Here’s the notice I’ve been getting the last few days when, logged into Facebook from a computer, I try to post a comment or update my status.

Clever observers will note that the recommendation to log in from a computer is misplaced, as I get it when I’m logged in from a computer. Facebook gives me no instructions when I log in (or when I log out and log in again), though it did once ask me to change my password, which I did.

Most likely, Facebook’s algorithms believe I’ve violated some part of the Terms of Service, such as by repetitive posting or other spammy behavior. My exclusion from the site began contemporaneous with my attempt to post a single comment that failed for reasons I couldn’t discern in several tries.

Undoubtedly, my friends at Facebook will leap to my aid and clear this up for me in short order, feeling slightly stung that I “went public” with the problem rather than going to them. But I wanted to experience this as an ordinary consumer, not as a member of the digerati with insider access to people at important companies. In the past, I’ve used insider access with services like PayPal and (the now defunct) Bitcoin7 to get help that an ordinary user couldn’t have gotten. Bully for me that I can do that, but my experience is atypical and no basis for observing how the world works.

Some observations:

I’ve been reading a lot about data mining lately, and I have a lifelong love of mental error (not only as a practitioner!). My best guess is that the folks at Facebook have come up with an algorithmic way to recognize and exclude bad behavior (which they see in droves and endless variety). Keenly focused on excluding baddies, they’ve kind-of forgotten to double-check about making sure not to exclude good people. The sources of error here are many. It could be that my behavior as a user of the site produced a false positive for spamming or similar behavior. It could be that a computer of mine has a virus that is seeking to abuse my access to Facebook (though I do practice good computer hygiene). Other things might be happening that I don’t know about.

But Facebook’s folk haven’t successfully produced a way for me to signal to them, “I am here. I’m a human, and I’m a user of your site whose behavior is ordinary and within your terms.”

Thus, I can log in to Facebook, I can see what my friends are doing, and I can see what they are posting and saying about me. I just can’t post any comments or update my own status. It’s kind of like being locked out of your house and watching your friends have a good time inside, unable to bang on the doors or windows loud enough to get anyone’s attention.

[While I think of it, would someone please post a link to this blog post on my wall? Thanks.]

It’s all a little strange, but this is exactly what one can expect from a company with a customer base as large as Facebook’s, enjoying continuing growth and working to add new features: imperfection.

Which brings me to my second observation: I really don’t think social networks ought to scale like we’re trying to make them scale. Having come to rely on one a little too much, I’m now being forced to reconsider whether I want to rely on one—and I don’t. Giving the bulk of my interaction to any one platform is a risk to my ability to interact. Here, it’s mistake, but any number of risks could manifest themselves, with individuals or society as a whole, if we lean too heavily on any one way of interacting.

As a basic privacy protection, for example, don’t put everything you do in one place. Think of your Internet access and your social networks (and lots of other things) the way you would your stock portfolio. You’re a fool of you don’t diversify.

So it sure is great we have markets and competition!

I’m a Twitter user, of course. You can get an odd blend of public policy comment and quirky personal observations there at @Jim_Harper. I also have Twitter account(s) you don’t get to know about.

And I’ll be ramping up my use of Google+, which I did not really want to do—but, yes, I should. And I’ll use it for stuff that’s more work oriented. Because I’m a stickler for the meanings of words, Facebook will be for actual friends. (Meeting once is not a friendship, friends. Nor is me referring to you as part of the collective “friends” in that last sentence.)

I’ll also do more on Diaspora, which is still nascent, but I think a very important network because nobody owns it. Kinda like the meatspace social network, it has no central controller, and that’s a very important protection for a lot of our human and political interests—even if Diaspora is not yet hitting on all cylinders.

So there you have it! Companies are imperfect, and if you’re part of the infinitesimal fraction of their customers who they fail to serve, you do get some hassles and annoyances. This counsels diversification—not only in social networks, but in all things under innovation—as a security against hassle and worse.

And finally: Ain’t it cool we got options!

I’ve grown increasingly tired of the fight over not just retransmission consent, but almost all TV regulation in general.  Seriously, why is our government still spending time fretting over a market that is more competitive, diverse and fragmented than most other economic sectors?  It’s almost impossible to keep track of all the innovation happening on this front, although I’ve tried here before. Every metric — every single one — is not just improving but exploding. Just what’s happening on the kids’ TV front is amazing enough, but the same story is playing out across other programming genres and across multiple distribution platforms.

More proof of just how much more diverse and fragmented content and audiences are today comes in this excellent new guest editorial over at GigaOm, “The Golden Age of Choice and Cannibalization in TV,” by Mike Hudack, CEO of Blip.tv. Hudack notes that, compared to the Scarcity Era, when we had fewer choices and were all forced to watch pretty much the same thing, today’s media cornucopia is overflowing, and audiences are splintering as a result.  “Media naturally trends towards fragmentation,” he notes.  “As capacity increases so does choice. As choice increases audiences fragment. When given a choice people generally prefer media that speaks to them as individuals over media that speaks to the ‘masses.’”

Indeed, he cites Nielsen numbers I’ve used here before illustrating how the top shows of the 50’s (like Texaco Star Theater) netted an astonishing 60-80% of U.S. television households while more recent hits, like American Idol is lucky if it can manage over 15% audience share. He concludes, therefore, that:

While American Idol remains strong, the trend is clear. Americans have been abandoning broadcast television in favor of cable’s niche shows for thirty years.  Historical trends like these do not disappear, they accelerate. Internet video is growing at a significant pace. It has not yet taken a chunk out of the broadcast and cable audiences, but the trend is there. Shows on the web are infinitely more targeted than the shows broadcast and cable companies deliver. […] The broadcast distribution model, which dictates that only one show can air at any given time, makes it impossible for a niche show to thrive. The opportunity cost is too high. And the corporate structures, cost structures, business models and cultures of the network and cable companies make change far too difficult. Thus the Internet will do to broadcast and cable what cable did to broadcast. It’s inevitable. And it’s already beginning to happen.

Too bad nobody bothered telling Washington policymakers that the world has changed so radically.

[ Update 11:00 pm: Ironically, just caught another piece along these lines from TechCrunch entitled, “Internet TV and The Death of Cable TV, really.”  I don’t agree with all it’s conclusions, but includes many good facts and anecdotes pointing to the revolutionary changes underway in the television marketplace.]

Today I am testifying at an FCC hearing on “Serving the Public Interest in the Digital Era.” [Speaker lineup here.] The purpose of the workshop is to explore:

• A brief history and overview of policies involving “public interest” requirements for commercial media and telecommunications companies;
• The state of local commercial broadcast TV and radio news and information; and
• The impact of media convergence and the emergence of the Internet, mobile technologies, and digital media on FCC media policy.

In my remarks, I focused on “Why Expansion of the FCC’s Public Interest Regulatory Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable.” Down below I have attached my written remarks.

Why Expansion of the FCC’s Public Interest Regulatory Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable

by Adam Thierer

I.       Introduction

Thank you for inviting me here today for this FCC workshop on “Serving the Public Interest in the Digital Era.” I have been asked to discuss “the impact of media convergence and the emergence of the Internet, mobile technologies, and digital media on FCC media policy”^[1] on the FCC’s “public interest” regulatory regime.

In my remarks, I will outline both the normative and practical cases against the expansion of “public interest” notions and corresponding regulatory requirements. I will argue that such considerations counsel that the Commission exercise extreme caution as it looks to revise regulations that govern America’s media marketplace.

II.     The Normative Case against Expansion of Public Interest Regulation

A.     The Inherent Ambiguity of “the Public Interest” Notion

The normative case against expansion of public interest regulation begins with the fact that this notion has always been haunted by an inherent ambiguity that is fundamentally at odds with America’s First Amendment tradition. Indeed, while public interest regulation has been considered the cornerstone of communications and media policy since the 1930s, at no time during these seven decades has the term been adequately defined.

Former FCC Commissioner Glen Robinson has argued that the public interest standard “is vague to the point of vacuousness, providing neither guidance nor constraint on the agency’s action.”^[2] And Nobel Prize-winning economist Ronald Coase argued 50 years ago that “The phrase… lacks any definite meaning. Furthermore, the many inconsistencies in commission decisions have made it impossible for the phrase to acquire a definite meaning in the process of regulation.”^[3]

And that is still true today. Simply put, the public interest standard is not really a “standard” at all since it has no fixed meaning; the definition of the phrase has shifted with the political winds to suit the whims of those in power at any given time.

B.      None Dare Call it Elitism

Still, many policymakers continue to prop up public interest notions and regulations in the belief that they are directing the content or character of media toward a nobler end. At times, their rhetoric takes on a fairy-tale quality as lawmakers and regulators speak of the public interest in reverential and fantastic terms, again, all the while deftly evading any attempt to define the term.

But the fundamental problem here is that public interest proponents assume that their values or objectives—which, in their opinion, are consistent with the needs and desires of the public—should ultimately triumph within the public policy arena. Simply stated, what motivates much public interest regulation is a simple desire by some here in Washington to tell the American people what’s best for them.

Worse yet, how the term has been interpreted and applied by the FCC has often depended on the ideological disposition of whatever party is in charge at the time.  As Ford Rowan, author of Broadcast Fairness, once noted: “Many liberals want regulation to make broadcasting do wonderful things; many conservatives want regulation to restrain broadcasting from doing terrible things.”^[4] Consequently, during periods of liberal rule, the “public interest” has been seen as a method of politically engineering more “educational” and “community-based” programming. By contrast, in the hands of conservative appointees, the public interest has been seen as an instrument to curb “indecent” speech.

Few have dared to call this elitism—but I will.^[5] What else should we call it when a five unelected officials here at the FCC sit in judgment of acceptable media content and dictate media marketplace outcomes? The viewing and listening public, however, has a broad array of interests and desires that cannot be easily gauged by this agency. As media scholar Benjamin Compaine has rightly noted, “[i]n democracies, there is no universal ‘public interest.’ Rather there are numerous and changing ‘interested publics.’”^[6]

Perhaps what some are afraid to ask is this: Does the public really want to watch what some policymakers and regulatory advocates consider to be more “culturally enriching” or “civic-minded” content, or would they rather tune into something else? Given the choice, many viewers will opt for what many public interest regulatory supporters would consider to be “low-brow” offerings over the programming that policymakers feel the masses should be consuming. Public interest supporters may bemoan the lack of civic spirit, or claim that this represents the end of our culture as we know it, but these are voluntary choices made by the citizenry that must be respected by government officials. In particular, government should not censor Americans’ choice of content through open-ended public interest regulatory rationales.^[7]

C.      There’s More “Public Internet” Content Than Ever Before, But You Can’t Force Citizens to Consume It

Generally speaking, however, the media marketplace traditionally has reflected what the public on average really wants to see and hear. And that’s even truer today. Viewers and listeners are being offered a stunning array of diverse media inputs and options. Just because the American people sometimes make choices that policymakers find distasteful, it does not mean that citizens don’t have good choices at their disposal.

