponents raise many commercial and content

possibilities, allowing the effective management of resources, services,
human resources, and finances while expanding the degree to which the
Internet connects humanity. Machines take over an increasing number of
the functions hitherto managed by human hands. The Internet of Things
is an unrealized dream at present, although the pace at which individual
items are being produced with various tagging systems indicates that
technological oversight will become more of a reality each year. Inci-
dentally, the Internet of Things promises to be a global destroyer of
millions of jobs, replacing human hands with machines and adding to the
digitally driven recasting of the fundamentals of modern work.18 There
is, as well, a strong philosophical and humanistic response to the idea
of a machine-dominated world, a familiar meme in novels, movies, and
television programs and an issue that is attracting considerable attention
from scholars uncomfortable with the limited notice given its potentially
disruptive impacts of machines’ displacing human activities.19
Digital-content data comprises a commercial sector emerging from

infancy and, potentially, entering an era of prolonged growth. There are
substantial generational gaps, for young people are far more engaged
with certain parts of the digital-content economy, gaming, and social
media than their parents, whose connections are more with news and
information. That market penetration is only partial and inconsistent
around the world indicates areas of considerable growth potential.
Digital-content revenue streams remain a matter of great debate. Digital-
download income has risen steadily, particularly in Asia, and despite
early forecasts of an Internet advertising bubble, that sector continues to
grow steadily. The continued commercial success of e-retailing sites, the
shift of major news and analysis sites to paid content, the expansion of
subscription entertainment systems (and the success of the production
of Internet-first digital-content in the form of Netflix’s series Arrested
Development and House of Cards), and the continued strength of massive
online gaming systems all point to the future expansion of the sector.
Similarly, governments continue to migrate services and information
provision to online venues; schools, colleges, and universities experiment

with new forms of online course delivery; and content producers generally
seek digital means of both distributing and selling their material to
regional, national, and international users.
There is growing evidence of the reach and impact of the digital-content

sector, particularly as smartphones have emerged as global consumer
devices. Consider advertising, for example, one of the core digital revenue
streams. Many consumers research products online before making a
purchase, making it imperative that firms have a proper digital presence.
Mobile advertising has been shown to be effective in driving consumers
(particularly young people) into retail stores. Almost one-quarter of the
Fortune 1000 companies globally had developed smartphone advertising
campaigns by winter 2011 as a means of raising their profiles, up from
three companies doing so in the fall of 2009. Even as nimble and new
an Internet giant as Facebook initially underestimated the impact of
mobile devices and made a slow transition into the new digital space.
Whereas the advertising aspects of the digital-content economy are clear
already—Google is more an advertising firm than it is anything else—
the marketing, branding, and outreach potential of digital content is
only slowly becoming apparent. In China, for example, the five-hundred-
million-user microblogging site Weibo has emerged as a fast, efficient,
and inexpensive means of getting news about products, services, and
commercial opportunities into mass circulation.20 So it is in many other
nations, although companies have been fairly slow to recognize the
potential, and governments have been even slower to understand the
broader economic and social implications.
The shape of the digital economy remains uncertain. A decade ago,

video-rental firms like the US-based Blockbuster built on the ready
availability of digital movies on DVDs seemed assured of a profitable
future. When Internet delivery surfaced as a technologically viable
solution, most video firms paid little attention initially and then sought
to meet that competition head on. In the case of Blockbuster, the effort
failed, and the company headed into bankruptcy. The Japanese equivalent,
Tsutaya, retains many of its rental outlets but has also been a pioneer
in Internet delivery of video programming. Companies like Yahoo that
seemed destined for longevity staggered in the new environment. Rovio,
the widely successful Finnish gaming firm behind Angry Birds, rose rapidly
and is now struggling. Blackberry, a cultural icon only a decade ago,
has plunged in North American markets, although it remains popular in
many developing nations—ironically, a victim of the company’s inability
to anticipate the importance of digital content. Digital firms come and go.
Trends wax and wane. In East Asia, where the digital-content sector is
better developed and more sustainable (for now, at least), Japan’s Rakuten
and China’s Alibaba have emerged as major commercial forces, the
former with one of the most aggressive global strategies for e-commerce
development. Importantly, the digital sector is experiencing shakeouts
that are not dissimilar to those going on in global finance, real estate,
tourism, manufacturing, and professional services. The digital-content
economy is not in turmoil; the global economy is in an era of grave
uncertainty and flux, and the digital-media sector is one of the most
promising avenues for sustained economic development.
There are indirect ways in which digital engagement has signifi-

cant effects on the economy and society. Anonymous commentary and
crowdsourcing rating systems have become commonplace, helpful for
consumers, and worrisome to businesses. Many retail sites, including
booksellers such as Amazon and Kobo, encourage people to rate indi-
vidual books; eBay allows buyers to rate retailers, providing an excellent
indication of reliability. Tripadvisor.com, the leading evaluation site for
hotels, tourist sites, and restaurants, and Urbanspoon for restaurants are
two of the most popular consumer-rating services. Ratemyprofessor.com
has sent chills across university campuses, giving students the chance to
post anonymous evaluations of their instructors (including the oppor-
tunity to give professors a chili pepper if they are deemed “hot”). The
university rating systems appear somewhat harmless, albeit not for a
faculty member who has been skewered by students, and the concept
is spreading to other areas. Ratemydoctor.com provides comparable

evaluations of medical professionals—a useful service for consumers
looking for reliable and trustworthy physicians. Many retail outlets allow
for anonymous product reviews, and online newspapers and other rich-
content sites promote comments from subscribers and visitors, even if
the commentary is often unsophisticated or caustic and critical. The
opportunity for consumers to engage directly with other consumers and
to thus influence purchases and company profits is a solid indication of
the ability of digital systems to affect the retail sector. That the system has
reached into the area of professional services portends future develop-
ments. The reaction of retailers and service providers to negative reviews
is but one portent of the serious impact of consumer empowerment.
An even better one, and a classic sign of capitalist creativity, is the
emergence of professional firms—specializing in the field of “reputation
management”—that promise to rehabilitate professionals or companies
that have been harshly reviewed on the Internet.
The dark cloud in the Internet environment is digital piracy. File

sharing, particularly through peer-to-peer systems, makes it simple for
users to download movies, television programs, music, and books with
ease and, if they wish, without cost. Some regions are much less prone
to piracy—Japan is particularly notable for self-restraint in this area—
but the reality is that illegal downloads undermined much of the global
commercial music industry, resulting in the closure of thousands of
music stores. Online streaming, illegal or otherwise, destroyed the video-
rental business in most countries and threatens to eliminate the physical
distribution of digital content. There are many legitimate digital-content
sales sites and many creative attempts to engender market demand for
artistic content (some independent movie sites, for example, allow users
to pay what they feel a movie is worth, rendering payment voluntary
in the hope of generating both an audience and some revenue). The
ubiquity of digital theft and the inability of governments to regulate such
activity constitute the major brake on the digital economy. Companies
that invest tens of millions of dollars in a blockbuster movie are furious
when they see hundreds of thousands of digital downloads occurring

within days, sometimes hours, of the film’s appearing in movie theaters.
Likewise, several major rock bands have taken the lead in suing people
who download their music without paying, a rather sharp disconnect
from the supposedly rebellious nature of the rock-and-roll industry. In
2000, the rapper Dr. Dre, the rock band Metallica, and the right-wing
rocker Ted Nugent led the public battle against digital piracy, launching
intellectual-property-rights lawsuits and adopting a stance that earned
them considerable criticism.21 Conversely, many performers and creators
capitalize on the distribution capabilities of the Internet to generate
paying audiences for their work or, less directly, to attract people to
their live performances. Until the piracy issue is addressed—and the most
promising current systems allow for micropayments (i.e., small, per-
use fees for digital content), subscriptions (such as Netflix), and easy-
access systems (iTunes, Spotify, and Grooveshark)—the growth of the
digital-content sector will be constrained and will work more effectively
in areas like Singapore, Japan, and South Korea, where such piracy is
controlled. In the future, digital-content producers will learn to capitalize
on what marketers describe as the “long end of the tail,” the ability to use
the Internet to distribute specialized content to specific users. Until its
producers are assured of being paid for such content, however, there will
be limits on the sector’s growth. From the consumer’s perspective, the
expansion of content delivered in a controlled, fee-based format will likely
produce a great selection at more reasonable prices, subscription-based
services presenting the best prospect for the sustainable development
of the field.
There is, of course, a contrary view about access to material via

the Internet, one embodied in organizations like the initial Napster (a
peer-to-peer sharing network), WikiLeaks, Pirate Bay, BitTorrent, and
4chan.org. For the emerging population of digital natives, openness
was an integral part of the Internet, and price, firewalls, and other
technical blockages interfered with the open flow of information. A
global network of digital libertarians, including many of the people
behind the file-sharing websites, had a great deal in common with the
early pioneers of rock and roll, which fought censorship and attempts
to restrict the sharing of the new music. The challenge was recently
extended to Google, which provides ready access to news reports from
around the world, a business model that angers many producers who
gain no revenue from the use of their content. Spanish politician Juan
Carlos Rodriguez, known for his advocacy of an open Internet, argued
in 2010 that “the internet is synonymous with freedom and free access
to culture. Everything that restricts that freedom for political reasons,
such as in China, or for economic ones, such as wanting to charge for
access or certain pages, breaks the spirit of the internet, it breaks the
invention.” Spain, of course, has been a hotbed for digital piracy, leading
companies to consider their presence in the country and convincing the
government to draft additional protective legislation for digital content.22
In Canada, more disposed to government regulation than many other
countries, over seventy thousand people signed an online petition to
protest proposed government regulation of the Internet and plans to
provide greater protection for digital content.23
Given that intellectual property rights lie at the center of the digital-
content economy, the presence of this countercultural element has been
of crucial importance. While companies and many performers complain
about lost income and pirated content, advocates for the open Internet
argue that free digital exchange has created and expanded markets for
content and maintained high returns to content producers. They argue,
with justification, that the collapse of video stores owes much more to the
rise of fully legal cable television (including video on demand) and legal
online systems such as Netflix and Hulu than it does to illegal downloads.
Furthermore, advocates of a more open system point out that shared
content does not automatically entail lost sales; many of the people
listening to pirated songs, television programs, movies, and books would
not, in the absence of a digital copy, have purchased a physical version of
the product. The discovery of extensive government monitoring of the
Internet—most notably by Edward Snowden—and ongoing controversy
about government regulation of digital content sparked a global debate

about the regulation and overregulation of the digital universe.24
Nonetheless, the losses through piracy are significant. The rapid rise
in digital piracy of music contributed to the rapid reconfiguration of
the industry, although iTunes, Spotify, and Pandora moved into the
space to provide legal, cheap, and easy access to digital copies. Movie-
download sites continue to flourish, although some of their advocates, like
Pirate Bay and Kim Dotcom, have run into significant legal challenges.
The book industry has faced lower-profile digital attacks, including
through P2P file-sharing sites like Pirate Bay, but authors have also
used the digital downloading system to produce books and find markets
for manuscripts that otherwise might never have seen the light of day
(see, for example, www.hundredzeros.com, www.getfreeebooks.com,
www.freetechbooks.com, www.scribd.com, www.bookyards.com). It will
take some time for a full understanding of the digital-content economy to
emerge and for the balance between the market-development and market-
loss elements of the open Internet to become clear. At present, however,
there is a global legal and political conflict between the content producers
or content owners and Internet libertarians who favor an open web.25
National and regional governments are not blind to the possibilities

of the Internet-based content economy. Indeed, there has been consid-
erable international debate about the best means of responding to the
opportunities for the digital sector. In its 2010 report on the digital
economy, the Economist Intelligence Unit observed that substantial
national commitments were required if countries were to remain compet-
itive in the digital age. The Organisation for Economic Co-operation
and Development (OECD), surveying recent trends in IT, followed a
similar line when it identified the top policy priority areas for national
governments in 2010. The survey suggests that traditional policies—
investments in training, infrastructure, and technology-focused research,
development, and commercialization—remained high on the agendas of
national governments (see table 6). Once again, digital-content produc-

tion is notable for its absence from the list of priorities.
ICT remains important to governments. Key international observers

understand the general significance of the sector. But in these cases,
the production, sale, and distribution of digital content—the meat in the
Internet sandwich—are given only passing attention. It is rather like
nations building railways without having given sufficient thought to
which goods will be distributed via the new infrastructure (an error made
many times in the past decades) or overbuilding highways with the vague
expectation that providing the roads would produce traffic on its own.
(The construction of now relatively unused expressways throughout
Europe owing to European Union financial support shows the risks of
such poor planning.) In the end, infrastructure is valuable only because
of the economic activity that it facilitates. Without online services and
digital-content delivery, a fast, reliable, and low-cost Internet system is
about as valuable to the country as one of the Shinkansen (bullet trains)
traveling to sparsely populated areas or as four-lane expressways into
the rural areas of Portugal. They are impressive projects, they often win
politicians major electoral points, and they demonstrate government
commitment to an area or sector. In the end, however, infrastructure
without sustained usage is a poor investment. The absence of integrated
planning for digital content in the global race to build ICT capabilities
presents an area of potential weakness in national economic strategies or,
at best, a serious opportunity lost by governments spending billions or
encouraging investment in Internet facilities without making appropriate
efforts to promote regional and national digital-content production.
In sum, digital content is a vast, expanding, and largely untapped

commercial sector. It has unfolded with some government investment
in and regulation of the Internet and wireless infrastructure but with
uneven public policy engagement overall. Thousands of companies have
emerged, large and small, in an industry that is notoriously fickle and
uncertain. Countries, investors, and (most important) consumers are
enamored with the digital-content sector, but governments have been

much more reluctant. While innovation investments continue to pour
into still unproven scientific and technological areas, like biotechnology,
quantum computing, and nanomaterials, governments struggle to find a
successful approach to promoting and sustaining digital-content initia-
tives. Politicians and government officials find it much easier to work
with established industries, particularly in manufacturing, and with well-
established large-scale firms. Computer geeks and creative professionals
rule in the digital-content sector, but they do not generally interface
well yet with policy makers and innovation planners. As a consequence,
government policy and innovation strategies remain disconnected from
one of the most important sectors of the evolving global economy.
Figure 1. Distribution of Internet users, 2000–2012.
Source. Data from the World Bank, http://data.worldbank.org/indi-

cator/IT.NET.USER.P2.
Figure 2. Broadband prices versus speed, 2012.
Source. Data from OECD, http://www.oecd-ilibrary.org.cyber.usask.ca/content/

graph/comms_outlook-2013-graph140-en.
Figure 3. Internet users by language, 2011.
Source. Star Translation Services, http://www.star-ts.com/translation-blog/

index.php/2012/06/14/top-10-internet-languages/.
Figure 4. Internet users around the world.
Source. Go Globe Blog, http://www.go-globe.com/blog/mobile-web-traffic/.

Figure 5. Internet users by region.
Figure 6. Mobile-phone subscriptions around the world, 2004–2013.

cator/IT.CELT.SETS.P2/COUNTRIES/1W-CN-IN-ID-MY-PH-VN?
display=graph.
Figure 7. Internet users around the world, 2004–2013.

cator/IT.NET.USER.P2/countries/1W-CN-IN-ID-MY-PH-VN?display=graph.
Table 1. Mobile Internet services market, worldwide, 2009–2015.
Source. IDATE in “Apps and the Mobile Internet,” World Newsmedia Network,
2012.
Figure 8. US device ownership over time.
Source. Data from the Pew Research Center, http://www.pewinternet.org/data-

trend/mobile/device-ownership/.
Note. As of January 2014, 90 percent of American adults had a mobile phone,
58 percent of American adults had a smartphone, 32 percent of American adults
owned an e-reader, and 42 percent of American adults owned a tablet computer.
Table 2. The top twenty-five: Leading Internet nations.
Source. World Economic Forum, http://www3.weforum.org/docs/

WEF_GlobalInformationTechnology_Report_2014.pdf.
Table 3. The bottom twenty-five: Lagging Internet nations.
Source. World Economic Forum, http://www3.weforum.org/docs/

WEF_GlobalInformationTechnology_Report_2014.pdf.
Figure 9. Mobile share of noncomputer device traffic.
Source. Joe Nguyen, “Getting to Know the Connected Consumer: From

Computers to Tablets to Smartphones,” ClickZ, 26 October 2011. http://
www.clickz.com/clickz/column/2281750/getting-to-know-the-connected-
consumer-from-computers-to-tablets-to-smartphones.
Table 4. Countries with the highest rate of mobile share of web traffic.
Source. Royal Pingdom, "Mobile share of web traffic in Asia has tripled since,
2010, 8 May 2012. ( http://royal.pingdom.com/2012/05/08/mobile-web-traffic-
asia-tripled/)
Table 5. Mobile share of web traffic worldwide.
Source. Royal Pingdom, "Mobile share of web traffic in Asia has tripled since,
2010, 8 May 2012. ( http://royal.pingdom.com/2012/05/08/mobile-web-traffic-
asia-tripled/)
Figure 10. Noncomputer traffic share by devices.

Figure 11. App downloads and usage by country.
Source. IDC ConsumerScape 360°, December 2011, World Newsmedia Network

2012.
Table 6. Top ICT policies for the economic recovery.
Source. Based on thirty responses to the OECD information technology (IT)

Outlook Policy Questionnaire 2010, section on “current IT policy priorities and
new directions.” http://dx.doi.org/10.1787/888932330365.
Note. The table ranks ICT policy areas by the number of countries that place
a high priority on specific policy elements as a means of promoting economic
recovery.
Notes
1. KPMG, Mobile Payments in Asia Pacific (New York: KPMG, 2009); and the
Nielsen Company, How We Watch: The Global State of Video Consumption
(New York: Nielsen Company, 2010).
2. The sites vary in content. Some, like Pandora, provide access to Internet
radio stations that operate only in this format. Others provide access via
streaming to actual AM and FM radio stations.
3. See Daya Kishan Thussu, ed., Media on the Move: Global Flow and Con-
tra-Flow (New York: Routledge, 2007); and Nissim Otmazgin, “Contest-
ing Soft Power: Japanese Popular Culture in East and Southeast Asia,”
International Relations of the Asia Pacific 8, no. 1 (2008): 73–101.
4. Internet World Stats, “Internet Users in the World: Distribution by Geo-
graphic Region, 2012 Q2,” www.internetworldstats.com/stats.htm.
5. “World Usage Patterns and Demographics,” August 2013,
www.newmediatrendwatch.com/world-overview.
6. World Bank, “Internet Users (per 100 people),” http://data.worldbank.
org/indicatorsit.net.USER.P2.
7. Comscore, “Southeast Asia Digital Future in Focus: Key Insights and
Digital Trends from Southeast Asia,” white paper, 26 July 2013, http://
www.comscore.com/Insights/Presentations_and_Whitepapers/2013/201
3_Southeast_Asia_Digital_Future_in_Focus.
8. Comscore, “Brazil Digital Future in Focus 2013: Key Insights from 2012
and What They Mean for the Coming Year,” white paper, March 2013,
http://www.slideshare.net/renatogalisteu/brazil-digital-future-in-focus-
2013-comscore-maro-2013.
9. The lists and the rankings come from “The Top 500 Sites in Each Country
or Territory,” www.alexa.com/topsites/countries/.
10. See “The Moz Top 500,” 10 January 2014, http://moz.com/top500/pages.
11. “2013 Year on Twitter,” https://2013.twitter.com/#category-2013.
12. Economist Intelligence Unit, Digital Economy Rankings 2010:
Beyond E-Readiness, 2 July 2010, graphics.eiu.com/upload/
EIU_Digital_economy_rankings_2010_FINAL_WEB.pdf.
13. Organisation for Economic Co-operation and Development, OECD Infor-
mation Technology Outlook 2010 (OECD Publishing, 2010), doi:10.1787/
it_utlook-2010-en.
14. “Facebook: 10 Years of Social Networking, in Numbers,” Guardian, 4

February 2014, http://www.theguardian.com/news/datablog/2014/feb/0
4/facebook-in-numbers-statistics; “Facebook Factsheet,” 28 November
2010, http://www.facebook.com/press/info.php?factsheet.
15. Nielsen Company, “How We Watch.”
16. World Newsmedia Network, Global Digital Media Trendbook 2012–13, 1st
ed. (N.p.: WNMN, 2012).
17. For an interesting—and critical—commentary on this concept, see Becky
Worley and David Poge, “Dumbest Tech Term at CES,” Yahoo News,
10 January 2014, http://news.yahoo.com/dumbest-tech-term-at-ces-15
4244517.html.
18. The Second Machine Age is the best example of this scholarship.
19. One of the best such studies is Will Wheeler, “Bruno Latour: Document-
ing Human and Nonhuman Associations,” in Critical Theory for Library
and Information Science, ed. Gloria J. Leckie, Lisa M. Given, and John
Buschman (Santa Barbara, CA: Libraries Unlimited, 2010),189–204.
20. “Weibo: Powerful Marketing Tool,” Nikkei Weekly, 21 August 2013.
21. David Bach, “The Double Punch of Law and Technology: Fighting Music
Piracy or Remaking Copyright in a Digital Age,” Business and Politics
6, no. 2 (2004): 1–35, http://david.bach.profesores.ie.edu/David.Bach/
Ficheros/4.pdf.
22. Andrew Eatwell, “Lost at Sea in the Fight against Digital Piracy,”
Iberosphere, 5 April 2010, http://iberosphere.com/2010/04/lost-at-sea-in-
the-fight-against-digital-piracy/867.
23. “No Internet Lockdown,” https://openmedia.ca/lockdown. See also http://
www.savetheinternet.com/sti-home.
24. Glenn Greenwald, No Place to Hide: Edward Snowden, the NSA, and the
US Surveillance State (New York: Metropolitan, 2014). See also Dana Bag-
well, An Open Internet for All: Free Speech and Network Neutrality (New
York: LFB Scholarly Publishing, 2012).
25. Hannibal Travis, Cyberspace Law: Censorship and Regulation of the Inter-
net (London: Routledge, 2012); Richard Spinello, Cyberethics: Morality
and Law in Cyberspace (New York: Jones & Bartlett, 2013); Jack Gold-
smith and Tim Wu, Who Controls the Internet? Illusions of a Borderless
World (Oxford: Oxford University Press, 2008); Paulina Borsook, Cyber-
selfish: A Critical Romp through the Terribly Libertarian Culture of High
Tech (New York: Public Affairs, 2000).
Chapter 2
The Contours of the

Digital-Content Economy
That governments have not yet fully embraced the digital economy is,
in part, a reflection of the newness and unique character of the content
industry. It is, after all, difficult to motivate politicians, given that the
first burst of enthusiasm for the sector—the dot-com boom of the 1990s—
resulted in a catastrophic meltdown that presaged the financial lunacy of
the early twenty-first-century global housing bubble. Even more, when
most segments of the digital-content economy still involve pornography
and online gaming, it is difficult for national governments to embrace
the sector. But this new content economy, which includes the production
of digital products for distribution online and the provision of digital
services via the Internet, is much larger and more diverse than a handful
of unpalatable commercial fields.
Digital technologies have spread faster and farther globally than any
previous disruptive technologies have. This is the most oversold and
underestimated technological revolution in history. The new technologies
have destroyed long-established sectors—as anyone who has tried to
buy traditional camera film or a videocassette knows only too well—
and have created entirely new industries, such as online gaming. The
Internet has turned front-porch activities such as garage sales into a
massive, global peer-to-peer economy. It has increased transactional
speeds, reduced communication costs, replaced millions of industrial and
service workers with computers, enabled tiny companies to sell their
products worldwide, and uprooted the entire entertainment industry.
Digital technologies have also made theft and harassment easier while
allowing for an explosion in security and spying. The distributive abilities
of the digital economy are so all encompassing, and the potential for
business loss and commercial growth is so dramatic that it is perhaps
not surprising that politicians and government officials have struggled
to come to terms with the present and future dangers and possibilities
of the digital-content revolution.
What is clear is that there exists only a partial understanding of the

scale and scope of the digital-content industry, and there is limited
appreciation for the speed with which these technologies are disrupting
established economic orders. Although the impact of digital technologies
and the digital-content sector generally on existing patterns of business,
government service, and work lies beyond the reach of this study, it
is increasingly apparent that the digital revolution is overturning the
established order and is a crucial part of the deindustrialization process
that is sweeping the modern world. Digital-content services played a
crucial role in facilitating the global financial-services web that generated
the prolonged economic boom of the late twentieth century. And it was
high-frequency trading systems and hopelessly complicated financial
instruments, packaged, sold, resold, and repurposed in digital formats in
a way that predigital systems would not have sustained that crippled the
United States’ economy in 2008–2009. The following brief overview of the
core elements in the digital-content economy provides an introduction to
the sector and its key components, offered in the full knowledge that this
industry changes rapidly. Many of today’s commercial stars will not be
around in a few years, having become victims of overzealous promotion,
having been absorbed by the megadigital firms that dominate the so-
The Contours of the Digital-Content Economy 65
called free-wheeling Internet space in a way that the automobile sector

needed decades to achieve in manufacturing, or having morphed into
yet another format to suit technological or creative changes.
Digital Platforms
The Internet requires a common technological foundation, and this is

provided by a series of major digital platforms. These services, YouTube,
Facebook, MySpace, and their foreign equivalents (e.g., Orkut, Gree, and
Qzone), are comparatively benign and neutral sites, allowing users to
post content (messages, photographs, videos, and the like), although all
maintain a measure of editorial control over the material. Whereas Google
has used its remarkable search-engine technologies to create a range of
services—Google Maps, Google Street View, Google Earth, Google Books,
Google Scholar, Google News, and many others—its cornerstone business
continues to be the product that converted Google from a company
name into an everyday verb. These services have millions or hundreds
of millions of subscribers and regular users. They often have linguistic
variants, operating in a variety of countries around the world. The
material on these platforms is technically available to anyone who wishes
to view it, but in reality language and culture remain substantial barriers
to full interaction. Japanese users typically stick to Japanese versions
of the global sites (e.g., www.google.co.jp) rather than turning to the
global English-language site. Chinese users rely heavily on Baidu.com for
Chinese-language searches; South Koreans use Naver.com. The platforms
are the equivalent of nineteenth-century shipping companies, early
twentieth-century railways, and post–World War II airline firms: they
are the stars of the Internet firmament, globally ubiquitous, exceptionally
rich and powerful. Unlike the earlier role models, however, the platform
companies have a remarkably small number of employees. Facebook,
although launched in an initial public offering (IPO) that brought in $16
billion,1 has only approximately 3,000 employees—the size of a large
automotive-assembly plant’s payroll. Google, despite its global reach, has
only 44,700 employees worldwide. Open Text, a Canadian-based software

company whose products hide in the background of hundreds of millions
computers in every country on earth, has only 5,000 employees, half
of them in the Waterloo, Ontario, head office. Never before have such
globally influential companies, those dominating a sector and shaping
the future of the world’s economy, been so small in terms of employment
and physical footprint.
Animation and Japanese Anime
The animation sector, its roots in the now-distant past of hand-drawn,

single-frame production, was an early adopter of the new digital tech-
nologies. Animation allowed producers to move quickly from the creative
work through film production as computers both assisted with the design
and drawing of the initial images and permitted the rapid and cost-
effective transition from storyboards to full programs. Fast-emerging
technologies, such as video capture, allow animators to connect human
movement with digital production, making animated characters ever
more lifelike and realistic.
Japanese animators have long been among the best in the world,
sustained by a vibrant local demand for their television, movie, and
comic-book products. They remained among the leading producers
of high-quality animation as the industry shifted to digital formats.
The early development of Japanese animation was supported by the
country’s love of manga (comic books) and the immense popularity of
early animated television programs like Astro Boy.2 Over the next thirty
years, Japanese animation became an annual multibillion-dollar export
industry. Internationally popular shows include Dragon Ball, Naruto,
Death Note, and One Piece, among many others. Popular in North America,
Japanese anime attracted even greater interest in East Asia, Latin America,
and Europe. Early Japanese animation comprised primarily science-
fiction, monster, and futuristic programs, but gradually it has crossed
into other genres (including pornography) and has even aimed beyond
its traditionally young audience.3 Korea also has an animation industry,

but it is less well known than Japan’s because Korean studios have made
production agreements mostly with American and Japanese animation
companies. Korean firms have produced episodes for television series
such as the Simpsons and Justice League Unlimited, for example.4
The animation industry has a long-standing commercial base, popular-

ized by Walt Disney Studios, and was one of the earliest examples of the
extension of product lines into toys, music, arcade games, theme parks,
and other spin offs. As computer-based technologies improved, animators
moved quickly into the new mode, producing more numerous and higher-
quality films faster than before. The new films were not cheap—Pixar
Studio’s three-movie Toy Story sequence cost $190 million to produce—
but the impressive global demand for the animation and its commercial
products more often than not recouped the costs. The Toy Story trilogy,
incidentally, generated theater and video sales of $1.9 billion.5
The availability of computer technologies also made animation one of

the first commercially successful examples of outsourcing. Animators in
the United States and Canada, where the sector remains strong, continue
to do the core creative work and produce the storyboards and central
characters. But more and more of the detailed work is being distributed
to animation studies in China and India, where workers paid a small
percentage of North American wages fill in the rest of the animation.
Opportunities are spreading farther afield. Monk Studios in Thailand,
for example, has enjoyed considerable success in animated films.
Video Games
Like animation, video games have a lengthy history, having evolved from
arcade games and the first computer-based games, like Pong (a simple
ping-pong-like game) and Nim (a variation of pick-up sticks). The games
developed for the Atari and Commodore devices developed cult-like
followings (the simple games are now available as mobile-phone apps—
a prime example of digital nostalgia). The beginning of the video-game

sector was led by Japan, which produced the Nintendo Famicom, Sony
PlayStation, and other consoles that dominated the global market for
video gaming. Nintendo launched Famicom in 1983, and the company
quickly became a household name around the world, selling almost sixty-
two million units globally. Super Mario Bros. and Pokémon, games designed
for Nintendo machines, were huge hits, as were two other consoles—
2004’s Nintendo DS and 2006’s Wii.6 Japan’s traditional advantage has
been in the relationship between the hardware and software sectors.
Many Japanese companies would produce for either the Nintendo or the
Sony consoles, and large numbers of these games would be meant only
for the Japanese or East Asian markets. In 2010 Sony surpassed Nintendo,
selling more than 2.6 million PlayStation Portable units.7 Along with
Microsoft, Sony and Nintendo have dominated the global market for
home consoles since the early 2000s. The year 2010 saw an explosion
in the popularity of smartphones (more than one billion smartphones
were sold in 2013),8 on which games can be downloaded as apps at a
much lower cost. Japan’s DeNA and Gree were some of the first into the
market, followed by GungHo Online Entertainment. (GungHo’s game
Puzzle and Dragons has been a phenomenal success. The game now has
over fifteen million users, mainly in Japan, and had vaulted the company
to a valuation of $14.4 billion as of June 2013.9) France’s Gameloft and
the United States’ Mobile Age, Ambrosia, Demiforce, and Popcap Games
are other successful mobile-game developers. In response, Microsoft
partnered with KLab Inc., a Japanese smartphone-game developer, to
adapt its Xbox games to the smartphone platform.10 The emergence
of these alternative digital games has had an enormous impact on the
sector, including Nintendo, which is struggling because of the increased
availability of free and inexpensive online games.11 To improve sales of
its most recent console, Wii U, Nintendo has begun offering developers
software that will allow them to convert their smartphone games for
use on the console.12
In the early 2000s, global sales of video games began to exceed receipts
from movie theaters. Sales of games (not including consoles or accessories)
in the United States totaled $15.9 billion in 2013 and over $20 billion
in 2013 in the United Kingdom, France, Germany, Italy, Russia, and
the Netherlands combined.13 Game producers expanded beyond Japan
and the United States to include countries like France (Vivendi, Ubisoft,
and Bigben Interactive). Video gaming began as a part of youth culture
—boys were particularly fond of the technology and the violence of
many games—but evolved as the youngsters grew into adults. Japanese
development of the Wii, which rested on the reapplication of an old
technology, expanded the reach of the video-game sector into the adult
market, particularly for women (Wii Fit has been remarkably popular;
as of 2013, almost twenty-three million units had been sold worldwide).
The development of motion-capture systems—Nintendo’s Wii, Sony’s
PlayStation, and Microsoft’s Kinect use cameras or wands, allowing
users to interact wirelessly with the video game—have further enhanced
the sector’s commercial value, spawning new products and producing
additional revenue. (Microsoft sees Kinect’s potential as surpassing that
of a game. It has encouraged developers to explore new ways to use the
technology. Mitsui Home is using Kinect to create a home that follows
orders by recognizing voice commands and gestures to turn appliances
on and off and to execute other home tasks.)14
The video-game sector is a classic digital-economy success story,

relying equally on storytellers and designers, computer technicians, and
animators to create compelling, almost addictive packages. Users must
buy a full-service video-game system that is routinely updated, upgraded,
or improved. There are large spin offs in the forms of “cheat books,”
which provide secrets that allow users to advance to higher levels in
the game, additional devices to connect to the video games, and (more
recently) movies based on the games. The releases of major video games
—World of Warcraft, Grand Theft Auto, Call of Duty, Resident Evil—are
high-level media events, noted particularly among teenagers and young
adults but generally ignored by the mainstream media, which prefers
to focus on much less profitable movies starring Tom Cruise, Sandra

Bullock, or Brad Pitt. Connecting video-game consoles to the Internet
enables players to engage online competitors, allowing an individual to
play with one or more gaming friends anywhere in the world in real
time. The game industry has come a long way from long-distance chess
matches played by individuals who sent their latest move by mail.
It is important that the technological, design, and creative work

launched by the video-game sector has produced a fast-growing market
for educational and training video games. The point-of-view approach
popularized by war games has been converted into useful training
components for police officers, soldiers, pilots, and others who need
to work through numerous and complex scenarios. Some of the most
exciting technologies, such as Christie Digital’s full-immersion units, use
3-D systems to allow users to work in multidimensional environments.
Young people who grew up playing video games are particularly well-
adapted for such systems, which provide a cost-effective, lifelike, and
accessible means of training and educating people to perform complex
and challenging tasks.
Production costs for new video-game development are surging. At

the 2013 Electronic Entertainment Expo, Sony announced Destiny, a
game developed by US companies Activision Blizzard and Bungie, as the
flagship game for its PlayStation 4. Development costs for Destiny were
at least $100 million, not including marketing and distribution. This is
three times what it normally costs to develop a game for the Japanese
market and twice what it costs to develop one for the American and
European markets.15 Advancements in next-generation game consoles,
though, demand higher development costs to produce better graphics
and performance. This has led to concerns that high costs will put smaller
production companies at financial risk.
Online Multiplayer Games
The primary challenge to the video-game sector comes from online

multiplayer video games. The concept is similar to that behind video
games except that these are played on computers or handheld devices.
China, South Korea, and Japan are all major actors in this sector. South
Korea has been particularly successful in developing multiplayer games,
creating a sizeable gaming industry—and a nation of addicted video
gamers in the process. Interestingly, the Korean gaming industry got
off to a rocky start because the government saw gaming as a waste
of time and deleterious to people’s health. However, in the late 1990s,
former president Kim Dae-jung, concerned about youth unemployment
following the Asian financial crisis and believing strongly in promoting
the information age, took steps to improve broadband availability. PC
bangs (lit., “PC rooms”), a kind of Internet café, opened. Video-game
companies began paying the PC bangs to promote their games, and
online games that allowed people to play long distance quickly became
popular. It is not surprising, incidentally, that South Korea also has
serious problems with video-gaming addiction and has taken educational
steps to discourage long periods of online gaming among young people.
Today South Korean games in particular are visually arresting and have
a strong storytelling element to them, often drawing on historical events
or processes and converting them into attractive contests for young
people. The multiplayer-game sector has exploded into prominence in
the past decade, producing global online revenues of close to $24 billion
(including digital delivery, subscriptions, and Facebook games).16 The
gaming companies have been particularly successful in drawing young
people in by offering free games for initial users, offering upgrades,
tokens, and weapons for additional cost. Revenue for many of these
games comes from monthly subscriptions and from micropayments that
players use to purchase items that are part of the game, such as weapons,
energy drinks, and the like (see table 8).
In one of the most unexpected twists in the digital-media sector, North

Korea has seized an economic opportunity in the multiplayer-games
field. North Korea allegedly hires hundreds of young gamers who play,
collecting bonus points or credits that are then resold to wealthy foreigners
who do not wish to work their way through the time-consuming game
ladder.17 That the Hermit Kingdom would earn foreign-exchange revenue
by enabling rich young Americans and others to cheat their way through
video games seems an almost perfect embodiment of the strange mix of
culture, technologies, and values in the Internet world.
Finland also has a thriving video-game industry. Rovio Entertainment

