The future of the news in the digital era
(With grateful thanks to Kay McCulloch, Executive Assistant at the CBI, for all her ideas and research)
Let me start by going back forty years to the newspaper Harold Wincott knew. Then, as now, large chunks of the Financial Times were given over to numbers and data. But there was one big difference.
Much of this material was available to a wide audience only through the pages of the FT. And a surprising amount of it was exclusive.
Some examples. Around half a dozen reporters would spend most of their day on the floor of the old stock exchange, chatting up the market makers and noting down prices on long strips of cardboard. In the days before a central pricing system, the FT could boast that the share prices it published were more accurate and up-to-date than anything else available.
There were occasional hazards, though. One dreadful night, the messenger bringing the vital data back to be printed fell off his bike on Throgmorton Street, and most of the cardboard strips were deposited in a puddle. All hands to the pump to decipher the soggy mess when they finally made it back to Bracken House.
Another example: every week, the FT would publish a table of the world value of the pound: everything from Papua New Guinea to Iceland. For all I know, it still does. The difference then was that the data took four days to collect and calculate - and it was unique. Copy sales picked up noticeably on a Tuesday, as luckless clerks around the country clipped out the table and pasted it up in the office records.
Company results were, of course, available in other publications - but not in the detail that the FT provided. So whenever the printers went on strike - which was often - a catch-up edition would be published to fill in the blanks once the unions had been bribed to return to work.
You’d find a copy of the FT in most clearing bank branches: it was the only way then available for customers to check out all their unit trust prices. And advertising volumes would be boosted by helpful regulations - for example, the rule that said new issue prospectuses had to be published in full in a national newspaper. The FT invariably picked up this business, with many full-page ads devoted to each offering.
In this way, the paper was a collection of monopoly or near monopoly information: streams of numbers that were of interest only to a limited number of readers - but of great value to them. Wincott and his colleagues provided the icing on the cake, and in his case it was particularly rich and enjoyable.
There was only one problem. Just about all these monopoly rents were siphoned off by the printers: in a good year, the paper made a small profit and in a bad year - when the troops were restless - it made a small loss. There was no scope for innovation, since any change was subject to endless and expensive negotiations with the unions.
In most respects, however, it was a very enjoyable life - provided you weren’t a manager.
Then, in the mid 80’s, everything changed.
First, the print unions were blown out of the water by Rupert Murdoch’s bold move to Wapping. The lead furnace which spewed out hot metal every night in the FT’s print works near St Paul’s was turned off, and the digital era was under way.
Second, the Big Bang brought competition and much fuller price disclosure to the City of London. Reporters were no longer needed on the floor of the Stock Exchange: indeed pretty soon the floor itself had disappeared. All those exclusive prices were now just a commodity item.
Third, competition from all kinds of other publications began to intensify. From print newspapers, especially after the launch of the Independent in 1987. From wire services, with Reuters and Bloomberg’s battling to win customers by offering more and more competitive products.
And then - with accelerating force from the 1990s - came the Internet, offering its infinite capacity and updated news available around the clock.
The end result: much of the material published in Harold Wincott’s Financial Times is now available more or less in real time, and for free.
The FT’s business model has been turned on its head - and so has that of most other news organisations. In print, every publication has had to rethink its role in order to stay in business, whether it’s a paper of record like the Times or a specialist number like the sporting pink.
Television broadcasters have had to adjust to a world in which viewers can access not four channels, but 400. Radio and TV news is now available on multiple channels around the clock.
More and more of us are spending time trawling the internet, which has turned out to be mean less time for reading the papers or watching the news.
And the process is only just getting under way. As broadband and wireless connections become more ubiquitous and more powerful, the scope for innovation and change will multiply.
For some people, this revolution in the way that people relate to the news is seriously threatening - a potential danger not just to traditional media organisations but even – as I will suggest later - to the very basis of our democracy.
For others, it represents freedom: a decisive break away from the old media oligopoly into a world of unlimited information and free access to ideas.
This is the theme of my talk tonight. In particular, I’d like to address three questions.
Was the Economist right to lead its front page last month with the question: Who killed the newspaper? Or do print newspapers still have a future in this digital world?