For example, we are blessed to be living in the golden age of children’s video programming.^[8] As I have documented in my ongoing PFF special report on Parental Controls & Online Child Protection [9] and in other filings to the Commission,[10] there’s never been more educational and enriching kids programming available to families than there is today. Similarly, consider the stunning diversity of programming available thanks to the 500-plus channel universe of multichannel video options now at our disposal.[11] Almost every conceivable interest or hobby is now covered by a video network.^[12]

And is there really any shortage political programming or “civic-minded” content from which to choose?  C-SPAN alone covers more activity in the course of a week than most of us probably came into contact with in our entire lives just 30 years ago. Consider these data points.[13] In the 2009 calendar year, C-SPAN provided the following amount of first run programming across their three channels:

• 8,438 overall hours of programming;
• 2,709 hours of House & Senate floor activity; and,
• 1,222 hours of House & Senate committee hearings.

Moreover, C-SPAN recently created the C-SPAN Video Library,[14] which archives 23 years worth (1987-on) of fully searchable (and free) video content, including:

• 161,000 overall hours of programming;
• 56,600 hours of House & Senate floor activity; and,
• 20,152 of House & Senate committee hearings.

Importantly, many people fail to realize that C-SPAN is a private, non-profit company that is provided as a public service by cable industry contributions. It receives no government or taxpayer contributions. From 1979-2009, total license fees paid by cable & satellite companies to support C-SPAN totaled $922 million.

And let’s not forget about what the Internet has made available to us. It has given us unprecedented access to public affairs information—local, state, national, and international.

But, again, you can’t make people watch, listen, or read if they don’t want to. “Today, the scarce resource is attention, not programming,” notes Ellen P. Goodman of the Rutgers-Camden School of Law. “Given the proliferation of consumer filtering and choice, these kinds of interventions are of questionable efficacy. Consumers equipped with digital selection and filtering tools are likely to avoid content they do not demand no matter what the regulatory efforts to force exposure.”^[15]

Absent truly repressive measures to limit choice or alter consumer media consumption patterns, it will be impossible for policymakers to force the masses to pay attention to what they want them to see or hear in an age of abundant media content and unrestricted choice. “[R]egulation cannot, in a liberal democracy, force viewers to consumer media products they do not think they want in the name of the public interest,” argues Goodman.[16] (This dilemma creates additional practical problems for proposals to expand public interest regulation, which will be discussed in Sec. II below.)

D.     Returning to First Principles

Yet now we face the prospect of this arbitrary regulatory regime being expanding to cover more platforms and speech.^[17] But, instead of first looking to expand regulation, we should use this as an opportunity to return to first principles—especially in light of the dubious constitutionality of the FCC’s existing public interest regulatory regime.^[18]

We should begin by recalling that, from the time of the republic’s founding, public interest regulation has never been applied to newspapers, magazines, pamphlets, or books. Instead, the First Amendment has reigned supreme.[19] And when policymakers attempted to apply such public interest obligations to print media, those edicts were ruled flatly unconstitutional.^[20]

The characteristics of broadcast radio and television, however, were considered sufficiently unique to justify a different regulatory approach and second-class citizenship status in terms of First Amendment rights.  Scarcity, of course, was the lynchpin of the regulatory regime imposed on the broadcast industry, and it yielded calls for public interest regulation of the medium. But whatever one thinks of the scarcity rationale for differential treatment of broadcasting—and, personally, I don’t believe it was ever a legitimate excuse for diminished First Amendment treatment—that era of scarcity is clearly over.^[21] We now live in an age of information abundance—even information overload.^[22] We have more media options and diversity at our disposal today than ever before, and generally at falling prices.^[23] And yet, at the Commission, it continues to be business as usual.

The courts, however, have acknowledged that the situation on the ground has changed, and changed radically. When policymakers have sought to expand broadcast-like regulatory requirements to newer media platforms in recent years, the Courts have pushed back. That has particularly been the case for the Internet^[24] and video game content.^[25] The jurisprudential Twilight Zone will live in today—in which we classify services and determine free speech rights based on technical characteristics or functional features—makes no sense and can’t last for much longer for reasons discussed next.[26]

III.  The Practical Case against Expansion of Public Interest Regulation

Let’s look beyond these normative concerns and instead focus on the practical considerations associated with any effort to expand the horizons of public interest regulation.

A.     The Scale & Volume Problem

As the title of this particular panel quite rightly noted, we now live in an age of media and technological convergence.^[27] All bits are coming together.^[28] Because convergence is now upon us, media can be distributed instantaneously across numerous platforms. Thus, a regulatory attack on one type of media outlet or technology might necessitate an attack on many other media outlets if it has any hope of being effective.

But how will this work? If we are to achieve regulatory parity in an age of convergence, we must come to grips with the sheer scale of the task at hand. The modern mediasphere is massive—and growing rapidly. Consider some statistics about online media activity:

• 1.73 billion Internet users worldwide as of Sept 2009; an 18% increase from the previous year.^[29]
• 81.8 million .COM domain names at the end of 2009; 12.3 million .NET names & 7.8 million .ORG names.^[30]
• 234 million websites as of Dec 2009; 47 million were added in 2009.^[31] In 2006, Internet users in the United States viewed an average of 120.5 Web pages each day.^[32]
• There are roughly 26 million blogs on the Internet^[33] and even back in 2007, there were over 1.5 million new blog posts every day (17 posts per second).^[34]
• In December 2009, 86% of the total U.S. online population viewed video content.^[35] The average online viewer watched 187 videos (up 95 percent from the previous year), while the average video length viewed grew from 3.2 to 4.1 minutes.^[36] The majority of online video viewing (52%) occurred at video sites ranked outside of the top 25, suggesting the increased fragmentation of online video and the emergence of sites in the “long tail.”^[37]
• YouTube reports that 20 hours of video are uploaded to the site every minute,^[38] and 1 billion videos are served up daily by YouTube, or 12.2 billion videos viewed per month.^[39]
• For video hosting site Hulu, as of Nov 2009, 924 million videos were viewed per month in the U.S.^[40]
• Developers have created over 140,000 apps for the Apple iPhone and iPod and iPad and made them available in the Apple App Store.^[41] Customers in 77 countries can choose apps in 20 categories, and users have downloaded over three billion apps since its inception in July 2008.^[42] Apple’s iTunes Store has a catalog of 12 million songs, over 55,000 TV episodes, and 8,500 movies. It has sold more than 10 billion songs.^[43]
• Social networking giant Facebook reports that each month, its 400+ million users upload more than 3 billion photos, and create over 3.5 million events. More than 3 billion pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared each week. There are also more than 3 million active Pages on the site.^[44]
• There are 10 million edits made to Wikipedia every seven weeks.^[45]

• Twitter users send out 50 million tweets per day, an average of 600 tweets per second.^[46]
• 4 billion photos hosted by Flickr as of Oct 2009.^[47]

Even in “traditional” media sectors, the scale and volume problem is formidable: [48]

• 565 cable TV channels^[49]
• over 2,200 broadcast TV stations ^[50]
• over 13,000 broadcast radio stations ^[51]
• over 20,000 magazines ^[52]
• over 276,000 books ^[53]

In sum, the mediasphere is bigger than ever and it begs the question how the FCC plans to wrap its public interest regulatory tentacles around all of it if analog era regulations are to cover digital era content, platforms, and technologies.

B.      The Definitional Problem: Who’s Covered (or Subsidized?)

Another intractable problem associated with expansion of public interest regulation will arise once policymakers are forced to define who or what counts as a “media entity” or a “journalist” in today’s wide-open media world. And this will be a problem whether public officials are regulating media entities or subsidizing them.

For example, will bloggers be regulated or, conversely, eligible for public media subsidies? Will foreign-owned news entities be regulated or be eligible for support?  What’s the public interest standard that applies to MySpace or Facebook? Are YouTube, Hulu, and Vimeo, and Joost “just like TV stations” and, therefore, regulated like one? There may well be rational ways to make cuts along these lines, but they could raise constitutional questions. Government preferences among speakers or classes of speakers are prior restraints, constitutional sins of the highest order.

Further, it would be just these sorts of choices that would open the door to the most abusive government intrusion into the production of journalism.  It is not hard to imagine that government regulators, even with the best of intentions and acting in the utmost good faith, would, perhaps unconsciously, favor speakers and classes of speakers to whom they felt the closest affinity.  And, because Administrations come and go, as do members of Congress, no particular class of speakers would ever be truly safe — no story would be reported without at least a glance by the author over her shoulder to make sure that she had not offended the “wrong” person.  This is not an approach consistent with a free press reporting to a free people.

C.      Expanded Regulation Will Kneecap Media Providers As They Are Struggling to Reinvent Themselves

Meanwhile, this inquiry comes at a time when many traditional media providers are fighting for their very existence. Audiences are fragmenting. Advertisers are fleeing. Revenues are shrinking.  And yet, again, here we are toying with the idea of expanding regulatory burdens while the media marketplace is experiencing unprecedented upheaval and gut-wrenching creative destruction.

And if the FCC’s intends to simply continue to impose public interest regulations on the narrow set of media operations they currently control—broadcast television and radio—that’s tantamount to the FCC signing a death warrant for those media operators. But, as noted below, any proposal to “spread the pain around” by burdening everyone equally is a recipe for even greater economic catastrophe, and it wouldn’t likely pass constitutional muster in the courts anyway.

This all begs the question: Do traditional media providers really have too much power, or do they actually have too little.  Indeed, the viability of traditional media operators is increasingly in doubt since they lack pricing power and the ability to control when, where, and how their content is delivered and consumed. They no longer have protected geographic markets or “protectable scarcity.” Meanwhile, advertising—the traditional lifeblood of the media sector^[54]—is increasingly being subjected to new scrutiny and regulation here in Washington.^[55] And copyright infringement has also made monetization more challenging and placed strains on many operators.  Regardless, with traditional media operators in such serious trouble, now certainly isn’t the time to impose new rules and red tape that could hamstring their ability to respond to new competitive pressures.

Perhaps the most destructive set of ideas floating around today are those that would essentially burn the village in order to save it. For example, some regulatory advocates have toyed with ideas like “public interest vouchers,”[56] broadcast spectrum taxes,[57] expanded ownership restrictions or forced media divestiture plans,[58] or even taxes on commercial advertising,^[59] consumer electronics, cell phone providers, and ISPs.[60] In each case, the cure would be worse than the disease that ails the body. We’re not going to get a more diverse media marketplace in this country by forcing private media providers to fund their non-commercial or public-subsidized competitors.  While some of these proposals are well-intentioned and aimed at addressing perceived deficiencies in the market for “public interest” content, there are better ways for policymakers to achieve that goal.