(responsible for Angry Birds and the Start-Up Sauna) and Supercell (Clash
of Clans) are two of the best-known companies. The roots of the video-
game industry’s success lie in a festival for gamers that Helsinki started
in the early 1990s. The event is so popular today that it takes place in
an enormous ice-hockey stadium with room for thirteen thousand, and
it is still oversubscribed. Along with the festival and Kajak University’s
courses in video games, “Finns have a comparative advantage in the four
things that make for great games—blood-soaked storylines (all those
sagas), bold design, ace computer programming and what might be
politely called ‘autistic creativity.’”18
Many massively multiplayer online games (MMOGs) are so complicated

that companies are hiring economists to help develop them. Valve,
which makes the Half Life games and Team Fortress 2, hired a Greek
economist who had analyzed his home country’s debt situation and the
Eurozone crisis to help link up economies in different games. Eyjólfur
Guðmundsson is an economist working for CCP Games, an Icelandic
company that produces Eve Online, an MMOG in which
players build their own spaceships and traverse a galaxy of 7,500

star systems. They buy and sell raw materials, creating their own
fluctuating markets. They speculate on commodities. They form
trade coalitions and banks. It’s a sprawling economy, with more
than 400,000 players participating in its virtual market—more
people, in fact, than live in Iceland. Inflation, deflation and even

recessions can occur.19
Guðmundsson heads a team of eight analysts who examine data to ensure

that Eve Online runs smoothly. As the makers of Second Life discovered
in 2007, without oversight a crisis can happen within a game that costs
people money in the real world: a bank run within that game once cost
depositors (i.e., players) about $750,000 in actual currency.20
Mobile Media Digital Content
In the past five years, smartphones have taken pride of place in the digital
world. The industry started in earnest in Japan—DoCoMo revolutionized
Japanese telecommunications, youth culture, and the Internet long before
Apple’s iPhone made a global splash—although the Japanese companies
had difficulty extending their reach outside the country. In the initial
years of the mobile free-for-all, firms from a variety of sectors jumped into
prominence. Although desktop and portable computers remain popular,
the global explosion in smartphone sales—Nokia (Finland), Blackberry
(Canada), Samsung (South Korea), other Android devices, and particularly
the iPhone (United States)—transformed the industry. Software and
Internet sites designed for thirteen-inch or larger screens had to be
reformatted to fit the smaller screens of the handheld devices and to work
via the often sketchier wireless Internet services. Some companies in
the sector, notably Nokia and Blackberry, seriously underestimated the
commercial value of the mobile media market. Driven by Steve Jobs, Apple
anticipated and led the transition almost perfectly, cornering the market
for content through iTunes, generating a vast global industry through
its App Store, and regularly updating the now iconic iPhone. Google
fought back in a battle of Internet titans, producing the Android operating
system, which, along with the rise of South Korea–based Samsung as a
hardware provider, overtook Apple as the leading foundation for mobile
Internet activities.
Digital content on mobile devices operates in a very different space. It is

relatively easy to read a full newspaper on a desktop or laptop computer;
it is harder to do so on a handheld device. Japanese mobile-phone and
content companies, capitalizing on the advantages presented by the visual
representation of the Japanese language, discovered decent markets for
books on mobile phones, and several of the top books sold hundreds
of thousands of copies and migrated back into physical books. What
are called ketai shosetsu (cell-phone novels) have been quite popular,
dominating the best-seller markets in 2007, when one book, Mei’s Red
Thread, sold over 1.8 million copies. The cell-phone books represent a
discrete market, written mostly by amateurs and targeting young women.
One of the most successful, a novel called Love Sky, was subsequently
released as a manga, a television show, and a movie. Maho I-Land (Magic
Island) is the lead portal for cell-phone novels, offering over one million
titles and attracting over three billion visits each month.21 In an attempt
to build global markets, Maruzen of Japan and the Peking University
Founder Group Corporation of China have developed a product-sharing
partnership that will greatly expand e-book opportunities in the two
countries.
The mobile-phone content market has expanded globally. Led by

companies like Polar Mobile, digital-software designers figured out how
to transfer digital content to handheld systems. App producers by the
hundreds of thousands created content and service applications for the
Apple or Android systems (many fewer for Blackberry, to the dismay
of its users worldwide). By 2013 the Apple Store offered nine hundred
thousand apps for sale or as free downloads. Google Play offers access
to seven hundred thousand apps. Though many of the applications are
frivolous, thousands have captured significant market share, making
instant millionaires of dorm-room and garage tinkerers and keeping the
mystique of the Internet underworld alive. Many apps provide specific
services—turning an iPhone into a flashlight, for example—and others
offer access to games, news sources, financial services, sports updates,
and thousands of other items. The best apps charge for downloads;
many others allow a free basic download but charge for upgrades or an
advertisement-free version. Only a small number have succeeded while
charging for ongoing content or services, and many of those are in the
pornography and gaming areas (see figs. 12–13, tables 9–12).
Mobile digital content remains an underdeveloped area, maturing

rapidly as youthful users age and acquire both more sophisticated tastes
and the money to pay for what they wish to use. Consider one subsector
in one market: mobile gaming in Russia. In 2011 mobile gaming grew
by more than 300 percent from the previous year. The following year,
it grew by 180 percent, representing the broad and rapid growth of the
mobile economy. The mobile Internet sector is much better developed,
commercially and in terms of quality, in East Asia (particularly Japan and
Korea) than it is in most other parts of the world, but the global industry
continues to improve. It is in the app world much more than in hardware
production that the remnants of the Wild West of the Internet’s early
days still reside, although the dominance of Apple and Google, both of
which maintain portals for their apps and exercise considerable control
over what is sold, has given an old economy heft in business growth and
expansion. That many of the more successful apps are quickly sold, often
at remarkable prices, to larger companies has, in the long tradition of
oligopolies, stifled the emergence of medium-size companies and thereby
limited competition for the main North American firms. Again, the East
Asian market is more fluid, characterized by more competition, more-
sizeable competitors, and greater commercial development than appears
to be the norm in other regions. In the developing world, particularly in
Africa and South Asia, where mobile devices are people’s primary and
often only access point to the Internet, there has been an explosion of
country- and region-specific applications. The development of financial
services through mobile devices has transformed business processes in
Africa, for example, while producing a fast-changing market for mobile
applications in countries such as Nigeria, Kenya, and Uganda.
The global connectivity of the Internet masks the fact that most
commercial applications and successful mobile-content sites are regional
or national. Whereas platforms like Facebook reach well across national
boundaries, the content and services are often localized. In the mobile
world, companies have prospered by responding to local circumstances
and niche opportunities, thus taking a different shape in Tanzania than
in South Korea; Russia bears little resemblance to Portugal. From the
outset of the digital revolution, promoters believed that the greatest
opportunities lay in supporting and enriching communities. There are
impressive prospects for using mobile-content sites to improve local
politics, to connect restaurants to area consumers, and to connect teachers
and students in a particular school district. Much of this opportunity
remains unrealized.
Digital Advertising
In the eyes of many observers, the digital economy hangs on the thin
thread of advertising. The revenue streams for Google, Facebook, and
many other sites focus largely if not exclusively on advertising. In
part, the shift to online advertising is a move in desperation. With
personal video recorders allowing consumers to speed through television
commercials, subscription-based satellite radio undercutting market
share for commercial radio, and the collapse of newspaper readership
destroying the classified-ad industry and reducing advertising impact
generally, companies have had to look for new venues in which to
promote products, services, and brands. As consumers, especially the
key demographic group aged fifteen to thirty, rapidly migrated to online
scenes, advertisers felt compelled to follow them. The results have been
dramatic, particularly in total expenditures on online advertising. A large
percentage of online advertising has gone to Google and other platform
sites, where companies pay for “click through” visits to their websites.
That companies have persisted in using these advertising techniques—
and that new firms have emerged to coach businesses in how to move
their products and services up in search-engine results—indicates that

there is considerable merit in the new approach to consumer cultivation.
There has also been a revolution in the development of new advertising

techniques based on digital content and social media. Innovative firms
have discovered the ease and low cost of reaching out through guerilla
advertising, or of using indirect social-media mechanisms to put product
or service ideas into circulation. The concept of going viral no longer
refers solely to the oddball item that spreads like wildfire around the
Internet but also describes deliberate corporate strategies to seed ideas
and product information in cyberspace and to seek to influence the
rapid spread of promotional information. A new breed of innovative
advertisers schooled in the techniques of digital content and social
media is moving aggressively into cyberspace, influencing consumer
behavior, transforming elections through social media in an Obama-like
fashion, and altering the way that businesses seek to change attitudes
and purchasing habits.
Digital advertising is only at the takeoff point in terms of commercial

viability. Many corporations are still reluctant to put their company’s
sales future in the hands of bloggers and social-media experts. But the
demonstrated success of firms such as Apple and of the movie industry,
both of which rely heavily on strategic mobilization of the digital-content
world to push their products and to generate consumer interest, is clearly
having an impact on the advertising industry. Digital advertising also
carries risks. The same processes and technologies that can let companies
reach millions of potential consumers for minimal cost can be turned
against the same firms. Consider Tripadvisor.com, one of the world’s
most popular travel sites. For a highly regarded and well-reviewed hotel
or restaurant, the website is superb advertising, used by thousands of
people planning their trips. But a sequence of bad reviews written by
unprofessional observers can harm a business, sometimes irrevocably,
as the harsh words and critical comments linger online for years. The
same holds for firms such as Amazon that post unedited consumer
reviews of books on the same page as the product information. The good
unsolicited reviews help; the bad ones can serve as a stake through the
heart. Boycott campaigns, consumer pushback, and negative digital press
are commonplace—as a quick visit to the comments section of any e-
commerce website reveals. Many consumer sites provide a counterbalance
to corporate advertising, presenting a substantial challenge for companies
trying to promote a product. In the ever-fluid book industry, for example,
the crowdsourcing site Goodreads.com allows readers to share their
thoughts with other readers and potential readers. A series of negative
reviews can create a groundswell against a title, just as word-of-mouth
enthusiasm for the e-book Fifty Shades of Grey turned the soft-core erotic
novel into a global best seller.
Digital Music
Few areas of the economy were hit by the digital revolution as quickly and
profoundly as the music industry was. In the 1980s and 1990s, building on
the success of the compact-disc industry, the popularity of portable CD
players, the advent of music videos and MTV and its global imitators, and
a robust radio sector, commercial music looked well set up for a long and
profitable run. Megastars earned huge salaries from CD sales in tens of
thousands of music stores around the world. The changes came fast. Sony
introduced an MP3 player, which allowed users to download their music
onto a small portable device. Apple followed with its highly successful
iPod, which was then attached to a music-sales system through iTunes.
Youthful users had a different ideas. The emerging hacker culture had
a field day with digital music. Napster, the first large-scale peer-to-peer
digital sharing system, allowed people to copy songs and share them
freely over the Internet. The industry went ballistic and eventually took
the company down, but copying music had quickly become commonplace.
The free and illegal distribution of copyrighted content had become
so ubiquitous as to be unremarkable. The new economy produced a
generation of small-scale kleptomaniacs who regularly stole music
and soon discovered that the same technologies would allow them to
download television programs, movies, and even books.
The music industry’s revenues plummeted. Sales of CDs peaked in

1999 and then started to fall precipitously. Digital downloads took up
some of the slack—most consumers bought individual songs instead of
the expensive albums that the industry had foisted on the marketplace
for years—but not enough to offset the decline in overall revenues.
Record stores began to close: first the small specialty shops, then the mall
outlets, and eventually the big-city superstores. The industry had been
transformed, but not in a way that it welcomed or could adapt to readily.
At the same time, the digital revolution opened up new markets and
new business models to the music industry. Performance bands (those
that earn a substantial percentage of their income from live events) such
as Phish maintained steady contact with their legions of fans through
Internet sites. New companies emerged that permitted bands to exploit
social media to promote and sell music and other products. Global markets
became available to groups hitherto constrained by geography. Grabbing
a tiny portion of a worldwide audience was, in financial terms, potentially
better than gaining a large chunk of a small regional market. Crossover
technologies—using YouTube videos, Facebook pages, and Twitter tweets
to promote a band—became commonplace, giving performers a cheap
means of reaching out to large numbers of people. At the same time,
inexpensive digital production technologies gave anyone with some skill
and a decent computer the capabilities of a million-dollar 1980s studio.
In East Asia, it is striking to see the dominance of national and

regional performers in sales of digital music. Contrary to the sense that
international superstars dominate everywhere, sales figures and top-
selling singles or album charts show that the best-selling artists in Japan
are Japanese, and those in Taiwan are Taiwanese (with an occasional
Chinese, Hong Kong, or Singaporean star). This is an interesting contrast
to Germany (see tables 13–15), where only three of the top twenty singles
in 2011 were German, although in earlier years sometimes half of the top
twenty singles in Germany were German. Both K pop (Korean Pop) and J
pop (its Japanese counterpart) have attracted millions of fans throughout
East and Southeast Asia. Korean and Japanese singers sometimes tour
together; some Korean artists sing in Korean, Japanese, and Chinese.
Digital Photography
For generations, photographers grew up with an allegiance to Kodak

or Fuji film stock and debated the merits of various single-lens reflex
cameras. And then came digital. Digital cameras went quickly from
experimental and toylike to high-end, user-friendly technology. The
film-processing industry, worth billions of dollars annually in worldwide
sales, crashed and burned. The new cameras improved steadily, but
the key element was the ability to download pictures from the camera
to computers and other memory devices. Where photographers once
worked in photo sets of twelve, twenty-four, and thirty-six and worried
about the high cost of processing, they now had almost unlimited digital
shots. As camera technology advanced, photographers could edit pictures
on the camera, delete bad shots, upload files, and use sophisticated photo-
editing suites to improve the quality of their images.
The digital photographic revolution did not stop there. In the past,
noncommercial photographers mounted selected photographs in picture
frames or in albums and made them available to besotted friends and
relatives. New photo-sharing services quickly popped up, led by Flickr. As
social-media sites like MySpace and Facebook evolved, they too allowed
photo sharing. New-generation smartphones’ cameras allow users to
snap a picture and upload it instantly to social-media sites like Facebook
and Instagram and thereby share their images with followers.
The effect has been dramatic; billions of photographs are taken each
year, many of them uploaded onto noncommercial websites. Spin-off
services—including companies that allow photographers to convert a
handful of photographs into a hardcover book with a few mouse clicks and
a credit card number—assembled around digital photography. The ease

and limited cost of producing imagery allowed individuals to document
their lives using social-media sites to share their stories and experiences
widely. And as a significant number of politicians and public figures—
from Vanessa Hudgens of High School Musical fame to New York politician
Anthony Weiner—soon discovered, reputation-destroying digital images
can also readily be shared with a wide audience.
Digital Pornography
From the outset, the pornography industry has been active on the Internet.
Indeed, the sector has consistently been among the most innovative and
aggressive of all commercial areas. Pornographers were quick to see the
value in file sharing and constructed password-controlled websites that
allowed willing purchasers to unlock content, that hosted fee-paying
real-time video chats between consumers and “models,” that used video
clips to draw surfers to full-cost movies, and that otherwise explored
the technological and commercial frontiers of the Internet. In many
instances, and in keeping with long-standing practices, the pornographers
worked along the line of legality in reaching into countries with strict
antipornography laws, developing technologies that pedophiles used to
share their images, and challenging community sexual norms in any
number of ways by providing ready and inexpensive access to images
and videos representing all manner of deviant behaviors.
Other digital-content fields maintained a safe distance from the pornog-
raphy sector even as it inched back toward the North American main-
stream in the 1990s and 2000s. Everyone kept a watching brief on the
industry, for the sector was technologically advanced and among the
most commercially savvy areas of the new digital economy. But digital
pornography had come out of the dark shadows of the movie industry.
According to Ogi Ogas, co-author of A Billion Wicked Thoughts: What the
Internet Tells Us about Sexual Relationships, in 2010 about 4 percent of the
million most popular websites were sex related, and from July 2009 to
July 2010 approximately “13% of Web searches were for erotic content.”22
Ogas also found that the most popular porn site in the world is a webcam
stream called LiveJasmin.com that is visited by thirty-two million people
a month.23 Webcam women tend to be from Eastern Europe or Southeast
Asia and perform for viewers in the United States or elsewhere outside
their homeland.
Sex continues to pay, although it is next to impossible to know how

much money goes into the porn industry online or off. Many of the
operators are small, particularly given that webcams and high-quality
cameras allow anyone to become a star. Yet an abundance of free sites
has meant that “the wealth is being concentrated in fewer and fewer
hands.”24 Manwin owns “eight of the 15 most popular and lucrative free
and paid-for-porn websites in the world. The company also manages
online operations for Wicked Pictures, a major studio that makes adult
films, and for Playboy’s TV and online operations.”25 This has made it
much harder for small filmmakers to compete.
The Stats on Internet Pornography

• Fully 12 percent of sites on the Internet are pornographic: 24,644,172
in all.
• Every second, $3,075.64 is spent on pornography, and 28,258
Internet users are viewing porn. Some 40 million Americans are
regular visitors to porn sites, and one in three porn viewers are
women. Seventy percent of men aged 18–24 visit porn sites in a
typical month.
• In the United States, Internet porn pulls in $2.84 billion per year.
The entire worldwide industry is worth $4.9 billion.
• No fewer than 2.5 billion e-mail messages per day are pornographic,
representing 8 percent of all e-mail.
• One-quarter (25 percent) of all search-engine requests are
pornography related—that is, 68 million per day.
• Thirty-five percent of all Internet downloads are pornographic.
• The top pornographic search terms (in millions of searches) are sex
(75), adult dating (30), and porn (23).
• Utah has the nation’s highest online porn subscription rate per
thousand broadband users (5.47).
• Thirty-four percent of Internet users have experienced unwanted
exposure to porn either through pop-up ads, misdirected links, or
e-mail.
• There are 116,000 searchers for child pornography every day.
• The average age at which a child first sees porn online is eleven.
• Twenty percent of men admit to watching porn online at work; 13
percent of women do. The average porn-site visit lasts six minutes
and twenty-nine seconds.
• The least popular day of the year for viewing porn is Thanksgiving.
• The most popular day of the week for viewing porn is Sunday.26
Online Gambling
Gambling provides better returns than pornography does: approximately

$32 billion annually. The gaming sector had been strictly regulated until
the 1970s, save for a few places like Las Vegas and Monaco. Revenue-
starved governments turned to lotteries in the 1970s to raise money and
soon realized that authorizing casinos and other gaming establishments
could produce substantial income. The rapid expansion of casinos and
lotteries predated the Internet but fostered a solid constituency of regular
gamblers looking for even easier ways to feed their enthusiasm for
games of chance.
The creators of online gambling sites discovered a very profitable

opening. In the early, unregulated days of the Internet, such sites sprung
up quickly, occasionally run by criminal types who wrung as much money
as they could out of their markets before shutting up shop and reopening
on other sites. The news media released woeful tales of compulsive
gamblers who lost all their money on these ill-controlled sites. Many
governments went after the perpetrators. The United States, in particular,

rushed to close them down, only to discover that they resurfaced or
relocated to Indian reservations, Canada, or Costa Rica. Sites found safe
havens—with minimal taxes and no controls on gambling—where they
could operate almost with impunity, although the United States continued
to pursue gambling entrepreneurs who allowed Americans to participate.
Online almost anything can be gambled twenty-four hours a day.

In the United Kingdom online gambling has soared since 2005, when
the country passed the Gambling Act, which permitted an increase in
gambling advertising; it was predicted that in 2013 almost nine million
Britons would gamble online and that the value of online gaming in the
UK would surpass £2 billion. As a result, there is rising concern about
the increase in gambling addicts and those at risk of becoming problem
gamblers. The Independent reported, “MPs are considering legislation to
try to reverse the trend, as online companies vie for bigger shares of the
market with blanket advertising and introductory offers.”27
Digital pornography and digital gambling reveal something of the

sordid underbelly of the digital-content sector. People pay for what they
want to see, own, and do, and digital technologies allow people to see,
own, and do things without being seen going into the store, possessing
the item, or using it. Future technological advances will likely push the
envelope even further. Digital manipulation is becoming more feasible
and cost effective. The same technologies that allow a doctor, working
at a distance, to move a scalpel over a patient will eventually allow
a prostitute to pleasure a client thousands of miles away without the
awkwardness and risk of personal intimacy. Even better, technology
will allow a computer to perform the manipulations, removing one
person from the picture altogether. Digital pornography and digital
gambling demonstrate a truism of the digital economy: the technologies
are excellent at enabling people to do things that they do not want other
people (from partners, family members, neighbors, and friends to co-
workers and government authorities) to know they are doing. Identifying
opportunity in the Internet era will often alight on the intersection of

the desire for privacy and the wish to purchase a product or service.
Chat and Voice Apps
A large global industry has emerged in chatting and voice apps, from
Skype and Blackberry Messenger to Snapchat. The major firms are well-
known, but clientele—largely youth—are always alert to better options.
The top chat and voice apps include WhatsApp, GroupMe, Line, WeChat,
Kakao Talk, Message Me, Kik, Tango, Cubie, Facebook Messenger, Hike,
Google Hangouts, Maaii, iMessage/FaceTime, Rounds, Nimbuxx, Voxer,
Summary, ChatON, and Viber.28 The usage numbers are staggering:
WeChat claims six hundred million and Line over three hundred million.
The South Korean Kakao is valued at $2.5 billion; it merged with Daum
Communications in October 2014 and is one of the most aggressive
firms in the field. It has 140 million users, half outside South Korea,
and a tie-in to BigBang, a boy band assembled by the chat company
to capitalize on the global interest in K pop.29 The explosive growth of
messaging and chat applications, while it has undermined the market
share of conventional telephony services, has been propelled by a youth
demographic that is not much interested in traditional communications
systems and that is more likely to connect via Instagram or SnapChat
than by using a standard telephone.
Day Trading and High-Frequency Trading
Despite the devastation caused by the financial crisis of 2008–2009, online

trading remains a popular form of investment or gambling, depending
on the quality and motivation of the participants. Day trading involves
the rapid purchase and sale of stocks and financial instruments; high-
frequency trading utilizes automated, extremely high-speed systems
that capitalize on tiny changes in stock prices and currency values to
spark buy and sell orders. Both systems took a beating during the global
financial mess—day trading because many small investors were wiped

out by the collapse of stock prices, and high-frequency trading because
it was blamed, inaccurately, for accelerating the collapse.
Online stock markets work because of the vast amount of information

available to the average investor, the speed and reliability of transactions,
and the sense of personal control over investment decisions that they
foster. Although the gambling element is in place—there are crisis lines for
online investors, as there are for online gamblers—the reality is that day
trading has become commonplace among small to midsize traders. The
development of sizeable and reputable online trading firms like eTrade,
RBC Direct Investing, and Questrade allows investors around the world
to engage in professional and dependable stock market transactions. That
the digital systems are now available on smartphones makes e-trading
even more immediate and personal—and adds to its obsessive qualities.
Digital Currency
There has been considerable conversation about the emergence of what

economist John Whalley liked to call digital swirl, or the development of
an international economy that is not linked to national currencies. The
rapid exchange of video-game credits or rewards on massive open online
games, both of which have been monetized, and the rise of a substantial
“real” market within Second Life, where Linden dollars function as
the currency, demonstrate the ability of the digital sector to produce
substantial economic activity that has real-world impact. The digital
economy is not about bonus points in Super Mario Bros. anymore.
The best example of this process, albeit one wracked with controversy
in 2014, is the rise and perhaps the fall of bitcoin. A digital currency
created on a software platform, bitcoin functions through peer-to-peer
engagement and operates without recourse to national or international
government regulations. As the organization describes itself:
Bitcoin uses peer-to-peer technology to operate with no central

authority or banks; managing transactions and the issuing of
bitcoins is carried out collectively by the network. Bitcoin is
open-source; its design is public, nobody owns or controls Bitcoin
and everyone can take part. Through many of its unique properties,
Bitcoin allows exciting uses that could not be covered by any
previous payment system.30
The system operates through the public registration of bitcoin ownership;

the owner may then use the currency to make purchases. Participation
in the system allows individuals to generate bitcoin revenues that can
be used through bitcoin exchanges or, in recent months, through cash
withdrawals at a small number of bitcoin terminals. Of course, many
of the transactions are handled electronically, again without the use
of national currencies, financial institutions, or regulatory agencies.
The system is not in wide use, although it has its supporters. Efforts to
extend bitcoins to common commercial use have found a small number
of retailers and service providers willing to accept bitcoin payments, in
large part because the costs of such transactions are lower than those
for using credit or debit cards. That dozens if not hundreds of firms
accept bitcoins suggests that the concept has found a certain audience,
but difficulties have arisen.
Governments, anxious to protect both consumers and the integrity of

their financial systems, are not enamored with bitcoin. The United States
Treasury, the government of Japan, and the European Banking Authority
have either warned consumers about the system or attempted to keep
it out of the marketplace. Authorities have been particularly concerned
that bitcoin facilitates illegal activity, particularly in the drug sector.
The rapid rise in the value of a bitcoin—soaring to over nine hundred
dollars before falling into the mid-three-hundred range in summer 2014—
resulted in the collapse of the pivotal Japanese Mt. Gox bitcoin exchange
(which handled over half of all bitcoin transactions as late as 2013) and
in widespread criticism of the new financial technology. Mt. Gox, after

all, had “lost” some 850,000 bitcoins worth an estimated $430 million.
One of the most recent cases of bubbles occurred in the new

“Bitcoin” experiment. Bitcoin is a cryptocurrency; the main and
original attraction of which is the low transactions cost associated
with its use. One can buy bitcoin the way one can buy euros
and trade freely with others having euros. Trouble started when
people began speculating that the value of bitcoin would rise,
thereby raising the demand for bitcoin and making the value-
rise a self-fulfilling prophesy. In other words, what we witnessed
recently in the bitcoin phenomenon fits the standard definition
of a speculative bubble.31
While critics suggested that bitcoin’s rise and fall had been created
by speculators, the explanation likely lies in global exuberance for the
latest digital phenomenon. Bitcoin has a series of elements that hold
considerable attraction for a sizable constituency: greater privacy, lower
transaction costs, liberation from government control (although govern-
ment regulation is being contemplated in some areas, including New
York State, which is also attempting to regulate such digital businesses
as Airbnb and Über). The collapse of Mt. Gox—a replacement Japanese
exchange is under development—rattled the bitcoin community but did
not immediately destroy interest in the concept. Among the libertarian,
open-source enthusiasts who are numerous in the digital economy,
bitcoin symbolized the potential of a new age, one free from government
regulation, fees, taxes, and other charges and one focused on peer-to-
peer relationships. Bitcoin may not survive the trials of 2013–2014, but
the concept of a digital currency and global digital financial exchanges
is far from dead.
Digital Relationships
The digital economy has provided creative entrepreneurs with the oppor-
tunity to create entirely new sectors. Online dating is a global phenom-
enon, and sites range from localized dating services such as NZdating.com
to e-relationship megasites like eHarmony, which has attracted postings
from some 150 countries. Standard dating and relationship sites are only
the tip of the iceberg. AshleyMadison.com is a provocative site, offering
people a chance for no-commitment hookups and specializing in facili-
tating affairs among members. The system goes much further. Tinder
connects the services of a dating site with GPS navigation, allowing
singles looking for a quick hookup to connect with on the spot. There
are partnership sites that allow rich men to search for sexual or marital
partners through the Internet. And so it goes, through literally hundreds
of such commercial sites serving groups as diverse as expats in Singapore
(Dating.singaporeexpats.com), Muslims looking for marriage partners
(Muslima.com), Christian fundamentalists (Christianmingle.com), and
transsexuals (Transpassions.com).
Cultural Content
The digital economy has given artists and performers new opportunities
to promote and sell their wares. In the case of the music industry—
discussed earlier in terms of the sector’s overall structure—digital systems
provide new musical entrants with the opportunity to reach out globally
for an audience. The result has been a musical tsunami; much of the
output is marked more by earnest mediocrity than by talent, punctuated
by occasional success stories. Justin Bieber, the Canadian teen, tried
to develop an audience by busking on the streets of his hometown
of Stratford, Ontario. When he moved his act online, he attracted the
attention of industry professionals who in fairly short order converted him
from a small-town performer into a musical superstar. Similar processes
are at work in other sectors as artists use the Internet to share their wares.
A new breed of digital artists has specialized in producing art for sale
on mobile phones, Japanese artists and mobile retailers foremost among
them. At this point, the commercial global market for artist-created work
is comparatively small, and the use of the Internet by artists—musical
or otherwise—is limited to promoting their work and to developing a

traditional audience for their wares.
Digital Social Economy
It is hardly surprising that the social economy has spread online. Social
economy refers to business-style enterprises that seek to achieve an
identified social good. They are similar to philanthropic organizations
such as the Red Cross, Oxfam, and Save the Children but have a clearly
commercial foundation. They work, in the main, by drawing on the
broader community to raise money and to launch businesses. Kickstarter,
for example, gives a wide variety of businesses and social enterprises an
opportunity to present their ideas, which range from new products and
services (standard commercial fare) to creative works and social events.
(The system requires that the sponsors post a target sum and that the
fund-raising target be met in full before they receive funding.) Kiva.org
gives donors and supporters an opportunity to provide repayable loans
to microbusinesses around the world, development organizations serving
as intermediaries between the donors (via Kiva.org) and recipients in
the field. Change.org is yet another example of an Internet-based system
for collective empowerment. Crowdsourcing has become an important
philanthropic tool, a means of both connecting followers with people in
the field and raising money for global good works.
The Digital Travel Industry
Travelers are among the most aggressive and systematic users of digital e-
commerce. They are, as a group, well educated and financially secure, and
they are information hungry. They use aggregator sites like Expedia.com
to find the best prices; to search for bargains on any of the hundreds of
last-minute discounting sites for hotels, car rentals, and airline travel;
to make reservations directly with airlines, hotels, and attractions;
and they capitalize on peer-reviewing sites like Tripadvisor.com and
Urbanspoon.com to identify the best hotels, restaurants, and activities. The

transition of digital travel planning has had major effects, reducing prices
through open competition, helping consumers find remarkable deals
(and allowing airlines and hotels to fill otherwise empty seats and beds),
and increasing interest in travel generally and in often ignored places in
particular. Sites allow individuals to bargain for cheap hotel rooms—and
allow hotels, resorts, and others to get rid of otherwise unused inventory.
The online systems have also eviscerated the traditional travel industry
(and the jobs of many travel agents), which has shrunk dramatically, and
have reduced the services available through airline- and hotel-reservation
systems. Few areas of the economy have been shaped as profoundly and
dramatically by the advent of digital systems, and the travel industry
holds the promise of increased digital intervention in the future.
E-Books and E-Information
The digital revolution is, first and foremost, about the electronic sharing
of data. Information presented in digital format can readily be shared
with hundreds of millions of people. And so it has. In rapid order, e-books
have undercut the viability of much of the publishing industry, resulting
in the closure of thousands of bookstores and the development of many
different e-book platforms (Kindle, Kobo, Nook, Sony, Samsung, and
iPad systems). E-book sales have been impressive, although not without
controversy regarding efforts by Amazon to set prices and consumers’
wondering why e-books remain expensive relative to paper books. The
same has happened in the newspaper and magazine industries, the former
facing unprecedented pressure and the latter holding up surprisingly well.
The newspaper sector suffered from the collapse of classified advertising,
thanks to Craigslist, Kijiji, and comparable online sales systems and from
the loss of advertising dollars to online delivery systems. Magazines,
most of which target specialized audiences, have survived, in part owing
to the production of online versions and to mass advertising by the
distribution of free content. Fully digital versions such as the Huffington
Post have emerged in some sectors, and all traditional newspapers and
magazines have an online presence, some hidden behind firewalls (almost
full in the case of the New York Times and the Wall Street Journal and
partial for other papers and magazines, such as Canada’s Globe and Mail).
Digital technologies have allowed for private publication through popular
distribution channels like Amazon’s Kindle; they have also encouraged
review sharing (Goodreads.com) and have made possible the creation
of fluid, ever-changing pirate sites (typically torrent-based) offering the
latest books. Copyright laws also allow the free distribution of older
content, best exemplified in the massive Google Books system and the
free digital texts available from e-book sites.
Digital information sharing is, in relative terms, in its infancy. Blogging

has made “journalists” of countless people, many of them mediocre and
unreliable. A small handful, like Michael Totten, have found ways to
monetize their insights and reporting; this practice is likely to grow
in the future. More and more people watch television via the Internet;
there are now five million “zero TV” (no cable and no broadcast antenna)
households in the United States, an increase of three million since 2007.32
The key information sites—radio, television, and newspapers—have to
move behind firewalls if they are to flourish long term, an arrangement
that so far has advanced further in East Asia than in other regions.
Simply put, the age of free high-quality information and insight is

not sustainable. Nor can the e-piracy of reading materials continue
indefinitely. In the near future, and likely based on the micropayment
systems (very small sums for small pieces of information—e.g., paying a
penny to read a single news story or column) popular in Japan and other
Asian countries will become more common. At present, the financial
models focus on editorial control, and the money goes to the newspaper
or the publisher. In the future, it is likely that producers will control more
of the content and receive more of the financial return, probably working
through aggregator sites rather than through proprietor-controlled
services.
Social Media and Social Networking
Social media and social networking are the “stars” of the digital business
world, driven into the stratosphere by the success of Twitter and Facebook
and by the surprising rebound of MySpace, which many assumed was
dead in the digital waters. Social networking has expanded dramatically,
and the companies, attaching advertising to their services, have profited
greatly from the growth in users. The economic potential of this sector is
uncertain, both as services such as Twitter seek ways to monetize their
vast army of “tweeters” and as social networks struggle to understand the
implications of their users’ migrating from computers to smartphones.
Social networking is, however, among the greatest social transitions
of this generation, having sparked widespread use and a revolution in
personal and collective engagement. As has always been the case, where
the people go, money and business will soon follow. The $100 billion
valuation of Facebook, although clearly overambitious, indicates that the
global business community anticipates growth in this sector.
Many top social-networking sites are actually nation and language

specific. Wrench.cc (owned by Yahoo Taiwan), a Taiwan-based social-
networking and blogging site, has 6.5 million users; Gree, Mixi, and
Mobage Town are the main social networking players in Japan, and
Cyworld is the leading Korean social networking site. Cyworld offers a
more integrative and interactive experience, allowing for the creation
of avatars, for example. China lacks a dominant social-media player;
instead, there is an active and competitive arena with at least eleven
social networks (including Qzone, which has over 190 million users;
RenRen, 95 million; Pengyou, 80 million; and Sina Weibo, 70 million) that
have more than 10 million active users each. China also has a vibrant
blogging culture; there are an estimated 300 million microbloggers.33
Digital Education and Massive Open Online Courses
Educational promoters have been speaking for years about the benefits
of digital education and the migration of course content and instruction
to online platforms. As a recent Economist article argues, however, a
technological revolution in education is now underway.
Why is this time different? Largely because a number of big changes

are coming at the same time: high-speed mobile networks, cheap
tablet devices, the ability to process huge amounts of data cheaply,
sophisticated online gaming and adaptive-learning software. For
instance, new interactive digital textbooks with built-in continuous
performance assessment can change in real time, depending on
what and how much the pupil using it is learning (sometimes with
the pupil being unaware that he or she is being tested). New data-
mining software is able to predict when a pupil is likely to fail at
reading or mathematics without special attention, allowing the
teacher to intervene before it is too late.34
Digital education has been overhyped in many instances in the past,

but the reality is that tens of millions of people are currently studying
online or in computer-enhanced environments (mixed-module formats).
In recent years, massive open online courses (MOOCs) have attracted
a great deal of attention and investment capital, as the world’s leading
universities have sought to capture global market share and to extend
their brands (and fund raising) by offering digital course content for free
via the Internet. Coursera, one of the first MOOC companies, has a large
following worldwide and offers courses from eighty-three institutions.35
By 2014 Coursera was in financial difficulty but had more than nine
million students in dozens of countries registered for hundreds of courses.
The MOOCs have not yet succeeded as proponents hoped. Thousands

sign up for classes, but only a handful completes them. Early efforts
to monetize the courses and programs likewise have foundered largely
because people were loath to pay for what they could download for free.
While it is still early days for the MOOCs, the longer experience with
online learning shows that it can be effective, that user motivation to

learn is a key element in determining outcomes, and that the anticipated
cost savings are less than expected. Supplementary learning services,
highlighted by the successful Khan Academy, in contrast, have been more
productive. The Khan Academy began in 2006 with a focus on math videos.
It now has six million users and offers a large range of online tutorials.36
Khan courses have been introduced in various US school districts with
significantly positive results. Although some software programs and
other forms of educational technology have been evaluated, overall—
according to William Bowen, former president of Princeton University
and the author of a new book on technology in higher education—“It is
appalling how little is actually known about the outcomes produced by
various forms of online learning.”37
There is a global market for high-quality content, and the possibility

exists that branded content could be commercially effective. The high
level of investment in MOOCs and online learning generally is unlikely
to be sustained, however, as a smaller number of online educational
services become viable and the weaker models fall to the wayside.
E-Government Services
New York City is one of the most digitally enabled urban places in the
world. Citizens can interact easily and quickly with civil authorities from
their computers or smartphones. They can protest about poor garbage
clean up, learn about a planning meeting, pay a parking ticket, and find
information about government regulations. Many governments around
the world are moving rapidly in the same direction, although none as
comprehensively or effectively as that of Estonia, which has realized
the importance of putting the whole nation online. Estonia offers many
core government services electronically, from prepopulated income-tax
forms to student report cards. Denmark announced in 2011 that by 2015,
citizens would be obliged to communicate digitally with the public sector.
Each Dane will have his or her own digital letterbox through which to
send and receive public sector correspondence.38
Governments exist to serve the people, and provided that the people
have ready and secure Internet access, e-government offers many benefits
and cost savings to authorities and citizens alike. At present, the global
effort has focused on migrating current services to digital formats,
largely in the form of sharing information about government programs,
regulations, and activities. In the near future, governments will, as
Estonia and some Scandinavian governments have started to do, reinvent
government for the digital age, reducing the costs of providing standard
services but also using the savings to serve their citizens even more
effectively.
E-Government Data
Governments collect a remarkable amount of data. In the private sector,

