public – Technology Liberation Front https://techliberation.com Keeping politicians' hands off the Net & everything else related to technology Thu, 03 Apr 2025 23:20:10 +0000 en-US hourly 1 6772528 Running List of My Research on AI, ML & Robotics Policy https://techliberation.com/2022/07/29/running-list-of-my-research-on-ai-ml-robotics-policy/ https://techliberation.com/2022/07/29/running-list-of-my-research-on-ai-ml-robotics-policy/#respond Fri, 29 Jul 2022 12:51:54 +0000 https://techliberation.com/?p=77020

[last updated 4/3/2025 – Check my Medium page for latest posts]

This a running list of all the essays and reports I’ve already rolled out on the governance of artificial intelligence (AI), machine learning (ML), and robotics. Why have I decided to spend so much time on this issue? Because this will become the most important technological revolution of our lifetimes. Every segment of the economy will be touched in some fashion by AI, ML, robotics, and the power of computational science. It should be equally clear that public policy will be radically transformed along the way.

Eventually, all policy will involve AI policy and computational considerations. As AI “eats the world,” it eats the world of public policy along with it. The stakes here are profound for individuals, economies, and nations. As a result, AI policy will be the most important technology policy fight of the next decade, and perhaps next quarter century. Those who are passionate about the freedom to innovate need to prepare to meet the challenge as proposals to regulate AI proliferate.

There are many socio-technical concerns surrounding algorithmic systems that deserve serious consideration and appropriate governance steps to ensure that these systems are beneficial to society. However, there is an equally compelling public interest in ensuring that AI innovations are developed and made widely available to help improve human well-being across many dimensions. And that’s the case that I’ll be dedicating my life to making in coming years.

Here’s the list of what I’ve done so far. I will continue to update this as new material is released:

2025

2024

2023

2022

2021 (and earlier)

]]> https://techliberation.com/2022/07/29/running-list-of-my-research-on-ai-ml-robotics-policy/feed/ 0 77020 Thoughts on FTC Economic Liberty Task Force Report & Occupational Licensing Reform https://techliberation.com/2018/09/25/thoughts-on-ftc-economic-liberty-task-force-report-occupational-licensing-reform/ https://techliberation.com/2018/09/25/thoughts-on-ftc-economic-liberty-task-force-report-occupational-licensing-reform/#respond Tue, 25 Sep 2018 19:47:37 +0000 https://techliberation.com/?p=76385

Over at the Mercatus Center Bridge blog, Trace Mitchell and I just posted an essay entitled, “A Non-Partisan Way to Help Workers and Consumers,” which discusses the new Federal Trade Commission’s (FTC) Economic Liberty Task Force report on occupational licensing.

We applaud the FTC’s calls for greater occupational licensing uniformity and portability, but regret the missed opportunity to address root problem of excessive licensing more generally. But while FTC is right to push for greater occupational licensing uniformity and portability, policymakers need to confront the sheer absurdity of licensing so many jobs that pose zero risk to public health & safety. Licensing has become completely detached from risk realities and actual public needs.

As the FTC notes, excessive licensing limits employment opportunities, worker mobility, and competition while also “resulting in higher prices, reduced quality, and less convenience for consumers.” These are unambiguous facts that are widely accepted by experts of all stripes. Both the Obama and Trump Administrations, for example, have been completely in league on the need for comprehensive  licensing reforms.

Trace and I argue that we need serious occupational reforms built on the idea of the “right to earn a living” that must pass this test: “All occupational regulations shall be limited to those demonstrably necessary and carefully tailored to fulfill legitimate public health, safety, or welfare objectives.”  Also, all licensing authorities should be put on the clock and be required, within one year, to reassess the wisdom of all existing licenses to ensure they meet that test. If not, they are repealed or reformed.

In recent testimony in Texas, our Mercatus Center colleague Matthew Mitchell has also discussed other reform options, including the “Occupational Board Reform Act,” which recently passed in Nebraska. The goal of the law is to “protect the fundamental right of an individual to pursue a lawful occupation;.” They key provision of the Act demands that state actors:

use the least restrictive regulation which is necessary to protect consumers from undue risk of present, significant, and substantiated harms that clearly threaten or endanger the health, safety, or welfare of the public when competition alone is not sufficient and which is consistent with the public interest;

That’s an excellent approach to reform and when combined with the Right to Earn a Living Act, policymakers can begin to reverse the protectionist, anti-competitive licensing schemes that encumber entrepreneurs and workers across the land.

In forthcoming work, I hope to more fully develop the connection between the right to earn a living, the need for comprehensive licensing reform, and the freedom to innovate more generally. In the meantime, hop over to The Bridge to read our new essay on how the FTC report helps advance this cause..

]]> https://techliberation.com/2018/09/25/thoughts-on-ftc-economic-liberty-task-force-report-occupational-licensing-reform/feed/ 0 76385 FDA, Biohacking & the “Right to Try” for Families https://techliberation.com/2016/05/09/fda-biohacking-the-right-to-try-for-families/ https://techliberation.com/2016/05/09/fda-biohacking-the-right-to-try-for-families/#comments Mon, 09 May 2016 17:44:07 +0000 https://techliberation.com/?p=76032

In theory, the Food & Drug Administration (FDA) exists to save lives and improve health outcomes. All too often, however, that goal is hindered by the agency’s highly bureaucratic, top-down, command-and-control orientation toward drug and medical device approval.

Today’s case in point involves families of children with diabetes, many of whom are increasingly frustrated with the FDA’s foot-dragging when it comes to approval of medical devices that could help their kids. Writing today in The Wall Street Journal, Kate Linebaugh discusses how “Tech-Savvy Families Use Home-Built Diabetes Device” to help their kids when FDA regulations limit the availability of commercial options. She documents how families of diabetic children are taking matters into their own hands and creating their own home-crafted insulin pumps, which can automatically dose the proper amount of proper amount of the hormone in response to their child’s blood-sugar levels. Families are building, calibrating, and troubleshooting these devices on their own. And the movement is growing. Linebaugh reports that:

More than 50 people have soldered, tinkered and written software to make such devices for themselves or their children. The systems—known in the industry as artificial pancreases or closed loop systems—have been studied for decades, but improvements to sensor technology for real-time glucose monitoring have made them possible. The Food and Drug Administration has made approving such devices a priority and several companies are working on them. But the yearslong process of commercial development and regulatory approval is longer than many patients want, and some are technologically savvy enough to do it on their own.

Linebaugh notes that this particular home-built medical project (known as OpenAPS), was created by Dana Lewis, a 27-year-old with Type 1 diabetes in Seattle. Linebaugh says that:

Ms. Lewis began using the system in December 2014 as a sort of self-experiment. After months of tweeting about it, she attracted others who wanted what she had. The only restriction of the project is users have to put the system together on their own. Ms. Lewis and other users offer advice, but it is each one’s responsibility to know how to troubleshoot. A Bay Area cardiologist is teaching himself software programming to build one for his 1-year-old daughter who was diagnosed in March.

In essence, these individuals and families are engaging in a variant of the sort of decentralized “biohacking” that is becoming increasingly prevalent in society today. As I discussed in a recent law review article, biohacking refers to the efforts of average citizens (often working together in a decentralized fashion) to enhance various human capabilities. This can include implanting things inside one’s body or using external devices to supplement one’s abilities or to address health-related issues.

I documented other examples of this trend in my essays on average citizens making 3D-printed prosthetics (The Right to Try, 3D Printing, the Costs of Technological Control & the Future of the FDA) as well as retainers (“In a World Where Kids Can 3D-Print Their Own Retainers, What Should Regulators Do?”) As “software eats the world” and allows for this sort of democratized medical self-experimentation, more and more citizens are likely going to be engaging in biohacking. In the process, they will often be doing an end-around the FDA and its complex maze of regulatory restrictions on health innovation.

Stated more provocatively, thanks to new technological capabilities and networking platforms, the public may increasingly enjoy a de facto “right to try” for many new medical devices and treatments. Technological innovation will decentralize and democratize medical decisions even when the legal status of such actions is unclear or even flatly illegal.

But is a world of increasingly decentralized, democratized, and such highly personalized medicine actually safe? Well, all risk is relative and as I discussed extensively in my recent book and other work on innovation policy, sometimes the greatest risk of all is the refusal to take any risk to begin with. If you disallow or limit efforts to engage in certain risky endeavours, ultimately, you could end up doing more harm because there can be no reward without a corresponding amount of risk-taking. It is only through constant trial and error experimentation that we find new and better ways of doing things. That is particularly true as it pertains to life-enriching or even life-saving medical treatments. While the FDA likes to think that its hyper-cautious approach to medical drug and device approval ultimately saves lives, in the aggregate, we have no idea how many lives are actually being lost (or how much pain and suffering is occurring) due to FDA prohibitions on our freedom to experiment with new products and services.

One of the parents Linebaugh interviewed for her story made the following remark: “Diabetes is dangerous anyway. Insulin is dangerous. I think what we are doing is actually improving that and lowering the risk.” That is exactly right. This father understands the reality of risk trade-offs. There are certainly risks associated with what these families are doing for their children. But these families also have a very palpable sense of the opposite problem: There is a profound and immediate risk of doing nothing and waiting for the FDA to finally get around to approving the devices that their children need  right now.

All this raises another interesting policy question: Why is it legal for these parents to engage in this sort of medical self-experimentation–experimentation on their children, no less!–while it remains flatly illegal for any commercial operator to offer similar products that could help these families? Many modern regulatory regimes accord differential treatment to commercial activities. Non-commercial versions of some activities are left alone, but as soon as commercial opportunities arise, policymakers seek to apply regulation.

Does this sort of commercial vs. non-commercial regulatory asymmetry make any sense? As far as I can tell, this regulatory distinction is mostly rooted in the fact that deep-pocked commercial operators make easier targets for regulators to go after when compared to harassing average citizens.  Going after average citizens would be bad PR and a serious legal hassle as well because issues pertaining to personal autonomy or parental rights would likely be raised both in the court of public opinion and courts of law.

Regardless, let’s not kid ourselves into thinking that this regulatory distinction is rooted in safety considerations. After all, it is almost certainly the case that those commercial medical innovators are likely building safer products, made by medical professionals with years of experience. Moreover, commercial operators are more likely to carry insurance to address any problems that may develop, and they possess strong reputational incentives to be good market actors. Commercial operators have to maintain brand loyalty to earn new or repeat business, or perhaps just to avoid stiff legal liability that non-commercial operators might not face. 

In any event, one thing should be abundantly clear: If the FDA doesn’t change its ways, we can expect an increasing number of citizens to begin pursuing medical treatments outside the boundaries of the law (and potentially outside the realm of common sense). Many people want a right to try new devices and therapies, and in our modern networked world, they are increasingly going to get it whether regulators like it or not.

Lawmakers in Congress need to exercise better oversight of rogue agencies like the FDA, which face no serious penalties for the sort of endless regulatory foot-dragging that threatens public welfare. If the agency was required by Congress to improve its drug and device approval process, then perhaps fewer Americans would be forced to take matters into their own hands to begin with. Down below, I’ve included a few reports suggesting how we might get this much-needed reform process started.

Additional reading from Mercatus Center scholars:

]]> https://techliberation.com/2016/05/09/fda-biohacking-the-right-to-try-for-families/feed/ 5 76032 New Paper on The Sharing Economy and Consumer Protection Regulation https://techliberation.com/2014/12/08/new-paper-on-the-sharing-economy-and-consumer-protection-regulation/ https://techliberation.com/2014/12/08/new-paper-on-the-sharing-economy-and-consumer-protection-regulation/#comments Mon, 08 Dec 2014 15:06:54 +0000 http://techliberation.com/?p=75035

Sharing Economy paper from MercatusI’ve just released a short new paper, co-authored with my Mercatus Center colleagues Christopher Koopman and Matthew Mitchell, on “The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change.” The paper is being released to coincide with a Congressional Internet Caucus Advisory Committee event that I am speaking at today on “Should Congress be Caring About Sharing? Regulation and the Future of Uber, Airbnb and the Sharing Economy.”

In this new paper, Koopman, Mitchell, and I discuss how the sharing economy has changed the way many Americans commute, shop, vacation, borrow, and so on. Of course, the sharing economy “has also disrupted long-established industries, from taxis to hotels, and has confounded policymakers,” we note. “In particular, regulators are trying to determine how to apply many of the traditional ‘consumer protection’ regulations to these new and innovative firms.” This has led to a major debate over the public policies that should govern the sharing economy.

We argue that, coupled with the Internet and various new informational resources, the rapid growth of the sharing economy alleviates the need for much traditional top-down regulation. These recent innovations are likely doing a much better job of serving consumer needs by offering new innovations, more choices, more service differentiation, better prices, and higher-quality services. In particular, the sharing economy and the various feedback mechanism it relies upon helps solve the tradition economic problem of “asymmetrical information,” which is often cited as a rationale for regulation. We conclude, therefore, that “the key contribution of the sharing economy is that it has overcome market imperfections without recourse to traditional forms of regulation. Continued application of these outmoded regulatory regimes is likely to harm consumers.”

We note that this is especially likely to be the case when the failure of traditional regulatory models is taken into account. As we document in the paper, all too often, well-intentioned “public interest” regulation is often captured by industry and used to to serve their interests:

by limiting entry, or by raising rivals’ costs, regulations can be useful to the regulated firms. Though regulations often make consumers worse off, they are often sustained by political pressure from consumer advocates because they can be disguised as “consumer protection.”

We provide evidence of the problem of regulatory capture and note it has been a particular problem in many of the sectors that are now being disrupted by sharing economy innovators–such as taxi and transportation services. It is evident that regulation has not lived up to its lofty expectations in many sectors. Accordingly, when market circumstances change dramatically—or when new technology or competition alleviate the need for regulation—then public policy should evolve and adapt to accommodate these new realities.

Of course, many bad laws and regulations that policymakers remain on the books and have constituencies who will defend them vociferously. Our paper concludes with some recommendations for how to “level the regulatory playing field” in a pro-consumer, pro-innovation fashion. We note that while differential regulatory treatment of incumbents and new entrants does represent a potential problem, there’s a sensible, pro-consumer and pro-innovation way to solve that problem:

such regulatory asymmetries represent a legitimate policy problem. But the solution is not to punish new innovations by simply rolling old regulatory regimes onto new technologies and sectors. The better alternative is to level the playing field by “deregulating down” to put everyone on equal footing, not by “regulating up” to achieve parity. Policymakers should relax old rules on incumbents as new entrants and new technologies challenge the status quo. By extension, new entrants should only face minimal regulatory requirements as more onerous and unnecessary restrictions on incumbents are relaxed.

Download this new paper on the Mercatus website or via SSRN or ResearchGate. Incidentally, we plan to release a much longer Mercatus Center white paper early next year that will explore reputational feedback mechanisms in far greater detail and explain how these systems help address the problem of “asymmetrical information” in these and other contexts.

