When Reform Has No Bang And Barely A Whimper

What a difference a year makes. One year ago, when Communications Minister Helen Coonan released the discussion paper which was to become the September 2006 media reform package, was also coincidently the same day that Apple’s iTunes service released its first movie for download – High School Musical, a movie apparently popular with the tween set. iTunes has now sold 50 million TV shows. Apple started shipping their Apple TV, a device which delivers content downloaded from the iTunes service to the family television, in March this year.

The frenzied media commentary which greeted YouTube’s sale to Google in October for $US1.65 billion wasn’t all hyperbole. YouTube only opened for business a year prior, and, due to its popularity, it now plays a central role in modern political campaigns, public relations, and is at the centre of debate about copyright online. No television program with aspirations of greatness can ignore the contradictory importance of YouTube – success on the online social video networking site can mean enormous popularity, but also copyright infringement on a massive scale.

YouTube and iTunes are merely two of the largest services. Video downloading services, in different shades of legality, have sprouted up rapidly over the last twelve months, and are injecting themselves into media consumption habits across the globe. In 2004, an American study found that in the United States, consumers spent roughly 10 per cent of their leisure time online. With the increase of applications and bandwidth since then, that number is no doubt higher.

There are few serious commentators on the media who doubt that in the near or at least foreseeable future, new media will be as popular, important and influential as the traditional print, radio and television triangle was in the second half of the 20th century.

On the one hand, change of this dramatic nature isn’t new. The history of media and technology is scattered with examples of disruptive, radical innovations.

Numerous technological innovations have altered the way we consume, produce and interact with media. The transition in the 1960s and 1970s of magazine printing from the older rotary press to offset lithography dramatically reduced the cost of printing, resulting in the proliferation of hundreds of specialty publications, in contrast with the previously rather limited selection.

The history of popular music was shaped by the potent combination of the use of the FM band by independent broadcasters, and the emerging competition from television in the 1950s. Vinyl recordings, tapes, CDs and MP3s – and the devices they are played on – have further altered our relationship with popular music, and the content of the music itself.

Similarly, entrepreneurs have altered patterns of media consumption with existing technologies with innovative new business models. Charles Dickens serialised his novels in popular magazines, changing the nature and structure of his stories, and creating new market opportunities to great effect. The practise of block booking, where film studios bundled multiple films together to sell to theatres, buttressed the Hollywood studio system, until it was prohibited by the Hollywood Antitrust Case of 1948.

The history of media is change, not continuity.

The dynamism of technological innovation couldn’t be better contrasted than by the narrow approach taken by governments to media law and regulation. It is a consequence of the inertia of the political process that major regulatory changes can be enacted perhaps once a decade. When policy is made and reform is pursued it must be forward-looking enough to facilitate unexpected changes in the industry it is trying to regulate. By this measure the government’s 2006 media law reforms were a regrettable failure – after ten years of promises to liberalise Australia’s media regulation, the package passed in Parliament in October had no bang, and barely a whimper.

Minor adjustments to ownership rules, the introduction of two crippled “non-traditional TV” licences, loop-hole closing in anti-siphoning regulations, another delay of switchover to digital television – it is only by force of habit that the package was referred to by commentators as “reform”. Where large regulatory decisions changes were made, they went in the opposite direction. Regional and rural radio licensees ended 2006 staring down the barrel of a draconian array of new regulatory controls, designed to keep rural politicians on the air, rather than increase any level of local “diversity”.

The federal government’s reluctance to pursue any meaningful reform after such a long build up is most unfortunate. The laws which govern Australia’s media are a fragmentary web of protectionism and restriction. It is hard to beat the Productivity Commission’s characterisation of a regulatory framework that “reflects a history of political, technical, industrial, economic and social compromises. This legacy of quid pro quos has created a policy framework that is inward looking, anti-competitive and restrictive”.

These regulations rest on an outdated conceptual framework. They assume that there is a fixed pie of media content and media outlets – there can only be so many television or radio stations, for instance. The regulatory framework then slices up that pie to a number of operators, and ensures they don’t get in each other’s way.

But this model is entirely unsuited to the contemporary media landscape. Gone are the days when our consumption of news and opinion was constrained by the number of printers in the town, or broadcasters with licenses. An infinite range of news and opinion can be now gathered at almost no cost from the Internet, produced by professionals and, increasingly, amateurs.

This new availability of sources requires us to look carefully at what we mean by “diversity”. The left-wing political critique of the 2006 reforms centred on the notion that a free market in media would necessarily result in media monopolies – Australians ruled over by omnipotent media moguls, rather than their democratically elected politicians. It’s true that the vast bulk of media consumed by Australians is still clustered around these “traditional” owners – Fairfax and News Limited have the lions share of online readership for Australian news sources.

But the measure of diversity should not be an analysis of what everybody is currently reading or watching, but what is available for their consumption, should they choose to investigate outside of the Murdoch, Packer and Stokes empires. We should not only include sources likeOn Line Opinion, but also the Washington PostPravda, and the Borehamwood & Elstree Times. Diversity is a question of available choice, not a question of how best to stop everybody reading Murdoch’s tabloids.

This question about what constitutes true diversity pervades the debate over ownership regulation. The reflections of former FCC chairman Michael Powell on a similar debate about reform in the United States could easily apply to Australia:

Here’s the truth: the ownership debate is about nothing but content … [The ownership rules] became a stalking horse for a debate about the role of media in our society. … It was really an invitation for people with particular viewpoints to push for a thumb on the scale, for content in a direction that people preferred.

Luckily, little the government does will alter the inevitable migration of our media consumption to the Internet. But retaining the byzantine regulations which we have inherited punishes consumers by both privileging and restricting the traditional media outlets which have, until recently, been protected from full exposure to the market.

There are a range of specific reforms that can be adopted. Governments could take convergence seriously and being to harmonise regulations across networks – the regulations that apply to radio broadcasting should apply to television broadcasting, which should also in turn apply to web broadcasting and podcasts. Similarly, the use of the electromagnetic spectrum should be determined by the market – who owns it, what technologies utilise it, how many television and radio stations are broadcast on it, and so on.

But the biggest change needed is philosophical. There is no legitimate role for government in the entertainment business. Consumers determine what they want to watch on television, listen to on the radio, or browse on the Internet. The sooner policy-makers acknowledge this simple fact, the better off our media will be.