such data (credit card transactions, financial activities, purchases, online
reading habits, and the like) has proved very lucrative for aggregating
firms. Governments, though they collect huge volumes of information,
have been more reluctant, often for reasons of privacy, to capitalize on the
richness of their material. At one level, digital data collection and retention
should make archiving and retrieving government information much
easier in the future than it is now. More generally, governments have
unique access to personal, financial, health, occupational, and educational
data, among other kinds of information. The current reliance on five- and
ten-year censuses should be rendered redundant if governments simply
capitalize and share the data that they currently collect and can make
available. This data is of great value to businesses, which are always
eager to learn more about consumers, but is also of real importance to
planners in the civil service. Currently, most governments do not have
enough data-literate civil servants or people who can capitalize on the
information that is available. In the future, as data collection and sharing
become more routine and as digitized processes make the presentation
and analysis of data that much easier and faster, governments will come
to realize the enormous value that rests in their digital materials. This
is already happening in several countries, particularly in the European
Union and in Japan, as discussed in chapter 4.
E-Health
Few areas in the digital economy stand to benefit as much from digital
intervention as e-health does. Current health systems are intervention
rich, typically involving expensive physician, nurse, or clinic time. These
approaches impose heavy indirect costs on health-care consumers, who
are left worrying between visits to the doctor about their well-being.
Elements of e-health have already caught on—individual blood-pressure
monitors, telehealth for people in remote locations, and even some
preliminary examples of digitally mediated surgery. Digital technologies
have improved assessment procedures, greatly enhanced surgical inter-
ventions, and introduced greater efficiencies to records management,
pharmaceutical ordering, and general official and client management.
They have also been extremely valuable in identifying epidemic outbreaks
and addressing other large-scale health concerns. Future improvements
in digital health, particularly the use of mobile devices to monitor patients
and to coordinate physician, patient, and pharmacist interaction, hold
great promise for reducing medical costs and improving health outcomes.
Imbedded chips, already used for personal security, could well be applied
to monitoring personal and community health. Given the increased costs
of health care and the medical challenges associated with aging, busi-
nesses and researchers are devoting a great deal of effort and energy to
identifying technological solutions to the challenges of medical preven-
tion, care, and cure.
Digital Politics
The political world has been turned upside down through digital inno-
vations, a transformation that is every bit as profound as the introduction
of public-opinion polling. The commercial and financial aspects of digital
politics gained international attention during the 2008 US presidential
election, when the successful Democratic candidate mobilized youth,
raised millions of dollars in small donations, and orchestrated a national
campaign. In recent years, the use of Twitter, Facebook, and other social-
media sites to launch political revolutions across North Africa and in the
Middle East has reinforced the simple truth that, from open democratic
systems to brutal dictatorships, politics has been changed by digital
technologies. But the use of the new systems is not consistent. Russia
and other Eastern European nations have not embraced digital media
wholeheartedly. Experiments in Canada by opposition parties in the 2010s
demonstrated the fallibility of digital systems: many people signed up for
Facebook and applied for online memberships when the parties hosted
online elections, only to be disappointed with the system’s transient
nature and the lack of follow-up among digital partisans.
On the business side of the political system, impressive opportuni-

ties have emerged in such diverse areas as Internet polling, online
fund raising, membership management, e-media analysis, digital party
and election organizing, profiling, and public communication. Political
parties, candidates, and governments have capitalized on many digital
technologies and processes in order to stay connected, raise support,
and coordinate political activities. At the most simplistic level, political
leaders in many countries have taken to Twitter to reach out to their
constituencies and beyond. Latin American political leaders have been
particularly active; Brazil’s president Dilma Rousseff has some 1.9 million
followers (still less than half the number following the most famous
South American in the world, Pope Francis). But many political leaders
are less enamored with social media and other digital technologies. Recep
Tayyip Erdoğan, Turkey’s prime minister, said bluntly, “Social media
are the worst menace to society.”39 In the most authoritarian states,

the private sector has discovered opportunities in digital surveillance,
using technology to counteract innovations in digital mobilization and
political empowerment.
E-Commerce
Digital business has been growing at a steady pace over the past two
decades through improvements to payment systems (like PayPal), alle-
viated concerns about digital theft (online purchases are still safe, despite
the increase in digital crime), and the development of prompt and
inexpensive courier systems. Stores like Walmart have revolutionized
warehousing and distribution systems by implementing Japanese-based
“just in time” delivery arrangements whereby a purchase at the till is
immediately registered with the supplier, who, according to an arranged
schedule, sends additional product to a specific store. As with so many
parts of the new digital economy, these arrangements have reduced store
costs and passed some savings on to consumers owing to increasingly
ferocious competition, but they have also eliminated thousands of jobs
in on-site storage facilities and in the broader warehousing industry. The
continued expansion of Amazon, which started as a book retailer and
now works equally in consumer products and secondhand items, created
global imitators, like Alibaba, Rakuten, and the Middle Eastern equivalent,
Souk.com. Specialty retailing has expanded dramatically as unique enter-
prises that sell old car parts, computer equipment, specialized medical
products, food items, and so on, expand in number, scope, and viability.
Many of these operations are nested inside Amazon, eBay, or other e-
retailers, reducing the costs of starting up and maintaining services.
The e-business environment is fragmented, demonstrating strong
growth in all sectors. Almost all of the attention has focused on the
consumer market, for Rakuten’s rapid rise and Amazon’s flamboyant
CEO, Jeff Bezos, are intrinsically more interesting than a digital company
that sells rebuilt tractor parts for agricultural equipment. The reality,
however, is that the strength of the e-business market rests on its

comprehensive nature and depth. The main sectors are discussed in the
following paragraphs.
Consumer-to-Consumer E-Commerce
Companies like eBay, Kijiji, and Craigslist, to use North American
examples, and their imitators allow consumers to deal directly with other
consumers. Taobao, a Chinese e-commerce company owned by Alibaba,
has developed a ground-up marketing system that converts villages into
Internet businesses platforms, allowing small producers and handicraft
makers to reach national and even international customers. There are
some twenty villages in China already (in each Taobao village, 10 percent
of the population engages in online retailing), each producing $1.6 million
or more in business. There is even a Taobao University, where outsiders
come to learn how to operate an online business.40 While many small
businesses have, leechlike, appended themselves to such companies,
the strength of this sector lies in the ability of individuals to leverage
the power of the Internet to sell their goods and services. Consumer-
to-consumer awareness sites where individuals can shower praise on
a product or service or attempt to relegate it to commercial purgatory
have likewise become increasingly important.
Business-to-Consumer E-Commerce
The continued strength of online retailers, from department stores to
specialty shops and from local firms serving the surrounding area to
companies reaching out globally to find unique consumers, is the public
face of the e-commerce revolution. Businesses have long realized that
indirect shopping—using the Internet to compare products and to narrow
choices—is a crucial part of the e-commerce world. Even websites that
produce few direct sales (not all that many people buy their cars online,
although millions use the Internet to determine their final choice) are an
important part of the business to consumer e-commerce world.
Business-to-Business E-Commerce
Behind the scenes, a growing percentage of the world’s e-commerce is
done among businesses. Global purchasing auctions are commonplace,
as are digital ordering, distribution, and business-to-business marketing
systems. In the B2B world, the emphasis is typically on cost, the speed
of delivery, the quality of products, and the reliability of suppliers; the
order and weighting usually depend on the businesses involved. Digital
interventions assist with each of these elements, providing companies
with the opportunity to source products and services globally and to
deliver the items and work that they need, where and when they need it.
As major retailers like Walmart, Target, McDonald’s have demonstrated,
these arrangements bring major financial and logistical efficiencies,
cutting corporate costs and, through competition, lowering prices for
consumers.
Government E-Procurement
Governments, consistently among the world’s biggest consumers of
products and services, have discovered the benefits of online procure-
ment, although in some jurisdictions political imperatives tied to local
sourcing and other such interventions restrict the global use of these
capabilities. Government processes are often more complicated than
standard business transactions are, for content and service requirements
and legal considerations are tied to government regulations. Nonethe-
less, many of the same benefits of speed and cost reduction attach to
government use of digital procurement.
Machine-to-Machine Transactions
One of the least known but potentially a vital part of the e-commerce
world rests with machine-to-machine transactions. In these instances,
there are no human interactions involved in what are often high-volume
commercial transitions. Automated systems tied to digitally enabled
vending machines, store cash registers, warehouse, or production systems
identify the need for a specific product in a specific amount and order the
material directly from another company’s system. At its most elaborate,

the receiving firm’s machine orders the items from an automated ware-
house or an automated production line, and the material is packaged and
distributed with little if any human contact until the products arrive at
the ordering facility. These systems are fast, they anticipate need, and
they offer high-level efficiencies. They also eliminate many jobs.
Digital Security
Digital harassment, terrorism, stalking, theft, and fraud are all key
elements of the digital revolution—and so is digital security. In a world
where the average Internet user is constantly bombarded by spam, e-
mail messages from Nigerian fraudsters, and endless attempts at identity
theft, it is hardly surprising that preventive measures have become
commonplace. Software companies like McAfee have been around since
the early days of the Internet, although even they admit that they
struggle to keep up with hackers, criminals, and other digital malefactors.
Cyberespionage is not new. The first big cyberattack took place in
1986, when KGB officials hacked into American military networks. In
A Fierce Domain: Conflict in Cyberspace, 1986—2012, edited by former
White House cyberpolicy chief Jason Healey, there are stories of the
various cyberattacks that followed:41 “Mr. Healey’s main message is to
urge policymakers to be less secretive and more humble. Too many past
attacks remain classified. Officials continue to burble the same warnings
and assurances as they did 20 years ago; the public is left in the dark.”42
For their part, those in government are increasingly worried about
the long-term viability of the Internet in security terms, both because
of the ever-growing threat of cyberwarfare and cyberterrorism and,
equally significant, because of the increased sophistication of organized
crime. Robert J. Deibert’s 2013 book, Black Code: Inside the Battle for
Cyberspace, argues that “under the guise of security, the Internet’s original
promise of a global commons of shared knowledge now risks falling
under the control of cybervillains, from governments to an emerging
new military-industrial complex.”43 On the consumers’ end, growing

frustration with increasingly complex passwords and security procedures
has undercut the ease of e-commerce, and specialists in the field believe
this could threaten the very viability of the Internet-based economy.
Digital security will be a major part of the global Internet economy,

and a great deal of work must be done on the technical end and in
terms of legal and policing procedures. The staggeringly high levels
of credit card theft, the costs of which are passed on indirectly to all
consumers, constitute a major impediment to the sector’s growth. Work
will continue on software security solutions, and biometric processes—
such as voice, fingerprint, and iris- or eye-recognition technologies—will
find an ever-growing market. The amount of money currently spent by
governments to protect state systems from cyberattacks is enormous,
as is the effort by financial institutions to ensure the security of their
transactions and holdings. Personal security expenditures are, to date,
comparatively small, but the number will escalate dramatically in the
coming years. Much less publicly, governments and nongovernmental
organizations are also ramping up their cyberwarfare capabilities—both
defensive and offensive—in line with the realities of conflict in the digital
age. It is worth noting the increased use of drones in the Middle East and
Afghanistan and in high-end surveillance systems that are both a reality
(as shown in the killing of Osama Bin Laden) and a growing popular
preoccupation (as shown in countless movies, like Enemy of the State, and
the television series Person of Interest). The extensive use of closed-circuit
television (CCT) systems—the average Londoner shows up on over five
hundred CCT videos every day—for policing, security, and increasingly
for consumer research demonstrates the practical implications of digital
videography and inexpensive storage. Combining these systems with
automated facial recognition creates remarkable surveillance powers
for the state. As the data released by American fugitive Eric Snowden
demonstrates, the state has extended its digital power to include e-mail
and phone surveillance on a global scale, a discovery matched only by
the limited outrage of otherwise freedom-loving Americans about this

massive intrusion on their privacy.
Though current efforts have focused on state and institutional security,

private security systems will likely be a major economic force in the
coming years. The current systems—armed doors and windows and
digital fire and smoke detectors—are already being supplemented by video
surveillance delivered to desktops and smartphones. Adults currently
use these systems to monitor their pets, children, and caregivers, just as
small-business owners can now easily afford to keep a close watch on
employees. Increasingly sophisticated and automated security devices
and systems will be marketed to civilians increasingly worried about
digital intrusions and personal safety.
Digital Volatility
The digital economy is a tumultuous field in which companies, products,

and services evolve at sometimes dizzying speeds. The recent decline
of Blackberry followed on the heels of the earlier collapse of Motorola,
Palm, and Nokia. Netscape, once the foundation of web browsing, was
overwhelmed by Microsoft’s Internet Explorer. Explorer has, over the
past two years, been replaced by Google Chrome as the most popular
browser in the world. Mobile-phone companies rise and fall. Websites
attract millions of unique visitors, but people gradually lose interest or
migrate to competitive sites, as happened to MySpace. Because digital
technologies emerge and expand in use so rapidly—tablets were not in
the public eye in 2009—the opportunities for digital-content producers
expand and contract with surprising suddenness.
The digital-content economy is highly sensitive and fast changing,

occasionally creating digital millionaires overnight and destroying stock
market value just as quickly. The result has been an economic sector
characterized by corporate buyouts, start-up burnouts, and commercial
aggregation. In its early stages, the digital economy was assumed to be
open, flexible, and well suited to small and medium-size entrepreneurs;

in fact, it has been as susceptible to corporate concentration and oligop-
olies as other economic sectors: megafirms Google, Amazon, Facebook,
Rakuten, Alibaba, and Microsoft have absorbed hundreds of smaller
companies. In the past, stable and long-term industrial companies—from
those associated with the keirestu of Japan and the chaebol of South Korea
to the massive automobile, energy, airline, shipping, and iron ore firms of
the Western industrial economy—facilitated strong connections between
government and business. The major digital-content and digital-media
firms, in contrast, are much smaller in terms of the number of employees
and the flow-on benefits from corporate operations, and they have weaker
connections with government than their industrial counterparts do.
The Digital Context
The digital economy is not something for the distant or even near future.
The world has a multifaceted, complex, and rapidly changing digital
economy right now. Mass digitization continues to morph. The world had
just become accustomed to working on computers when smartphones
came along. And in the midst of the migration to smartphones, tablets
emerged as a major economic force, one much better suited than phones
to sharing information and services. Speeds continue to increase, as do,
ironically, both reliability and security breaches. Digital entrepreneurship,
young and fast moving, is increasing rapidly. Incubators, like Velocity
and the Hub in Kitchener-Waterloo and like Cyberport in Hong Kong,
have proved popular, as has GNEX’s Bridgecamp in Japan, designed to
spur young entrepreneurs. Low costs of entry and the constant turmoil
in the digital sector create excellent environments for start-ups, fostering
creativity and emergent ideas.
Two things stand out in the digital universe. First, digitization has
had a devastating impact on the traditional work force. Governments
rushed in to save thousands of manufacturing jobs when global forces
threatened them, and many governments have underwritten the cost
of transitioning to digital equipment. There were few such bailouts for

travel agencies, newspapers, and other information-based companies
struck down by the digital revolution. Second, mass digitization has
already sparked entire new industries and, therefore, jobs in the digital-
content field. People are comfortable working, reading, learning, and
being served online, and the level of comfort increases over time. Small-
town firms have found global markets; global firms have found distant
suppliers. Internet connectivity is fueling dramatic and near-continual
change in the modern economy.
The forces of change are many, and they exist largely outside the
comfort and knowledge zones of most national governments. Familiarity
with the nuances of digital animation and gaming remains slight, and
the promise and threat of digital health and e-education perplex many
officials, most of whom are either too reluctant or too enthusiastic
about the possibilities. Generally speaking, national governments do not
understand the complexity of digital-content revolution or the dramatic
changes that are currently underway. The world has underestimated the
large job losses attributable to digital content and digital services and
has failed to understand how to adjust training and education to prepare
young people to enter a digitally enabled work force. It is clear that a
large, dynamic, and increasingly important digital economy is emerging,
one that is global in nature, technologically driven, and largely outside
the realm of current government policy.
The digital-content world is changing so quickly that this review, based

on developments up to 2014, will quickly become outdated. Companies
and services will come and go. New trends and fads will emerge. Although
some areas are unsavory—not many nations are truly comfortable with
the promotion of gambling, and most pretend that pornography is not
a serious business—governments celebrate the emergence of new firms
and sectors and cheer the creation of additional jobs. But in an age
when governments invest and even gamble heavily on the innovation
economy, they have struggled to find ways of incorporating this dynamic,
profitable, and expanding sector. It is to this important connection—

or more appropriately, disconnection—between national innovation
strategies and the digital-content sector that we now turn.
Table 7. The global games market, 2013.
Source. Data from “Newzoo Announces New Report: Global Games

Market to Grow 6% to $70.4Bn in 2013,” press release, 22 May 2013,
http://www.newzoo.com/press-releases/newzoo-announces-new-
report-and-projects-global-games-market-to-grow-6-to-70-4bn-in-2013/
#MKmm7bOoEw44WG4p.99.
Table 8. Market share for MMOGs.
Source. Infogram, http://infogr.am/MMO-Market-Share?src=web.

Table 9. In-app revenue by country.
Source. Streaming Innovation, http://streaminginnovation.com/app-

purchasing-and-revenue-statistics-infographic/.
Table 10. Features of “freemium” apps and their users.
Source. Get Elastic, http://www.getelastic.com/economics-of-freemium-mobile-

gaming/.
Figure 12. Reasons for in-app purchases, 2011.
Source. Get Elastic.

Figure 13. Mobile-game spending, 2011.
Source. Get Elastic.

Table 11. Features of mobile gaming, 2011.
Source. Digital Buzz, http://www.digitalbuzzblog.com/infographic-mobile-

gaming-statistics-stats-2011/.
Table 12. Mobile movement.
Source. http://en.wikipedia.org/wiki/List_of_best-
selling_singles_in_2013_(Japan).
Table 13. Best-selling singles in Japan, 2013.
Source. Data from Oricon, “Oricon 2013 Yearly Charts: Singles,” Toyko-
hive, 6Theory Media, LLC, 15 December 2013; Oricon, “Single Top 100,” 15
December 2013, oricon.co.jp (in Japanese).
Table 14. Top twenty iTunes singles in Taiwan.
Source. iTunes, “Taiwan iTunes Top 20 Songs,” http://

www.hotmusiccharts.com/tw/itunes#.
Table 15. Best-selling singles in Germany, 2013.
Source. Data from Media Control, http://www.officialcharts.de/.

Notes
1. Lee Spears and Sarah Frier, “Facebook Stalls in Public Debut after record
$16B in IPO,” Bloomberg, 18 May 2012, http://www.bloomberg.com/
news/2012–05–17/facebook-raises-16-billion-in-biggest-technology-ipo-
on-record.html.
2. Fred Ladd and Harvey Deneroff, Astro Boy and Anime Come to the Amer-
icas: An Insider’s View of the Birth of a Pop Culture Phenomenon (Jeffer-
son, NC: McFarland, 2009).
3. Carin Holroyd and Kenneth Coates, Digital Media in East Asia (Amherst,
NY: Cambria, 2012), 174.
4. Ibid., 175.
5. “Toy Story,” Box Office Mojo, http://www.boxofficemojo.com/franchises/
chart/?id=toystory.htm.
6. “Nintendo Crisis Casts Shadow on Famicom’s 30th anniversary,” Nikkei
Weekly, 22 July 2013, 9.
7. Holroyd and Coates, Digital Media in East Asia, 176.
8. Charles Arthur, “Smartphone Sales Pass 1Bn in 2013 as China Booms,”
Guardian, 29 January 2014, http://www.theguardian.com/technology/20
14/jan/29/smartphone-sales-billion-2013-samsung-apple-china.
9. Kim-Mai Cutler, “Advice from the Game Maker That Made GungHo
Worth $14B: ‘Listen To Your Wife,’”Tech Crunch, 23 June 2013, http://
techcrunch.com/2013/06/23/gung-ho/.
10. “Smartphones Help Steal Gaming Crown from Established Makers,”
Nikkei Weekly, 29 July 2013, 12.
11. “Nintendo Crisis,” 9.
12. “Nintendo Hopes Developers Will Port Smartphone Games to Its
Struggling Wii U Console,” Apple Insider, 5 June 2013, http://
forums.appleinsider.com/t/157378/nintendo-hopes-developers-will-port-
smartphone-games-to-its-struggling-wii-u-console.
13. David Hinkle, “NPD: US Video Games Sales Reach $15.39 Billion in
2013,” Joystiq, 12 February 2014,http://www.joystiq.com/2014/02/12/
npd-us-video-game-sales-reach-15-39-billion-in-2013/; “Video Games in
Europe,” Wikia, http://vgsales.wikia.com/wiki/Video_games_in_Europe;
www.npd.com; Uta Stenzel, Maria Goretti Sanches Lima, and John
J. Downes, with Berit Wader, “Study on Digital Content Products
in the EU” (Brussels: IBF International Consulting, n.d.), 20. http://
ec.europa.eu/consumers/enforcement/sweep/digital_content/docs/dcs_
complementary_study_en.pdf.
14. “Reality Grows Ever More Virtual,” Nikkei Weekly, 5 August 2013, 3.
15. “Video Game Industry Faces Shake-Up on Initial Costs,” Nikkei Weekly,
14 July 2013.
16. Malathi Nayak, “Factbox: A Look at the $66 Billion Video-Games
Industry,” Reuters, 10 June 2013, http://in.reuters.com/article/2013/06/1
0/gameshow-e-idINDEE9590DW20130610.
17. “Seoul Warns of Latest North Korean Threat: An Army of Online Gaming
Hackers,” New York Times, 4 August 2011, http://www.nytimes.com/20
11/08/05/world/asia/05korea.html?_r=4&.
18. “Entrepreneurs: If in Doubt, Innovate,” Special Report: The Nordic
Countries, Economist, 2 February 2013, http://www.economist.
com/news/special-report/21570834-nordic-region-becoming-hothouse-
entrepreneurship-if-doubt-innovate.
19. Brad Plumer, “The Economics of Video Games,” Wonkblog, Washington
Post, 28 September 2012, http://www.washingtonpost.com/blogs/
wonkblog/wp/2012/09/28/the-econ.
20. Robin Sidel, “Cheer up, Ben: Your Economy Isn’t as Bad as This One,”
Wall Street Journal, 23 January 2008, http://online.wsj.com/news/articles/
SB120104351064608025.
21. “Books, Cell Phone Novels, and the Japanese Publishing Industry,” Facts
and Details, August 2012, http://factsanddetails.com/japan/cat20/sub128
/item2291.html#chapter-5. See also Dana Goodyear, “Letter from Japan: I
[Heart] Novels,” New Yorker, 22 December 2008, http://www.newyorker.
com/magazine/2008/12/22/i-♥-novels.
22. Julie Ruvolo, “How Much of the Internet Is Actually for Porn,” Forbes,
7 September 2011, http://www.forbes.com/sites/julieruvolo/2011/09/07/
how-much-of-the-internet-is-actually-for-porn.
23. Ibid.
24. Steve Boggan, “Getting in on the Act: How the Porn Industry Intends to
Reinvent Itself,” Independent, 16 February 2013, http://www.independent.
co.uk/life-style/love-sex/sex-industry/getting -in-on-the-act-how-the-
porn-industry-intends-to-reinvent-itself-8493699.html.
25. Ibid.
26. Statistics from Maryland Rescue and Restore Coalition, http://
marylandcoalition.org/prevention/pornographyandtrafficking/.
27. Paul Gallagher, “Addiction Soars as Online Gambling Hits £2Bn Mark,”
Independent, 27 January 2013, http://www.independent.co.uk/news/uk/
home-news/addiction-soars-as-online-gambling-hits-2bn-mark-846837
6.html.
28. “22 of the Best Messaging Apps to Replace SMS on Your Smartphone,”
The Next Web, accessed 27 September 2014, http://thenextweb.com/apps/
2013/10/18/best-mobile-messaging-apps.
29. “South Korea,” Globe and Mail (Toronto), 15 March 2014, B3.
30. “Bitcoin Is an Innovative Payment Network and a New Kind of Money,”
Bitcoin, https://bitcoin.org/en/.
31. Nermin Hajdarbegovic, “World Bank Report: Bitcoin Is a ‘Naturally
Occurring’ Ponzi,” CoinDesk, 17 July 2014, http://www.coindesk.com/
world-bank-report-bitcoin-naturally-occurring-ponzi/.
32. “The Bottom Line,” Week, 26 July 2013, 30.
33. Drawn from Holroyd and Coates, Digital Media in East Asia.
34. “Teaching and Technology: E-ducation,” Economist, June 29, 2013, p. 13.
35. Ibid.
36. Ibid.
37. “Education Technology: Catching on at Last,” Economist, 29 June 2013,
25.
38. Government of Denmark, The Digital Plan for Future Welfare eGovern-
ment Strategy 2011- 2015.
39. “Internet Protests: The Digital Demo,” Economist, 29 June 2013.
40. “Cash Cow, Taobao,” Economist, 24 May 2014.
41. Jason Healey, ed., A Fierce Domain: Conflict in Cyberspace, 1986 to 2012
(Vienna, VA: Cyber Conflict Studies Association, 2013).
42. “Cyber-Warfare: Digital Doomsters,” Economist, 29 June 2013, 75.
43. Ronald J. Deibert, Black Code: Inside the Battle for Cyberspace (Toronto:
McClelland & Stewart, 2013), quoted in Institute for Research on Public
Policy, “Summer Reading for Wonks: A Collection,” Policy Options (July
2013), http://policyoptions.irpp.org/issues/summer-reading/collection/.
Chapter 3
Government, National
Innovation Strategies,
and the Emergence of the
Digital-Content Sector
In the aftermath of the dot-com bust of 1999–2000, commentators

wondered about the future of the digital-media sector. After all, the idea
of an economy based on computers, the Internet, and related technologies
seemed potentially fanciful, particularly as billions of dollars of stock
market value in poorly conceived Internet businesses evaporated in less
than a year. In short order, however, the continued development of
Research in Motion (now Blackberry), Skype, Apple, Facebook, YouTube,
Google, Alibaba, Gree, QQ.com, Open Text, and SAP SE reinvigorated
the digital economy and convinced politicians and governments to invest
heavily in the infrastructure needed for the new media sector.1 But it
soon became evident that there was no simple or obvious way to engage
the fast-changing and unique digital-media industry that emerged in the
aftermath of the expansion of the global Internet.
Several patterns developed as national governments turned to the

digital economy. Some countries, like China, saw the manufacturing
potential of digital technologies and committed heavily to developing
digital manufacturing. Japan, Taiwan, and South Korea, while focusing
on manufacturing IT hardware, also saw the potential of digital content
and sought new means of supporting and expanding the content-based
portions of the Internet economy.2 Still others, most notably Canada,
Estonia, and Singapore, focused on e-government, e-health, and other
public sector initiatives. In Europe, as in the United States, governments
spoke expansively about multiple avenues, from manufacturing to content
creation and from cultural preservation to information management.
In each nation, however, governments, industry representatives, and
universities wrestled with the options and possibilities of digital media,
seeking the best means of mobilizing national and regional resources in
the interest of expanding the digital-content economy. The Internet is
history’s greatest and fastest-growing technological network, connecting
people across linguistic, cultural, and national boundaries. The initial
forecasts that the spread of the Internet would result in the rapid West-
ernization of the world, however, were not borne out. Instead, the digital
planet and the digital-content sector constitute a commercially diverse,
culturally complex place, reflecting societal and government imperatives
and very different implementations of digital media in various countries
and regions.
Despite the impressive growth and importance of the digital economy,

national governments have struggled to develop policy responses to the
new sector. Digital manufacturing clearly fit well within industrial policies
and programs, but the wide-open, seemingly anarchistic nature of the
digital-content and e-commerce fields presented a challenge for traditional
government approaches to innovation and economic transformation.
How would any government pick an early-stage company like Facebook
from the vast sea of digital applications and then figure out a way to
support such an initiative? Similarly, a quick look at the Finnish app
Angry Birds would reveal a child’s game, simple in execution and design
National Innovation Strategies 123
but not immediately obvious as the foundation for a highly profitable

global company, at least in the short term.3 The first significant sectors
of digital content to rise to profitability, after all, were online gambling
and pornography,4 hardly business areas governments wish to promote,
despite their apparent profitability. That so many digital firms emerged
from basement studios, garages, and university dorm rooms moved
the digital-content sector, in particular, further from the large-scale,
manufacturing-focused activities that governments know how to support
and encourage through various innovation and industrial policies. Not
surprisingly, national governments found different elements of the digital
economy attractive as the sector continued to grow but wrestled with
the challenge of supporting and encouraging the field’s development.
Discussions about how best to take advantage of the digital economy

emerged as part of a global fascination with the commercial potential of
scientific and technological innovation and as part of an international
effort to figure out how to effectively convert technological discoveries
into economic opportunities. Government policy, including the full array
of legislation, subsidies, training programs, and the like, is important for
the development of regional and national digital ecosystems. However,
although digital content is clearly part of the so-called new economy, it has
not fit easily into economic development or national innovation-systems
plans for twenty-first-century economic development.
National Innovation Systems
The concept of a national innovation system—developed through the

work of Chris Freeman, Bengt-Åke Lundvall, Richard Nelson, and others
—focuses on government policies designed to foster globally competi-
tive science- and technology-based economies. A national innovation
system is composed of government policies and programs though which
governments, in conjunction with the business and university commu-
nities, can help countries and regions develop economically in a rapidly
changing world.
National innovation became a global mantra in the 1990s as nations and

regions around the world began working to identify the combination of
training, education, research, and commercialization that would provide
for twenty-first-century competitiveness and productivity. From Canada
to Botswana, from Thailand to Israel, governments, universities, and
business organizations are attempting to work cooperatively to create
the foundations for private sector creativity and commercial growth.
The global competition in the innovation field is truly impressive, char-
acterized by countries and regions fighting over top talent (researchers,
students, and highly qualified personnel) and by emerging and estab-
lished companies, patents, and other key elements of the twenty-first
century economy.
The impact of new technologies, the rise of China and India, and the
effects of globalization generally have dramatically changed the global
economic landscape. Developed and developing countries struggle to
determine how best to ensure their economic competitiveness. In both
academic and policy circles, debates have raged about the most effective
ways of mobilizing a country’s human and financial resources to achieve
economic success. Governments, uncertain about the major economic
and employment changes underway, have looked at national, local, and
regional successes and attempted to understand what led to the triumph
of Silicon Valley, California, and Bangalore, India.
There are quite literally billions of dollars at play globally in the

innovation race. Governments are investing heavily in postsecondary
education and basic research, believing that advanced education is a
fundamental element in contemporary competitiveness. The remark-
able expansion of the Chinese university system and Turkey’s massive
investment in engineering education are two high-profile examples of
this emphasis. In Europe, universities and other institutions are creating
specialized academic and technological programs. Countries are shifting
resources toward engineering, applied science, business, and emerging
technologies. They assume that companies will be drawn by the ready
availability of highly skilled, talented individuals. Similarly, the leading

nations are making massive investments in practical technologies and
the commercialization of basic science.
The development of new products, services, and technologies creates

new businesses, new and more efficient processes and increases employ-
ment both directly and indirectly. As developed countries lose thousands
of manufacturing jobs to China and Southeast Asia and, recently, lose
many service jobs (in accounting, law, programming, call centers) to
India, North Americans and Europeans strive to find sectors to make
up for the positions that have been lost. National politicians around the
world have, for a decade, spoken earnestly about the new economy, the
knowledge economy, and the digital economy without showing that they
truly understand the concepts or have figured out how to successfully
capture jobs, business, and prosperity within their country or region.
The challenge for governments is formidable. Consider one key element

—the creation of work for the younger generation. Youth unemployment
and underemployment are particularly dire around the world. Steady jobs
with decent incomes are increasingly difficult to find in both developing
and developed countries. The highest rates of youth unemployment
are in the Middle East and North Africa and, since the Eurozone crisis,
in southern Europe. According to Index Mundi, in 2012 there were
forty countries with unemployment rates over 20 percent and fifty-
eight countries with youth (ages fifteen to twenty-four) unemployment
rates over 20 percent.5 It is hardly surprising, then, that governments
around the world are wrestling with the challenges positioning their
countries for economic success in the short and long term. Many of
the factors of the past—reliable natural resource markets, protected
domestic markets, limited international completion—have disappeared. In
particular, the impact of the digital economy on the current employment
scene, nationally and globally, and the potential for new businesses and
sectors to create jobs for the future are pivotal to any government seeking
to make sense of the twenty-first century.
Discussions about how to prepare for a new economy are not

completely new. Adam Smith (1723–1790) and Friedrich List (1789–1846)
were leading thinkers of their time regarding how to best prepare a
society for major technological change and concerning the need for
significant investments in education and training. The modern world has
been through numerous technological transitions following, for example,
the advent of the steam engine, industrialization, mass communications,
and improved agricultural production. Universal education, in fact, grew
from the work-force needs of the industrial age. The Cold War space and
arms race was an important catalyst for expanded university education in
the 1950s and 1960s, just as the rapid expansion of the university system
globally in the 1990s and 2000s was tied to the alleged imperatives of
the knowledge economy. That so many university and college graduates
struggle to find work suggests that the government approaches of the
past, often tied to the idea that “learning equals earning,” may not be
well suited for contemporary economic circumstances.
Industrial nations like the United States, Germany, the United Kingdom,
and later Japan have been on the cutting edge of technological innovation
for a long time. For the second half of the twentieth century and into the
twenty-first century, technological developments in these countries was
supported by basic research done at universities, by military spin offs,
and by substantial corporate investments in research and development.
Creative design and marketing work allowed the United States, Italy,
France, Germany, the United Kingdom, and Japan to build upon and
expand their industrial bases. In the 1980s and 1990s, Hong Kong,
Singapore, South Korea, and Taiwan emerged as rapidly developing
economies primarily because of their manufacturing prowess and abilities
to leverage incremental innovations in production processes and design.
All of these countries have used technological innovation to build national
prosperity.
Science and technology have, therefore, become the cornerstone

of national economic development. Information and communications
technology, biotechnology, nanotechnology, environmental technologies,

robotics, regenerative medical research, and health-care equipment and
technologies are among the fields that appear to offer economic and
employment potential. The focus, therefore, of the national innovation
system discussions and plans that emerged in the 1990s was on science
and technology and on ways to facilitate “triple helix” (government,
industry, and academia) cooperation in pursuit of economic opportunity.
Little is guaranteed about investments in these risky and expensive
sectors, so governments and companies must weigh the potential benefits
of research into highly speculative but potentially lucrative scientific
areas. Even if scientific success is obtained, taking an idea from the
laboratory to the marketplace is a long and difficult process. In most
nations, particularly those able to mobilize substantial investment capital
through their armed forces, governments are the only agencies capable of
making the long-term, large-scale investments necessary to underwrite
national development in emerging scientific fields.
Governments have a variety of tools at their disposal—direct funding

for research and development; regulatory measures; first purchaser
support; commercialization units; investments in education, training,
and physical infrastructure; assistance in bringing venture capitalists
to the table; incentives for consumers or businesses—but deciding what
to do, how much money to invest, and where is a difficult challenge.
National innovation draws together basic science, scholarly training,
and commercialization efforts, which in concert are supposed to provide
a country with the building blocks for twenty-first-century prosperity.
However, the details of how to best support that interplay and which
government initiatives help or hinder innovation and commercialization
are not at all clear.
Product and process developments, therefore, are often tied to govern-

ment spending on academic scientific research or to tax incentives that
underwrite industrial investments in the area. Universities worldwide
have largely succeeded in convincing governments that major invest-
ments in academic research are essential for long-term commercial

development. Creating a sure supply of future innovators, including
researchers, entrepreneurs, workers, and investors, required improve-
ments in elementary, high school, and university education. If such help
was not forthcoming, the argument went, the high-technology companies
would not have the workers that they needed to survive. Government
also encouraged domestic and foreign investment, promoted their juris-
dictions as business friendly (tax breaks were the most frequently used
tool) and otherwise sought to promote economic development. It has
not proved to be enough, however, particularly when countries around
the world have adopted similar strategies toward business creation and
expansion. To be successful, a national or regional environment also
requires entrepreneurs, investment capital, flexible and highly skilled
workers, and companies that are not risk averse. Government can push
only so far; without these other elements, government innovation invest-
ments typically come to naught. Even more worrisome, innovations
funded and created at the research and start-up level in one nation have
often moved to more commercially responsive areas.
Though governments have generally recognized that innovation

economies require forward-looking strategies, they have typically been
reluctant to move too far from the existing commercial base in their
economies.6 As a consequence, investments tend to cluster around
enhancements of current sectoral strengths rather than new areas like
digital content. Car-manufacturing regions, for example, have sought new
commercial opportunities in auto parts, electric or hybrid engines, and
technology-assisted devices. Resource-based countries search for new
applications in the collection, processing, and use of natural resources,
having attained impressive results in the oil- and gas-extraction sector
and in forestry and mining. More generally, innovation efforts focus
as much on modernizing and sustaining existing industries as they do
on developing new economic sectors. The global investment in labor-
reducing machines, for example, has increased firm competitiveness while
simultaneously cutting thousands of manufacturing and processing jobs.
In almost all countries, existing commercial operations exert considerable

economic and political authority and are able to convince governments
that innovation investments should build on an established economic
base. The allocation of national stimulus spending following the 2008–
2009 financial crisis, whereby much more government funding was
devoted to propping up the old economy (particularly the automobile
industry in North America) than to catalyzing the new economy, is an
excellent case in point. The reaction to the Obama government’s financial
investments in solar and other alternative energies revealed the political
challenges associated with wandering too far from existing industries.
National Innovation Strategies and the Emergence of

