Tuesday, September 18 2018
By Christa Ouderkirk Franzi, CEcD, Senior Project Manager, Camoin Associates, Inc.
Digital media is arguably the most disruptive industry across the economy. Beyond completely transforming the way we watch movies, play video games, and receive news within just a few years, businesses that do any sort of online marketing are in a constant battle to keep up with the perpetual onslaught of new channels, applications, technology, and tactics to reach targeted audiences.
The digital media industry is just as hard to define as it is to stay on top of. When broken down, ‘digital’ means anything related to using a computer and ‘media’ are the tools used to communicate across space and time such as books, radio, television, etc. While streaming radio over the internet is a form of digital media, the use of computers to communicate allows something that traditional broadcast media does not: interaction across networks. Consumers of digital media engage with content with a simple ‘like’ or ‘share’ to their personal online network, or they can create an online group to identify others interested in the same type of content. All these actions by consumers are a way of communicating preferences back to content producers and providers who use this information to better their offerings and the user experience.
The digital media supply chain begins with content curators who develop digital content in countless forms that include animation, video games, articles, infographics, music, and more. Content publishers and distributors make the content available to consumers through digital media channels like email, social media, video streaming, and mobile apps. Consumers engage with the content, providing data and intelligence that gets feed back into the system and informs subsequent creation and distribution of content. All of this is made possible by enabling technology such as cloud computing, mobile devices, graphic design software, telecommunications providers, etc.
Perhaps because of its disruptive nature across so many industry sectors, digital media lacks a widely accepted industry definition. In this article, the digital media industry is broken into three core industry groups – publishing related sectors, distribution related sectors, and professional business services related sectors. The definition also acknowledges traditional entertainment related industries as a peripheral group.1
Peripheral digital media industries that overlap with traditional entertainment include those related to the production and postproduction of movies and music/sound, cable subscription programming, and independent entertainers. The role of most of these subsectors in digital media is contented creation.
Digital media industries involved in the publishing of content online include newspaper, periodical, and software publishers (video games and mobile applications).
Industries that support the distribution of content include telecommunication carriers, data hosting services, online portals, and programming services.
Finally, there are many professional business service industries that engage with the digital media as it relates to marketing and promotion, consumer analytics, etc.
In total, the 16 digital media subsectors provided 3.45 million Americans with jobs in 2017, an increase of five percent since 2007. Average earnings per job well surpass $100,000 annually for these industries.
The entertainment subsectors that overlap with digital media added another 838,000 jobs in the U.S. with average earnings at $81,250 in 2017.
From 2007 to 2017, the U.S. economy grew by five percent and added over eight million jobs. During this same period, the digital media industry matched the five percent growth rate and added 169,000 jobs. In addition, the peripheral entertainment sector grew by four percent adding about 35,600 jobs.
While the digital media industry grew at a similar rate to the U.S. economy over the past 10-years, a closer look at the changes within individual sub-sectors tells a much different story.
Of the four categories, the distribution category experienced the most dramatic growth from 2007 to 2017, adding over 326,000 jobs for a growth rate of 17 percent. Driving this growth were significant gains in computer programming, internet publishing and web search (think Google), and data processing and hosting and related services. However, not all sub-sectors in the distribution group are growing. Over the past several years, telecommunication carriers have shed thousands of jobs as households continue to cut the cord and telecommunication carriers transition from providing voice to data-services.
Digital media industries in the business services category declined by four percent from 2007 to 2017 at a loss of about 24,800 jobs. Sectors that experienced the greatest job loss include graphic design services, media representatives, and marketing research and public opinion polling. The decline in these industries reflects the shift toward digital media advertising and away from traditional advertising media sources like print and television. Advertising agencies, media buying agencies, and commercial photography all added jobs from 2007 to 2017, largely because of the recovering economy and growing corporate profits available to invest in marketing and advertising.2
Regarding publishing related sectors, it is no secret that newspapers and periodicals have been struggling over the past decade as they transition from print to online operations and advertisers have shifted budgets to digital platforms; but, looking at the actual numbers illustrates the harsh reality of this disruption. Publishing related sectors in the digital media industry shrank in employment by 17 percent from 2007 to 2017. Newspaper publishers across the U.S. declined by 53 percent at a loss of over 201,000 jobs during this period and employment levels at periodical publishers declined by 34 percent, representing nearly 54,000 jobs lost. The one winner in this category is software publishers, whose 48 percent growth from 2007 to 2017 was driven by the increasing demand for mobile applications and web-based solutions.3
The peripheral entertainment category experienced a four percent increase in employment from 2007 to 2017, netting just over 35,000 jobs. The motion picture and video production industry experienced large gains, adding over 70,600 jobs for a growth rate of 30 percent. Interestingly, this sector’s business model is shifting as studios prioritize blockbusters, particularly action movies, and increasingly rely on international markets. In the U.S., distribution channels are shifting to non-traditional digital media sources, causing a decline in box office revenues.4 Employment in the cable and other subscription programming sector declined by 41 percent from 2007 to 2017, which is being driven by reduced subscriptions and a shift in the sector to seek partnership with digital platforms.
Labor market trends for digital media illustrate how digitization is disrupting nearly every aspect of this industry. Establishments from all sectors must be able to quickly adapt to constantly changing technology. Increasing reliance on smartphones and tablets has added a new component to the world of digital media, allowing consumers to be accessed on-the-go. However, smartphones also create challenges for businesses, who find that they need to not only generate online content, but also mobile-compatible applications to stay competitive and current. Cloud computing has also presented a new element to the digital media space by making it possible to reach anyone, anytime, anywhere, creating need for greater efficiencies in content generation, especially in relation to news-related publications.5
New forms of digital media are constantly hitting the market, many of which have been in the gaming space. Video games have become instantly accessible; many can now be downloaded from the internet. Increased convenience coupled with the introduction of new gaming technologies such as virtual reality has caused the gaming industry to move to the forefront of Digital Media sector growth nationally.6 Also largely contributing to sector growth is digital advertisements.
Careers in digital media are being altered by dramatic digital transformation that change how content is created, disseminated, and consumed. Training and education programs constantly need to adapt and retool to prepare students for the in-demand occupations of tomorrow.
So, with all this change, what actions can those working in economic develop take to help their local business community adapt to the disruptive digital media sector?
The digital media industry shows no signs of slowing down and its path of economic disruption is only getting wider. These changes can open new doors for businesses who are able to adapt.
Note: All industry data provided in this article was derived from Emsi, which provides labor market analytics. More information is available at: www.economicmodeling.com.
1 This cluster definition is largely based on the definition used by the Center for a Competitive Workforce in their report: Entertainment and the Rise of Digital Media in the Los Angeles Basin: An Industry Disrupted, 2018.
2 Source: IBISWorld U.S. Industry Report
3 Source: IBISWorld U.S. Industry Report
4 Source: IBISWorld U.S. Industry Report