Newspaper crisis ensuring Finkelstein’s demise

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.

How’s that?

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:

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Australian media and creative destruction

This week’s dramatic events in the Australian media have underscored the Schumpeterian “creative destruction” being wrought before our eyes by the Internet and associated technologies and cultures:

  • Fairfax’s announcement of the sacking of 1900 staff, closure of print facilities, adopting some sort of paywall approach for accessing content, and moving the print versions of its “quality” broadsheets to a tabloid format;
  • Murdoch’s sacking of a lesser but uncertain number of staff, launching a takeover bid for the balance of Fox Sports and taking its ownership of Foxtel to 50% (in uneasy partnership with Telstra);
  • Murdoch’s takeover of Kohler et al’s Business Spectator group; and
  • Gina Rinehart taking her shareholding in Fairfax very close to the 20% mark where she would be forced to launch a full takeover offer.

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Fairfax: Gina Rinehart’s money can’t buy readers

As Ken Parish’s post below shows, there is now a widespread view that Gina Rinehart will win control of Fairfax, publisher of the Sydney Morning Herald and The Age, and then seek to move their editorial stances well to the right. From people who believe that, you hear both wails and cheers, depending on their point of view.

Many of these people still seem to believe that rather than customers choosing a newspaper, newspapers shape the minds of their readers*. That’s a little bit true, but mostly wrong, and getting wronger every year the Internet is with us. If a newspaper doesn’t reflect the readers’ world-view and interests, then the readers leave.

Gina Rinehart’s billions might well help shape opinion on a single issue like the mining tax, where they’re employing emotive 30-second TV spots to tap existing beliefs that the mining industry keeps the nation from penury. Those same billions can’t make people keep buying a newspaper they don’t like, though.

There isn’t enough money in the world for that.

If Rinehart does move the Fairfax general newspapers’ political and cultural outlook substantially, she will learn a sharp business lesson.

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Micropaying Rupert

Journalism academic Terry Flew blogs about a recent paper by a UK colleague:

Recently published on Open Democracy has been an influential paper by Angela Phillips on “The Future of Journalism“. The paper was presented at the Media, Power and Revolution: Making the 21st Century, held in London and hosted by the Goldsmiths Leverhulme Media Trust.

There are certainly valid points that Phillips makes. The point that the much talked about “crisis of journalism” is actually a crisis of traditional news business models, at a time which in other respects is an exciting one for journalism, is well made. Similarly, the limits to the Huffington Post-type business model, where more and more content is aggregated, and drawn from as many non-paid sources as possible, are timely and important.

The question remains of, as Phillips puts it:

Journalism, done well, is an expensive business and it has to be paid for. The question is not whether it should be paid for but how.

The problem is that Phillips’ answer enters into the realms of conspiracy theory. …

Maybe the real reason why we cannot have a simple payments system, that doesn’t require complex and off-putting log-ins, is because that would prevent the big players from getting their hands on all that private data. It is in the interests of big players to keep small players out of the game and they are doing it by telling us that information wants to be free.

Flew observes that there are no technological barriers to media organisations implementing anonymous micro-payment systems allowing casual readers to access and download individual articles for (say) a few cents.  I can’t help wondering why someone hasn’t tried it.  Or have they?  Do Troppo readers know of any examples?  Examining my own reactions, there’s no way in the world I’m going to pay a few dollars a week to Rupert Murdoch for an online subscription to The Australian, but I would certainly click to access individual articles that interested me at (say) 5-10 cents a pop.  My gut feeling is that I’d probably spend on average $1-1.50 per week by such a system, which is less than Rupert charges for a subscription but $1-1.50 more than he receives from me now.

In more rarefied fields casual access “micropayments” seem to be getting more common.  For example, I noticed only a few days ago that the Alternative Law Journal offers a casual individual article purchase option.  However at $8.80 per article they’re not really “micropayments” except perhaps from the standpoint of a highly paid QC.  I can’t help wondering how carefully the Alternative Law Journal has actually thought through this initiative.  The main consumers of journal articles are academics and university students.  Neither group is likely to pay for casual access because we can get it for free anyway through our university’s subscription to the journal or by inter-library loan.  For the small number of casual browsers who come across an article and decide they’d like to read it, a price of $8.80 will almost certainly serve as a complete deterrent. It doesn’t make any obvious sense given that the marginal cost of allowing articles to be downloaded is zero and the extra revenue is money they otherwise simply won’t receive. Fifty cents or a dollar, or two dollars at most would surely be much more sensible.

As for News and Fairfax,  I have no idea why they don’t try a casual download micropayments option.  Anyone want to venture an explanation?

Sorry, Jon: How political interviews should work

Last week I was ready to write off ABC Melbourne interviewer Jon Faine for ill-judged rudeness and inadequate research. Now he’s gone and redeemed himself with a Tony Abbott interview.

Faine at his best is smartly, aggressively prosecutorial without actually being rude. Abbott at his best takes questions seriously and tell people what he thinks. They were both (mostly) at their best here, and the result was an interview that reminded me of many of Abbott’s good points even while reinforcing my view that he doesn’t present convincing responses about the economy.

