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15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 267. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 267, Bluetooth capabilities regarding wireless inter firms clustered near university campuses that. equipment communication for example the have intellectual power but crave the venture. refrigerator tells the mobile phone that it is run capitalists and large pharmaceutical firms to. ning short of milk but that the fridge contents fund their next contract or milestone But. can supply ingredients for particular recipes these do not cohabit spatially unless the cor. Clearly these functions are new and they are porate client puts a lookout branch in the. performed by media so to repeat the question cluster Such small firm clusters are dynamic. are they new media Unquestionably there has productive and innovative and show remark. been morphing of what even in conference in able new firm formation and death rates The. 1997 see for example Braczyk et al 1999 was two go together risky businesses operate in. painfully being defined as multimedia or new clusters because of strength in numbers or the. media into handheld communicator equip aforementioned spillover effects They are an. ment by 2000 and wireless telephony by 2005 increasingly prominent organizational form as. But that may not be the whole story As indus the new economy transcends the old but as we. tries mature even in a few years divergences have seen their identity can be fleeting. become evident Thus whereas specialist bank In what follows the first section will reason. ing financial and stock market information ably briefly review the relevant literature on. accessible only by PC on CD ROM or online in what multimedia and or new media comprise. 1997 was accessible on a mobile phone in 2000 Other chapters in this book perform this. advanced computer graphics of the kind now function at greater length Nevertheless it is. routinely deployed in films like Star Wars were important to be clear about the focus of this. probably not However games deploying com contribution since as has been argued thus far. parable pixel densities were by 2005 common the sector is changing and coalescing with some. place on mobile devices Internet games firms technologies while diverging from others and it. were part of the dot com revolution as were is crucial to understand why and with what. varieties of Internet applications businesses effects Following that the second section will. they had in many cases a high market value deal with the interesting question of why indus. measured by share price and having made an tries like new media organize themselves as clus. initial public offering IPO still are often ters These are becoming widespread in new. courted and acquired by the likes of Sony Sega economy sectors but they were also the spatial. or Nintendo Nokia and Microsoft games divi form that early capitalism took almost wherever. sions By 2000 Web page design which was it started and as Porter 1998 showed for the. considered as the bottom feeder end of new US many of those also survive and prosper. media could be performed by anyone with The pivotal part of this section will relate. Microsoft Frontpage By 2005 A4 Desk Flash the small firm clustering phenomenon where. Website Builders were similarly available creativity and innovation are pronounced to. The texture is complex not least because overall industry structure where corporate. much of the nexus of businesses around new behemoths like Time Warner in new media. media is entrepreneurial small or very small clumsily seek to get on board by acquisition yet. scale in terms of human capital but creative lack the agility and absorptive capacity Cohen. and knowledge driven with even virtual firms and Levinthal 1990 to succeed terminating. being a pronounced feature Classically these with their own acquisition by a dot com firm. businesses tend to congregate in geographical like America Online AOL By 2003 such was. clusters often as we have noted where the the ignominy and so vast the losses incurred. coffee is good and the street life is vibrant 100 billion by the merged entity due to AOL s. Crossover interactions between members of overstating of its advertising revenue that AOL. social political or economic networks focused was downgraded to a unit of a division of Time. on cultural products with design intensive Warner On 16 October AOL was removed. content are the lifeblood of such communities from the corporate name and within a year all. In this sense they are rather like biotechnology AOL executives had been ousted from senior. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 268. 268 HANDBOOK OF NEW MEDIA, positions in the now repudiated merged entity Singer had appeared moving and still images. Klein 2003 Clearly such new economy voice and music were combined on a single. old economy dynamics were interestingly poised medium The line of trajectory in old media. at the start of the millennium Nevertheless now was locked into elaborations and enhance. as then the predominant industry force remains ments of these basic tools But the key to their. technological convergence integration was their property of supporting. the narrative flow of the product Coinciding,with the more recent hardware enhancements. in cabling and routing came the cultural turn,NEW MEDIA IN TRANSITION. against narrative and the rise of the spatial,consciousness to challenge the temporal Cooke.
