summary of remarks at “Crisis in Journalism” event

by on February 17, 2010 · 7 comments

This morning I spoke at a Georgetown Center for Business and Public Policy event on, “The Crisis in Journalism: What Should the Government Do?” The panel also included Steven Waldman, senior advisor to FCC Chairman Julius Genachowski, who is heading up the FCC’s new effort on “The Future of Media and the Information Needs of Communities in a Digital Age; Susan DeSanti, Director of Policy Planning at the Federal Trade Commission. (The FTC has also been investigating whether journalism will survive the Internet age and what government should do about it); and Andy Schwartzman, President of the Media Access Project. Mark MacCarthy of Georgetown Univ. moderated the discussion.  Here’s the outline of my remarks. I didn’t bother penning a speech. [Update: Video is now online, but not embeddable and sound is bad.]

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What Funds Media? Can Government Subsidies Fill the Void?

1)      Public media & subsidies can play a role, but that role should be tightly limited

  • Should be focused on filling niches
  • bottom-up (community-based) efforts are probably better than top-down proposals, which will probably end up resembling Soviet-style 5 year plans
  • regardless, public subsidies should not be viewed as a replacement for traditional private media sources
  • And I certainly hope we are not talking about a full-blown “public option” for the press along the lines of what Free Press, the leading advocate of some sort of government bailout for media, wants.

2)      Indeed, public financing would not begin to make up the shortfall from traditional private funding sources

  • Free Press wants a $50+ billion endowment; would produce annual funding of $1.5 billion. But this is a drop in bucket compared to aggregate private media expenditures which total in the hundreds of billions each year
  • $270 billion spent on advertising in 2008
  • according to the Census Bureau, when aggregated together, U.S. “information industries” include over 140,000 establishments and have over 3.3 million employees.  And the publishing industries alone (not including the Internet) are a $300 billion a year sector.
  • are public subsides going to fill that void?
  • and where will all this money come from in tight fiscal times!
  • does Congress or the taxpaying public really have the appetite for massive media bailout?  It seems unlikely.

3)      Shouldn’t force taxpayers to foot the bill for things they might not want or find offensive

  • Should liberals be forced to help fund the next Fox News or Rush Limbaugh?
  • Should conservatives have to support Keith Obermann or Bill Moyers?

4)      Greater government involvement—even in the form of subsidies—will raise profound questions about press independence & First Amendment rights

  • Ken Ferree on FCC’s “Future of Media” public notice: “The problem is that the very act of initiating such an inquiry will chill protected speech; government inquiries into what is and is not working in the area of news, information, and media is itself an affront to the First Amendment. And it is no answer that the Commission has embarked on this journey with beneficent motives, it has no power to derogate from the protections of the First Amendment in the name of what one group of bureaucrats may think are important government interests.”
  • Chilling effect could be very real… “Regulation by ‘raised eyebrow’ has become a well-established tool for a number of federal agencies, including the FCC, but with this inquiry the Commission has taken the concept to a level heretofore unknown – this inquiry is regulation by penetrating leer.” – Ken Ferree
  • In particular, putting journalists on the public dole, as some like Free Press have advocated, compromises their independence [Free Press has proposed “a journalism jobs program to support veteran, qualified reporters and simultaneously to engage young people in journalism” that would be part of AmeriCorps.]
  • The prospect of a large swath of the American media sector being treated as publicly funded wards of the State isn’t just a small leak in the important wall between Press and State, it is the end of that wall.  It would dynamite that wall to the ground. It could potentially open the door to a fundamental corruption of the journalistic profession by public officials who would not likely be able to resist the urge to pressure those who are subservient to the State.

5)      Oh, by the way, where exactly does the FCC and FTC derive the authority to be playing these games?

  • Sure, they’re just studying the issue. But neither agency has the power to act expansively in this area, yet both agencies can simultaneously threaten media operators with other forms of regulation. Such indirect intimidation could have the chilling effect mentioned previously

What Can Be Done to Promote Journalism / Assist Media Operators?

1)      First, Do No Harm… Be patient and humble.

  • We are in a gut-wrenching evolution with a great deal of creative destruction taking place, but we should be careful to not to head off potentially advantageous marketplace developments, if even some are highly disruptive

2)      Exercise extreme caution re: new or existing public interest regulatory obligations, which won’t make media reinvention any easier

  • localism requirements
  • educational programming mandates / advertising restrictions
  • political airtime or advertising regs
  • speech controls
  • other public interest requirements

3)      Beware new advertising restrictions at both FCC & FTC

  • If the complaint is that private media funding streams are drying up or being fragmented,  crippling advertising is the last thing we should be doing!
  • And yet, there’s a plethora of new regulatory proposals pending; many fronts in “Washington’s war on advertising”
  • FCC
    • content-based ad blocking being studied
    • new children’s television advertising restrictions rumored
    • FCC investigating product integration advertising
    • talk of regulating erectile dysfunction ads in Congress
  • FTC
    • Increasing signs that agency is on warpath to regulate online advertising / targeted ads
    • continues to put pressure on re: marketing of violently-themed entertainment to children
    • now stepping up oversight of online product placement or “blogola”
    • there’s also legislation pending that would require the FTC to regulate “advertising, promoting, and marketing directed at children and youth” to promote healthier lifestyles
  • Regardless of how well-intentioned these or other regulatory efforts may be, as the FCC & FTC continue their inquiries into the future of news and journalism, they would do well to remember that an attack on advertising is tantamount to an attack on media itself
  • If Washington goes to war on advertising, private media will suffer because advertising is the very mother’s milk of private media in this country.
  • Biggest threat of all = Free Press is calling for “small tax” on advertising to fund public media programs
    • in other words, FP wants to tax private media operators to fund public media competitors
    • Now there’s a sure-fire way to destroy private journalism… force private media providers to fund their own, publicly-subsisted rivals!!
    • It’s precisely what the French, masters of socialized media, have recently proposed

4)      Gov’t must be willing to allow business model flexibility

  • micropayments
  • paywalls
  • other subscription-based schemes
  • more personalized, targeted, and potentially more profitable, advertising
  • even if they don’t work, experimentation must be allowed

5)      Ownership flexibility needs to be part of the solution

  • It’s no silver bullet, but essential to allow flexibility to determines what works

6)      Non-profit BUT non-governmental options should be allowed

  • But non-profit status shouldn’t come with all sorts of strings attached
    • Ex:  Sen. Cardin’s “Newspaper Revitalization Act,” which would forbid political editorializing in exchange for non-profit status.  It would protect incumbents from criticism.
  • and, again, ownership flexibility will need to be part of this for non-profits to work
    • hybrid arrangements including co-op models & joint ventures will need some scale to survive
    • useful to remember that many foreign “public media” efforts have massive scale & if we expect private non-profit operators to survive, they’ll likely need some serious scale as well.

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Adam Thierer

Adam Thierer / Senior Fellow in Technology & Innovation at the R Street Institute in Washington, DC. Formerly a senior research fellow at the Mercatus Center at George Mason University, President of the Progress & Freedom Foundation, Director of Telecommunications Studies at the Cato Institute, and a Fellow in Economic Policy at the Heritage Foundation.

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