New media, the new economy and new spaces

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Geoforum 31 (2000) 425±436
New media, the new economy and new spaces
Andy C. Pratt
Department of Geography and Environment, London School of Economics and Political Science, Houghton Street, London WC2A 2AE, UK
This paper counters proponents of the Ôweightless economyÕ who have suggested the Ôdeath of distanceÕ in relation to economic
and social activities that use the worldwide web (WWW). An analysis of new media developers in New YorkÕs ÔSilicon AlleyÕ
demonstrates that place and distance are still important. The most important aspect of this co-location is the possibility of social
interaction. This paper points to the value of analysis of the material practice of the social (and the economic and cultural). The
notion of Ôuntraded dependenciesÕ is developed through looking at its manifestation and constitution in the speci®city of space, time
and economic activity. Ó 2000 Elsevier Science Ltd. All rights reserved.
Keywords: New media; Cultural industries; Place; Networks; Location
1. Introduction
adopt a rather more sophisticated view of untraded
dependencies than is currently found in the literature.
There is a growing consensus amongst academics,
The paper is divided into three substantive sections.
business commentators, politicians and the news media
The ®rst section situates the research in the context of
that the infrastructure, technologies and practices which
the development of the internet and the worldwide web
constitute the new media are revolutionising economic
(WWW). The second section outlines a number of
activity, most speci®cally through the activities known
conceptual debates that have a bearing on accounting
as electronic-commerce (e-commerce) and business-to-
for new media practices and the locational clustering of
business (B2B). Many (non-geographical, mainly eco-
new media activities. The ®nal substantive section is a
nomic) commentators are also quick to add that the role
case study of new media in Silicon Alley, New York.
of geography in shaping the location of these new eco-
nomic activities is at best limited, at worst it is non-ex-
1.1. De®nitions
istent. A growing number of accounts do document,
albeit in a partial or anecdotal manner, a revolution of
The term new media has been used carefully in the
business practices and economic organisation. However,
research reported below in order to represent those in-
none, as yet, seem to be able to sustain the popular ar-
volved in developing tools and practices that exploit the
gument that geography, or speci®cally place and dis-
potential of the WWW. As we will note below, de®ni-
tance, no longer matters. This point is also borne out by
tions are contentious, so this is a situated de®nition, not
the empirical evidence of local clusters of new media
one that is universally held. New media incorporates
activity in New York, San Francisco and London and
what has been commonly known as multimedia: liter-
many other global cities (Hillner and Weiners, 1998).
ally, the convergence of text, sounds and images in the
It may be hypothesised that geography matters even
same medium. Multimedia, as a term, is closely associ-
more in this current phase of development of new media.
ated with the CD-ROM delivery system. New media is
The aim of this paper is to explore why and how ge-
used in this paper as a term to refer to all multimedia
ography matters, and to o€er an account of the multiple
systems whether on-line, on disc, or related to the de-
dimensions of the clustering of new media activity. We
velopment of older broadcast or recording technologies
accept the case for untraded dependencies playing a role,
associated with text, sound and images.
however, the paper suggests that it may be necessary to
The focus of interest in this paper is on the practi-
tioners of new media, those who construct and maintain
web pages and those who create companies that seek to
E-mail address: [email protected] (A.C. Pratt).
exploit the possibilities of e-commerce or B2B activities.
0016-7185/00/$ - see front matter Ó 2000 Elsevier Science Ltd. All rights reserved.
PII: S 0 0 1 6 - 7 1 8 5 ( 0 0 ) 0 0 0 1 1 - 7

A.C. Pratt / Geoforum 31 (2000) 425±436
We have consciously focused on companies primarily
established, international trade could develop from a
involved in these activities, and not looked at those
position of strength (Lanvin, 1993). The 1964±1989
companies that have Ôbolted-onÕ a new media capability
version of the internet, a switching system of digital
to their existing business. To include such companies
information, had a limited application. However, the
would introduce a range of confounding factors into an
development of the WWW, the multimedia branch of
already complex situation; however, this might be a
the internet that utilised graphical elements, in 1990 was
useful focus for future work.
the beginning of that which is the recognisable web of
There is a common perception amongst commercial
today. Another key element was the development of
analysts of new media that the sector will continue to
software, most notably search engines, and particularly
grow (Baldwin et al., 1996; Kelly, 1998). This prediction
web browsers. The ®rst browser, NCSAÕs Mosaic, was
is based upon the well-founded assumption that because
developed in 1993. In 1995 NetscapeÕs Navigator be-
new media is a convergence form, its impacts will mi-
came available and quickly established itself as a uni-
grate to activities that form the basis of convergence.
versal standard. Microsoft later sought to re-colonise
Thus, the ®rst two areas of frontline impact should be:
the web via its own browser, Internet Explorer.1 Around
®rst, media, communications, and the electronically
the same time, companies such as Macromedia devel-
based cultural industries; and second, businesses going
oped web-authoring tools ± such as Director ± to facil-
Ôon-lineÕ (the domain of e-commerce and B2B). Many
itate the construction of web pages. The ®nal element
commentators have claimed that economic and business
has been the growth of Internet Service Providers (ISPs)
practices are somewhat peculiar in the new media sector.
providing access to the internet for private users. The
This ÔstrangenessÕ of the new media sector, added to its
growth of ISPs has been even more recent; however, the
capacities to impact more widely on the economy as a
growth has been signi®cant. America Online (AOL) has
result of convergence, has led some commentators to
achieved such a powerful position by the start of 2000
claim that new media will create a Ônew economyÕ with
that it was able to draw the global media conglomerate
new rules of business practice and economic rationale
Time-Warner into a merger.2 The resulting entity was,
(Kelly, 1998). This paper does not make any claims as to
at formation, the third largest company in the world,
the broader nature of the current or the future Ônew
with a turnover close to that of Mexico.
economyÕ. Instead, it con®nes its comments to devel-
opments and practices within the actually existing new
1.3. Research lags, time lags
media sector.
