The Mystery of the Digital Economy: Where Is the Money? Where Are the Jobs?

A Critical Look at the #DigitalSingleMarket strategy Part 1

Time and time again we were promised innovation, progress and not least added value from the digital economy. But now economists are increasingly scratching their heads, because we certainly see a lot of disruption through the effects of digital economy, but – in a broad sense – no added value. The German economic magazine Wirtschaftswoche recently reported that the growth of both industrialised countries and emerging markets is slowing considerably, and that the world economy needs a new growth story. Digitization was hailed by many as such a growth story, but at the moment it does not deliver – at least not on a macroeconomic scale. In the United States the economy has shrunk even faster than anywhere else on the world: Yet Silicon Valley is still hailed as the role model of technological innovation. Is there perhaps a connection between digitization and declining economic growth?

First we have to see the bigger picture.

Looking For Growth: Brand Value

The economic performance of GAFA (Google, Apple, Facebook, Amazon) stands in sharp contrast to the overall performance of the world economy. According to Google’s new report, the company improved its turnover by 11% in the second quarter of 2015, and is projected to reach a yearly turnover of 65 Billion € in 2015 (71 Billion US$). The others are on a similar course, so the question why this growth does not affect the general economy does become more and more crucial.

At the same time, many businesses at the fringes of digitization are becoming dissatisfied with the political frame conditions. Whether the entire creative industry, logistics, taxi drivers or even telecom access providers: Everybody fights for a level playing field with GAFA. So where does the growth of GAFA come from, and is it perhaps partially borrowed value from other businesses instead of a classic added value?

Where does the growth of GAFA come from, and is it perhaps partially borrowed value from other businesses instead of a classic added value?

A look at the development of companies’ brand value supports this argument. Brand value companies like Interbrand’s Best Global Brands or Millward Brown’s Brandz try to put a fixed economic value to a company brand. The brand value is based on certain factors, like image reception in public, stock performance and financial performances of the companies. This way company brands can be put into performance charts like music or book sales. As a result you can compare businesses in a broader scale in terms of performance and development over a longer time. And while the brand studies of Millward Brown Brands and Interbrand often disagree in terms of exact value or position of a specific brand, they show the very same tendency: Not only does the brand value of digital companies like Apple and Google soar at unparalleled speeds. At the same time, the values of media and entertainment companies have been going down and being pushed out from the top 100 brand value charts. While 2006 still saw media brands like the New York Times or Reuters in the Top 100 brands, those brands have been completely pushed out of the top 100 in the last decade. Also, Apple and Google overtook Coca Cola as the world’s most successful brand in 2013, while Disney remains the only entertainment brand left in those studies (though it has lost positions). Facebook and Amazon are both top climbers in the recent 2014 studies.

So if you consider the brand values to be representative as the broader picture of the branches in economy, then the last decade has not only seen a rapid growth of digital technology brands, but at the same time a very steep decline of media and entertainment brands. This is a parallel development to many companies’ financial performance. So, does the digital economy favor tech over content in general? And is the internet revolution and digital economy not supposed to liberate content and make the entire economy prosper, not just a few digital technology companies?

Continue reading in Part 2.

8

Leave Comment

  1. You should add the possibility to the people to translate and add captions to the videos of other people, as a Wiki, then it would be helpful. Not all people knows to translate… :/

  2. Hi Lena,We’re really big on drawing from observation in the museum space, since it’s one of the activities that one can only really do in the museum (drawing from a reproduction of an artwork never seems to get to the heart of the it). I usually start with a theme for the session and then let students choose the work they want to focus on. I would definitely take a look at “The Big Draw” Web site (just google the name), as they are chock full of activities and ideas. Good Luck!

  3. Right here is the right site for anybody who hopes to understand this topic. You know so much its almost tough to argue with you (not that I actually would want to…HaHa). You definitely put a fresh spin on a subject which has been discussed for years. Wonderful stuff, just wonderful!

  4. Es allo del d’on no n’hi ha no en raja. Amb classe, glamour i savoir faire s’hi neix; es com ser artista, que no es fa amb el temps sino que es porta a dins de tota la vida.Quin dia de Nadal que li van donar! A aquest tipus de gent els fot molt que els deixin en evidencia.

  5. slt,a mon avis si jetait a ta place si par téléphone sa marche pas moi j’me déplacerait pour info et si y a pas de réponse je croie bien que hausserait un peut la voie pour faire bouger les choses

  6. Great initiative by ACI Global!!!I invite all present and past students of ACI Global to post their queries on ‘Quality’, including those about software quality. Let it be a forum to discuss issues related to quality, exchange views and solve problems. Cheers,Ribhu

  7. Reblogged this on and commented: This old post came to mind while writing a conversation for my book. So I though I’d let you revisit it with me. It was written almost 2 years ago. But seems to be relevant to my life right now. It also has really terrible Sharpie On Cardstock comics. I should start doing those stupid stick figures again.

  8. Thanks for helping me to see things in a direffent light.

Comment on this article