Also see: “The Debate over the Sharing Economy: Talking Points & Recommended Reading,” which includes the following video of me on the Stossel Show discussing these issues recently.

]]> https://techliberation.com/2014/12/08/new-paper-on-the-sharing-economy-and-consumer-protection-regulation/feed/ 1 75035 Anupam Chander on free speech and cyberlaw https://techliberation.com/2013/11/12/anupam-chander-on-free-speech-and-cyberlaw/ https://techliberation.com/2013/11/12/anupam-chander-on-free-speech-and-cyberlaw/#respond Tue, 12 Nov 2013 11:00:03 +0000 http://techliberation.com/?p=73785

Anupam Chander, Director of the California International Law Center and Martin Luther King, Jr. Hall Research Scholar at the UC Davis School of Law, discusses his recent paper with co-author Uyen P. Lee titled The Free Speech Foundations of Cyberlaw. Chander addresses how the first amendment promotes innovation on the Internet; how limitations to free speech vary between the US and Europe; the role of online intermediaries in promoting and protecting the first amendment; the Communications Decency Act; technology, piracy, and copyright protection; and the tension between privacy and free speech.

Download

Related Links

]]> https://techliberation.com/2013/11/12/anupam-chander-on-free-speech-and-cyberlaw/feed/ 0 73785 Book Review: Brown & Marsden’s “Regulating Code” https://techliberation.com/2013/06/27/book-review-brown-marsdens-regulating-code/ https://techliberation.com/2013/06/27/book-review-brown-marsdens-regulating-code/#respond Thu, 27 Jun 2013 20:51:52 +0000 http://techliberation.com/?p=45035

Regulating Code book coverIan Brown and Christopher T. Marsden’s new book, Regulating Code: Good Governance and Better Regulation in the Information Age, will go down as one of the most important Internet policy books of 2013 for two reasons. First, their book offers an excellent overview of how Internet regulation has unfolded on five different fronts: privacy and data protection; copyright; content censorship; social networks and user-generated content issues; and net neutrality regulation. They craft detailed case studies that incorporate important insights about how countries across the globe are dealing with these issues. Second, the authors endorse a specific normative approach to Net governance that they argue is taking hold across these policy arenas. They call their preferred policy paradigm “prosumer law” and it envisions an active role for governments, which they think should pursue “smarter regulation” of code.

In terms of organization, Brown and Marsden’s book follows the same format found in Milton Mueller’s important 2010 book Networks and States: The Global Politics of Internet Governance; both books feature meaty case studies in the middle bookended by chapters that endorse a specific approach to Internet policymaking. (Incidentally, both books were published by MIT Press.) And, also like Mueller’s book, Brown and Marsden’s Regulating Code does a somewhat better job using case studies to explore the forces shaping Internet policy across the globe than it does making the normative case for their preferred approach to these issues.

Thus, for most readers, the primary benefit of reading either book will be to see how the respective authors develop rich portraits of the institutional political economy surrounding various Internet policy issues over the past 10 to 15 years. In fact, of all the books I have read and reviewed in recent years, I cannot think of two titles that have done a better job developing detailed case studies for such a diverse set of issues. For that reason alone, both texts are important resources for those studying ongoing Internet policy developments.

That’s not to say that both books don’t also make a solid case for their preferred policy paradigms, it’s just that the normative elements of the texts are over-shadowed by the excellent case studies. As a result, readers are left wanting more detail about what their respective policy paradigms would (or should) mean in practice. Regardless, in the remainder of this review, I’ll discuss Brown and Marsden’s normative approach to digital policy and contrast it with Mueller’s since they stand in stark contrast and help frame the policy battles to come on this front.

Governing Cyberspace: Mueller vs. Brown & Marsden

Mueller’s normative goal in Networks and States was to breathe new life into the old cyber-libertarian philosophy that was more prevalent during the Net’s founding era but which has lost favor in recent years. He made the case for a “cyberliberty” movement rooted in what he described as a “denationalized liberalism” vision of Net governance. He argued that “we need to find ways to translate classical liberal rights and freedoms into a governance framework suitable for the global Internet. There can be no cyberliberty without a political movement to define, defend, and institutionalize individual rights and freedoms on a transnational scale.”

I wholeheartedly endorsed that vision in my review of Mueller’s book, even if he was a bit short on the details of how to bring it about. But it is useful to keep Mueller’s paradigm in mind because it provides a nice contrast with the approach Brown and Marsden advocate, which is quite different.

Generally speaking, Brown and Marsden reject most forms of “Internet exceptionalism” and certainly reject the sort of “cyberliberty” ethos that Mueller and I embrace. They instead endorse a fairly broad role for governments in ordering the affairs of cyberspace. In their self-described “prosumer” paradigm, the State is generally viewed as benevolent actor, well-positioned to guide the course of code development toward supposedly more enlightened ends.

Consistent with the strong focus on European policymaking found throughout the book, the authors are quite enamored with the “co-regulatory” models that have become increasing prevalent across the continent. Like many other scholars and policy advocates today, they occasionally call for “multi-stakeholderism” as a solution but they do not necessarily mean the sort of truly voluntary, bottom-up multi-stakeholderism of the Net’s early days. Rather, they are usually thinking of multi-stakeholderism as what is essentially pluralistic politics; it’s the government setting the table, inviting the stakeholders to it, and then guiding (or at least “nudging”) policy along the way. “We are convinced that fudging with nudges needs to be reinforced with the reality of regulation and coregulation, in order to enable prosumers to maximize their potential on the broadband Internet,” they say. (p. 187)

Meet the New Boss, Same as the Old Boss?

Thus, despite the new gloss, their “prosumer law” paradigm ends up sounding quite a bit like a rehash of traditional “public interest” law and common carrier regulation, albeit with a new appreciation of just how dynamics markets built on code can be. Indeed, Brown and Marsden repeatedly acknowledge how often law and regulation fails to keep pace with the rapid evolution of digital technology. “Code changes quickly, user adoption more slowly, legal contracting and judicial adaptation to new technologies slower yet, and regulation through legislation slowest of all,” they correctly note (p. xv). This reflects what Larry Downes refers to as the most fundamental “law of disruption” of the digital age: “technology changes exponentially, but social, economic, and legal systems change incrementally.”

At the end of the day, however, that insight doesn’t seem to inform Brown and Marsden’s policy prescriptions all that much. Theirs is a world in which policy tinkering errors will apparently be corrected promptly and efficiently by still more policy tinkering, or “smarter regulation.” Moreover, like many other Internet policy scholars today, they don’t mind regulatory interventions that come early and often since they believe that will help regulators get out ahead of the technological curve and steer markets in preferred directions. “If regulators fail to address regulatory objects at first, then the regulatory object can grow until its technique overwhelms the regulator,” they say (p. 31).

This is the same mentality that is often on display in Tim Wu’s work, which I have been quite critical of here and elsewhere. For example, Wu has advocated informal “agency threats” and the use of “threat regimes” to accomplish policy goals that prove difficult to steer though the formal democratic rulemaking process. As part of his “defense of regulatory threats in particular contexts,” Wu stresses the importance of regulators taking control of fast-moving tech markets early in their life cycles. “Threat regimes,” Wu argues, “are best justified when the industry is undergoing rapid change — under conditions of ‘high uncertainty.’ Highly informal regimes are most useful, that is, when the agency faces a problem in an environment in which facts are highly unclear and evolving. Examples include periods surrounding a newly invented technology or business model, or a practice about which little is known,” Wu concludes.

This is essentially where most of the “co-regulation” schemes that Brown and Marsden favor would take us: Code regulators would take an active role in shaping the evolution of digital technologies and markets early in its life cycle. What are the preferred regulatory mechanisms? Like Wu and many other cyberlaw professors today, Brown and Marsden favor robust interconnection and interoperability mandates bolstered by antitrust actions as well. And, again, they aren’t willing to wait around and let the courts adjudicate these issues in an ex post fashion. “Essential facilities law is a very poor substitute for the active role of prosumer law that we advocate, especially in its Chicago school minimalist phase” (p. 185). In other words, we shouldn’t wait for someone to bring a case and litigate it through the courts when preemptive, proactive regulatory interventions can sagaciously steer us to a superior end.

More specifically, they propose that “competition authorities should impose ex ante interoperability requirements upon dominant social utilities… to minimize network barriers” (p. 190) and they model this on traditional regulatory schemes such as must-carry obligations, API interface disclosure requirements, and other interconnection mandates (such as those imposed on AOL/Time Warner a decade ago to alleviate fears about instant messaging dominance). They also note that “Effective, scalable state regulation often depends on the recruitment of intermediaries as enforcers” to help achieve various policy objectives (p. 170).

The Problem with Interoperability Über Alles

So, in essence, the Brown-Marsden Internet policy paradigm might be thought of as interoperability über alles. Interoperability and interconnection in pursuit of more “open” and “neutral” systems is generally considered an unalloyed good and most everything else is subservient to this objective.

This is a serious policy error and one that I address in great detail in my absurdly long review of John Palfrey and Urs Gasser’s Interop: The Promise and Perils of Highly Interconnected Systems. I’m not going to repeat all 6,500 words of that critique here when you can just click back and read it, but here’s the high level summary: There is no such thing as “optimal interoperability” that can be determined in an a priori fashion. Ongoing marketplace experimentation with technical standards, modes of information production and dissemination, and interoperable information systems, is almost always preferable to the artificial foreclosure of this dynamic process through state action. The former allows for better learning and coping mechanisms to develop while also incentivizing the spontaneous, natural evolution of the market and market responses. The latter (regulatory foreclosure of experimentation) limits that potential.

More importantly, when interoperability is treated as sacrosanct and forcibly imposed through top-down regulatory schemes, it will often have many unintended consequences and costs. It can even lock in existing market power and market structures by encouraging users and companies to flock to a single platform instead of trying to innovate around it. (Go back and take a look at how the “Kingsbury Commitment” — the interconnection deal from the early days of the U.S. telecom system — actually allowed AT&T to gain greater control over the industry instead of assisting independent operators.)

Citing Palfrey and Gasser, Brown and Marsden do note that “mandated interoperability is neither necessary in all cases nor necessarily desirable” (p. 32), but they don’t spend as much time as Palfrey and Gasser itemizing these trade-offs and the potential downsides of some interoperability mandates. But what frustrates me about both books is the almost quasi-religious reverence accorded to interoperability and open standards when such faith is simply not warranted after historical experience is taken into consideration.

Plenty of the best forms of digital innovation today are due to a lack of interoperability and openness. Proprietary systems have produced some of the most exciting devices (iPhone) and content (video games) of modern times. Then again, voluntary interoperable and “open” services and devices thrive, too. The key point here — and one that I develop in far greater detail in my book chapter, “The Case for Internet Optimism, Part 2 – Saving the Net From Its Supporters” — is that the market for digital services is working marvelously and providing us with choices of many different flavors. Innovation continues to unfold rapidly in both directions along the “open” vs. “closed” continuum. (Here are 30 more essays I have written on this topic if you need more proof.)

Generally speaking, we should avoid mandatory interop and openness solutions. We should instead push those approaches and solutions in a truly voluntary, bottom-up fashion. And, more importantly, we should be pushing for outside-the-box solutions of the Schumpeterian (creative destruction / disruptive innovation) variety instead of surrendering so quickly on competition through forced sharing mandates.

The Case for Patience & Policy Restraint

But Brown and Marsden clearly do not subscribe to that sort of Schumpeterian thinking. They think most code markets tip and lock into monopoly in fairly short order and that only wise interventions can rectify that. For example, they claim that Facebook’s “monopoly is now durable,” which will certainly come as a big surprise to the millions of us who do not use it all. And the story of MySpace’s rapid rise and equally precipitous fall has little bearing on this story, they argue.

But, no matter how you define the “social networking market,” here are two facts about it: First, it is still very, very young. It’s only about a decade old. Second, in that short period of time, we have already witnessed the entire first generation of players fall by the wayside. While the second generation is currently dominated by Facebook, it is by no means alone. Again, millions like me don’t use it at all and get along just fine with other “social networking” technologies, including Twitter, LinkedIn, Google+, and even older tech like email, SMS, and yes, phone calls! Accusations of “monopoly” in this space strain credulity in the extreme. I invite you to read my Mercatus working paper, “The Perils of Classifying Social Media Platforms as Public Utilities,” for a more thorough debunking of this logic. (Note: The final version of that paper will be published in the CommLaw Conspectus shortly.)

Such facts should have a bearing on the debate about regulatory interventions. We continue to witness the power of Schumpeterian rivalry as new and existing players battle in a race for the prize of market power. Brown and Marsden fear that the race is already over in many sectors and that it is time to throw in the towel and get busy regulating. But when I look around at the information technology marketplace today, I am astonished just how radically different it looks from even just a few years ago, and not just in the social media market. I have written extensively about the smartphone marketplace, where innovation continues at a frantic pace. As I noted in my essay here on “Smartphones & Schumpeter,” it’s hard to remember now, but just 6 short years ago:

  • The iPhone and Android had not yet landed.
  • Most of the best-selling phones of 2007 were made by Nokia and Motorola.
  • Feature phones still dominated the market; smartphones were still a luxury (and a clunky luxury at that).
  • There were no app stores and what “apps” did exist were mostly proprietary and device or carrier-specific; and,
  • There was no 4G service.

It’s also easy to forget just how many market analysts and policy wonks were making absurd predictions at the time about how the telecom operators at the time had so much market power that they would crush new innovation without regulation. Instead, in very short order, the market was completely upended in a way that mobile providers never saw coming. There was a huge shift in relative market power flowing from the core of these markets to the fringes, especially to Apple, which wasn’t even a player in that space before the launch of the iPhone.

As I noted in concluding that piece last year, these facts should lead us to believe that this is a healthy, dynamic marketplace in action. Not even Schumpeter could have imagined creative destruction on this scale. (Just look as BlackBerry). But much the same could be said of many other sectors of the information economy.  While it is certainly true that many large players exist, we continue to see a healthy amount of churn in these markets and an astonishing amount of technological innovation.

Public Choice Insights: What History Tells Us

One would hope these realities would have a greater bearing on the policy prescriptions suggested by analysts like Brown and Marsden, but they don’t seem to. Instead, the attitude on display here is that governments can, generally speaking, act wisely and nudge efficiently to correct short-term market hiccups and set us on a better course. But there are strong reasons to question that presumption.

Specifically, what I found most regrettable about Brown and Marsden’s book was the way — like all too many books in this field these days — the authors briefly introduce “public choice” insights and concerns only to summarily dismiss them as unfounded or overblown. (See my review of Brett Frischmann’s book, Infrastructure: The Social Value of Shared Resources for a more extended discussion of this problem as it pertains to discussions about not just infrastructure regulation by the regulation of all complex industries and technologies.)