Second, what if any are the broader political consequences of this radical shift in the way that most of us learn about what’s happening?
And third, can we rely on market forces to deliver an informed citizenry in the future? Or is there a risk that we will see a growing underclass of people who are totally ignorant of what’s going on in the world?
I’m going to focus my remarks mainly on newspapers, because that’s what I know best, and mainly on the US. As I’ll explain, the structure of the news media is very different on either side of the Atlantic. But as is so often the case, there are better data available in the US. This is in good measure because Americans care a lot more about the role of the media than we do, and are ready to invest in surveys about its impact on public life.
And I’m going to suggest that there are strong messages to be drawn from the changes that are taking place in the US today for what might happen to the UK tomorrow.
And we have my friend Paul Steiger, managing editor of the Wall Street Journal, to put things right when I go wrong.
Newspaper circulation has been gently declining in the US for decades: indeed, when measured by household penetration, the market peaked in the 1920s.
But if the pundits are to be believed, business conditions have changed dramatically for the worse in the past year or two. In a triumph of straight-line extrapolation, one well-regarded observer has gone so far as to predict that the first quarter of 2043 will mark the death of newsprint in America – the moment when the last scrumpled-up copy will disappear into the waste paper basket.
Why all the gloom?
The answer is that advertising volumes and copy sales, the lifeblood of the industry, are both under threat.
The decline in circulation was masked for many years by rising advertising rates. From 1975 to 1990, they rose by 253 per cent in the US, compared with a 141 per cent increase in the consumer price index. But charging more to advertisers for delivering a smaller audience is not a sustainable strategy, especially when the whole advertising proposition is being challenged by new media.
The first big challenge came from on-line publishers of classified advertising - mainly jobs ads offered at much lower prices than available on traditional media. That took away a chunk of business: McKinsey has estimated that between 2001 and 2004, online players like Monster and Realtor.com captured around 5 per cent of the newspapers’ US market share.
Then came two killer competitors.
One was Craigslist, whose online classified listings are absolutely free except for job recruitment in some big cities. The maddening thing about founder Craig Newmark, so far as old-style publishers are concerned, is that he doesn’t seem to be very interested in making money.
Craigslist is now active in 190 cities in 35 countries, giving free and instant audiences to people who want to rent a house, sell a car, buy a ticket, find a partner – or to do more or less anything.
In San Francisco, home base of Craigslist, the service is estimated to have cost the San Francisco Chronicle $50m in 2004. On one estimate, a quarter of all print classified advertising will be lost to digital media in the next decade.
A much bigger threat comes from the search engine. Newspaper and broadcast advertising is notoriously inefficient: as someone once said: “Half my advertising is wasted: the trouble is, I don’t know which half.” Search engines offer the promise of dramatic improvements in the efficiency of advertising, by providing a direct link between advertisers and potential customers who have already shown an interest in their products or services.
About 50 per cent of all search queries are now linked to paid-for ads alongside the results which are relevant to the question. Last time I looked, Google alone boasted well over 225,000 unique advertising relationships. According to one consultant, paid search as an industry grew from a base in the low millions in the late 1990s to a figure of around $4bn a year ago, and will be a multiple of that figure by 2010.
In the good old days, a chunk of this money would have gone to the newspaper industry.
Somewhat belatedly, newspapers are now fighting back with their own on-line publications. In the first quarter of this year, advertising on US newspaper owned websites jumped by 35 per cent to over $600 million. But weighed down by the weakness of print, total advertising revenues – print and online – were only marginally higher in the period at $11 billion.
While advertising revenues sag, the long term weakness in circulation is also pulling down on revenues. Total sales of weekday newspapers in the US have declined by more than a tenth since 1990, and readership per copy has also fallen. In a survey this summer, just two fifths of Americans reported that they’d read a newspaper on the previous day, down from a half a decade ago.
Back in 1975, a different survey found that fully 71 per cent had read a paper on the previous day.
That’s bad enough. But what really puts the breeze up the publishers is the dreadful demographics of their readership. The younger you are, the less likely you are to read a newspaper. On one survey, just 24 per cent of 18 to 29 year olds said they read a newspaper. The proportion rises by age cohort: 58 per cent of people over 65 are newspaper readers.
