June 2005

It was no surprise yesterday that the Supreme Court announced it would not be reviewing the Third Circuit Court of Appeals decision overturning the FCC’s media ownership revisions from 2003. Neither the agency nor the Bush Administration had the heart to re-fight the battle that Michael Powell waged to get these meager revisions through given the backlash it created two years ago.

So, where do we go from here? It’s pretty obvious. Media ownership reform will, once again, become a piecemeal, incremental process with each rule being considered individually over time. The FCC could have taken that path before, but Powell and staff opted for a more principled approach to the issue. He rightly viewed the media world not as a collection of distinct entities, outlets, and technologies, but rather as a big bucket of bits that were all increasingly commingling. Acknowledging the reality of media and technological convergence, Mr. Powell’s FCC decided to take a comprehensive approach to reforming this hodgepodge of confusing media ownership restrictions.

The problem was, by doing so, Powell had created a very juicy target for the media critics to go after. They were able to paint the reform effort as a radical gutting of all the media ownership rules even though the FCC’s revision of the rules only moderately relaxed the existing regulations–and even retained or strengthened some of the rules under consideration.

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Well, after mentioning it in just about every blog entry I’ve penned over the past few months, I’m happy to say that my new book, Media Myths: Making Sense of the Debate over Media Ownership, is finally out!

I open the book by posing the following questions:

* Are media companies in this country too big?
* How big is “too big”?
* Is the media diverse enough and competitive enough today?
* And what relationship, if any, does media size have to the health of our democracy?

I go on to show that, contrary to what some media critics claim, to the extent there was ever a “Golden Age” of media in America, we are living in it today. The media sky has never been brighter and it is getting brighter with each passing year. Citizens have more media options today than ever before. Indeed, far from living in a world of “media monopoly” we now live in a world of media multiplicity.

Regarding claims that extensive media regulation benefits consumers, I show that such rules do little to encourage increased media diversity and competition. Indeed, more often than not, they thwart important new developments that could enhance media diversity and competition. Citizens will be better off without such regulations because their private actions and preferences will have a greater bearing in shaping media markets than arbitrary federal regulations. No matter how large any given media outlet is today, it is ultimately just one of hundreds of sources of news, information, and entertainment that we have at our collective disposal. It is just one voice in our contemporary media cacophony, shouting to be heard above the others. Information and entertainment cannot be monopolized in a free society, especially in today’s world of media abundance.

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Apparently I’m not the only one who thinks that Google is a media company. Check out this Reuters story about how Google is not only a media company, but with its stock trading at a staggering $293 a share, it is the most valuable media company in the world. In just 10 months of trading as a public company, it has surpassed Time Warner to take that honor.

Meanwhile, Google and Yahoo! are “sucking the financial air out of the room” in terms of stealing away valuable advertising dollars from newspapers. According to this story, when it comes to new revenue, Google and Yahoo! have generated $4 billion last year–the same amount as the 10 largest newspaper companies combined! Folks, when two new companies are stealing away that much revenue from other industry players, that’s a sure fire sign that consumers find these products or outlets interchangeable. That is, they are substitutes for one another and they are part of the same “relevant market” in antitrust terms.

So, now that Google is a media company, should we start imposing silly ownership caps and audience reach limits on them the same way we do for the older media giants? I think most would agree that would be foolish, but the reality is that the old media operators still have their hands tied by regulators in many ways while Google and other new media giants storm ahead without any similar regulatory shackles. Seems sort of silly and blatantly unfair doesn’t it?

[UPDATE (6/10): Check out this interesting story about Google’s efforts to improve its automated newsgathering capabilities. The title of the story, “Can Google News Robot Rival the Newspapermen?” is great, but the subtitle is the real kicker:
“A Potential Nightmare Faces the ‘Dead-Tree-and-Ink’ Business.” No doubt about it.

Forbes has an interesting column on how to lower your mobile phone taxes by changing your area code to a lower tax jusrisdiction. Though this loophole will likely be plugged quickly, it illustrates the difficulty of jurisdictional controls in an increasingly borderless world and the increasing absurdity of regulations based on mere physical location. It also demonstrates the benefits of tax competition among the states.

Adam co-authored an excellent paper on the benefits of tax competiton a couple of years ago, which is worth a read.

Two months ago, I told the story of how I found a $29 progressive scan DVD player at CompUSA. As I noted then, I found this amazing in many respects, but mostly because I had spent something like $1000 bucks on my first DVD player when they hit the market.

Well, I have found yet another reason to lament being an early adopter of technology. I opened the D section of today’s Wall Street Jounral to read Walt Mossberg’s review of the new Pure Digital Technologies disposable video camera. The price? An amazing $29.99! These video cameras will be sold at drug stores like CVS, which started stocking them on Monday of this week. In their stores, CVS will brand the cameras under their own name.

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Last night, the “News Hour with Jim Lehrer” on PBS ran a wonderful segment on the changing demand for news and how the industry is responding. Ironically, the News Hour’s own website is a great example of how old news outlets can adapt to the changing times. Not only can the complete transcript and video of the show be found there, but the site also includes links to many of the organizations and technologies mentioned in the report.

The report noted that media organizations are being forced to make radical changes to their operations to cope with the increasing customization and specialization that viewers and listeners demand today. I really enjoyed the comments of Kinsey Wilson, the vice president and editor-in-chief of usatoday.com. Wilson said:

The audience is beginning to interact with news. We’ve gone from a world in which news organizations had either monopolistic control of certain markets or because of barriers to entry, fairly exclusive control over certain aspects of media, and consumers gravitated towards a few favored sources of news to a world in which there’s saturation news. We no longer have exclusive control of the printing press.

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I had an editorial that ran in today’s Washington Post entitled “New Worlds to Censor.” In this editorial, I discuss the threat of expanded media censorship and point out why traditional regulatory rationales are no longer applicable in our new media environment. This editorial builds on the First Amendment studies that we have been publishing at PFF in recent months, which can be found here, here, and here.