Ovid (publius_ovidius) wrote,

Corporate Media and Competition

This is a quick repost of a some points I made in discussion on another site. I was asked why I thought the media is not terribly competitive. It's also a cross-post from liberal_bias

A good primer on the topic is Unreliable Sources by Martin Lee and Normon Solomon. It was published back in 1991 one and explained very thoroughly the problems with media consolidation over a decade ago. The problem has become worse due to increased media mergers. We're all familiar with monopolies -- a market where there is only one supplier of a good -- but as Microsoft has amply demonstrated, you don't have to have a pure monopoly in order to profitably engage in monopolistic behavior.

As a general benchmark, economists frequently consider an industry in which five or fewer suppliers control in excess of the fifty percent of the market to be very monopolistic. According to the book The Case Against the Global Economy (weird choice of light reading for me, eh?), with the waves of mergers that really started to take off in the 80s, we are now in a position where five companies control forty percent of the global market in media. We are very close to a monopolistic media market and the results are highly predictable -- a lack of competitiveness, high barriers to entry and lack of innovation (in this case, good news reporting). Many people argue that the Internet automatically creates a low barrier to entry, but research tends to show that most surfers stick to a handful of sites and much of what is available is ignored in favor of the 'Net giants like Yahoo!, AOL and MSN.

In The Silent Takeover, economist Noreena Hertz describes how Adbusters produced an ad for the 1997 "Buy Nothing" day. They wanted to show it in the US but ABC, CBS and NBC refused to sell them air time. Richard Gitter, the vice president of advertising standards at NBC said "We don't want to take any advertising that's inimical to our legitimate business interests".

I could cite plenty of other examples, but run over to Greg Palast's site and read what he has to say about media monopolies and free speech. Too many people sit and home and watch the nightly news and don't notice how much of it is dedicated to covering the local mall, talking about a new store or covers mainly "sizzling" stories since many important ones don't sell well.

And in a follow-up post responding to someone asking how I felt people's actions and media watching habits might change:

The short (and cheap) answer is simply that I don't know if people would notice and if things would change. If competition led to better quality news but people still chose sizzle over steak, that would be a disappointment, but at least people would be freely choosing instead of having the choice made for them. There is good information out there now, but it's not always easy to find it.

A more accurate answer would be to discuss why I desire more competition -- or more precisely, a different sort of competition (nice of me to casually shift the debate via clarifications, eh?). But before I describe that, I should discuss my rationale.

Virtually all economists argue that free access to information is a prerequisite for a properly functioning market (there's a branch of economics called information economics that explores the cost of information). Adam Smith said this. David Ricardo said this. Milton Friedman said this. John Keynes said this. No one questions the importance of the availability of information. The worse the information, the worse the market. This is much of the reason why command economies fail. The farmer sees that he's getting too much rain and reacts accordingly -- unless he has quotas set for him months ago by a central government that couldn't foresee the weather. You wind up with stores with no bread but an abundance of socks.

Conversely, the better the information, the better the functioning of a given market. This is part of the reason why Extreme Programming (a software project management system) can work so well when applied to an appropriate project. The roles of all of the actors are well defined as is the flow of information between them. Easy access to quality information is necessary for effective decisions whether we're dealing with the small scale or the large.

While the tie-in to the media is obvious, it's not obvious how increased competition will improve the situation. Even though there used to be more competition within the media, the yellow journalism of Hearst was easily on par with what Fox is pumping out today. In another example, Robin Anderson, reported in Consumer Culture and TV Programming:

A study of women's magazine in the period 1983 to 1987 revealed that not one magazine that carried cigarette advertising published any full-length feature, column, review, or editorial on any aspect of the dangers of smoking. During the same period lung cancer was determined to be the number one killer of women, surpassing even breast cancer.

Noreena Hertz reports an NBC story in which GE engineers in a nuclear power plant discovered that one out of every three bolts that a major supplier was sending them was defective. GE had been accepting those bolts for eight years before discovering this. GE killed the story. Similarly, an ABC story revealed that Disney had allegedly hired pedophiles at one of their theme parks. That's not just steak, that's sizzle to boot (as the Michael Jackson story demonstrates). However, ABC never ran that report. Disney owns ABC.

These are all significant news stories. This is information that might change how you shop. It might change how you vote. It might do plenty of things, but it won't if you don't have a change to hear about it. And those anecdotes are not alone. Many books have been written about the stories that corporate dominated media is suppressing. It makes you wonder how many stories we didn't hear.

The problem lies in the inherent conflict of interest with how the media currently exists in our country. Frequently, managers are prohibited from hiring family. Judges are to recuse themselves when they know the defendant. Politicians are supposed to divest themselves of holdings that might unduly influence their political decisions. While the media often jumps to point out these issues, you don't hear them taking themselves to task. This puts the public in the awful situation of being dependent on the media to tell us what's wrong with the media. It's like that silly interview question "what's your worst habit?" "I work too hard."

When Jesus said a man cannot serve two masters, one might be forgiven for thinking that he was prophesying about today's media. The media is there for the public -- a public which needs this information to make good decisions -- but it's either owned by huge conglomerates like Disney and GE, or it earns the bulk of its revenues from advertising. The effect of this conflict of interest in readily apparent when people dig for it, but instead, media giant Clear Channel warns of liberal media domination and the pretty blond on the nightly news stares at us through sea anemones of mascara while commenting about the new store in the mall.

As for what a different sort of competition might entail, I'll leave that for others to sort out. I've written enough and, I'm sure, some will be upset with what I have to say. I've done enough for a Christmas Eve morning.

Tags: economics, politics
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