According to another survey, 45 per cent of Americans between the ages of 18 to 34 said they saw a newspaper just a few times a month or less. Forty four per cent of the same group looked at a web portal every day.
And Americans are not picking up the newspaper reading habit as they grow older. Back in 1996, 70 per cent of people aged 65 or more were reading a paper on a typical day, compared with today’s figure of 58 per cent.
The growing availability of newspapers on line has helped to stem their loss of readership. But all but a handful of publications – of which the Wall Street Journal is the most distinguished example - give their content away for free and have to rely on online advertising for their revenues.
Free content, lower advertising rates and shorter attention spans: all this means that an online reader is worth much less to a publisher than someone who buys the newspaper. One analyst puts the annual value of a pair of regular online eyeballs at $20 to $25, compared with $360 for a print reader.
All this helps to explain the gloom now enveloping the newspaper industry in the US and elsewhere, and provides the context for that stark Economist cover story. Share prices are falling, and there is a siege mentality in newsrooms, with journalists being laid off everywhere.
The number of people employed in the US industry has fallen by a fifth since 1990. One of the fiercest cost cutters was Knight Ridder, the second biggest newspaper chain, but that didn’t save it from an attack by aggressive investors a year ago which broke up the business. Within the last few weeks, Tribune Company – owner of the Los Angeles Times, the Chicago Tribune and Newsday has also effectively put itself up for sale.
Earlier this year came the ultimate act of lese majeste, when Morgan Stanley Investment Management went public with its criticisms of the New York Times’ management, and called for an end to the dual voting structure which leaves control of the company with the Sulzberger family.
But it’s possible to overdo the gloom. Consider the other side of the story.
First, this remains a very profitable industry – average profit margins pushing 20 per cent in the US last year – which spins out lots of cash. In its last year as an independent company, Knight Ridder’s profit margin was a fat 19.3 per cent. With daily sales of 55 million copies and returns like this, the US newspaper business is going to be around for a long time to come.
Second, the overall circulation declines masks some healthier trends. In the US, the circulation declines over the last fifteen years can be attributed almost entirely to the evening papers – squeezed by lifestyle changes – whereas the mornings have fared very much better.
There are some indications that the long term decline in readership may have stabilised in recent years, with no significant change since 2002 in the number of people claiming to have read a paper on the previous day.
In the UK, by the way, circulation falls have largely been driven by the decline in mass market tabloids, as readers have found better ways of accessing sport, soft porn, and show biz stories. Circulation at the quality end has looked more robust.
Third, and a related point, print readers may be greying round the temples, but they remain very attractive to advertisers. The steepest declines in US readership have been among those who didn’t go to college. By contrast, the proportion of readers with post graduate degrees has risen in the past four years.
These tend to be the people with the jobs, and the money.
Fourth, it’s wrong to think that large numbers of people are deserting traditional media altogether in favour of the internet Of the 23 per cent of Americans who get news online in a given day, the vast majority also use other news sources, on which they spend more time than they do online. So far, at least, the internet has been a supplement, rather than a replacement, for most users.
Fifth, the internet has significantly broadened the reach of the major national newspapers. Only 2 per cent of US newsprint readers see the New York Times: 18 per cent of those who read a paper on line turn to the grey lady.
And these people are again attractive to advertisers. Nearly three quarters of the visitors to Washintonpost.com have annual incomes of $75,000 or more, compared with around three fifths for the print version.
Finally, publishers around the world have started to innovate – often for the first time in generations. Some, like the Wall Street Journal or the Guardian, are investing heavily in new printing plant to improve their offering to advertisers and raise their appeal to readers. The Journal has also started a Saturday edition, in a bid to attract new readers and to work its assets harder. Others, like the Daily Telegraph, are thinking of new products and services to offer their existing audiences.
The other big innovation is the explosive competition in the market for free dailies, nearly 30 million of which are now being printed in weekdays around the world. The nose-to-nose battle on the streets of London between the Murdoch and the Rothermere press may shock newspaper traditionalists, but it’s hard to reconcile with the notion of a dying industry.