Digital Content
Digital media and digital content comprise, as mentioned earlier, a

commercial sector where the fit between government policies and
industry needs is less obvious than it is in other areas of the economy;
therefore, the sector has met some difficulty gaining government interest
in many countries. The digital-media and digital-content sector does
not really follow standard manufacturing structures, which emphasize
industrial processes, large-scale operations, and the production of phys-
ical products. Instead, the field emphasizes creativity, design, art, and
digital mediation. Vast sums can be made from a relatively small amount
of fairly simple code (Facebook), a creative algorithm (Google), attractive
and efficient designs for communications systems (Apple), the refinement
of long-known technologies for Internet-based telephony (Skype), or
the application of digital-storage technologies to a familiar consumer
activity (YouTube).
The digital-content sector is also challenging to support because of
its continual transitions and the often short life span of innovations.
Many of the pioneering firms in the digital-content field have disap-
peared (Netscape, JDS Uniphase, Nortel), having experienced limited
shelf life in an age of global competition and corporate concentration.
Over the past decade, the rapid emergence of new applications and the
shift from desktop computers to smartphones and tablets has dramati-
cally changed what is commercially possible. Innovations abound and
continue to emerge—including social media, mobile Internet, digital
cameras, ubiquitous computing, digital animation, Internet protocol (IP)
telephony, multiplayer games, virtual reality, immersion chambers, elec-
tronic auctions, digital projection, digital advertising, cloud computing,
tablet computers, content-management and search systems, mass digiti-
zation, and many more. The simplicity of the past, when early adopters
showed off their Compaq Portable or their Apple II computer or spoke
learnedly of the storage capacity of the three-and-a-half-inch floppy
disk, seems like ancient history in an industry where product cycles are
defined in months rather than years.
Many of these digital innovations passed quickly from the research

laboratory to the sales floor or, more commonly now, the digital market-
place. Some flamed out quickly. A few, like the Apple Newton, the grand-
parent of the iPhone and iPad, faded into obscurity and then resurfaced
in a different form. Many others moved speedily from high-technology
devices targeting computer aficionados to mass-market success stories.
For much of the last quarter-century, consumer attention has focused
on the latest gadgets and technological upgrades and, until recently,
much less on applications. A marginal upgrade to an existing product—
the 2012 iPhone release being a good example—can unleash a consumer
frenzy; a new product like the Samsung Galaxy or Apple’s iPad Mini can
generate great fervor among the technically inspired. The global focus is
now shifting to applications and content, from workplace-management
systems and Netflix to massive online gaming and various crowdsourcing
initiatives. More recently, advanced uses of digital technologies for work,
play, entertainment, government, business, and the like have garnered
the greatest attention.
The rapid spread of the Internet, accelerated by the global introduction

of wireless telephone systems, has transformed many key economic
processes and created diverse commercial opportunities. CDs are out;

MP3 files are in. Video games have replaced movies as the focal point of
youth culture. Convergence technologies have joined television programs,
movie rentals, and music purchases with computers, televisions, mobile
phones, and tablets. Multiplayer Internet-based video games link players
around the world. Hands-free gaming has emerged as a major commercial
opportunity. Digital-content initiatives like Wikipedia, Google Books,
and YouTube have revolutionized libraries, museums, historic sites,
and government services. On the company side, digital commercial
operations tend to be small, corporate arrangements are fluid, and top
priority is assigned to the maintenance and development of creative
personnel. The larger firms like Google, SAP, Open Text, Microsoft, and
Facebook innovate, in large measure, by buying promising small firms or
purchasing useful patents. Markets are now driven by viral international
cultural and entertainment preferences rather than by standard retail
and marketing imperatives.
With submarine fiber-optic cables spanning the globe, satellite Internet

services reaching into remote regions, and wireless Internet bringing
millions of previously disconnected people online every year, digital is
now a part of the lives of billions around the world. The digital economy
bears some resemblance to previous industrial orders, although the bursts
and busts of Internet firms have relatively few comparators in other
sectors. The Internet is perhaps the most transformative technology of
all time, producing social, economic, and political change in a matter
of years compared to the decades it took ocean navigation, electricity,
radio, and television to produce similar economic and social shifts. A
technological system that expands this fast has been difficult for govern-
ments to track, let alone anticipate, and certainly to lead. The transfer of
government services online has created a global e-government industry
as e-health and e-education have expanded rapidly in recent years. The
convergence of new technologies has left traditional entertainment and
communication industries battered, if not undermined, forcing newspa-
pers, music companies, television and movie producers, retailers, political
parties, and countless other institutions and organizations to adapt to

the new realities.
In sum, digital content is a vast, expanding and still largely untapped

commercial sector, one that has unfolded with some government invest-
ment in and regulation of the Internet and wireless infrastructure but
with extremely uneven public policy engagement overall. Thousands
of companies have emerged, large and small, in an industry that is
notoriously fickle and uncertain. Countries, investors, and consumers
are enamored with the digital-content sector, but governments have
been much more restrained. Politicians and government officials find it
significantly easier to work with established industries, particularly in
manufacturing, and with large scale, well-established firms. Though they
continue pouring innovation investments into sometimes speculative
scientific and technological research, governments have so far failed to
promote successful digital-content initiatives as a long-term economic
solution. Put simply, the nature and parameters of the youth-focused,
fast-changing digital-content sector are not well suited to the metrics,
expectations, and structures of national innovation strategies.
Nonetheless, as politicians and government officials contemplated

the digital sector, recognition grew that promoting the digital economy
required attention first to infrastructure, installing high-speed broadband,
to legal areas like intellectual property, skills training, industrial and
granting policies, and to the nuances of fast-changing, globally compet-
itive markets. In return, as the digital economy continued to evolve,
countries realized the growing potential for employment and business
development associated with producing new technologies, animation,
video games, multiplayer online games, virtual reality projects, digital
music and video, and numerous digitally enabled services and supports.
Connecting these opportunities with government programs, however,
has proved more difficult.
Chapter 4 discusses some of the most successful and high-profile

examples of major government initiatives in the digital-content sector
around the world. Various national governments have engaged in large

demonstration projects, major e-government initiatives, massive invest-
ments in e-education and e-health, and nationwide efforts to bring their
countries to digital prominence. Governments have been trying, with
varying degrees of success, to make digital content prosper in their
countries. It is clearly proving to be a demanding challenge, however.
Digital Plans and Agendas
Beginning in the early twenty-first century, countries began releasing

national digital economy plans or agendas. Most of these were national
broadband plans, outlining government goals and policies with regard to
improving and expanding broadband connections. The plans started with
the recognition of a simple set of facts: that citizen access to the Internet
was crucial, that the speed, cost, and dependability of Internet service was
important, and that governments had—through investments, regulation,
or promotion—to take the lead in expanding Internet capabilities within
each country and across national boundaries (see tables 13–15, fig. 17).
The adoption of fiber in broadband (which makes connections faster)
has been growing rapidly. Japan and Korea lead in fiber-optic broadband
penetration (see fig. 18); fiber technology there accounts for over 60
percent of fixed broadband lines.7 Within national broadband plans,
governments can use a variety of strategies to achieve their objective of
facilitating the construction and use of broadband networks. These include
increasing private sector investment through regulatory framework
changes and the stimulation of competition, creating private-public
partnerships to construct and run the networks, giving tax breaks or
subsidies particularly so telecommunications companies will develop the
infrastructure in remote areas, and on the demand side, expanding e-
government and encouraging the expansion of digital literacy.8 Germany’s
Digital Germany 2015 agenda touches on this in its introduction, which
states that the federal government is “also aware of the social-policy
significance of Internet and ICT, will continue to engage in dialogue
on the prospects of German Internet policy and the appropriate role

of government in the future organization of the Internet and channel
the outcomes into improving the regulatory policy framework.”9 The
national plans, therefore, vary in both their goals and their strategies
for mobilizing government and the business community to respond to
opportunities.
East Asia quickly gained a substantial lead over the rest of the world
on the broadband front as Japan, South Korea, and Taiwan (and a
little later Hong Kong and China) moved aggressively in the early
years of the twenty-first century. These countries, all of which lagged
behind in the early stages of the digital revolution, quickly made and
supported large-scale investments in Internet connectivity, promoting
the expansion of high-speed fiber networks, particularly in major cities.
The mass urbanization and dense settlement of much of East Asia gave
the region a great advantage over others; connecting a network of high-
rise apartment blocks in Tokyo, Seoul, or Shanghai is much cheaper
than laying cable between isolated farmhouses in the Australian outback
or on the North American prairies. While other countries set modest
standards for speed and connectivity—promising 100 MB download
speeds was seen as a stretch—major East Asian cities were provided
with 1 GB download capabilities. Japan, South Korea, and Taiwan all
moved beyond simple connectivity as an aspiration, providing assertive
policy targets for engagement, employment, and business development.
Taiwan moved stepwise through the technologies, starting with an e-
Taiwan policy, moving to m-Taiwan (for its mobile strategy) and then to
u-Taiwan (for ubiquitous computing). Of the three nations, and indeed
as an international leader in the field, Taiwan identified digital content,
particularly the production of Chinese-language content for distribution
to the mainland, as an economic sector of considerable importance.10
As part of the Digital Agenda for Europe (DAE)—a five-year action

plan launched in 2010 and discussed in more detail in chapter 4—all
EU member nations were required to publish national broadband plans
by 2012 to facilitate the achievement of high-speed broadband targets.

The DAE requires all member countries to achieve basic access to the
Internet for 100 percent of the population by 2013, fast access (30 Mbps or
more) for 100 percent of the population by 2020 and ultrafast access (100
Mbps or more) for 50 percent of the population by 2020. Each country’s
national broadband plan outlines the steps to be taken to achieve these
objectives. Denmark (followed by Sweden and Finland) introduced its
first national broadband plan in 2001, well in advance of the DAE. The
ultrafast targets, incidentally, had been well-eclipsed by urban centers
in East Asia by the early 2010s.
Along with the twenty-eight EU members, a number of other coun-

tries—including Argentina, Australia, Brazil, India, Mexico, New Zealand,
Peru, and the United States—have also released broadband plans since
2008. Japan and South Korea introduced national broadband plans much
earlier (in 2001 and 2002, respectively), and Taiwan launched its broad-
band plan in 2006. The various plans explain each nation’s goals with
regard to the achievement of widespread, affordable, and fast Internet
access, as well as the steps that will be taken to meet those objectives.
Some of the plans also discuss the ways in which each country believes
faster broadband and greater online participation by households, busi-
nesses, and nonprofits will benefit the nation and its citizens. Only a
few of these plans (outside of the Asian ones) discuss digital content as
an economic sector. France’s plan prioritizes support for the increased
development of its video-game and software sectors.11 Brazil clearly
sees national investment in broadband and related physical and social
infrastructure as a key component in the country’s modernization,
poverty reduction, and competitiveness strategies.12 New Zealand’s
Digital Strategy 2.0 describes plans for a digital-content innovation
cluster intended to “encourage collaboration and networking, and support
specific projects from leading firms, researchers and educational institutes.
It will boost local production of broadband applications in areas such as
e-learning, e-health and online gaming.”13 However, it is unclear how
much has happened at a government level to develop the digital-content

sector since the release of the 2008 strategy. Dunedin, however, has a
burgeoning ICT sector, and Wellington is developing a digital cluster.
The German approach is one of the most comprehensive and well

funded, particularly in Europe, but reflects national governments’ struggle
with digital technology versus digital content. The German ICT strategy
sets out the country’s priorities and plans with regard to the expansion
of digital infrastructure, the strengthening of competitiveness, and the
improvement of social conditions through widespread use of ICT and
increased research and development in the ICT sector meant to translate
into marketable products and services. As the report notes with regard to
the last goal, Germany has much upon which to build: “The strengths of
the German ICT industry lie in software and embedded systems, which
are, however, frequently unknown to the public. There are many more
high-quality, leading ICT products and services from Germany than is
generally known, such as semi-conductor chips from Europe’s largest
microelectronic cluster in Dresden. According to the OECD, Germany
was the fifth largest producer of electronic products worldwide in 2009.”14
Digital Germany 2015 sets out a variety of initiatives and objectives,

several of which relate to the development of a digital-media sector. In
Germany, digital content falls under cultural and creative industries within
the Federal Ministry of Economics and Technology. In recognition of the
importance of the cultural and creative industries sector (government
estimates indicate that the sector contains 244,000 companies with almost
one million employees and a revenue of €143 billion),15 the Center for
Creative and Cultural Industries was established in 2009 and expanded
to eight regional offices in 2010. The center’s goals are to increase the
competitiveness of the cultural and creative industries by enhancing the
business and professional skills of companies in the eleven subsectors
(music, books, art, movies, radio, performing arts, architecture, design,
media, advertising, and software and games), nurturing new trends,
speaking about relevant issues with business and government experts,
and hosting workshops and panels. Although digital content is definitely

a part of cultural and creative industries, it is not the key focus. In
addition, despite the creation of this structure, it can still be difficult
for creative professionals to access federal funding programs because
according to staff at the center, the German government maintains a
traditional focus on manufacturing.16
Other digital-content-related initiatives outlined in the plan include

the Start-Up Nation Germany initiative that focuses on the creation of
thirty thousand new jobs in the ICT and applied ICT industries. To that
end, a start-up competition offers financial and other forms of help, the
EXIST grant promotes university-based ICT start-ups, ICT summits with
young IT enterprises, and the High Tech Start-Up Fun II.17 The plan
also highlights the Federal German Computer-Game Prize, a series of
seven categories of prizes for outstanding German game production—
Best German Game, Best Game for Children, Best Game for Youth, Best
Mobile Game, Best Serious Game, Best Browser Game, and Best New
Concept—by high school and university students.18
The German strategy reflects governments’ growing awareness of the

economic and employment potential of the digital economy. Though this
approach has some useful elements, it is a surprisingly limited program
given the country’s existing scale of employment and business develop-
ment and its clear potential for long-term expansion. That Germany,
one of the greatest industrial powers in the world, would emphasize
traditional manufacturing and industrial processes over content-related
fields is hardly surprising. That a country with a rich cultural and artistic
tradition—Berlin has one of the best-funded cultural programs of any city
in the world—would experiment with digital content and seek to build
economic opportunity in the field is also not surprising. In time, it is
likely that the German government will attach greater priority to digital
content as an economic sector and perhaps apply a similar combination
of government-business collaboration and national investment in the
field of digital content. At present, however, the level of commitment
and the range of programming in Germany fall far short of its industrial
economic-development strategies.
Overall, those digital plans that move beyond discussion of broadband

goals and targets tend to discuss the potential of broadband to improve
the world economically and socially. Most countries begin by discussing
in general terms their vision of the benefits of a national broadband
network. The American broadband plan states, “Like electricity a century
ago, broadband is a foundation for economic growth, job creation, global
competitiveness and a better way of life. It is enabling entire new industries
and unlocking vast new possibilities for existing ones. It is changing
how we educate children, deliver health care, manage energy, ensure
public safety, engage government, and access, organize and disseminate
knowledge.”19 Sweden’s plan discusses ways that ICT contributes to
more than economic growth “but also to improving and simplifying
everyday life for everyone—the public, businesses, organizations and the
public sector, wherever one is in life or whatever one does.”20 Australia’s
plan contends that “ensuring that Australia becomes a leading digital
economy will contribute to Australia’s productivity, maintain our global
competitiveness and improve our social wellbeing.”21 It does not describe
in detail how this will occur within Australia or how digital content fits
into overarching economic concerns.
Some digital plans or agendas outline in greater detail visions and goals
regarding the impact that improved broadband would have on society.
Many plans lack specific details, but some common threads are apparent.
The first step toward achieving almost all of these visions starts with
digital inclusion, addressing the need for and benefits of increased online
participation by households, businesses, and nonprofits—discussed in
most national plans. Ensuring good broadband access to people living in
rural and remote areas is another key part of digital inclusion. Whereas
in most countries decent access to broadband is available in large cities,
often via a number of competing broadband operators, residents of small
towns and rural areas often remain outside of mobile coverage. Improving
the broadband situation for people in such places is critical for countries
with large, sparsely populated areas. Sweden, Australia, and Brazil all
draw attention to this issue in their plans.
Many countries emphasize the need to improve digital literacy rates

both to justify the investment in broadband infrastructure and to ensure
that individuals (particularly the elderly, the poor, and those with disabil-
ities) are not left behind. Improved access and an increase in the number
of citizens using the Internet allow both companies and governments
to reduce their administrative burdens by adopting new digital prac-
tices. Small businesses can participate more easily and effectively in
the global marketplace by both marketing to and fund-raising among
a broader audience. Citizens’ lives improve with increased access to
business and job opportunities and to health, education, and government
services. Being able to telecommute, having better access to information,
to products, and to price comparisons—all contributing to the decline
of social exclusion—are a few of the ways that many countries predict
that increased broadband and the accompanying digital content will
promote growth, foster productivity, and as the Finnish plan promises,
thereby facilitate “a better balance between work, education, family life
and leisure activities.”22
Improved delivery of government services is a key objective of several

plans. The general theme is that services need to be better connected
(or as New Zealand’s agenda puts it, “joined-up services—the right
information in the right place at the right time”23) because citizens seldom
care which organization delivers a program. People should be able to
easily interact with all the government services that they need. Estonia is
the most successful country in the world in this regard. Every Estonian
citizen has a mobile ID that gives him or her digital access to every
secure e-service in Estonia. Each card’s chip has a 2048-bit public key
encryption. Remarkable is that Estonia introduced this card over a decade
ago, in 2002, well before most countries had formulated a basic national
strategy for Internet engagement. This mobile ID card is used by over
90 percent of the Estonian population as a bank, public transportation,

health insurance, and medical card, as well as for digital signatures, e-
voting, and e-prescriptions.
Aging populations around the developed world are adding strain to

already overstretched health-care systems, and governments realize that
the Internet could be part of the solution. The application of digital
practices upgrading and reforming health processes, procedures, and
services can result in substantial savings. The coordination of health-
records transfer—common clinical applications among public and private
health care providers so that lab results, referrals, notes from family
doctors, and so on, are easily transferred—is one step. Increasing the
ability of individuals to gain access to their own medical records is
another example. Sweden is working on “My Care Contacts” and “1177,”
which allow “for interaction with health care, information and advice or
a health Diary in which patients themselves can document and monitor
their health development and obtain personal advice.”24 Monitoring and
preventing health-care-related infections can be facilitated by digital
technologies. Telehealth initiatives that allow users in remote regions
to access medical advice compose another area of importance for many
countries. Saving transportation costs and time for both patients and
health-care providers could become a major support for the health system
as a whole. Telehealth systems, however, are dependent on fast and
reliable broadband connections everywhere, including rural and remote
regions.
Some national broadband plans discuss the impact of ICT on energy

management, particularly through energy-efficient ICT products and
smart-grid technologies. Smart grids use ICT to manage energy demand
and to produce and distribute energy more reliably and efficiently.
Smart community technologies build upon smart grids, using ICT to
integrate the management of heat, power, water, transportation, and
communications. Clearly, and especially in a time when energy costs and
supplies are of crucial importance globally, using Internet technologies
to regulate, monitor, supplement, and control energy use could carry

significant benefits.
The impact of ICT on education is also discussed in various plans.

This includes increasing computer literacy among school children and
using ICT as a teaching tool for students and teachers. Mainstreaming e-
learning in national policies is one key proposal of the DAE. The delivery
of education online has been discussed and promoted for a number of
years now. The concept of being able to access courses anywhere at
any time is very appealing. Both high school courses and vast numbers
of university courses have been available online for the past fifteen
years, many of these supplemented with video and audio clips, online
discussion boards, and live-chat features. Despite great efforts to make
these courses as interesting as possible, the dropout rates have proved to
be much higher than desired; e-learning has not become be the panacea
promoters believed it would.
Promoting Digital Content
National digital strategies have been (save for in Taiwan, as mentioned

earlier) surprisingly quiet on the subject of digital content. Beyond general
comments that improved broadband would favor business start-ups, the
plans include almost no discussion of the steps needed to facilitate the
development of content industries. Indeed, the global digital strategies
have a strong element of “build it and it will be used” about them,
containing surprisingly little discussion about how to fill the Internet
with national content and nationally based services for domestic and
international use and sale. This approach is, as suggested earlier, much
like a government’s promoting the development of a highway system and
ignoring the need for gas stations, car-repair facilities, auto manufacturing
and sales, map makers, and all of the related business and activities
associated with a highway system.
Though the approach reflects, perhaps, a standard capitalist assump-

tion that it is the government’s responsibility to provide or promote the
development of infrastructure and the private sector’s duty to respond
to market pressures and opportunities, the core of national innovation
strategies has been that greater government engagement is necessary
to produce the greatest possible return in business development and
employment. Indeed, national innovation policies have been decidedly
interventionist, resulting in major investments in basic research, univer-
sity commercialization offices, incubator facilities, start-up funding,
equipment subsidies, tax incentives, and many other interventions in the
marketplace. These are clearly in place for the infrastructure and core
technologies but have not been built into the national strategies in order
to promote digital-content and digital-media development. That this is
so reinforces the main argument of this book—namely, that governments
have struggled to integrate the digital-content sector into their costly
interventions in the science- and technology-based economy, even in the
face of promising opportunities for business and employment growth.
Governments have not been entirely inactive in this sphere, of course,

and have tried a variety of approaches to engage with the digital-content
sector. National innovation strategies may have seemed a logical place
to promote and invest in digital content, but national and regional
governments have opted for other avenues, primarily connected to the
cultural and heritage sectors. That they have taken this approach has,
implicitly, marginalized the digital-content field, leaving it an adjunct
of the long-ignored creative sector rather than a part of the heavily
promoted science- and technology-based economy. The failure to see
the truly revolutionary nature of digital content and digital service—that
they marry the fastest-changing technologies in the world with global
connectivity, the creative sector, and worldwide business opportunities
and commercial potential—underscores the degree to which governments
and, it must be acknowledged, the broader business community continue
to underestimate the pace, direction, and nature of the digital economy.
Table 16. Country rankings by number of fixed Internet subscriptions, 2009–

2013.
Source. http://data.worldbank.org/indicator/IT.NET.BBND.
Figure 14. Countries’ wireless broadband subscriptions, 2013.
Source. OECD, “OECD Broadband Statistics Update,” December 2013. http://

www.oecd.org/sti/broadband/broadband-statistics-update.htm.
Table 17. Country rankings by percentage of fixed Internet subscriptions.
Source. International Telecommunication Union 2012.

Table 18. Country rankings by mobile subscriptions.
Source. International Telecommunication Union, 2012.

Figure 15. Percentage of fiber connections in total broadband subscriptions,

2013.
Source. Data from OECD, “OECD Broadband Portal,” http://www.oecd.org/sti/

broadband/oecdbroadbandportal.htm.
Notes
1. For an effective overview of the Internet-based economy, see Don

Tapscott and Anthony Williams, Wikinomics: How Mass Collaboration
Changes Everything (Toronto: Tantor Media, 2006); for an up-to-date
analysis, see Erik Brynjolfsson and Andrew McAfee, Race against the
Machine: How the Digital Revolution Is Accelerating Innovation, Driving
Productivity, and Irreversibly Transforming Employment and the Economy
(New York: Digital Frontier Press, 2012).
2. Holroyd and Coates, Digital Media in East Asia.
3. Tom Cheshire, “How Rovio Made Angry Birds a Winner (and What’s
Next),” Wired, 7 March 2011.
4. On pornography, see Patchen Barss, The Erotic Engine: How Pornography
Has Powered Mass Communication (New York: Random House, 2010).
5. “Country Comparison: Unemployment, Youth Ages 15–24,” Index Mundi,
1 January 2012, http://www.indexmundi.com/g/r.aspx?t=0&v=2229&l=
en.
6. There is a very substantial literature on national innovation systems.
Some of the more important works are the following: Allison Bramwell,
Jen Nelles and David A. Wolfe, “Knowledge, Innovation and Institutions:
Global and Local Dimensions of the ICT Cluster in Waterloo Canada,”
Regional Studies 42, no. 1 (2008): 1–16; Bo Carlsson, Staffan Jacobsson,
Magnus Holmén, and Annika Rickne, “Innovation Systems: Analytical
and Methodological Issues,” Research Policy 32, no. 2 (2002): 233–245;
Bo Carlsson and Staffan Jacobsson, “Diversity Creation and Techno-
logical Systems: A Technology Policy Perspective,” in Systems of Inno-
vation: Technologies, Institutions and Organizations, ed. Charles Edquist
(London: Pinter, 1997); Bo Carlsson and Rikard Stankiewicz, “On the
Nature, Function and Composition of Technological Systems,” Journal of
Evolutionary Economics 1, no. 2 (1991): 93–118; Philip Cooke, “Regional
Innovation Systems, Clusters, and the Knowledge Economy,” Industrial
and Corporate Change 10, no. 4 (2001): 945–974; Philip Cooke, Mar-
tin Heidenreich, and Hans-Joachim Braczyk, eds., Regional Innovation
Systems: The Role of Governances in a Globalized World, 2nd ed. (Lon-
don: Routledge, 2004); Philip Cooke, “Regional Knowledge Capabilities
and Open Innovation: Regional Innovation Systems and Clusters in the
Asymmetric Knowledge Economy,” in Clusters, Networks and Innova-
tion, ed. Stefano Breschi and Franco Malerba (Oxford: Oxford Univer-
sity Press, 2005), 80–112]; Philip Cooke, “Regional Innovation Systems:
Origins of the Species,” International Journal of Technological Learn-
ing, Innovation and Development 1 (2008): 393–409; C. Edquist, ed., Sys-
tems of Innovation: Technologies, Institutions and Organizations (London:
Pinter, 1997); Henry Etzkowitz and Loet Leydesdorff, “The Dynamics
of Innovation: From National Systems and ‘Mode 2’ to a Triple Helix
of University-Industry-Government Relations,” Research Policy 29, no.
2 (2002): 109–123; Christopher Freeman, “The National System of Inno-
vation’ in Historical Perspective,” in Technology, Globalization, and Eco-
nomic Performance, ed. Daniele Archibugi and Jonathan Michie (Cam-
bridge: Cambridge University Press, 1997), 24–49; Christopher Freeman,
Technology Policy and Economic Performance: Lessons from Japan (Lon-
don: Pinter, 1997); Michael Gibbons, Camille Limoges, Helga Nowotny,
Simon Schwartzman, Peter Scott, and Martin Trow, The New Produc-
tion of Knowledge: The Dynamics of Science and Research in Contem-
porary Societies (London: Sage, 1994); James R. Held, “Clusters as an
Economic Development Tool: Beyond the Pitfalls,” Economic Develop-
ment Quarterly 10 (August 1996): 249–261; Bengt-Åke Lundvall, ed.,
National Systems of Innovation: Towards a Theory of Innovation and
Interactive Learning (Pinter: London, 1992); Bengt-Åke Lundvall, “Why
Study National Systems and National Styles of Innovation,” Technology
Analysis and Strategic Management 10 (1998): 407–421; Kevin Lynch, “Is
Canada Really Ready to Compete?” Policy Options 31 (September 2010):
75–78; Richard R. Nelson, ed., National Innovation Systems: A Compara-
tive Analysis (New York: Oxford University Press, 1993); Richard R. Nel-
son, “National Innovation Systems: A Retrospective on a Study,” Indus-
trial and Corporate Change 19 (1992): 347–374; Douglass North, Under-
standing the Process of Economic Change (Princeton, NJ: Princeton Uni-
versity Press, 2005); OECD, Competitive Regional Clusters: National Pol-
icy Approaches (Paris: OECD, 2007); OECD, The OECD Innovation Strat-
egy: Getting A Head Start on Tomorrow (Paris: OECD, 2010); Peter W. B.
Phillips, Governing Transformative Technological Innovation: Who’s In
Charge? (Oxford: Edward Elgar, 2007); Michael E. Porter, The Compet-
itive Advantage of Nations (New York: Free Press, 1990); Vernon W.
Ruttan, Social Science Knowledge and Economic Development: An Insti-
tutional Design Perspective (Ann Arbor: University of Michigan Press,
2003); Joseph Schumpeter, Business Cycles: A Theoretical, Historical, and
Statistical Analysis of the Capitalist Process (New York: McGraw-Hill,
1939); Luc Soete, Bart Verspagen and Bas ter Weel, Systems of Innova-
tion, working papers #2009-062 (Maastricht: UNU-Merit, 2009); David A.
Wolfe and Allison Bramwell, “Innovation, Creativity, and Governance:
Social Dynamics of Economic Performance in City Regions,” Innovation:
Management, Policy & Practice 10, nos. 2–3 (2008): 170–182.
7. OECD, “OECD Broadband Statistics Update,” 21 July 2014, http://www.
oecd.org/sti/broadband/broadband-statistics-update.htm.
8. Marcelo Barros da Cunha, “The Brazilian and the US National Broadband
Plan: A Comparative Review on Policies and Actions,” George Wash-
ington University Institute of Brazilian Issues, XXXI Minerva Program,
April 2012, p. 7.
9. German Federal Ministry of Economics and Technology, ICT Strategy of
the German Federal Government: Digital Germany 2015 (Berlin: Federal
Ministry of Economics and Technology, 2010), 3.
10. This paragraph is drawn from Holroyd and Coates, Digital Media in East
Asia.
11. French Ministry of Economy, Finance, and Industry, France numérique
2012–2020: Plan de développement de l’économie numérique (Paris: Min-
istry of Economy, Finance, and Industry, 2008).
12. See Institui o Programa Nacional de Banda Larga, Decree 7.175, 12
May 2010, http://www.planalto.gov.br/ccivil_03/_Ato2007-2010/2010/
Decreto/D7175.htm.
13. New Zealand Ministry of Economic Development, The Digital Strategy
2.0 (Wellington: Ministry of Economic Development, 2008), 15.
14. German Federal Ministry of Economics and Technology, ICT Strategy, 5.
15. German Federal Ministry of Economic Affairs and Energy, “Initiative
Kultur- und Kreativwirtschaft der Bundesregierung” [Initiative of the
cultural and creative industries of the German government], http://www.
kultur-kreativ-wirtschaft.de/.
16. Author interview with officials at the Center of Excellence for Creative
and Cultural Industries, Frankfurt, Germany, 4 June 2012.
17. Germany Federal Ministry of Economics and Technology, ICT Strategy,
6 and 34.
18. See “Deutscher Computerspielpreis” [Federal German computer game
prize], http://www.deutscher-computerspielpreis.de/4.0.html.
19. US Federal Communications Commission The National Broadband
Plan: Connecting America, http://www.broadband.gov/plan/executive-
summary/.
20. Swedish Ministry of Enterprise, Energy, and Communications, ICT for

Everyone: A Digital Agenda for Sweden (Stockholm: Ministry of Enter-
prise, Energy, and Communications, 2011), 12.
21. Australian Department of Broadband, Communications, and the Digital
Economy, #au National Digital Economy Strategy (Canberra: Department
of Broadband, Communications, and the Digital Economy, 2011).
22. Finnish Ministry of Transport and Communications, Productive and
Inventive Finland: Digital Agenda for 2011–2020 (Helsinki: Ministry of
Transport and Communications, 2011).
23. New Zealand Ministry of Economic Development, The Digital Strategy
2.0, 11.
24. Swedish Ministry of Enterprise, Energy, and Communications, ICT for
Everyone, 32.
Chapter 4
Major Initiatives in the

Content Revolution
Given that the greatest government effort focused on developing digital

infrastructure, some nations assumed that high-profile investments or
activities could stimulate widespread interest in the digital-content sector
and fuel business and employment growth in this highly competitive and
fast-moving field. The rapid evolution of the digital-media and digital-
content sector provides an interesting window on global innovation
investments and on the importance of national differences in responding
to the emergence of a new economic sector. The ubiquitous nature of the
digital-content sector—YouTube, Google, Facebook, Skype, and many
other digital-content services are available around the world—has not
resulted in a uniform government policy response to the emergence of
the digital-content economy. Though there are similarities across and
between regions, discrete regional digital approaches have emerged,
reflecting the priorities of various nations and country-specific approaches
to digital innovation. Responses range from those of the developing
world, where cash-strapped governments provide regulatory space for
private providers to deliver cable and wireless services to Internet-
hungry populations, to those in countries that are trying to stimulate a

digital economy through the digitization of government services. Only
in Asia have national governments made an extended effort to draw
digital content toward the center of their innovation strategies. In most
other nations, despite government and political statements favoring
the commercialization of digital content and digital services, politicians
and officials have not yet devised policy instruments suitable for this
borderless, fast-changing sector. The variation between countries and
regions reflects, moreover, the sector’s newness and variability and the
conceptual challenges governments face in attempting to adjust policy
frameworks designed for the industrial age to the nuances, creativity,
and business models of digital content. An overview of some of the more
important digital-content investments and initiatives in various parts of
the world illustrates the range of government efforts to contribute to
the sector’s continued development.
Digital Content in Europe
European initiatives in the digital-content sector, both those of individual

EU member states and those of the European Commission as a single
entity, have focused on regulating and managing telecom markets,
eliminating digital-content barriers between EU member countries, and
developing the manufacturing and research and development capabilities
within the broader ICT field. These policy priorities ensured that the
EU developed an open, cost-effective market for the cable and wireless
industries and for digital content generally. For many European countries,
policy priority has generally remained ICT, including infrastructure
and manufacturing. Digital-content initiatives have not focused on the
commercial opportunities of the sector; rather, the emphasis has been
on collaboration and networking, accessibility and cultural heritage.
Over the past decade and a half, the EU and its member countries
have launched a series of initiatives to promote the development and
use of digital content. Many of the early projects focused on e-learning
Major Initiatives in the Content Revolution 155
or the use of multimedia technologies and the Internet for teaching,

collaboration, and learning. The European E-Learning Action Plan ran
from 2002 to 2004. It aimed to establish the necessary infrastructure
and equipment (e.g., increasing the number of computers with Internet
access per student), teacher training (for using the web and shifting
teaching methods to better utilize Internet resources ), content (various e-
learning projects to develop more effective e-learning or develop specific
kinds of content) and pan-Europe cooperation initiatives. Additional e-
learning programs and action plans built on this work. A number of the
projects begun under the 2002 e-learning action plan fostered European
cooperation by hosting meetings and online discussions and by improving
cooperation within European Schoolnet (a network of Ministries of
Education, teachers, researchers, and school principals). The e-Europe
2005 Action Plan, for example, concentrated on e-learning, e-government,
and e-health. Various pan-European cooperation and networking projects
were set in place, including the Network for Sustainable European E-
Learning (ENSEL; supporting pilot-project collaboration) and the Special
Interest Group for Digital Learning Accreditation in Europe (SIG DLAE;
establishing an e-learning accreditation system). Digital literacy projects
for the visually impaired and persons with disabilities, as well as ways
to benchmark technological literacy, were also launched.1
In 2000, a study commissioned by the European Commission revealed

barriers affecting digital-content producers. Some barriers are common
to digital-content industries the world over (e.g., users expect content to
be free, venture capitalists do not understand the nature of the digital-
content industry, finding investment capital is difficult), but some are
unique to Europe. In particular, as the report notes, “the cost of creating
content suitable for a European-wide market is high. Content is expensive
to create and to maintain, and in Europe it is made worse by the variety of
different languages and cultures. This, on the positive side, creates niche
markets, but on the negative side it increases the costs of marketing.”2
In 2001 the European Commission launched a 2001–2004 program

designed “to support the production, use and distribution of European
digital content and to promote linguistic and cultural diversity on the
global network.”3 The program supported innovative projects involving
public and private partners from various EU countries. Subsequent e-
content programs were designed to tackle the fragmentation of the
European digital-content market and to improve the accessibility and
usability of geographical, cultural, and educational material.
Another program, i2010, served as the EU information-technology

policy framework between 2005 and 2009. The initiative sought to
promote the positive impact of ICT and to boost Europe’s competitiveness
in the ICT sector. It contained three broad policy measures: streamlining
and coordinating regulations in the telecommunications sector among
the member states, pooling research funding in areas where Europe can
become a global leader, and ensuring that all Europeans benefit from
improved ICT by focusing on improving public services, particularly
health-care systems, through enhanced ICT. By the end of 2010, more
Europeans were online, there were higher rates of broadband connectivity
(although not evenly spread among member states), the public used
online services more regularly, and over 100 percent market penetration
of mobile phones had been achieved.
The Digital Agenda for Europe (DAE) followed i2010. The five-year
program went into effect in May 2010. The focus of the DAE remains
on infrastructure and policies to allow open access across all member
states. There are seven pillars to the DAE, and each has a range of action
items attached to it. In total, there are 101 specific action items: seventy-
eight of these are to be undertaken by the European Commission (thirty-
one of those are legal proposals), and the remaining twenty-three items
are to be executed by each member country.4 The seven pillars and their
basic objectives are listed in the following subsections.
Single Digital Market

The goal of the first pillar is to increase the free flow of creative content
and services throughout the EU by simplifying distribution and licensing
across borders. Specifically, this pillar aims to boost the online music
business, create a single system for online and mobile payments, and
protect online consumers’ rights.
Interoperability and Standards

The second pillar focuses on the need for Europe to standardize its
devices, applications, and services without compromising competition
so that they interact seamlessly throughout the EU.
Trust and Security

The EU needs to create a coordinated response to potential cyberattacks;
the DAE proposes exploring the creation of a European Cybercrime
Center. Consumers must feel secure making online purchases, so the EU
needs shared rules about the protection of personal data.
Very Fast Internet