Old media were fairly easy to grasp conceptu 1990 The possible and the desirable interacted. ally they were products and services that in the creation of the multimedia product a. broadcast knowledge information and enter classic example of which would be Microsoft s. tainment in forms intermediary between the Encarta encyclopaedia. originator and the ultimate consumer of prod One of the earlier intellectual contributions. uct or service The Gutenberg galaxy as to understanding the nature of new media pre. Marshall McLuhan 1962 called the effect of sented in 1995 and published as Scott 1998. the invention of the printing press captures the argued that in California new media took the. idea perfectly The word hitherto accessible following form Making their appearance from. only to the priesthood and its interpretations the mid 1980s in San Francisco especially. of the source message became mechanically Silicon Valley and Hollywood Los Angeles. reproducible as the book an intermediary they intersected high technology and cultural. object capable of independent democratic industries For Scott the industry was orga. interpretation and use by its consumers Other nized into four hierarchical levels At the base. communication media such as newspapers was machinery and hardware notably comput. pamphlets and songsheets followed suit Later ing communication and associated peripherals. their electronic forms of film radio TV and and components Resting on this base was. video performed equivalent functions in wider programme interfacing software and systems. secular fields So what is new about new media design Utilizing the software platform were the. In one important sense nothing since CD visual audio and print media industries at. ROMs the Internet digital databases com whose intersection were found multimedia. puter games content and advanced computer Thus Scott s core definition of multimedia or. graphics that can simulate anything from tor new media exactly replicates ours in that they. nados to T Rex carry content that informs or exist at the point of convergence of traditional. entertains as an intermediary between creative or old media and take the form of discrete. talent and consumer The old new new thing combinations of voice text and visual commu. to paraphrase Lewis 2000 in respect of new nication These discrete combinations are then. media was its convergent nature New media realized as multimedia products and services. involved the capability to have on disk or online such as games and entertainment educational. a broadcast message that combined still and products business applications and so on At. moving images text voice and music as dis the product and service end of this chain are. crete elements of a single product or service two kinds of actor developers who actually. These were made possible because of hardware design and make titles and publishers that. advances in cabling and routing using upgraded market them The latter sometimes finance the. copper or optical fibre enabling simultaneous former who tend to be small medium enter. transmission of the multiplicity of media prises SMEs Title publishers are both large. hence multimedia Clearly all these media had e g Disney and SME in scale Scott concludes. been previously combinable Once The Jazz that new media emerged in Hollywood as an. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 269. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 269, adjunct to the entertainment film and music many of these technologies were embodied in. industries with studios such as Fox Disney 3G mobile telephony. Universal and Time Warner active as publish So we are clear on the technological conver. ers and commissioners of multimedia titles gences that have made new media possible. Northern California has a little of this as with Now it is time to look at some divergences. Sony Electronic Publishing and Dreamworks even though it is essential to remember that. but it is strongest in production of the plat according to Mansell 2000 the digital eco. forms enabling multimedia titles to be pro nomy is fundamentally chaotic devoid of. duced In addition more business multimedia shape form edges and geography in the. products such as financial and business related words of a visionary from British Telecom. database products e g Dataquest were devel Hence among the divergences there are always. oped there coalescences caused by institutional actors. In their definitive collection on the subject such as firms and regulators One such sphere. Braczyk et al 1999 concur with the defini of coalescence is Hollywood where Scott. tions discussed so far by saying that multi 1999 observed a multimedia and digital. media has a narrow and a broader meaning visual effects industry growing apace As field. In the former case it is conceived of as a con leader this obviously had implications for new. vergence of several digital media that interest media and motion picture activities of all. ingly contain time sensitive sound motion kinds The digital visual effects element of the. pictures and time insensitive text graphics couplet arose from digital enhancement through. elements used interactively to produce an inte computer graphics applied to conventional. grated effect This is an aspect of the novelty of media This encompassed and unified hitherto. new media More broadly rather as the open separate fields of multimedia animation and. ing remarks of this contribution emphasized special effects into a toolbox routinely used in. multimedia can be said to describe the TV and film and video programming Scott. present form taken by information and com identified by 1997 188 firms doing this kind. munications technology ICT That is con of multimedia work in Los Angeles mostly in. vergence has almost been achieved unifying or near Hollywood. the contributions of content developers pro Another diversion was Internet games a vast. gramme and service providers network oper market with abiding growth opportunities. ators server and router suppliers software and Modern games service providers rely on the. computer telephony and consumer electron fact that up to 80 per cent of games can be. ics industries This elaborates the four level played in a multiplayer format on the Internet. multimedia value chain identified by Scott on a hand held device or a box The spectrum. 1998 The extent of the then relatively recent of providers runs from the lower end based. technological innovations that made multi on a central server enabling up to 30 to be. media possible was outlined by Egan and involved in a system which keeps track of the. Saxenian 1999 They included operating virtual game world in question to companies. systems software at 32 and 64 MB for PCs supplying massive multiplayer games based in. audio and video processing on PC storage a server farm capable of serving hundreds. growth from CD to DVD high resolution and of thousands of players British Telecom s. flat panel displays colour laser printing soft Wireplay and smaller firms like Gameplay were. ware applications for desktop publishing then cases in point Small startups concentrate. image processing and editing for audio and on the former segment but are also key in. video interface devices like touch screens designing and writing code for big games firms. graphic scanners digital cameras and multi in the latter Advertising to build a customer. media projectors and networking through base is done online and much of the burn rate. Internet and WWW accessed through TV PC of startups is explained by the need to adver. and recently handheld devices By 2005 tise The more widely used games technology. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 270. 