The big question is not about whether newspapers will continue to exist in hard copy form into the foreseeable future. Many if not most of them clearly will. Television changed newspapers, by replacing them as the primary news source for most people, but it did not kill them. The same will be true of the internet.
The important question is not about survival. It’s about what kind of service newspapers will provide to the public as they adapt their business model – and with it their editorial content – to a digital world and a much more competitive environment.
And the reason this matters so much from the public interest viewpoint is that it’s not just newspapers that are going through a process of painful transformation to adapt to a digital era. The same applies with at least as much force to all other forms of traditional media – especially television and radio news broadcasting.
So this leads me on to my second big question, about the broader policy consequences arising from these big changes in the way that most of us learn what’s happening in the world.
In the words of one commentator, “The glory of the newspaper business in the United States used to be its ability to match its success as a business with self-conscious attention to its social service mission.”
With little in the way of national competition, publishers reaped large returns from their domination of big metropolitan areas or regions. And they could afford to share some of those returns with their readers, by substantial investment in editorial and a sense that their mission was not driven by need to maximise profits.
Papers like the Washington Post, the New York Times and the Los Angeles Times remained in family ownership for generations, and had few reasons to worry too much about budgets. When Knight Newspapers finally went public in 1969, chairman John S Knight told the bankers that “as long as I have anything to do with it we are going to run the newspapers. We are going to spend money sometimes that the bankers wouldn’t understand why, for future gains, and we do not intend to be regulated or directed by them in any way.”
The poor man must be spinning in his grave at what’s happened to his newspaper chain in recent years.
The result was, at least by UK standards, some very lavish editorial budgets. A dozen years ago, for example, the Philadelphia Inquirer had bureaux in Moscow, London, Rome, Jerusalem, South Africa, New Delhi and Berlin. By the time it changed hands a year ago, it was only left with Jerusalem.
Just as the big US newspapers believed that they had a mission that somehow extended beyond their commercial performance, so the same was true of television network news. The classic example was Ed Murrow of CBS, a man who in the words of one historian was more of an educator than a journalist, and whose “legacy was a tradition of reporting from which the corporate officials, whatever their private feelings, simply could not back down”.
Back in 1980, ABC, CBS and NBC could each claim an audience of 16 to 19 million viewers for their nightly news shows. The network news really was a shared experience for millions of American families: “a nightly national séance”, in the words of one contemporary.
By 2005, however, their audiences were down to between 8 and 10 million each, and the median age of these viewers was around 60.
Part of their problem has been the arrival of a feisty newcomer in the shape of Rupert Murdoch’s Fox News. Founded in 1996, it overtook CNN in the ratings in the early 1990s, and it played right into the heart of America in the aftermath of 9/11.
Vice President Cheney is said to insist on Fox being the default channel in any hotel he visits: its stars include the likes of Colonel Oliver North, of Iran Contragate fame, and the fearsomely right wing Bill O’Reilly.
Fox’s audience share doubled between 2000 and 2004, and although it has slipped back somewhat since then, its average prime time viewership per week is still within sight of NBC’s.
Along with Fox came an explosion of cable networks, together with video games, a host of online offerings and mobile phone services to splinter viewer’s attention.
The days when the nation gathered round the water cooler to discuss what Murrow or Walter Cronkite had said the night before were gone forever.
Against this background, the networks have been trimming their budgets consistently over many years. One of the most obvious consequences is that their foreign news bureaux have all but disappeared.
Except in times of great crisis, American viewers are essentially not interested in what’s going on outside their country – and foreign coverage is very expensive. In 1970, CBS had 14 major foreign bureaux, ten-mini-bureaux and stringers in 44 countries. Today, it has eight foreign correspondents in just three bureaux.
The result is that viewers today are much more likely to learn about the latest health fad then they are about what’s going on inside Putin’s Russia. Soft stories of this type boost the ratings and are cheap to produce.
Just two weeks ago, NBC Universal took the process a significant stage further when it announced cuts that, in the words of the Wall Street Journal, marked “the starkest recognition yet that established TV networks can’t keep carrying the high costs they were accustomed to in earlier decades, when they faced less competition for viewers’ attention”,
The axe is to fall most immediately on the news division. The company itself remains profitable – it expects operating profits of $3 billion on sales of $16.5 billion in 2006. But it has been dragging down on the earnings of its parent, General Electric, in recent quarters and that is not the way to win fame and fortune in today’s environment.