Historians of technology comment upon the rapid
1.2. Novelty and rates of change
adoption rate of the web compared to technologies such
as the telephone or the fax. One of the stable charac-
A key problem in an analysis of any aspect of new
teristics of the new economy has been the rate of change
media is time. There are many anecdotal accounts of the
and instability of both technologies and of business and
almost instantaneous economic success, as well as veri-
wider social practices. A period of 5 years, or less, of
®ed empirical evidence of the actual performance of
Ôpermanent revolutionÕ is hardly the best vantagepoint
Ôe-stocksÕ. The Ôe-economyÕ is the child of the WWW.
from which to make any sort of judgement about the
The WWW has come to prominence, and crucially to
structure of an industry, or its location patterns. How-
wide user-ship, only in the late 1990s. The rate of growth
ever, this situation must be faced when carrying out
is dramatic.
research in this area.
The internet, that is a network of switches to split,
The object of our enquiry is thus novel, and con-
direct and recombine digital packages of information,
stantly changing. A large number of journalistic ac-
was initially developed in 1964. The public investment in
counts of the growth of the web, and commercial
the ARPANET in the US expanded the internet across
adventures of its use, are now appearing (see, for ex-
military and university installations (Hafner and Lyon,
ample, Stoll, 1993; Negroponte, 1995; Coupland, 1995;
1996). Various national information infrastructure ini-
Hafner and Lyon, 1996; Ullman, 1997; Dyson, 1997;
tiatives were proposed in the early 1990s, notably US
Wol€, 1998; Kelly, 1998; Bronson, 1999). These o€er a
Vice-president Al GoreÕs much heralded Ôinformation
superhighwayÕ, with an aim to expand the internet to
build national foundations for companies providing
1 Both Navigator and Explorer were distributed free in an attempt to
both hardware and software. A key objective here was
develop demand for the use of the web. Clearly, there was a future
not so much that of Ôrolling out infrastructureÕ as that of
possibility for any provider of such software, if it had enough users, to
creating demand to build up the user base, so that the
exploit its monopoly position by extraction of a micro-rent for each
(national) private sector would be stimulated to develop
use. In part, this is what propelled Microsoft into the market.
2 See Herman and McChesney (1997) for details of the political
internet software tools and applications. The notion was
economy of the global media industries before convergence with the
that once a base in protected national markets had been

A.C. Pratt / Geoforum 31 (2000) 425±436
partial insight into the various lifeworlds of the pro-
a range of physical location, economic, social and cul-
tagonists, and are a necessary part of the background to
tural settings of new media activity. Next, we review
a study such as this. What is of particular value in these
literature on the weightless economies and multimedia
accounts is not only their immediacy, but also the ways
clusters as a way of positioning the Silicon Alley case
in which some re-count an awareness of the unformed,
only partially imagined, potential of the web. Compa-
nies and individuals are not only considering ®lling a
market niche with a re®ned product as is commonly
2.1. Weightless economies
found, in the case of new media they are having to si-
multaneously imagine a market, a niche, and a product.
A body of work on the Ôweightless economyÕ has been
This extraordinary practice is an important character-
developed in the ®eld of economics and has become
istic of the new media sector. Moreover, in parallel,
in¯uential in business and policy arenas (Quah, 1996a,b,
there is a strong conviction that huge amounts of money
1997a,b,c; Coyle, 1998; Caincross, 1998).3 This work has
will be made from these (yet unde®ned) activities.
yet to make an impact within geography; this is ironic
Three simple models can be identi®ed. ISPs o€er a
given what it has to say about geography. Put very
standard manner of making money as they are gate-
simply, accounts of the Ôweightless economyÕ point to the
keepers charging a tari€ for use. Advertisers o€er an-
radical possibilities of the cost-free reproduction and
other traditional mechanism as clients can be charged
distribution of e-goods such as software. In®nite num-
for display advertisements. Finally, web pages can act as
bers of copies (all ÔoriginalsÕ) can be made and be in-
a display that can be a Ôshop windowÕ or a point of sale.
stantaneously available ready for use on any number of
However, these three models o€er a rather backward
customerÕs computers. Consequentially the role of
looking conception of the future of the web, and its
physical location associated with transport of raw ma-
convergence with commerce, entertainment and infor-
terials to the producer and the goods to market are no
mation. The additional possibilities lie at the boundaries
longer relevant. Producers will be free to locate where
of imagination and technical problem solving that can
they wish. An extension of this argument is that cities
link together both concepts of exchange and the prac-
will decline as centres of economic activity and be re-
ticalities of facilitating that exchange with interactive
placed by dispersed teleworkers. It is on this foundation
communications technologies. Much of the initial de-
that the notion of the ÔdeathÕ, or the end, of geography
velopment of web companies has focused on the simple
as a location factor in relation to new media has been
provision of services (web-page design), or the creation
of a new type of intermediary between suppliers and
It is not my intention to dispute the core idea of the
consumers. Some radical organisational forms that are
Ôweightless economyÕ; simply to add three signi®cant
®rst con®ned to web companies have quickly generated
caveats that concern the embedded nature of the
a realignment of organisational forms in non-web
weightless economy in the world of atoms and people.
companies as they too attempt to exploit the potential of
First, even within Ônew mediaÕ few goods actually fall
web-based commerce.