Europe needs more extensive broadband coverage and faster Internet
speeds. This pillar outlines plans to extend broadband coverage to rural
and remote parts of the continent and to invest heavily in high-speed
broadband so that at least half of European households have access to
Internet speeds of 100 Mbps by 2020.
Research and Innovation

The digital agenda aims to encourage increased investment in ICT
research and development throughout the countries of Europe. The
research and innovation pillar also outlines action items to encourage
the coordination of IT policies and research efforts.
Enhancing E-Skills
Another goal is to increase the percentage of people using the Internet by
giving them the skills to do so. As a smaller percentage of disadvantaged
people, such as the elderly and people with disabilities, are accessing the
Internet, particular efforts must be made to provide them with the digital
skills they need to take advantage of online resources.
ICT for Social Challenges

Digital technologies offer many opportunities to make the world better
through improving lives for seniors, improving health care, delivering
public services more efficiently, and preserving Europe’s history and
culture.
The European Commission committed to publishing an annual score-

board each May indicating the performance of the EU countries against
the targets outlined in the DAE; the most recent scoreboard was published
in May 2014. The review identified three major areas of accomplishment
and two significant concerns. On the positive side, the scoreboard indi-
cated that Internet usage had increased substantially (from 60 percent to
72 percent in four years, with even faster growth among the economically
disadvantaged), online shopping had jumped 10 percent, and access to
broadband had leapt from 29 percent of the European population to
62 percent, the fastest growth having occurred in urban areas. On the
downside, use of e-government services had increased only marginally
and in some countries had actually declined, clearly a disappointment to
advocates of digital public services. In addition, only 14 percent of small
and medium-size enterprises capitalized on the Internet as a significant
sales channel, representing a mere 2 percent rise in four years, perhaps
contributing to limited growth in cross-border shopping. More ominously,
public investment in research and development in ICT had stagnated
over the four-year period, in large measure owing to the continued effects
of the post-2008 recession.
Challenges in implementing the digital agenda have included intellec-

tual property barriers to digitization (different rules in different member
states) and access to twentieth- and twenty-first-century material (dealing
with orphan works, or items without identified ownership, and rights
harmonization), along with securing access to long-term funding. The
European Commission is now deliberating ways to encourage the reuse
of the material it has gathered. It wants to encourage users to focus now
on using this digitized information for business purposes. One of its
attempts to do so is through what it calls “hacker funds.” Young people
are invited to develop applications for the use of digital cultural materials.
There is some money attached to the award, but the main prize is public
recognition through the annual Digital Assembly in Brussels each June.
Although there is recognition that the cultural and creative industries

compose a key economic sector in Europe (some estimates show it
accounting for 4.5 percent of total EU GDP and 3.8 percent of the work
force5), digital content has only tangentially been connected to the sector.
Nonetheless, there are some significant European initiatives in the digital-
content area. Though at first glance the initiatives do not seem to have
an economic focus, there is often a commercial component. The EU’s
Europeana program is an ambitious digital-content project, the goal of
which is to provide digitized access to Europe’s cultural heritage in its
entirety by 2025. As explained by the European Council of Ministers at the
launch of the Europeana prototype, “digitisation and online accessibility
are essential ways to highlight cultural and scientific heritage, to inspire
the creation of new content and to encourage new online services to
emerge. They help to democratize access and to develop the information
society and the knowledge-based economy.”6
Europeana was launched in late 2008, bringing together two million

objects from twenty-seven EU member countries. By 2014 Europeana had
digitized over thirty million items.7 The Europeana Foundation works
with a network of museums, archives, and libraries, assisted by Europe’s
leading universities. Europeana does not store data but instead links to
a host institution’s site. As each country’s institutions have different

standards, the key has been to standardize the metadata. Europeana’s
“ambition is to provide new forms of access to culture, to inspire creativity
and stimulate social and economic growth.”8 Beyond aggregating content
in one place, Europeana aims to “facilitate knowledge transfer, innovation
and advocacy in the cultural heritage sector, distribute their heritage to
users wherever they are, whenever they want it, [and] engage users in
new ways of participating in their cultural heritage.”9
The European Commission generally funds new projects like Europeana

for approximately three years. Other initiatives include the European
1914–1918 Roadshow, at which people are invited to come by and
have their World War I–era objects digitized, a European library (a
continent-wide portal for all European libraries), an EU Film Gateway,
and a Biodiversity Heritage Library.
The Open Data Strategy for Europe is another interesting European

Commission initiative. Launched in December 2011, the program is
intended to release the vast amounts of information collected by govern-
ment departments and offices throughout the EU. The commission hopes
that opening up this information to the public for free through a new
data portal will benefit many people, from researchers and academics
to creators of smartphone applications. Given the goal of building a
digital-content society founded on the potential commercial value of
government and public information, the EU estimates that releasing
public sector information and allowing it to be reused could bring as
much as €40 billion annually into the European economy.10
As part of the Open Data Strategy, the EU is revisiting its 2003 Public
Sector Information (PSI) Directive, which “introduced a common legisla-
tive framework regulating how public sector bodies should make their
information available for re-use in order to remove barriers such as
discriminatory practices, monopoly markets and a lack of transparency.”11
PSI is the information produced and collected by the public sector and
includes geographical, meteorological, legal, economic, and other data
that could be reused or combined into new goods (e.g., car-navigation

systems) or services (e.g., weather forecasts). The goal of the Open Data
Strategy is to encourage and enable people to reuse public information.
The general parameters are that member states are not told what infor-
mation to make public, but they commit to a policy stating that any
information they do make public is available for reuse in a fair, nondis-
criminatory way. Because the information has been paid for with tax
dollars, governments can charge the public only a nominal fee (i.e., the
incremental cost of giving it to someone).12
Not surprisingly, many European countries show a strong commitment

to accessibility, including some cutting-edge efforts to ensure that
disadvantaged groups (the elderly, those with disabilities, and the poor)
have regular and reliable access to digital content. Get Online Week, for
example, takes place across Europe every March. Finland’s Ubiquitous
Information Society Action Program 2008–2011, which committed the
government to e-accessibility and e-inclusion for all citizens, included
specific programs to address the social isolation of seniors and to use
digital technologies to improve the overall quality of life. The Finnish
National Knowledge Society Strategy states the government’s desire
that all citizens possess basic ICT skills and be able to capitalize on
available ICT technologies and services, including those requiring virtual
interpreters, special devices, and assistance meeting challenges related
to disability, age, or other factors. The policy commits the government
to providing information-based services to all citizens, regardless of
socioeconomic position or physical location—no small pledge for the
thinly populated northern regions of the country. Sweden’s Digidel 2013,
an Internet-participation campaign launched in 2011, is probably the
best example of an Internet-accessibility effort.13 Its goal was to give
at least half a million Swedes then not using the Internet the ability to
do so before the end of 2013. Although Sweden has high Internet usage
rates, there are 1.2 million Swedes not using the Internet. The prevalence
of the Internet in daily life makes matters that much more difficult for
those left behind.14 Digidel comprised a network of almost three hundred
librarians, government authorities, companies, individuals, volunteer

organizations, and foundations. It is a grassroots organization aimed
at supporting “those who do not know how to use digital services and
those who are unaware of the opportunities the Internet could offer
them.”15 Digidel’s target group is mainly the elderly, but the initiative
includes nonusers of all social and age groups. The United Kingdom,
aiming to attain the highest levels of digital participation in the EU,
wants to be a digital hub for the world and wants every one of its citizens
connected to the web and included in the digital economy.16 The UK’s
National Plan for Digital Participation aims “to ensure that everyone
who wants to be online can get online, do more online and benefit from
the advantages of being online.”17 The plan sets the ambitious goal of
getting 60 percent of the 12.5 million people currently not accessing the
Internet online by March 2014.18
A number of European countries have seen infrastructure investments

as the critical first stage of a digital-media strategy. Infrastructure
development, including broadband, was a big part of the stimulus plans
of many countries in 2009. Broadband is seen as benefitting the whole
economy by facilitating the creation of new industries, business processes,
and services. In December 2008, Finland set the ambitious goal of ensuring
that 99 percent of all its residents would have access to fast Internet
(100 Mbps).19 One of the key objectives of the UK’s Digital Britain plan
is upgrading and modernizing the country’s digital networks—wired,
wireless, and broadcast—so that Britain will have an infrastructure that
enables it to remain globally competitive in the digital world. Spain’s
Plan Avanza 1 aimed to extend broadband and mobile coverage; by 2009
fully 99 percent of the population was covered by broadband, and half of
Spain’s households were connected.20 In addition, 80 percent of its public
services are now offered online. An OECD official argued, however,
that “many stimulus plans appear to be long on promoting broadband
and short on saying how it would be used.”21 As discussed in chapter
3, national broadband goals are delineated in the Digital Agenda for
Europe, and all member nations were required to publish a plan by the
end of 2012 indicating how those goals would be achieved.
EU member nations also emphasize e-government, hosting some exten-

sive administrative innovations. Estonia has one of the most impressive
e-government systems in the world.22 By 2012 in that country, 99 percent
of all bank transfers were handled electronically. Citizens have been
able to submit tax forms online since 2000. The forms are automatically
prepopulated (substantially filled out with the relevant data) so that it
takes only a few minutes to file tax returns; refund checks are mailed
out within a week. Since 2005, e-voting has been in place: citizens can
cast their ballots within a fixed preelection period. A mobile ID card that
ensures access to every secure e-service in Estonia was launched in 2002,
as mentioned earlier; residents use the encrypted card for tasks related
to health insurance, banking, public transportation, digital signatures,
voting, prescriptions, and more. All of Estonia’s government and private
sector databases are linked (connected by what Estonia refers to as an
X Road) and operate together no matter the platform. Once logged in
to the e-services portal with an electronic ID, the user does not have
to log in again.
Overall, the EU’s efforts reflect a commitment to government-centered

development built largely around the belief that moving cultural heritage
and government information online will, over time, build public accep-
tance and the commercial viability of digital content. Europe as a collec-
tive political entity has devoted a great deal of effort to promoting
digital content and removing barriers and enhancing opportunities in
the sector. Though language remains a formidable challenge, as do the
various cultures and operational styles within the archival, library, and
cultural industries, the EU has clearly identified the prospect for improved
economic performance and business creation. Indeed, there are growing
signs that the continent sees the digital-content sector as a mechanism
for marrying the region’s formidable cultural heritage and strengths
with its solid technical and industrial capabilities, thereby creating the
foundation for a significant part of the new economy in Europe.
Digital Content in Asia
The governments of East Asia have the most comprehensive digital-

content promotional policies in the world. The region dominates the
production of digital hardware; many products currently identified with
other countries, including Apple iPads and iPhones, are manufactured
wholly or in large measure in the region. Building on the success of digital
manufacturing and Japan’s early domination of the video-game market,
South Korea, Japan, China, and Taiwan made major investments in the
standard elements of the digital economy (wireless and wired Internet
services) but quickly broadened this to support training, business devel-
opment, international marketing, and product enhancement in digital
content. Asia continues to lead the world in digital manufacturing—
importantly, across the range of low-end production, high-end manufac-
turing, and digital design—while putting the promotion of the Internet-
based economy and society reasonably high on national policy agendas.
The development of the digital-content sector began with an emphasis
on the necessary broadband infrastructure. Private and public partner-
ships have provided the region with world-leading Internet connectivity,
through both fiber-optic cable and wireless services. Internet speeds
have been among the fastest in the world, and the once-high charges for
Internet services have fallen dramatically in recent years. The dense, high-
rise-based population in Asia’s large cities has made it comparatively
easy to provide digital connectivity. Taiwan’s government referred to its
approach to the sector as “Bandwidth First, Content Later” and pledged
to provide broadband to every household as quickly as possible. The
Korean government launched a $10 billion broadband program in 2003
with the goal of achieving universal coverage by 2005. As of 2014, South
Korea not only had the highest wireless broadband Internet penetration
in the world (100 percent),23 but it also had the lowest prices and among
the highest speeds. Hong Kong, Japan, Singapore, and South Korea are all
among the top six countries in the world in terms of download speeds.24
Key Asian nations, particularly Japan, South Korea, Malaysia, and

Singapore, see the economic potential of the digital-content sector.
The rapid expansion of wireless technologies, an innovation led more
by Japan’s NTT (Nippon Telegraph and Telephone) DoCoMo than,
as most people believe, by Apple or Research in Motion, sparked an
early realization of the commercial potential of digital content. With
wireless use expanding in China, neighboring countries and Chinese
entrepreneurs alike awoke to business opportunities. Whole new sectors
—video games in Japan, massive online gaming in Korea, animation in
China, e-government in Singapore—emerged in fairly quick order. Asian
companies realized, too, that they had significant advantages in language
and cultural understanding in reaching into Asian markets, particularly
the underdeveloped Chinese-language sector. Governments thus became
enthusiastic about the prospects of digital content. Taiwan launched
extensive content-development strategies, whereas Japan, Korea, and
Hong Kong promoted video, art, music, and other digital products. Policies
focus on everything from skills training (with significant efforts made
by private educational firms in some countries) and talent promotion
to marketing support.
Several governments have even set up central agencies to coordinate

the development of the digital-content sector. Taiwan, for example,
established the Institute for Information Industry (Triple I) in 1979 with
the goal of developing a world class Taiwanese information industry.
Beginning in 2002, the government, led by Triple I, began focusing on
developing a globally competitive digital-content industry. The Digital
Content Industries Promotion and Development Office was established
and charged with shaping policies for the industry. Triple I encourages
university-business collaboration, talent cultivation, and market promo-
tion and participates in the country’s aggressive e-economy strategies.
Korea created a similar organization, the Korea Creative Content Agency
in 2009, bringing together five existing organizations in an influential

body charged with expanding the national presence in digital content.
Korea’s ambitious aspiration is to rank among the five top countries in
terms of digital content. Japan identified content-industry policy as a key
national strategy in 2002. A Japan Brand Strategy was launched with the
slogan Cool Japan, and the Content Industry Promotion law was passed.
In 2009 the Digital Japan Creation Project, designed to develop a new
growth strategy for the sector, was launched. Part of prime minister
Shinzo Abe’s 2013 structural reform proposals focused on the promotion
of Cool Japan. Japan plans to triple its 2012 overseas sales of broadcast
content by 2018 to strengthen measures against intellectual property
piracy, and to increase the production of digital content for overseas
markets. Following Europe’s example, Japan also plans to “achieve the
world’s highest level of public data disclosure in a machine-readable
way” by 2015.25
Governments in Asia have recognized the importance of drawing

attention to the digital-media field and of highlighting its increasing
economic importance. To this end, the creation of flagship facilities—
high-profile digital-content showcases—provides tangible evidence of
what the governments believe the potential scale and significance of
the content industry are. In South Korea, Songdo, developed inside the
Incheon Free Economic Zone, is designed as a demonstration project
for all manner of digital-content and connectivity initiatives. The U-
City (U symbolizing ubiquitous computing) model illustrates how work,
personal life, government, and recreation can be bundled through digital
technology, providing residents and visitors alike with a window on
the digital future. Also in Korea, Seoul’s Digital Media City, planned
and funded by Seoul’s city government, represents perhaps the largest
digital-content investment in Asia if not the world, promising a complex
of some eight hundred companies and over sixty thousand employees,
moving beyond a demonstration center to become an Asian hub for
digital-content creation and commercialization. Hong Kong has followed
suit, investing US $2 billion in Cyberport, a collaborative center that
brings together training, research, and commercialization, focusing on

digital content. The goal is to establish Hong Kong as a leading digital-
content center, incubating new companies, creating jobs, and providing
a sustained avenue into the emerging economy. It provides cutting-
edge infrastructure (from the broadband network to intelligent-office
buildings to hardware, software, and technical support) conducive to
the development of a strategic small and medium IT enterprise cluster.
Members of Hong Kong’s creative digital community are key tenants
of Cyberport.
Singapore built an impressive Interactive Digital Media Institute with

specialized facilities for simulations and 3-D visualization. Set up in
Temasek Polytechnic’s (TP) Engineering School, Interactive Digital
Media Center Asia is the result of a collaboration between TP, Eon
Reality, and IM Innovations and aligns with TP’s aim to further develop
competencies in 3-D computer graphics and applications. Educational
institutions can use the 3-D interactive applications to teach complex
concepts. IDC Asia can join other educational as well as research and
development organizations to work on pioneering projects in areas such as
simulation-based learning and interactive 3-D web conferencing. Further,
IDC Asia’s sophisticated visualization equipment can help companies
showcase products via “smart” digital replicas, revolutionizing product
launches and sales toolkits.
Regional collaboration is a feature of Singapore’s outreach and planning

and the work of the Interactive Digital Media Center. Meetings at
the ChinaJoy Digital Entertainment and Content Conference led to an
emerging partnership between China and Singapore. Epic Games China
joined the Singapore Polytechnic to create the region’s first Unreal
Technology Lab. The new unit is housed at the Interactive Digital Media
Center and provides access to technology, software support, and other
assistance. Singapore also announced plans to build a digital media hub,
slated for completion in 2020; its state-of-the-art facilities will include
digital production studios, broadcast studios, interactive digital-media
facilities, research and development facilities, “a media ecosystem of

soundstages with green screen capabilities,” and, naturally, fast and
secure broadband connectivity.26
China launched itself into the field of digital animation, developing

animation parks across the country, each focused on the establishment of
sustainable digital-content businesses. The National Animation Industry
Park in Tianjin is expected to be a globally significant creative center
with a strong focus on the commercialization of Chinese productivity.
Tianjin is one of almost a dozen animation industrial parks around China.
Most were created by municipal governments since 2005. These parks
range in size from three to over one hundred companies. Wuxi and
Fuzhou list three and six firms, respectively; the Shanghai Zhangjiang
Creative Industry Base is the largest, home to 105 firms. The Beijing
Digital Entertainment Industry Model Base has seventy firms, and the
Dalian High-Tech Industrial Zone Animation Park has another fifty
companies. The parks sponsor a variety of prizes (e.g., for outstanding
digital animation, to a firm that produces Internet games suitable for
minors, for animation that wins an award), incentives (e.g., free or reduced
rent, housing for industry talents), subsidies, loans, tax breaks, training,
and funds for collaboration.27 These investments have come outside the
Chinese national innovation system. Unlike Taiwan, which integrated
digital-content into its national plans, China has yet to embrace the
digital-content side of the Internet and wireless economy. In China, as
in so many countries, government and business priorities remain firmly
focused on manufacturing and infrastructure investments.
Despite the overall marginalization of digital content in official plans

and investment strategies, China is catching up fast. According to Deng
Lili, director of the Animation and Game Research Center at Peking
University,
At present, there are 6463 animation institutions in China, 447

universities which have offered the animation program, and 1234
universities offered faculties and schools involving animation as
the major. There are 64,000 graduates majoring in animation and

466,000 students studying animation on campus. 78 animation
Industries Bases (Clusters) have been set up in mainland China
(excluding Hong Kong, Macau and Taiwan).28
Asian governments have not restricted their engagement with digital

content to high-profile facilities even though they attract public support
and send strong messages to the business community about opportunities
in the field. There are also major government investments in specialized
projects. Korea’s Long-Term Plan seeks to gain and maintain prominence
in gaming. Japan has invested in the job-focused Digital Japan Creation
Project. Malaysia’s government created the national Media Development
Authority. Taiwan, for its part, developed the E-Learning and Digital
Archives Program.
Malaysia made a high-profile and expensive commitment to IT and

the digital economy, clearly seeing the sector as a crucial means of leap-
frogging other developing nations. Malaysia’s Multimedia Super Corridor
includes a major high-technology, cyberconnected area and constituted a
multibillion dollar investment in infrastructure and training. The corridor
includes Cyberjaya, a city built around IT, the Multimedia University
(MMU), and a private institution, the Limkokwing University of Creative
Technology, all of which are devoted to digital content. Malaysia’s
strong investments include the Multimedia Development Corporation,
the Content Industry Development Fund, and the Malaysia Animation
Creative Content Center, the last devoted to talent creation.
Although the initial returns from this comprehensive commitment to

digital-content development have been lower than expected—few people
in the industry see Malaysia as a world leader—the likelihood is that the
investment will generate significant outcomes. Furthermore, Malaysia is
capitalizing on its Islamic awareness and its knowledge of Middle Eastern
and other Muslim markets, focusing a considerable amount of its content
creation on products for these regions.
Universities and colleges factor prominently in digital-media strategies

and are often closely connected to major government investments in
digital media. There is a clear understanding in all leading countries that
long-term success in digital media requires the ready availability of highly
trained personnel. The Malaysian Animation Creative Content Center
(MaC3) has a range of programs to develop digital-media talent. It begins
with introducing digital media to the general public, school children, and
university and college students. The goal is to make sure that teachers,
parents, and students are aware of the digital-media industry and the
kinds of jobs that are available in the sector. The MaC3 teaches classes
on blogging, geo-tagging, and digital storytelling.
MaC3 works to support the approximately twelve digital-media

programs that exist at Malaysian universities. MMU and the two private
universities located in Cyberjaya take particular advantage of these
opportunities. MaC3 brings in trainers to teach specialized programs such
as gaming to university lecturers. MaC3 has other initiatives to support
companies in the industry. There is a content accelerator program to
encourage entrepreneurship by helping start-ups. Once an individual
has a contract for a project, he or she has access to office space for the
contract’s duration, as well as to both the hardware and software that
might be needed. Rendering facilities—putting all the pieces in one frame,
which can require a great deal of bandwidth—are also available.
Noting that companies frequently point to a lack of time and money

to work on their own intellectual property because they are working on
contracts to pay the bills, MaC3 pays companies to do their own creative
intellectual property work. Companies must indicate how long it will
take to create a prototype (submit a production schedule and sign a
contract), and they are funded for that amount of time. MaC3 also offers
a mentoring program in which senior people in the field are on hand
for consultation and assistance. At the project’s conclusion, MaC3 will
produce a marketing video and will help pitch the completed project by
bringing in a variety of local and international broadcasters, including
Disney Asia and Al Jazeera. This program has been successful, helping
to launch approximately twenty-five companies a year since 2007.
MaC3 also offers workshops for companies in the industry to teach the
business side of the industry. In 2009 it hosted the KRE8tif conference,
where sixteen speakers shared their technical and business knowledge.
The conference was and continues to be a success; the most recent
meeting occurred in March 2014.29 MMU, which opened in 1999 in
Cyberjaya, was launched as a center of learning and teaching that would
feed the companies in the city with research and employees. MMU’s
faculties include IT and creative multimedia and management. The
Limkokwing University of Creative Technology, a private institution
located close to MMU, has over nine thousand students and focuses on
the commercialization of digital content.
As Ng Eng Hen, Singapore’s minister for manpower and second

minister for education, has said, “The media business is all about talent.
Without this, all plans will come to naught. We can never have enough.
Singapore welcomes and invites talent here to let your creative juices
flow. The Government will invest more to train and attract people.”30
Singapore’s initiatives in education and training, many facilitated through
the Media Development Agency (MDA), include a media education
scheme, which provides S$500,000 to thirteen talented Singaporeans to
help them study film and television production, scripting, and animation
at reputable local and overseas institutions in the United States, the
United Kingdom, and Australia. They also supported the creation of
Digiworkz Regional Broadcast Training Center, which was established
by Asia Pacific Broadcasting in 2001. In collaboration with Ngee Ann
Polytechnic, Digiworkz aimed to provide broadcasters and production
houses from around the Asia-Pacific region with broadcast engineering
and production skills.
The government, again working through MDA, launched a digital-

content development scheme to promote innovative ideas and concepts,
including original television animation, technical models for game series,
and interactive media projects. In addition, Singapore’s Infocomm Devel-

opment Authority supports three major programs: the Digital Market-
place, the Trusted Digital Cinema Hub, and the Connected Games
Program, the last of which sought to establish Singapore as a leading
center for developing and distributing connected games content and
services.31
One of MDA’s high-profile initiatives, the Singapore Media Fusion

effort, draws international attention to Singapore’s efforts, focusing
primarily on the Asian market. The program, which highlights the
commercial potential of bridging Asian and global markets, works to
bring Asian media to world attention, cultivates companies interested in
creating specifically for the Asian market, and promotes the development
of new media business in Singapore.
Asia’s engagement is much more comprehensive than this survey

suggests. South Korea, for example, holds a national storytelling compe-
tition to promote the development of creative talent for the digital-media
industry. Like China, South Korea sees the importance of promoting
intraregional trade in digital-content products, its leaders having realized
that the sector holds great economic potential in East Asia. Much the same
is true in Japan, where large and diverse anime and animation industries
have created a global market for the country’s digital production, part
of the soft-power profile-raising activity associated with the Cool Japan
cultural branding exercise. The government of Japan has engaged in a
variety of promotional activities designed to support international sales
of digital-content. The East Asia nations, to put it simply, understand the
commercial and economic potential of the digital-content industries.
Asia has both benefitted and suffered economically from the substantial
barriers of language, culture, and politics that keep the region separate
from much of the rest of the world. Just as most countries earlier misread
the emergence of Japan as an economic superpower, so has there been
little recognition of the powerful position of East Asia, in particular, in
digital media and the growing regional digital culture. Although certain
elements—South Korean multiplayer games and Japanese video games—

have found global markets, the content sector remains largely unknown,
even as interregional strengths continue.32 Asian countries have done
more than most to develop and expand their digital-content sectors
and have backed up substantial industry investments with sustained
government support. Given its huge regional market enhanced by the
continued economic power of China, Asia is likely to continue to expand
its digital economy without the rest of the world paying it much heed.
Digital Content in North America
North America, specifically the United States, is seen as the birthplace

of the digital revolution because it is the home of major global firms
like Apple, Microsoft, Google, Facebook, YouTube, Amazon, eBay, and
many others. This reputation survived the American-led dot-com boom
and bust, a market collapse that threatened the global vitality of the
digital sector. Though other countries have just as many successful e-
commerce activities, if not more, the United States remains the gold
standard, and Canada plays its usual supporting role through companies
like hardware firm JDS Uniphase and Nortel (now both defunct) and the
wireless communications company Research in Motion (endangered).
The continent also has some impressive e-government implementations,
particularly at the urban level (e.g., New York). Compared to Europe,
however, the United States has made a smaller commitment to e-govern-
ment and to the digitalization of cultural material, the latter in part
because of tepid public demand and the perceived limited commercial
potential of such documentation.
America’s effective presence in digital media and digital content
has expanded in two areas: the transition of traditional information
sectors into digital formats and the development of new digital-media
applications. Many of the most innovative content sites and services
—save for the US-dominated pornography industry, which along with
gambling has long been among the most commercially creative—are
based in other countries, but North America has some points of strength.
The United States has led in particular the commercialization of digital
information. The past decade has seen serious problems emerge in the
music, video/movie, newspaper, and book industries, largely because of
the Apple- and Amazon-led race to digital formats. The commercial boom
in everything from online sales (Amazon and eBay), music sales (iTunes),
television programs and movies (Netflix, Hulu, and Blockbuster), and
news and analysis (New York Times, Drudge Report, Huffington Post)
had a devastating impact on traditional outlets. Sales of CDs and DVDs
collapsed partly because of the ready availability of online products at
lower prices and, more important, because of widespread piracy. The
digital-content industry nonetheless expanded apace, claiming thousands
of commercial victims in traditional media along the way.
In all of this expansion and digital innovation, the American and

Canadian governments have largely been bystanders. The government
of Canada has intervened through its regulatory arm, the Canadian
Television and Radio Commission, which has tried without a great
deal of success to manage the expansion of the digital-content sector.
The main impact has been the maintenance of a Canadian oligopoly of
wireless service providers that has left the country with comparatively
high Internet charges. The dominance of the three large carriers was
under threat with the possible arrival of Verizon as a result of a sale of
wireless spectrum previously allocated to small start-up firms. But Verizon
backed out, leaving the large Canadian firms in dominant positions. The
government of Canada announced the formation of a digital economy
strategy in 2009, but a promising round of consultations and planning
sessions foundered, and the strategy never materialized.33 That same
year, Industry Canada was allotted $225 million over three years to
produce and put in a place a strategy on extending broadband coverage
to rural and remote regions. However, the funding was not followed up
in subsequent budgets, and rural Canada remains poorly covered. Canada
did launch a Digital Canada 150 strategy in 2014, although critics argued
that the policy initiative did little more than provide more funding for
rural broadband and barely mentioned the content sector.34
The United States federal and state governments, like their Canadian
counterparts, have invested in or supported efforts to expand the Internet
to underserved rural and remote regions and to provide better Internet
access. Neither Canada nor the United States has seen grand government
investments in digital content despite the significant economic perfor-
mance of the sector over the past two decades. The marketplace has been
the source of capital, innovation, and entrepreneurship given limited
government investment in digital content or the facilities and digitization
efforts that might underpin a digital-content economy.
Perhaps the greatest surprise in the North American digital economy

has been how quickly the sector passed from one marked by innovation,
anarchy, and a libertarian ethos into one of the most corporate-dominated
parts of the economy. The collapse of the dot-com boom left only a small
number of firms standing. The more successful ones, like Microsoft, Apple,
and Amazon, have been joined by emergent powers, including Google
and Facebook. Together, these large firms exert enormous authority over
the digital economy and shape the sector’s operation. An economic field
that a short time ago prided itself on its anarchistic tendencies and a
“garage start-up” mentality has become dominated by a small number
of firms that act in an oligarchic fashion.
Digital Media in the Developing World
Africa’s experience, not surprisingly, is markedly different. Ten years

ago any conversation about the digital-content sector in Africa would
have been short, focusing on the false promises of the Internet, low levels
of connectivity, and high charges. The fast-growing wireless sector on
the continent has, however, changed the situation dramatically. This is
beginning to change as Liquid Telecom has been building a fiber-optic
network across landlocked Africa. Currently, Liquid Telecom’s network
stretches some seventeen thousand kilometers in twelve countries.35 Parts

of Africa now host one of the most innovative and transformative digital-
content and digital-services environments in the world, largely because
of low-cost mobile services and the absence of intermediate, global
companies. In sub-Saharan Africa, for example, banking infrastructure
has long been so woefully weak that few citizens made much use of
banking services. The advent of cell-phone banking has brought about
revolutionary changes, often reaching into remote parts of the continent
(see tables 19–20).
At the same time, and to the great consternation of governments,

the digital revolution has also fomented political unrest and antigov-
ernment actions. The famed Arab Spring that started in 2010, toppling
governments, bringing angry crowds into the streets, and sparking civil
conflicts, capitalized on the ubiquitous nature of digital communications
to overcome traditional and often government-controlled media. African
governments, many of which score low by global standards of trans-
parency and democracy, are of mixed minds about digital services and
digital content, knowing that the systems can enhance and improve lives
and create new jobs and businesses but also realizing that the technology
has been extremely effective in sustaining antigovernment unrest.
The results have been intriguing, among them the emergence of a

series of country- and region-specific innovations designed to capitalize
on the potential of the Internet, particularly on wireless services. The
continent is rife with developers specializing in mobile applications for
basic phones, products that would be of little commercial interest in
higher-technology environments. Similarly, the emphasis in Africa is on
practical, inexpensive applications, particularly focusing on e-banking,
e-payments, and e-services, which have helped the poor and widely
dispersed population connect to the digital world. M-Pesa (pesa is the
Swahili word for “money”) is one of Africa’s success stories. Launched
in Kenya and Tanzania, the money-transfer service allows individuals to
distribute and receive funds electronically—a basic function in the devel-
oped world but a life-changing and economy-boosting system when made

available to the people of sub-Saharan Africa. The company has expanded
to other African and South Asian nations using the well-established
central African market as a solid foundation for growth. Another Kenyan-
based organization, Ushahidi, capitalizes on the power of the Internet in
other ways. This well-known not-for-profit crowdsourcing firm provides
digital platforms for the recording and distribution of information about
events, including political conflicts and natural disasters, for activist
purposes. Ushahidi, which first came to widespread attention during the
violence that followed the 2007 Kenyan presidential elections, transforms
users into contributors as the firm’s websites post and map reports
and images and provide immediate and widely distributed updates on
unfolding events. For countries without a robust and independent press
and in times of uncertainty and crisis, Ushahidi has provided invaluable
information that has often prevented further suffering.
Ghana’s mPedigree sells an app that allows people to verify whether a

pharmaceutical is real or counterfeit, fake pharmaceuticals being a major
problem in much of Africa.36 The Kenyan and Ugandan governments have
been offering paper vouchers to pregnant women that are redeemable for
health-care services or for transportation to a hospital and can be prepaid
in installments in advance of the birth. Changamaka, a Kenyan health
insurance provider, is working to provide these vouchers electronically.
Many more women could be reached if the vouchers could be sent by text
message. Changamaka is also using text messages “to make women and
their families aware of the importance of medical care during childbirth,
and to [let them] know that financial help is available to help them
get it.”37
IBM and Microsoft clearly see Africa’s potential. IBM has opened
offices in more than twenty African countries, and in August 2012 it
opened a research laboratory in Nairobi. Microsoft has an on-the-ground
presence in fourteen countries on the African continent, and in February
2013 it launched a Huawei-made smartphone with a Microsoft operating

system designed specifically for Africa.38
Though Africa has seen some impressive digital innovations, partic-

ularly in the mobile field, the hand of government has been largely
invisible. This is hardly surprising given the many challenges faced
by governments and citizens on a continent divided by the legacies of
colonialism and despoiled by the shortcomings of most contemporary
administrations. Broadband is expensive and an outlay that is challenging
to justify for countries with high poverty rates and education and health
systems that lack the basics. Kenya has been the most enthusiastic about
IT and the potential for broadband. Back in 2006, it approached the United
Arab Emirates about a link to the Gulf cable because it was frustrated
that plans to lay fiber-optic cable along Africa’s east coast were taking
so long.39 Google’s Eric Schmidt is very enthusiastic about Nairobi’s
technological prowess, having written that Nairobi “has emerged as a
serious tech hub and may become the African leader.”40
As in many nations, government digital policy has focused largely

on improving access to the Internet and on migrating government
services to digital and mobile environments. Governments have made
no significant efforts to ensure international competitiveness. Instead,
countries focus on small-scale project that have the less ambitious goal
of bringing the content into the digital space. In many respects, the
African market demonstrates the continuing dynamism of the Internet
economy, particularly insofar as low incomes and low Internet usage
and availability across the continent have kept the major international
digital-content firms largely out of Africa. The major hardware firms,
in contrast, are extremely prominent in terms of public advertising.
That most African nations provide minimal oversight or regulation of
e-business and digital content generally has left private firms freer to
innovate, small digital firms providing services that governments or
large-scale businesses offer in most nations.
Many other developing areas—Eastern Europe, Russia, South Asia,

South America, Australasia—have had limited digital reach, and few
companies from these regions have found an international market. The
Internet-based economy in the developing world focuses largely on
a specific country or region, with local firms fighting for space and
investment dollars with the large global digital firms. Nonetheless,
interesting examples of new digital applications pop up in all kinds of
sectors and in all parts of the world. For example, Pakistan has recently
been using smartphones to combat mosquito infestations. As one report
noted,
They equipped 1,500 city workers with $100 smartphones and

asked them to take “before and after” photographs of their anti-
dengue tasks and to upload images tagged by location so that they
could be plotted on an online map, made available to the public.
They also recorded where larvae were spotted (usually in traps),
and reported the locations of known dengue patients. The resulting
data were then analyzed to create a visualization showing where
and when dengue was infecting people. It was then possible to
predict where dengue-infected mosquitoes would buzz up next, so
that fogging and larvae-hunts could be targeted appropriately. The
use of smartphones also had more subtle effects. Knowing they
were being monitored and tracked in public, municipal workers
also applied themselves more assiduously to their tasks. Anyone
looking at the online map could see if the work being done in a
particular area was adequate—and complain if it was not.41
Smartphone use to improve public services in Pakistan has also expanded.