In the words of the television group’s chief executive, NBC has had to recognise that news is “not an area of high growth”.
Two other developments have also helped to change the American news media.
In 1987, the Federal Communications Commission abolished the so called Fairness Doctrine, which had required TV and radio broadcast to cover controversial issues of interest to their communities and to do so in a bipartisan manner. The effect of this doctrine had largely been to keep political commentary off the air.
With that requirement gone, a new kind of voice began to be heard on the airwaves. In 1988, the world first heard of Rush Limbaugh, a dedicated enemy of what he calls liberalism and a man whose website refers to Guantanamo Bay as Club G’itmo, a plush country residence. Here’s a sense of the style:
Club G’itmo 4 Kids: Send your little jihadi to daycare in air-conditioned comfort! The food at Club G’itmo beats the taxpayer-provided lunches in the infidel’s schools. Plus, we provide students with all the tools needed to worship the god of their choice, free of charge!
Hundreds of stations now carry his show, which in turn has prompted a whole range of other right-wing talk show hosts to take to the air.
The second big development has been the rise of the blogger. For the uninitiated, these are websites like an online journal, typically including daily postings, an archive of past entries, and a space for reader comment.
Most of the tens of millions of blogs now available online have just one reader: the blogger him or herself. But some have substantial audiences, and quite a few commentators have switched from old media in a bid to capture their own equity – making themselves independent from the whims of publishers and editors.
Bloggers have certainly left their mark – particularly on what they derisively call the MSM – the mainstream media. They hounded Trent Lott out of his office as Senate Majority Leader over a racist remark that had been glossed over by MSM. They did the same to veteran news anchor Dan Rather, when they exposed that the documents he had used in a story on President Bush’s national guard service had been a fake.
They have also become part of mainstream politics. Howard Dean was the first to exploit the new medium properly when he came from nowhere in the 2003 campaign for the Democratic nomination. His “Blog for America” served as the nerve centre of his entire campaign and helped him both to raise large sums of money and to build real momentum in the early stages.
Bloggers provided vivid on the spot coverage of the Tsunami disaster, well ahead of the mainstream media, and bloggers from Baghdad have told stories that simply weren’t available to traditional reporters from their secure base in the Green zone.
So some of them get big audiences. According to one estimate, the four top blogs in the US now have a combined readership to match that of the New York Times.
Almost by definition, bloggers are partisan: you don’t look to them for a balanced view: on the one hand - and on the other. A good number of the most read are strongly right wing; others are in the liberal camp. What most of them share is their rage at the mainstream media. For example, several blogs are devoted solely to rubbishing the New York Times on a daily basis.
At a time when budgets are being slashed and staff laid off, the bloggers’ attacks have certainly added to the sense of gloom and crisis in America’s newsrooms.
But should the rest of us care about what is happening to traditional media?
It’s true that digital competition is biting into the editorial budgets – and so into the content – of traditional newspapers and broadcasters. But that same competition is providing a whole range of new products and services that have the potential to make us far better informed about the world than we ever were before.
For example. I’m a subscriber to the Wall Street Journal and the New York Times online: I no longer have to rely only on the editorial judgments of our own national newspapers, and when I choose to read them is a matter for me to decide – not the head printer. I can and do have direct access to the speeches, reports and data which the newspapers are writing about: if you are really interested in a subject, why not disintermediate the journalist altogether?
I’m not really into blogs, or audio and video downloads – but they are there if I feel like them. I can scan the world news headlines at my convenience, without having to wait for the next news broadcast or the evening paper. If I’m really keen, I can get them sent to my mobile phone.
The ability to exchange ideas and information freely around the world - these potentially are enormous benefits to society, of a kind that would have been unthinkable in Harold Wincott’s day.
However, this process of change – like any other - is not without risk. I’d like to mention two in particular.
The first is about the quality of journalism.
We are used to partisan coverage in the UK, where many of our newspapers have never been too concerned about the difference between news and comment, or have bothered to hide their party political bias. But we have had a powerful public news broadcaster with an obligation in its charter to provide the balance.