IV.  Using Existing Public Platforms to Promote Preferred Content Through a “Public Interest Portal”

Most obviously, support for the Corporation for Public Broadcasting (CPB) could be expanded. However, that should be achieved without skimming funds off of commercial advertising budgets or through “fees” on private media operators. Enhanced support for CPB and non-commercial media in general should be derived from general treasury funds, not special levies on commercial media operators.

If the FCC believes something more must be done to create—or drive citizens to—“public interest” or civic-minded content, the best approach would be for the agency to work with other federal and state entities and leverage existing government platforms and resources to accomplish this task.

Consider how federal agencies are already doing so in an effort to promote Internet safety and security. A dozen federal agencies and several private child safety organizations have collaborated^[61] to create the OnGuardOnline.gov website, which “provides practical tips from the federal government and the technology industry to help you be on guard against Internet fraud, secure your computer, and protect your personal information.”^[62] Among other things, the effort includes a “Stop-Think-Click” promotion that recommends “Seven Practices for Safer Computing.” In October 2009, OnGuardOnline also released a new online safety resource called Net Cetera: Chatting with Kids about Being Online . [63] This 54-page document, which is being widely distributed by the government (both online and offline), is an outstanding resource for parents and kids.

In a similar vein, the FCC could work with several other agencies to create a massive “Public Interest Portal” that aggregates and promotes the sort of the public interest programming and content that policymakers hope will gain more widespread distribution—whether produced by traditional programmers, niche professionals, or amateurs. The collaborating agencies might even be able to create a downloadable widget or toolbar for use on any web browser that could enable citizens to instantaneously access a wide variety of public interest content. Many organizations already offer similar portals for children’s content. (Examples include: KidZui,[64] Glubble,[65] Browser Buddy,^[66] KidRocket,^[67] KIDO’Z,^[68] Noodle Net,^[69] Hoopah Kidview Computer Explorer^[70] and Peanut Butter PC.^[71]) There’s no reason that model couldn’t be significantly expanded by the FCC and other government agencies if they put their resources behind it.

The success of this approach, of course, is by no means guaranteed since, as noted above, it is impossible to force a free people to consume content they do not demand.  Nonetheless, it would allow the government to at least accomplish the objective it has long sought to achieve through affirmative regulation of commercial media providers: increasing the availability and practical accessibility of public interest programming. Moreover, this approach would have the advantage of not raising serious constitutional objections or burdening commercial media operators with onerous new regulatory requirements or fees. If, however, policymakers reject this approach on the grounds that citizens would still “tune in” to other types of programming first, it would confirm the fundamental elitism that some of us have long suspected truly animates most “public interest” regulatory efforts.

V.    Conclusion: Regulate Up or Deregulate Down?

In light of the considerations addressed above, we must ask: To achieve regulatory parity, should we regulate up or deregulate down? To the extent that technological convergence leads to policy convergence, it should be done in the latter direction. In a world in which scarcity has been overthrown by abundance, we should strike the balance in favor of greater media freedom and stronger First Amendment protections for all speech however it is delivered. [72]

It is vital that the outmoded public interest rationales undergirding the broadcast regulatory regime be discarded, not only to spare broadcasters from more unfair, asymmetrical regulatory restrictions, but also to ensure that this contorted vision of the First Amendment is not extended to other media platforms.[73] While some policymakers and media critics propose extending the broadcast regulatory regime to cover new media outlets and digital technologies,^[74] if America is to have a consistent First Amendment in the Information Age, such efforts should be halted and the public interest regulatory regime should be relegated to the ash heap of history.

There are better ways for the Commission and Congress to accomplish “public interest” goals other than by regulating as if it’s still 1934.

[2] Glen O. Robinson, The Federal Communications Act: An Essay on Origins and Regulatory Purpose, A Legislative History of the Communications Act of 1934 3, 14 (Max D. Paglin ed., 1989). Likewise, Lawrence J. White has noted that, “The ‘public interest’ is a vague, ill-defined concept. Under the ‘public interest’ banner the Congress and the FCC have established far too many protectionist, anticompetitive, anti-innovative, inflexible, output-limiting regulatory regimes and have unnecessarily infringed on the First Amendment rights of broadcasters.” See Lawrence J. White, Spectrum for Sale, The Milken Inst. Rev. (June 2001) at 38. See also William T. Mayton, The Illegitimacy of the Public Interest Standard at the FCC, 38 Emory L. J. 715, 716 (1989).

[3] Ronald H. Coase, The Federal Communications Commission, 2 J. L. & Econ. 1, 8–9 (1959). Even supporters of broadcast regulation such as Paul Taylor and Norman Ornstein admit that, “neither in the 1927 [Radio] Act nor in the 1934 [Communications] Act, nor subsequently, did Congress define clearly what actions by broadcasters would represent managing their stations in the public interest.” Paul Taylor & Norman Ornstein, New America Foundation, A Broadcast Spectrum Fee for Campaign Finance Reform, Spectrum Series Working Paper No. 4, (2002) at 6.

[4] Ford Rowan, Broadcast Fairness (Longham, 1984), p. 39.

[5] See Adam Thierer & Berin Szoka, The Progress & Freedom Foundation, What Unites Advocates of Speech Controls & Privacy Regulation?, Progress on Point 16.19, Aug. 11, 2009, www.pff.org/issues-pubs/pops/2009/pop16.19-unites-speech-and-privacy-reg-advocates.pdf. On occasion, even public interest regulatory advocates have admitted this. “One of the dangers in evaluating the media in a public interest framework is that it can easily take on an elitist tone.” David Croteau and William Hoynes, The Business of Media: Corporate Media and the Public Interest (2001) at 151.

[6] Benjamin M. Compaine, The Myths of Encroaching Global Media Ownership, Open Democracy.net, Nov. 6, 2001, at 5, www.opendemocracy.net/content/articles/PDF/87.pdf

[7] See Harry Kalven, Jr., Broadcasting, Public Policy and the First Amendment, J. L. & Econ. 15, 19 (1967) (“The mandate to grant licenses that serve the public [interest]… does not constitute the FCC the moral proctor of the public or the den mother of the audience.”)

[8] Adam Thierer, The Progress & Freedom Foundation, We Are Living in the Golden Age of Children’s Programming, Progress Snapshot 5.6, July 2009, www.pff.org/issues-pubs/ps/2009/pdf/ps5.6-childrens-television-golden-age.pdf.

[9] Adam Thierer, The Progress & Freedom Foundation, Parental Controls and Online Child Protection: A Survey of Tools and Methods, Version 4.0 (2008) (“PFF Parental Controls Report”), www.pff.org/parentalcontrols.

[10] Comments of The Progress & Freedom Foundation and the Electronic Frontier Foundation In the Matter of Empowering Parents and Protecting Children in an Evolving Media Landscape, Federal Communications Commission, MB Docket No. 09-194, Feb 24, 2010, www.pff.org/issues-pubs/filings/2010/2010-02-24-PFF-EFF_Response_to_FCC_Empowering_Parents_Protecting_Children_NOI_MB_09-194.pdf; Adam Thierer, The Progress & Freedom Foundation, Comments in the Matter of Implementation of the Child Safe Viewing Act; Examination of Parental Control Technologies for Video or Audio Programming, Federal Communications Commission, MB Docket No. 09-26, April 15, 2009, www.pff.org/issues-pubs/filings/2009/041509-%5BFCC-FILING%5D-Adam-Thierer-PFF-re-FCC-Child-Safe-Viewing-Act-NOI-%28MB-09-26%29.pdf.

[11] The number of channels available on multichannel video distribution platforms skyrocketed from just 70 in 1990 to 565 in 2006, the last year for which the FCC has released data. Federal Communications Commission, Thirteenth Annual Video Competition Report, MB Docket No. 06-189, Nov. 27, 2007, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-206A1.pdf.

[12] For an up-to-date list, see National Cable & Telecommunications Association, Cable Networks, www.ncta.com/Organizations.aspx?type=orgtyp2&contentId=2907, or Wikipedia, List of United States Cable and Satellite Television Networks,  http://en.wikipedia.org/wiki/List_of_United_States_cable_and_satellite_television_networks.

[13] All C-SPAN data confirmed by Peter Kiley, Vice President, C-SPAN Networks. Also see: Marking 30 Years. Covering Washington Like No Other, www.c-span.org/30Years/default.aspx.

[14] www.c-spanvideo.org/videoLibrary

[15] Ellen P. Goodman, “Proactive Media Policy in an Age of Content Abundance,” in Philip M. Napoli, ed., Media Diversity and Localism: Meaning and Metrics (2007) at 370, 374.  And there is no reason to believe this situation has ever been different or will ever change. Writing in 1922, famed journalist Walter Lippmann noted that, “it is possible to make a rough estimate only of the amount of attention people give each day to informing themselves about public affairs,” but “the time each day is small when any of us is directly exposed to information from our unseen environment.” Walter Lippmann, Public Opinion (1922), p. 53, 57.

[16] Id., at 374.

[17] Among the expanded public interest responsibilities regulatory advocates promote: Controls on speech (indecent or “excessively violent” content); expanding coverage of political campaigns, debates and developments; free (or lower-cost) campaign ad time; expanded “educational” or cultural programming (especially aimed at children); and expanded coverage of community affairs and public service announcements.

[18] See Randolph J. May, The Public Interest Standard: Is It Too Indeterminate to Be Constitutional? 53 Fed. Comm. L. Jour. (May 2001) at 427-68, www.law.indiana.edu/fclj/pubs/v53/no3/may.pdf.

[19] Jonathan Emord, Freedom, Technology and the First Amendment (1991).

[20] Miami Herald v. Tornillo, 418 U.S. 241(1974).

[21] Even FCC officials have acknowledged this. See John W. Berresford, Federal Communications Commission, The Scarcity Rationale for Regulating Traditional Broadcasting: An Idea Whose Time Has Passed, FCC Media Bureau Staff Research Paper No. 2005-2, (March 2005) www.fcc.gov/ownership/materials/already-released/scarcity030005.pdf. Berresford refers to the scarcity rationale as “outmoded,” “based on fundamental misunderstandings of physics and economics,” and “no longer valid.”

[22] See Adam Thierer and Grant Eskelsen, The Progress & Freedom Foundation, Media Metrics: The True State of the Modern Media Marketplace (Summer 2008), www.pff.org/mediametrics; Adam Thierer, The Media Cornucopia, 17 City Journal 2 (Spring 2007) at 84-89, www.city-journal.org/html/17_2_media.html.

[23] See Benjamin M. Compaine, The Media Monopoly Myth: How New Competition is Expanding Our Sources of Information and Entertainment, New Millennium Research Council (2005) www.newmillenniumresearch.org/archive/Final_Compaine_Paper_050205.pdf.