270 HANDBOOK OF NEW MEDIA, the Sony Playstation 2 or Nintendo Game significant multimedia firms among which. Boy type with sales of 80 million units has Dow Jones and Co owners of Wall Street. converged with the PC based multiplayer Journal and other financial titles is the leading. kind As Safer 2000 reported Digital Bridges business information specialist In London. in early 2000 introduced Wirelessgames com as Pearson Group owners of Financial Times and. a portal delivering multiplayer games to third ft com and particularly Reuters have compa. generation wireless application protocol rable functions Of course New York s dominant. WAP enabled mobile phones This is a step old new media firms dwarf Dow Jones partic. beyond the large numbers of providers who ularly Time Warner Viacom NBC CBS and. have developed games playable on the Palm the Hearst Corporation and these also have. handheld device new media roles in business and financial. Finally a further divergence which as we information as well as entertainment Pavlik. have already noted also comes back to Palms 1999 noted that in 1997 southern Manhattan. and WAP mobiles is business information had 1106 multimedia firms employing 23 390. Despite the leading edge software to build the while midtown and uptown together had 668. global financial nets that were once only firms employing 25 378 The former Silicon. the province of currency dealers but in the Alley was as the numbers signify the home of. dot com boom became routinely exploited by the small creative firm cluster Most of the. day trading taxi drivers and academics inter multimedia energy of such firms was drawn. alia such systems are characterized by a combi into the dot com surge and much of what was. nation of picosecond speed in monitoring and temporarily a sector with fleeting identity as. updating but a rather dull passivity in service multimedia was thus better understood as. provision The news cuttings services while of having morphed into that sphere. use are scarcely interactive and in consequence It would be remiss not to pay some attention. are incapable of supplying the kind of problem to the larger entertainment segment of the. solving advice tailored to specific need that is New York new media industry where more. so characteristic of required enterprise support skills remain in niches around computer. The dot com induced stock market slide after graphics special applications programming and. March 2000 cost dearly many such investors content provision and small firms feed to and. and stock option holders who were locked in to from corporate giants such as Time Warner. swiftly declining paper assets that the popular TW for a short time AOL Time Warner as. ity of stock markets for non experts may take a we have seen An insider s view of some cul. generation to recover tural discontinuities involved in such relation. Curiously interactivity had been vaunted ships was supplied by Wolff 1998 whose. for decades since Fowles French Lieutenant s Wolff New Media WNM content business. Woman and in other narrative oriented enter created NetGuide In search of a possible acqui. tainment where there is scarcely any market for sition or at least investment WNM courted. it Current cases in point are interactive TV and Time Warner and AOL in the 1990s The TW. the cinematically questionable but available New Media Group had recently appointed a. interactive choose your own plot line and new general manager of New Media to join the. ending cine camera developed from the per editor of New Media an old media journalist. sonalized version so successfully deployed in who nevertheless occupied third position on. Blair Witch Project But on business informa the headed notepaper The new appointee. tion it has yet to surface leaving global finan replaced an executive whose enthusiasm for. cial markets with relatively unimaginative new media was such that he announced pub. services in abundance licly the death of the book something not. Underlining this Heydebrand 1999 pre guaranteed to please TW shareholders TW had. sented a portrait of New York s Silicon Alley an Online Steering Committee and a president. First New York is home to seven globally of Multimedia who outranked the head of the. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 271. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 271, New Media Group but knew far less about the are generally speaking not technologically. subject creative except in making first moves and then. The TW New Media Group was responsible aggrandizement They may not be as intrigu. for the company s relationship with AOL who ing to analyse as the lean and agile startups. published Time on the Internet for which AOL which of course included AOL at that time. received free advertising in Time The earnings on whom large corporate actors almost com. ratio was at least 1 to 30 in AOL s favour by pletely depend for new media content But the. 1994 The Online Steering Committee was creativity to achieve scale without imagination. formed to solve the AOL conundrum TW is a subject worthy of study in its own right yet. appointed WNM as a consultant to the Online regrettably perhaps not one that is able to be. Steering Group For the editor of New Media pursued here We have rather set the scene by. content is king was the mission statement to exploring the transmutations of new media. which technology is destiny had recently been and defined the field in the process The next. added Hence put Time on the Web became step is to set that field in a wider context of. the strategy despite the obvious evidence that industry organization and spatial dynamics. AOL customers had rejected that option sub because despite the power of the corporate. stantively Pathfinder the vehicle for this cost sector there would be few even transient new. TW up to 20 million per year to run on rev economy industries without the exploitation. enues of 2 4 million Meanwhile WNM innovation and commercialization capabilities. started courting AOL only to find them a firm of small dynamic new business entrants The. where the supplicant had to organize the next section explores the settings in which. whole corporate interaction process the exact such firms prosper. opposite of the rococo administrative struc,ture of Time Warner No result came from. the interaction with AOL whose executives,THE CLUSTER IMPERATIVE IN.
gave every indication of seeking an acquirer as,THE NEW ECONOMY. much as WNM except that in early 2000 the,acquired turned out to be Time Warner and. the acquirer AOL The medium had truly taken Clustering is neither an unusual nor a new. over the message form of business organization It was present. AOL Time Warner was the first and maybe in the beginning of the industrial age where. last new media conglomerate merging all the cotton textiles firms in Britain France and the. multimedia elements of visual print and audio USA concentrated in industrial districts and. media into the ISP dominated infobahn Sony handgun manufacturers famously clustered. Bertelsmann Viacom and the rest of the pack in places like Springfield Massachusetts They. also came to terms with this content and did so to access skilled labour and to pick up as. communication convergence As we saw for free goods the knowhow that was said to be in. AOL Time Warner it unravelled because of the air in such places For much of the twentieth. incompatibilities not least of management style century the ownership of firms in such dis. Klein 2003 reported the detestation of Time tricts concentrated so that for example the. Warner executives for the aggressive accounts classic auto cluster of Detroit was dominated. driven management style that had brought by the big two producers Ford and GM with. swift growth to AOL s stock market valuation Chrysler some way behind and now part of. One Time Warner executive referred to his AOL Daimler Benz s global grouping But these. counterparts as gross creeps hardly grounds were once clusters of numerous independent. for a happy merger of corporate minds Klein assembly and components supplier firms and. 2003 228 So it is important to recognize the when Japanese competition began to bite in. overarching role of large and powerful units of the 1980s the giants began to downsize and. multimedia capital such as Time Warner who externalize production back into supply chains. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 272. 