Other officials who travel for work are required to take smartphones to
work and to upload geo-tagged photographs of themselves on the job.
Random calls or text messages to users of public services have also been
implemented to ensure the quality of service and the absence of bribes.42
The developing world presents important opportunities and challenges

in the digital space. The early impact of the Arab Spring, attributed at
least in part to the power of social media, generated two contradictory
responses: greater youth enthusiasm for smartphones and digital mobi-

lization and increased government concern about the political effect
of digital communications. Most important, however, is that numerous
companies and services, such as banks, do not have a physical presence
in many poorer areas, a fact that has created substantial openings for
digital operations, allowing significant areas in the developing world
to jump quickly from being disconnected to being digitally engaged. It
remains to be seen whether this promising start will develop into a full-
fledged and extensive digital economy.
Digital Israel
Israel is something of a unique case. It is a small and embattled country

with an impressive record for generating start-up firms and high-tech-
nology innovations.43 The national language—Hebrew—is not globally
significant in demographic terms. It rests, at present, as the twenty-
ninth most-common language used in websites, slightly behind Norwe-
gian and ahead of Lithuanian (and a raft of other Eastern European
languages). Jewish and Israeli cultural content (the two are not the same
thing) constitute a niche market internationally. Israel is well wired,
with work underway on a 1 GB high-speed network starting in 2013.
There are approximately seven hundred “new media” companies that
work on everything from content creation to satellite delivery, from
gaming to cable TV, and Tel Aviv is highly regarded in the sector as
a center for high-technology innovation. The Israeli Center for Digital
Art is one of a growing number of institutions globally that is working
on both digital artistic expression and the creation of a national and
international audience for digital art. Generally, Israel as a whole has
a stellar reputation as a start-up nation. The country is not, however,
seen as a hotbed of digital-content creation, although the foundations
for such activities have been well set, in part because Israeli companies
often downplay their origins in order to avoid negative reactions from
people in some countries. Israel, included here because of its innova-
tive digital technology environment, shares a common challenge with

other small market countries, particularly those that do not work in
one or more of the world’s major languages (although English is quite
prominent in Israel). The country’s market liabilities have not stopped
it from succeeding economically in other digital fields, holding open the
possibility for continued digital-media success.
Digital Overview
The digital planet is not a uniform place. American Internet firms continue
to dominate the top ranks of digital firms, but the United States no
longer controls the sector. The swift digital transformation of China,
Taiwan, and South Korea, all of which have raced to catch up with Japan,
has elevated East Asia to a position of global prominence, influenced
significantly by government engagement and promotion. Multiplayer
online gaming, a particular achievement of South Korea, is but one of
the region’s contributions to the evolution of the digital ecosystem. Each
country and each region has capitalized on the essential flexibility of the
digital world to adjust digital realities to national and local circumstances.
North America and Africa provide useful illustrations of private sector
dominance and limited government engagement, one using the rapid
emergence of digital-content firms to establish global leadership and
the other, though lagging well behind the rest of the world, capitalizing
on the rapid expansion of low-cost wireless Internet to innovate in
the development of a digital sector. The rapid rise of wireless Africa
based on the availability of low cost, low-quality Internet services, along
with the political mobilization of the Arab world in Spring 2010–2012
through instant messaging and Facebook, demonstrated some of the
myriad applications of digital technologies. Governments, in general,
remain fonder of the manufacturing possibilities of the digital economy
than of the content opportunities, but that may be changing slowly as
the realization grows of the commercial potential of animation, digital
art, music and video, digital services, and the like.
The world is in the early stages of the digital revolution, even though the
transformation of the past two decades has been both dramatic and wide
ranging. In the coming years, continued innovation in e-education, digital
health, social-media applications, digital-based work environments, 3-
D manufacturing, and many other imminent digital developments will
continue to upend global realities. Predicting the trajectory of the digital
world is as difficult now as it was a generation ago. Governments will
continue to wrestle with the policy and regulatory aspects of the digital
world, devoting increasing effort to cybersecurity and digital privacy,
to say nothing of the continued digitization of the world’s financial
systems. For the past generation, the digital revolution has been led by
young people, who have flocked in the hundreds of millions to YouTube,
Baidu, Facebook, Orkut, Skype, Google, Gree, Wrench.cc, and many
other applications, and whose rapid adaptation to touch screens, instant
messaging, downloading (legal and illegal), and video gaming has pushed
the digital economy in ways that the mainstream business community
largely failed to anticipate.
The digital-content economy is ubiquitous in terms of access and usage

—few parts of the world have not been affected by the advent of the
Internet—but patterns of development and commercialization are far
from standardized. Few non–North American firms have emerged as
major players in the digital-content market. The more successful ones,
such as Skype (purchased by Microsoft), often attract American suitors,
as a handful of US-platform firms continue their efforts to dominate the
digital economy. That a company like Facebook, Google, or YouTube is
available globally does not, however, necessarily mean that the content
being accessed across the digital platform is American or Western. The
use of local languages and the localization technologies that underlie
websites like Google mean that Japanese users capitalize on the system to
see Japanese language materials, just as Germans use the same software
to explore German-language sites and content.
Only a small handful of companies, such as Rovio Entertainment

(producers of Angry Birds) and several successful Korean online gaming
firms (including Nexon, now based in Tokyo, and HanbitSoft, developers
of the Starcraft games) have established sustained global markets for
their digital content. Minecraft, created by a Swedish games developer,
had sold over 50 million copies across all digital platforms by fall 2014
—before being sold to Microsoft for $2.5 billion the same year. The New
York Times, one of the most-recognized newspaper firms in the world
and a leader in digital content, has fully 60 percent of its online users
in the United States. Only the English-speaking countries (India, 5.5
percent of all users; Canada, 3.4 percent; United Kingdom, 2.4 percent;
and Australia, 1.7 percent) have produced significant amounts of traffic
for the New York Times website.44 The Economist magazine, one of the
world’s best-known media sources, barely makes the top 1,500 websites
in the world (1,486 as of 31 December 2012). In comparison, YouTube, a
digital platform that holds user-generated content without concern for
the language or culture of the content, ranks in the top five websites
in the following countries: Saudi Arabia, Romania, Austria, the United
States, Colombia, Egypt, Chile, Algeria, Mexico, Greece, Venezuela,
Argentina, Peru, Italy, Germany, Taiwan, the Philippines, Belgium,
Portugal, Vietnam, Sweden, South Africa, Ukraine, Thailand, France, the
United Kingdom, Brazil, India, Spain, Canada, the Netherlands, Malaysia,
Poland, Australia, Turkey, Indonesia, and Russia. In the digital-content
space, as with the Internet generally, the platforms are universal, but
the content and therefore usage patterns follow closely the cultural and
linguistic character of the countries and regions. Wikipedia is a major
exception that nonetheless proves the point about the sustaining power
of culture and language. The user-generated and crowdsource-evaluated
site contains digital material in over 280 languages, providing both global
access and localized information.
If the patterns of the last two decades hold, the digital planet will
continue to reflect the unique cultures, regulatory environments, tech-
nological capabilities, and economic circumstances of individual coun-
tries and regions. When the Internet emerged as a major global force,
governments from East Asia to South America worried about the effects
of rampant Westernization or Americanization on local populations. The
underlying technologies and software have become ubiquitous—Facebook
alone has close to 1.23 billion users operating in dozens of languages—
but the content and usage reflect national or regional realities. Many of
the leading digital-content technologies are just that: technologies. They
provide platforms that individuals and societies can use in unique and
culturally specific manners. In the end, the Internet and the digital revo-
lution are as much about foundations as they are about content, providing
a base upon which nations and regions create separate digital cultures,
separated by language, cultural reference points, and regional values.
The process is, in effect, a digital version of glocalization, a powerful

twenty-first-century phenomenon in which two forces—the global reach
of new companies, products, services, ideas, processes, and values and the
persistence of cultural attributes and attitudes at the local or regional level
—define the global reality. Global forces are real and influential, but so
is the tenacity of culture, tradition, language, and local practice. Twenty
years ago, analysts in many countries, most notably authoritarian states
like China and several Middle Eastern nations, worried that the arrival of
the Internet would hasten the destruction or at least the Westernization
of the regional population. In practice, local and regional cultures and
traditions have remained more resilient than commentators expected, for
national or regional intranets function behind one of the most important
firewalls of all: language.
Digital technologies continue to transform the world in dramatic and

unexpected ways. The next decade will likely see an acceleration of this
trend. But the technologies themselves have not overcome the influence of
national and regional cultures and languages. The World Wide Web, like
the planet itself, is a platform upon which humanity can build, sustain, and
celebrate diversity while also functioning as a means of accelerating and
sustaining conflict between and among peoples. National governments
have largely been bystanders in one of the most remarkable technological

and commercial transformations in world history, although as the study
of Europe and East Asia shows, they are finding various ways of engaging
the sector. Although governments have invested in aspects of the digital-
content sector, the field does not lend itself to standard innovation policies
or to the kind of control, regulation, and subsidies that typically dominate
government intervention in the economy. The digital-content sector, as
a consequence, reveals the rough and ready character of a global free-
market economy, with many examples of upstart entrepreneurs, cluster
developments, legal battles, government-business partnerships, corporate
concentration, rampant speculation, and constant overpromotion and
underestimation of the commercial effects of the digital revolution.
The digital-content sector is at the same time a great planet equalizer

and a source of cultural distinctiveness. The digital-content platforms
that span and unite the globe provide a common vocabulary and an
increasingly shared experience of the Internet. The basic structures of
Facebook, Google, YouTube, and Amazon are much the same the world
over. At the same time, the power of language and culture as distinctive
and influential forces in contemporary affairs is strongly revealed in the
digital-content space. Few people outside Asia understand the reach,
variety, and intense growth of Chinese-language digital content or
the nation-specific effectiveness of the South Korean– and Japanese-
language digital spaces. The rest of the world, including many countries
locked in narrow, culturally and linguistically specific digital spaces
or linked to the English-language digital marketplace, will find limited
opportunities to connect with other parts of the planet. In the early
days of the Internet, visionaries spoke with equal optimism and fear of
the prospect of a culturally united (and American-dominated) planet.
The assumptions have proved mistaken. The digital-content world is as
much about Gree, Baidu, and Orkut as it is about the linking platforms
of Facebook, YouTube, and Google. When e-mail emerged as a major
form of communication and when web browsers brought worlds of
information to the desktop, many people saw the Internet as the next
Hollywood, a cultural-wrecking force that would dominate the world.

Instead, the World Wide Web and digital content have emerged as the
next electricity, a powerful technological tool that creates economic
opportunity, rewards creativity and innovation, and produces platforms
that societies, cultures, nations, and regions can use to promote, sustain,
and celebrate cultural and linguistic differences.
Table 19. The Internet in Africa.
Source. CP-Africa, “Infographic: Over 167 million Internet Users in Africa,”

http://www.cp-africa.com/2013/11/07/internet-usage-in-africa-an-infographic/.
Table 20. Top ten Internet countries in Africa.
Source. CP-Africa, “Infographic: Over 167 million Internet Users in Africa,”

http://www.cp-africa.com/2013/11/07/internet-usage-in-africa-an-infographic/.
Notes
1. Hüseyin Uzunboylu, “A Review of Two Mainline E-Learning Projects in

the European Union,” Educational Technology Research and Development
54, no. 2 (2006): 201–219.
2. VDI/VDE-IT, INBIS, and Price Waterhouse Coopers, Access to Capital
for the Content Industries, study submitted to the European Commis-
sion (Teltow, Germany: VDI/VDE-IT, 2000),ftp://ftp.cordis.lu/pub/econ-
tent/docs/access_final.pdf.
3. “Welcome to the eContent Programme,” Cordis, last updated 22 August
2005, http://cordis.europa.eu/econtent/.
4. European Commission, “Digital Agenda for Europe: A Europe 2020
Initiative,” http://ec.europa.eu/information_society/digital-agenda/
index_en.htm.
5. CIP ICT PSP work programme 2012.
6. European Commission, Europeana Strategic Plan, 2011–2015, http://
pro.europeana.eu:9580/documents/866067/983523/D3.1+-+Europeana+
Strategic+Plan+2011-2015.
7. Material drawn from an author interview with Luca Martinelli (principal
administrator and policy officer, European Commission, Information
Society and Media Directorate General, Digital Content and Cognitive
Systems Directorate [now DG Connect]), 5 June 2012, Luxembourg.
Statistic from Europeana Professional, http://pro.europeana.eu/content.
8. European Commission, Europeana Strategic Plan 2011–2015, 5.
9. Ibid.
10. European Commission, “Digital Agenda: Turning Government Data
into Gold,” press release, 12 December 2011, http://europa.eu/rapid/
pressReleasesAction.do?reference=IP/11/1524&format=HTML&aged=0
&language=EN&guiLanguage=en.
11. European Commission, “Public Sector Information: Raw Data for New
Services and Products,” December 2011.
12. Author interview with Malte Beyer-Katzenberger (European Commis-
sion, Information Society and Media Directorate General, Digital Con-
tent and Cognitive Systems Directorate [now DG Connect]), 5 June 2012,
Luxembourg.
13. Author interview with Digidel’s Ellen Pettersen, Stockholm, Sweden, 12
June 2012.
14. Digidel 2013 pamphlet, www.digidel.se.

15. Ibid.
16. An interesting paper on ways to increase the digital inclusion, particu-
larly of older people, is Ian Agnew and Laura Ripper, “Using Embedded
Outreach to Bridge the Digital Divide,” Working with Older People 15, no.
3 (2011): 127–134.
17. UK Department for Business Innovation and Skills, National Plan for Dig-
ital Participation (London: UK Department for Business Innovation and
Skills, 2010), 5.
18. Ibid., 6.
19. Juha Parantainen, High-Speed Broadband to Everyone in Finland, Ministry
of Transport and Communications PowerPoint, http://www.mrr.gov.pl/
aktualnosci/fundusze_europejskie_2007_2013/Documents/Nationwide_
NGA_project_in_Finland_Parantainen.pdf.
20. See www.planavanza.es.The program is now in a later stage, Plan
Avanza 2.
21. “Is ‘Broadband for All’ a Recipe for Recovery, or a Boondoggle?,” Benton
Foundation, 2 February 2009, http://benton.org/node/21511.
22. Author interview with Anna Hrapovitskaja (ICT Demo Center), Tallinn,
Estonia, 18 June 2012.
23. Daniel Tencer, “The 15 Countries with the highest broadband Internet
penetration rate in the world,” Huffington Post Canada, 2 August 2012.
24. See “Household Download Index,” Ookla Net Index, http://www.netindex.
com/download/allcountries/.
25. Prime Minister of Japan and His Cabinet, “Japan Is Back,” Japan
Revitalization Strategy, Japan Portal, 14 June 2013, 20, http://www.
japanportal.jp/article/414774.html.
26. See the website of Singapore’s Media Development Authority, http://
www.mda.gov.sg.
27. “Policies across the Country that Support Animation and Game Industry,”
Comic.gov.cn, last modified 23 October 2009, http://www.comic.gov.cn/
info/news/20091023/10304_3.html (site no longer active).
28. Deng Lili, “Discussion on Current Development of China Animation,
Comic and Game (ACG) Industries,” Animation and Game Research
Center, Institute for Cultural Industries, Peking University, http://
waleschinacreativeindustries.net/wp-content/uploads/Prof-Deng-Lili-
paper.pdf.
29. Interview with Vernon Fernandez (MaC3, Multimedia Development
Corporation), 12 May 2010.
30. “Speech by Dr Ng Eng Hen, Acting Minister for Manpower and Minister of
State for Education at the Ministry of Manpower National Day Observance
Ceremony, 2003,” availabe on the website of the Singapore Workforce
Development Agency, http://www.wda.gov.sg/content/wdawebsite/L20
9-001About-Us/L218-SpeechListing/08_Aug_2003.html.
31. See the website of Infocomm Development Authority of Singapore,
http://www.ida.gov.sg.
32. Holroyd and Coates, Digital Media in East Asia.
33. Government of Canada, “Digital Canada 150,” http://www.ic.gc.ca/eic/
site/028.nsf/eng/h_00029.html.
34. Michael Geist, “The Digital Strategy without a Strategy,” 5 April 2014,
http://www.michaelgeist.ca/2014/04/digital-canada-150-2/.
35. “Many Rivers to Cross,” Economist, 5 July 2014.
36. Robert Guest, “The Next Generation of Entrepreneurs: Tough Times Will
Breed Tough Tycoons,” Economist, December 2012, 129.
37. Jocalyn Clark, “Txting for Safer Births,” Policy Options, October 2012, 8.
38. “Information Technology in Africa: The Next Frontier,” Econ-
omist, 16 February 2013, 63; “Microsoft, Huawei Partner to
Launch Affordable Windows Smartphones for Africa,” 5 February
2013, www.ventures-africa.com/2013/02/microsoft-huawei-partner-to-
launch-affordable-windows-smartphones-in-Africa.
39. “Information Technology in Africa: The Next Frontier,” 64.
40. Ibid., 63.
41. “Zapping Mosquitoes, and Corruption,” Economist, 1 June 2013, 8.
42. Ibid.
43. Dan Senor and Saul Singer, Start-up Nation: The Story of Israel’s Economic
Miracle (New York: Twelve, 2011).
44. Data as of 31 December 2012, site overview of the New York Times,
http://www.alexa.com/siteinfo/nytimes.com#.
Chapter 5
Digital Futures
Governments and policy makers face fundamental dilemmas in the realm

of digital media and digital content. The sector is given to fluctuations
that mirror sharp rises and declines in public interest and economic
returns. The high hopes and severe consequences of the dot-com boom
and bust remain alive in the collective memories of governments around
the world. While there is no denying the steady rise of the digital-content
sector, the reality is that the economic, work-force, and societal impacts
of the field remains suspect. Governments work best, cynics would argue,
when they are focusing on what should have been done five to ten years
previously. They are not, in the main, good at forecasting or anticipating
the future. East Asian countries, particularly Japan but also Taiwan, South
Korea, Malaysia, and Singapore, believe that their prospects are governed
in substantial measure by their ability to make smart investments tied
to assumptions about the economic and social realities of the 2020s
and 2030s. European and North American policy making, in contrast,
is often short sighted, determined as much by electoral cycles and local
politics as by long-range strategies and thoughtful analysis of trends
and possibilities.
The digital transformations of the past generation have been profound.

Few people in the 1970s anticipated the world of personal computers,
let along that of the Internet and smartphones. When a 2 TB (terabyte)
storage unit can be purchased for under $150.00, when 1 GB download
speeds are commonplace in East Asian cities and scheduled for many other
locations, when Google Project Loon is planning to launch balloon-based
Internet services so that people in poor and remote regions can receive
inexpensive access, when Thai mogul Suphachai Chearavanont declares
his intention of bringing low-cost Internet to the whole country, and when
mobile phones reach into !Kung villages in the Kalahari Desert, the digital
universe has truly arrived. In Japan, a “Galapagos environment” that has
rich internal diversity but does not welcome outside digital species, the
turnover in products and new technologies is simply stunning. Akihabara
is the most important digital-products marketplace in the country, but it
is so oriented toward Japan that its global influence tracks very closely
to the international success and impact of Japanese companies. These
achievements notwithstanding, the world is in comparative terms still
in the infancy of the digital revolution. Driverless cars are already a
technical reality; digital technologies have advanced to the point that
hundreds of vehicles can share a highway, traveling at high speeds,
without incident and without driver interventions. The pressure is now
shifting to governments to come up with appropriate regulations and
licensing arrangements for vehicles that can drive themselves, navigate,
and even slot themselves into a narrow parking space. Thirty years might
be a long time in software-production cycles and e-commerce transitions,
but it is only a blink of the eye in technological and societal terms.
The combination of academic and private sector research and devel-

opment in digital media now easily reaches into hundreds of billions of
dollars a year in expenditures. Tens of thousands of company and govern-
ment researchers, graduate students, and entrepreneurs are digging deep
into the digital sector looking for commercial opportunity—and that is
only in China. Almost every country on earth has a significant commu-
nity devoted to exploring the technological and business prospects of
Digital Futures 193
mass digitization. Much of this work will never lead to commercial or

practical applications. In other cases, the impact of the discoveries will
not be felt for years or decades. But in the midst of all of this research
and development activity are the technological seeds of future digital
disruptions. Even more, the vast majority of the discoveries, inventions,
patents and innovations of the past three decades remain under- or
unexploited. The digital revolution is just starting.
This, of course, creates problems for governments and organizations

trying to make sense of the digital changes and opportunities. Politicians
and business leaders persuaded of the need to provide 3G wireless
services almost immediately discovered that they had to prepare for the
introduction of 4G wireless. Companies that upgraded their phones to
Blackberry 9800s faced, only two years later, the question of whether they
should switch to the new Z10s and Q10s. Now, in 2014, with Blackberry
struggling, companies are considering abandoning the firm altogether.
Software is constantly updated, sometimes with dramatic changes in
working style and structures and occasionally disastrous ones, as with
some Microsoft Windows software packages. But these product cycles
are the easy pieces. What is more difficult to determine is where the
digital economy is going and where to get off or on the Internet train.
What follows is completely speculative, a general outlook on trends in

the digital economy complete with reflections on possible economic and
policy implications. The consistent failure of governments to anticipate
the rapid growth of the Internet is one of the reasons there has been
a surge in digital crime and hacking; governments, police forces, and
security systems lag well behind the private sector and the criminal
element in terms of understanding how people use the Internet and how
to exploit its many cracks and holes. Some of what follows is fanciful,
some is real, and some is only possible. The point of the digital economy
is that it has been repeatedly both overhyped and underestimated. No
national government anticipated—let alone responded aggressively to
—the development of the smartphone-application industry. Little has
been done to capitalize on the huge volumes of government data to

create new industries, although Europe is moving in that direction.
Most ominously, there are few signs that governments are on top of the
challenges associated with the job-killing, sector-destroying capabilities
of digital technologies.
It is highly instructive that governments continue to focus on attracting
and retaining manufacturing operations—the cornerstone of the old
industrial economy—while doing little to prepare for a comprehensively
global digital future. Much of this digital reality will be dominated by
digital content and digital services; competitive markets and improve-
ments in design and manufacturing are rapidly reducing the economic
benefits of digital technologies, most of which are produced in China,
Taiwan, and East Asia generally. Government policy is often respon-
sive rather than forward looking. Politicians and civil servants react to
rapid and negative changes in the economy or society at large instead
of pursuing carefully conceived strategies. Although it is no surprise,
therefore, that national political and policy-making systems have been
slow to identify the risks and benefits of the revolution in digital content,
it is clear that this rapidly expanding sector will be driven more by market
and social forces than by clearly developed government policy.
Digital Speed and Storage
Moore’s law, the idea that digital storage will double in scale and drop
dramatically in price every two years, according to specialists in the field,
has another decade to run, though quantum computing could repeal
Moore’s law in short order. Digital speeds continue to creep up. Large and
medium-size cities around the world are being promised download speeds
of up to 1 GB; many East Asian cities are already there. In the mid-1980s,
computers came with two 256 K floppy disk drives; a hard disk was
the preserve of major research laboratories and large offices. Currently,
computers can be found off the shelf with 100 GB of memory and optional
expansion slots. Terabyte devices are cheap and easy to find. Speed and
Digital Futures 195
storage capabilities will continue to expand, probably past the point of

relevance to most users and almost all consumers. MP3 music players
that hold eight thousand songs or over one hundred movies are more
about bragging rights than practical utility—although the scale of the
storage speaks eloquently about the commonness of digital piracy. Storage
capacity matters in any case, given the emergence of cloud computing.
The rapid development of cloud computing has destroyed reliance on
the capacity of a specific digital machine. Instead, users with Internet
access can leave vast quantities of material in “the cloud,” a networked
set of computers connected through a virtualization process, depositing
applications, content, files, and other materials without burdening the
local machine. The cloud allows users to place books, movies, television
programs, and games in the digital cloud. The ability to sync files and data
sets across multiple platforms, to collect information almost anywhere
in the world, and the speed with which material can be retrieved have
revolutionized the digital economy even more than the transitions from
floppy disks to hard drives did.
Of the changes that have occurred, download speeds are the most
significant technological element for users. The ability to download a
movie in a few minutes instead of an hour is significant. The faster the
downloads, the more data can be accessed from a website, giving web
designers and game makers much more flexibility with the production
values and complexity of their digital products. As speeds increase,
news sources can put more video and audio online and rely less on
text. Retailers can load 3-D images of their products. In time, holograms
could become as common as videos—recall the Star Wars devices that
projected a hologram of Luke Skywalker into the middle of the room
—but again, fast speeds are essential for this to work smoothly. The
development of commercially viable holograms could, in turn, enhance
the creative sector by providing enriched outlets for musical, theatrical,
and other entertainment.
The world is reaching the point where computers and smartphones

are simple household devices and digital connectivity is a utility no
less dramatic or notable than electricity or the water supply. Geeks and
computer techs recede into the background as reliability and remote
troubleshooting improves. As this occurs—and the point has arrived
where people rarely obsess about the storage capacity (everyone has a
lot), the speed (almost all get fast downloads), or other qualities (people
seldom discuss RAM, MHZ, and other technical elements) of their devices
or Internet services. With the technological foundations generally well
laid—save for remote and rural areas, which will suffer in many economic
and social sectors from the reality of weak and unreliable Internet services
—global commercial attention will shift from the connecting technologies
to new devices and, even more, to the content and services being made
available digitally. While the world works its way through the stages of
technological fascination, the transition to the digital-content economy
will likely accelerate.
3-D Printing
The digital revolution was about bytes and data, about the transfer of
information at high speeds across large distances. The digital forces were
not about “things” and not about the production of physical objects. The
introduction of computer-driven manufacturing processes, of course,
changed the image and impact of digital technologies. In rapid order,
sparked in large measure by the sophisticated manufacturing processes in
Japan and Germany, industrial firms learned to integrate digital systems
into their operations. Large-scale business became less about machine
operators and more about computer programmers and digital designers.
These technologies, of course, were far removed from the average
consumer, who nonetheless benefits from the cost- and labor-reducing
effects of technological innovation. The distance between consumers
and technologies has shrunk; the benefits of data-driven manufacturing
Digital Futures 197
processes are now in the hands of anyone with a remarkably inexpensive

3-D printer.
The 3-D printers work on simple principles: a digital design is down-

loaded to the printer, which then extrudes the desired item, currently
most often in plastic, at the operator’s site. This technology seemingly
passed from science fiction to desktop functionality in half a decade. At
present, people can purchase a workable 3-D printer for between one
thousand and three thousand dollars, the latter price providing larger
and more precise production. Current estimates suggest that a household
can pay off the cost of a digital printer in approximately one year using
designs that are currently downloadable and easily available online.
Many items that can now be molded or shaped by standard industrial
processes based on a single input substance can be printed at home.
The future is much more promising, however. Enhanced devices will
use more than plastic and will be able to print multicomponent, multi-
textual items, all at the speed of the Internet. It is possible, according to
promoters of the technology, to imagine printing a new smartphone or
a complex medical device or musical instrument, all according to precise
and copyright-protected plans for sale on the Internet.
The applications are obvious. The shower head in the bathroom breaks
or starts to leak. Download the design of the replacement item off the
Internet, send it to the 3-D printer in the basement, and within a minute
to two install the new shower head. Car parts, medical equipment,
computer parts, and many other items can already be printed from
digital downloads. For people in small towns or isolated areas—an Arctic
village or an oceanside community on a Pacific island—3-D printing will
transform commercial and work life.
This system shifts the focus of modern manufacturing from its current
industrial emphasis—Chinese factories, in the main—to a design priority.
Designers, working independently, will be able to upload 3-D printer
designs and will be paid for each download instead of working for a
large-scale manufacturing company and being paid on salary for creating
new or replacement product plans. The results could be dramatic—the

loss of manufacturing jobs globally (particularly in low-wage countries),
greater efficiencies in work and private life, the disappearance of many
warehouses (and their employees), an attenuated need for shipping (and
the workers thus employed), a loss of business for retail stores, reduced
costs to consumers, and the emergence of a whole network of 3-D printing
distribution centers as entrepreneurs open shops with large and high-
power printers to serve immediate markets. Of course, the technology
could founder—it would not be the first—and pass from the scene as a
science-based fantasy. Recent developments suggest otherwise, however.
In fact, a Staples store in Almere in the Netherlands has just introduced
a 3-D printer that uses paper, much less expensive than previously used
materials. The new printers have been used to produce architectural
models, molds, figurines, parts prototypes, and 3-D maps.1
Ubiquitous Computing: The Internet of Things
As noted earlier, one of the key trends in the digital economy has been the
shift toward the Internet of Things. The idea that “everything” should and
could be connected to the Internet is not new, but continued technological
refinements have accelerated interest in the field. The imbedding of chips
and other sensory devices is well advanced. Instant inventory systems
allow grocery and department stores to follow their stock with precision
and to implement automated restocking arrangements with suppliers.
The idea of a world in which billions of tangible, physical items are
connected via the Internet, producing data and interacting, is no longer
science fiction. Cisco estimates that some fifty billion different items will
be web-enabled by 2020, a number that other analysts believe is much
too low.2 It means, at the personal level, that people will be able to track
their lost glasses or keys with precision. Perhaps the easiest illustration
involves the GPS locators in smartphones. There are many applications
in the market that allow (on a permission basis) one user to monitor the
movements of friends or family members.
Digital Futures 199
The digital-content and digital-service sector has not really begun to

appreciate the commercial potential and public interest in the Internet of
Things, nor has it come to appreciate the full importance of ubiquitous
computing. With digital devices attached to “everything,” tourists can
walk around a city accessing historical information or consumer updates.
Companies can use the information to determine consumer habits and to
anticipate changes in behavior. It is vital to remember that the early online
grocery firms made much of their profit not from selling food but rather
from selling information about consumers’ actions and preferences. It will
take a generation to determine the shape and extent of commercializable
activity based on ubiquitous computing, but doing so has the potential
to change the world in powerful yet unpredictable ways.3 Security
experts, for example, are concerned about the risks associated with
web-connected cars and medical devices. Hackers could penetrate the
control systems and, with sharp digital interjections, could interfere with
pacemakers, drive Internet-controlled cars off the highway, or crash
digitally controlled trains and airplanes.
Quantum Computing
If the current wave of computers and digital technologies is not enough,

there is another transformative phase in the offing. Quantum computing
promises to accelerate the standards of speed, computational ability, and
storage capacity in short order. Mike Lazaridis, former co-CEO of Research
in Motion (now Blackberry), has invested and donated several hundred
million dollars to turn Waterloo, Ontario, into the global hub for quantum
computing, the theoretical physics behind the new technology. The
science behind quantum computers is complicated—basically, quantum
computers write data on atoms rather than on silicon chips—but the
possibilities are clear: blazingly fast computation abilities that are millions
of times quicker than those of modern computers, coupled with the ability
to store and manipulate vast quantities of information in a more complex
and creative fashion than those computers currently in operation can
do. Though this sounds like a boon for mathematicians and scientists
with few practical applications, the opposite is the case. Thousands of
current applications—from facial recognition to the operation of driverless
automobiles—rely on the ability of computers to aggregate, process, and
manipulate vast quantities of data. If a quantum computer can expand
capacity exponentially, then the number, variety, reliability, and utility
of such applications will leap dramatically. In a practical sense, quantum
computing may be ten to twenty years from full implementation; indeed,
such computers may never become commercially and technologically
viable. If they succeed, and the odds are quite good that they will, quantum
computing will do for data processing and mass digitization what the
transition from card-based computers to multiple-terabyte, silicon-chip-
based portable computers has accomplished over the past thirty years.4
Digital Data Depth
People marvel at the amount of content currently available online—

newspapers, radio and television, magazines, blogs, social media input,
government data, and on and on. The process is just beginning. In time,
as governments, libraries, companies, and individuals fully engage the
digital environment, and as “born digital” items remain available on the
World Wide Web, the planet and individual countries will develop digital
depth. Some nations, particularly in Europe, have made a concerted effort
to put government and historical material online; they openly hope that
companies will find commercial applications for the massive amounts of
data. Developing countries, often with weak record-keeping systems, are
many decades away from matching the data-rich nations. In a digitally
deep environment with proper protection for personal information, vast
quantities of material are available for open or subscription-based users.
Given the importance that business, financial institutions, insurance
agencies, researchers, governments, political parties, private business,
and interest groups attach to regional, national, and international data, it
is not difficult to imagine that substantial business operations could arise
Digital Futures 201
from digital depth. The implications in other sectors—from advertising

and education to tourism and health care—remain largely unexplored.
The scale of what is possible is intriguing. Google Books has a target of
making fifteen million volumes available digitally, the largest library in
the world, available online and free of charge. Major archives, such as the
Library of Congress and the British Museum, are digitizing vast quantities
of material. The government of Japan has paid for the digitization of a
great deal of its literary and visual heritage, depositing millions of images
online. And the process is only starting as thousands of libraries, archives,
museums, galleries, and other data sources digitize some or all of their
collections. In an unspecified period of time, it may be that the entire
corpus of human creativity—every letter, book, painting, film, television
program, song, magazine, government document, and the like—will be
available online. So much time and effort has been devoted to getting
the material online, including major battles over copyright protection
for intellectual property, that people have only begun to imagine what
they can do with the information.
The Digital Destruction of Work
In the mid-1990s, Jeremy Rifkin wrote a prescient book called The End of
Work. In this study, he argued that technological advances were replacing
industrial and office workers at a rapid pace, facilitating outsourcing of
work to India and other countries, and cutting into job opportunities
for workers around the world. Rifkin also pointed out that this tech-
nology-driven transformation could well be one of humanity’s greatest
achievements, eliminating much difficult, dangerous, and unappealing
work that people generally do not want to do, and providing for a major
increase in leisure time. That is not what happened. Digital technologies
have eroded a great deal of industrial and, increasingly, office work. The
Internet enabled the transfer of routinized and, increasingly, professional
work from the first world to the developing world—with significant
implications for workers globally. That Thai doctors are reading North
American x-rays and CAT scans, that Indian accountants are handling
tens of thousands of US income-tax forms, and that the legal profession
is now experiencing global outsourcing produces cost savings, job losses,
and social dislocations in some countries and creates work and greater
prosperity elsewhere.
The positive alternative painted by Rifkin is not working out. Leisure

time is not expanding, save for the soul-destroying inactivity of unem-
ployment. More often, workers are putting in more hours in positions
for which they are overqualified rather than resting at the beach or
in the movie theater while machines and computers produce income
for them. Globally, the loss of work associated with mass digitization
is substantial and is likely to grow dramatically in the coming years.
Millions of personal, corporate, and government choices all focused on
reducing costs rather than on redistributing wealth are moving work
into technology-based solutions, eliminating jobs, and undercutting
worker’s incomes.
All is not lost, however. The same digital technologies create many
opportunities for “new work,” digitally enabled work that did not exist a
few years ago. Basement comedians who sell their jokes online, product
designers for 3-D printers, musicians and artists finding niche global
markets, craft retailers selling internationally, home-based workers who
operate online for distant companies, video game designers, and many
others will discover profitable opportunities in the online world. Digital
content and digital services will increasingly come of age. Equally impor-
tant, the techniques and technologies of gamification (the structures and
processes behind video games) are likely to provide an extended foun-
dation for employment and business development. Using video gamers
to make video games, for example, already happens. Paid crowdsourcing
could become more common in the future.
Governments should be worried about the digital destruction of work

and should be proactive about identifying future employment and busi-
ness-development opportunities in the digital world. Without such
Digital Futures 203
engagement, governments will simply be allowing current forces to

unfold, along with consequent job loss, social distress, and continued
dislocation. On balance, governments did little that was creative to
respond to the loss of industrial work through outsourcing and the rise
of China, India, and other countries. They may be more moved by the
plight of displaced finance workers, lawyers, accountants, and eventually
medical technologists, physicians, and even teachers as digital solutions
replace traditional workers. There is, to date, little evidence of awareness
of the global and national trends and only limited planning for the future
of digitally enabled employment.
Digital Health Monitoring
The massive global health-care industry stands to be shaken to its core

by advances in digital technology, particularly as this relates to health
monitoring, physician oversight, patient-physician-pharmacist relations,
and a patient’s capacity to self-assess and self-medicate. Information
sites like WebMD.com provide information that stops some people
from going to the doctor and convinces others that they have serious
illnesses. In the near future, smartphones will be drawn into the game.
They can already provide a considerable amount of monitoring—of
exercise, caloric intake, and basic health measures. In time, and when
combined with the information available through DNA and genomic
testing, these mobile devices will become much more sophisticated.
Regular doctor’s visits could be replaced by automated subscription-based
health-monitoring companies, treatment regimens could be managed
digitally, instant eating and exercise recommendations could be provided
to the health conscious, and many other medical and preventive health
applications could be developed. Governments could use aggregated
processes, as they already are doing, to identify epidemic outbreaks,
and pharmaceutical companies could identify people who might benefit
from—or at least who might purchase—their products. The ability of
governments and international organizations, such as the US Centers for
Disease Control and Prevention and the World Health Organization, to

evaluate megahealth trends is directly tied to the sophistication of digital
technologies and analytical tools. As individuals in many countries and
governments in nations with state-funded health-care systems wrestle
with the high and unpredictable costs of medical care, digital solutions
will become increasingly attractive. When programmable and potential
navigable nanorobots become regularly available, they may well unite
digital and nanotechnologies to create a preventive and interventionist
health-care industry that could, in some visions, be staffed by employees
who, using video-game-based technologies that control nanorobots, work
inside the bodies of humans thousands of miles away to identify and
destroy dangerous cells. At times, the future is both exciting and nervous-
making—and more than a little Orwellian.
Digital Policing and Security
In many ways, it appears as though the future has already arrived in

terms of security and policing. With such technologies as voice and facial
recognition, DNA and genetic testing, drones, satellite surveillance, and
data mining already available, it is clear that digital technologies and
the use of digital content have already transformed the security sector.
Further advances are possible and, indeed, are already under development,
including improved monitoring systems for offenders (the ankle bracelets
currently used could soon be a thing of the past), preventive monitoring
of financial, legal, and other documented transactions, close evaluation of
e-mail messages and social-media contributions for antistate or terrorist
messages, and precriminal behavior (such as the purchase of suspect
items) that might forewarn authorities. Imbedded chips provide an
almost unlimited opening for authorities, for they could monitor personal
movements, the sale and distribution of products, travel by car and other
means, and many questionable activities. Data-mining techniques, in
particular, allow researchers to look for suspicious or criminal behavior
even when a crime has not been noticed or a potential offender identified.
Digital Futures 205
Many of these, of course, represent significant invasions of privacy and

will be vigorously protested by human-rights advocates, particularly
in democratic nations. Nondemocratic countries, conversely, will have
fewer qualms about using any available means, digital or otherwise, to
track suspicious or antigovernment individuals.
Perhaps most ominously, these technologies also work in reverse. At

