Thomas Poell - Platforms and Cultural Production

Collectively, these examples reveal that, while platform business models are marked by a high degree of formalization, complementors are not fully platform-dependent when it comes to generating revenue. Musicians, for instance, retain the ability to secure income outside the boundaries of a platform, such as through selling merchandise or live performances (Hesmondhalgh & Meier, 2018). For complementors, finding the “right” balance between platform-dependent and platform-independent forms of income can be a complicated, continuous exercise. For instance, Spotify not only streams music, it also helps users purchase concert tickets – thus granting the company infinitely more control of previously platform-independent transactions. Similarly, Twitch has added a number of monetization functionalities, some of which integrate the streaming platform more deeply into one of the many business units of its parent company Amazon.

In the end, what makes digital markets more efficient than physical ones is a platform’s ability to extract, store, and analyze information about its end-users and any of the transactions it facilitates. Nick Srnicek goes as far to say that “twenty-first century advanced capitalism” is “centered upon extracting and using a particular kind of raw material: data” (2017: 39). Platforms can provide complementors with detailed market and customer insights, often in real time. To be sure, the systematized gathering of user or market data is not without historical precedent, as media companies have long sought to gather actionable information (Ang, 1996; Napoli, 2011; Turow, 2011). What is different are the scale and the velocity of these efforts.

The datafication of digital markets has a number of implications, discussed in this chapter, chief among which is the lowering of costs. Another side-effect of datafication is that platform markets can be made more transparent compared to nondigital markets – at least to those who are granted access to valuable platform data. For example, data intermediaries can provide information on which app is ranked number one in an app store, creators can see how many people are watching and donating, and journalists can test different headlines to see which one attracts more readers (Beer, 2018; Petre, 2018). Similarly, because data is at the very heart of the digital advertising ecosystem, platform companies remain at the forefront of tracking, analyzing, and modeling end-user behavior (Couldry & Mejías, 2019; Turow, 2011). Game developers, movie studios, and newspaper companies use digital platforms to advertise their games, hype their movies, and sell subscriptions, respectively. The functionality provided by advertising technology is incredibly sophisticated and seemingly endless because of Google’s and Facebook’s relentless investments in data tracking and user targeting technology (Crain, 2019).

Then again, as with so many transformations ushered in by digitalization and datafication, digital advertising is a double-edged sword for complementors. On the one hand, it allows cultural producers to find, track, and target new pockets of end-users that can be sliced and diced into highly granular subgroups. Compared to, let’s say, putting an advertisement in a local newspaper, the ease with which small and medium-sized enterprises (which many cultural producers are) can use Facebook’s and Google’s advertising tools is remarkable. Using Facebook’s targeting tools, it is relatively simple and affordable for a game developer to set up a small advertising campaign to, for example, target a small group of players to see if they like a new game. Using Facebook’s advertising analytics tools, that same game developer can then see the exact demographics of those who have downloaded the game along with features of those who keep playing it; such data can, in turn, be used to launch even better targeted digital advertising campaigns.

On the other hand, using platforms for “user-acquisition” campaigns as described above only makes complementors all the more platform-dependent. In certain cultural industry segments, such as the game app economy, growing an audience organically – without paying money – can be too uncertain, too slow, or simply impossible for new market entrants. As a result, publishers are forced to invest heavily in digital advertising campaigns if they want to reach audiences and get noticed among the never-ending glut of digital content. Facebook’s and Google’s data are richer and their targeting capabilities better than many of their competitors, granting this duopoly significant influence over the digital advertising ecosystem. Therefore, they can set measurement standards and rates, and enforce idiosyncratic regulations with virtual impunity.

This chapter has demonstrated how platforms are becoming central markets in key segments of the cultural industries, as an increasing number of cultural producers create, distribute, market, and monetize content and services through these “matchmakers.” This affects, in turn, how cultural producers operate as economic actors. Aligning their business models with those of platforms, they become subject to the economic dynamics of platform markets. For one, in platform-dependent modes of cultural production, “winner-take-all” dynamics, which have long characterized the cultural industries, are further intensified. Like other digital markets, platforms allow for direct network effects; the more users who join the platform, the more valuable it becomes. Yet, unlike other markets, platforms are also characterized by indirect network effects. That is, when more end-users join a platform, it becomes more valuable for complementors, and vice versa. When positive, these network effects not only enable platforms to rapidly become dominant markets, they also lead to greater disparities between cultural producers. While some creators, game publishers, and news organizations become hyper-visible, others remain largely invisible.

Second, cultural producers as complementors are subject to the volatility of platforms markets. In their efforts to entice end-users and complementors to join while staving off competition from legacy media companies, telecoms, and other platforms, platform companies are constantly evolving, changing pricing models, and adjusting access to their market. While all markets are inherently dynamic, platform markets are particularly capricious. When a platform has just launched, it tends to be highly accommodating to cultural producers, as it tries to grow its complementor population. When it reaches a “mature” stage, however, it can alter pricing models and platform regulations on its own terms, which instantly impacts tens of thousands of content producers. In the second half of this book, we will come back to this issue of volatility by pointing toward the precarity of platform labor and the contingent nature of platform creativity.

For now, let us return to the central argument of the book concerning the reorganization of power relations in the cultural sector. In economic terms, we can observe that platformization involves a simultaneous decentralization and centralization of economic power. Especially early on in a platform’s development, this process opens up new economic opportunities for cultural producers to find audiences and generate revenue. These opportunities are open not just to large media companies, but also to individual cultural producers. As such, platformization furnishes the potential for individual producers to be economically emancipated from legacy media companies. At the same time, when network effects materialize, platformization leads to extraordinary concentration of economic power held by a handful of platform corporations. In combination with the constant evolution of platform markets, this concentration of power is particularly problematic for cultural producers, as it exacerbates the uneven distribution of resources and other forms of economic inequality.