Not so in the US.
In the digital world, it is possible to rely only on those news sources which confirm your existing prejudices. You don’t even have to think that there might be another side to the story.
Thus Republicans are far more likely to watch the Fox News Channel than are Democrats, and Democrats are substantially more likely to watch network news than Republicans. A tenth of Republicans say they regularly listen to Rush Limbaugh: not surprisingly, almost no Democrats are willing to make the same admission.
This can have consequences. In a survey three years ago, four-fifths of Fox viewers believed one or more of the following: Iraq was directly involved in September 11; world opinion favoured the Iraq war; and weapons of mass destruction had already been discovered. Less than a quarter of the listeners and viewers of National Public Radio or PBS made the same mistake.
It’s hard to imagine that the venomous and destructive hostility between Republicans and Democrats which has been so visible in the US over the past decade has not been fed to some extent by the increasingly partisan tone of the media.
Moreover, it may be that the flood of round-the-clock news is damaging the cause of judicious journalism. The US media, taken as a whole, have not covered themselves with glory in the past few years. Self-inflicted wounds have played a part, such as the errors of judgment which cost the editor of the New York Times his job in 2003. Lack of self-confidence during a period of structural change might be another explanation.
On top of all this came the aggressive press management of a largely hostile White House, especially at the time of the second Iraq war. As with the Blair administration in the UK, the White House was determined to promote the view that any delay in invading the country could lead to nuclear Armageddon, and it is now clear that some of America’s most senior reporters were used either actively or passively to promote the approved plot line.
The war was, at least initially, presented on television as a cross between July 4 and Halloween night, with flags fluttering and no unpleasant imaged of mayhem and death. With a few distinguished exceptions, no-one seriously challenged the initial premise for the invasion, or drew attention until it was too late to the organisational chaos which followed the initial victory.
Frank Rich is a columnist on the New York Times who is deeply hostile to the Bush administration. You have to take account of this bias in reading his new polemic, a book called The Greatest Story ever Sold.
Still, I found myself brooding about his concluding paragraphs, where he suggests that worrying changes in the media started to affect US public life in the mid-1990s. I quote:
“That’s when CNN was joined by even more boisterous rival 24/7 cable networks, when the Internet became a mass medium, and when television news operations, by far the main source of news for Americans, were gobbled up by entertainment giants such as Disney, Viacom and Time Warner. While there has always been a strong entertainment component to TV news, that packaging was now omnipresent, shaping the coverage of stories from Washington scandals to Wall Street bubbles to child abductions to war – and around the clock, not just on evening news, the morning shows and the occasional network newsmagazine. In this new mediathon environment, drama counted more than judicious journalism; clear cut “evildoers” and patriots were prized over ambiguous characters who didn’t wear either black or white hats. Once-definable distinctions between truth and fiction were blurred more than ever before, as “reality” was redefined in news and prime-time entertainment alike.”
You don’t have to go the whole way with Rich to worry about the character of a changing news media, which is not certain of its future and which is absolutely preoccupied with audience figures.
The second of my two big risks is potentially more serious.
It’s true that there is an extraordinary cornucopia of ideas and knowledge available on line for those people who want to look for it.
But what about those people who are not willing or not able to make the effort?
There is already evidence that people with relatively modest educational attainments are simply tuning out of the news altogether. A few decades ago, you could hardly avoid exposure to the networks news or the evening newspaper.
Today, you can find a lot of other ways of entertaining yourself. And the risk as time passes is that we will see a steep decline in that crucial component of a democracy – the well-informed citizen.
A survey this summer by the Pew Research Center showed how news often takes a back seat to other daily activities for young Americans. For instance, 40 per cent of those under 30 had watched a movie at home the previous day, far more than read a newspaper, listened to radio news or went on line for news.
The most alarming figure was this. A quarter of all Americans with a high school education or less had taken in no news of any kind on the previous day, whether from television, newspapers, radio or the internet.
For college graduates, by contrast, the proportion fell to 11 per cent.
In his book, “Tuned out: Why Americans under 40 don’t follow the news,” David Mindich tracks the way young people have become progressively less informed about their world in recent decades.