present, many of the illegal or harassing digital activities use simple
systems, such as sending out thousands of spam messages or targeted
e-mail messages of fraudulent intent. Credit card thieves can be more
sophisticated, but many thefts still rely on such old methods as swiping
cards in readers when out of the owner’s view. All of the technologies,
devices, surveillance systems and products available to police and armed
forces are also available to the criminal element. Organized criminals hire
top-end hackers and technology specialists to supplement their other
accomplices, and many police forces are convinced that they cannot keep
up with their rivals. The digital-security sector has become the locus of
a new arms race, replacing the old reliance on military hardware and
technologies. That criminals are targeting everything from governments
and corporations to individuals and administrative systems makes the
challenge of keeping up with and protecting citizens, companies, and
nations that much more challenging. It is worth noting, as well, that
Western businesses have often done well by producing surveillance and
monitoring systems for authoritarian regimes, services, and technologies
that they would be reluctant to see in operation within their own country.
For reasons as much social as technological, it is likely that there

will be a rapid growth in the digital-security industry. As the Economist
recently reported, “an annual study of 56 large American firms found
that they suffered 102 successful cyber-attacks a week between them
in 2012, a 42 percent rise on the year before.” 5 Many analysts are now
suggesting that companies be permitted to “hack back”—in other words,
aggressively defend themselves by using hacking tactics to fight cyber
criminals. Internet security companies such as CrowdStrike, Endgame,
and CloudFare sell active-defense technology that helps firms proactively

eliminate threats by striking back at their online assailants. Security
analysts hold mixed views as to how much leeway companies should
have to fight back.6
In addition to providing protection from criminals, the new systems

can turn any person into a modern-day James Bond, complete with
gadgets and surveillance facilities galore. Monitoring children, partners,
colleagues, employees, clients, and the public at large is already techno-
logically easy and inexpensive. In the coming decades, it will become
even more so. No doubt antisurveillance systems are either available or
in the works, sure to provide the user with some measure of privacy
until a replacement technology comes along. Right now, the struggle
over privacy is largely viewed in government-citizen terms; in the future,
the tensions will be far more complicated and will include not just
state-level engagement but also personal, corporate, and institutional
efforts to both invade and preserve privacy. Journalist Gwynne Dyer
has suggested that Edward Snowden’s recent revelations on the extent
of the US National Security Agency (NSA) spying “are going to cause
a wholesale restructuring”7 of the Internet. Dyer pointed out that the
NSA’s widespread surveillance (its xKeyscore system searches e-mail and
web traffic, and another secret program screens mobile-phone records)
affects not only US traffic but all traffic that is routed through the United
States—that is, most of it. Therefore, he suggested, many non-Americans
are going to be looking to
join one of the many services that will spring up to meet an

exploding demand for secure internet services. Importantly, the
short-term reaction to the Snowden revelations has shown that
Americans and others value security over privacy and are prepared
to accept such intrusions in order to be protected from attack.
Finnish Internet servers are already emphasizing the security of
their services. Germany, whose memories of the Gestapo and
Stasi secret police make it particularly sensitive about the NSA’s
spying, may take the lead in building non-US internet capacity,
Digital Futures 207
or it may be big countries like Brazil and India that are relatively
invulnerable to US pressure. But this is a huge opportunity, and
it will get done.8
Security is the Achilles’ heel of the digital sector, carrying many risks
and causing great concern. Identity theft is increasingly common. Major
companies with large security operations have lost thousands of pieces
of personal information and thousands of credit card numbers. Hackers
have broken into supposedly secure systems and have released huge
volumes of information (consider WikiLeaks). The Internet of Things
escalates the benefits and the risks of global connectivity, producing the
potential for expanded intrusion into the lives of individuals, breaches
in privacy, and digital chaos. Ironically, the rapid advance in digital
technologies poses security challenges that, left addressed, could destroy
the Internet and the Internet-enabled society.
Wearable Computers
Pebble, a Canadian start-up company launched on the Kickstarter crowd-

funding website, presold $8 million worth of digital watches. The success
of this venture immediately sparked discussion about the appearance
of the Apple Watch, a fall 2014 Apple product. The idea of a wearable
computer seems odd, if not unappealing—smartphones, after all, are
small, versatile, and easy to keep on one’s person—but clearly some sort
of market exists for the devices. As a bit of a salutary warning, Japanese
companies produced wristband television sets over twenty years ago, but
they fell flat in the market. However, in 2013 Seiko Epson came up with
a wristwatch medical device to monitor heart rates and let exercising
wearers know when they have reached an optimum heart rate.9 Other
kinds of wearable sensors include high-end running shoes that track
performance data. More than anything, the prospect of an e-watch has
generated media debate about wearable computers. In the future, perhaps
sensors will be embedded in clothing to help, for example, consumers
coordinate outfits. One Japanese clothing store has embedded sensors in
its hangers, and when a customer chooses a piece of clothing, the sensors
send a message to the store’s computer, which then launches a video
showing a model wearing an outfit featuring that piece (and others).10
Google has continued its transition into the digital-hardware space by

introducing a beta-test of Google Glass, a wearable digital device that is
worn like normal glasses. The camera-equipped device will, when fully
operational, provide feedback on surroundings to the wearer (everything
from addresses of buildings, directions to destinations, menus from area
restaurants, and coupons from nearby retail stores), allow access to
sharable personal information from other Google Glass wearers, and
create a full recording of one’s movements throughout the day. The reac-
tion to the new technology has been far from universally positive. Some
people dislike the idea of being watched; several restaurants and other
facilities, including movie theaters, have banned the use of Google Glass
on their premises. The current Google Glass devices are cumbersome; in
time, they will be reduced to tiny devices mounted on regular glasses or
use some such system. The gadget has thousands of potential uses, some
of them challenging standard assumptions about privacy and freedom
from surveillance and many having unique commercial or consumer
applications. Telepathy Inc., a Japanese company, has launched its own
enhanced-reality smartphone that uses cameras and GPS technology
to digitally mark various items with comments. The company’s new
Telepathy One comes with a camera, microphone, and a small projec-
tion display. Telepathy One wraps around the user’s head with an arm
extended in front of the eyes; it is secured with earbuds.11 The device
projects images in front of the user’s eyes.
The key point about e-watches, Google Glass, and Telepathy One is
that they already exist and will be subject to refinement, improvement,
miniaturization, and cost reductions in the coming years. More important,
the utility—and the potential intrusiveness—of such devices should also
increase steadily over time. In summer 2013, rumors spread that Microsoft
was developing a comparable system, complete with facial recognition
Digital Futures 209
and other capabilities, to use in association with its Xbox games. The
acceleration is starting.
Wearable computers—any clothing or accessory that is connected

to the Internet—are already en route to the market. They may not be
fully functional, insofar as one will not be able to read an e-mail on
a friend’s sweater, but they will have fashion, health, monitoring, and
other applications. Parents could, for example, monitor their children’s
movements from tiny GPS devices woven into the clothing fabric. In fact,
parents worried about the possibility of their children being kidnapped
can have such devices imbedded under the child’s skin, providing ready
surveillance if the child were to go missing. There are many companies
already in this market; the United States hosts a significant number,
including Family Tracker, GPS Tracking Pro, Find My Friends, and Find
My Kids ~ Footprints, among others. Properly equipped pieces of clothing
could serve as health monitors. More provocatively, companies could
pay people to wear clothing with advertising capabilities. The world has
come a long way from giving out John Deere baseball caps as corporate
promotion—or has it?
At this point, there are few restrictions on how wearable clothing

might be utilized. The key element is that migrating digital connectivity
and capabilities to hats, gloves, boots, and regular clothing, as well as
to already extant glasses and watches, is technologically feasible, is
under commercial development, and is anticipated to grow strongly
in future years. Where this sector will go is difficult to predict. Will
people watch movies on their glasses as they walk in the forest, will their
undergarments transmit data directly to their physician’s office, or will
the whole thing turn out to be a costly and foolish gimmick? A seasoned
analyst will point out that people once thought that a small black mobile
device capable of holding e-mail and produced by an unknown Canadian
firm called Research in Motion was of marginal, niche interest at best.
The Blackberry proved them wrong. Google Glass may do the same,
and almost certainly, some aspects of wearable computers and digital-

content sharing will find a global market.
High-Quality Digital Content
To date, the digital world has been dominated by high-quality content

distributed for free by newspapers, magazines, and other media companies
and by wildly diverse personal material, largely in the form of blogs,
social-media postings, and various online commentaries. Some of these—
the political website Drudge Report in the United States and a vast array
of entertainment-based gossip sites (such as RealitySteve.com, which
monitors reality television programs and gives away inside secrets)—
have had a significant impact and produced substantial revenues. Overall,
however, the World Wide Web is awash in mediocre and dreadful
content, largely undifferentiated from the excellent, serious material
that is also available. High-quality content is coming, however. Oxford
University Press reportedly makes $1 million a year profit from its online
division, largely through subscriptions to libraries, a key development
given the rapid decline in the market for physical books. Companies
that offer enriched access to classical music, to offer another example,
are finding sizable markets. A TouchPress app related to Beethoven’s
Ninth Symphony has been downloaded over six hundred thousand times.
Almost thirty thousand people have enrolled in a five-week online
Beethoven sonata course through Coursera.12
In the coming years, high-quality content protected by firewalls and
available by personal or institutional subscriptions will likely become
much more prominent. After a decade or two of experimenting with
information dross, consumers will begin to migrate to paid sites, particu-
larly when providers become more creative about their charging systems.
La Presse, a popular newspaper in Quebec, has made a bold investment in
online news and commentary, hiring dozens of journalists at a time that
others are laying off, and gambling the company’s future that French
Canadian readers will pay for prime content. Efforts by major newspapers
Digital Futures 211
and magazines, led by such high-quality publications as the Economist

and the New York Times, will test, improve, and eventually create the
global market for the best content. Institutional libraries, eager to provide
their customers with top content but aware of the steady migration to e-
reading, will be the major financiers of this enterprise, although philan-
thropists and individual consumers will likewise also support the effort.
In the end, it will all come down to usage. If the destruction of reading
for pleasure associated with the Internet and video games continues, the
growth potential for high-quality content will dissipate as well.
Digital Analysis
Data-rich environments allow for a dramatic expansion in analytical

capabilities, particularly when the data is matched with mass-compu-
tational power. That the average mobile phone or tablet has as much
storage and processing power as a small university’s mainframe computer
two or three decades ago is well known. The implications of mobile
and desktop capabilities that are a million times (or more) greater than
what is currently available have only begun to be explored. The financial
sector is on top of this development, using masses of data to forecast and
anticipate market trends. Major political parties have gone far beyond
public opinion polls to delve deep into the collective consciousness of
a nation or region. As social scientists turn, just as they initially did
for the stock market and banking industries, to instantaneous analysis
for commercial, political, and social purposes, the ability to tap into the
zeitgeist of a nation will increase dramatically.
There are worrying sides to such developments, for the potential to
manipulate populations—consumers, voters, students, and so on—is as
dramatic and obvious as the capacity to inform and elucidate. The role
of public commentators will change dramatically when vast quantities
of information and sophisticated computer-based analysis are freely
available without intermediaries. Journalism will shift significantly from
interview-founded approaches to data-mining activities, likely producing
a greater number of provocative stories than has been the norm in recent
years. Computers, put simply, are better scandal-ferrets than even the
most dogged journalist, and the kind of relational research (connecting
one set of data to another) that this facilitates will produce many difficult
questions for politicians and public figures to answer.
Technology that can work in the public interest can also work against
it. Though there is considerable obsession about privacy questions—
even as hundreds of millions of people unwittingly allow the use of
their data by commercial interests—much less attention is paid to the
ability of outside organizations to track personal habits and actions.
Reality mining, for example, was used by proponents of the yes vote in
the September 2014 referendum on Scottish independence to identify,
via sophisticated analysis of the social-media activities of hundreds
of thousands of potential voters, individual habits and tendencies that
might be of interest to the proponents. Companies do much the same
with information about preferences for restaurants, movies, music,
clothing, vacations, and many other things, using push technologies to
meet consumers precisely where they are in terms of personal choices.
Popular culture is captivated by the spine-chilling potential of a digitally
controlled reality. The movie Enemy of the State foretells a future—not so
distant—in which regular surveillance of all citizens is possible. The deep-
data television drama Person of Interest reveals how the accumulation
of personal information can provide observers with the opportunity to
explore all aspects of an individual’s life. The British dramatic series The
Last Enemy describes the total isolation of an individual through state
control of their personal information, presenting a portrait of digital
isolation that is surprisingly terrifying in its implications.
In addition, analysis will shift from written reports to data visualization

in many instances. The classic contemporary example is the discussion
of climate change and its impact on the Arctic ice cap. Thousands
of pages of scholarly analysis were easily trumped by a time-series
representation of the changes in Arctic ice coverage over the past twenty
Digital Futures 213
years. Similarly, the visual representations of the Tohoku earthquake and

tsunami, particularly those based on satellite imagery, were breathtaking
and conveyed the power and speed of the disasters far better than all the
millions of words written about them could.
It is possible to anticipate a world in which tables, maps, and dynamic

figures (showing movement or change over time) become commonplace
and the written text takes a back seat in terms of public debate and
enlightenment. At present, the shift to data-rich commentary and analysis
has focused on economic or statistical and environmental information.
As companies and governments become better at collecting, sharing,
and analyzing more social and cultural information, it is fair to assume
that journalism in these areas will likewise shift to more visual and data-
based analysis. Imagine, for example, a situation in which a national
government increases the tax on tobacco products in an attempt to curb
smoking. The major question is the efficiency and sustainability of the
tax-induced restrictions. Real-time visual representations, available free
online, could provide instant tracking of shifts in smoking habits and
prove—or disprove—the utility of the tax-based regulation of personal
habits.
The analytical technology for some of this work already exists. The
social statistics platform NVivo allows the almost instantaneous analysis
of social-media activity. A national leader appeals to the nation for action
on a particularly social, cultural, or economic issue. As is now the norm,
people turn quickly to e-mail, Facebook, Twitter, and other sites to post
their thoughts. NVivo-type analytics can not only assess the frequency of
public engagement on the issue being discussed—and in the new world,
this data would be instantly displayed online—it can actually evaluate
the words, tone, and content of the personal interventions. Of course, the
availability of such systems would likely increase public engagement,
for people could see where their views fit with those of fellow citizens,
thereby improving the utility of the data. By the end of the speech—
indeed, actually during the speech—the nation could see a real-time
visualization of the collective response, providing instant reactions to

the political leadership and to the country at large.
Other Digital Sectors
This section barely scratches the surface of the possible economic and
service transformations associated with mass digitization and expanded
Internet service. Gaming continues to evolve and, as noted earlier,
gamification is rapidly spreading to other sectors, particularly in the
areas of training and upgrading. Remote digital manipulation, already
developed for surgery, has the potential to create entire new business
lines from the unsavory (prostitution) to the practical (highly technical
computer repair). The entire entertainment industry, already shaken to
its foundations by digital services, will continue to evolve in various
digital formats. Education is in the early stage of experimentation and
implementation, protected from major shifts by conservative teachers
and university professors. It is possible that significant changes will come
in non-Western, statist countries that are not strongly influenced by
unions or professional associations. Web innovations hold considerable
promise, as well. The system has advanced a long way from the first
browsers—Mosaic and Netscape—but efforts to reimagine the large-scale
management of information continue. Promising work on the semantic
(or thinking) web, pioneered by Canadian company Primal Fusion, has the
potential to revolutionize how people interact with digital data by having
the computer anticipate the user’s needs and interests. The dark hole in
the digital future is probably in the area of e-services. Although consumers
do a great number of things online—buy tickets for the theater, purchase
airline tickets, plan holidays and make reservations, investigate potential
purchases—the service sector is poised for further growth. Everything
from online education to physician advice, nutritional planning, and tax
reporting is being done partially online, and further expansion is clearly
possible. Equally important, clever entrepreneurs will no doubt come up
with concepts and approaches that have not yet been provided, creating
Digital Futures 215
profit and work in digitally new areas. Collectively, digital applications,

digital content, and digital media have relevance in virtually every sector
of the economy and have the potential to disrupt business, employment,
service, and usage patterns in almost all areas.
Digital Futures
The most exciting and worrisome elements of the digital revolution

consist of those applications, services, and uses of digital media that have
not been conceptualized, shared, or brought to the beta-testing stage.
The world has already seen the impact of digitally controlled robots on
manufacturing processes around the world. Connecting the Internet to
manipulatable devices has transformative potential, most readily seen in
the existing capacity to perform remote surgery. Where does this part of
the digital economy lead? Can people cook meals at home while on the
train from work? Can employees in the developing world take orders and
deliver fast food to consumers in the wealthy parts of the world using
digitally enabled technologies? Can technical training based in colleges
and polytechnic institutions be changed forever by a combination of
video-game technologies, digital immersion chambers, and remotely
controlled and monitored devices? Governments have long believed that
local services—barbers, waiters, tailors, gardeners, and the like—were
protected from digital replacements, but is that really the case? It is easy
to imagine a technology-based hairstylist, even if one is reluctant to put
one’s head at the mercy of a machine wielding a sharp implement. And
as this new world unfolds, where are the jobs, the business opportunities,
and the income that bring personal and national prosperity?
The point, of course, is that none of this is known. Digital futures are
simply not easily defined or readily anticipated. There is, therefore, no
simple strategy, no singular approach that will help a region or a nation
become fully digitally engaged and propel it to international prominence.
A new digital economy beckons, one likely to be marked by much less
physical manufacturing and a greater reliance on services. The world will
likely shift from one in which the purchase of tangible, physical items is
paramount to one which in the exchange of less tangible, digital products
and services is central. These changes can create wealth, particularly
when issues of intellectual property and payment are dealt with properly,
and could produce a very different, less consumption-oriented society that
emphasizes the purchase and sale of creative content more than physical
goods. The global economy could, in an interconnected, cross-cultural
way, focus much more on the sale and marketing of ideas, experiences,
artistic productions, and other forms of intellectual property. Culture
remains a prominent source of division, as enabled by digital technologies
as it is threatened through globalization and Westernization.
It is hard to imagine a world that is not dramatically transformed by

the digital revolution. It seems likely that the major changes in health,
education, government services, policing, security, work, information
sharing, creative work, and many other sectors will be dramatically
transformed. It is easy to make this prediction because all these sectors
and many others are already in transition to a digital reality. Governments
face a crucial task coming to terms with the digital-content revolution
and figuring out how best to adjust national strategies to capitalize on
opportunities, minimize the risks, and respond to significant dislocations.
At present, national governments are moving slowly and unimaginatively,
working largely through digital variations of established policies and
processes, with the result that few nations are thinking collectively about
their digital futures. Time will show whether this strategy has been
successful; the evidence to date is that the absence of policy is potentially
harmful for countries seeking to make sense of the twenty-first century.
Digital Futures 217
Notes
1. “3D Printing with Paper: Print Me the Head of Alfredo Garcia,” Econo-
mist, 10 August 2013, 69.
2. “The Internet of Things: Home, Hacked Home,” 12 July 2014, Economist,
14.
3. Adam Greenfield, Everyware: The Dawning Age of Ubiquitous Computing
(New York: New Riders, 2006); Paul Dourish and Genevieve Bell, Divin-
ing a Digital Future: Mess and Mythology in Ubiquitous Computing (Cam-
bridge, MA: MIT Press, 2014).
4. Phillip Kaye, Ray Laflamme, and Michele Mosca, An Introduction to
Quantum Computing (Toronto: Oxford University Press, 2007).
5. “Computer Hacking: A Byte for a Byte,” Economist, 10 August 2013, 11.
6. “Business and Cyber-Crime: Firewalls and Firefights,” Economist, 10
August 2012, 53.
7. Gwynne Dyer, “Spying Mess Will Change Internet,” New Zealand Herald,
14 August 2013, A29.
8. Ibid.
9. “Reality Grows Ever More Virtual,” Nikkei Weekly, 5 August 2013, 3.
10. Ibid., 3.
11. Ibid.
12. “Can Digital Devices Give Classical Music New Life,” Globe and Mail, 3
September 2013.
Chapter 6
Conclusion and
Policy Recommendations
This volume examines the digital-content sector, a subset (albeit a crucial

one) of the broader socioeconomic transformation that is currently
underway. Governments have struggled to find appropriate policy solu-
tions for the challenges and opportunities presented by the content
sector, in large measure because of the disruptive, slightly anarchistic
and complex forces at play, all of it unfolding at the speed of the Internet.
Governments are generally slow moving at the best of times. In the face
of multidirectional, hard-to-predict, and highly contentious technolog-
ical changes, they tend to be still more reluctant to move quickly and
dramatically, even when that is required.
In their important study The Second Machine Age, Erik Brynjolfsson

and Andrew McAfee offered one of the more systematic commentaries
on the need for government action in the face of digital transformations.
Their work is much more broadly based than The Global Digital Economy
in that it covers the multifaceted aspects of the digital revolution. It is
important to note their policy suggestions, however. They specifically
suggest that governments address the following:1
Teach children well through a commitment to primary and

secondary education, using digital technologies and better
teaching.
Focus on the promotion of start-ups and general entrepreneurship

as the foundation of ongoing innovation.
Emphasize the importance of job creation by promoting better

matches between job seekers and employers as a means of meeting
both personal and economic needs.
Broaden and strength support for scientists and for basic research
generally, including reforming the intellectual property-rights
system and offering prizes for transformative innovations.
Upgrade the digital infrastructure, to ensure long-term competi-

tiveness and widespread access to leading edge technologies.
Open up the country (they are writing primarily about the United
States) to more immigration as a means of meeting talent needs
(at least until the education systems improve);
Reform the tax system to respond to the realities of the digital

economy.
Having charted a short-term priority list for government action—a set

of suggestions that, quite frankly, are both very standard and hardly
dramatic in their approach—Brynjolfsson and McAfee then offered some
longer-term suggestions based largely on what they see as the manner
in which technology will disrupt work and employment:2
Avoid efforts to constrain or limit technological innovation or

application, even in the interests of protecting jobs and companies.
Revisit the basic income system within the country to ensure

that all people, including those unable to find work owing to
technological and work-force changes, have decent lives and can
Conclusion and Policy Recommendations 221
remain active as consumers and can avoid Voltaire’s three great

evils: boredom, vice, and need.
Consider applying the negative income tax to supplement the

income of low-wage workers.
Capitalize on the potential of crowdsourcing and the peer economy

to create economic opportunity.
Support and encourage “wild ideas” through a variety of capital

funds, tax incentives, and other support in order to sustain inno-
vation.
Brynjolfsson and McAffee concluded their study thus: “In the coming
decade, we will have the good fortune to witness a wave of astonishing
technologies unleashed. They will require changes in our economic
institutions and intuitions. By maximizing the flexibility of our systems
and mental models, we will be in the best position to identify and
implement these changes. A willingness to learn from others’ ideas and
to adapt our practices—to have open minds and open systems—will be
the hallmarks of success.”
The digital-content economy, part of this broader digital transfor-

mation, is real, substantial, and diversifying rapidly. Governments are
struggling to respond to both the larger transformations and the more
specific changes associated with the creation of the truly global, fast-
changing digital-content world. As we completed this book, dozens of
digital-content stories were circulating internationally, each one pointing
in ways large and small to the dramatic changes occurring in the digital
sector. For example, North Americans now apparently spend more time
on the Internet than they do watching television—Internet-based services
like Netflix and Hulu continue to expand rapidly. Chinese companies,
supported by their government, are underwriting the expansion of cell-
phone service and wireless Internet into the most poorly served parts of
Africa. Japanese and Korean smartphone makers have announced plans
for devices that would be faster than fiber-optic cabling (220 Mbps),
while Apple and several East Asian companies have brought cheaper
phones to market, broadening the industry’s reach. Internet-enabled
watches, introduced to consumers by large firms such as Sony, Qual-
comm, and Samsung and by start-ups such as Pebble, promise to take
the wearable computer in new directions. These are old hat compared
to the oral sensors currently under development that will move digital
data collection and services into the users’ mouths, and compared to
still-evolving digital homes that will adapt appliances, heating, and other
domestic elements to the homeowners’ personalized patterns. The X-
Prize, which sponsors open competitions for technological solutions to
wicked societal and science challenges, has gone more digital, holding
competitions for new educational software that will allow children to
teach themselves and devices designed to move health-care assessments
from doctors to individuals. Applications for mobile devices go viral
and sell hundreds of thousands of copies; the innovation associated
with tablets and smartphones represents one of the most expansive and
dynamic areas in the global economy. Characters and storylines that
started with video games have morphed into books, movies, and dozens
of ancillary products, including a Monster Hunter village patterned on
the game of the same name in Yamanouchi, Japan. Also in the video-
game sector, sales of Grand Theft Auto 5 reached an astonishing $800
million on the first day of sales—at a time when a blockbuster movie
like Iron Man 3 (now one of the top fifteen grossing movies of all time)
took twenty-two days to reach the $1 billion mark in global ticket sales.
The global emergence of Alibaba, with a wildly successful initial public
offering that speaks to investors’ confidence in both e-commerce and
the Chinese economy, continues the process of pushing digital firms
to the forefront of the global economy. Stories like these are replicated
each and every month as the digital sector continues to expand and as
the content sector races to keep up with technological change and to
encourage the further adaptation of hardware and transmission services
to mesh with the requirements of the digital age.
The examination of major initiatives, best practices, and future

prospects in digital content from around the world makes clear that many
countries have identified the commercial potential of digital media. This
is a fast-moving sector, producing corporate and regional winners and
losers at a stunning pace. Digital-content production has become a crucial
source of employment, corporate growth, and national prosperity. There
is every indication that this will continue and even accelerate in the
coming years. Several countries have integrated digital media and digital
content directly into their programming for national innovation; in many
others, efforts to promote the sector remain largely disconnected from
the broader push for commercial innovation. The examination of the
current state of national innovation and the digital sector reveals some
important trends and transitions, including the following three points.
Digital media, with a small number of national exceptions, has not yet
been fully integrated into national innovation policies. Some countries—
Taiwan, South Korea, Malaysia, Singapore, Japan, and some others—are
very active in the digital-media sector and have a broader perspective
on the potential of digital media.
The scale and intensity of the East Asian investment in digital media,
coupled with the increasingly regional focus of the digital-content
enterprise, has largely escaped Western attention. Singapore has a
fast and effective mechanism for funding digital-media projects and is
particularly eager to support the digital-content field. Major research
centers, incubators, and collaborative initiatives in Taiwan, South Korea,
Malaysia, China, and elsewhere, have no substantial counterparts in
other parts of the world.
Government policy and investment in the digital sector continues to

emphasize digital technologies and manufacturing and, only belatedly, the
commercial potential of digital content. The decision-making structures
and government priorities have not, in most countries, incorporated digital
content into the appropriate funding and government-support programs.
There is a need for the clear articulation of the current strength in terms of
companies formed, employment provided, and general economic returns

of the digital-media sector and much greater appreciation for the long-
term potential of the industry.
The commercial and employment potential of digital media and digital

content is becoming increasingly evident but lacks the centralized indus-
trial associations and political lobbying groups that have been so instru-
mental in securing government funding for other sectors. The coordi-
nating agencies in places like Taiwan, which are largely government
led, have been crucial in moving the sector forward. There are signifi-
cant divides between the technology sector, the commercial or business
group, and the content creators. The long-term economic success of
digital media rests on building connections between the three areas and
finding appropriate institutional voice and organizational structure to
these crucial collaborations.
The digital-content sector, with its emphasis on content creation,

small companies, and popular and youth culture, does not lend itself
readily to the large-scale structures and investment strategies inherent
in most national innovation strategies. Governments generally prefer
major initiatives—the opening of a new factory, the construction of a
highway or subway, or a major investment in infrastructure. In most
democracies, governments are reluctant to choose major scientific and
technological sectors, particularly in emerging areas. Digital-content
production is somewhat anarchistic and ill coordinated. A successful
local cluster has thousands of creative personnel, many small companies,
and a handful of larger enterprises. For every company like Apple,
for example, there are thousands of independent iPhone application
producers. Content ecosystems have long encountered difficulty gaining
government attention; this applies even more to cultural production,
which many governments fail to appreciate as a source of employment
and as a commercial sector.
Major investments in flagship operations in many countries are

signaling the growing national belief that digital content will factor
prominently in twenty-first century economic development. There are

major digital-media facilities like Cyberport in Hong Kong and Digital
Media City in South Korea that signal the emergence of digital content
as a formidable economic force. If one or more of these major initiatives
experience sustained success, expect the model to be replicated in other
countries, most of which are open to a manageable and proven approach
to digital-content promotion.
The speed and nature of digital content—companies rise and fall at

a remarkable pace, and new sectors, technologies, and interests open
quickly—put a high priority on rapid decision making and responsiveness
to emerging commercial opportunities. Most countries have careful and
cautious review processes, often favoring peer assessment over govern-
ment review. These processes, particularly when connected to extremely
high accountability expectations, produce slow decision-making proce-
dures. In the digital sector, ideas and personnel can flow out of a country
quickly, or a competitor may get a product or service to market sooner.
Speed is of the essence, something that is anathema to most governments.
Countries vary in their ability to convert early-stage innovations

into viable companies and to translate creative content into commercial
enterprises. More study is needed on the commercialization outcomes of
academic research and government-funded projects. Canada, for example,
does quite poorly in this regard when compared to Israel and South
Korea. On the digital-content side, the capacity of new products and
services to go viral, or to spread rapidly through informal networks and
without substantial investment in marketing or advertising, can produce
unexpectedly fast responses to new content. This, in turn, can lead to a
need for the rapid transition of digital-content operations from pure start-
ups to sustainable businesses, a transition that is often difficult to manage.
Each country and each region has much to learn from digital-media
developments elsewhere. Europe’s approach, with its emphasis on digi-
tization of cultural heritage and the use of government-collected data, is
quite different from East Asia’s focus on the sector’s economic potential.
No lessons are more important than the realizations that digital-media

and digital-content initiatives emerge from and belong within national
innovation strategies and that other nations, particularly in Asia, are
forging substantial economies around digital innovation and digital-
content. The digital race is on.
Pursuing Digital Progress
In its annual report on the digital economy, the Economist Intelligence

Unit observed that substantial national commitments were required if
countries are to remain competitive in the digital age. The basic elements,
the report concluded, were quite straightforward.
The goalposts are shifting, but the imperatives for countries to

extract the maximum economic and social benefits from the use
of digital technology remain:
Ensure the population has affordable access to the highest quality

fixed and wireless data and voice connections possible.
Establish ICT as a focal point of education, and ensure students

at all levels learn how to use digital technology to their benefit.
Make possible the wide-scale provision of goods and services

online which provide genuine utility to citizens and businesses.
Encourage greater innovation and entrepreneurship, to create the

best chances for ICT-enabled change to filter through the economy.
Ensure that the legal regime avoids placing undue shackles on

the use of technology while also providing adequate protection
to people and organizations from its abuse.3
There is little need, therefore, to restate the widely accepted point that
creating the appropriate digital infrastructure is essential to medium- and
long-term economic success. Similarly, the high priority attached to tech-
nological education and online-service delivery seems straightforward.
Digital infrastructure must be followed by a high priority on techno-

logical education and online-service delivery. Two of the Intelligence
Unit’s five points speak to aspects of the digital-content sector. The
emphasis on providing goods and services online underscores the impor-
tance of digital content as a growth sector; the final point on the legal
regime highlights the fundamental importance of intellectual property
rights in ensuring the content producers receive a fair return on their
work. It is interesting, however, that the unit did not emphasize the
importance of digital-content production and distribution either as key
to the development of the national Internet economy or as a potentially
valuable source of export revenue.
Although policy initiatives that address fundamental infrastructure

and industrial challenges are important, there remains considerable
policy and priority-setting space for digital-media and digital-content
development within the larger ICT policy framework. The recommenda-
tions arising from the review of international competitive environments
focus on encouraging greater coordination of activities (particularly
among universities, colleges, and researchers), identifying areas for
major, internationally competitive investment and creating administra-
tive environments that move at the speed of the digital economy. Other
challenges include connecting more effectively to developments in Asia,
drawing digital-content initiatives into the core of innovation strategies,
establishing a more future-oriented approach to digital-media initiatives,
and using government procurement to support early-stage companies.
To underpin all of this activity, countries have understood the importance
of launching major national digital initiatives in education, government
services, health care, security, and other fields.
Before we turn to specific matters for government attention, it is vital

to point out that other major players in the digital economy—consumers
and corporations—have much to contribute, as well. Any effort to position
a country as a leading digital-media and digital-content nation requires
comprehensive engagement and some major improvements in at least

two critical areas.
The Consumer Environment

Advocates of greater engagement in the digital economy are quick
to emphasize government action as a precondition for success in this
sector. Government has important roles to play in national digital
futures, but the countries experiencing the greatest improvement in
this sector are driven as much by consumer markets as by government
investments. If consumers are quiescent, willing to wait months or longer
for new consumer technologies, uncomplaining as they lag well behind
in the digital-products world, then companies will respond accordingly.
Consumers need to expect more from their service providers and retailers
and need to rely on more than Internet purchases and cross-border
shopping to stay abreast of the latest developments. This is one of the
many reasons why Japan, South Korea, and Taiwan continue to move
ahead with a steady stream of digital innovations and why Canada,
Australia, and the United Kingdom—despite good infrastructure and
high-end training programs—lag behind.
The Commercial Environment

In some countries, the need for greater corporate investment in ICT is
well documented, but the conversation rarely extends into the corporate
aspects of digital-content production. Countries that devote a great deal of
effort to promote manufacturing, industrial, and service-sector business
development generally pay much less attention to business development
in the content sector. There have been constructive developments—
such as Silicon Valley’s unique ecosystem, the emerging French digital-
content environments around Lyon and Paris, the gaming industry in
Vancouver, and South Korea’s extended online-gaming sector—with
limited government engagement in business promotion. Digital content
sits at a unique place in the modern economy, at the point where the
creative intersects with the commercial. In the strictly creative areas
—such as selling music, art, and animation—creative personnel often

struggle with the transition to the marketplace. The same holds for areas
like high-quality content and digital design, where producers operate
in professional, academic, and artistic environments that have weak
historical connections to the marketplace. As the transitions in the modern
economy continue, and with a potential shift toward more Internet service
and content-based commerce, it will become increasingly important that
creative people develop and exercise appropriate commercial abilities.
The weak connection between digital content and commerce in many
parts of the world undermines commercialization efforts. In time, as new
pay-based platforms emerge and as consumers’ familiarity with such
systems improve, substantial expansion should follow. Amazon’s Kindle
platform for self-published books and eBay’s auction and sales sites
have been matched by such Asian megafirms as Rakuten and Alibaba
(the latter raised over $22 billion in a September 2014 initial public
offering), which provide opportunities for consumer-to-consumer sales.
In time, the Internet will bring together creators, consumers, and acute
businesspeople to generate sustained opportunities for tens of thousands
of small entrepreneurs and medium-size service providers, reaching
clients around the world. Government has only a minor role to play in this
space, for the challenge rests with individuals and the local or regional
business environments. There is an urgent need for improvements in
the supporting financial and regulatory specialists (including banks and
credit card providers) and training institutions. The challenge, in sum,
rests as much with the business community and commercial environment
as with government—if not more—requiring much greater understanding
of the digital-content sector than is currently in place in almost all
countries and regions in the world.
Government and the Digital-Content Sector
Governments still have a substantial role to play in the promotion of

the digital-content sector. Indeed, without a recalibration of government
programming and support, real progress will likely be constrained.