[24] Reno v. American Civil Liberties Union, 521 US 844, 874 (1997); American Civil Liberties Union v. Gonzales, 478 F.Supp.2d 775, 795 (E.D.Pa. 2007).

[25] See, e.g., Video Software Dealers Association v. Schwarzenegger, 556 F.3d 950, 965-967 (9th Cir. 2009); Entertainment Software Ass’n v. Blagojevich, 469 F.3d 641, 652 (7th Cir. 2006); Interactive Digital Software Association, et. al. v. St. Louis County, et. al., 329 F.3d 954 (8 Cir. 2003); American Amusement Machine Association, et al. v. Kendrick, et al., 244 F.3d 572 (7th Cir. 2001); Entertainment Software Ass’n v. Granholm, 426 F Supp 2d 646 (E.D. Mich. 2006); Video Software Dealers Association, et. al. v. Maleng, et. al., 325 F. Supp.2d 1180 (W.D. Wa. 2004).  See generally Adam Thierer, The Progress & Freedom Foundation, Fact and Fiction in the Debate Over Video Game Regulation, Progress on Point 13.7, March 2006, at 13-18 www.pff.org/issues-pubs/pops/pop13.7videogames.pdf (discussing cases striking down state video game laws); Henry Cohen, Constitutionality of Proposals to Prohibit the Sale or Rental to Minors of Video Games with Violent or Sexual Content or Strong Language, Congressional Research Service, U.S. Library of Congress (Jan. 12, 2006), http://digital.library.unt.edu/ark:/67531/metacrs9144/m1/1/high_res_d/.

[26] Adam Thierer, Why Regulate Broadcasting : Toward a Consistent First Amendment Standard for the Information Age, Catholic University Law School, 15 CommLaw Conspectus (Summer 2007) at 431-482; http://commlaw.cua.edu/articles/v15/15_2/Thierer.pdf. Randy May as referred to these artificial distinctions as “techno-functional constructs.” Randolph J. May, Charting a New Constitutional Jurisprudence for the Digital Age, Engage (Oct. 2008) at 109.

[27] Henry Jenkins, founder and director of the MIT Comparative Media Studies Program and author of Convergence Culture: Where Old and New Media Collide, defines convergence as “the flow of content across multiple media platforms, the cooperation between multiple media industries, and the migratory behavior of media audiences who will go almost anywhere in search of the kinds of entertainment experiences they want.” Henry Jenkins, Convergence Culture: Where Old and New Media Collide (2006) at 2.

[28] Nicholas Negroponte, Being Digital (1995).

[29] Royal Pingdom, Internet 2009 in Numbers, Jan. 22, 2010, http://royal.pingdom.com/2010/01/22/internet-2009-in-numbers.

[30] Id.

[31] Id.

[32] Gavin O’Malley, Comcast Taps Hispanic Web Portal, MediaPost News, Online Media Daily, March 8, 2006, www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=40714

[33] Royal Pingdom, supra 29.

[34] David Sifry, The State of the Live Web, April 2007, www.sifry.com/alerts/archives/000493.html

[35] comScore, The 2009 U.S. Digital Year in Review – A Recap of the Year in Digital Marketing 10, Feb. 2010, http://www.comscore.com/Press_Events/Press_Releases/2010/2/comScore_Releases_2009_U.S._Digital_Year_in_Review.

[36] Id.

[37] Id. at 12.

[38] Ryan Junee, Zoinks! 20 Hours of Video Uploaded Every Minute!, Broadcasting Ourselves: The Official YouTube Blog, May 20, 2009, http://youtube-global.blogspot.com/2009/05/zoinks-20-hours-of-video-uploaded-every_20.html

[39] Royal Pingdom, supra 29.

[40] Royal Pingdom, supra 29.

[41] Apple, 140,000 apps at your fingertips. From day one., www.apple.com/ipad/app-store.

[42] Press Release, Apple, Apple’s App Store Downloads Top Three Billion (Jan. 5, 2010), www.apple.com/pr/library/2010/01/05appstore.html.

[43] Press Release, Apple, iTunes Store Tops 10 Billion Songs Sold (Feb. 25, 2010), www.apple.com/pr/library/2010/02/25itunes.html.

[44] Facebook, Statistics, www.facebook.com/press/info.php?statistics (last accessed Mar. 2, 2010).

[45] Katalaveno, Edit growth measured in time between every 10,000,000^th edit, en.wikipedia.org/wiki/User:Katalaveno/TBE (last accessed Mar. 2, 2010).

[46] Twitter Blog, Measuring Tweets, Feb. 22, 2010, http://blog.twitter.com/2010/02/measuring-tweets.html.

[47] Royal Pingdom, supra 29.

[48] Statistics derived from various sources, but all can be found in Adam Thierer and Grant Eskelsen, The Progress & Freedom Foundation, Media Metrics: The True State of the Modern Media Marketplace (Summer 2008), www.pff.org/mediametrics.

[49] Federal Communications Commission, Thirteenth Annual Video Competition Report, MB Docket No. 06-189, Nov. 27, 2007, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-07-206A1.pdf.

[50] Central Intelligence Agency, The World Fact Book, United States, www.cia.gov/library/publications/the-world-factbook/geos/us.html (data is from 2006).

[51] Id.

[52] Magazine Publishers of America, Magazines: The Medium of Action, A Comprehensive Guide and Handbook 2009/10, at 8, www.magazine.org/ASSETS/088C8564EB9E4E978A69B183881AEF58/MPA-Handbook-2009.pdf.

[53] Bowker, Bowker Reports U.S. Book Production Flat in 2007, May 28, 2008, www.bowker.com/index.php/press-releases/526.

[54] “Advertising is the mother’s milk of all the mass media,” Wall Street Journal technology columnist Walt Mossberg has noted. Walter Mossberg, Now You See ‘Em…, SmartMoney.com, June 15, 2000, available at http://web.archive.org/web/20061124235126/http://www.smartmoney.com/mossberg/index.cfm?story=20000615; And Harold L. Vogel, author of Entertainment Industry Economics, the definitive textbook for media market analysts, has noted, “Advertising is the key common ingredient in the tactics and strategies of all entertainment and media company business models. Indeed, it might further be said that advertising has substantively subsidized the production and delivery of news and entertainment throughout the last century.” Harold L. Vogel, Entertainment Industry Economics (Cambridge University Press, 7^th Edition, 2007) at 46.

[55] Adam Thierer & Berin Szoka, The Hidden Benefactor: How Advertising Informs, Educates & Benefits Consumers, Feb. 22, 2010, www.pff.org/issues-pubs/ps/2010/ps6.5-the-hidden-benefactor.html; Berin Szoka & Adam Thierer, Targeted Online Advertising: What’s the Harm & Where Are We Heading?, Progress on Point 16.2, April 2009, www.pff.org/issues-pubs/pops/2009/pop16.2targetonlinead.pdf; Berin Szoka & Adam Thierer, Behavioral Advertising Industry Practices Hearing: Some Issues that Need to be Discussed, PFF Blog, June 18, 2009, http://blog.pff.org/archives/2009/06/behavioral_advertising_industry_practices_hearing.html

[56] For example, Robert McChesney and John Nichols advocate a “Citizenship News Voucher” that would give every American adult a $200 voucher to donate money to the non-profit news medium of their choice. Of course, a number of restrictions would apply to eligible entities, including a ban on accepting advertising as a condition of receiving support from the program. Robert W. McChesney & John Nichols, The Death and Life of American Journalism (2010) at 201-6.

[57] For a recent debate on the question of broadcast spectrum taxes, see: Resolved, Broadcasters Should be Charged a Spectrum Fee to Finance Programming in the Public Interest, Pro: Norm Ornstein, Con: Adam Thierer, in Richard J. Ellis and Michael Nelson, Debating Reform: Conflicting Perspectives on How to Fix the American Political System (2010) at 53-69. Also see McChesney & Nichols, supra 56 at 209-10.

[58] For example, Free Press calls for “government incentives to encourage local ownership and media divestiture.” They want to prevent private media operators from attaining greater scale at the exact time they probably need to do so. Instead, they would subsidize those media entities who went non-commercial and disaggregated to become more atomistic. Comments of Free Press In the Matter of News Media Workshops: From Town Crier to Bloggers: How Will Journalism Survive the Internet Age? Federal Trade Commission, Project No. P091200, Nov. 6, 2009, at 21, www.ftc.gov/os/comments/newsmediaworkshop/544505-00027.pdf.

[59] Free Press advocates channeling more money to public media by affixing “a small tax” on private commercial advertising. Comments of Free Press In the Matter of News Media Workshops: From Town Crier to Bloggers: How Will Journalism Survive the Internet Age? Federal Trade Commission, Project No. P091200, Nov. 6, 2009, at 18, www.ftc.gov/os/comments/newsmediaworkshop/544505-00027.pdf.

[60] McChesney & Nichols, supra 56 at 210-11. They advocate a 5% tax on consumer electronics and a 3% tax on monthly cell phone bills to channel money into a massive new “public works” program for the press.

[61] www.onguardonline.gov/about-us/overview.aspx

[62] www.onguardonline.gov/default.aspx

[63] www.onguardonline.gov/pdf/tec04.pdf

[64] www.kidzui.com

[65] www.glubble.com

[66] www.buddybrowser.com

[67] http://kidrocket.org

[68] www.kidoz.net

[69] www.noodlenet.com

[70] www.hoopah.com

[71] www.peanutbuttersoftware.com

[72] Brian C. Anderson & Adam D. Thierer, A Manifesto for Media Freedom (2008).

[73] See Adam Thierer, Why Regulate Broadcasting : Toward a Consistent First Amendment Standard for the Information Age, Catholic University Law School, 15 CommLaw Conspectus (Summer 2007) at 431-482; http://commlaw.cua.edu/articles/v15/15_2/Thierer.pdf; Adam Thierer, FCC v. Fox and the Future of the First Amendment in the Information Age, Engage (Feb. 2009) www.fed-soc.org/doclib/20090216_ThiererEngage101.pdf.

[74] See Adam Thierer, The Progress & Freedom Foundation, Thinking Seriously about Cable and Satellite Censorship: An Informal Analysis of S. 616, The Rockefeller-Hutchison Bill (2005) www.pff.org/issues-pubs/pops/pop12.6CableCensorship.pdf; Robert Corn-Revere, The Progress & Freedom Foundation, Can Broadcast Indecency Regulations Be Extended to Cable Television and Satellite Radio? (2005) www.pff.org/issues-pubs/pops/pop12.8indecency.pdf.

Adam Thierer (PFF) Remarks at FCC Hearing on Public Interest in Digital Era (3-4-10) http://d1.scribdassets.com/ScribdViewer.swf

No one disputes that a key goal of the FCC is to help foster diversity in, and minority access to, channels of communication. In practice, this all too often has been interpreted to mean ownership limits, set-asides, preferences and other mandates imposed by the Commission. Usually lost in the heated debates is the fact that ill-considered regulation itself can impede minority access and diversity.

