Who Pays for Journalism?Principles of NewsProfessor Neil Foote

Chapter 4, Principles of American Journalism

What is the “business of journalism”?• Uphold our democracy?• Protect the First Amendment? • News?• Advertising?• Distribution?• Technology?• Access?

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Media’s EvolutionThe Old Days Web 1.0 Web 2.0

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The

Old

Days (circa 1946)

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5New York Times Front Page: 1982 USA Today – First Edition 1982“The Nation’s Newspaper”

USA Today: The Reaction

“In 1981, when we announced it, most critics said we were crazy. They wrote our obit before we were born.“In 1982, after we published Vo. 1, No. 1 on September 15, 1982, many said we had aborted on the launchpad.“The whole idea was simply too big and too bold for the newspaper establishment club and the journalism critics to accept.”-- Al Neuharth, the late founder, USA Today & Gannett Corporation Chair.(p. 106, Confessions of a SOB)

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USA Today: The Reaction cont.

• “A national newspaper so informative and entertaining and enjoyable that it would grab millions of readers, including many of the television generation who were then nonreaders.”

-- Al Neuharth, the late founder, USA Today & Gannett Corporation Chair (p. 107, Confessions of a SOB.)

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USA Today: The Reaction cont.

• “A newspaper so differ, so advance in design and appearance and content that it would pull the rest of the industry into the twenty-first century, albeit kicking and screaming.

• “We’ll reinvent the newspaper.”-- Al Neuharth, the late founder, USA

Today & Gannett Corporation Chair (p. 107, Confessions of a SOB.) 8

Today

Tampa Tribune

WFLA-TV & TBO.com

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Radio’s First Newscast

1920 – Radio staff of the Detroit News:

Source: http://www.wired.com/thisdayintech/2010/08/0831first-radio-news-broadcast/

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Radio “Goes Commercial”

1920 The Joseph Horne department store in Pittsburgh advertises ready-made radio receivers that can pick up a local broadcast station.

Source: http://www.wired.com/science/discoveries/news/2008/09/dayintech_0929

Westinghouse, Pittsburgh, PA: In 1922, 30 radio stations were in operation in the United States, and 100,000 consumer radios were sold. Just a year later, 556 stations were on the air and half-a-million receivers were sold.

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60 Years of TV News

NBC News

• http://www.youtube.com/watch?v=mFvTrGDTCYU

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CBS / Walter CronkiteSept. 2, 1963 – Half-Hour News

https://www.youtube.com/watch?v=UYR8w7Xzxxs

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CNN’s First Broadcast• June 1st, 1980: http://www.youtube.com/watch?v=dqDopY5dMD8

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Number of Years to Reach a 50 Percent Penetration of U.S. Households

Technology / Medium Years

Newspapers 100+

Telephone 70

Phonograph 55

Cable Television 39

Personal Computer 19

Color Television 15

Radio 9

Broadband Internet 9

Internet 7

Tablets 7

Source: Part 1, The Changing Media Landscape, p. 54, “Converging Media”

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Inte

rnet

Time Shifting Mobility

Imm

edia

cyChangin

g Dem

os

Ad D

eliv

eryDistribution

Reporting

Methods 16

Traditional Media

17SOURCE: http://visualeconsite.s3.amazonaws.com/wp-content/uploads/2008/02/history-of-products.gif

What’s Going On?

• Anytime, anywhere on any deviceInsatiable desire for information

• Time-shiftingChanges in Lifestyles

• Methods of distribution• Devices – Smartphones, tablets

Exponential growth in technology

• Blogs, Facebook, TwitterContent CreationEverywhere/Everybody

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What is ‘media’?

