Media-Rule Horse Has Bolted

Communications Minister Helen Coonan’s attempts at policy reform have so far been conspicuous failures. Telstra’s fibre to the node network was scuttled by her requirement that Telstra build it and then give control over it to the regulator. And now what was already a timid “media reform” package has been watered down almost to the level of pointlessness.

The coalition’s proposed changes to media laws were obsolete on the day they were released. They were an attempt to deal policy into the frenzied technological change taking place in the unregulated parts of the media and telecommunications sector.

In March, the day the government released its media discussion paper, Apple released for download and purchase on its iTunes service High School Musical. The movie has been a huge success with the “tween” market (children between the ages of eight and 12). It cannot be seen at the cinemas, it’s available only on DVD and via the internet. Movie distributors had learnt the lesson from music distributors’ failure half a decade ago – consumers are migrating their entertainment onto the internet, and are happy to pay for the privilege.

This week we saw the final watering down of the media package and the sale of YouTube to Google – $US1.65 billion ($2.2 billion) for 67 employees and a website.

None of Apple, YouTube, Google or Microsoft made submissions or appeared at the Senate inquiry into the government’s media legislation. Telstra gave evidence only about the mobile television licence. These companies didn’t need to get involved in debates about old media. No reform package can stop the migration of consumers from traditional media into more exciting and more flexible formats.

Now, with the release of Telstra’s Next G network, the transition from old to new media is firmly under way. Certainly, the wireless network is slower than the scuttled fibre to the node network, but it doesn’t take much to happily stream a YouTube video onto a mobile phone. Next G speeds are already faster than those that many consumers have piped into their home, and are set to increase in speed tenfold.

When Prime Minister John Howard says media reform is only a second-order priority, he is more prescient than he realises. The creative storms of change will blow no matter what is in the Broadcasting Services Act.

The Holy Grail of modern communications has long been obvious: high-speed internet. If this is available on mobile devices, consumers can watch video from any service, read their email from any provider and browse any website with the same freedom they have in front of their computers at home. But Australia has a regulatory environment dramatically at odds with technological and cultural developments here and overseas.

What was the debate about? The “diversity” cry rings hollow – on the internet, an infinite array of content and opinion is available to anybody who cares to look. Online media services, still in their infancy, can deliver more diverse content than can be consumed in a lifetime.

But political debate about media ownership always ends up with politicians pontificating about the relative merits of media content. Genuine deregulation means that this decision would be made entirely by consumers. In a deregulated market, what people want on television or radio, people get.

By forcing local radio stations to broadcast a minimum of local content, the politicians say they know better than consumers what should be broadcast. It is an attempt to force consumers to pay for politicians’ public visibility – elsewhere this would be called corruption. By restricting the ability for stations to respond to consumer demand, the reform package condemns many independent broadcasters to failure.

Local media produces niche products that can be supplied by other vehicles. Whether product is supplied on the same radio transmitter as 50 years ago, or a podcast inaugurated 50 days ago, should be of no concern to legislators.

Outside the realm of government regulation, we have innovative, dynamic companies responsive to market demand. Within its reach, we have an industry being variously protected and attacked by flawed public policy and political manoeuvring. Unsurprisingly, audiences for unregulated new media are growing faster.

Traditional media still have a role. But when the government imposes new regulations and fails to strip away the old ones, that role is looking more and more perilous.

Opening statement to Commonwealth Standing Committee on Environment, Communications, Information Technology and the Arts inquiry into the Broadcasting Services Amendment (Media Ownership) Bill 2006

As well as being a research fellow with the Institute of Public Affairs, I am the editor of our magazine, the IPA Review. The Institute of Public Affairs is a public policy think tank based in Melbourne. It was founded in 1943. We believe in small government, private enterprise, the rule of law, representative democracy. It is our position that any media reform should be clearly and unambiguously directed towards liberalisation and deregulation. We say this because, in cases where there are many potential or actual suppliers of goods and services—which is clearly the case in media—markets are far more efficient providers than government bureaucracies.

Technological and commercial innovation have provided Australians with a multitude of choice in the information and entertainment content we consume, the way we receive it and display it and our capacity to store it for future consumption. Therefore, any regulatory rationale based on assumed scarcity of media content or delivery mechanisms is no longer valid.

The IPA welcomes changes to media ownership regulations. The removal of foreign ownership restrictions is long overdue. Similarly, the removal of cross-media ownership restrictions is welcome. After all, millions of Australians each day already access foreign owned media through the internet. This access does not seem to have harmed us and certainly has not reduced the output of Australian produced and managed media. However, we believe that the proposed reforms do not sufficiently tackle the problem. Given the wide variety of choice available to Australians, we feel there is no longer any convincing case to maintain media-specific competition and ownership regulations. Instead, the government could better rely on the general economy-wide merger and ownership regulations to ensure competition. The ownership of media assets is no more sensitive than the ownership of, say, railroad assets.