In comments filed last week, a group of sixteen minority and civil rights organizations — ranging from the Lawyers’ Committee for Civil Rights Under Law to the National Conference of Black Mayors — argue that net neutrality regulation may do just that. “[T]his proceeding implicates one of the most important civil rights issues of our time,” the comments –written by David Honig of the Minority Media and Telecommunications Council — assert.

Minorities lag behind in broadband adoption, the comments point out, and thus have the most to gain by its growth and the most to lose if that growth is hindered. Among the more specific possible harms cited: higher prices, slowed deployment, and slower job growth, all of which would be especially harmful to minorities. Net neutrality regulation, Honig writes, could become yet another in a long line of facially neutral government policies that hurt the most disadvantaged in society rather than help them.

“The lesson from these experiences is clear,” he says:

…even apparently universal and neutral federal programs can widen existing disparities. As we now continue the transition into a digital age, the Commission should ensure that its efforts to promote a free and open Internet for all do not end up leaving minorities and other groups lacking equal access to broadband behind.

Definitely worth reading.

I’ve just released a new PFF white paper looking at the hysteria that has often accompanied major media mergers and then taking a look at the marketplace reality years after the fact.  Here‘s the PDF, but I have also pasted the entire thing down below.

_____________________________

A Brief History of Media Merger Hysteria: From AOL-Time Warner to Comcast-NBC

by Adam Thierer

Although the pending union of Comcast and NBC Universal has not yet made it to the altar, Chicken Little-esque wails about the marriage have already begun in earnest. For example, the pro-regulatory media organization Free Press has already set up a website to complain about the deal.[1] And Jeff Chester, executive director of the Center for Digital Democracy, has called it “an unholy marriage.”[2] The fever only promises to spread once the deal is formally announced, and a lengthy fight over the deal is expected at the Federal Communications Commission (FCC) and whichever antitrust agency reviews the deal.[3]

But reality tends to play out somewhat less dramatically than the script penned by the media worrywarts. It’s worth looking back at some of the more prominent examples of media merger hysteria in recent years to understand why such panic is unwarranted, and why a deal between Comcast and NBC Universal is unlikely to lead to the sort of problems that the pessimists suggest.[4]

AOL-Time Warner: From the “New Totalitarianism” to Digital Divorce Court in Less Than a Decade

When the mega-merger between media giant Time Warner and Internet superstar AOL was announced in early 2000, the marriage was greeted with a cacophony of righteous indignation and apocalyptic predictions.  When referring to the dangers of the deal, syndicated columnist Norman Solomon, a longtime associate of the media watch group Fairness & Accuracy In Reporting, summoned the ghost of Aldous Huxley when he and referred to the transaction in terms of “servitude,” “ministries of propaganda,” and “new totalitarianisms.”[5] Similarly, USC Professor of Communications Robert Scheer wondered if the merger represented “Big Brother” and claimed, “Diversity is out, niches are gone, it’s Skippy peanut butter time. AOL is the Levitown of the Internet, mom and apple pie, ‘50s boredom, conformity and dullness as a virtue: A Net nanny reigning in potentially restless souls.”[6]

Such pessimistic predictions proved wildly overblown. To say that the merger failed to create the sort of synergies (and profits) that were originally hoped for would be an epic understatement.[7] The titles of two popular books about the deal summed up the firm’s troubles: One was entitled Fools Rush In (by Nina Munk) and the other, There Must Be a Pony in Here Somewhere (by Kara Swisher and Lisa Dickey).[8]

The numbers were mind-boggling. By April 2002, just two years after the deal was struck, AOL-Time Warner had already reported a staggering $54 billion loss.^[9] By January 2003, losses had grown to $99 billion.^[10] By September 2003, Time Warner decided to drop AOL from its name altogether and the deal continued to slowly unravel from there.^[11] In a 2006 interview with the Wall Street Journal, Time Warner President Jeffrey Bewkes famously declared the death of “synergy” and went so far as to call synergy “bullsh*t”!^[12] In early 2008, Time Warner decided to shed AOL’s dial-up service^[13] and now is set to spin off AOL entirely.[14] Looking back at the deal, Fortune magazine senior editor at large Allan Sloan called it the “turkey of the decade”:

The day the deal was announced, Jan. 10, 2000, Time Warner closed at the equivalent of $184.50 a share. After almost 10 years of travail, the $184.50 has shrunk to about $42.25, consisting of one Time Warner share and a quarter of a Time Warner Cable share. The 77 percent decline is triple the decline in the Standard & Poor’s 500-stock index over the same period.[15]

And the Time Warner-AOL split wasn’t the end of this messy divorce process. In 2008, Time Warner Cable and Time Warner Entertainment decided to split.^[16] Time Warner has even spun off some of its oldest properties. In 2006, it announced that it was putting 18 of the 50 magazines in its Time magazine division up for sale.^[17]

As is always the case, these divestitures and down-sizing efforts garnered little attention compared with the hullaballoo and hysteria that accompanied the announcement of the deal back in 2000.^[18]

News Corp/DirecTV: Murdoch’s “Digital Death Star” Blows Up

No media industry personality attracts more attention (or angst) than News Corp. Chairman and CEO Rupert Murdoch. The popular leftist blog The Daily Kos has likened him to “a fascist Hitler antichrist.”[19] And CNN founder Ted Turner once compared the popularity of the News Corp.’s Fox News Channel to the rise of Adolf Hitler prior to World War II.^[20] Alternatively, Murdoch has been accused of being a Marxist.[21] Meanwhile, Karl Frisch, a Senior Fellow at Media Matters for America, speaks of Murdoch’s “evil empire”^[22] and a recent MSNBC poll has asked people to vote on the question: “Is Rupert Murdoch evil?”[23] In 2003, when asked by talk show host Chris Matthews, “Would you break up [News Corp.-owned] Fox?” then Democratic presidential candidate Howard Dean answered, “On ideological grounds, absolutely yes.”^[24] And in their book Our Media, Not Theirs, John Nichols and Robert McChesney took the Murdoch-as-evil-overlord storyline to its logical extreme when they suggested Hollywood was on to something by scripting a media tycoon like Murdoch as the bad guy in a James Bond movie: “No wonder conspiracy theories are so popular in America; no wonder, when the makers of James Bond movies look for believable villains these days, they eschew Eurotrash bad guys for more credibly threatening villains such as the Rupert Murdoch-like media baron of 1997’s Tomorrow Never Dies.”^[25]

These Murdochian fears came to a head in 2003 when News Corp. announced it was pursuing a takeover of satellite television operator DirecTV.  Paranoid predictions of a pending media apocalypse followed.  A group of regulatory activists filed joint comments to the FCC claiming that if News Corp. and DirecTV were allowed to merge, “the result will be unprecedented concentration within all aspects of the television marketplace, as well as increased prices for consumers of cable and satellite television.”[26] Similarly, then-FCC Commissioner Jonathan Adelstein worried that the deal would “result in unprecedented control over local and national media properties in one global media empire. Its shockwaves will undoubtedly recast our entire media landscape.” He continued; “With this unprecedented combination, News Corp. could be in a position to raise programming prices for consumers, harm competition in video programming and distribution markets nationwide, and decrease the diversity of media voices.”[27]

Not to be outdone, full-time media fussbudget Jeff Chester predicted that Murdoch would use this “Digital Death Star” as the base of a nefarious scheme to conquer the media universe:

Murdoch will use DirecTV as a ‘death star’ to force his programming on cable companies by threatening a price war unless they give Fox favorable access. Since News Corp will control cable TV’s principal multichannel competitor, it will easily create new channels—unlike anyone else in the TV business.  Rather than engage in open combat and competition, cable powerbrokers such as Comcast and AOL-Time Warner will likely accommodate Murdoch and add his new channels to their own services. Imagine Fox News on steroids. Worse, with DirecTV’s capacity to ‘spotbeam’ channels to serve distinct communities, localized versions of Fox programs could be available in major cities across the nation.[28]

Imagine the horror of new, “spotbeamed” local media competition!  However, unlike the destruction of the planet Alderaan by the Death Star in Star Wars,[29] no one was harmed in the making of the News Corp-DirecTV marriage.  Indeed, the rebels would get the best of Darth Murdoch since his “Digital Death Star” was abandoned just three years after construction.  In December 2006, News Corp. decided to divest the company to Liberty Media Corporation in an effort to win back more controlling News Corp. stock.^[30]

Ironically, many of the same groups that had vociferously protested the original News Corp-DirecTV deal again found reason to complain when the deal was being undone! The FCC’s failure to implement various restrictions as part of the license transfer, they claimed, would “result in continuing control by News Corp. over content distribution, harming competition in both the programming and distribution markets, reducing consumer choice and raising cable prices.”^[31] Unsurprisingly, little mention was made of the previous round of pessimistic predictions or whether there had ever been any merit to the lugubrious lamentations of the media critics.

Sirius-XM: “Merger to Monopoly” or Prelude to Bankruptcy?

Some of the most entertaining and wrong-headed predictions about the future of the media marketplace often come from media moguls themselves. For example, back in 2003, when he was still President and Chief Operating Officer of Viacom, Mel Karmazin said in reference to Microsoft, AOL Time Warner, and Comcast: “I can’t imagine being a competitor with any of these guys.”[32] Just six years later, however, plenty of others are competing with those companies. Microsoft finds itself in a heated war with Google on all fronts, AOL-Time Warner has fallen apart, and Comcast is squaring off against telco (e.g., Verizon’s FiOS and AT&T U-Verse) and online video competitors (e.g., YouTube, Hulu) that were unfathomable in 2003—not to mention the traditional satellite TV competitors they still face. Meanwhile, Karmazin abandoned Viacom and is now struggling to find a way to make subscription-based satellite radio survive the ongoing digital music bloodbath caused by the rise of online music services and a little thing called the iPod.

Of course, hysteria ran rampant when Sirius and XM were merging, too.  Critics called it a “merger to monopoly” and predicted a variety of coming calamities.[33] National Association of Broadcasters Vice President Dennis Wharton described the merger as a “monopoly platform for offensive programming” that would be “anti-consumer.”^[34] Mr. Wharton later remarked that the merged firms “will raise prices, won’t improve their technology and will limit their offerings.”^[35] A coalition of six non-profits claimed that the merger was “perhaps the worst offense against the basic principle that competition is the consumer’s best friend” and, if approved, “a tsunami of mergers could ripple through the digital space at the worst possible moment.”^[36] They predicted that “once the competition is eliminated, prices will rise over time,” “innovation will slow to the pace preferred by the monopolist and consumers will be much worse off in the long run.”^[37] Another coalition argued that the new company would “abuse consumers, artists and other input suppliers in the satellite radio market.”[38]

In the end, the merger took an astonishing 500-plus days for the FCC to finally approve[39] and was conditioned with a lengthy set of “voluntary concessions” to supposedly rectify these potential harms—including pricing constraints that could limit the firm’s ability to cover costs and pay down debt over time.