272 HANDBOOK OF NEW MEDIA, that were by now as much global as local by commonalities and complementarities. Simultaneously new industries such as semi emphasis added This in turn underpinned. conductor and computer production grew as the definition used by the UK Minister of Science. new small firms entered production in places for the work of his task force on biotechnology. like Silicon Valley and Boston Rogers and clusters as geographic concentrations of inter. Larsen 1984 Saxenian 1994 and while the connected companies specialized suppliers. evolutionary trajectories of even these two service providers firms in related industries. places have diverged more such clusters have and associated institutions for example uni. emerged elsewhere in the world including the versities standards agencies and trade associa. developing world see for example Schmitz tions in particular fields that compete but also. and Nadvi 1999 Fired by the early success of cooperate. high technology clusters many administra There is nothing wrong with these definitions. tions tried to emulate Silicon Valley Most except that they are all static whereas the key. failed dismally but one case that stands out as feature of clusters is that they are dynamic. successful and policy driven is Austin Texas Hence we prefer the following also to be taken. see for instance Henton et al 1997 where into account A cluster displays a shared identity. strong private leadership involving business and future vision It is characterized by turbu. government and education in association lence as firms spin off spin out and start up. attracted blue chip firms such as Motorola and from other firms or institutions A cluster is an. IBM as well as high technology consortia such arena of dense and changing vertical input. as Sematech and MCC It was in the 1970s and output linkages supply chains and horizontal. 1980s that a soft infrastructure of investors and interfirm networks It is likely to have developed. other knowledge intensive service providers localized third party representative governance. grew in tandem with a harder incubation associations that provide common services but. infrastructure at the University of Texas to also lobby government for change A cluster. form an establishment known as IC From may have caused governments to develop poli. this what had the look of a branch plant econ cies to assist cluster development especially. omy became more entrepreneurial as firms like where market failures are present Over time. Dell and its suppliers came to prominence clusters can reveal features of emergence domi. through endogenous growth nance and decline So we come to a preferred. Clusters have now become a key mode of definition of a cluster as geographically proxi. economic coordination and focus of govern mate firms in vertical and horizontal relation. ment policies across the world and for a wide ships involving a localized enterprise support. variety of industries The UK IT industry s cluster infrastructure with a shared developmental. prospective group Information Age Partnership vision for business growth based on competi. definition of a cluster as a geographical con tion and cooperation in a specific market field. centration of interdependent companies and Why are clusters more prominent now than. institutions connected by a system of market hitherto Why does the hierarchical firm so. and non market links is a useful starting point pronounced a feature of the mid twentieth. as it captures key elements of competitive and century corporate landscape no longer necessar. collaborative interaction that characterize ily act as the model for economic coordination. firm relationships It also recognizes the impor There are at least three key reasons for this. tance of proximity to those relationships and First global competition initially from Japan. that important relationships are not limited to and South East Asia then from the US response. those between firms only It is thus close to to it caused large corporations to reduce in. Michael Porter s 1998 definition which is house production and administrative overhead. that A cluster is a geographically proximate while increasing outsourcing and learning. group of interconnected companies and associ for example lean production in order to sur. ated institutions in a particular field linked vive Second innovation became a leading. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 273. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 273, competitive weapon and small knowledge based easily recruited and are of key importance to. firms often close to universities were further knowledge transfer Informal knowhow trad. up the technological learning curve Ultimately ing is easier in clusters than through more. large firms have in many areas outsourced distant relationships. even their R D functions to such entities in a Finally new businesses are more readily. process called open innovation Chesbrough formed where better information about innov. 2003 Third as we have seen in the case of ative potential and market opportunities is. Time Warner and new media the intrinsic locally available Barriers to entry for new firms. rigidities of the hierarchical corporate organiza can be lower because of a clearer perception of. tion meant rapid learning and accommodation unfulfilled needs product or service gaps or. to change could not be easily implemented anticipated demand Locally available inputs. In brief Porter 1998 holds that a number and skills further reduce barriers to entry A. of advantages are derived from clusters among cluster in itself can be an important initial. which are the following First productivity market Familiarity with local public venture. gains arise from access to early use of better capital or business angel funding sources may. quality and lower cost specialized inputs from speed up the investment process and minimize. components or services suppliers in the cluster risk premiums for new startups and growing. Local sourcing can be cheaper because of min businesses Clusters attract outside firms and. imal inventory requirements and transaction foreign direct investors who perceive benefits. costs generally can be lower because of the exis from being in a specialized leading edge busi. tence of high trust relations and the impor ness location These may also be a further. tance of reputation based trading Common source of corporate spinoff businesses. purchasing can lower costs where external Clusters work through networks between a. sourcing is necessary Serendipitous informa variety of business and other appropriate. tion trading is more likely in contexts where actors who are familiar with each other s. formal or informal face to face contact is expertise trustworthiness reliability and will. possible Complementarities between firms ingness both to share relevant assets e g. can help joint bidding and scale benefits on information or lending a machine or employee. contract tenders or joint marketing of prod if needed and engage in normal business rela. ucts and services Access to public goods from tionships based on market exchange Networks. research or standards bodies located in prox can be formal or informal soft or hard i e. imity can be advantageous contractual with an agreed project and. Second innovation gains come from prox business plan In high technology industry. imity between customers and suppliers where such linkages are likely to involve research. the interaction between the two may lead to organizations such as universities for knowl. innovative specifications and responses User edge but also indirectly through spinout firms. led innovation impulses are recognized as Cooke et al 2000 Aspects of this appear in. crucial to the innovation process and their dis Figure 13 1 which anatomizes key parts of the. covery has led to a better understanding of Cambridge UK IT cluster showing regular. the interactive rather than linear processes of cooperative as well as competitive relation. innovation Proximity to knowledge centres ships within the cluster. makes the interaction processes concerning A key question for policy is can clusters be. design testing and prototype development built This refers to the role of policy on the. physically easier especially where much of the part of different levels of government While. necessary knowledge is partly or wholly tacit many correctly cast doubt on the difficulty if. rather than codified Localized benchmarking not impossibility of building clusters from. among firms on organizational as well as zero this has not stopped governments trying. product and process innovation is facilitated to do this in the past Technopoles and the cog. in clusters Qualified personnel are more nate notion of technopolis are cases in point. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 274. 274 HANDBOOK OF NEW MEDIA,Supplying Supplying Business.