Brown and Marsden make it clear that their intentions are pure and that their methods would incorporate the lessons of the past, but they aren’t very interested in dwelling on the long, lamentable history of regulatory failures and capture in the communications and media policy sectors. They do note the dangers of a growing “security-industrial complex” and argue that “commercial actors dominate technical actors in policy debates.” They also say that the “potential for capture by regulated interests, especially large corporate lobbies, is an essential insight” that informs their approach. The problem is that it really doesn’t. They largely ignore those insights and instead imply that, to the extent this is a problem at all, we can build a better breed of bureaucrats going forward who will craft “smarter regulation” that is immune from such pressures. Or, they claim that “multi-stakeholderism” — again, the new, more activist and government-influenced conception of it — can overcome these public choice problems.

A better understanding of power politics that is informed by the wisdom of the ages would instead counsel that minimizing the scope of politicization of technology markets is the better remedy. Capture and cronyism in communications and media markets has always grown in direct proportion to the overall scope of law governing those sectors. (I invite you to read all the troubling examples of this that Brent Skorup and I have documented in our new 72-page working paper, “A History of Cronyism and Capture in the Information Technology Sector.” Warning: It makes for miserable reading but proves beyond any doubt that there is something to public choice concerns.)

To be clear, it’s not that I believe that “market failures” or “code failures” never occur, rather, as I noted in this debate with Larry Lessig, it’s that such problems are typically “better addressed by voluntary, spontaneous, bottom-up, marketplace responses than by coerced, top-down, governmental solutions. Moreover, the decisive advantage of the market-driven approach to correcting code failure comes down to the rapidity and nimbleness of those response(s).” It’s not just that traditional regulatory remedies cannot keep pace with code markets, it’s that those attempting to craft the remedies do not possess the requisite knowledge needed to know how to steer us down a superior path. (See my essay, “Antitrust & Innovation in the New Economy: The Problem with the Static Equilibrium Mindset,” for more on that point.)

Regardless, at a minimum, I expect scholars to take seriously the very real public choice problems at work in this arena. You cannot talk about the history of these sectors without acknowledging the horrifically anti-consumer policies that were often put in place at the request of one industry or another to shield themselves from disruptive innovation. No amount of wishful thinking about “prosumer” policies will change these grim political realities. Only by minimizing chances to politicize technology markets and decisions can we overcome these problems.

Conclusion

For those of us who prefer to focus on freeing code, Brown and Marsden’s Regulating Code is another reminder that liberty is increasingly a loser in Internet policy circles these days. Milton Mueller’s dream of decentralized, denationalized liberalism seems more and more unlikely as armies of policymakers, regulators, special interests, regulatory advocates, academics, and others all line up and plead for their pet interest or cause to be satisfied through pure power politics. No matter what you call it — fudging, nudging, coregulation, smart regulation, multistakeholderism, prosumer law, or whatever else, — there is no escaping the fact that we are witnessing the complete politicization of almost every facet of code creation and digital decisionmaking today.

Despite my deep reservations about a more politicized cyberspace, Brown and Marsden’s book is an important text because it is one of the most sophisticated articulations and defenses of it to date. Their book also helps us better understand the rapidly developing institutional political economy of Internet regulation in both broad and narrow policy contexts. Thus, it is worth your time and attention even if, like me, you are disheartened to be reading yet another Net policy book that ultimately endorses mandates over of markets as the primary modus operandi of the information age.

Additional Resources about the book:

Other books you should read alongside “Regulating Code” (links are for my reviews of each):

]]> https://techliberation.com/2013/06/27/book-review-brown-marsdens-regulating-code/feed/ 0 45035 New Paper on Wu’s “Separations Principle” & the War on Vertical Integration in the Tech Economy https://techliberation.com/2012/10/16/new-paper-on-wus-separations-principle-the-war-on-vertical-integration-in-the-tech-economy/ https://techliberation.com/2012/10/16/new-paper-on-wus-separations-principle-the-war-on-vertical-integration-in-the-tech-economy/#respond Tue, 16 Oct 2012 20:29:53 +0000 http://techliberation.com/?p=42606

[UPDATE 4/30/13: This article was subsequently published in Volume 65, Issues 2 of the Federal Communications Law Journal in April 2013. The links below now point to the final FCLJ version.]

The Mercatus Center at George Mason University has just released a new paper by Brent Skorup and me entitled, “Uncreative Destruction: The War on Vertical Integration in the Information Economy.”  Brent, who is the research director for the Information Economy Project at the George Mason University School of Law, and I have been working on this paper since the Spring and we are looking forward to getting it published in a law review shortly. The paper focuses on Tim Wu’s “separations principle” for the digital economy, something I’ve spent some time critiquing here in the past. Here’s the introduction from the 44-page paper that Brent and I just released:

Are information sectors sufficiently different from other sectors of the economy such that more stringent antitrust standards should be applied to them preemptively? Columbia Law School professor Tim Wu responds in the affirmative in his book The Master Switch: The Rise and Fall of Information Empires. Having successfully pushed net-neutrality regulation into the policy spotlight, Wu has turned his attention to what he regards as excessive market concentration and threats to free speech throughout the entire information economy.To support his call for increased antitrust intervention, Wu explains his view of competition in the information economy—a view that deviates substantially from current mainstream antitrust theory. First, Wu contends that “information monopolies” are pervasive in the information economy. Wu’s “monopolists” include Facebook, Apple, Google, and even Twitter. In The Master Switch and essays like “In the Grip of the New Monopolists,” Wu argues that these so-called monopolies are increasing their market power and require more aggressive oversight and regulation.Second, Wu argues that traditional antitrust analysis is not sufficient for information systems because they carry speech. He claims, “Information industries… can never be properly understood as ‘normal’ industries,”and traditional forms of regulation, including antitrust enforcement, “are clearly inadequate for the regulation of information industries.”Wu believes that because information industries “traffic in forms of individual expression” and are “fundamental to democracy,” they should be subject to greater regulatory treatment.Third, in contrast to current competition law’s focus on horizontal relationships, Wu desires a reinvigorated regulatory enforcement that addresses “the corrupting effects of vertically integrated power” in the information sectors.He is particularly concerned about private threats to free speech arising from such vertical integration.The solution, he says, is preventing vertical mergers in the information economy and the mandatory divestiture of vertically integrated companies. To implement this, Wu proposes a Separations Principle for the information economy, which would segregate information providers into three buckets, which we have labeled information creators, information distributors, and hardware makers.This article outlines Wu’s separations proposal, explains why his fears regarding vertical relationships should be rejected by regulatory and antitrust policymakers, and illustrates the legal and practical problems his Separations Principle poses. Wu justifies his Separations Principle by citing monopolies and market power in the information economy. He also advocates using U.S. antitrust authorities to enforce his Principle. We argue that the antitrust harms he fears are not present, and we highlight scholarship on the accepted benefits of vertically integrated firms. We show that Wu’s remedies are policy preferences wrapped in the language of competition law. In fact, the information economy is largely competitive and does not warrant interventionist regulatory enforcement. Since much of American economic vitality flows from the information economy and technology, policymakers should reject a radical antitrust remedy like Wu’s preemptive Separations Principle.

The paper can be downloaded from the Mercatus website, SSRN, or Scribd.

]]> https://techliberation.com/2012/10/16/new-paper-on-wus-separations-principle-the-war-on-vertical-integration-in-the-tech-economy/feed/ 0 42606 new paper: The Perils of Classifying Social Media Platforms as Public Utilities https://techliberation.com/2012/03/19/new-paper-the-perils-of-classifying-social-media-platforms-as-public-utilities/ https://techliberation.com/2012/03/19/new-paper-the-perils-of-classifying-social-media-platforms-as-public-utilities/#respond Mon, 19 Mar 2012 18:25:33 +0000 http://techliberation.com/?p=40360

The Mercatus Center at George Mason University has just released my new white paper, “The Perils of Classifying Social Media Platforms as Public Utilities.” [PDF] I first presented a draft of this paper last November at a Michigan State University conference on “The Governance of Social Media.” [Video of my panel here.]

In this paper, I note that to the extent public utility-style regulation has been debated within the Internet policy arena over the past decade, the focus has been almost entirely on the physical layer of the Internet. The question has been whether Internet service providers should be considered “essential facilities” or “natural monopolies” and regulated as public utilities. The debate over “net neutrality” regulation has been animated by such concerns.

While that debate still rages, the rhetoric of public utilities and essential facilities is increasingly creeping into policy discussions about other layers of the Internet, such as the search layer. More recently, there have been rumblings within academic and public policy circles regarding whether social media platforms, especially social networking sites, might also possess public utility characteristics. Presumably, such a classification would entail greater regulation of those sites’ structures and business practices.

Proponents of treating social media platforms as public utilities offer a variety of justifications for regulation. Amorphous “fairness” concerns animate many of these calls, but privacy and reputational concerns are also frequently mentioned as rationales for regulation. Proponents of regulation also sometimes invoke “social utility” or “social commons” arguments in defense of increased government oversight, even though these notions lack clear definition.

Social media platforms do not resemble traditional public utilities, however, and there are good reasons why policymakers should avoid a rush to regulate them as such. Treating these nascent digital services as regulated utilities would harm consumer welfare because public utility regulation has traditionally been the archenemy of innovation and competition. Furthermore, treating today’s leading social media providers as digital essential facilities threatens to convert “natural monopoly” or “essential facility” claims into self-fulfilling prophecies. Related proposals to mandate “API neutrality” or enforce a “Separations Principle” on integrated information platforms would be particularly problematic. Such regulation also threatens innovation and investment. Marketplace experimentation in search of sustainable business models should not be made illegal.

Remedies less onerous than regulation are available. Transparency and data-portability policies would solve many of the problems that concern critics, and numerous private empowerment solutions exist for those users concerned about their privacy on social media sites.

Finally, because social media are fundamentally tied up with the production and dissemination of speech and expression, First Amendment values are at stake, warranting heightened constitutional scrutiny of proposals for regulation. Social media providers should possess the editorial discretion to determine how their platforms are configured and what can appear on them.

This 63-page paper can be found on the Mercatus site here, on SSRN, or on Scribd.  I’ve also embedded it below in a Scribd reader. Eventually, a shorter version of this paper will appear as a chapter in a MIT Press book.

Social Networks as Public Utilities [Adam Thierer]

]]> https://techliberation.com/2012/03/19/new-paper-the-perils-of-classifying-social-media-platforms-as-public-utilities/feed/ 0 40360 The Wrong Way to Reinvent Media, Part 5: Media Bailouts & Welfare for Journalists https://techliberation.com/2010/04/30/the-wrong-way-to-reinvent-media-part-5-media-bailouts-welfare-for-journalists/ https://techliberation.com/2010/04/30/the-wrong-way-to-reinvent-media-part-5-media-bailouts-welfare-for-journalists/#respond Fri, 30 Apr 2010 18:28:38 +0000 http://techliberation.com/?p=28493

PFF today released the fifth installment in our ongoing series on “The Wrong Way to Reinvent Media.” This series of papers explores various tax and regulatory proposals that would have government play an expanded role in supporting the press, journalism, or other media content. In the latest essay, Berin Szoka, Ken Ferree, and I discuss proposals for direct subsidies for failing media outlets and out-of-work journalists.

We argue taxpayer support for failing outlets and unemployed journalists implicates significant First Amendment concerns. On the whole, subsidies can make “journalists and media operators more dependent upon the State; compromise press independence and diminish public trust in the free press; and result in government discrimination in the politically inescapable dilemma of determining eligibility for subsidies.” Such an agenda would also entail huge cost to taxpayers—initially about $35 billion per year according to advocates—and would represent “a massive wealth transfer from one class of speakers to another…”

We warn that calls for seemingly beneficent bailouts “to save” the media and journalism may actually be driven by those who have something more nefarious in mind: a “post-corporate” world shorn of media capitalists, and “such radicalism must be rejected if we hope to sustain a truly free press and uphold America’s proud tradition of keeping a high and tight wall of separation between Press and State.”

The ideas within these and other essays in the series will be worked into a major PFF filing in the Federal Communications Commission’s (FCC) proceeding on the “Future of Media” on May 7. The paper may be viewed online here and I’ve attached it down below in a Scribd reader.

Wrong Way to Reinvent Media Part 5 – Media Bailouts [Thierer Szoka Ferree – PFF] http://d1.scribdassets.com/ScribdViewer.swf

]]> https://techliberation.com/2010/04/30/the-wrong-way-to-reinvent-media-part-5-media-bailouts-welfare-for-journalists/feed/ 0 28493 The Wrong Way to Reinvent Media, Part 3: Media Vouchers https://techliberation.com/2010/04/14/the-wrong-way-to-reinvent-media-part-3-media-vouchers/ https://techliberation.com/2010/04/14/the-wrong-way-to-reinvent-media-part-3-media-vouchers/#respond Wed, 14 Apr 2010 21:13:59 +0000 http://techliberation.com/?p=28082

As I’ve mentioned here previously, PFF has been rolling out a new series of essays examining proposals that would have the government play a greater role in sustaining struggling media enterprises, “saving journalism,” or promoting more “public interest” content. We’re releasing these as we get ready to submit a big filing in the FCC’s “Future of Media” proceeding (deadline is May 7th).  Here’s a podcast Berin Szoka and I did providing an overview of the series and what the FCC is doing.

In the first installment of the series, Berin and I critiqued an old idea that’s suddenly gained new currency: taxing media devices or distribution systems to fund media content. In the second installment, I took a hard look at proposals to impose fees on broadcast spectrum licenses and channeling the proceeds to a “public square channel” or some other type of public media or “public interest” content.

In our latest essay, “The Wrong Way to Reinvent Media, Part 3: Media Vouchers,” Berin and I consider whether it is possible to steer citizens toward so-called “hard news” and get them to financially support it through the use of “news vouchers” or “public interest vouchers”?  We argue that using the tax code to “nudge” people to support media — while less problematic than direct subsidies for the press — will likely raise serious issues regarding eligibility and be prone to political meddling.  Moreover, it’s unlikely the scheme will actually encourage people to direct more resources to hard news but instead just become a method of subsidizing other content they already consume.

I’ve attached the entire essay down below.

The Wrong Way to Reinvent Media, Part 3: Media Vouchers

by Adam Thierer & Berin Szoka*

PFF Progress on Point 17.4 [PDF]

Should the government play a greater role in the media sector in the name of sustaining struggling media enterprises, “saving journalism,” or promoting public media?  In this ongoing series of essays, we’ve been analyzing proposals that would have public policymakers use taxes, subsidies, or regulations to accomplish those objectives.