Unsurprisingly, things haven’t turned out so well for Sirius XM. When the merger was finally approved by the FCC in August 2008, Commissioner Copps dissented vigorously on various grounds but specifically insisted that, “We must assume that the marketplace can support two financially viable competitors.”[40] Unfortunately for Commissioner Copps—as well as Sirius XM—it’s not even clear that the market can sustain one satellite radio provider. The company’s stock went into freefall following completion of the deal and, at one point, its stock fell below 10 cents per share. The company flirted with bankruptcy in February of this year as “satellite radio failed to win over many younger listeners, and competition from other sources slowed subscriber growth.”[41] In March 2009, Karmazin orchestrated a cash-for-stock swap with Liberty Media to get a $530 million lifeline and avoid bankruptcy.[42] But even with the cash infusion Sirius XM faces an uncertain future with stiff competition.[43] “Sirius is girding for slower growth than in the past,” notes Olga Kharif of Business Week, “and analysts remain concerned about the company’s ability to control costs.”[44] Former stockbroker and RealMoney.com contributor Tim Melvin predicts the overleveraged company “will disappear from the landscape. The subscribers will go to another tech or entertainment company in bankruptcy proceedings. Subscription radio just does not have that much appeal to most people.”[45]

Whether Melvin’s dour forecast for satellite radio proves accurate remains to be seen. What’s clear, however, is that the fears bandied about by critics when the Sirius-XM deal was pending have not come to pass.

Murdoch’s Wall Street Journal Quest

In 2007, Rupert Murdoch announced his desire to purchase The Wall Street Journal.  Once again, a great deal of hand-wringing ensued. “This takeover is bad news for anyone who cares about quality journalism and a healthy democracy,” argued Robert McChesney. “Giving any single company—let alone one controlled by Rupert Murdoch—this much media power is unconscionable.”[46] And FCC Commissioner Copps warned that “It will create a single company with enormous influence over politics, art and culture across the nation and especially in the New York metropolitan area.”[47]

Today, however, the Journal keeps humming along and continues to produce some of the finest journalism on the planet. Meanwhile, “politics, art and culture” seem largely unaffected by the deal—either in New York or the nation.

And the deal certainly hasn’t made Murdoch or News Corp. any richer. “His purchase of The Wall Street Journal is widely seen as one of the worst moves of his career,” notes Michael Wolff of Vanity Fair.[48] News Corp. has already taken a whopping $3 billion write-down on the deal.  Considering the $5 billion price tag Murdoch paid two years ago, one wonders if he’ll hold on to this property any longer than he did DirecTV.

Comcast-NBC Universal: Debunking the Fears Preemptively

No doubt we’ll soon be hearing many of these same apocalyptic predictions about the Comcast-NBC deal. Free Press has said the new entity “will have an incentive to prioritize NBC shows over other local and independent voices and programs, making it even harder to find alternatives on the cable dial.”[49] And Free Press Executive Director Josh Silver has called for the Obama Administration to block the deal saying “it would further starve Americans of [media] diversity.”[50] Even competitors are complaining. Liberty Media Corp. Chairman John Malone, which owns DirecTV, has suggested that they might push the government to reject the deal.[51] Many other rivals will likely join that bandwagon.

These critics will likely raise vertical integration fears and claim that Comcast will act as a “gatekeeper” by limiting the ability of independent voices to get a slot on cable distribution systems, or by withholding NBC-Universal content from other platforms and providers. But there’s little historical evidence that suggests this will be a problem. As the adjoining exhibit illustrates, the overall number of video programming channels available in America has skyrocketed, from just 70 channels in 1990 to 565 channels in 2006, the last year for which the FCC has made data available.

More importantly—and despite claims to the contrary—vertical integration in the video marketplace has plummeted over the past two decades. While many more cable and satellite networks are available today than ever before, the greatest share of the growth in the multichannel video marketplace has come from independently owned video networks. Since 1990, the number of cable-owned or affiliated channels has increased slightly, but it pales in comparison with the growth of independently owned and operated video networks. In real terms, therefore, the percentage of the overall video marketplace controlled (i.e., owned and operated) by cable companies has plummeted—from 50% in 1990 to just 14.9% in 2006. Moreover, in the wake of the Time Warner Cable and Time Warner Entertainment divorce, vertical integration in the cable sector has probably fallen into the single digits. Even if the merger of Comcast and NBC-Universal results in slight increase in industry vertical integration, it almost certainly will not surpass 20 percent.  Consequently, as far as vertically integrated industries go, it is impossible to conclude that this market could be characterized as being controlled by “gatekeepers.”

It is difficult to imagine that Comcast would buck these trends and begin restricting independent options on its systems or withhold its content from others.  Video distributors don’t make money by restricting choice. Consumers would flock to alternative video providers and media services if Comcast played such games. The great thing about the modern media marketplace is that there is always another place for consumers to turn to find something they want.[52] Sports programming could be an exception to the rule, and is the one issue that Comcast may need to bargain over with FCC regulators or antitrust officials since they own regional sports networks that other video distributors want access to.^[53] But traditional concerns about access to over-the-air broadcast signals (namely, the NBC local broadcast television properties) shouldn’t be as much of an issue today as it was the past.  Frankly, local broadcasters need all the eyeballs they can get these days. Thus, it’s unlikely that Comcast would try to withhold those stations from other video distributors, especially since a great deal of NBC programming is already available through other means. And intense competition exists for some of the most important news and informational services that NBC offers, such as local news, weather, and traffic.

Overall, therefore, it’s hard to see the case for the FCC rejecting the deal. Regulators need to be forward-looking about what is driving this deal.  This deal isn’t about protecting old markets but instead about building new ones. “The real motivation behind this deal,” argues Mike Berkley, former CEO of SplashCast Media, “is survival.”

Comcast understands that the price point for distributing TV into homes is going to fall dramatically in the coming years. Comcast’s 3 distribution products, Voice – TV – Internet, are collapsing into just one, single product: Internet. This poses a huge threat to Comcast’s top line. As such, Comcast is hedging through diversification into content, moving up the media value chain. Comcast will be looking to replace lost revenue in distribution with revenue from content (advertising, subscriptions, etc).[54]

Similarly, Wall Street Journal business columnist Holman Jenkins points out that Comcast is scrambling to find a way to rework their business model as the era of set-top box-delivered video slowly gives way to a world of ubiquitously available online video:

This would be a merger, after all, of two businesses that seem headed toward some combination of the fates of newspapers, music CDs and the old wireline telephone business. Customers want the product for free. Comcast’s lifeblood, the $100-a-month cable bill and the $50-a-month broadband bill, increasingly look like duplicative expenses. And so on. True, the number of households that have actually dropped their cable subscriptions in favor of subsisting on TV streamed or downloaded from the Internet is not yet large. But for the Roberts family and its Comcast property, their worst fears lurk just around the corner—being reduced to a “dumb pipe,” subject to commodity pricing while somebody else (Google) makes all the money. Yet an escape route is vexingly hard to envision. Time Warner and Comcast have been talking up plans to make their respective cable lineups available by computer—as long as you keep paying your cable bill. This is a stopgap, especially appealing to anyone who owns two homes but wants to pay only one cable bill. Never mind, too, that hundreds of shows are already available online for free, via Web sites operated by none other than Comcast and the TV networks themselves.[55]

In light of such technological upheaval and marketplace uncertainty, it’s important that regulators proceed cautiously when reviewing this deal or future deals.

Conclusion: Let Markets Evolve

The point here is not that media mergers are inherently good or always make sense. Indeed, as the examples discussed above illustrate, mergers sometimes prove to be huge blunders.[56] But the hysteria sometimes heard before media mergers are consummated rarely bears any relationship to reality once the deals move forward. Media markets are extremely dynamic and prone to disruptive change and technological leap-frogging. Mergers are often one response to that turbulence.

But mergers are no panacea, and they often fail to produce the “synergies” hoped for. A 2004 survey by McKinsey & Co. found that “Nearly 70 percent of the mergers in our database failed to achieve the revenue synergies estimated by the acquirer’s management.”[57] Perhaps, therefore, the best argument for blocking media mergers is not their potentially pernicious effect on markets or consumers, but rather to save the merging firms (and their stockholders) from a miserable marriage!

On the other hand, experimenting with alternative business models and ownership structures is an important part of any dynamic market, because markets are not static but represent and ongoing processes of entrepreneurial “discovery.”[58] Thus, policymakers would be wise to avoid micro-managing mergers and instead let things run their course.  Sometimes collaboration makes a great deal of sense, especially when the significant costs of providing a media service becomes impossible absent a partnership. Indeed, federal officials and agencies are currently exploring how (or whether) journalism can survive an era of seeming perpetual media upheaval.[59] Healthy media companies certainly must be part of the answer and new ownership arrangements might be part of the solution.

Given how difficult it is to predict the future course of events in this chaotic sector, humility—not hubris—is the sensible disposition when it comes to media merger policy. At a minimum, policymakers should insist that ongoing debates are governed by facts instead of fanaticism, because, if the past decade is any guide, discussions about media mergers have been more often rooted in hyperbolic rhetoric and unsubstantiated hysteria.

[1] www.freepress.net/comcast

[2] Quoted in Cecilia Kang, Public Interest Groups Rail against a Comcast and NBC Merger, Washington Post, Post Tech Blog, Nov. 9, 2009, http://voices.washingtonpost.com/posttech/2009/11/for_example_were_advancing_tv.html

[3] “For regulators, a deal like this is a gift; an occasion to impose their will upon needy companies that would otherwise be outside their regulatory reach.” Craig Moffett, Bernstein Research, Comcast: Snatching Defeat from the Jaws of Victory? Oct. 23, 2009, at 14.

[4] Cecilia Kang, A New Kind of Company, A New Kind of Challenge for Feds, Washington Post, Nov. 26, 2009, at 1, www.washingtonpost.com/wp-dyn/content/article/2009/11/26/AR2009112602500.html

[5] Norman Soloman, AOL Time Warner: Calling The Faithful To Their Knees, Jan. 2000, www.fair.org/media-beat/000113.html

[6] Robert Scheer, Confessions of an E-Columnist, Jan. 14, 2000, Online Journalism Review, www.ojr.org/ojr/workplace/1017966109.php

[7] Looking back at the deal almost ten years later, AOL co-founder Steve Case said, “The synergy we hoped to have, the combination of two members of digital media, didn’t happen as we had planned.” Quoted in Thomas Heath, The Rising Titans of ’98: Where Are They Now?, Washington Post, Nov. 30, 2009, www.washingtonpost.com/wp-dyn/content/article/2009/11/29/AR2009112902385.html?sub=AR

[8] Nina Munk, Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner (New York: Harper Business, 2004); Kara Swisher and Lisa Dickey, There Must Be a Pony in Here Somewhere: The AOL Time Warner Debacle and the Quest for a Digital Future (New York: Crown Business, 2003).

