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Papering over the Problem

By 14 July 2010 No Comment

In “Journalism Needs Government Help” (Wall Street Journal, July 14) Columbia President Lee Bollinger urges public support for both press and broadcasting, which are reeling financially as “proliferation of communications outlets has fractured the base of advertising and readers.” He argues that the current system, or perhaps one should say the late system, was a product of mixed public and private action, and that “trusting the market alone . . . would mean venturing into the unknown – a risky proposition.”

Dear to his heart is the idea of a national broadcasting service, akin to the BBC or Xinhua or Al Jazeera, though of course OUR broadcasting system would retain “full journalistic independence.”

The article gets some things right, but it then mostly draws the wrong conclusions.

The “fracturing” point is correct, but the problem is not the multiplicity of outlets but the lack of effective property rights and thus the collapse of markets.

Bollinger notes that newspapers became a natural monopoly within their viewsheds, and he celebrates the noblesse oblige that caused owners to develop specialized expertise in many fields. Well, maybe. Many owners, especially of the post-founding generation, did indeed see themselves as having a public duty, and salud to them, but let’s not overdo it, especially given the decline in standards of objectivity over the past couple of decades. Another explanation is that newspapering was a business with high fixed costs and very low marginal costs, so once the basic platform was built, it was only canny business to spend a bit on multiple specialized services each of which would bring in a few more readers. It also helped discourage competition from raising its ugly head.

As for government regulation of broadcasting, perhaps at Columbia this is regarded as a triumph, but in the cafés where I hang out it is regarded as the progenitor of a vast wasteland that became fertile only when the communications revolution started spinning too fast for the regulators to keep up. But the regulators are running fast, and if they have their way on issues like net neutrality they will once again create a dysfunctional system that requires endless tweaks by a well-paid class of regulatory drones to perpetuate its dysfunction.

From Amazon

The fact is, the news business of the recent past was pretty bad. Basically, it was a huge monopoly in which locally-based papers pooled their newsgathering resources via the AP and the interchange of stories, and then gave each member a mini-monopoly in its viewshed. This system resulted in all sorts of bad things – it choked off independent sources, vastly over-charged for services like classified ads, monopolized the channels of communication between newsmakers and readers (and used this power ruthlessly in the interests of favored its political and social agendas). It depended on selling eyeballs to advertisers much more than selling information to readers, an economic model that converts the reader from a customer into a product, and which truncates the resources available for information collection. Thank heaven it is (almost) gone.

The last thing we need is government funding to try to perpetuate this system, sort of like saddling up the body of Rodrigo de Bivar and sending it into battle. Instead, we need a new system in which people pay for the content they value and free riding is discouraged.

Let me give the last word to Claudia Rosett, writing at Pajamas Media:

The way America pulled itself out of the 19th century era of yellow journalism, when coverage was for sale, was that some publishers realized they could make money by offering the public reliable reporting. That was the origin, among other things, of The Wall Street Journal, back in 1882. The aim was to satisfy customers who needed honest news of Wall Street. It was left to the paying customers (not to the presidents of ivy league schools, or the Federal Department of Lofty Bureaucrats) to judge whether the product satisfied their needs. They signaled their preferences by deciding — voluntarily — to pay for the newspaper, or not.

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