into the weightless category. The prime example is a
software program. To be weightless it must be con-
ceived, traded and distributed on-line, moreover, it must
2. Conceptualising new media activities
have no paper documentation and no packaging. Few
items reach such purity, often for good reason. It is
Academic accounts of new media are rather less
possible to sell computer games in this way. However,
common than the journalistic variety, in part due to the
people still have an attachment (maybe nostalgic) to
lag-time between research idea, funding application,
consuming material objects: the box and the brochure
research activity and publication that can commonly
associated with a product. As one of my informants
exceed 3 or 4 years. A variety of strands of academic
noted: ``you canÕt put a web page under a Christmas
work can be identi®ed and broadly categorised into
tree''. So, whilst weightless products are possible, they
those that are concerned with the Ôon-lineÕ world and
are not yet, and possibly may never constitute, the
those with the o€-line world. The former can be divided
into two camps. First, those sociological or cultural
accounts that explore the formation of online identity
3 This body of work is also referred to as dematerialised economics.
and community (for example Rheingold, 1993; Feath-
Leading business commentators, as well as national and international
erstone and Burrows, 1995; Doheny-Farina, 1996).
public policy advisors also draw upon this literature. These ideas are
Second, those by economists interested in electronic
common currency amongst what Negroponte (1995) terms the
commerce. A particular in¯uential representative of this
ÔdigeratiÕ (for example, those associated with Wired magazine and
with MIT Media Lab) as well as more widely such as with writers and
group has theorised about the Ôweightless economyÕ. The
commentators on The Economist and the Financial Times, and the
o€-line group are characterised by those concerned with
Bank of England Quarterly.

A.C. Pratt / Geoforum 31 (2000) 425±436
majority of goods traded (even as a proportion of those
these goods must still take place and the role of labour
that are nominally weightless).
processes and transport costs be taken into account.
Second, weightless products still have to be conceived
Perhaps it is better to think of e-commerce companies as
and created. As yet, software is not autonomously
a new technical division of labour. Whilst it may be
produced by other software. In fact, as the case studies
argued that one fraction of the labour process is freed
of the development of contemporary software indicate
from location constraints; it is still inextricably linked to
(Cusumano, 1991; Cusumano and Selby, 1996), pro-
the rest of the production process which is subject to
duction is an intensively human process. Production
more traditional location factors. Even if we take the
involves a huge amount of investment to sustain the
extreme case by abstracting e-commerce from its pro-
employment of huge teams of designers and managers to
duction processes we could argue that such activities will
create and continually update the software. On top of
still be subject to ties to particular places. As we will
this there is a huge sales force, advertising, and a
note below, these ties may not be of the traditional
growing cohort of Ôhelp sta€Õ to be maintained if a
transport variety, but instead related to organisation
product is to be trusted and viable.
and knowledge transfer issues. Nevertheless, the result is
Third, related to the second point, the armies of
a spatial clustering.
software designers, managers, sales and support need to
be co-ordinated. It is theoretically possible to carry out
2.2. Embedding the weightless economy
such tasks remotely. Software exists to facilitate so-
phisticated monitoring, delegation and evaluation of
If the prescription of the death of geography is pre-
dispersed tasks carried out by individuals connected to a
mature how are we to account for and explain this ge-
system. Thus, conceivably, all of these tasks could be
ography? One useful source of insight might be the body
carried out remotely and there exist a Ôvirtual software
of economic geography that has sought to account for
factoryÕ. Moreover, the Ôvirtual cityÕ could also exist
clustering of economic activities. Work on transaction
whereby work related social interaction could take
costs has been used to account for similar phenomena in
place. However, the Ôpower of placeÕ seems to continue
more traditional manufacturing industries. However,
to exert an in¯uence. A good example is the recent
this argument rests upon the minimisation of transac-
growth in Ôcall centresÕ in many parts of the world. It is
tion costs through organisation and location. Transac-
true that some sta€ work from home, however, by far
tion costs theorists argue that, organisationally, costs
the majority work in individual cubicles in huge open
may be reduced through outsourcing production to sub-
plan ÔshedsÕ. Workers are intensively, and many would
contractors (see, for example, Williamson, 1975, 1985).
argue, intrusively monitored (data are collected and
Empirical analyses indicate that strong control over
summarised by managers of every key stroke, and of the
contractors may require frequent contact and inspection
time to make a sale on a call; time of visits to the toilet
of part-®nished goods, as well as transport of goods
are also measured in detail). However, workers are still
from supplier to production in a very short time period
collected together in one location.
(such as Just-In-Time systems). Both points suggest a
Work has yet to be carried out on this issue but one
spatial dimension to the minimisation of transaction
can hypothesise that there must be some local, geo-
costs, namely physical proximity and the co-location
graphical factor, related to surveillance, to work disci-
with similar or parallel industries (Scott, 1988).
pline or work practices, that commercial operators
Analyses of clusters, or co-located ®rms, have high-
believe bene®ts co-location of workers. Such a location
lighted what are termed Ôuntraded dependenciesÕ. Un-
factor must apply to both routinised work such as call
traded dependencies may reinforce the economic factors
centres, as well as to specialised activities such as soft-
of transaction costs. Storper (1997, p. 19) identi®es Ôla-
ware, see, for example, the corporate campuses of Mi-
bour markets, public institutions, and locally or na-
crosoft et al. The same point can be made regarding
tionally derived rules of action, custom, understanding
clusters of companies that either group around the
and valuesÕ. Other writers have used the far more di€use
corporate campus or, the grouping of new media com-
term of the embeddedness of economic action to allude
panies found in New York, San Francisco, London, and
to the same processes (Granovetter 1985; Grabher,
other emerging centres. Thus, despite the apparent logic
and potential of the Ôdeath of distanceÕ with regard to the
The question is, what form do transaction costs, un-
weightless economy, when the matter is looked at in
traded dependencies, or embeddedness generally take in
more detail there are a number of material impediments
the new media sector? Moreover, will these factors be
that Ôbring it back to earthÕ.