Virtual company Sunrise Hyperreality Cartesia,Unilever Glaxo. Startup advice,Cambridge The,Cambridge Industrial liaison Walfson. Advanced Cambridge,University CU,Electronic Network. Internet services,Minitura Ericsson,Consultants,Systems Fontel. service Bluetooth prototypes,Design services,Prototype PCB.
development assembly Symbionics,Venture Systems design Design services. Systems design,Tavisham Synergy PA,Electronics joint venture Consultancy. Prototype PCB equipement,Supplying TV studio graphics Mega. Pixel Power,Industries,Figure 13 1 Aspects of the Cambridge IT Cluster. These are large spaces sometimes even whole programme in favour of a clusters programme. towns or cities designated by governments as since 2001 Cooke et al 2004 This is because. locations for which incentives are available to synergetic interactions scarcely occured despite. encourage corporations or public organiza proximity most interactions persisted over. tions to relocate research and development distance back to corporate headquarters or. R D facilities The aspiration was that these other corporate divisions elsewhere There was. would interact with synergetic growth and little evidence of spinoff or other kinds of new. innovation effects France and Japan built firm formation despite this also being a key. technopoles by attracting research branches aspiration This lack of local linkage denied. to co locate in special zones such as Sophia technopoles the status of clusters Synergy effects. Antipolis and Tsukuba City However most are now understood to be extremely hard. commentators agree these are not clusters to create But it is now better understood that. Indeed Japan has abandoned its technopolis a soft infrastructure of knowledge intensive. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 275. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 275, business services ranging from investment entrepreneurs were the founder of Litton.
management legal patenting and technology Industries and later Hewlett and Packard. transfer to specialist consultancies is a key preceded as tenants on the park by Varian. presence in most successful clusters These were and succeeded by Fairchild Semiconductors. typically not present in technopoles Synergies Fairchild was the matrix for Intel National. meaning a surplus or Gestalt effect created by Semiconductors American Micro Devices and. fruitful interaction can be assisted enormously some 40 other US chip manufacturers from. by the market transactions of such private 1957 when the Shockley eight began to find. intermediaries and the supportive actions of their feet. grant giving public ones The science push emphasis of the story fitted. However where there is something with which in well with the dominant linear model of inno. to work especially in creative and knowledge vation then at the forefront of understanding. intensive activity then policy may enhance of the relationship between scientific progress. cluster formation Some examples of this include and the commercialization of products and. Finnish regional science and technology policy processes Clearly also for what with hindsight. encouraging universities to set up technology were the truly radical innovations of semicon. parks on university campuses with Nokia or ductors namely integrated circuits and micro. other research labs acting as customers to multi processors technology push was a significant. media software and computing services sup impulse at least in relation to civilian applica. plied by startups The Technical University at tions Even so the role of the Department of. Tampere has generated a small multimedia clus Defense and the National Aeronautics and Space. ter on its Hermia Technology Park As Nokia Administration as users of miniaturized com. recognized content to be the key to its future puters and guidance systems has perhaps been. profitability with hardware being outsourced to highlighted less than their role as suppliers of. China it built a number of new R D laborato large scale funding for the development of. ries in proximity to behavioural psychology and microcircuitry We still know relatively little. cognitive neuroscience research centres of uni about the nature and extent of interaction. versities such as Helsinki Tampere and Jyv sk la between users and technologists at the early. to access new knowledge applicable to games stage of the development of these new technolo. technologies notably its N Gage box and 3G gies though it has been argued that 67 per cent. mobile telephony solution In the US clusters of the functional source of innovation develop. are often promoted at state level through setting ment for semiconductors was users and only. up infrastructure industry associations grants 21 per cent manufacturers von Hippel 1988 4. tax credits and R D credits But there still has to To return to the efforts by policy makers to. be a knowledge generating source in research model high tech innovation on developments. labs or other key firms at Stanford and Silicon Valley it is clear that. Stimulated by the evident success of Silicon most approaches have involved the idea of. Valley California in the 1970s and 1980s many co locating research centres and innovation. national and regional governments sought to intensive firms in science and technology. encourage the formation of high technology parks In some cases this has involved desig. industry complexes by earmarking budgets and nating whole cities as science cities or. special high tech development zones modelled technopoles Although benefits have been. to some extent on the pattern established by the accrued from such plans there is also in the. science park at Stanford University founded in literature that reviews such developments a. 1951 Castells and Hall 1994 It is well known frequent sense of disappointment that more has. that Frederick Terman later Provost and Vice not been achieved In cases drawn from France. President at Stanford was the driving force and Japan countries that have arguably pro. behind Stanford Industrial Park as it was ceeded furthest with the technopolis policy a. officially known and that among his student certain absence of synergies has been observed. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 276. 