[9] Frank Pellegrini, What AOL Time Warner’s $54 Billion Loss Means, April 25, 2002, Time Online, www.time.com/time/business/article/0,8599,233436,00.html

[10] Jim Hu, AOL Loses Ted Turner and $99 billion, CNet News.com, Jan. 30, 2004, http://news.cnet.com/AOL-loses-Ted-Turner-and-99-billion/2100-1023_3-982648.html

[11] Jim Hu, AOL Time Warner Drops AOL from Name, CNet News.com, Sept. 18, 2003, http://news.cnet.com/AOL-Time-Warner-drops-AOL-from-name/2100-1025_3-5078688.html

[12] Matthew Karnitschnig, After Years of Pushing Synergy, Time Warner Inc. Says Enough, Wall Street Journal, June 2, 2006, http://online.wsj.com/article/SB114921801650969574.html

[13] Geraldine Fabrikant, Time Warner Plans to Split Off AOL’s Dial-Up Service, New York Times, Feb. 7, 2008, www.nytimes.com/2008/02/07/business/07warner.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1209654030-ZpEGB/n3jS5TGHX63DONHg

[14] John Letzing, AOL, On The Verge Of Independence, Weighs On Parent, Wall Street Journal, Nov. 4, 2009, http://online.wsj.com/article/BT-CO-20091104-718782.html

[15] Allan Sloan, ‘Cash for . . .’ and the Year’s Other Clunkers, Washington Post, Nov. 17, 2009, www.washingtonpost.com/wp-dyn/content/article/2009/11/16/AR2009111603775.html

[16] Tim Arango, Time Warner Spinning Off Cable Unit, New York Times, April 30, 2008, www.nytimes.com/2008/04/30/business/30warner-web.html?ref=technology

[17] Carolyn Pritchard, Time Inc. to Sell 18 Magazine Titles, MarketWatch, Sept. 12, 2006,  www.marketwatch.com/News/Story/Story.aspx?guid=%7B94967C37%2D9B4A%2D4C1A%2D8AC0%2D64904C1267A1%7D&dist=rss&siteid=mktw&rss=1

[18] “Break-ups and divestitures do not generally get front-page treatment,” notes Ben Compaine, author of Who Owns the Media?  See Ben Compaine, Domination Fantasies, Reason, Jan. 2004, p. 28, www.reason.com/news/show/29001.html

[19] www.dailykos.com/story/2009/9/7/778254/-Rupert-Murdoch-is-a-Fascist-Hitler-Antichrist

[20] Jim Finkle, Turner Compares Fox’s Popularity to Hitler, Broadcasting & Cable, Jan. 25, 2005, www.broadcastingcable.com/CA499014.html

[21] Ian Douglas, Rupert Murdoch is a Marxist, Telegraph.Co.UK, Nov. 9, 2009,  http://blogs.telegraph.co.uk/technology/iandouglas/100004169/rupert-murdoch-is-a-marxist

[22] Karl Frisch, Fox Nation: The Seedy Underbelly of Rupert Murdoch’s Evil Empire? MediaMatters.org, June 2, 2009, http://mediamatters.org/columns/200906020036

[23] www.msnbc.msn.com/id/19817142/

[24] Dean Vows to ‘Break Up Giant Media Enterprises,’ The Drudge Report, Dec. 2, 2003, www.drudgereport.com/dean1.htm; Bill McConnell, Dean Threatens to Break Up Media Giants, Broadcasting & Cable, Dec. 3, 2003, www.broadcastingcable.com/index.asp?layout=articlePrint&articleID=CA339546.

[25] John Nichols and Robert W. McChesney, Our Media, Not Theirs: The Democratic Struggle against Corporate Media (New York: Seven Stories Press, 2002) at 31.

[26] Consumers Union, Consumer Federation of America, Center for Digital Democracy, and Media Access Project, Comments In the Matter of News Corporation/Fox Entertainment Group Merger with Hughes Electronics Corporation/DirecTV, MB Docket No. 03-124, July 1, 2003, www.consumersunion.org/pdf/0701-DirecTV.pdf

[27] Dissenting Statement of Commissioner Jonathan S. Adelstein, Re:  General Motors Corporation and Hughes Electronics Corporation, Transferors, and The News Corporation Limited, Transferee, MB Docket No. 03-124, Jan. 14, 2004, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-03-330A6.doc

[28] Jeff Chester, Rupert Murdoch’s Digital Death Star, AlterNet, May 20, 2003, www.alternet.org/story/15949

[29] Destruction of Alderaan, Wookieepedia: The Star Wars Wiki, http://starwars.wikia.com/wiki/Destruction_of_Alderaan

[30] News Corporation and Liberty Media Corporation Sign Share Exchange Agreement, News Corp Press Release, Dec. 22, 2006, www.newscorp.com/news/news_322.html.  A frustrated Murdoch referred to DirecTV as a “turd bird” just before he sold it off. See Jill Goldsmith, Murdoch Looks to Release Bird, Variety, Sept. 14, 2006, www.variety.com/article/VR1117950090.html?categoryid=1236&cs=1

[31] Consumers Union, Consumer Federation of America, Free Press, and Media Access Project, Comments In the Matter of Authority to Transfer Control of DirecTV, MB Docket No. 07-18, March 23, 2007, www.mediaaccess.org/file_download/177

[32] Richard Linnett, Media Rivals Backslap at Cable Conference, AdAge.com, June 10, 2003.

[33] Dissenting Statement of Commissioner Michael J. Copps, Applications for Consent to the Transfer of Control of Licenses, XM Satellite Radio Holdings Inc., Transferor, to Sirius Satellite Radio Inc., Transferee, MB Docket No. 07-57, Aug. 5, 2008, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-178A3.pdf

[34] Dennis Wharton, National Association of Broadcasters, NAB Statement in Response to Sirius/XM Proposed Merger, Feb. 19, 2007, www.nab.org/AM/Template.cfm?Section=Search&template=/CM/HTMLDisplay.cfm&ContentID=8258.

[35] Peter Whoriskey and Kim Hart, Justice Dept. Approves XM-Sirius Radio Merger, The Washington Post, Mar. 25, 2008, www.washingtonpost.com/wp-dyn/content/article/2008/03/24/AR2008032401645.html.

[36] The XM-Sirius Merger: Monopoly or Competition from New Technologies: Hearing Before the Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, 3 & 6 (March 20, 2007) (statement of Common Cause et. al), www.hearusnow.org/fileadmin/sitecontent/2007_-_0320_Public_Interest_GroupsStatement-_Senate_Judiciary.pdf

[37] Id. at 6.

[38] Common Cause, Consumer Federation of America, Consumers Union, Free Press, Comments in the Matter of Consolidated Application for Authority To Transfer Control of XM Radio Inc. and Sirius Satellite Radio Inc., MB Docket No. 07-57July 9, 2007, at 1, www.hearusnow.org/fileadmin/sitecontent/xm-sirius_comments.pdf

[39] James Gattuso, Day 505: The XM-Sirius Circus Is Finally Over, Technology Liberation Front Blog, Aug. 7, 2008, http://techliberation.com/2008/08/07/day-505-the-xm-sirius-circus-is-finally-over

[40] Dissenting Statement of Commissioner Michael J. Copps, Applications for Consent to the Transfer of Control of Licenses, XM Satellite Radio Holdings Inc., Transferor, to Sirius Satellite Radio Inc., Transferee, MB Docket No. 07-57, Aug. 5, 2008, http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-178A3.pdf

[41] Andrew Ross Sorkin & Zachery Kouwe, Sirius XM Prepares for Possible Bankruptcy, New York Times, Feb. 10, 2009,  www.nytimes.com/2009/02/11/technology/companies/11radio.html

[42] Jon Birger, Mel Karmazin Fights to Rescue Sirius, Fortune.com, March 16, 2009, http://money.cnn.com/2009/03/13/technology/birger_sirius.fortune/index.htm

[43] Former stockbroker and RealMoney.com contributor Tim Melvin worries about the “significant competition for the company going forward” He notes:

Most of the younger people I know have iPod docks in their vehicles for listening to music. Smartphones are bringing music and podcasts to mobile consumers. E-reading machines have wireless connections that can eventually deliver content on a subscription or pay-per-use basis. I really do not need the sports channels from Sirius if I can watch and listen to the games I want on my phone. As time goes by, satellite radio will be viewed as a stepping-stone technology that was replaced by smartphones and other portable media devices.

Tim Melvin, Sirius’ Hopes Keep Slipping Away, The Street.com, Nov. 10, 2009, www.thestreet.com/story/10624757/1/sirius-hopes-keep-slipping-away.html?cm_ven=GOOGLEFI

[44] Olga Kharif, Sirius XM: The Good and Bad Earnings News, Business Week, Nov. 5, 2009, www.businessweek.com/technology/content/nov2009/tc2009115_002716.htm

[45] Melvin, supra 39.

[46] Robert McChesney, Murdoch’s Deal for the Journal: Yet Another Blow for Journalism, Free Press Press Release, July 30, 2007, www.freepress.net/release/260

[47] Michael Copps, Letter to FCC Chairman Kevin Martin, Oct. 25, 2007, http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-277576A1.pdf

[48] Michael Wolff, Rupert to Internet: It’s War! Vanity Fair, Nov. 2009, at 112.