manifest as a co-location of ®rms engaged in the same
Before moving on, we must note a further issue,
and parallel activities? If the weightless economy hy-
namely that the weightless economy only accounts for
pothesis is followed to its conclusion, along with the
activities in part of the economy. Where there is e-trade
technological determinism commonly found in such
involving regular, weighty, goods then production of
accounts, we should not expect clustering. Transaction

A.C. Pratt / Geoforum 31 (2000) 425±436
costs are the very stu€ of B2B and e-commerce, what
important point is whether electronic communications
clustering there was would occur near distribution hubs.
can fully replicate the physical world of face-to-face
It could also be assumed that untraded dependencies
meeting and social interaction. The aim of the remainder
could be managed Ôat a distanceÕ with telephone, e-mail
of this paper is to explore the nature of untraded de-
and web cameras.
pendencies in the new media sector in Silicon Alley, New
Research by Scott (1996, 1997, 1998, 1999, p. 811)
York. As will be clear as the argument is developed, it is
draws upon ®eldwork in a range of cultural industries,
®rst necessary to explore the local nature of business and
and he argues that the spatial clustering of producers
labour organisation.
facilitates Ôunstable, ®nely grained, frequent and medi-
ated face-to-face contactÕ, moreover, that mediation,
iteration and heuristic development involves Ônot only
3. New media, New York (Silicon Alley)
concrete practices and technologies, but also the emotive
content of productsÕ (emphasis added). Following this, it
New York has emerged as a contender to be the
could be hypothesised that in the ®eld of new media a
world node in the production of Ônew mediaÕ (Hillner
clustering of producers will occur where new commu-
and Weiners, 1998). Such a claim has been made by
nication technologies are insucient to capture the full
protagonists via assertion, reference to commissioned
range of human expression. Although it is not the focus
research, and journalistic survey (Coopers and Lybrand,
of this paper, we might also expect to ®nd a clustering of
1996, 1997; Indergaard and McInerney, 1998; Citizens
distribution points at transportation hubs, something
Budget Commission, 1998). The objective here is not to
not so di€erent from current patterns.
evaluate such claims; rather, simply to acknowledge that
Clustering of producers will, it may be hypothesised,
the protagonists believe it to be so and to explore how
occur in particular places, namely those that a€ord a
they are seeking to substantiate such claims. One of the
large degree of chance and random encounter with both
themes developed below is how New York, or rather
similar and di€erent producers, and users. These places
Silicon Alley in particular, is actively being ÔmadeÕ into a
would facilitate mediation, iteration and heuristic action
New Media centre.
that is integral to production in the wider cultural in-
The ®ndings reported below draw upon a series of in-
dustries, and particularly the case in new media.
depth interviews and participant observation carried out
The debates outlined above suggest that whilst
in mid 1998 in New York. The objective is to bring as
manufacturing industries may exploit economies of
few preconceptions to the research as possible. Thus, the
scope via subcontracting the additional communication
agenda was to ®nd out what people were doing, how
needs that involve person, time and transport are more
they constituted themselves and their companies, and
likely to be resolved through co-location. Arguments
how they carried out their business. This naõve approach
about the weightless economy suggest a minimisation,
employs a loosely de®ned ethnographic frame of refer-
or erasure, of distance e€ects due to the improved fa-
ence. The overall objective is to report activities as the
cility of communication and ÔfreeÕ transport of ®nished
protagonists see and understand them, and in so doing
goods (if they are wholly software). Although not
render their life-world for comparison or contrast with
mentioned in the literature, there is empirical evidence
more general expectations or assumptions.
to suggest that e-trade that involves Ôweighty goodsÕ will
Research on the topic of new media is very dicult,
give rise to warehouse clusters near existing communi-
due to the fast moving nature of the business and its
cations hubs that give access to large markets, com-
relative youth, consequently, very few documentary re-
monly at motorway intersections.4 Amazon.comÕs
cords exist. In addition, there is considerable debate
distribution centre in Slough, West London is a good
amongst and between protagonists and general com-
example (Dodge, 1999).
mentators as to what new media actually is. A wide
The case of new media would seem to o€er a better
range of new media protagonists were interviewed
potential ®t with the weightless economy argument as it
(networkers, employees, free-lancers, entrepreneurs,
represents a new technical division of labour that can be
property developers, and city ocials). Each interview
organisationally and physically separate from produc-
took place in the new media milieu, in Downtown and
tion and distribution. Clearly, B2B interactions (pur-
Mid-Town New York, in the oce, studio, co€ee shop,
chasing) could potentially erase the standard transaction
or restaurant. Interviews probed the history and current
costs arguments for co-location; however, the issue of
position of protagonists in the creation of new media
untraded dependencies may be less clear cut. The most
enterprises. Interviewees commonly ranged over (what
academics would classify as the economic, social, cul-
tural and political) aspects of their work and life in a
seamless thread. Rather than excluding the Ônon-eco-
This process of the reorganisation or warehousing and distribution,
together with the use of automated picking systems, has already
nomicÕ, or the Ônon-geographicalÕ, discourse from the
developed apace (McKinnon and Pratt, 1985).
analysis, I sought to embrace the complex webs of

A.C. Pratt / Geoforum 31 (2000) 425±436
relations that characterised protagonists lives. As well as
a credit card. The big break is getting a contract to de-
the interview material, secondary sources such as web-
sign a one-o€ web page for a small company; then they
sites, newsletters, e-mail, and newspapers were moni-
may move to New York to be part of the perceived New
tored. I also Ôhung outÕ in Silicon Alley talking and
Media community in ÔSilicon AlleyÕ. This pattern may
observing activities inside and outside new media com-
continue until they want to pitch for larger contracts, or
panies, and in the social milieu that the new media
they devise a web related application that they think
workers frequented.