He starts with a telling anecdote. Only 4 million of those aged 18 to 24 years old cast their vote in the 1998 midterm elections. By contrast, 24 million votes were cast, mainly by young people, in the 2003 final of American Idol, the reality talent show.
It’s not at all clear to me how market forces, left to themselves, will help to resolve this digital divide. What commercial interest would a news publisher have in seeking to engage a relatively unsophisticated and uninterested young person into what’s happening in the world? And as economic forces increasingly shape editorial judgments, how will we be able to develop a properly informed citizenry?
I think this is an alarming prospect.
There are no signs that US policymakers have any interest in this agenda, or serious concerns about my two big risks. But at least there is a growing debate within the media and academia about the changing role of news organisations and a lot of new research about the policy consequences. Americans worry about this kind of thing, which is at least a start.
What about the UK?
Commercial news organisations here have never had the lofty sense of purpose of their American counterparts, and nor have British journalists. They regard themselves cheerfully as hacks, and are pleased to swap stories of their saucy escapades.
That’s not just because they lack a first amendment. It’s also down to the fact that, taken as a whole, they have never been very profitable. Dominated by fiercely competitive national newspapers – 15 separate titles published every day - the press has not for the most part been able to afford grand ideas of civic responsibility.
Instead they have done their best to restrict competition by consolidating into a few holding companies. Today, the top five publishers control 90 per cent of the national newspaper market – an unhealthy degree of concentration by most measures.
Commercial television companies had public service responsibilities imposed upon them. But for many years the regulator also kept them separated on a regional basis, which meant they were too small to be powerful players in the marketplace. Independent Television News has been squeezed by the financial pressures on its holding companies, and by competition from digital channels, notably Sky.
What’s different about the UK, of course, is the existence of an enormous public sector broadcaster, the BBC, funded by a licence fee which brought in almost pounds 2.8 billion in 2003-04. Competing in a market place where market shares are being fragmented by rapidly increasing digital competition, the BBC’s relative strength is increasing year-by-year.
The prime justification for the licence fee has always been that a guaranteed level of funding has enabled the broadcaster to make long term commitments in the public interest, and free from political pressures.
But there are good reasons for challenging the view that an arrangement which made sense when the BBC was the only national broadcaster around is still the best option available today. As Terry Burns wrote in his report on the BBC charter:
·The fee is highly regressive, and bears down on low income families who anyway tend to spend less of their time watching and listening to BBC programming.
·It raises more than is necessary to fund public service broadcasting – that is, unless you believe that by definition all BBC productions come into this category.
·As the BBC seeks to hold onto its market share at a time when viewer choice is multiplying, it starts to behave in a way similar to broadcasters who fund themselves through commercial revenues.
Moreover, the existence of a state financed broadcaster curbs the opportunities for market-driven news providers. For example, the BBC’s 24-hour news service provides direct competition to Sky. And its highly successful news website makes life very hard for newspapers which are competing for the same audience and which are not supported by the BBC’s vast newsgathering resources.
There is a growing risk that the existence of such a powerful publicly funded broadcaster will enfeeble other news organisations in the UK, whatever their main channels of distribution.
What are the conclusions of all this?
Not that we should get rid of public service broadcasting. The US story suggests that the market cannot, by itself, be relied on to deliver balanced and comprehensive news reporting, or to stand up against over-mighty politicians. Whatever you might have thought of the BBC’s coverage of the Kelly affair, it certainly did not kow-tow in the face of extreme political pressure.
Public service funding may well also be the best way of addressing the digital news divide, which looks at least as big a threat in the UK as it does in the US. But it would be surprising if the BBC were to be the one organisation to emerge unscathed from this media maelstrom, and if there weren’t to be growing arguments for public funding to be distributed more widely among different news providers at a local as well as a national level in the future.
The digital revolution creates massive opportunities for new products and new services, many of them driven by market forces and others by growing armies of volunteers – bloggers, podcasters and the rest. This is unambiguously welcome.
But it also raises big public policy questions. These include the case for regulations, to support a balanced news agenda; for public investment – for example, to reach audiences who are not of interest to commercial publishers; and for a broader debate about the role and responsibilities of public service news.