276 HANDBOOK OF NEW MEDIA, among co located laboratories and firms health technologies research and training. Science parks in themselves have not always infrastructures were poorly connected with. met the expectations of their founders and local industry and industrial cooperation has. efforts have been made to learn from early been for a long time considered insufficient. mistakes Nowadays in response to the improve De Bernardy 1999 also suggested that to the. ment in understanding of innovation as an extent collective learning was present in Rh ne. interactive possibly systemic process more Alpes it was informal fragile and vulnerable to. attention is paid to the factors that lead to market pressures. embeddedness among firms and innovation,support organizations Granovetter 1985. This anthropological idea refers to the institu Sophia Antipolis. tional and organizational features of commu, nity and solidarity the exercise of social Established in 1972 as a personal mission of. capital Cooke and Wills 1999 Putnam 1993 Pierre Laffitte co director of the prestigious. and the foundations of high trust networked Paris cole des Mines Sophia Antipolis started. types of relationship among firms and organi slowly with little interest in the idea from busi. zations To some extent also there is emerging ness or the public sector After 1975 a second. recognition that science parks are a valuable launch was aimed at attracting R D from US. element but not the only or main objective of firms Some such as Digital came and were. a localized or regionalized innovation strategy joined by French firms Thomson and L Or al. A good deal of research has been conducted and government pharmacological and infor. which helps understanding of the nature and mation technology laboratories followed By. range of interaction among firms and organi the early 1990s Sophia Antipolis had 14 000. zations engaged in innovation see for exam employees with 9000 of them directly engaged. ple Acs 2000 Braczyk et al 1998 Cooke and in technological activities Longhi and Qu r. Morgan 1998 Cooke et al 2004 de la Mothe 1993 Among the US firms locating development. and Paquet 1998 Edquist 1997 and policy is units to introduce products to the European. moving towards a notion of the regional inno market were Cardis Dow and Rockwell in addi. vation system as an important level at which tion to Digital. strategic innovation support is appropriate In Longhi and Qu r s 1993 evaluation the. Cooke 1992 Cooke et al 2000 T dtling and following key points were made First innova. Sedlacek 1997 tion networks were still marginal in Sophia. The French and Japanese examples of tech Antipolis especially regarding local activities and. nopole implantation help us learn how diffi employment While Digital and Thomson had. cult it is to plan clusters The French were the organized a local network as had two pharma. first to experiment with the idea of technopoles cological firms interacting with production and. at Grenoble with Meylan ZIRST Industrial research skills locally few dynamic innovations. Zone for Research in Science and Technology had ensued and learning from local partner. This has concentrated many public and ships was minimal Second where a few linkages. private research laboratories but produced existed they were almost exclusively vertical. few synergies among smaller or even larger never horizontal Firms were isolated from their. firms locally Our example is that of Sophia parent organizations and feared poaching from. Antipolis which has eventually succeeded like other co located laboratories Further active. Meylan ZIRST in attracting government mistrust existed between innovative large firms. research laboratories and larger private invest and local research institutions although not. ment but is perceived still to suffer from the between the latter and local small innovative. relative absence of interactive innovation firms The fear of losing proprietary knowhow. Even in Grenoble Rallet and Torre 1998 was behind this mistrust Third there was no. noted that despite strong specialization in local labour market There was almost no. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 277. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 277, mobility between firms or organizations In people and the Ministry of Construction paid. each case an internal labour market operated for infrastructure Laboratories and a science. The risk of information exchange was the main and technology university were relocated to the. reason for this absence of labour market mobil science city Only in the 1980s did private. ity This was the single most obvious instance of industry show interest in the site following. the lack of an innovative network or milieu construction of a motorway to service the. culture at Sophia Antipolis International Science and Technology Expo of. In terms of learning from this experience the 1985 Public investment by 1990 was 1 1. following points are of considerable significance billion But many national research institutes. There were by 2000 weak signs of innovative e g Inorganic Materials Disaster Prevention. interaction between larger firms seeking for High Energy Physics Health and Hygiene and. example locally available software services Some Environment continued to experience diffi. French firms were being attracted to Sophia culties in developing linkages other than the. Antipolis by aspects of its critical mass and net vertical ones typical of government agencies. work potential More new firms were still needed Hence they did not share facilities or link to. to create sufficient critical mass for synergies and universities or private industry There was also. creative innovation Where external networking a lack of new spinoff firms Tsukuba was seen as. existed it largely remained a vertical supply an isolated island although in the 1990s more. chain relationship The public sector policy local conferences and information exchanges. networks were the most significant factor in began to occur But in general there was rela. potentially building up local innovative net tively little synergy among organizations. works Early on their main focus had been on An evaluation of the Japanese technopolis. selling square metres Thus Longhi and Qu r programme was reported in Castells and Hall. 1993 concluded Sophia Antipolis was only a 1994 They concluded that there had been. qualified and rather one dimensional economic failure to achieve the original vision Some. success A more recent paper by Longhi 1999 were dormitory or conventional new towns. underlined the missing preconditions for collec not technopoles There was a branch plant. tive learning in the absence of a science base syndrome as decentralized firms mainly con. spinoff firms and weak local interactions ducted routine assembly work for the parent. However some moderation of the position company There had been failure to develop. occurred when the University of Nice moved its university industry links the main links were. IT departments to Sophia Antipolis in 1986 with local technical laboratories rather than. helping create a local labour market supply universities Notable was a lack of soft infra. resource Global firms were thereafter making structure consisting of venture capital R D. stronger local linkages with startups and research consortia and university research networks. institutes Elements of a localized form of sys There had been a failure to relocate R D labo. temic innovation began to emerge after 25 years ratories Before decamping to China these had. been relocating closer to headquarters than to, Technopoles in Japan factories Problematic was a lack of interindus.