might be saleable (a software application is the most
Interviewees were very sensitive about labelling; they
conventional, however, some only have a distinctive site
generally sought to distance themselves from the term
name and a concept). Product development, or company
ÔmultimediaÕ and orientate themselves toward the label
development, requires ®nance for new hardware and
Ônew mediaÕ. Accounts of this preference cited the
sta€; this requires money in the form of Ôup frontÕ in-
commonly held, lay, association of multimedia with
CD-ROMs; which were generally regarded as either at
Next most new companies seek venture capital. They
best a limited, or at worst a failed product. The term
do this by pitching ideas to Venture Capitalists who
new media sought to link their activities with established
meet new media developers at ÔcybersudsÕ parties. Cy-
ÔmediaÕ activity; at the same time, associating with the
bersuds parties, are informal meetings of new media
ÔnewÕ achieved a distancing e€ect of themselves from the
people (Ôcyber-Õ) with drinks, beer (ÔsudsÕ); people meet,
ÔoldÕ. Finally, many interviewees were re¯exive about the
network and talk (have Ôface timeÕ, or meet IRL: In Real
term, considering Ônew mediaÕ as a Ôplace holderÕ rather
Life). These parties are also where the new company
than a de®ned place. Whilst this point may be consid-
may recruit, via word of mouth, new employees. The
ered as minor, I think that it is emblematic of the un-
Venture Capitalists are e€ectively ÔshellÕ ®nancial in-
stable and hybrid nature of what we might understand
struments for small investors. Venture Capitalists create
as Ônew mediaÕ.
a strategic position such that they are the key passage-
The analysis that follows summarises the ®ndings
point of investors and companies. The Venture Capi-
from this research through seven themes that o€er a
talists will, if they are interested in the investment, put
number of perspectives on the form and nature of new
together a plan with a clearly de®ned Ôexit strategyÕ
media activities in New York.
timed for 18±24 months hence. Thus, money is chan-
nelled into the company, which may well at this stage
3.1. Burn rate: the vaporous company
have not produced a product or sold anything. The exit
strategy is the Independent Public share O€ering (IPO);
Most economic and cultural geographers display
where stock in the company will pay o€ the initial in-
unquestioning con®dence that their respondents know
vestors, channel some money to the initial entrepre-
what they are doing. The new media community is de-
neurs, and raise further development capital. In a recent
monstrably and overtly unsure about its own activities;
commentary on this process Wol€ (1998) (see also
however, this is presented with some bravado. This can
Cringely, 1996, on a similar process in Silicon Valley,
be accounted for either in terms of naivety, or in terms
California) refers to the total capital advanced divided
of insight. I think that what respondents were trying to
by days before the IPO as the Ôburn rateÕ of new media
communicate was the inappropriateness of conventional
companies. At this stage the original new media entre-
business models. Indeed, they often orientated against
preneurs may have, via stock options or straight pay-
Ôbusiness modelsÕ. Their ad hoc alternative was to go
ment, been made rich; the Venture Capitalists and their
with the ¯ow and Ômake it up as you go alongÕ. Another
clients have made their pro®t, and shareholders will be
way of looking at this would be a, yet unnamed, ¯exible
holding shares (which may well be appreciating in
management and product strategy. Conceptually, this
value). The company may well still not have produced
resonates with the notion of strategic agency. Here the
anything; or, it will, as in the case of all internet com-
point is not so much about alliances, but about actually
panies at the time of writing, be making an operating
constituting the resources (human, physical, ®nancial
and contractual) to create a ®rm that has some stability
It is not surprising that conventional Business School
of business goal and product. Some sense of the eco-
models ¯ounder in such a vaporous world of expecta-
nomic and organisational maelstrom within which new
tion and virtuality. Of course, what all protagonists
media operates can be garnered from the following
hope and believe (not unrealistically) is ®rst that there
thumbnail sketch of a new media Ôstart upÕ that can be
will be a product, and second it will have a market, and
patched together from interviewees experiences.
third, that eventually pro®ts will be made, and the stock
A typical company is set up by one or two high-
will be worth even more than it is now. Aside from those
school students who work part-time, all night, in their
who have made an early pro®t through an IPO, entre-
bedrooms in upstate New York. What investment is
preneurs worry about how to make money from the
required is ®nanced on unsecured loans commonly using
internet. What can they sell; what is their product or

A.C. Pratt / Geoforum 31 (2000) 425±436
service? This is the other aspect of the lack of a business
tancy and artist. Some of the companies had migrated,
model, the lack of a product.
from one activity to another as they became trusted by
contractors. It is perhaps better to identify these com-
3.2. Virtual products and services: the viral company
panies as ÔviralÕ in nature. Just like a biological virus,
they mutate and develop when in contact with host
We can perhaps now see why those outside the new
companies. In some cases one or other partner may ÔkillÕ
media community feel more secure with the idea of the
or absorb the other.
CD-ROM/multimedia. As one interviewee noted, re-
For many readers the appendage of ÔartistÕ to the
tailers, investors and consumers understand and accept
activities of new media companies may seem anomalous.
multimedia, especially if it translates into a familiar box
However, it is an important part of many companyÕ
or material objects (classically, the CD-ROM in a Ôjewel
identities, and that of their workers, that they are also
boxÕ). All concerned have many more diculties with
producing Ôcutting edgeÕ digital art. Some companies
Ônew mediaÕ especially if it has no material product as-
host Ôdigital galleriesÕ of their own, their friends, or
sociated with it. So, shiny discs can retail with a price
simply their favourite work (see Razor®sh: http://
point; the consumer is used to buying records and CDs.
www.razor® While for some companies this is
CD-ROMs are more of the same. Except, they are not;
part showcase for their design skills, for many it seems
they are a version of new media. Other versions are still
to be a statement of principles associated with the
Ôunder developmentÕ.
workers identities.