Part 1 of this series examined proposals to fund media content via a tax on consumer electronics, broadband service, or cell phone bills.[1] Part 2 critiqued proposals to impose fees on broadcast spectrum licenses and channeling the proceeds to a “public square channel” or some other type of public media or “public interest” content.[2] Other essays in this series will address proposals to tax private advertising revenues to support public media; expand postal subsidies; directly subsidize out-of-work journalists; and to prop up or bail out failing media entities.  A wrap-up essay will then focus on some potentially constructive policy reforms that could assist media enterprises without a massive infusion of state support or regulation of the press.

In this installment, we will consider whether it is possible to steer citizens toward so-called “hard news” (“serious” journalism)—and get them to financially support it—through the use of “news vouchers” or “public interest vouchers”?  We will argue that using the tax code to nudge people to support media—while less problematic than direct subsidies for the press—will likely raise serious issues regarding eligibility and be prone to political meddling.  Moreover, it’s unlikely the scheme will actually encourage people to direct more resources to hard news but instead just become a method of subsidizing other content they already consume.

Funding Hard News is Hard

Funding “hard news” has always been challenging.  Financing a team of dedicated local beat reporters, investigative journalists, national desks, foreign bureaus, and all the associated production facilities and support staff is an extremely expensive undertaking.[3] And, for all that trouble and expense, hard news rarely turns a healthy profit.  Often it has been considered a “loss leader” for media companies and has been cross-subsidized by other types of content or services.[4] This is why “bundling” has been such a popular model for many media operations such as newspapers, magazines, and cable television.  By tying news production to other types of content or services, media operators have been able to sustain the production of hard news, despite its general unprofitability on its own.

It’s worth recalling that a business model to sustain hard news production and dissemination on a mass scale really only developed mid-way through our Republic.  The early history of media in this country was characterized by the “partisan press” due to the heavy reliance on a patronage model and direct association with political parties and figures. This changed with the rise of large daily newspapers in the mid-1800s and then broadcast radio and television in the early half of the 20 th century.[5] Media providers were able to cross-subsidize news production independent of private or political patronage thanks to three things: (1) high-speed printing presses or broadcast facilities, (2) geographic-based market and pricing power, and (3) the widespread advertising base that was made possible by (1) and (2).

Over just the past 15-20 years, we’ve seen this traditional model upended.  Increased competition and technological/platform proliferation are placing an enormous strain on traditional media operations and business models. Schumpeterian “creative destruction” is at work in a serious, and for many, painful, way.

This is what is keeping the Federal Communications Commission,[6] the Federal Trade Commission,[7] some in Congress,[8] and many media worrywarts up at night: the fear that, as traditional financing mechanisms falter (advertising, classifieds, subscription revenues, etc.), many traditional news-gathering efforts and institutions will disappear.  And that’s leading to calls for government intervention or assistance of some sort to prop up struggling entities or directly subsidize the hard news that many of them have traditionally provided but may not be able to for much for longer.

Can Vouchers “Nudge” Citizens to Support Hard News?

One much-discussed proposal would create a “public interest voucher” or what Robert W. McChesney & John Nichols, authors of the new book The Death and Life of American Journalism, call a “Citizenship News Voucher.”[9] This is a variant on the “artistic freedom voucher,” an idea first put forward in 2003 by economist Dean Baker as an alternative to copyright law as a means of incentivizing artistic creation.[10] The regulatory activist group Free Press, which McChesney founded, has also endorsed a news voucher scheme.[11]

The idea is fairly straightforward: give every American a voucher (McChesney and Nichols propose $200) to support the non-profit news entities of their choice by listing those entities on their tax return.  (If half of all adult Americans actually used their voucher, that would cost at least $20 billion/year.[12])  They assume this would be an efficient way of channeling money to hard news providers while avoiding the serious concerns that arise when government officials or agencies are the ones providing or steering the subsidies.  McChesney and Nichols go so far as to call their tax-and-redistribute proposal “a libertarian’s dream,” since “people can support whatever political viewpoint they prefer or do nothing at all.”[13]

McChesney and Nichols seem to be building on the approach popularized by Richard Thaler and Cass Sunstein in their highly influential 2008 book Nudge: Improving Decisions about Health, Wealth, and Happiness.[14] Based on behavioral economics studies, Thaler and Sunstein argue that both government and private actors must inevitably make decisions about “choice architecture” and that, by setting defaults, incentives and rules smartly, “choice architects” can and should improve private decision-making—but only where they can do so without blocking, fencing-off or significantly burdening choices.[15] While their proposal might not qualify as a nudge in the strict sense defined by Thaler and Sunstein, the essential similarity between the concepts lies in trying to restructure the choices Americans make about media consumption by changing how they spend money on media—with the declared goal of “improving” both media consumption and the media itself (by “freeing it” of supposedly evil corporate influences).

Problems with the News Voucher Proposal

While nudges might be less objectionable in circumstances where it’s objectively evident what’s really “good” for us, the same can hardly be said for media consumption.  “Nudging” consumers towards better media choices isn’t based on clear science about, say, eating better or getting more exercise, but on highly subjective decisions about what kind of information consumption is really good for individuals, communities, and polities.  For policymakers to imagine that they can steer the public’s tastes or behavior in more desirable directions through law (including media subsidy schemes) is a profoundly elitist enterprise.[16] In the case of “news vouchers,” the hope is that the public can be encouraged to at least channel some additional support to news-gathering activities and institutions.  The problem, however, is that some people just don’t much like being “nudged” by officials from afar and they’ll often take steps to evade such paternalism—however ostensibly “libertarian” it might be.  And it could lead to a host of unintended consequences, discussed further below.[17]

As a general matter, it simply isn’t possible to make consumers choose the “right” media in an age of information abundance.[18] With so many voices competing for our attention, it’s impossible make people watch, listen, or read if they don’t want to.  That’s especially true with hard news, which has never netted major ratings.  As Ellen P. Goodman of the Rutgers-Camden School of Law has noted: “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.”[19] As Goodman rightly argues, “regulation cannot, in a liberal democracy, force viewers to consume media products they do not think they want in the name of the public interest.”[20] There’s 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.”[21]

McChesney and Nichols’ effort to sell this scheme as “a libertarian’s dream” is a huge stretch.  There aren’t too many libertarians—or anyone else for that matter—who favor sending more money to the federal government only to win back the right to spend it on “qualifying media entities.”  And regarding their claim that “people can support whatever political viewpoint they prefer or do nothing at all,” well, people are already free to do whatever they want with their money when it comes to media products!  Why do we need to send money to Washington first and then have policymakers tell us how we can spend it?  This seems like a needless nudge—and one that would likely result in government bureaucracy taking a cut of the money or meddling in media markets.

Analogies to educational vouchers don’t work because we long ago decided to treat education as a public good and force everyone to pay for it.  “Voucherization” may make sense as a more efficient and “libertarian” way to fund such traditional public goods, when we absolutely have to force people to spend money on certain goods or services.  While McChesney and Nichols claim that the time has come for the government to fund media as such a public good, most people probably wouldn’t agree, since the private provision of media services has worked quite well for some time—being funded by a mix of advertising and subscription revenues for centuries.  They repeatedly claim that era is over (with little substantiation) but, in reality, it is their policies that would end private, for-profit media by taxing and regulating it to death.[22]

Second, what counts as a “qualifying media entity,” and how will the IRS make that call?  Can just any outlet that purports to gather and report “news” draw support from this new federal program?  McChesney and Nichols aren’t clear: They want the IRS to “determine eligibility—according to universal standards that err on the side of expanding rather than constraining the number of serious sources covering and commenting on issues of the day.”[23] They specify only that the entity must be a non-profit (though not necessarily a federally-recognized 501(c)(3)); not accept advertising; “do exclusively media content”; “cannot be part of a larger organization or have any non-media operations”; and that everything the medium produces must be made available immediately upon publication on the Internet and made available for free to all.”[24] But, anticipating objections about the dangers of political meddling, they also insist that “the government will not evaluate the content to see that the money is going toward journalism.  Our assumption is that these criteria will effectively produce that result, and if there is some slippage so be it.”[25] The only mechanism they can suggest for reducing fraud and ensuring “seriousness” is that, “for a medium to receive funds it would have to get commitments for at least $20,000 worth of vouchers” (100 full donations of the $200 voucher).[26]

But will policymakers really let citizens redeem their vouchers on The National Inquirer or People magazine?  How about the satirical The Onion or Jon Stewart’s Daily Show?  “This is a risk we are more than willing to take,” McChesney and Nichols say since they are “operating on a gut instinct that people will use their vouchers to fund serious media while reaching into their pockets to pay for copies of The National Inquirer at the supermarket checkout.”[27] Of course, it’s always easier to take such risks when you are playing with other people’s money!  (Nearly half of all Americans don’t pay any Federal income taxes,[28] so their $200 news voucher is definitely coming out of someone else’s tax bill.)

But it’s naïve to believe this idea is going to change the face of journalism in any serious way.  Most people will spend their vouchers on whatever media outlets and content they are currently consuming, which probably isn’t what McChesney and Nichols (or most policymakers) would prefer.  “The program may not develop exactly the type of journalism our greatest thinkers believe is necessary,” McChesney and Nichols admit.[29] But the real question is: What sort of demands will policymakers begin making if the voucher program ends up channeling money into media entities that don’t measure up to their standards or desires?  Qualification criteria would inevitably become the tool of political meddling.

The Inevitable Strings & the Political/Constitutional Paradox

This raises a fourth concern: How long will it be before government starts attaching more strings to the vouchers?  To borrow a recent headline from The Wall Street Journal, how long will it be before the “Economic Policy ‘Nudge’ Gives Way to a Shove?”[30] Although, in theory, the news voucher idea lets consumers figure out how to steer the funds, it’s unlikely much of those funds would go toward hard news, civic-minded or “high brow” content if consumers were actually free to choose.  How do we know this?  Because we already know what consumers choose today—and those “poor” choices are part of the supposed “problem” to be solved by media vouchers.  Once people start redirecting taxpayer dollars to content that the elites and policymakers don’t like, the nudge will become a shove and more interventions will follow in the form of “voucher guidance and compliance” hearings, rules, etc.

But the pressure for strings won’t just come from the top down because, as Thomas Jefferson famously put it in the 1786 Virginia Act for Establishing Religious Freedom, “to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves, is sinful and tyrannical.”[31] That is, we naturally—and rightly—resent subsidizing speech that is antithetical to our own values.  McChesney and Nichols dismiss this natural (presumably bourgeois?) indignation by saying, “people will have to accept that some of the vouchers are going to go to media that they detest.”[32] In one sense, they are dead wrong: People won’t just accept that.  They may accept subtle, indirect subsidies, but the more clear it becomes that they are being forced to pay for media they detest—and that could scarcely be more clear than with a refundable tax credit “voucher”—they will protest and demand that certain viewpoints, or at least kinds of content, be deemed out of bounds.

But in another sense, McChesney and Nichols are probably correct: For such a scheme to work, it probably can’t come with any content strings, because this is probably what the First Amendment would require.  Yet they don’t actually explain that point, stopping only to say that we all just have to become more tolerant of “dissent”— i.e., subsidize those who disagree with us!  In this sense, news vouchers therefore would likely fall prey to a common paradox faced by proposals for the government to subsidize speech: What’s politically feasible is unconstitutional and what’s constitutional is politically impossible.  Specifically, the kinds of eligibility restrictions necessary to push a voucher scheme through Congress would probably cause the courts to strike down the whole scheme.  Even if the courts were willing to strike down only the eligibility provisions as “severable” from the rest of the scheme, the whole scheme would likely die in the very next federal budget if the courts require the funding of “offensive” or “frivolous” content.  Understanding why this is the case requires a brief overview of key First Amendment case law.

In general, “when the Government appropriates public funds to establish a program it is entitled to define the limits of that program.”[33] Thus, in its 1991 Rust v. Sullivan decision, the Supreme Court upheld a law forbidding federal funding for family planning services to go to abortion counseling.[34] But the Supreme Court later clarified that such viewpoint discrimination is permissible only “[w]hen the government disburses public funds to private entities to convey a governmental message.”[35] By contrast, where subsidies are “designed to facilitate private speech,” government may not discriminate against viewpoints it does not like.[36] Thus, the government may not fund legal services but bar funding for defendants trying to amend or otherwise challenge existing welfare law.[37]

The First Amendment prohibits not only such viewpoint discrimination but content discrimination as well.  In 2003, the Supreme Court held that the University of Virginia could not exclude religious groups from drawing on the University’s Student Activity Fund, even though the Fund’s eligibility requirements did not discriminate against any particular religion.[38] Yet in 1995, the Court had upheld another content restriction: a requirement that the National Endowment for the Arts (NEA) “take into consideration general standards of decency and respect for the diverse beliefs and values of the American public” when making grants to “help create and sustain not only a climate encouraging freedom of thought, imagination, and inquiry but also the material conditions facilitating the release of . . . creative talent.”[39] The Court concluded, in an 8-1 majority, that the “’decency and respect’ criteria do not silence speakers by expressly threaten[ing] censorship of ideas.”[40] This decision rested largely on the fact that “Educational programs are central to the NEA’s mission” and “it is well established that ‘decency’ is a permissible factor where ‘educational suitability’ motivates its consideration.”[41] The Court left the door open to future First Amendment challenges to the statute “as applied,” such as “[i]f the NEA were to leverage its power to award subsidies on the basis of subjective criteria into a penalty on disfavored viewpoints.”[42]

What explains these starkly different outcomes is that the Court decided that the University of Virginia’s Student Activity Fund constituted a “limited public forum”[43] intended to “encourage a diversity of views from private speakers,” but the NEA did not.  The University had funded all speech except “religious editorial viewpoints” from its Student Activities Fund, into which every student paid a $14 mandatory fee each semester.  By contrast, the NEA made only a limited number of grants through a “competitive process” according to principles of inherently content-based principles of “excellence” as well as “geographic, ethnic, and esthetic diversity.”  Thus, it was permissible, in principle, for the NEA to exclude “indecent” content.

The Supreme Court’s decision in U.S. v. American Library Association, Inc. (2003) also suggests that content restrictions regarding Citizen News Vouchers would be struck down.  The Court held that the First Amendment did not bar Congress from requiring in the Children’s Internet Protection Act (CIPA) that “a public library may not receive federal assistance to provide Internet access unless it installs software to block images that constitute obscenity or child pornography, and to prevent minors from obtaining access to material that is harmful to them.”[44] Critically, the Court held that libraries were not public fora:

A public library does not acquire Internet terminals in order to create a public forum for Web publishers to express themselves, any more than it collects books in order to provide a public forum for the authors of books to speak. It provides Internet access, not to “encourage a diversity of views from private speakers” … but for the same reasons it offers other library resources: to facilitate research, learning, and recreational pursuits by furnishing materials of requisite and appropriate quality.[45]

But what is the purpose of the news voucher scheme if not to “encourage a diversity of views from private speakers?”  Indeed, this is precisely how McChesney and Nichols attempt to sell their scheme—as a “libertarian’s dream.”  But, paradoxically, the more “libertarian” and broader subsidies for speech are, the more likely the political/constitutional paradox mentioned above is to arise.