The interview’s single best point is that Faine challenges Abbott about quantities. Asked about a string of high-profile job losses, Abbott starts to explain the claimed impact of the carbon tax. Faine pulls him up, noting that the high value of the Australian dollar is more important to firms like Qantas. Abbott responds coolly that while he accepts the carbon tax is not the only factor in these companies’ problems, it is a big problem. Faine asks him to address issues other than the carbon tax, and Abbott’s response is to start talking about cutting government waste. “If you succeeded in abolishing every single instance of waste in the federal government,” asks Faine, “what effect do you think that would actually have on the Australian dollar and interest rates?” Abbott says he’ll leave the modelling to the experts. Faine argues that most economists think it would make a minimal difference, and that the real issue is the mining industry’s effects on other sectors.

Note to journalists: keep asking not just what good a policy would do, but how much good it would do.

Abbott sounds tired (listen to him saying “good morning” at the start of the interview) and yet very much on his mettle here. The reason he does not come off better is that the weight of evidence suggests Faine is right: the commodity-bound $A and other outside influences are driving most of the job losses; removing the carbon tax and the mining tax and hoeing into “government waste” will, even on the best interpretation, make little improvement to national outcomes. I suspect Abbott knows this, too.

There’s a quality to this interview that is a credit to our democracy. It’s getting to the heart of important political claims and economic arguments. It’s intellectually confrontational discussion between two smart people who don’t very much like each other, all the better because both participants are working to keep a lid on their natural aggression.

Last week I said Faine was turning into a left-wing shock-jock. That was unfair. Sorry, Jon.

The RBA has not been rendered impotent by the Big Four (updated)

The bank debate now seems officially out of control. Increasingly foolish notions about banking are being served up day after day. One example: the developing meme that claims the banks have decided they will no longer be bound by official interest rate policy.

One morning last week I listened to ABC’s Melbourne local radio presenter, Jon Faine, beat up the banking industry’s official spokesman, Steven Münchenberg, on radio (audio here). Münchenberg could well be Australia’s King Of Making Difficult Arguments Sound Reasonable, but Faine is fast turning into Australia’s One And Only Left-Wing Shock-Jock, and the whole thing quickly became pretty awful to listen to. Its worst awfulness was that Faine kept insisting that the banks were now rendering government and Reserve Bank policy impotent. By deciding to react to rising overseas funding costs by raising their rates, he claimed, the banks were saying: “we will decide what’s best for the Australian economy; we won’t let the Reserve Bank decide what’s best for the Australian economy”. “It nobbles the government’s main strategy for trying to in some ways address inflation and therefore control what goes on in parts of Australia”s economic activity,” Faine declared, in a tone that suggested he knew exactly what he was talking about.

If Faine were right, this would be a huge problem for macroeconomic management in Australia. Thankfully, it’s populist blather. As a couple of Faine’s phrases disclose, he has little idea about how or why the Reserve Bank conducts monetary policy. If Faine really believes it … Continue reading

The Independent Media Inquiry: Six impossible things by February 28th

Right now Ray Finkelstein and Matthew Ricketson, the two members of the federal government’s Independent Media Inquiry, are trying to finish off their report to the government. It’s due by 28 February.

Writing these reports is frequently difficult, but Finkelstein and Ricketson have a particularly intriguing task. It’s more difficult because they clearly want to rein in a few of traditional media’s worst excesses – and they want to do it just at a time when that traditional media is shrinking in importance in the face of an Internet-driven explosion of information availability:

  1. Finkelstein and Ricketson have to examine what the terms of reference call “the effectiveness of the current media codes of practice in Australia”. That’s tough enough on its own, because it’s hard to think of a more effective system which isn’t also more restrictive of freedom of speech. The head of Curtin University’s journalism department, Dr Joseph Fernandez, has made this point well – see the transcript of his evidence here. Fernandez perhaps understands these issues clearly because he spent 14 years editing newspapers in Malaysia, a country where editors face real experience of freedom-of-expression issues.
  2. They must examine the codes of practice “in light of technological change that is leading to the migration of print media to digital and online platforms”. Their problem here is that technological change is leading to an explosion of content that undermines the case for even existing restrictions on publishers. This is a point that Ian Rogers and I have tried to make at length in WorkDay Media’s submission to the inquiry. Traditional media had a level of oligopoly power over information distribution. These days anyone can publish. There is no longer any such thing as “the media” – rather, there is a huge and messy range of information forms, sources and channels with different levels of reach, frequency, engagement, audience trust and motivation. This is great for citizens: the “marketplace of ideas” has never been closer to being fully realised. But it’s bad for traditional publishers – and for aspiring regulators.
  3. They must assess “the impact of this technological change on the business model that has supported the investment by traditional media organisations in quality journalism and the production of news”.  For anyone who pulls the economics of media apart, the answer is pretty obvious: printed newspapers mostly won’t survive. They are losing advertisers and readers to a fundamentally more attractive and efficient Internet. The media analyst Roger Colman calculates that “all metropolitan newspapers in print editions will be unprofitable, definitely, by 2020″. But a surprising number of people don’t want to say this. And if Finkelstein and Ricketson do say it, they will instantly raise the question: “so why are we bothering about extra regulation of print media now?”.
  4. They must figure out how investment in quality journalism ”can be supported, and diversity enhanced, in the changed media environment”. This is an interesting question. But as Ian Rogers and I have argued, the answer is less obvious than many people think. The media and those who analyse it are constantly in danger of over-estimating traditional print media journalism’s contribution to the world, and underestimating the benefits of the information availability explosion which the Internet is bringing us.
  5. They must look at “ways of substantially strengthening the independence and effectiveness of the Australian Press Council, including in relation to online publications”. The ABC’s Jonathan Holmes has predicted that the inquiry will push from a stronger Press Council with more powers and a much broader remit. And that will bring us back to the inquiry’s fundamental problem: it seems to want a more activist government media body just at the time when technology is making traditional media of all sorts less dominant and undermining the case for media regulation.
  6. They will feel pressure to come up with a solution that fits in with the interim report of the Convergence Review, which has decided the inconsistency of Australia media regulations should be addressed by a system of regulating equally all members of a vaguely-defined group called “content services enterprises”. These firms’ content would be subjected to a public-interest test. The firms covered would include television, radio, newspapers and online outlets – which means print and online journalism would face new restrictions. Finkelstein and Ricketson are at least awake to the freedom-of-expression minefield that such a law would sow. As Jonathan Holmes again points out,  the convergence review’s authors seem largely, weirdly, oblivious to the whole issue.

The Independent Media Inquiry could sensibly suggest that a voluntary body provide reputation indicators for online and offline media. That’s the solution recommended by Monash University’s Dr Johan Lidberg. (The Council could also make it easier for small online media organisations to join.)

But if the inquiry recommends the Press Council or a new media super-regulator starts regulating a much wider group of reporters and commenters, and government follows that recommendation, three things will happen. The council  will be quickly overwhelmed, it will be forced to make impossible judgments, and it will eventually become a joke.

[Update: An hour after first posting, I gave in to the impulse to properly honour Lewis Carroll by adding a sixth point, on the Convergence Review.]

Journalists as truth vigilantes?

When New York Times public editor Arthur Brisbane asked whether Times reporters should challenge the ‘facts’ asserted by the newsmakers they write about a large majority of readers responded: "yes, you moron, The Times should check facts and print the truth." That’s pretty much how John Quiggin responded too. But it’s actually a more difficult question than it seems.

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In (sort of) defence of The Australian

With the Media Inquiry in full swing and the Greens’ Bob Brown complaining loudly about News’s lack of fairness and accuracy, now might be a good time to travel back in time 20 years. Let’s visit another era when a powerful paper was unashamedly boosting one side of politics – the left.

In 1992, Joan Kirner’s government was in its dying days: state government debt had ballooned, and many ministers seemed frequently to be denying reality. One newspaper, however, resisted the consensus that change was needed. The Age stuck by Kirner, took its initiatives seriously, derided the government’s critics and Opposition Leader Jeff Kennett in particular. Some of its best journalists, on beats like national politics and business, looked on in despair. But the state reporters and commentators would not be swayed. Balance consisted of criticising the Kirner government from the left as much as from the right.

The Age had many fine journalists in that era, but working on state issues there sometimes had an air of unreality. When Kennett won the 1992 election in a landslide, some of the paper’s reporters seemed not quite to believe it had happened. Only one of the paper’s Melbourne-based political journalists – the cheerfully professional Sue Neales – appeared to have cultivated contacts within the Coalition. ALP reformers like John Brumby thought the Cain/Kirner government had stuffed up; quite a few at The Age did not. On my third day working for the paper in Melbourne in 1993, I turned down a request from a news editor to write an opinion piece explaining that the new government’s budgetary tightening was unnecessary and dangerous. When Kennett’s initiatives succeeded – he ran one of the most successful privatisation processes ever – many at The Age seemed determined to ignore them. Steve Bracks and John Brumby knew better; on assuming government, they kept the best of the Kennett government reforms firmly in place.

Alan Kohler, appointed editor in 1992 to bring the paper back to a more centrist line, struggled against the power of the paper’s welded-on sympathy for the left. Kohler’s successor, Bruce Guthrie, an aggressive newsman, made Kennett the target of much of his aggression.

The point is not that The Australian’s frenzied campaigning against the current federal government is warranted. (I don’t think it is, and neither do many journalists at The Australian.) It’s not even that The Age’s approach in the early 1990s damaged democracy (the News-owned Herald-Sun was pro-Kennett, and frequently manically so, throughout this period). The point is simply that newspapers have campaigned against governments at regular intervals in Australian history, and campaigned at least as hard as The Australian is campaigning against the federal government now. If a newspaper or an owner has a duty to be even-handed, no-one noticed in the early 1990s. Certainly not Bob Brown.