If Ônew mediaÕ is not quite a boxed product, may be it
is simply a service? It is clear that a web designer can sell
her services on a one-o€, or continuing basis; just as any
3.3. The ®rm as zoo
other service might be sold. Likewise, new media com-
panies can package information for delivery (databases,
Given what has already been discussed above about
images, text). Finally, they can use new media to sell
the nature of new media production it will be no surprise
other products: namely advertising. These three stereo-
to discover that the labour process too is far from that
types have analogous positions in the old media world;
which we may normally expect to ®nd. In many respects,
and as such their business models are not so di€erent.
ÔnormalÕ is not a word that adequately describes much of
This is true to an extent. However, few companies
what goes on in the cultural industries more generally,
seek to replicate old media in this way (this is the gen-
let alone new media (Lash and Urry, 1994). Thus, it is
erally acknowledged failed strategy of old media oper-
not surprising that we ®nd casualisation, self-employ-
ating with new media). Even the ÔstraightÕ strategies
ment, chronic job insecurity, and Ôself-exploitationÕ
noted above tend to hybridity. In short, the potential of
common to analyses of the media and cultural industries
technology and human imagination generates something
more generally (Ross, 1997, Zukin et al., 1999). Some
new. Advertising is not ÔsoldÕ in the conventional way.
particular aspects of the new media workers are worth
An illustration of the Madison Avenue based company
highlighting. The ®rst, and this is shared with many
DoubleClick ( will help
other media industry workers, is the spill over between
here. DoubleClick operate software that collects and
work and play. Long hours and socialising with media
analyses information on the user and the website looked
co-workers and other creative workers generate a strong
at Ôon the ¯yÕ, such that by the time the user clicks on the
and peculiar a€ective community.
second site information systems and databases have
What is particularly interesting is how dicult it
been analysed and a customised advert is placed on the
seems to be to create Ô®rmsÕ. We have already noted that
userÕs screen. DoubleClick collects a rent from adver-
the ÔmarketÕ location of a ®rm and its product are
tisers for the number of ÔclicksÕ as well as the accumu-
problematic. However, even when this problem is re-
lated data returned to companies advertising with
solved the internal issues of constituting a ®rm still have
DoubleClick. Such a simple idea (though very complex
to be attended to. A strong aspiration of many new
in practice) is an apparently Ôsure-®re winnerÕ; yet
media workers is to freelance, or to be self-employed.
DoubleClick, one of New YorkÕs most successful new
Indeed, it is possible to operate on this basis. Conse-
media companies, still has yet to ®le a pro®t.
quently, many new media companies ®nd it dicult to
DoubleClick, which e€ectively trades data, is one of
recruit sta€. Aside from the usual labour market re-
the more conventional companies. Many others have a
cruitment issues the most signi®cant in the new media
far less clearly de®ned product or activity. In fact, this is
world are those of convincing workers to eschew inde-
complicated by the fact that so many companies that I
pendence and work for a company. Companies talk of
interviewed were in an advanced and rapid state of
the need to Ôadd valueÕ via decor, perks, and a relaxed
evolution/revolution. In summary, a continuum can be
setting. In addition to ®nancial bene®ts, which usually
identi®ed from web-page design, through, advertising,
are not about pension schemes and health plans, there
marketing, e-commerce, logistics, management consul-
are stock options in the company. Recruitment is

A.C. Pratt / Geoforum 31 (2000) 425±436
seldom by conventional advertising but by word of
referred to as a ÔsabbaticalÕ (see Ullman, 1997, for an
mouth and e-lists.
autobiographical `factionalised' account of new media
Perhaps most interesting is the labour process in new
workers in San Francisco that closely follows accounts
media. New media companies seldom have a de®ned
that I heard in New York). The sabbatical described
structure and hierarchy. The best analogy is that with a
typically divides along the group that they identify with
common radio and television format that emerged in the
most. Coders aspire to a trip far away (South America,
1980s called Ôzoo radioÕ (Garner, 1990; Gill, 2000). In
India, SE Asia, etc.) to Ôdiscover themselvesÕ, or to dis-
contrast to the usual format of DJ presenter and his /her
cover the Ômeaning of lifeÕ.5 Artists take time o€ to de-
silent support sta€, the ÔzooÕ format involves the pre-
velop their art. Interestingly, some of the artists
senter and Ôthe teamÕ all contributing in a rather hap-
feedback their Ôpure artÕ into their commercial practice
hazard and informal manner to the programme. The
either directly, or as a ÔsidebarÕ.
concept of the ®rm as a ÔzooÕ captures the extreme in-
formality and the mixing of di€erent skills and expertise
3.5. Network building
required to get the product completed. The common
sense meaning of Ômulti-mediaÕ is suggestive of the ne-
Networks exist within, without, and across ®rms, ®-
cessity to meld many di€erent media skills. The new
nanciers and clients. This statement is equally true in
media community, and educators associated with it, in
other areas of economic activity. However, in the new
California have identi®ed this as a potential problem.
media community developers and ®nanciers have sought
The model of the ÔstudioÕ has been suggested as worthy
to `grow' the community. I am not simply referring to
of emulation by new media companies, whereby the key
networks as connection here, rather the notion of net-
individual is the Director who has to plan, marshal and
work as a constitutive and constructive process and
mediate between many di€erent individuals and skill
entity. In New York, for example, Wall Street exiles
sets, as well as weaving a successful narrative, and
searching for potential new investment targeted nascent
completing the project (Regan and Associates, 1997,
new media companies. Obviously, such investment is
p. 13). Companies report that they develop Ôcorporate
risky; in the mid 1990s it was more so. It can be hy-
structuresÕ in an isomorphic response to contracting
pothesised that the synergistic relationship between
relations; in many cases, this is more the Ôcorporate faceÕ
venture capitalists and new media developers developed
of an organisationally anarchic ®rm.
to reduce the investment risks.