The Citizenship News Voucher Fund proposed by McChesney and Nichols strongly resembles the University of Virginia’s Student Activity Fund:  In both cases, consumers are taxed to finance a fund that is, in theory, available to any entity that meets certain basic eligibility criteria.  No attempt is made in either case to ensure the quality of content or activities being funded.  Indeed, McChesney and Nichols explicitly reject such oversight of voucher spending and insist that taxpayers must accept that much of the fund will simply be wasted on media that falls well short of the “hard” or “serious” news they’re trying to save.  (By contrast, the Corporation for Public Broadcasting, whose budget McChesney and Nichols propose increasing nine-fold to fund more public media,[46] more closely resembles the NEA as a selective grant-maker.)

Also distinguishing the Court’s decision upholding CIPA’s content-based restrictions is the fact that both Justice Kennedy in his concurrence and Justice Souter in his dissent (joined by Justice Ginsburg) agreed that First Amendment problems could be solved to the extent that adults could opt-out of filtering.[47] But with news vouchers, the government either restricts the eligibility of certain publications to receive vouchers depending on their eligibility or it does not.

Furthermore, unlike with CIPA or the NEA, the Citizenship News Voucher wouldn’t be related to educational settings, so it’s not even clear a “decency” requirement like that Congress imposed on the NEA’s grant-making could be imposed on voucher eligibility.[48] Magazines like Playboy offer a mix of pornography and thoughtful commentary on the news, proving that there is a market for such combination of journalism and controversial entertainment and photography.  Going even further, “Naked News” is a daily show whose buxom anchors strip while delivering the news.[49] Why wouldn’t millions of Americans, especially younger men, use their voucher for such content?  Who’s going to draw the line between porn-spiced news and “serious” content?

The typical taxpayer will be outraged by having to subsidize some media outlet, whether because of its objectionable viewpoint or indecent or unserious content.  He will fiercely resist being compelled “to furnish contributions of money for the propagation of opinions which he disbelieves and abhors,” as Jefferson put it.  Good luck getting even the most “tolerant” gay voters, for example, to accept being taxed to pay for fundamentalist Christian perspectives on the news—or vice versa!  McChesney and Nichols don’t actually say anything about the First Amendment, but do recognize that, for their program to be accepted, the American people will have to swallow the “hard pill” of accepting that “some of the vouchers are going to go to media that they detest” and “embrace dissent in reality and not just rhetoric.”[50] They seem to think this “hard pill” is a benefit of their scheme because it would teach us all to be more tolerant of “dissent.”  That’s easy for an endowed professor at a taxpayer-funded university and avowed neo-Marxist like Robert McChesney to say, but it’s not likely to fly with most Americans.  Disputes over “qualifying entity” eligibility will only add new rancor to the Culture Wars (over sex, abortion, religion, politics, etc.).

Realistically, it would likely take years for a news voucher bill to make its way through Congress, and if it ever did pass, it would likely be tied up in the courts for years, requiring at least one visit to the Supreme Court.  If any content strings are included, the law could well lead to the same kind of ordeal as with the 1998 Child Online Protection Act, which spent nearly 9 years in litigation and went up to the Supreme Court twice.[51] Yet somehow McChesney and Nichols imagine their proposal will save media today at this critical moment of technological transition.

Down with Copyright, Down with Capitalism?

There’s another problematic caveat to the McChesney-Nichols variant of the news voucher idea: They would disallow any copyright protection or advertising support for an entity who receives voucher funds.  That’s an effort by the authors to steer even more media activity away from the commercial sphere and toward what might be thought of as a “public option” for the press—what McChesney and Nichols euphemistically (and repeatedly) call “post-corporate” media.

Let’s not forget that McChesney has argued (during an interview on the Canadian-based “Socialist Project”) that “the ultimate goal is to get rid of the media capitalists,” and that, “unless you make significant changes in the media, it will be vastly more difficult to have a revolution.”  So, it’s important to keep his true intentions in mind when he starts claiming to have found “a libertarian’s dream” of a solution to what ails America’s media sector.[52] It sounds more like a central planner’s dream.  The true “libertarian’s dream” would be to leave Americans free to make their own choices about media without additional meddling from the State, and to look to innovation to fund media through a combination of advertising, sponsorship, subscriptions and micropayments.

Related PFF Publications

[1] Adam Thierer & Berin Szoka, The Progress & Freedom Foundation, The Wrong Way to Reinvent Media, Part 1: Taxes on Consumer Electronics, Mobile Phones & Broadband, PFF Progress on Point 17.1, March 2010, www.pff.org/issues-pubs/pops/2010/pop17.1-the_wrong_way_to_reinvent_media.pdf.

[2] Adam Thierer, The Progress & Freedom Foundation, The Wrong Way to Reinvent Media, Part 2: Broadcast Spectrum Taxes to Subsidize Public Media, Progress on Point 17.2, March 2010, www.pff.org/issues-pubs/pops/2010/pop17.2-wrong_way_part_2.pdf

[3] “Until now, the iron core of news has been somewhat sheltered by an economic model that was able to provide extra resources beyond what readers—and advertisers—would financially support. This kind of news is expensive to produce, especially investigative reporting.” Alex S. Jones, Losing the News: The Future of the News that Feeds Democracy (2009) at 4.

[4] “For a long time, publishers have used news as a ‘loss leader,’ a product sold below costs to create other sales.” The Media Consortium, The Big Thaw: Charting a New Future for Journalism, July 2009, at 36, www.themediaconsortium.org/thebigthaw.

[5] James T. Hamilton notes that, “nonpartisan reporting emerged as a commercial product in American newspaper markets in the 1870s.  Before that time, many papers openly proclaimed association with a particular political party.”  James T. Hamilton, All the News That’s Fit to Sell (2004), at 3.

[6] The Federal Communications Commission (FCC) recently kicked off a new “Future of Media” effort with a workshop on “Serving the Public Interest in the Digital Era.” See Federal Communications Commission, FCC Launches Examination of the Future of Media and Information Needs of Communities in a Digital Age, FCC Public Notice, GN Docket No. 10-25, Jan. 21, 2010, at 2, http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-10-100A1.pdf

[7] The Federal Trade Commission (FTC) has hosted two workshops asking “How Will Journalism Survive the Internet Age?” www.ftc.gov/opp/workshops/news/index.shtml

[8] Both the Senate and House of Representatives have held hearings about “the future of journalism,” and Senator Benjamin L. Cardin (D-MD) recently introduced the “Newspaper Revitalization Act,” which would allow newspapers to become nonprofit organizations in an effort to help them stay afloat—but also curtail their political editorializing.  See http://cardin.senate.gov/news/record.cfm?id=310392.

[9] Robert W. McChesney & John Nichols, The Death and Life of American Journalism (2010) at 201-206. McChesney discussed this idea in more detail when he spoke at the recent FTC event on saving journalism.  Robert W. McChesney, Rejuvenating American Journalism: Some Tentative Policy Proposals, Presentation to FTC Workshop on Journalism, March 10, 2010, www.ftc.gov/opp/workshops/news/mar9/docs/mcchesney.pdf

[10] Dean Baker, The Artistic Freedom Voucher: An Internet Age Alternative to Copyrights, Nov. 5, 2003, www.cepr.net/documents/publications/ip_2003_11.pdf.

[11] Free Press, Saving the News: Toward a National Journalism Strategy, May 2009, at 36, www.freepress.net/files/saving_the_news.pdf.

[12] McChesney & Nichols, supra note 9 at 205.

[13] Id. at 204.

[14] Richard H. Thaler & Cass R. Sunstein, Nudge: Improving Decisions About Health, Wealth, and Happiness (2008).

[15] They define choice architecture as follows:  “A structure designed by a choice architect(s) to improve the quality of decisions made by homo sapiens. Often invisible, choice architecture is the specific user-friendly shape of an organization’s policy or physical building when homo sapiens come into contact with it. Examples of choice architecture include a voter ballot, a procedure for handling well-meaning people who forget a deadline, or a skyscraper.”  Nudge Glossary of Terms, www.nudges.org/glossary.cfm.

[16] 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.

[17] As Glen Whitman notes in challenging such “nudging”: “the new paternalism carries a serious risk of expansion. Following its policy recommendations places us on a slippery slope from soft paternalism to hard. This would be true even if policymakers — including legislators, judges, bureaucrats, and voters — were completely rational. But the danger is especially great if policymakers exhibit the same cognitive biases attributed to the people they’re trying to help.”  Glen Whitman, The Rise of the New Paternalism, Cato Unbound, April 5, 2010, www.cato-unbound.org/2010/04/05/glen-whitman/the-rise-of-the-new-paternalism.

[18] Adam Thierer, The Progress & Freedom Foundation, Why Expansion of the FCC’s Public Interest Regulatory Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable, Testimony Before the Federal Communications Commission Hearing on “Serving the Public Interest in the Digital Era,” March 4, 2010, www.pff.org/issues-pubs/testimony/2010/2010-03-04-Thierer_Remarks_at_FCC_Hearing.pdf.

[19] 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.

[20] Id.

[21] Walter Lippmann, Public Opinion (1922), at 53, 57.

[22] For example, among other things, McChesney and Nichols call for a 5% tax on consumer electronics, a 3% tax on monthly ISP & cell phone bills, a 2% sales tax on advertising, and a 7% tax on broadcasters.  See McChesney & Nichols, supra note 9 at 209-11.

[23] Id. at 202.

[24] Id.

[25] Id.

[26] Id.

[27] Id. at 205.

[28] http://www.taxpolicycenter.org/UploadedPDF/1001289_who_pays.pdf

[29] McChesney & Nichols, supra note 9 at 205.

[30] Jonathan Weisman, Economic Policy ‘Nudge’ Gives Way to a Shove, Wall Street Journal, March 8, 2010, http://online.wsj.com/article/SB10001424052748704869304575103980232739138.html.

[31] http://religiousfreedom.lib.virginia.edu/sacred/vaact.html

[32] McChesney & Nichols, supra note 9 at 205.

[33] Rust v. Sullivan, 500 U.S. 173, 194 (1991).

[34] Id. (emphasis added).

[35] Rosenberger v. Rector and Visitors of Univ. of Va., 515 U.S. 819, 833 (1995) (emphasis added).

[36] Legal Services Corp. v. Velazquez, 531 US 533, 542 (2001).  The Court in Rosenberger noted:

even in the provision of subsidies, the Government may not “ai[m] at the suppression of dangerous ideas,” Regan v. Taxation with Representation of Wash., 461 U.S. 540, 550 (1983), and if a subsidy were “manipulated” to have a “coercive effect,” then relief could be appropriate. See Arkansas Writers’ Project, Inc. v. Ragland, 481 U.S. 221, 237 (1987) (Scalia, J., dissenting); see also Leathers v. Medlock, 499 U.S. 439, 447 (1991) (“[D]ifferential taxation of First Amendment speakers is constitutionally suspect when it threatens to suppress the expression of particular ideas or viewpoints”). In addition…, a more pressing constitutional question would arise if Government funding resulted in the imposition of a disproportionate burden calculated to drive “certain ideas or viewpoints from the marketplace.” Simon & Schuster, Inc. v. Members of N. Y. State Crime Victims Bd., 502 U.S. 105, 116 (1991).

Id. at 587.

[37] 531 U.S. at 542.

[38] Rosenberger v. Rector and Visitors of Univ. of Va., 515 U.S. 819, 833 (1995).  The University’s rule prohibited funding of any group that “primarily promotes or manifests a particular belie[f] in or about a deity or an ultimate reality.”

[39] National Endowment for the Arts v. Finley, 524 U.S. 569, 574 (1998).

[40] 524 U.S. at 583 (quoting R. A. V. v. St. Paul, 505 U.S. 377 (1992) (internal quotations omitted).

[41] Id. at 584 (citing  Board of Ed., Island Trees Union Free School Dist. No. 26 v. Pico, 457 U.S. 853, 871 (1982); see also Bethel School Dist. No. 403 v. Fraser, 478 U.S. 675, 683 (1986)).

[42] Id. at 587.

[43] 515 U.S. 819 (1995).

[44] U.S. v. American Library Association, Inc., 539 U.S. 194 (2003).  See generally Robert Corn-Revere, United States v. American Library Association: A Missed Opportunity for the Supreme Court to Clarify Application of First Amendment Law to Publicly Funded Expressive Institutions, Cato Supreme Court Rev. 105, 2003, www.cato.org/pubs/scr2003/publiclyfunded.pdf.

[45] Id. at 207 (quoting Rosenberger, 515 U.S. at 834).

[46] McChesney & Nichols, supra note 9 at 192, 199.

[47] “If, on the request of an adult user, a librarian will unblock filtered material or disable the Internet software filter without significant delay, there is little to this case.” American Library Association, 539 U.S. at 214 (Kennedy, J. concurring).  Justice Souter agreed that it would ‘‘tak[e] the curse off the statute for all practical purposes’’ if adult patrons could obtain an unblocked Internet terminal ‘‘simply for the asking,’’ but doubted this would actually happen in practice.  Id. at 232.

[48] Cf. Rosenberger, 515 U.S. at 584 (“Educational programs are central to the NEA’s mission.… And it is well established that ‘decency’ is a permissible factor where ‘educational suitability’ motivates its consideration.”).

[49] See www.nakednews.com.

[50] Id. at 205.

[51] See Adam Thierer, Closing the Book on COPA?, Technology Liberation Front, Jan. 21, 2009, http://techliberation.com/2009/01/21/closing-the-book-on-copa/.

[52] Adam Thierer, The Progress & Freedom Foundation, Free Press, Robert McChesney & the “Struggle” for Media, Aug. 10, 2009, http://blog.pff.org/archives/2009/08/free_press_robert_mcchesney_the_struggle_for_media.html

Wrong Way to Reinvent Media Part 3 – Media Vouchers [Thierer & Szoka – PFF] http://d1.scribdassets.com/ScribdViewer.swf

]]> https://techliberation.com/2010/04/14/the-wrong-way-to-reinvent-media-part-3-media-vouchers/feed/ 0 28082 Podcast about Spectrum Taxes as Tool to Subsidize Public Media https://techliberation.com/2010/04/06/podcast-about-spectrum-taxes-as-tool-to-subsidize-public-media/ https://techliberation.com/2010/04/06/podcast-about-spectrum-taxes-as-tool-to-subsidize-public-media/#respond Tue, 06 Apr 2010 13:20:06 +0000 http://techliberation.com/?p=27853

In the latest PFF TechCast, I discuss the issues considered in the second essay in our ongoing series, “The Wrong Way to Reinvent Media.”  In this 6-minute podcast, PFF’s press director Mike Wendy chats with me about proposals to impose taxes on broadcast spectrum licenses to funnel money to public media or “public interest” content.  In my paper and this podcast, I make the case again socially engineering media choices and outcomes through the tax code.