Politicians and civil servants have to educate themselves about the
character and imperatives of digital media and have to become much
more conversant with the characteristics of the digital-content sector. At
present, few elected or appointed officials are comfortable with current
developments in the field. The major exceptions—Estonia, Taiwan,
Singapore, and Malaysia—stand far apart from the crowd. Unless there
is a regional or national understanding of and commitment to the sector,
major improvements are unlikely. The first order of business, therefore,
is to convince government officials that digital content is a prominent,
fast-growing economic sector with the potential for job creation, business
development, and the general promotion of prosperity. Much more is
needed in this area; the digital-content industry has not enjoyed a great
deal of success in promoting its sector to civil servants and politicians.
In other words, the preliminary work—selling the digital-content sector
to national governments—has yet to be done. Only when governments
are convinced that digital-content is an area of long-term, sustainable
growth will the next set of policy options be brought into play.
Government Signaling
For countries behind in the digital race, perhaps the most important steps
governments can take involve a fairly small expenditure. Governments
need, as they have done in Japan, France, Taiwan, Singapore, and other
nations, to present themselves as supporters of the digital economy. This
can be done by integrating greater discussion of digital media and digital
content into speeches and policy statements, by using domestically made
technologies, by drawing attention to domestic digital content, and by
promoting digital-friendly investments. Governments need to speak the
language of the digital age and need to lead their countries in exploring,
utilizing, and promoting their own digital media and digital content.
Governments as First Adopters

Governments are major consumers of new technologies and major
producers of content. In both instances, governments are proceeding
slowly. By becoming a first adopter and by accelerating and promoting
the use of digital media, maximizing the use of internally generated
digital content, national authorities can accelerate the pace of adaptation
to the digital age. Governments need to get directly involved in testing
and developing new technologies, working with companies to create
digital products and services and to identify new ways of utilizing digital
content in the everyday business of government. Only governments have
the potential and the ability to raise the profile of digital content as a
viable commercial sector.
Asian Connectivity
Many companies and content providers outside of East Asia have been
slow to capitalize on the rapid development of the Asian digital-media
sectors. Given the rapid growth of the East and South Asian economies,
particularly the increasingly important role of digital media and digital
content in the region, it is vital that companies and content creators be
awakened to the potential that rests in Asian markets. Using existing
organizations, including trade associations, sectoral associations, and
international partners, governments could replicate the efforts being
made in Singapore, Taiwan, and elsewhere to extend commercial and
digital ties with Asia.
Investment Capital for Creative Content

Comparatively small amounts of money are currently available through
governments for creative content. In comparison to key competitive
sectors, in many countries the funds available for content creation or
content commercialization are too meager and the time required to make
decisions on grants is too long. Greater emphasis should be placed on
the commercial potential of creative content. At present, many of the
grants are artist controlled and focus on artistic impact rather than on
commercial potential. Though fostering artist-driven creativity remains

important, the emphasis on job creation and economic development
requires greater attention to the broader economic reach and the job-
creation benefits of digital content.
Competitive Pricing and Service

Laying cable and erecting wireless towers constitute only part of the
digital equation. Price and quality of service are also key. Specific
government and industry measures to ensure global competitiveness
in digital services are essential. It is important that the gap between
domestic service and costs and comparable international environments
be understood. By drawing attention to price and quality differentials,
governments can play a major role generating consumer reactions and
corporate improvements.
Multiculturalism and the Digital Age

The advent of the digital age has changed the dynamics of migration and
multiculturalism. Residents in one country can easily stay connected to
their country of birth through newspapers, radio stations, television, and
other web-based services. E-commerce allows new immigrants to shop
in culture-specific stores if they wish and to move funds readily between
countries. At the same time, as the digital age places greater priority
on linguistic diversity and access to other cultures, the multicultural
nature of a country should create a commercial advantage in the digital
space. Governments should be exploring, in detail, the specific ways in
which the multicultural talent pool can be used to promote and extend a
country’s digital reach. Along the same lines, searching for cultural and
linguistic linkages with other parts of the world has proved important for
some countries. Malaysia has strong Muslim and Chinese connections
and has encouraged digital-content promotion targeting these cultural
groups. Turkey has built on its Islamic culture to create products that
appeal to other Muslim nations. Peak Games, an Istanbul-based firm,
offers regional versions of online games (no pigs or vineyards exist in the
Arabic-language version of Happy Farm) and traditional games online.4
A Flagship Investment in Digital Media

Signature investments in scientific and technological infrastructure draw
attention to a particular sector. Only a few countries have flagship digital-
media centers (e.g., Seoul’s Digital Media City), one that provides a new
model of training, applied research, and commercialization and that offers
content providers an entry point to the global digital economy. Govern-
ments should think strategically about creating a demonstration project.
The inclusive, multipartner nature (engaging businesses, government, the
creative sector, universities, colleges, and the commercial support firms)
of the enterprise is more important than erecting a large building. Coun-
tries need exemplars, whether it is Waterloo’s Communitech collabora-
tive business development organization (Canada), Lyon’s digital-content
ecosystem (France), Singapore’s government-sponsored digital ecosystem,
or Estonia’s e-government sector. Businesses, creative personnel, and
government officials respond well to positive and successful examples.
When they emerge—often through major government support at the
regional or national level—it is vital that the activity be promoted aggres-
sively and that other communities and regions be encouraged to replicate
or adapt the successful model.
Conclusion
Digital media and digital content should be integrated into national

innovation strategies and into government plans for twenty-first-century
job, business, and general economic development. Many countries are
already making such commitments, and the digital economy is growing
apace in these nations, faster outside of North America than inside. The
digital-content economy is a unique, fast-changing, and increasingly
important element of the modern international economy. Commercial
opportunities and threats emerge quickly, in large measure because the
digital-media and digital-content sector sits at the interface of economic

globalization, technological innovation, and—most fickle of all—popular
culture. Content is becoming increasingly important as technological
improvements bring billions of potential consumers within easy reach
of content producers around the world. For a generation, politicians and
government leaders have argued that national innovation holds the key
to regional and national prosperity in the twenty-first century; some
countries have belatedly started to add digital content to their broader
economic planning, even if the effort is overwhelmingly focused on the
technological aspects of digital media.
The growth of digital media and the digital-content economy continues

to surprise observers and to elude many governments. Though many
other sectors of the global economy struggle through difficult transitions,
Internet usage continues to grow dramatically, and equally important,
the production and sharing of content over the Internet continues to
accelerate.
The Global Digital Economy set out to address three main themes: (1)
that national governments have underestimated the economic potential
of the digital-content sector, in large measure because existing policy
frameworks and mindsets are built around the traditional industrial
economy; (2) that there are important regional and cultural patterns in
digital-content policy, government initiatives reflecting the significant
variations in the manner in which the digital economy has developed
in specific countries or regions and the differential abilities of national
governments to see the possibilities in digital content; and (3) that
the fast-changing nature of the digital-content field means that the
need for continued innovation in policy, regulation, and government
investments will continue to grow, requiring greater government and
political understanding of the real nature and potential of the digital-
content economy.
There is little doubt that the response of most national governments

to the challenges and opportunities of the digital-content economy
has been marginal and slow. Politicians and civil servants have not
reacted well to the possibilities of a fast-moving, globally connected,
and lucrative sector, largely because national strategies for business
and economic development are closely aligned with standard industrial
and commercial processes. The general failure to understand the unique
character of digital media, such strength resting in the creative industries,
has hamstrung governments seeking to understand how best to promote
the digital-content sector. The result has been the uneven development
of digital-content policies as varied as the aggressive strategies of East
Asian countries and Estonia; the largely hands-off approach of the United
States, Canada, and much of Western Europe; and the early-stage, catch-
up developments occurring in South Asia and Africa.
The primary argument in The Global Digital Economy is that national

and regional standard economic development strategies are not well
suited to the imperatives of the digital-content economy. The nature
of the industry is such that typical policies and procedures, ranging
from training programs and business development loans to intellectual
property protection, do not work particularly well in the digital-content
sector. It turns out, hardly surprisingly, that the “new economy” requires
different approaches than other commercial or business sectors do. The
digital-content sector supports thousands of companies and tens of
thousands of jobs globally. Growth is expected to accelerate well into the
future. Governments must take accelerated steps to understand the global
digital-content economy and learn how to adapt their policies, programs,
funding, and investments to better suit the imperatives of the digital-
media sector. With a fairly small number of exceptions, governments
have struggled to figure out the standards and requirements of the digital-
content industry and to develop policies that will bring this important
sector into the economic and policy-making mainstream of national and
global economies.
Forty years ago, even the most creative futurologists failed to forecast
the development of the Internet, let alone social media, file sharing, e-
commerce, electronic banking, online gaming, telephone over Internet

protocol, mobile Internet, and the thousands of other creative and
important businesses that have emerged since then. It is likely that the
pace of change and commercial innovation will continue and more likely
that it will accelerate in the years to come. Entire new fields of business
and service have emerged in recent years, many of them producing a
great deal of money for employees, innovators, entrepreneurs, investors,
and (indirectly) governments. As the world shifts significantly from
economies based on traditional products and services to one based on
digital items and services, the digital-content field will emerge as an ever
larger, ever more prominent part of the economy. Nations and regions
that capitalize on the promising and now proven development of the
digital-content sector stand to benefit from the long-term economic
growth, expanded job opportunities, and general prosperity associated
with an economic sector that remains in an early stage of development.
There is a contrary view presented by observers who are more skeptical

about the long-term economic impact of digital technologies and digital
content. The starting point is simple: many of the things human being
need to survive are physical (food, clothing, shelter, and so on). Though
new technologies might generate shifts in purchasing and delivery—from
an e-company rather than a local store—the reality is that the core of
the economy will continue to be defined by the production, distribution,
and sale of physical products. Further, the argument continues that the
current displacement in Western industrial economies owes more to
the supremacy of Chinese manufacturing than to digital innovations.
Digital developments might displace accountants, civil servants, and
even television producers, but they cannot fully or even substantially
replace the production of tangible, nondigital products and services. This
is a valuable perspective and worth keeping in mind when digital hype
takes over business or government discussions.
There is considerable tension between the digital skeptic’s perspective

and the vision of digital transformation presented in books like The Second
Machine Age. Indeed, the authors of that important work have argued that
digital technologies are displacing human beings in substantial segments
of the economy, allowing production to increase despite a decline in the
work force. Erik Brynjolfsson and Andrew McAfee are clearly worried
that the industrial world is rapidly moving toward a bifurcated work force:
a small group of high skilled elite professionals and a large underclass of
service workers on either side of a much reduced middle class as lawyers,
accountants, and managers are replaced by digital technologies. This,
they argue, is a recipe for civil unrest and social chaos.
One of the problems with determining the scale, scope, and sustain-
ability of the digital-content economy is that this is a sector without major
factories, with considerable fluidity, with fast and often overwhelming
financial returns from a small innovation, and with rare concentrations
of personnel, companies, and sectors. The main digital work—anima-
tion, digital art, e-commerce, e-health, and the like—does not generally
assemble in a single place but rather is spread widely across a country or
the world. Companies and their workers come and go with considerable
rapidity, in sharp contrast to the multigenerational factory operations
that long shaped the economies of the leading nations and that are still
crucial to the prosperity of most countries. At the same time, the business
and creative world have just begun to explore the commercial potential
of the digital economy. The highest returns now come from advertising,
as Google and Facebook have discovered (using big data to deliver preci-
sion-selected advertisements to individual users) rather than from digital
content. This will likely change, paralleling the current and continuing
shift in spending from movies to video games and from cable television to
Internet services. There is a digital economy, and it will grow. The scale
and precise nature of the new digital environment remain to be seen.
At present, and perhaps reflecting the uncertainty about the future of

the sector, national governments, their innovation policies, and general
economic development strategies are not well suited to the digital age and
are even less suited to the imperatives of the digital-content sector. As
has been the case with other industries and economic sectors, significant
opportunities await the country that mobilizes its consumers, businesses,
policy makers, and leaders behind a national digital-content strategy.
Where digital content truly stands apart, largely because of the power
of the Internet, is the low cost of commercial entry, the absence of
geographical advantages or disadvantages, the size and diversity of
global markets, and the speed of business development. Put simply,
there is no sector quite like digital content and digital media. It follows
logically, therefore, that national governments wishing to build twenty-
first-century economies need to develop innovative policies that connect
national strengths to promote and expand the digital-media sector with
global opportunities and technological transformations. The world is
now truly digital. It is not yet clear which countries will build strong and
competitive economies based on the development of digital content for
delivery via the broadband Internet networks that now span the globe.
Notes
1. Brynjolfsson and McAffee, The Second Machine Age, chapter 13, “Policy
Recommendations.”
2. Ibid., chapter 14, “Long-Term Recommendations.”
3. Economist Intelligence Unit, Digital Economy Rankings 2010: Beyond e-
readiness, 2 July 2010.
4. “Turkey’s Tech Businesses: Boom on the Bosporus,” Economist, 22
December 2012, 103.
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Index
Abe, Shinzo, 166 Australia (continued), 138–139, 151,

Activision Blizzard, 70 171, 183, 228
advertising, 10, 25, 39–40, 76–78, Austria, 20, 183
84, 91, 93, 130, 136, 178, 201, 209,
225, 237 Baidu, 27–28, 65, 182, 185
Afghanistan, 24, 103 Bangladesh, 24
Africa, 8–9, 11, 22–25, 28, 33, BBC World Service, 20–21
37–38, 75, 98, 125, 175–178, 181, Beijing Digital Entertainment
183, 186–187, 190, 221, 235 Industry Model Base, 168
Airbnb, 88 Belgium, 183
Akihabara, Japan, 192 Benin, 24
Algeria, 183 Bezos, Jeff, 99
Alibaba, 8, 10, 27, 41, 99–100, 105, Billion Wicked Thoughts: What the
121, 222, 229 Internet Tells Us about Sexual
Amazon, 20, 25, 28–33, 35, 41, 77, Relationships, A. See also Ogas,
91–92, 99, 105, 173–175, 185, 229 Ogi
Ambrosia, 68 Biodiversity Heritage Library, 160
animation, 6, 21, 66–67, 69, 106, Bitcoin, 86–88, 119
130, 132, 165, 168–172, 181, 189, BitTorrent, 43
229, 237 Blackberry, 17, 41, 73–74, 85, 104,
Angry Birds, 41, 72, 122, 183 121, 193, 199, 209
app downloads and usage by Black Code: Inside the Battle for
country, 58 Cyberspace. See also Deibert,
Apple, 2–3, 33, 35, 37, 73–75, 77–78, Robert J.
117, 121, 129–130, 164–165, blogging, 19, 30, 49–50, 57, 77, 118,
173–175, 207, 222, 224 200, 210
Arab Spring, 4, 21, 176, 179 Boston Marathon bombings, 33
Argentina, 37, 135, 183 Brazil, 8, 26, 29, 36, 38, 60, 98, 135,
Asian connectivity, 231 139, 150, 183, 207
Asia Pacific Broadcasting, 171 broadband prices versus speed, 48
Asia-Pacific, 171 Brynjolfsson, Erik, 4–5, 16, 148,
Assange, Julian, 12 219–221, 237, 239
Atari, 67 Bungie, 70
Australasia, 179 Burundi, 25
Australia, 20, 34, 37, 134–135, Buscapé Company, 26
business-to-business e-commerce, Commodore, 67

1–4, 7, 12, 15, 18, 21, 25, 34, competitive pricing and service,
36, 42, 44, 64–65, 75, 77, 79, 90, 232
93, 98–101, 104–106, 123–125, Congo, 25
128, 130, 132, 134, 136–137, 139, Connected Games Program, the,
141–142, 149, 153–154, 157, 159, 172
162–165, 168–169, 171–172, 178, consumer environment, the, 228
182, 185, 192–193, 196, 198, 200, consumer-to-consumer e-
202–203, 214–215, 224, 228–231, commerce, 100
233–238 Content Industry Development
business-to-consumer e-commerce, Fund, 169
100 content revolution, major
initiatives in the, 153
California, 9, 124 Cool Japan, 166, 172
Call of Duty, 69 Coursera, 94, 210
Cambodia, 19 Craigslist, 91, 100
Canada, 9–10, 20, 35–38, 44, 66–67, crime, 20, 83, 99, 102, 193, 204–205,
73, 84, 89, 92, 98, 122, 124, 217
148–149, 173–175, 183, 189–190, Croatia, 19
207, 209–210, 214, 225, 228, 233, crowdsourcing, 21, 41, 78, 90, 130,
235 177, 202, 221
Canadian Television and Radio CrowdStrike, 205
Commission, the, 174 cultural content, 89–90, 180
CBS Interactive, 25 currency, 73, 85–88
CCP Games, 72 Cyberjaya, Malaysia, 169–171
cell-phone books, 74 Cyberport, 105, 166–167, 225
Central African Republic, 25 Cyworld, 93
Chad, 25
chat and voice apps, 85 Dae-jung, Kim, 71
Chile, 37, 183 Dailymotion, 25
China, 1, 3–4, 7–8, 10–11, 18, Dalian High-Tech Industrial Zone
20–23, 27–28, 31, 36, 38, 40–41, Animation Park, 168
44, 65, 67, 71, 74, 79–80, 93, 100, data mining, 204
117, 122, 124–125, 134, 164–165, day trading, 85–86
167–169, 172–173, 181, 184–185, high-frequency trading, 64, 85–86
189, 192, 194, 197, 203, 221–223, Deibert, Robert J., 102, 119
232, 236 Democratic Republic of the Congo,
Christie Digital, 70 25
Clash of Clans, 72 Demiforce, 68
commercial environment, the, DeNA, 68
228–229 Denmark, 8, 95–96, 119, 135
Index 279
Destiny, 70 digital progress, pursuing, 226–228

Digidel, 161–162, 188–189 digital relationships, 88–89
digital advertising, 76–78, 130 digital revolution, the second wave
Digital Agenda for Europe (DAE), of the, 17
71, 134–135, 141, 156–158, digital sectors, other, 214–215
162–163, 188 digital security, 102–104
digital analysis, 211–214 digital social economy, 90
digital content economy, the digital speed and storage, 194–196
contours of the, 63 Digital Strategy 2.0, 135, 150–151
digital content in Asia, 164–173 digital travel industry, 90
digital content in Europe, 154–156 digital volatility, 104–105
digital content in North America, Digiworkz Regional Broadcast
173–175 Training Center, 171
digital content, promoting, Disney Asia, 171
141–147, 163 DoCoMo, 73, 165
digital context, the, 105–116 dot-com, 1–3, 5, 9, 63, 121, 173, 175,
digital currency, 86–88 191
digital data depth, 200–201 Dotcom, Kim, 12, 45
digital education and massive open download speeds, 134, 165, 192,
online courses, 94–95 194–195
digital futures, 191, 215–216, 228 Drudge Report, 174, 210
Digital Germany 2015, 133, 136, 150 Dunedin, New Zealand, 136
digital health monitoring, 203–204 Dyer, Gwynne, 206, 217
digital Israel, 180–181
Digital Japan Creation Project, 166, East Asia, 10, 14–15, 22, 33, 41, 66,
169 75, 79, 92, 117, 119, 134–135,
Digital Marketplace, the, 130, 172, 148, 150, 164, 172, 181, 184–185,
185 190, 194, 225, 231
digital media, flagship investment Eastern Europe, 33, 82, 179
in, 233 e-banking, 176
digital media in the developing eBay, 30, 32, 41, 99–100, 173–174,
world, 175–180 229
digital music, 19, 78–80, 132 e-book, 74, 78, 91–92
digital overview, 181–187 e-commerce, 6, 10, 14, 34–35, 38,
digital photography, 80–81 41, 78, 90, 99–101, 103, 122, 173,
digital plans and agendas, 133–141 192, 222, 232, 235, 237
digital platforms, 65–66, 177, 183 Economist’s Digital Economy
digital policing and security, Ranking, 34
204–207 e-government data, 96–97
digital politics, 4, 98–99 e-government services, 95–96, 158
digital pornography, 81–82, 84 Egypt, 23, 36, 183
eHarmony, 89 Facebook, 8, 10, 26–32, 35–36, 40,

e-health, 6, 97, 122, 131, 133, 135, 61, 65, 71, 76, 79–80, 85, 93, 98,
155, 237 105, 117, 121–122, 129, 131, 153,
e-information, 91 173, 175, 181–182, 184–185, 213,
E-Learning and Digital Archives 237
Program, 169 Family Tracker, 209
Electronic Entertainment Expo, 70 fiber connections in total
Endgame, 205 broadband subscriptions,
End of Big: How the Internet Makes percentage of, 147
David the New Goliath, The. See Fierce Domain: Conflict in
also Mele, Nicco Cyberspace, A. See also Healey,
End of Power: From Boardrooms Jason
to Battlefields and Churches to Fifty Shades of Grey, 78
States; Why Being in charge isn’t Filippetti, Aurelie, 6
what it used to be, The. See also financial crisis, 1, 71, 85, 129
Naim, Moises Find My Friends, 209
End of Work, The. See also Rifkin, Find My Kids ~ Footprints –, 209
Finland, 35, 41, 72–73, 122, 135, 139,
Jeremy
151, 161–162, 189, 206
enhancing e-skills, 158
Flickr, 33, 80
Erdoğan, Recep Tayyip, 98
France, 10, 20, 68–69, 126, 135, 150,
Estonia, 6, 8, 10, 95–96, 122, 139,
183, 230, 233
163, 189, 230, 233, 235
freemium apps, 109
eTrade, 86
EU Film Gateway, 160 gambling, 83–86, 106, 118, 123, 173,
Europe, 1, 3, 14, 21–23, 33, 36–38, 210
46, 66, 82, 117, 122, 124–125, Gameloft, 68
134, 136, 154–161, 163–164, 166, Gates, Bill, 2
173, 179, 185, 188, 194, 200, 225, Germany, 20, 23, 26, 30, 69, 79–80,
235 116, 126, 133–134, 136–138, 150,
European Commission, 154–156, 182–183, 188, 196, 206
158–160, 188 Giosis Group, 26
European E-Learning Action Plan, global economy, 1, 12, 41, 47, 216,
The, 155 222, 234
European Union (EU), 8, 10, 46, Global Digital Media Trendbook, 61
97, 117, 134–135, 154, 156–160, Globo, 26, 29
162–163, 188 glocalization, 184
Europeana, 159–160, 188 Goodreads.com, 78, 92
Eve Online, 72–73 Google, 10, 26–32, 35, 40, 44, 65,
Expedia.com, 90 73–76, 85, 92, 105, 121, 129, 131,
Index 281
Google (continued), 153, 173, 175, ICT for social challenges, 158–164
178, 182, 185, 201, 237 ICT policies for the economic
Google Chrome, 104 recovery, top, 59
Google Glass, 17, 208–209 Ilves, Toomas Hendrik, 6
Project Loon, 192 in-app purchases, 38, 110
Gore, Al, 5 in-app revenue by country, 109
government and the digital-content Index Mundi, 125, 148
sector, 229–230 India, 3, 8, 19, 21, 24, 30, 36, 38, 67,
government and the realities of the 84, 124–125, 135, 183, 201–203,
new economy, 1 207
governments as first adopters, 231 Indonesia, 18, 26, 36, 183
government e-procurement, 101 Industry Canada, 174
government, national innovation Infocomm Development Authority,
strategies, and the emergence of 172, 190
the digital-content sector, 121 information and communications
government signaling, 230 technology (ICT), 1, 21, 35,
46, 59, 126–127, 133, 136–138,
GPS Tracking Pro, 209
140–141, 148, 150–151, 154,
Grand Theft Auto, 69, 222
156–158, 161, 188–189, 226–228
Greece, 72, 183
infrastructure (digital), 6, 11, 19,
Guðmundsson, Eyjólfur, 72–73
21–22, 34–35, 37, 45–46, 121,
Gulf News, 28
127, 132–133, 135–136, 139, 142,
GungHo, 68, 117 153–156, 162, 164, 167–169, 176,
Gusovsky, Dina, 16 220, 224, 226–228, 233
ING, 18
Half Life, 72 Instagram, 10, 29, 35, 80, 85
Healey, Jason, 102, 119 Institute for information industry,
Helsinki, 72, 151 165
Hen, Ng Eng, 171, 190 Interactive Digital Media Center,
Hewlett Packard, 9 167
High School Musical, 81 internet countries in Africa, top
high-quality digital content, ten, 187
210–211 internet in Africa, the, 186
hologram, 195 internet nations, the top twenty-
Hong Kong, 79, 105, 126, 134, five: leading, 53
165–167, 169, 225 Internet of Things, 38
Hudgens, Vanessa, 81 internet pornography, statistics on,
Hulu, 44, 174, 221 82
internet users around the world, 49,
IBM, 177 51
Iceland, 22, 73 internet users by language, 49
internet users by region, 50 Laos, 25

internet users, distribution of, 23, Latin America, 23, 26, 37, 66, 98
47 Lazada, 25
internet, very fast, 157 Lazaridis, Mike, 199
interoperability and standards, 157 Limkokwing University of Creative
investment capital for creative Technology, 169, 171
content, 231–232 LinkedIn, 26–33
iPad, 17, 91, 130 Liquid Telecom, 175
iPhone, 10, 73–74, 130, 224 List, Friedrich, 113, 126
Iran, 7, 23 Luxembourg, 22, 188
Israel, 124, 180–181, 190, 225 Lyon, 10, 228, 233
Israeli Center for Digital Art, 180
Italy, 69, 126, 183 M-Pesa, 38, 176
iTunes, 17, 20, 25, 43, 45, 73, 78, 174 machine-to-machine transactions,
iTunes singles in Taiwan, top 101–102
twenty, 115 Malaysia, 25, 165, 183, 191, 223, 230,
232
Japan, 3, 5, 8–9, 20, 22–23, 31–32, Malaysian Animation Creative
35, 37–38, 41–43, 60, 65–71, Content Center (MaC3), 170
73–75, 79–80, 87–89, 92–93, Multimedia Super Corridor, 169
97, 99, 105, 113–114, 118, 122, manga, 66, 74
126, 133–135, 149, 164–166, Manwin, 82
169, 172–173, 181–182, 185, MMOGs, market share for, 108
189, 191–192, 196, 201, 207–208, massive open online courses
221–223, 228, 230 (MOOCs), 94–95
JDS Uniphase, 129, 173 Maruzen of Japan, 74
Jobs, Steve, 2, 73 McAffee, Andrew, 4–5, 16, 221, 239
journalism, 4, 92, 206, 210–213 Media Development Authority,
Justice League Unlimited, 67 169, 189
Media Development Agency, 171
Kalahari Desert, 192 Mele, Nicco, 4, 16
ketai shosetsu (cell-phone novels), Mexico, 8, 31, 36, 135, 183
74 Microsoft, 2, 10, 32–33, 68, 104–105,
Kenya, 4, 38, 75, 176, 178 131, 173, 175, 177–178, 182–183,
Kickstarter, 90, 207 190, 193, 208
Kijiji, 91, 100 Kinect, 69
Kinect, 69 Middle East, 4, 21, 23–24, 28, 33,
Kiribati, 25 36, 98–99, 103, 125, 169, 176,
KLab Inc., 68 178–179, 181, 184
Mixi, 93
languages and the internet, 23, 184 Mobage Town, 93
Index 283
Mobile Age, 68 national innovation (continued)

mobile-game spending, 111 strategies and the emergence of
mobile gaming, features of, 112 digital content, 129–133
mobile internet services market, national policies, 141
worldwide, 51 Naver, 28, 65
mobile media digital content, 73–76 Netflix, 20, 39, 43–44, 130, 174, 221
mobile movement, 113 new economy, the, 1, 3, 5, 78, 125,
mobile-phone subscriptions around 129, 164
the world, 50 New Zealand, 12, 19, 135, 139,
mobile share of noncomputer 150–151, 217
device traffic, 55 Ngee Ann Polytechnic, 171
mobile share of web traffic Nielsen Company, 36, 60–61
worldwide, 57 Nigeria, 19, 23, 32, 75
mobile web-share traffic, countries Nintendo
with the highest rates of, 56 Famicom, 68, 117
Monaco, 83 Wii, 68–69, 117
Mori, Yoshirō, 5 Nippon Telegraph and Telephone,
165
Motorola, 104
Nokia, 73, 104
mPedigree, 177
noncomputer traffic share by
MSN.com, 28, 31–32
devices, 57
Mt. Gox, 87–88
Nortel, 129, 173
multiculturalism and the digital
North America, 3–4, 11, 14, 20–23,
age, 232–233 33, 36, 66, 129, 173–174, 181, 233
Multimedia Development northern Europe, 3
Corporation, 169, 189 North Korea, 72
Multimedia University (MMU), Nvivo, 213
169–171
Multiply, 26 Obama, Barack, 77, 129
Myanmar, 7, 25 Ogas, Ogi, 81–82
Myspace, 33, 65, 80, 93, 104 Online Advertising JSC, 24h, 25
online gambling, 83–85, 118, 123
Naim, Moises, 4, 16 Open Data Strategy, 160–161
Nairobi, 177–178 Open Text, 66, 121, 131
Napster, 43, 78 Organisation for Economic Co-
National Animation Industry Park, operation and Development
168 (OECD), 45, 48, 59–60, 136, 144,
national innovation, 14, 107, 121, 147, 149–150, 162
142, 168, 223–224, 226, 233–234 Orkut, 26, 65, 182, 185
national innovation systems,
123–129, 148–149 Pacific, 4, 25, 60, 171, 197
Pakistan, 25, 179 Resident Evil, 69

Palm, 104 Rifkin, Jeremy, 201–202
Papua New Guinea, 25 Rodriguez, Juan Carlos, 44
Pebble, 207, 222 Romania, 183
peer-to-peer networks, 20, 38, Rousseff, Dilma, 98
42–43, 64, 78, 86–88 Rovio Entertainment, 72, 183
Peking University, 74, 168, 189 royal baby, 34
Peru, 135, 183 Russia, 7–8, 16, 29, 38, 69, 75–76,
Pew Research Center, 52 98, 179, 183
Philippines, 18, 25–26, 34, 36, 183
Pinterest, 32–33 Samsung, 73, 91, 117, 130, 222
piracy, 12, 37, 42–45, 61, 166, 174, SAP, 121, 131
195 Saudi Arabia, 32, 36, 183
Pirate Bay, 10, 12, 20, 43, 45 Scandinavia, 22, 96
Pokémon, 68 Schmidt, Eric, 178
Polar Mobile, 74 Second Life, 73, 86
Poland, 183 Second Machine Age: Work, Progress
policing, 7, 103, 204, 216 and Prosperity in a Time of
policy recommendations, 219, 239
Brilliant Technologies, The. See
Popcap Games, 68
also Brynjolfsson, Erik, see also
Pope Francis, 33, 98
McAffee, Andrew
Portugal, 46, 76, 183
Seoul, 10, 118, 134, 166, 233
Primal Fusion, 214
Shanghai, 10, 19, 134, 168
procurement, 101, 227
public sector information, 160, 188 Shanghai Zhangjiang Creative
Putin, Vladimir, 7 Industry Base, 168
Putin Wants to Control Russia Web Shoutcast.com, 20
Access. See under Gusovsky, Silicon Valley, 9–10, 124, 228
Dina Simpsons, 67
Singapore, 9–10, 26, 36, 43, 79, 89,
quantum computing, 12, 47, 194, 122, 126, 164–165, 167, 189–191,
199–200, 217 223, 230–231, 233
Questrade, 86 Media Development Agency
(MDA), 171–172
Rakuten, 8, 10, 26, 41, 99, 105, 229 singles, digital market for, 78–79
Ratemydoctor.com, 42 singles in Japan, best-selling, 114
Ratemyprofessor.com, 41 singles in Germany, best-selling,
RBC Direct Investing, 86 116
research and innovation, 157 Skype, 8, 85, 121, 129, 153, 182
Research in Motion, 121, 165, 173, smartphone, 10, 17, 40, 52, 68, 73,
199, 209 117, 119, 160, 178–179, 193, 197,
Index 285
smartphone (continued), 208, 221 Sweden, 12, 20, 37, 135, 138–140,
Smith, Adam, 126 151, 161, 183, 188
Snapchat, 10, 85
Snowden, Edward, 12, 44, 61, 206 Taipei, 10
social media, 16, 25, 33, 38–39, 77, Taiwan, 9–10, 22, 35, 79, 93, 115,
79, 93, 98, 130, 179, 200, 235 122, 126, 134–135, 141, 164–165,
social networking, 28–33, 61, 93 168–169, 181, 183, 191, 194,
Softbank, 8, 10 223–224, 228, 230–231
Solomon Islands, 25 Tallinn, 10, 189
Son, Masayoshi, 10 Taobao, 27–28, 100, 119
Sony, 78, 222 taxation, 84, 88, 95, 127–128, 133,
Kobo, 41, 91 142, 161, 163, 168, 202, 213–214,
PlayStation, 68–70 220–221
SmartWatch, 17 Team Fortress 2, 72
South Africa, 8, 183 telehealth, 97, 140
South America, 11, 179, 184 Temasek Polytechnic, 167
South Asia, 4, 11, 21, 75, 179, 235 terrorism, 102, 204
Southeast Asia, 22, 25–26, 60, 80, Thailand, 25–26, 36, 67, 124, 183,
82, 125
192, 201
Southern Europe, 1, 125
3-D, 11, 70, 167, 182, 195–196, 202
South Korea, 9–10, 21–22, 28, 43,
3-D printer, 197–198
71, 73, 76, 85, 105, 119, 122, 126,
Tinder, 89
134–135, 164–166, 172, 181, 191,
Toffler, Alvin, 5
223, 225, 228
Spotify, 43, 45 Tohoku earthquake and tsunami,
streaming, 14, 42, 60, 109 213
Sub-Saharan Africa, 176–177 TouchPress, 210
subscription, 39, 43, 50, 71, 76, 83, Toy Story, 67
144, 147, 200, 203, 210 trading, 64, 85–86
fixed internet subscriptions, Tripadvisor.com, 41, 77, 90
country rankings by number trust and security, 157
of, 143 Trusted Digital Cinema Hub, the,
fixed internet subscriptions, 172
country rankings by Tumblr, 26, 29, 31–33
percentage of, 145 Turkey, 98, 124, 183, 232, 239
mobile subscriptions, country Turkmenistan, 25
rankings by, 146 Twitter, 6, 26, 28–33, 60, 79, 93, 98,
Stanford, 9 213
Super Bowl, 33
Supercell, 72 U-City, 166
Super Mario Bros., 68, 86 Über, 88
ubiquitous computing: the internet Walmart, 99, 101

of things, 198–199 Walt Disney Studios, 67
Ubisoft, 69 Waterloo, 10, 66, 105, 148, 199, 233
Uganda, 75 wearable computers, 207–210
Ukraine, 183 Weibo, 27, 40, 61, 93
unemployment, 1, 71, 125, 148, 202 Weiner, Anthony, 81
United Arab Emirates, 4, 21, 24, 28, Wellington, New Zealand, 136, 150
36, 176, 178–179, 181 Whalley, John, 86
United Kingdom, 31–32, 35, 69, 84, WikiLeaks, 12, 43, 207
126, 162, 171, 183, 228 Wikipedia, 28–32, 113, 131, 183
United States, 1, 8, 11, 20–21, 26, Wild West, the, 11, 75
31–32, 35–38, 64, 67–69, 73, 82, wireless broadband subscriptions,
84, 87, 92, 122, 126, 135, 171, by country, 144
173–175, 181, 183, 206, 209–210, Wordpress.com, 29, 33
220, 235 World Cup, 34
UOL Shopping, 26 World Economic Forum, 53–54
Urbanspoon, 41, 91 World of Warcraft, 69
US device ownership over time, 52 work, the digital destruction of,
Ushahidi, 177 201–203
Valve, 72 Xbox, 68, 209

Venezuela, 183
Verizon, 174 Yahoo, 10, 28–33, 41, 61, 93
Vevo, 25–26 Yemen, 25
Viacom Digital, 25 YouTube, 8, 20, 25–32, 65, 79, 121,
video games, 14, 18, 20, 67–72, 129, 131, 153, 173, 182–183, 185
117–118, 131–132, 165, 173, 202,
211, 222, 237 Zing MP3, 25
Vietnam, 25–26, 36, 183
Vivendi, 69

Carin Holroyd, Ken S. Coates - The Global Digital Economy - A Comparative Policy Analysis (2015, Cambria Press)

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The Global

Carin Holroyd and Ken Coates

All rights reserved

No part of this publication may be reproduced, stored in or introduced

Requests for permission should be directed to:

This book has been registered with the Library of Congress.

Includes bibliographical references and index.

ISBN 978-1-60497-891-9 (alk. paper)

List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii

Figure 1: Distribution of Internet users, 2000–2012 . . . . . . . . . . . . . . . . . . . . 47

Figure 2: Broadband prices versus speed, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . 48

Figure 3: Internet users by language, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Figure 4: Internet users around the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Figure 5: Internet users by region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Figure 6: Mobile-phone subscriptions around the world, 2004–

Figure 7: Internet users around the world, 2004–2013 . . . . . . . . . . . . . . . . . 51

Figure 8: US device ownership over time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Figure 9: Mobile share of noncomputer device traffic . . . . . . . . . . . . . . . . . 55

Figure 10: Noncomputer traffic share by devices . . . . . . . . . . . . . . . . . . . . . . . 57

Figure 11: App downloads and usage by country . . . . . . . . . . . . . . . . . . . . . . 58

Figure 12: Reasons for in-app purchases, 2011 . . . . . . . . . . . . . . . . . . . . . . . . 110

Figure 13: Mobile-game spending, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Figure 14: Countries’ wireless broadband subscriptions,

Figure 15: Percentage of fiber connections in total broadband

Table 1: Mobile Internet services market, worldwide, 2009–

Table 2: The top twenty-five: Leading Internet nations . . . . . . . . . . . . . . . . 53

Table 3: The bottom twenty-five: Lagging Internet nations . . . . . . . . . . . 54

Table 4: Countries with the highest rate of mobile share of web

Table 5: Mobile share of web traffic worldwide . . . . . . . . . . . . . . . . . . . . . . . . 57

Table 6: Top ICT policies for the economic recovery . . . . . . . . . . . . . . . . . . 59

Table 7: The global games market, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Table 8: Market share for MMOGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Table 9: In-app revenue by country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Table 10: Features of “freemium” apps and their users . . . . . . . . . . . . . . . 109

Table 11: Features of mobile gaming, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Table 12: Mobile movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Table 13: Best-selling singles in Japan, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Table 14: Top twenty iTunes singles in Taiwan . . . . . . . . . . . . . . . . . . . . . . . 115

Table 15: Best-selling singles in Germany, 2013 . . . . . . . . . . . . . . . . . . . . . . . 116

Table 16: Country rankings by number of fixed Internet

Table 17: Country rankings by percentage of fixed Internet

Table 18: Country rankings by mobile subscriptions . . . . . . . . . . . . . . . . . 146

Table 19: The Internet in Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186

Table 20: Top ten Internet countries in Africa . . . . . . . . . . . . . . . . . . . . . . . . . 187

This book emerged out a longer term series of studies on national

Development. Many thanks as well to the many people in various

Family remains a source of inspiration. During the time that we

Government and the

Beginning with the dot-com meltdown in the late twentieth century,

The first stage of the digital transformation rested on the development

For national and regional governments, the parameters of economic

Mainframes soon gave way to desktop computers, which became

The computer revolution started in the industrial world, where

and capacity mattered, giving the leading nations a large advantage in

Scholars are now paying greater attention to the broadly transformative

The first is that we’re living in a time of astonishing progress

Our second conclusion is that the transformations brought about

Our third conclusion is less optimistic: digitalization is going to

Beginning with the dot-com boom of the 1990s, politicians understood,

of the Internet, and a humorous 2013 contretemps involving Twitter, a

Time has shown that few national political leaders—Toomas Hendrik

The digital-content industry did not follow traditional industrial lines.

Digital media has emerged in recent decades as an economic force at a