[49] www.freepress.net/comcast

[50] Josh Silver, Too Big to Block? Why Obama Must Stop the Comcast-NBC Merger, Huffington Post, Nov. 13, 2009, www.huffingtonpost.com/josh-silver/too-big-to-block-why-obam_b_356826.html

[51] www.forbes.com/feeds/afx/2009/11/19/afx7143505.html

[52] Adam Thierer and Grant Eskelsen, The Progress & Freedom Foundation, Media Metrics: The True State of the Modern Media Marketplace, Summer 2008, www.pff.org/mediametrics

[53] However, experience with regulation of sports programming suggests that FCC meddling has had negative unintended consequences.  See W. Kenneth Ferree, Competition in the Sports Programming Marketplace, Testimony before the Subcommittee on Telecommunications and the Internet, House Committee on Energy and Commerce, March 5, 2008, www.pff.org/issues-pubs/testimony/2008/030508ferreetestimony.pdf; Barbara Esbin, Unable to Watch the Big Game? Testimony before the National Conference of State Legislatures Communications, Financial Services and Interstate Commerce Committee, Apr. 25, 2008, www.pff.org/issues-pubs/testimony/2008/080425esbinNCSLpresentation.pdf

[54] Mike Berkley, The Comcast-NBC Deal is a Defensive Move by Comcast. It’s about Survival, TV News Stream, Nov. 16, 2009, http://tvnewsstream.com/the-comcast-nbc-deal-is-a-defensive-move-by-c

[55] Holman Jenkins, The Economics of Jay Leno, Wall Street Journal, Nov. 18, 2009, at A17, http://online.wsj.com/article/SB10001424052748704431804574541684183772504.html

[56] Chris O’Brien, Beware the Hype Around Mergers, MercuryNews.com, Nov. 12, 2009, www.mercurynews.com/chris-obrien/ci_13756963?nclick_check=1

[57] Scott A. Christofferson, Robert S. McNish & Diane L. Sias, Where Mergers Go Wrong, McKinsey on Finance, Winter 2004, at 2, http://westportcapital.com/library/McKinsey_Where_Mergers_Go_Wrong.pdf.  The authors noted that, “acquirers face an obvious challenge in coping with an acute lack of reliable information. They typically have little actual data about the target company, limited access to its managers, suppliers, channel partners, and customers, and insufficient experience to guide synergy estimation and benchmarks.”

[58] See, e.g., Israel M. Kirzner, Competition, Regulation, and the Market Process: An “Austrian” Perspective, Cato Institute Policy Analysis No. 18, 1982, www.cato.org/pubs/pas/pa018.html

[59] For example, congressional hearings have been held on this topic and the Federal Trade Commission is holding a workshop on December 1^st and 2^nd asking, “Will Journalism Survive the Internet Age?” www.ftc.gov/opp/workshops/news/index.shtml

Adam Thierer & I have just released a detailed examination (PDF) of brewing efforts to expand the Children’s Online Privacy Protection Act of 1998 to cover adolescents and potentially all social networking sites—an approach we call “COPPA 2.0.”

As Adam explained on Larry Magid’s CNET podcast, COPPA mandates certain online privacy protections for children under 13, most importantly that websites obtain the “verifiable consent” of a child’s parent before collecting personal information about that child or giving that child access to interactive functionality that might allow the child to share their personal information with others. The law was intended primarily to “enhance parental involvement in a child’s online activities” as a means of protecting the online privacy and safety of children.

Yet advocates of expanding COPPA—or “COPPA 2.0″—see COPPA’s verifiable parental consent framework as a means for imposing broad regulatory mandates in the name of online child safety and concerns about social networking, cyber-harassment, etc. Two COPPA 2.0 bills are currently pending in New Jersey and Illinois. The accelerated review of COPPA to be conducted by the FTC next year (five years ahead of schedule) is likely to bring to Washington serious talk of expanding COPPA—even though Congress clearly rejected covering adolescents age 13-16 when COPPA was first proposed back in 1998.

We’ll discuss some of the key points of our paper in a series of blog posts, but here are the top nine reasons for rejecting COPPA 2.0, in that such an approach would:

• Burden the free speech rights of adults by imposing age verification mandates on many sites used by adults, thus restricting anonymous speech and essentially converging—in terms of practical consequences—with the unconstitutional Children’s Online Protection Act (COPA), another 1998 law sometimes confused with COPPA;
• Burden the free speech rights of adolescents to speak freely on—or gather information from—legal and socially beneficial websites;
• Hamper routine and socially beneficial communication between adolescents and adults;
• Reduce, rather than enhance, the privacy of adolescents, parents and other adults because of the massive volume of personal information that would have to be collected about users for authentication purposes (likely including credit card data);

• Would likely be the subject of massive fraud or evasion since it is not always possible to definitively verify the parent-child relationship, or because the system could be “gamed” in other ways by determined adolescents;
• Do nothing to prevent offshore sites and services from operating outside these rules;
• Present major practical challenges for law enforcement officials in the face of such evasion by both domestic users and offshore sites;
• Could destroy opportunities for new or smaller website operators to break into the market and offer competing services and innovations, thus contributing to consolidation of online content and services by erecting barriers to entry; and
• Violate the Commerce Clause of the U.S. Constitution, since Internet activity clearly represents interstate commerce that states have no authority to regulate.

I haven’t been blogging much lately because, along with my PFF colleagues Berin Szoka and Adam Marcus, I’m working on a lengthy paper about the importance of Section 230 to Internet freedom. Section 230 is the sometimes-forgotten portion of the Communications Decency Act of 1996 that shielded Internet Service Providers (ISP) from liability for information posted or published on their systems by users or other third parties. It was enshrined into law with the passage of the historic Telecommunications Act of 1996. Importantly, even though the provisions of the CDA seeking to regulate “indecent” speech on the Internet were struck down as unconstitutional, Sec. 230 was left untouched.

Section 230 of the CDA may be the most important and lasting legacy of the Telecom Act and it is indisputable that it has been remarkably important to the development of the Internet and online free speech and expression in particular. In many ways, Section 230 is the cornerstone of “Internet freedom” in its truest and best sense of the term.

In recent years, however, Sec. 230 has come under fire from some academics, judges, and other lawmakers. Critics raise a variety of complaints — all of which we will be cataloging and addressing in our forthcoming PFF paper. But what unifies most of the criticisms of Sec. 230 is the belief that Internet “middlemen” (which increasingly includes almost any online intermediary, from ISPs, to social networking sites, to search engines, to blogs) should do more to police their networks for potentially “objectionable” or “offensive” content. That could include many things, of course: cyberbullying, online defamation, harassment, privacy concerns, pornography, etc. If the online intermediaries failed to engage in that increased policing role, they would open themselves up to lawsuits and increased liability for the actions of their users.

The common response to such criticisms — and it remains a very good one — is that the alternative approach of strict secondary liability on ISPs and other online intermediaries would have a profound “chilling effect” on online free speech and expression. Indeed, we should not lose sight of what Section 230 has already done to create vibrant, diverse online communities. Brian Holland, a visiting professor at Penn State University’s Dickinson School of Law, has written a brilliant paper that does a wonderful job of doing just that. It’s entitled “In Defense of Online Intermediary Immunity: Facilitating Communities of Modified Exceptionalism” and it can be found on SSRN here. I cannot recommend it highly enough. It is a masterpiece. In the paper, Holland argues that Section 230 has helped give rise to our modern Web 2.0 world and that it “plays a vital role in [the] process of building heterogeneous communities that encourage collaborative production and communication.” Specifically, Holland argues that Sec. 230 immunity allows an online community:

to evolve and structure itself in the most efficient manner. To a limited extent, §230 immunity permits uncoordinated and uncoerced individual choice among different values and among different embodiments of those values. It further allows the intermediary to play an active role in facilitating the market in social norms and in creating enforcement mechanisms as a tool of self-governance. Those enforcement mechanisms can then themselves adapt. This allows not only for the development of distinct community values, but also for a means of tapping into incentives, adapting to evolving norms and conditions, and reducing costs associated with disputes. Within this framework, greater variations in community norms are possible. As communities grow, niche communities are formed at low cost. It… functions as a laboratory for testing social norms and values.

I think that is exactly right. Moreover, reading Professor Holland’s article got me thinking about something my favorite modern political philosopher, the late Harvard University philosophy professor Robert Nozick, said in his brilliant 1974 book, Anarchy, State, and Utopia. In a sense, Section 230 and existing online liability norms have helped foster what Nozick called “a utopia of utopias.”

Because people are all complex and quite different from one another, Nozick argued that, “There is no reason to think that there is one community which will serve as ideal for all people and much reason to think there is not.” Consequently, as a normative matter, it would be preferable for government to allow spontaneous community formation such that individuals can pursue their own interests. Nozick elaborated in the closing chapter of his book as follows:

The conclusion to draw is that there will not be one kind of community existing and one kind of life led in utopia. Utopia will consist of utopias, of many different and divergent communities in which people lead different kinds of lives under different institutions. Some kinds of communities will be more attractive to most than others; communities will wax and wane. People will leave some for others or spend their whole lives in one. Utopia is a framework for utopias, a place where people are at liberty to join together voluntarily to pursue and attempt to realize their own vision of the good life in the ideal community but where no one can impose his own utopian vision upon others.

That last line almost perfectly encapsulates everything that is so wonderful about our modern Web 2.0 world. Netizens are free to pursue their own vision of a good life in a community of their choosing, free from centralized or coerced visions of what “a good life” should entail.

Web 2.0 is Nozick’s utopia of utopias, and Section 230 has been instrumental in fostering and protecting it. We shouldn’t forget that.

Faithful readers will recall that, several months ago, I penned a 7-part “Media Metrics” series that took a hard look at the health of the media marketplace. Today, the Progress & Freedom Foundation is releasing a greatly expanded version of these essays that I have put together with my PFF colleague Grant Eskelsen. In this 100-page special report, “Media Metrics: The True State of the Modern Media Marketplace,” we begin by noting that heated debates about the state of the media marketplace continue to rage in Washington, and opinions seem to range from grim to outright apocalyptic. As we note on pg. 1:

Many people—including a large number of legislators and regulators—argue that America’s media marketplace is in a miserable state. Some claim that citizens lack choice in media outlets and that options are just as scarce as ever. Others believe that media “localism” is dead or that many groups or niches go underserved because of a lack of true “diversity” in media. Others argue that the market is hopelessly over-concentrated in the hands of a few evil media barons who are hell-bent on force-feeding us corporate propaganda. And still others say that the quality of news and entertainment in our society has deteriorated because of a combination of all of the above. It all sounds quite troubling, but is any of it true?

After taking an objective look at the true state of America’s media marketplace, we conclude that such pessimism is unwarranted. Indeed, a careful review of the facts reveals that—contrary to what those media critics suggest—we have more media choice, more media competition, and more media diversity than ever before. Indeed, 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. We come to this conclusion by looking beyond the rhetoric that has for too long governed debates about media in American and providing a comprehensive look at a variety of media sectors such as audio, video, print and online media. Our survey contains over 70 charts and exhibits illustrating facts and figures on such diverse topics as advertising revenue, company market share, audience trends, and areas of growth in the sector. We will also aim to periodically updated the report to reflect the rapidly evolving media industry.

We encourage readers to provider input about how to improve and expand the report going forward in an attempt to refine and improve the metrics. And we look forward to future debates on this subject–debates that we hope will be guided by facts instead of fanaticism and by evidence instead of emotion. The hyperbolic rhetoric, shameless fear-mongering, and unsubstantiated claims that have driven policy debates in recent years have no foundation in reality and should be rejected as the debate over media policy continues.

This and future installments of “Media Metrics: The True State of the Modern Media Marketplace” will be available on the PFF website at www.pff.org/mediametrics. I have also embedded the entire document below as a Scribd file so that those interested in the topic can peruse the report immediately.