MP3 file: PFF TechCast #2 – Saving the Media Through Broadcast Spectrum Taxes (4/5/2010)

]]> https://techliberation.com/2010/04/06/podcast-about-spectrum-taxes-as-tool-to-subsidize-public-media/feed/ 0 27853 The Wrong Way to Reinvent Media, Part 2: Broadcast Spectrum Fees for Public Media https://techliberation.com/2010/03/29/the-wrong-way-to-reinvent-media-part-2-broadcast-spectrum-fees-for-public-media/ https://techliberation.com/2010/03/29/the-wrong-way-to-reinvent-media-part-2-broadcast-spectrum-fees-for-public-media/#comments Tue, 30 Mar 2010 01:13:56 +0000 http://techliberation.com/?p=27606

As mentioned last week, in a new series of essays, PFF scholars will be examining proposals that would have the government play a greater role in sustaining struggling media enterprises, “saving journalism,” or promoting more “public interest” content. With many traditional media operators struggling, and questions being raised about how journalism in particular will be supported in the future, Washington policymakers are currently considering what role government can and should play in helping media providers reinvent themselves in the face of tumultuous technological change wrought by the Digital Revolution. We will be releasing 6 or 7 essays on this topic leading up to our big filing in the FCC’s “Future of Media” proceeding (deadline is May 7th).  And here’s a podcast Berin Szoka and I did providing an overview of the series.

In the first installment of the series, Berin and I critiqued an old idea that’s suddenly gained new currency: taxing media devices or distribution systems to fund media content. In the second installment, “The Wrong Way to Reinvent Media, Part 2: Broadcast Spectrum Taxes to Subsidize Public Media,” I discuss proposals to impose a tax on broadcast spectrum licenses to funnel money to public media projects or other “public interest” content or objectives. Such a tax would be fundamentally unfair to broadcasters, who are struggling for their very survival in the midst of unprecedented marketplace turmoil.  Moreover, such a tax is unnecessary in light of the many other sources of “public interest” programming available today. Finally, even if the government creates or subsidizes wonderful, civic- and culturally-enriching content, there’s no way to force people to consume it.  Nor should government force such media choices upon the public. There’s no good reason for government to be socially-engineering media choices through taxes.

I’ve attached the entire essay down below.

The Wrong Way to Reinvent Media, Part 2: Broadcast Spectrum Taxes to Subsidize Public Media

PFF Progress on Point 17.2 [PDF]

by Adam Thierer*

In an ongoing series of essays, we‘re discussing proposals to have the government play a greater role in the media sector in the name of sustaining struggling enterprises or “saving journalism.”  Washington policymakers are currently considering what, if any, role government can and should play in assisting media operators, supporting journalism, or expanding public media.  For example, the Federal Communications Commission (FCC) recently kicked off a new “Future of Media” effort with a workshop on “Serving the Public Interest in the Digital Era.” Likewise, the Federal Trade Commission (FTC) has hosted two workshops on “How Will Journalism Survive the Internet Age?”  Meanwhile, the Senate has already held hearings about “the future of journalism,” and Senator Benjamin L. Cardin (D-MD) recently introduced the “Newspaper Revitalization Act,” which would allow newspapers to become nonprofit organizations in an effort to help them stay afloat—but also curtail their political editorializing.

Part 1 of this series examined proposals to fund media content via a tax on consumer electronics, broadband service, or cell phone bills.[1] Other essays will address proposals to tax private advertising revenues to support public media; directly subsidize out-of-work journalists; expand postal subsidies; and to prop up or bail out failing media entities.  A wrap-up essay will then focus on some potentially constructive policy reforms that could assist media enterprises without a massive infusion of state support or regulation of the press.

This essay will discuss proposals to impose a tax on broadcast spectrum licenses to funnel money to public media projects or other “public interest” content or objectives.[2] Such a tax would be fundamentally unfair to broadcasters, who are struggling for their very survival in the midst of unprecedented marketplace turmoil.  Moreover, such a tax is unnecessary in light of the many other sources of “public interest” programming available today. Finally, even if the government creates or subsidizes wonderful, civic- and culturally-enriching content, there’s no way to force people to consume it.  Nor should government force such media choices upon the public. There’s no good reason for government to be socially-engineering media choices through taxes.

Why the “Public Interest” Regulatory Regime Can’t Continue

There’s always been a bit of mythology surrounding so-called “public interest” regulation of broadcasting in America.[3] Those who advocate expansive regulatory obligations for licensed radio and television operators typically claim they’re directing the content or character of broadcasting toward a nobler end—a sort of noblesse oblige for the Information Age.  At times, their rhetoric takes on a fairy-tale quality as lawmakers and regulatory advocates speak of “the public interest” in reverential and fantastic terms, all the while deftly evading any attempt to define the term.  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.[4]

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.”[5] 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.”[6]

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.[7] Nonetheless, the public interest regulatory regime remains with us and continues to apply to licensed broadcast radio and television operators.

Regardless of the rationale used to advance public interest regulation—public spectrum ownership, licensing, scarcity,[8] pervasiveness,[9] or “public enlightenment”—it is hard to explain why we have singled out broadcasters for unique regulatory obligations while operators of other media platforms have been given a free pass.  Such regulatory asymmetry is more difficult to justify today in light of rising competition for many new platforms and players.[10] And it is difficult to believe that Congress or the FCC could concoct a constitutionally-defensible rationale for extending “public interest” regulation to new media platforms.[11] Indeed, efforts to do so for both old (newspapers, print) and new (Internet, video games) media have failed when tested in the courts.  And, practically speaking, even if expansion of the old regime was desirable, it would be exceedingly difficult to do so in light of the sheer scale and volume of new media that would need to be covered.[12]

Spending Money Instead of Imposing Mandates?

The combination of these factors has forced many traditional public interest regulatory advocates to reconsider the wisdom—or at least the practicality—of the old broadcasting regime.  One alternative that has received increasing attention in recent years would see broadcasters largely relieved of their public interest obligations and charged instead an annual fee for their use of the airwaves.  The proceeds from such a spectrum fee or tax would then be used to subsidize a variety of programs or content.  For example:

  • Henry Geller, a former FCC general counsel, first advocated such a spectrum fee scheme as a method of financing more public broadcasting programming.[13]
  • Likewise, Charles Firestone, executive director of the Aspen Institute’s Communications and Society Program, has argued that the scheme could fund “educational programs for children, free political spots on an equal opportunities basis, public service announcements, or other programming that the Government wants.”[14]
  • American Enterprise Institute scholar Norman Ornstein has advocated that the money be spent on a “Public Square” channel to “focus on local and national politics, policy issues, debates, campaigns, and other vital issues.”[15]
  • Elsewhere, along with Paul Taylor, Ornstein has said the money raised from such fees might be spent to ensure greater election coverage or to subsidize political advertising.[16]
  • Leonard Downie, Jr., Vice President at Large of The Washington Post, and Michael Schudson, a Professor at the Columbia University Graduate School of Journalism, have advocated the creation of a “Fund for Local News” that “would make grants for advances in local news reporting and innovative ways to support it.”[17] The Fund would make grants to news organizations through “Local News Fund Councils” and would be financed by “fees paid by radio and television licensees, or proceeds from auctions of telecommunications spectrum, or new fees imposed on Internet service providers.”[18]
  • Most recently, Robert W. McChesney and John Nichols, authors of the new book The Death and Life of American Journalism, have proposed a 7% tax on broadcasters, which they estimate would generate $3-6 billion annually.  They would use it to fund some combination of all of the above items and far more, including welfare for journalists.[19]

A Spectrum Tax as a Regulatory Reparations Policy

We might think of spectrum tax proposals as a sort of reparations policy for the regulatory sins of the past.  That is, broadcast spectrum fees are typically pitched as a way to “repay the public” for use of the spectrum that broadcasters obtained originally at no charge.  As Charles Firestone explains, in theory, the spectrum fee proposal:

provides a specific dollar value to the trade-off that has traditionally marked the public trusteeship theory of broadcast regulation. That is, for the initial grant and/or exclusive use of a valuable frequency, protected against interference or encroachment by governmental enforcement mechanisms, the broadcaster serves the needs and interests of the local audience service area.[20]

But like the “public interest” standard itself, spectrum taxes are also an idea whose time has passed.[21] Broadcast spectrum fees make little sense today, even if the notion might have made some sense two or three decades ago as a method of monetizing public interest obligations.

First, using spectrum fees as a reparations policy today fails to “punish” those who originally got their spectrum free-of-charge.  The vast majority of broadcast spectrum licenses have traded hands in the secondary market for lucrative sums.  In many cases, those television and radio properties have traded hands numerous times.  Thus, the current spectrum-holders who would be taxed are generally not the beneficiaries of any “windfall,” but have instead paid competitive market prices for the spectrum they use that should be roughly commensurate with the economic value of that spectrum (at least for the limited range of uses allowed by the FCC).

Second, although broadcasting remains an important medium, its once-supreme relevance has eroded significantly over the past three decades.  Even Norm Ornstein, a defender of broadcast spectrum fees, has noted that “Over-the-air broadcasting is a dinosaur.  It’s not going to last very long.”[22] Although that might be hyperbole, it’s certainly true that whatever weight the broadcast medium might have had in the past, that is now ancient history.

For most of the past century, broadcasting was a fairly stable industry that did not witness business model-shattering types of changes.  As its very name implies, broadcasting attracted broad audiences.  Consequently, returns were stable, even substantial at times.  Today, however, stability has given way to volatility.  The entire media marketplace is in a state of seemingly constant upheaval.  Long-standing industry players are shedding assets or even disappearing as underdogs rapidly enter the sector and become big dogs overnight.  This has become a textbook example of Schumpeterian “creative destruction” in action.[23]

Consider what this has meant for broadcasters in terms of audience share and advertising revenues.  Start with broadcast television.  The television audience has grown increasingly fragmented since the 1950s.  The top shows on TV during that era ( e.g., “I Love Lucy”) garnered 40-50% of the viewing audience.  By the 1970s, the top broadcast TV shows (e.g., “All in the Family”) were pulling in roughly 30% of the audience.  Today, however, with so many other media options vying for our increasingly scarce attention, the top shows on television (e.g., “American Idol”) are lucky to break 15% and most shows rarely break single digits.

The “problem” is growing competition for eyeballs.  Broadcasters face a growing array of rivals: cable and satellite multi-channel distributors; DVDs and Netflix; VOD and online video; video game platforms; and much more.  According to Nielsen Media Research, the “Big 3” networks of the past (ABC, CBS, NBC), which held 90% of the primetime market in 1980, control only 30% share today.  In terms of total day shares, cable blew past broadcast television at the turn of the century and never looked back.  The advertising situation is equally bleak for television broadcasters.  According to McCann Erickson Worldwide, broadcast television’s overall share of media advertising revenues dipped below 20% back in 1990 and continues to fall steadily, standing at approximately 15% today.

Unsurprisingly, the financial outlook for the broadcast TV sector is bleak.  “Almost all the indicators for local TV are pointing down,” notes the Pew Project for Excellence in Journalism in its annual State of the News Media report.  It continues:

Revenue, too, was in a free fall.  Ad revenue is always lower in a year without federal elections or the Olympics, but the drop in 2009 was especially severe even with the unexpected bounty of political spending on health care legislation.  Revenues were estimated to have fallen by 22% from the year before.  The last two non-election years, by contrast, recorded much smaller declines: 5% in 2005 and 6% in 2007.  Looking ahead, most market analysts project revenues to grow only slightly, in the 3%-to-5% range in 2010, but that is hardly taken as good news given that it is a year that will include both the off-year elections and winter Olympic games.[24]

In light of the recent turmoil, some major network television executives are now thinking about doing what was unthinkable just a decade ago: casting off their local broadcast affiliates and repurposing their content on alternative media platforms ( e.g., cable, satellite, Internet). For example, in early 2009, CBS Corp. President and CEO Les Moonves told an investor conference that moving all CBS network programming to cable and satellite platforms would be “a very interesting proposition.”[25] If television networks start following their audience in the continuing mass exodus to alternative distribution platforms, how would local broadcast affiliates pay for a new federal spectrum fee? Even if that scenario does not develop, local television broadcasters face an uncertain future, and likely declining revenues for some time to come.

The situation for broadcast radio operators is even grimmer.  The competition for our ears has never been more intense with satellite radio, non-commercial radio, iPods and MP3 players, online radio, downloadable music, podcasting, etc. with terrestrial broadcasters for audience share.  As a result, radio operators have seen their audiences dwindle and their revenues nose-dive. According to Arbitron, time spent listening to radio has dropped for every age demographic they’ve measured for the past decade.  And BIA Financial Network notes that while the radio revenue growth rate ran between 7% and 14% during the late 1990s, the industry hasn’t seen growth above 3% since 2002 and in recent years growth has rarely broken 1%.  Furthermore, the Pew Project for Excellence in Journalism reports that:[26]

  • Total radio revenue was down 18% in 2009 from 2008, according to the Radio Advertising Bureau.
  • Local and national radio advertising—the biggest sources of revenue for radio—were both down and projected to continue falling at least through 2011.  There was growth in online advertising, but not enough to make up for the loss of on-air advertising.
  • National and local advertising fell by 20% and 19% respectively in 2009 compared to 2008.  Local advertising has always been radio’s lifeblood.
  • Online advertising revenue saw a 13% increase in 2009, but represented only 3% of industry advertising revenue and was not enough to offset the losses in other categories.
  • Off-air revenues, such as billboards and concert sponsorships, fell 9% in 2009 compared to 2008, to 1.3 billion.  While these revenues currently make up only a small part of radio revenue, the continued decline of national and local advertising may add to their importance.

Again, can struggling radio broadcasters absorb the added burden of a new national spectrum tax in light of their precarious situation? Indeed, it’s numbers like these that usually leads intervention-minded analysts to advocate subsidies, not taxes, for some struggling media entities!

Where Would the Money Go?

Questions also surround the pool of funds that would be amassed through the creation of a broadcast spectrum fee.  Given the declining fortunes of the broadcast industry, it seems unlikely the fee would generate as much revenue as some proponents might imagine. Let’s assume, however, that the spectrum levy netted respectable sums.  How would those funds be used?

America’s recent experience with spectrum auction proceeds suggests that Congress would first look to use a spectrum fee to pay for federal spending priorities or pay off past budget deficits instead of channeling those funds to new “public square” or “public interest” initiatives.  But, for the sake of argument, let’s assume Congress honored a pledge to use the broadcast fee only for its intended purpose.  What exactly counts as a “public square” or “public interest” initiative, and who would be in charge of it?