•Mass Media:• Sending and receiving messages on a

massive scale

•NEWS Media• Sending and receiving NEWS

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Theoretical Framework•Characteristics of media economy•Ownership: Who Owns What• Structure

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Ownership Patterns

• Publicly traded companies:• Disney, Viacom, Comcast, Gannet, New York Times,

Belo Corporation

• Privately held• Journal Register, New York Daily News, Boston

Globe,

•Public-Private• NPR, BBC•Government Owned• Voice of America

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Key issues• Contrast of market and public sphere models• Assumptions• Advantages of market model• Economies of scale• Horizontal and vertical integration

• Critique of market model by public sphere model• Concentration of ownership• Dual-product model

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Market Model Public Sphere

How are media conceptualized?

Private companies selling products

Public resources serving the public

What is the primary purpose of the media?

Generate profits for owners and stockholders

Promote active citizenship via information, education and social integration

How are audiences addressed?

As consumer As citizens

What are the media encouraging people to do?

Enjoy themselves, vie ads and buy products

Learn about their world and be active citizens

What is the public interest?

Whatever is popular Diverse, substantive and innovative content, even if not always popular

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Market Model Public Sphere

What is role of diversity and innovation?

Innovation can be a threat to profitable, standardized formulas. Diversity can be a strategy for reaching niche markets.

Innovation is central to engaging citizens. Diversity is central to media’s mission of representing the range of the public’s views and tastes.

How is regulation perceived?

Mostly seen as interfering with market processes.

Useful tool in protecting the public interest

To whom are media ultimately accountable?

Owners and shareholders

The public and government representatives

How is success measured?

Profits Serving the public interest

Source: David Croteau and William Hoynes, The Business of Media: Corporate and the Public Interest, Pine Forge Press, 2001, p. 37.

Structure of Media Markets

• Daniel C. Hallin and Paolo Mancini: “Comparing Media Systems: Three Models of media and Politics”• Development of the “mass press”• The rate of newspaper circulation. How

much is the circulation the newspaper.• Newspaper-readership relationship. It

defines what the ratio of mass or elite audience is.

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Structure of Media Markets

• Relative importance of newspapers and television as sources of news• Ratio of local, regional, and national

newspapers• Regional or linguistic segmentation of

media markets

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Contrasts to consider

• Ownership• Commercial versus Noncommercial

• Orientation• Market versus Public

• Primary Goal• Profit versus Service

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Commercial ownership

• Not owned by government• Operate as for-profit business• Owners can be individuals, families

or stockholders•Media monopolies evolve to media

oligopoly

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Media Oligopoly

•A marketplace in which media ownership and diversity are severely limited and the actions of any single media group substantially affect its competitors, including determining the content and price of media products for both consumers and advertisers. 29

Source: Chapter 2, Media Literacy in the Digital Age, p. 51, Converging Media

Market Driven v. Public

Market• Unregulated supply

and demand• Unregulated

ownership• Media like all other

products• Consumer is key

Public• Supply and demand

can’t meet all needs• Government has a

role• Media not like all

other products• Citizen is key

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Driving the Changes

ECONOMYDeclining

Profit Margins

AUDIENCEChanging Behaviors

ADVERTISERSIncreased Options

TECHNOLOGYRise of Digital

Media

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Primary Goal

Profit

PublicService

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Market advantages

Promote:• Efficiency• Responsiveness• Flexibility• Innovation

Markets can deliver media like any other product

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Market structures characterized by:•Number of owners•Product diversity•Barriers to entry•Vertical and horizontal integration•Concentration of ownership

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How does it offer those advantages?• Economies of scale• Horizontal integration• Vertical integration

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Horizontal Integration

•When a single large media corporation owns a number of different kinds of media products or outlets.•E.g. The Hearst Corporation

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Vertical Integration

•When a media corporation owns companies involved in different phases of the media production process – creating media products, distributing them, showing them. •E.g Comcast 37

Examples: Economies of Scale

• Hearst Corporation• Horizontal Integration• 15 newspapers, 20 magazines (300 int’l

editions, including Cosmo, ELLE, Seventeen, Car and Driver), 29 television stations

http://www.cjr.org/resources/?c=hearst

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Examples: Economies of Scale

