In the torrent of words over the job cuts at Fairfax and News Ltd, not many people seem to have noticed that these events also further undermine the already teetering argument of the Finkelstein Review for a new system of media regulation.
Recall that the Finkelstein Review is founded on a downplaying of print media’s central economic problem. This problem is simply that print circulation and ad revenues are collapsing – and use of print media’s online versions is not close to making up the difference. As information economist Hal Varian noted of the US news industry in 2010: “The average amount of time looking at online news is about 70 seconds a day, while the average amount of time spent reading the physical newspaper is about 25 minutes a day.”
The Finkelstein Review repeatedly declares this is not a problem:
- Page 62: “For newspapers, the internet is the latest in a series of major threats to their operation … On each occasion, while some consumers shifted their consumption to the new media, many changed their consumption patterns to encompass the old and new media in a complementary fashion. Some evidence is emerging that a similar process may be under way for the internet.”
- Page 83: “The available data do not lend much support to the speculation of a wholesale shift of classified advertising from newspapers to the Internet.”
- Page 99: “While online news sites are unable to extract an advantage from the traditional relationship between news content and specialist content, they have a long and successful history in producing specialist content that appeals to audiences. Either independently or in partnership with other interests, they could use that experience to their advantage in the establishment or development of specialist content websites and use them to secure online advertising.”
- Page 101: “Representatives of newspapers acknowledge the difficulties confronting them, but at the same time are confident their strategies will successfully transform and adapt their companies as major players in the new environment.”
- Page 101: “The Australian press is in no immediate danger of collapsing. The main media companies appear to be reasonably capable of dealing with the pressures facing them at least over the medium term. Nonetheless, some potential pressure points are becoming evident.”
Only by repeating over and over that all is well with the Australian press can the Finkelstein Review sustain the rest of its arguments: that the “marketplace of ideas” is an unsuitable foundation for for media policy, and that therefore we have to have laws to make the Few Media Outlets act responsibly.
In fact print media in Australia is going through a very tough restructuring. Newspapers may well survive but they will be less dominant. The newspaper industry’s future is unclear, but the Few Media are clearly being replaced by the Many Media. And Finkelstein’s depiction of the media landscape is fading away in the glare of reality.
Footnote: I continue to expect and hope that out of Finkelstein and the convergence view we will get a somewhat strengthened Press Council. The online media company I work for, WorkDay Media, has now joined the Press Council, as have several other online media firms. Kudos to the Press Council for opening up to smaller organisations, one of the recommendations of WorkDay Media’s submission to the Finkelstein Review.
Extra material added later for Sancho (because you can’t put graphics in comments):
Below are the numbers Finkelstein presented for circulation …
…and revenue …
These numbers don’t look like disaster, do they? Finkelstein’s view was that they showed the Big Print Media would remain Big Print Media for a while yet.
What these numbers don’t include is the results from 2011 (probably down) and early 2012 (probably worse). No-one knows the tale those numbers tell – except the newspaper firms themselves. All the industry talk in Australia has been of sharply falling ad volumes and prices.
The significance of the past fortnight’s events is that it suggests the talk of substantial revenue falls is right and the Finkelstein Review’s analysis of newspaper revenues is wrong. You don’t do what Fairfax and News are doing unless you are facing a profit collapse.