Some proponents of a spectrum fee seem to long for a world in which everything looks or sounds like a combination of National Public Radio, the Public Broadcasting Service, and cable “public access” channels.  But regardless of the quality of such networks or the programming on them, the viewing and listening public has shown a clear desire for programming of a very different nature.  While critics might lament what they regard as the “low-brow” entertainment or supposedly lower-quality news seen or heard on some commercial networks or stations, there is no denying that citizens tune in to commercial programs in very large numbers.  Whether regulatory advocates care to admit it, supply and demand are at work in America’s media marketplace and citizens vote with their eyes and ears all the time.  Media scholar Ben Compaine, co-author of Who Owns the Media?, focuses on the real issue here, choice:

If large segments of the public choose to watch, read, or listen to content from a relatively small number of media companies, that should not distract policy makers from the key word there: choose. … It may indeed be that at any given moment 80 percent of the audience is viewing or reading or listening to something from the 10 largest media players.  But that does not mean it is the same 80 percent all the time, or that it is cause for concern.[27]

Commenting on efforts to make the modern media landscape look more like PBS or NPR, Compaine notes: “Content might well be different.  But it wouldn’t necessarily be better.… This might work only in a … world of enforced equality, where no democracy of content was allowed, where the voice of the audience was not heard.”[28] He notes that PBS is instructive in this regard since, even in the days when it only had three primary rivals, it could rarely get the attention of more than 2% of the total TV audience.  And as television journalist Jeff Greenfield has noted, “[W]hen you no longer need the skills of a safecracker to find PBS in most markets, you have to realize that the reason people aren’t watching is that they don’t want to.”[29]

Simply put, in a world of unlimited options and freedom of media choice, there’s just no way to force the audience to tune in.[30] 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 consume media products they do not think they want in the name of the public interest,” argues Ellen P. Goodman of the Rutgers-Camden School of Law.[31]

Our Many “Public Squares”

More importantly, there seems to be little need for a new spectrum fee for “public interest” content or a “public square” channel in light of the explosion of civic-oriented and culturally enriching programming on both traditional and new media platforms.  In essence, we now have many “public square” channels.

For example, the growth of news channels and programs (CNN, Fox News, MSNBC, Current TV, many financial news networks, and more) and international news outlets (BBC America, CNN International, etc.) has been well-documented.  Most notable in this regard is the stunning success of the cable industry’s C-SPAN network and its sister properties.[32] But these cable news channels and programs are also a growing force online as well.  “Like their television programs, the major cable news channels’ websites attracted record viewership in 2008, driven in a large part by the political and economic news of the year,” reports the Pew Project for Excellence in Journalism.[33] Moreover, these cable news sites “have also evolved into true multimedia destinations.  All now feature video archives, RSS feeds and features for accessing the sites on mobile devices.  They all offer live streaming content.”[34] Meanwhile, C-SPAN recently created the C-SPAN Video Library,[35] 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 hours of House & Senate committee hearings.[36]

Americans have many other ways of finding important news and civic information online.  The 2008 presidential election serves as a dramatic illustration of how voters have become better informed and how candidates have exciting new ways to connect with them.  The Pew Internet & American Life Project found that “some 74% of Internet users—representing 55% of the entire adult population—went online in 2008 to get involved in the political process or to get news and information about the election.”[37] And President Barack Obama’s unprecedented use of new media tools during 2008 is often credited with helping to propel him into the White House.  Millions of Americans made their views known about various issues on sites such as Obama’s Change.gov website.  Wired reported that “Obama’s online success dwarfed [Senator John McCain’s], and proved key to his winning the presidency.”[38]

Volunteers used Obama’s website to organize a thousand phone-banking events in the last week of the race—and 150,000 other campaign-related events over the course of the campaign.  Supporters created more than 35,000 groups clumped by affinities like geographical proximity and shared pop-cultural interests.  By the end of the campaign, myBarackObama.com chalked up some 1.5 million accounts.  And Obama raised a record-breaking $600 million in contributions from more than three million people, many of whom donated through the web.[39]

Four years earlier, Joe Trippi, former campaign manager of Howard Dean’s 2004 presidential campaign and the author of The Revolution Will Not Be Televised: Democracy, The Internet, and The Overthrow of Everything, had noted that the Dean campaign’s heavy use of new, interactive media and communications technologies was, “a sneak preview of coming attractions—the interplay between new technologies and old institutions.  The end result will be massive communities completely redefining our politics, our commerce, our government, and the entire public fabric our culture.”[40] He concluded: “what we are seeing—at its core—is a political phenomenon, a democratic movement that proceeds from our civic lives and naturally spills over in the music we hear, the clothes we buy, the causes we support.”[41] President Obama’s campaign certainly seems to have been proof of that.

Of course, all this comes in addition to the stunning proliferation of user-generation media such as blogs, discussion boards, listservs, social networking sites, Twitter, You Tube, and so on.  Dan Gillmor, author of We the Media: Grassroots Journalism By the People, For the People, notes just how profound the impact of new media and citizen journalism will be:

Tomorrow’s news reporting and production will be more of a conversation, or a seminar.  The lines will blur between produces and consumers, changing the role of both in ways we’re only beginning to grasp now.  The communications network itself will be a medium for everyone’s voice, not just the few who can afford to buy multimillion-dollar printing presses, launch satellites, or win the government’s permission to squat on the public’s airwaves.[42]

Likewise, in its recent State of the News Media 2010 report, the Pew Project for Excellence in Journalism reported that “Citizen journalism at the local level is expanding rapidly and brimming with innovation.”[43] The report also noted that:

highly promising citizen and alternative sites are emerging daily.  Imaginative news formats, partnerships, formats, technological capabilities and passionate supporters of journalism values offer significant reasons for optimism as journalism continues its mission to inform citizens, make their lives better and nurture democratic processes.[44]

Conclusion

In light of these developments, it’s hard to take seriously the charge that “deliberative democracy” is somehow on the decline in America and that the imposition of a spectrum fee to create a government-controlled “public square channel” or more “public interest” content in general would actually change the constitution of news, culture, or civic engagement in any significant way.  And even if government creates or subsidizes wonderful, civic- and culturally-enriching content, there’s no way to force people to consume it.

Finally, regardless of how spectrum fee proceeds might be spent, the proposal raises fundamental fairness issues for broadcasters.  Indeed, it is doubly insulting for them.  Not only has public broadcasting and non-commercial media been siphoning off more and more market share in recent years, but this proposal would impose a new tax on private broadcasters to fund those competitors (or some other media outlets) at a time when broadcasters are struggling for their very existence.  If Congress imposed a spectrum fee on broadcasters, it would essentially be signing a death warrant for the medium.  It’s hard to see how that’s in “the public interest.”

Related PFF Publications

[1] Adam Thierer & Berin Szoka, The Progress & Freedom Foundation, The Wrong Way to Reinvent Media, Part 1: Taxes on Consumer Electronics, Mobile Phones & Broadband, PFF Progress on Point 17.1, March 2010, www.pff.org/issues-pubs/pops/2010/pop17.1-the_wrong_way_to_reinvent_media.pdf.

[2] This essay is condensed from a chapter that appeared in a new book from Congressional Quarterly Press. 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.

[3] See generally Adam Thierer, The Progress & Freedom Foundation, Media Myths: Understanding the Debate over Media Ownership (2005) at 85-104, www.pff.org/issues-pubs/books/050610mediamyths.pdf.

[4] Adam Thierer, The Progress & Freedom Foundation, Why Expansion of the FCC’s Public Interest Regulatory Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable, Testimony Before the Federal Communications Commission Hearing on “Serving the Public Interest in the Digital Era,” March 4, 2010, www.pff.org/issues-pubs/testimony/2010/2010-03-04-Thierer_Remarks_at_FCC_Hearing.pdf.

[5] Glen O. Robinson, The Federal Communications Act: An Essay on Origins and Regulatory Purpose, in 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 Institute Review (June 2001) at 38. See also William T. Mayton, The Illegitimacy of the Public Interest Standard at the FCC, 38 Emory Law Journal 715, 716 (1989).

[6] 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.

[7] See Adam Thierer, Media Myths: Making Sense of the Debate over Media Ownership (2005) at 85-104; www.pff.org/issues-pubs/books/050610mediamyths.pdf; Adam Thierer, Is the Public Served by the Public Interest Standard? The Freeman, Vol. 46, No. 9, Sept. 1996, at 618-20, www.thefreemanonline.org/featured/is-the-public-served-by-the-public-interest-standard; William T. Mayton, The Illegitimacy of the Public Interest Standard at the FCC, 38 Emory Law Journal, 1989, at 715-69.

[8] 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.”

[9] Adam Thierer, Why Regulate Broadcasting : Toward a Consistent First Amendment Standard for the Information Age, 15 CommLaw Conspectus (Summer 2007) at 431-482; http://commlaw.cua.edu/articles/v15/15_2/Thierer.pdf.

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

[11] Thierer, supra note 4.

[12] Id. at 7-12.

[13] “By taking some modest fee from commercial broadcasters for their use of the public spectrum in lieu of the public trustee obligation, noncommercial television could be adequately funded to deliver high-quality public service programming.” Henry Geller, Geller to FCC: Scrap the Rules, Try a Spectrum Fee, Current.org, Oct. 30, 2000, www.current.org/why/why0020geller.shtml. Also see Henry Geller, Promoting the Public Interest in the Digital Era, Federal Communications Law Journal, Vol. 55, No. 3, 2003, www.law.indiana.edu/fclj/pubs/v55/no3/Geller.pdf.

[14] Charles M. Firestone, The Aspen Institute, The Spectrum Check Off Alternative to Public Interest Regulation of Broadcasters, www.aspeninstitute.org/policy-work/communications-society/papers-interest/-spectrum-check-alternative-public-interest-regul

[15] See Ornstein supra 2 at 61. Also see Remarks of Norman Ornstein at George Mason University event, The Gore Commission, 10 Years Later: The Public Interest Obligations of Digital TV Broadcasters in Perfect Hindsight, Oct. 3, 2008, www.iep.gmu.edu/documents/Ornstein.doc.

[16] Paul Taylor and Norman Ornstein, New America Foundation, A Broadcast Spectrum Fee for Campaign Finance Reform, Spectrum Series Working Paper #4, June 2002, www.newamerica.net/files/IssueBrief5.FreeAirTime.TaylorOrnstein.pdf.

[17] Leonard Downie, Jr. & Michael Schudson, The Reconstruction of American Journalism, Columbia Journalism Review, Oct. 20, 2009, at 92, available at www.scribd.com/doc/21268382/Reconstruction-of-Journalism.

[18] Id.

[19] See Robert W. McChesney & John Nichols, The Death and Life of American Journalism (2010) at 209-10.

[20] Firestone, supra note 14.

[21] Adam Thierer and Wayne Crews, Cato Institute, Just Don’t Do It: The Digital Opportunities Investment Trust (DO IT) Fund, Cato TechKnowledge, No. 35, May 6, 2002, www.cato.org/tech/tk/020506-tk.html

[22] Quoted in Neil Hickey, TV’s Big Stick: Why the Broadcast Industry Gets What it Wants in Washington, Columbia Journalism Review, September/October 2002, p. 53.

[23] See Thierer & Eskelsen, supra note 7.

[24] Pew Project For Excellence in Journalism, Local TV, The State of the News Media 2010, March 2010, www.stateofthemedia.org/2010/local_tv_summary_essay.php.

[25] Michael Grotticelli, Local TV Stations Face Uncertain Future, Broadcast Engineering, Feb. 23, 2009, http://broadcastengineering.com/news/local-stations-face-uncertain-future-0223.

[26] Pew Project for Excellence in Journalism, Audio – Traditional Broadcast and Broadcast Online, The State of the News Media 2010, March 2010, www.stateofthemedia.org/2010/audio_traditional_broadcast.php.

[27] Ben Compaine, Domination Fantasies, Reason, Jan. 2004, at 33, http://reason.com/archives/2004/01/01/domination-fantasies

[28] Id.

[29] Quoted in Thomas G. Krattenmaker and Lucas A. Powe, Jr., Regulating Broadcast Programming (1994) at 314.

[30] Ellen P. Goodman of the Rutgers-Camden School of Law argues: “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.” 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.

[31] Id. at 374.

[32] 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. See Adam Thierer, The Progress & Freedom Foundation, C-SPAN, Civic-Minded Programming & Public Interest Regulation, PFF Blog, March 2, 2010, http://blog.pff.org/archives/2010/03/c-span_civic-minded_programming_public_interest_re.html

[33] Cable TV, in State of the News Media 2009, www.stateofthemedia.org/2009/narrative_cabletv_digitaltrends.php?media=7&cat=6/#key6

[34] Id.

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

[36] See Thierer, supra note 28. See also Brian Stelter, C-Span Puts Full Archives on the Web, New York Times, March 15, 2010,  www.nytimes.com/2010/03/16/arts/television/16cspan.html

[37] Aaron Smith, The Internet’s Role in Campaign 2008, The Pew Internet & American Life, April 15, 2009, www.pewinternet.org/Reports/2009/6–The-Internets-Role-in-Campaign-2008.aspx

[38] Sarah Lai Stirland, Propelled by Internet, Barack Obama Wins Presidency, Wired.com, Nov. 4, 2008,  www.wired.com/threatlevel/2008/11/propelled-by-in

[39] Id.

[40] Joe Trippi, The Revolution Will Not Be Televised: Democracy, The Internet, and The Overthrow of Everything (2004), at 203. [emphasis original].

[41] Id.

[42] Dan Gillmor, We the Media: Grassroots Journalism By the People, For the People (2004), at xiii.

[43] Pew Project For Excellence in Journalism, Introduction, State of the News Media 2010, March 2010,   www.stateofthemedia.org/2010/overview_intro.php

[44] Pew Project For Excellence in Journalism, Community Journalism, State of the News Media 2010, March 2010,  www.stateofthemedia.org/2010/specialreports_community_journalism.php

Wrong Way to Reinvent Media Part 2 – Broadcast Spectrum Taxes [Thierer- PFF] http://d1.scribdassets.com/ScribdViewer.swf

]]> https://techliberation.com/2010/03/29/the-wrong-way-to-reinvent-media-part-2-broadcast-spectrum-fees-for-public-media/feed/ 1 27606 The Wrong Way to Reinvent Media: A New Series of Essays https://techliberation.com/2010/03/23/the-wrong-way-to-reinvent-media-a-new-series-of-essays/ https://techliberation.com/2010/03/23/the-wrong-way-to-reinvent-media-a-new-series-of-essays/#comments Tue, 23 Mar 2010 21:49:28 +0000 http://techliberation.com/?p=27401

By Adam Thierer & Berin Szoka

In a series of upcoming essays, we will be examining proposals being put forward today that would have the government play a greater role in sustaining struggling media enterprises, “saving journalism,” or promoting more “public interest” content. The reason we’re working up this multi-part series is because, with many traditional media operators struggling, and questions being raised about how journalism in particular will be supported in the future, Washington policymakers are currently considering what role government can and should play in helping media providers reinvent themselves in the face of tumultuous technological change wrought by the Digital Revolution.