• Comcast• Vertical integration: TV, Cable, Internet,

Programming• 22.0 million video customers, 19.4 million

high-speed Internet customers, and 10.0 million voice customers• NBC Universal, Telemundo• Weather Channel, Bravo, SyFy, USA, Golf

Channel, NBC Sports, E! Online• http://www.cjr.org/resources/?c=comcast

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Examples: Economies of Scale

• Disney Corporation• Horizontal and vertical integration• ABC, ESPN, Disney World, Disneyland,

Disney Cruise Buena Vista Pictures, Lucas Film, Radio Disney, Local radio stations• http://www.cjr.org/resources/?c=disney

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Examples: Economies of Scale

• Gannett Corporation• Concentration of ownership• 82 daily newspapers, including USA Today• 200 weekly publications• 23 Television stations• Numerous websites• http://www.cjr.org/resources/?c=gannett

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Examples: Economies of Scale

• Clear Channel• Concentration of ownership • Reaches 243 million monthly listeners via

radio • 150 cities through 850 owned radio

stations in the U.S., as well as more than 140 stations in New Zealand and Australia• http://www.cjr.org/resources/?c=

clearchannel42

Competition

•Without it, no incentive to… • improve product• keep prices attractive• Innovate• Consolidation has thwarted innovation,

fueled complacency•Allowed more noble, agile smaller

players into the marketplace43

Media consolidation

•What’s its impact?• Let’s listen to Sen. Maria Cantrell ask

questions of Thomas Wheeler, nominee for chair, Federal Communications Commission• https://www.youtube.com/watch?v=

p8AfKrGgcLs

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Government regulation• Government intervention (regulation) can

serve the market where competition is lacking.• Fueled growth, standardization;• All digital signals in 2009, fueling HD TV• FCC: Federal Communications Commission• FTC: Federal Trade Commission

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Public sphere model

• News media a social space for public dialogue, which needs:• Free-flowing, public interest information• Citizen participation• Diversity of ideas and voices

Markets are limited in their ability to provide those things.

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Why is the market limited?

• Markets can be undemocratic• $1 = 1 vote

• Unequal access to marketplace• Amoral • Bad content often cheap as well as popular

• Markets don’t necessarily meet social needs• Market success may or may not = political or

cultural success

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Market logic: Media as Product

People treated as consumers not citizens

Produce economic, not civic, benefits

“Toaster with

pictures”

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From the public perspective:

•Market OK for media consumers, not so much for media citizens•Media are resources for citizenship, not

just entertainment•Media have unique role in democracy,

recognized in US legal protections

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Dual-product model

Media content Audience Advertisers

Media: • “Selling” programming to your viewers• “Selling” viewers’ attention to advertisers

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Summary: Conflicting logics

Market• Private companies selling

products• Purpose is to generate

profits• The public interest is

whatever is popular• Accountable to owners

Public• Public resources serving

the public• Purpose is to promote

citizenship• The public interest is

good content, even if unpopular• Accountable to the

public52

Media Ownership: The Trilogy

• Competition• Localism• Diversity (of voices, ownership)

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Old School • Display ads• Classified ads• Auto• Real Estate• Jobs

• Subscriptions• Suburban sections• Inserts• Coupons• Direct mail• Special Sections

New School• Paywalls• Nonprofit• Hyperlocal• Banner ads• Cost Per Click• Cost Per Action• Search• Events• E-books• Mobile• Tablet

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Adapt or Die

YOUR QUESTION OF THE DAY:

• Some say profits and good journalism are constantly in conflict. Given the economic problems of traditional media today, consolidation has become a solution for survival.• Is consolidation of media good or bad for

media?•What impact does advertising you see in

today’s news coverage? Programming? 55

The Media Who Owns What

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/

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Source: http://www.pbs.org/wgbh/pages/frontline/shows/cool/giants/