The New York New Media Association began as a
3.4. The new media tribe and the –bulimic career9
series of soirees and dinner parties of those involved in
the arts and technology; as a cultural link between MIT
Many workers talked about the salience of their
(Boston) and New York.6 At such occasions, business
identity as part of Ônew mediaÕ, a point that is buoyed by
and pleasure mixed with the exchange of knowledge.
their interaction with a ÔcommunityÕ of like-minded
Investors developed the knowledge and insight that
workers, and the construction of the community in
made investment possible. In time, these parties grew
writing by the press and by civic promotion agencies.
from what became ÔcybersudsÕ meetings, to huge 1000
Moreover, it is also linked to a particular elective anity
plus attendee events.7 The role such events play is still as
group associated with lifestyle, music, aesthetics, decor
a point of the exchange and updating of knowledge, as
and clothing. There are strong parallels here with the
well as acting as a crude market place of ideas and
notion of the ÔtribeÕ that Ma€esoli (1996, p. 139) dis-
business options; additionally, they have developed into
a community support and labour recruitment fair. This
``F F F[T]he constitution of micro-groups, of the tribes
is the process by which the NYNMA was created.
which intersperse spatiality, arises as a result of a feeling
Subsequently, it became the Ôpublic faceÕ of the New
of belonging, as a function of a speci®c ethic and within
Media community, able to act as a Ôthird partyÕ to
the framework of a communications network'' (empha-
pressurise the City for concessions for its members; it has
sis in original).
also acted as a publicity machine (see below). Another
Obviously, more detailed work would be needed to
spin-o€ of this community are the online newsletters: for
establish this notion more fully, however, it is a useful
example, @NY (, and the
proposition that might be explored in future work. In
Silicon Valley Daily (http://www.siliconalleyreporter.
the New York research I found that new media workers
tended to self-identify with two stereotypes: (software)
coders and (digital) artists. Both groups tended to work
5 Most of the workers that I interviewed were in their 20s.
in Ôboom and bustÕ patterns; which I term Ôbulimic ca-
6 The point here is the attempt to replicate the overlap of technology,
reersÕ. People work long days and nights, then break
money and media that proved so propitious in Silicon Valley.
7 For example Silicon Alley 99 (, and the
until the next project. They keep this pattern up for a
Rising Tide (July, 1998)
few years and then fear Ôburn outÕ and take what many
ty.html events organised by the Silicon Alley Reporter.

A.C. Pratt / Geoforum 31 (2000) 425±436
com), as well as the glossy paper magazine, Silicon Alley
The early CD-Rom was an evidence of this; they were
Reporter, which acts as a cross between social diary,
developed and sold (or, more commonly given away free
gossip column and business barometer. Of course, the
in a Ôsoftware bundleÕ) on the back of a physical Ôpre-
irony for many is that Ôface timeÕ, plays such an im-
installedÕ base (integral CD-ROM players in PCs).
portant role in such a wired community. More generally,
Whilst bits and atoms were aligned in one strategy,
this question also resonates with questions about space
strategic agency was not achieved. Retailing of games
and place in the wired world.
and information has generally been about transferring
existing activities from one platform to another. E-
3.6. Locating the wired world; aligning bits and atoms: the
commerce is no di€erent; market pioneers are following
portal as strategic agency
the CD-ROM strategy by either discounting computers,
or, in the case of a US company, giving them away free
It has been suggested, inappropriately, that place is
in order to build an on-line consumer base. Attempts to
not important in the ®eld of activities that can be
encourage the migration of users also lie behind the
transacted entirely via electronic means. However, the
strategies of cable TV companies providing internet
®eldwork does suggest ways in which space is very im-
access via and through the TV. The strategic point here
portant. First, the achievement of strategic agency; that
concerns which company can control the feed into a
is, the optimal solution, or the advised solution to the
household and thus collect the rental on the information
problems of others. Second, the mediation of the real
and the virtual worlds that is manifest in physical lo-
The other substantive spatial point is that all of these
activities require people to work for them, they all need
The ®rst sense has two dimensions to it. First, the
a place to work. Likewise, workers are needed to
organisational and aspirational interlocking of interests
maintain infrastructure, to service hardware and recep-
via strategic alliances. In the wired world this is best
tion equipment (TV, computer, modem, fax, and tele-
illustrated by the notion of a ÔportalÕ. Simply put this is a
phone). In addition to operating and servicing machines,
website which acts as a window to a selection of other
people are also required to produce the hardware, as
sites. The ÔportalÕ operator (such as Yahoo! or, on a
well as the more obvious production of content. In total,
subscription basis, Compuserve) charges a rental to
this amounts to a substantial dependent employment,
those other sites to which it signposts. The rental
and a particular geography to its location.
charged may be linked to the numbers of users passing
through the portal. These companies literally position
3.7. Real estate and the constitution of Silicon Alley
themselves at a junction, through which they hope many
will wish to pass. Their success will be increased by
Finally, we can focus on the creation of the more
convincing more users that their aspirations and desires
traditional physical presence of New Media in New
will be satis®ed if they use the portal.
York: the real estate. The ®rst salient point is the de-
The second sense, is the product: or, as the e-com-
velopment on promotion of ÔSilicon AlleyÕ. If nothing
munity would have it, the killer application. The term
else, this seems to suggest a ÔplacenessÕ about new media.
