DIGITAL MEDIA AND CONVERGENCE

The cassette tape. The VHS video. The mass market paperback book. The digital turn in mass media has consigned all these objects to the dustbin (or thrift shop) of media history. Our digital culture and economy are in the process of outmoding yet another familiar object: the wallet. Traditionally, a wallet would hold a person’s money, credit cards, and perhaps photos of loved ones. Now, all these things can be accomplished with what has become the one essential device to take with you out of the home: a smartphone.

Photos have already shifted to smartphones (why carry a few photos of family, friends, and pets when you can have several hundred with you?), and soon credit cards and money will be right there on the same device. Several companies even make smartphone cases with a compartment for carrying ID cards, credit cards, and a few bills of old-fashioned cash—essentially an interim stop on the way to full digitalization.

This shift of mobile phones into money exchange devices is already underway, with a number of digital start-ups offering innovative devices and apps. Retailers can turn a mobile phone or tablet into a point of sale (that is, a digital cash register) with Square, a small, square credit card reader that plugs into a mobile device’s headphone jack. Square was released in 2010 by digital entrepreneur Jack Dorsey, cofounder of Twitter. Square also has the Square Wallet, an app that turns a smartphone into a credit card for payments at places like Starbucks.

Of course, there is a cost to digital transactions. Credit cards typically charge merchants about 2 to 4 percent in various fees on each traditional credit card sale. (Visa and MasterCard control over 77 percent of the global market share of credit card purchases.)1 Square charges merchants 2.75 percent per swipe for transactions with major credit cards, although the retailers get the Square device and software for free. PayPal (owned by eBay since 2002), AT&T, Verizon Wireless, Google, Amazon, Apple, and start-ups like Braintree and Stripe either have already launched their mobile payment systems or plan to, but these payment systems all charge the same kinds of transaction fees.2

The biggest goal in digital transactions is enabling people to use their mobile phones to exchange money without involving the credit card companies and their high fees. One start-up doing this is Dwolla, which provides an app that allows users to exchange money for just $.25 per transaction, or for free for transactions less than $10. “Money is basically data. We should be able to exchange it without paying huge fees. When I saw the opportunity to replace this infrastructure with something newer, safer, better, faster, I thought, Why not?” says Ben Milne, the founder and CEO of the Iowa-based Dwolla.3 Milne’s motivation for creating Dwolla was that his e-commerce business in Iowa was paying $55,000 a year in credit card fees. Dwolla claims that its system of payment is more secure than credit and debit card payment, as it requires only a user name and ID. Because no other information is exchanged, there is less information at risk. Other digital companies are following with similar apps and networks, including Square Cash (released by Square in 2013), Venmo (now owned by PayPal), and Popmoney. With recent security breaches of credit card or account information at retail chains like Target, Staples, and Home Depot, the need for more secure digital transactions may also give mobile-device payments a boost.

Of course, cash is still the most secure medium for information security—it contains no personal information at all. But wallets can only hold so much, and with a smartphone already in your pocket, it is becoming easier to just leave the cash and credit cards at home—just another way that mobile devices bring Internet tech into your pockets.

THE INTERNET, the vast network of telephone and cable lines, wireless connections, and satellite systems designed to link and carry digital information worldwide, was initially described as an information superhighway. This description implied that the goal of the Internet was to build a new media network, a new superhighway, to replace traditional media (e.g., books, newspapers, television, and radio), the old highway system. In many ways, the original description of the Internet has turned out to be true. The Internet has expanded dramatically from its initial establishment in the 1960s to an enormous media powerhouse that encompasses—but has not replaced—all other media today.

In this chapter, we examine the many dimensions of the Internet, digital media, and convergence. We will:

As you read through this chapter, think back to your first experiences with the Internet. What was your first encounter like? What were some of the things you remember using the Internet for then? How did it compare with your first encounters with other mass media? How has the Internet changed since your first experiences with it? For more questions to help you think through the role of the Internet in our lives, see “Questioning the Media” in the Chapter Review.