try linkages because of the weak R D and, In Japan a major effort to build a scientific pole strong branch plant characteristics There was. or cluster occurred at roughly the same time a lack of spinoff for the same reasons as the. as in France Tsukuba originated in 1958 as a absence of interindustry linkages and universities. satellite science city for Tokyo Tsukuba met the In general the conclusion made by Castells. criteria regarding infrastructure location and and Hall 1994 was that the Japanese tech. transportation later used to judge which cities nopolis programme had not yet proved itself. would join the technopolis programme It was successful in terms of interactive innovation. mainly government funded the Japan Housing As we saw by 2001 the programme had been. Corporation built housing for nearly 125 000 closed down. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 278. 278 HANDBOOK OF NEW MEDIA, Neither France nor Japan became leading section connected to large often global. players in new economy sectors new media customers located not in geographic but in. in particular except for handheld electronic functional proximity Functional proximity. games by Sega and the like though recall most means virtual space whereby a customer and. of the creative work is done by startups in the supplier may be extremely close in their. UK and US Nonaka and Reinm ller 1998 specific shared interest in an aspect of new. had an interesting take on this at least for media for example but geographically poles. Japan They referred to Japan s problem as the apart Of the two geographic proximity is the. legacy of learning That is Japan spent so more important from a creativity or innova. much time and energy on catching up with the tion capabilities point of view but of course. West by learning from its practices and seeking without finance especially in new media. to improve upon them in mature sectors that where there are few public research grants. its economy became locked into old economy available there is no demand So they are. activities and its universities and technopoles conceptually as important as one another con. failed to anticipate any new economy areas stituting a global capabilities relationship that. Now there is a frantic effort to relearn and is fundamental to a given new economy sector. leapfrog as once before but economic condi In the largest cities geographic and functional. tions are far less propitious for achieving this proximity may coincide see for further analy. than they once were France also suffers from sis Rallet and Torre 1998. an overdependence on institutional structures A good example of the latter case occurs. that are state led and subsidized a predeliction in London where small creative new media. for mature old economy sectors and a weak firms are found in a cluster in Soho and. base in the new economy This could be said of numerous large corporate consumers are. the other European big hitting economies found in rather less funky locations in the. only the UK has a good presence in new West End Soho is interesting in terms of. economy business including new media while industrial history having once been London s. Germany and Italy are adrift in major ways garment district Accordingly comparatively. despite strong German media corporations large working spaces were available when. like Kirch and Bertelsmann these workshops and small factories were no. longer viable once scale economies entered the,business The UK film industry has for long. been managed and had its distribution arranged,NEW MEDIA CLUSTERS AND THE. from Soho as to some extent has the recorded,INDUSTRY TRAJECTORY.
music industry But most famously Soho,became one of Europe s leading adult enter. We thus do not find much new economy tainment centres with outstanding jazz and. industry particularly that relating to new blues clubs strip joints and gourmet as well as. media to be satisfactorily built by public more affordable restaurants and pubs with. policy from scratch with the small but inter artistic clienteles Much of this economy oper. esting exception of the Finnish policy of ated in basements but in the 1960s into the. inducing multimedia firms from technology former clothing workshops upstairs entered. faculties linked to a proximate and exacting the UK software industry represented by. user such as Nokia More typical are the fol firms like Logica and Hoskyns The large. lowing five cases in cities varying in size from relatively open plan working spaces with. the global metropolitan to the regional busi attractive iron frame building construction. ness or administrative capital where the unify and cheap rents were ideal for such firms So. ing feature is the overwhelming importance unlike SoHo New York where such industrial. for production of the kind of small firm spaces were adaptively reused by artists help. dominated clusters described in the preceding ing leapfrog the area into a loft living cultural. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 279. NEW MEDIA AND NEW ECONOMY CLUSTER DYNAMICS 279, space of which one part was new media Soho valued and accessed as a normal business. London possessed the fine tilth of multiple spillover. cultural forms including old media the arts In Heydebrand s 1999 and Pavlik s 1999. entertainment and advertising from which studies of multimedia in New York as we have. multimedia could naturally grow seen the entertainment and financial sectors. As Nachum and Keeble 2000 showed are powerful drivers of the industry with both. London has at least 70 per cent of UK employ functional and geographic proximity being key. ment in media and 90 per cent in music Of features albeit as in London the precise. this Soho captures about 70 per cent and as streetblocks occupied by the corporate giants. they said The entire chain of production are somewhat upscale of those of the new. film production and post production film media firms themselves In south Manhattan. distribution and sales agents design photo especially around SoHo and the iconic. graphy music advertising is available in an 55 Broad Street where was established the. area of about one square mile 2000 11 New York Information Technology Center. Soho is also home to foreign media firms as business as elsewhere involved entertainment. well as those from the UK Hence multimedia software Internet services CD ROM title. in London has a bias towards traditional development and website design Surrounding. media and advertising growing from the them functionally and spatially are the adver. audio video and print media in the neigh tising marketing entertainment education. bourhood The main kinds of new media publishing and TV film and video producers. market served involve corporate presentation and