For example, the Federal Communications Commission (FCC) recently kicked off a new “Future of Media” effort with a workshop on “Serving the Public Interest in the Digital Era.” (The  filing deadline for the FCC’s “Future of Media” proceeding is May 7th).  Likewise, the Federal Trade Commission (FTC) has hosted two workshops asking “How Will Journalism Survive the Internet Age?”  Meanwhile, the Senate has already held hearings about “the future of journalism,” and Senator Benjamin L. Cardin (D-MD) recently introduced the “Newspaper Revitalization Act,” which would allow newspapers to become tax-exempt non-profits in an effort to help them stay afloat.

Thus, in light of Washington’s sudden interest in the future of media and journalism, we will be taking a hard look at several issues and proposals that are being floated today, including:

  • Taxes on media devices, mobile phones, or broadband bills to channel money to media enterprises / content;
  • Taxes / fees on broadcasters to funnel support to their public sector competitors or to public interest programs;
  • “News vouchers” or “public interest vouchers” that would encourage citizens to channel support to media providers;
  • Taxes on private advertising to subsidize non-commercial / public media content;
  • Expanded postal subsidies for media mail; and
  • Targeted welfare programs for out-of-work journalists or corporate welfare in the form of bailouts for failing media enterprises.

You won’t be surprised to hear that we are generally quite skeptical of most of these ideas, but we promise to give each one serious consideration.  We’ll kick things off tomorrow with our essay on why taxing media devices or distribution systems to fund media content is not a particularly good idea.

]]> https://techliberation.com/2010/03/23/the-wrong-way-to-reinvent-media-a-new-series-of-essays/feed/ 8 27401 More on Muni Fiber Failures https://techliberation.com/2010/03/11/more-on-muni-fiber-failures/ https://techliberation.com/2010/03/11/more-on-muni-fiber-failures/#comments Fri, 12 Mar 2010 03:00:48 +0000 http://techliberation.com/?p=27031

I somehow missed this excellent ITIF paper by Robert D. Atkinson and George Ou when it came out at this point last year, but George has just dusted it off, made a couple of updates, and re-posted it over at the Digital Society blog. Worth reading. It touches on a lot of the same case studies I have been documenting in my ongoing series, “Problems in Public Utility Paradise.”  In particular, it focuses on the UTOPIA and iProvo fiascos out in Utah. Here’s a key takeaway from those case studies:

The lessons learned in Utah is that projected uptake models and deployment plans don’t always come to fruition, and when that happens the consequence is failure.  For UTOPIA, the project was projected to reach 35% uptake rates by February 2008 but the reality was less than 17% uptake.  UTOPIA had also hoped for 17% uptake from lucrative business customers but the reality was only 2 to 3 percent.  Provo County’s iProvo was hoping for 10,000 subscribers by July 2006 with the assumption that 75% of those customers would subscribe to lucrative triple play services, but the reality was 10,000 customers in late 2007 with only 17% of those customers subscribing to triple play.  Many consumers were quite happy to subscribe to existing broadband cable or telecom providers.  The consistent theme in Utah was an overestimation of the uptake rates and the underestimation of competition from incumbent cable operator Comcast and telecom operator Qwest which led to consistent underperformance.

Ouch. For more details, see this old essay of mine about UTOPIA from 2008, and this piece from last Sept about iProvo. Not a pretty picture. As I say every time I pen a piece about the latest muni failure du jour, these case studies should serve as a cautionary tale about the dangers of grandiose, centrally planned broadband schemes. There is no such thing as a free lunch. Network-building is hard, and politicians usually aren’t that good at doing it.

]]> https://techliberation.com/2010/03/11/more-on-muni-fiber-failures/feed/ 4 27031 Does TV Cause Violence Against Women? PTC’s “Women in Peril” Report https://techliberation.com/2009/10/29/does-tv-cause-violence-against-women-ptcs-women-in-peril-report/ https://techliberation.com/2009/10/29/does-tv-cause-violence-against-women-ptcs-women-in-peril-report/#comments Thu, 29 Oct 2009 04:58:18 +0000 http://techliberation.com/?p=23062

The Parents Television Council (PTC) released a new report today entitled Women in Peril: A Look at TV’s Disturbing New Storyline Trend. The report argues that “by depicting violence against women with increasing frequency, or as a trivial, even humorous matter, the broadcast networks may ultimately be contributing to a desensitized atmosphere in which people view aggression and violence directed at women as normative, even acceptable,” said PTC President Tim Winter.  As evidence the report cites… Nicole Kidman.  OK, it cites more than Nicole Kidman, but the 7-page report and accompanying press release does seem to place a lot of stock in the fact that, while being questioning by a House Foreign Affairs subcommittee hearing about violence against women overseas, “Ms. Kidman conceded that Hollywood has probably contributed to violence against women by portraying them as weak sex objects, according to the Associated Press.”  I’m not sure what Ms. Kidman was doing testifying before Congress on the matter of violence against women overseas — dare I suggest some congressmen were out for another photo-op with a Hollywood celeb? — but the better question is whether Ms. Kidman’s opinion has any bearing on the question of what relationship, if any, there is between televised violence and real-world violence against women. (Incidentally, if she really feels passionately about all this, is she prepared to go back and recut some of her old scenes in “Dead Calm,” “To Die For,” and “Eyes Wide Shut“?)

Violent Crime Rate

But let’s not nitpick about the credentials Ms. Kidman brings to the table or whether it makes any sense for PTC to elevate her opinions to proof of theory when it comes to a supposed connection between depictions of violence against women in film or television and real world acts of violence against women. PTC, however, suggests that’s exactly what is going on today. They allude to a few lab studies which are of the “monkey see, monkey do” variety — where the results of artificial lab experiments are used to claim that watching depictions of violence will turn us all into killing machines, rapists, robbers, or just plain ol’ desensitized thugs.

There’s just one problem with such studies, and the PTC report:  Reality.  Whatever lab experiments might suggest, the evidence of a link between televised media violence and the real-world equivalent just does not show up in the data. The FBI produces ongoing Crime in the United States reports that document violent crimes trends. Here’s what the data tells us about overall violent crime, forcible rape, and juvenile violent crime rates over the past two decades: They have all fallen.  Perhaps most impressively, the juvenile crime rate has fallen an astonishing 36% since 1995.

Forced Rape Crime Rate

Juvenile Violent Crime

Now, let me be perfectly clear about something.  When analyzing such things it is vitally important to recall one of the first rules of statistical analysis: correlation does not necessarily equal causation. This works in both directions. Even if an increase in real-world violence was closely tracking depictions of violence on television or in video games, it wouldn’t necessarily mean there is a connection. But it would also be wrong to state that, on its own, an inverse correlation (with the trends moving in opposite directions) meant that there was absolutely no connection between these things.

At the margin, I believe that some media can have negative impacts on some people. Certainly, in heavy enough doses, watching non-stop depictions of sex or violence probably would have some sort of negative effect on some people — loss of sleep, if nothing else. Perhaps more.

Then again, I just cannot entirely dismiss the real-world evidence being so starkly at odds with the “monkey see, monkey do” theories bandied about by PTC and some researchers or regulatory proponents. At a minimum, the real-world evidence should at least call into question the “world-is-going-to-hell” sort of generalizations made by proponents of increased media regulation, who all too often make casual inferences about the relationship between media exposure and various social indicators. Such a causal relationship is even more dubious today since all Americans, especially youngsters, are surrounded by a much wider variety of media than ever before. Even though television viewing has gone down slightly in recent years, it has been due to the rise of other media substitutes that command the attention of children, including the Internet, cell phones and video games. Overall, therefore, it appears that children are “consuming” as much, if not more, media than ever before. One would think that if depictions of violence in media really were leading to increased aggression among youth it would start showing up in some of these indicators at some point. But that’s just not occurring. [If you’re interested, I’ve discussed all these issues at much greater detail here, here, here, and here.]

Another argument I often here is: ‘Well, the numbers would be even better if not for media violence!’  But there’s just no way to prove that one way or the other. Would the juvenile crime rate be down 46% instead of the 36% decrease we’ve actually since 1995?  I don’t know. Nobody can know. But I certainly hope that media critics and regulatory proponents aren’t so foolish as to suggest that the crime rate would drop to zero if we just forced everybody to watch “Mary Poppins” all day long.

Juv violence table

Finally, let’s assume that the PTC is right and that depictions of violence against women are on the rise on TV. I can actually accept that statement. With all the forensic science shows and crime dramas on TV today, it’s clear that some of the plot lines are going to involve people dying in some fashion and many of those people will be women. And yes, some of the depictions will get pretty gritty. “Fringe” and the various “CSI” shows are clearly showing things we didn’t see on “Quincy” back in the day. (Bring back Jack Klugman! He was awesome.)

But, hey, culture has changed.  Envelopes have been pushed a bit.  A little less is left to the imagination.  But most of us can live with that fact.  Indeed, many of us actually enjoy that fact!  And for those who do not share that worldview or who have heightened sensitivities about depictions of violence in TV shows, movies, or games, I would like to tell them that I really do understand and appreciate where they are coming from.

Yet, there are many other ways you can deal with that without forcing us all to forgo content we might enjoy consuming. And, you guessed it, this is where I remind the world for the umpteenth time that I have written a whole book about parental control tools and methods! [The shameless self-promotion never ends here, folks!]  In fact, part of the reason I have invested so much time in that project — and my ongoing efforts to get companies and other third parties to expand the range of tools, ratings, and other information that we have access to — is because I genuinely want to make sure that those individuals and families who have different needs and values than I have the ability to craft their own “household media standard.”   I want each family to be empowered to make media content decisions for themselves such that they can find the media content they want and discard all the rest. Luckily, that is the world we increasingly live in today. Parents have more tools and methods at their disposal to help them decide what constitutes acceptable media content in their homes and in the lives of their children.

I know that some critics including the PTC feel that the tools aren’t good enough, but I just don’t buy it. Sure, there’s always some room for improvement regarding parental control tools and rating systems, but the existing panoply of tools and methods offer families unprecedented control over their media consumption habits. And that includes tools and methods which enable them to find enriching and educational content, which we have more of than ever before.

I understand PTC doesn’t share my worldview on these matters.  But the difference between us is that they want to take something away from me (the right to watch certain types of content) while I want to give something to them (the ability to block that which they find distasteful).  To be fair, however, their report did not rush to the regulatory solution, even though they did call for more hearings and they warn that:

if the television industry is unwilling or unable to take serious steps to reduce or tone down such graphic images, then we will urge the Congress and the FCC, by virtue of their regulatory authority over the public airwaves, to step in and take action.

The problem is, I don’t think PTC will ever rest until all this content is removed from the airwaves altogether, even if millions of Americans actually enjoy that programming.  Again, the better solution is for PTC to work with others to improve the tools and methods available to families to more effectively make this decision for themselves.  I certainly don’t want others making these determinations for my wife and me and our two kids.  We’ve got the job handled, thank you very much.

]]> https://techliberation.com/2009/10/29/does-tv-cause-violence-against-women-ptcs-women-in-peril-report/feed/ 22 23062 Problems in Public Utility Paradise (a continuing series) https://techliberation.com/2009/09/10/problems-in-public-utility-paradise-a-continuing-series/ https://techliberation.com/2009/09/10/problems-in-public-utility-paradise-a-continuing-series/#comments Thu, 10 Sep 2009 18:57:04 +0000 http://techliberation.com/?p=21251

For some time now here at the TLF, we have been documenting the track record of various government-owned or subsidized utility projects — municipal wi-fi projects, locally-owned telecom ventures, city or state fiber projects, and so on.  We’ve attempted to see if the rhetoric matches the reality when it comes to the grandiose promises made about government investment or ownership of communications or broadband networks being our ticket to high-tech paradise.

The results?  Well, the record speaks for itself.  It’s been one miserable failure after another.  And yet the high-tech pork barrel rolls on and taxpayers are all too often stuck picking up the tab.

I just wanted to make everyone aware of the fact that I finally got around to collecting most of our essays on the subject here into an “Ongoing Series” page that will be permanently housed here.  (As far as I can tell, we’re up to about 18 or 19 installments).  I encourage my TLF contributors to help me contribute entries to the series and I also invite our readers to continue to submit examples of these experiments so we can continue to document their failure.  Of course, if there are success stories, we’d like to hear about those too.  But that will likely be a much shorter series!

]]> https://techliberation.com/2009/09/10/problems-in-public-utility-paradise-a-continuing-series/feed/ 5 21251 Irony Alert: Supreme Court Refuses to Allow Public to Hear Free Speech Case Live https://techliberation.com/2008/10/27/irony-alert-supreme-court-refuses-to-allow-public-to-hear-free-speech-case-live/ https://techliberation.com/2008/10/27/irony-alert-supreme-court-refuses-to-allow-public-to-hear-free-speech-case-live/#comments Mon, 27 Oct 2008 19:44:14 +0000 http://techliberation.com/?p=13530

Like many others, I have long been troubled by the fact that the Supreme Court does not allow TV cameras or live audio coverage of the cases it hears.  I know all the arguments against live video or audio coverage and I find them all quite unconvincing when weighed against the public’s right to hear the oral arguments and decisions that will have such a direct bearing on their lives and liberty. We should be allowed to see, or at least hear, these arguments and decisions as they happen.

Anyway, as I was reading through an article today in Broadcasting & Cable about how “C-SPAN Seeks Oral Argument Tapes in Fox Swearing Case,” I couldn’t help but think about how particularly ironic it was that our nation’s highest court would be considering one of the most important free speech cases in decades — FCC v. Fox — and it yet wouldn’t be allowing any of us to listen in live when it takes place on November 4th! If we are lucky, the Court might grant C-SPAN expedited access to the tapes of the arguments, but it may be that we have to wait many weeks to hear what was said.

Seems silly to me. Worse yet, it means I will have to camp out in front of the Supreme Court the night before and freeze my butt off in the hope of getting a seat in the courtroom to hear the live argument! Which brings up the final bit of irony I always like to point out about restricting cameras and microphones from courtrooms: Why are they letting anyone in the courtroom at all if they so fear instantaneous public access to the arguments?

]]> https://techliberation.com/2008/10/27/irony-alert-supreme-court-refuses-to-allow-public-to-hear-free-speech-case-live/feed/ 12 13530