Ôkiller applicationÕ has commonly been applied to soft-
When it is explored a little further it appears that Silicon
ware applications such as ÔVisicalcÕ the ®rst computer
Alley was initially a construct of NYNMA, but one
software spreadsheet that not only de®ned a business
eagerly taken up by the community, the city and real
tool, but also made it worthwhile buying computers for
estate developers. It is true that many new media com-
average business users (Cringely, 1996). A similar ap-
panies do cluster between midtown and downtown
plication for the internet is the Ôholy grailÕ of new media
around the locale of the intersections of 5th and 6th
developers. Hopes were high for CD-ROMs as carriers
avenues, and 18th and 21st streets. The connection here
of information and games, however they were very slow
is with the availability of relatively cheap loft space for
to build a PC dedicated consumer base. Latterly, ®lms
developers to live and work; also with close proximity to
via digital video disk (DVD), and shopping, have also
street and restaurant life (SoHo); and not so far from
sought to reinvigorate this delivery channel. The details
Madison Avenue (advertising) and Midtown (old me-
are not relevant here, what is important is that each of
dia), and of course, the Downtown (®nance and city
these ÔproductsÕ seeks to de®ne a ÔterritoryÕ in virtuality
through which all other users will want to, or have to,
Interestingly, much of the promotion and construc-
pass. As users pass that way, a micro-rent can be applied
tion of Silicon Alley has been carried out through an
and, as the trac ¯ow increases, so will incomes.
alliance of the city and NYNMA, and its actual focus
Despite much popular media comment that asserts
has been on the Downtown area. Two in¯uential reports
otherwise, it can be argued that the development of a
carried out by accountants and management consultants
completely ÔvirtualÕ portal is impossible. A successful
Coopers and Lybrand (1996, 1997) sang the praises of
portal has not only to align the bits, but also the atoms.
the economic contribution that the nascent new media

A.C. Pratt / Geoforum 31 (2000) 425±436
was making to the New York economy. These reports
4.1. Location
were circulated free of charge, made available on-line,
and became the subject of news reports the world over.
A review of the literature and debates of the loca-
It was a successful example of an advertising and
tional determinants of new media and e-commerce ac-
booster strategy for the city as well as announcing that
tivities suggested a decline in cluster formation where
Silicon Alley was the Ôplace to beÕ. In e€ect, it was
communications infrastructures and technologies were
seeking to mobilise a virtual community and to attract
widely available. Empirical examples demonstrated a
it to, and weave it into, the community and fabric of
clustering of new media activities in a select group of
New York.
From the City HallÕs point of view, and the Down-
As we noted above there are two lines of argument
town Alliance Business Improvement District (http://
that can be developed. First, that the Ôweightless econ-, it was jobs and taxes that were
omyÕ perspective is prone to technological determinism ±
the target of the promotion of new media in the city.
if something is possible, it will happen (in a pre-de®ned
Economic decline, a property overhang, and the ®nan-
manner). Second, that it is also prone to a form of
cial downturn of the late 1980s and early 1990s had
economism ± economic factors are the only consider-
caused many problems for New York (Sassen, 1991;
ation in location. The paper developed an alternative
Fitch, 1993). However, there was yet another player,
perspective that stressed the signi®cance of non-traded
one that managed to achieve a strategic position: the
dependencies. The paper explored the nature of these
Rudin family. The Rudins owned real estate in the
untraded dependencies in the new media sector.
Downtown area, property that was in the early 1990s
One point that came through very clearly was that the
lying empty (Conway, 1997). Not surprisingly, the Ru-
form and practice of untraded transactions was impor-
dins paid attention to the potential market of new me-
tant; speci®cally, the need for face-to-face communica-
dia (and, at the time, its technological infrastructure
tion of a formal and informal, planned, chance and
needs). They developed a ¯agship building, called a
serendipitous nature. It was clear that many aspects of
Ôplug and goÕ building that o€ered the potential to
human interaction, those that are important in untraded
simply Ôplug inÕ to tailored infrastructure. The irony is
transactions, cannot be achieved solely by new tech-
that the building, the New York Information Technol-
nology (e-mail, webcasting, video links, etc.). The need
ogy Centre, at 55 Broad St in the heart of the Down-
for physical interaction was identi®ed in the practices of
town, close to Wall Street, was originally the very site of
learning, innovating, contracting, employment, as well
Drexell BurmanÕs Ôjunk bond factoryÕ; in part, the cause
as in socialising, eating, relaxing, or just Ôfeeling the
of the 90s slump. The Rudins, through careful and in-
pulseÕ of the city. Moreover, these functions of interac-
sightful property development, created their own real
tion were commonly transacted simultaneously; this
estate ÔportalÕ site. Not only did they create the new
multi-tasking itself could be seen as characteristic of the
media address to be seen at, but they created a website
pattern of human interactions that underpins new media
that became the unocial site of Silicon Alley (http://
production activities. So, as many commentators
The argument in favour of clustering based upon
have pointed out, the Ôpublic face of Silicon AlleyÕ is not
minimisation of economic transactions costs is weak in
even in Silicon Alley.
the case of new media. However, the case for untraded
dependency was high; based upon the character and the
multiple and interlocking function, of these interactions.
Moreover, physical proximity facilitates these untraded
4. Conclusions
dependencies and patterns of interaction. Structured
and routinised social events and institutions (such as
The focus of this paper has been on clustering of new
cyber suds parties, and particular restaurants, co€ee
media practitioners. There are a number of conclusions
bars, and night clubs) became the focus for such inter-
and points for further investigation that can be drawn
actions. Characteristically, new media spaces over-
out of the analysis. We can deal with these issues in two
lapped with other cultural milieu, and other production
parts, ®rst, location questions, and second, conceptu-
milieu (advertising, music or old media). Finally, we can
alisations of the ÔsocialÕ.
note that important agents are able to leverage these
social spaces into physical spaces, and virtual spaces.
The example of Silicon Alley, and of the NYITC (http:// demonstrated this.
The virtual and ethereal nature of new media and the
WWW should not seduce us into thinking that the
Currently Rudin is globalising Silicon Alley, a linked building is,
for example, being developed in London. See the WWW page, http://
materiality of new media production is insigni®cant. for further examples.
Quite the contrary, what this paper has shown is that the