publishers Heydebrand 1999 saw a. entertainment and leisure particularly Internet three level structure to the industry with the. games and advertising and marketing corporate giants resting on the mass of new. notably development of Internet websites In a media businesses who themselves relate impor. study by Russ 1998 he shows that London tantly to Silicon Alley s creative and innovative. also has subclusters in Covent Garden capability as represented particularly strongly. Clerkenwell and Shoreditch The first named by 55 Broad Street Because the last named is. is well known as one of Europe s leading unique to New York it is more interesting to. urban cultural zones the ambience of which explore its existence as a public private inter. was reinvigorated when the capital s fruit and vention than to repeat the locational lineages. vegetable market was adaptively reused for and rationales of the 1000 plus startups in and. shopping and leisure activities to complement around SoHo That it functions as a cluster. its traditional function as one of the world s with horizontal and vertical networks based on. leading places for opera The other two are in trust exchange co bidding and competition. London s East End former industrial and on contracts subcontracting and knowhow. working class zones Clerkenwell was once and equipment sharing as in London is made. London s clock making quarter These loca clear by Heydebrand 1999 and Pavlik 1999. tions are selected because they are in cheap in their accounts. rent areas yet the EC1 postcode is seen as The development at 55 Broad Street is dif. valuable owing to its proximity to central ferent in that it is the product of the new econ. London s huge financial district Much of the omy governance practice of associationism. market for these firms is governed by the vari Cooke and Morgan 1998 With its first meet. ety of clients locally available especially in ing in mid 1997 the New York multimedia. business services Although far smaller than innovation network set a mission of develop. the Soho clusters firms in these mini clusters ing the city as the global capital of multimedia. congregate for the same reasons notably that It united mayoral and gubernatorial represen. it is useful to be co located as an insurance tation Columbia University s NSF backed. against breakdowns of equipment or for sub Engineering Research Centre in multimedia. contracting Trust in each other is highly the finance and services community venture. 15 Lievrouw 3314 13 qxd 11 21 2005 2 51 PM Page 280. 280 HANDBOOK OF NEW MEDIA, capital leading multimedia startups major computing clusters gaining externalities or. multimedia companies arts and culture spillovers from such co location Median. groups and industry associations They met in firm size is small converging upon nine. the New York Information Technology Center employees though it is supplemented with. 55 Broad Street brainchild of developer freelancers as required by specific projects. William Rudin who invested 40 million in large firms tend to have a more stable labour. superwiring the building as an incubator for force profile Creative workers are rather. multimedia startups Technologically the intensively employed in the industry at a level. building offered in 1997 turnkey multimedia approximately equivalent to those employed. transmission with satellite access desktop fibre in technical and business functions together. optics C5 copper video conferencing and Firms market products globally but interact. 100 MB per second Internet bandwidth in production highly locally Over half. There were 72 tenants in 1997 including the value of sales is accounted for by inwardly. International Business Machines and many or outwardly subcontracted activities more. startups in design reportage security and than two thirds of which is local The San. research among others The association like Francisco cluster is more associative Cooke. other cluster governance networks has policies and Morgan 1998 in the sense of having. to lobby for tax equity and rent incentives developed representative organizations but. business support programmes and expanding real service support is largely private rather. incubator opportunities By 2005 as well as than public in origin except for close asso. startups it housed the likes of Cap Gemini ciation with universities in the Los Angeles. software Nokia content Level 3 commu cluster, nications and Sun Microsystems Java mobile A second case of special interest because of. devices its cluster identification and warehouse district. We have already given some attention to location is that offered by Brail and Gertler. Scott s 1998 1999 studies of Californian 1999 which anatomized the multimedia. multimedia As we have seen they are closely industry of Toronto Canada Underlining the. linked to the software and peripherals sectors functional division of the industry between. of Silicon Valley and business and education developers and publishers by reference to the. products often for San Francisco clients in Canadian Interactive Multimedia Arts and. the north with the Hollywood entertainment Technologies IMAT distinction between. cluster in southern California being the driver producers and publishers Brail and Gertler. of multimedia in Los Angeles There are many segment the market into four corporate. smaller and startup businesses in the clusters education entertainment and information. with many of the standard characteristics reference They speculate that health may. found generically elsewhere Geographically be developing as a new segment Interestingly. San Francisco s multimedia firms are strung evidence is advanced of the Ontario Film. out along Route 101 from south of San Jose to Development Corporation s view that multi. San Mateo and the main concentration in media like the film TV industries shows. downtown San Francisco across the Golden increasing vertical integration as producers. Gate bridge to northern Marin County In Los attempt to control distribution channels. Angeles the axis is much less attenuated con However Brail and Gertler s research evidence. centrated on a line from Burbank through suggests this is a misreading of the situation. Hollywood to Santa Monica In California and that most Canadian multimedia firms are. there are more developers and hardware independent small creative and dualistic full. software technicians in the San Francisco area timers and freelancers just as in California. and more entertainment and communication The Toronto study identified some 300. companies in Los Angeles They also overlap firms in Ontario from a Canadian total of. somewhat with pre existing software and some 560 of which 201 67 per cent are in.


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