While we welcome the release of two new television stations, we regret the imposition of regulatory requirements on both A and B. There appears to be no justification for these restrictions. They merely represent the elite imposing its preferences on consumers, and government technocrats seeking to impose their preferences on the way technology develops. Unfortunately, these provisions illustrate clearly that the lesson has not been learned for centre of government failure in introducing new media technology. We strongly oppose the imposition of any regulation which attempts to enforce local content requirements, plans or anything else on regional or rural media services.

In conclusion, the government has been presented with an opportunity to genuinely reform this regressive regulatory framework that the Australian media has been burdened with for over a century. This reform package makes a few minor adjustments, however its practical effect is not as large as the public debate has made out. Furthermore, in many areas it represents a significant re-regulation of the sector. This does not mean that the reforms are without value. The removal of the cross-media ownership restriction, as absurd an ownership restriction as can be imagined, is welcome, as is foreign investment deregulation. Adjustments to the digital transition are long overdue. The package needs significant revision. However, the need for reform is clear and should not be abandoned. It is less bad than the status quo.

Only The Market Can Properly Reshape The Media

Robert Menzies despised television and stated privately that he hoped it would not be introduced during his government. Does Communications Minister Helen Coonan have a similar attitude towards the next radical media change?

Given the opportunity to robustly liberalise the regulatory environment that the Australian media has been subject to for over a century, the government has declined to act.

There are big entrenched media companies which have made large investment decisions based on the current framework, and the political reality is that genuine deregulation would have to be a slow and careful process. But instead of attempting to unwind our Byzantine media regulations, at whatever pace, the government’s media reforms do nothing more than add more rope.

For instance, the proposed auction of two additional swathes of spectrum should have been greeted with enthusiasm. Entrepreneurial companies which had won these new licences could have used them to deliver whatever services they perceived to be in demand.

Instead, the government has chosen to dictate to potential users the terms and conditions of their licences, terms and conditions which will not apply to existing users of broadcast spectrum. This “command and control” approach to economic management has been discredited in both theory and practise. It’s ill-suited to managing a limited and static array of services, and it’s doubly unsuited to manage the fast paced and high-risk communications and media industry.

It does, however, allow the government to claim credit, as the Communications Minister did this week, for any potential new services delivered within their strict framework. What Coonan fails to mention is the services that the government will not allow us to receive. To this end the government has invented two terms, “narrowcasting” and “datacasting”, defined not by what they can do, but what they cannot.

One of the channels to be auctioned is allowed to broadcast free-to-air, but not replicate traditional TV services. Why not?

The government is not a suitable body to predict the possibilities of and the demand for newer forms of media. Only a market unhindered by restriction is capable of doing so with any success.

Similar objections can be raised to the government’s proposal to replace one elaborate formula for media ownership restriction within a market with another elaborate formula. While touted as a grand liberalisation of ownership regulations, they are in fact, little more than minor adjustments. For advocates of genuine deregulation throughout the economy, this should be a disappointment.

Many critics of the reform proposals hinge their arguments upon the potential lessening of diversity that could be the result of consolidation within the industry.

It is absurd to argue that media diversity will decline without stringent checks on the ownership of broadcast media outlets. In no era in history has this been less true. While the internet has been justifiably praised in bringing alternative viewpoints and independent media outlets to the home, rapid technological improvements in seemingly mature industries like printing have increased in the last few decades the volume of magazines, newspapers and printed material manyfold.

Anybody who doubts that minority or niche voices will not get heard after genuine media reforms should consult the vast ethnic press, made possible by dramatically lower print production costs.

In fact, mergers between media organisations could have tangible benefits. A fully vertically integrated corporation, able to command world-wide news gathering and content production, may be able to produce a far better and diverse range of services.

The massive competitive pressure exerted upon existing media companies from the proliferating new media compels dramatic change, even in such seemingly dominant organisations as News Ltd. Rupert Murdoch’s recent acquisition of the social networking website MySpace is a case in point.

These gains are not guaranteed, however. The US market, after a rush of media consolidation in the 1990s as companies rushed to prepare for the digital era, has been beset by a series of failures and divestitures. AOL Time Warner has been shedding assets now that the financial gains expected from its highly publicised merger have not appeared. Viacom, Disney, Clear Channel, Knight-Ridder and many others have downsized or spun off companies in the last few years.

But these companies need the freedom to experiment, and fail, with new business models.

New media organisations are popular and influential, and will become more so. Governments of all stripes across the world are struggling to predict its significance. That is understandable – nobody has any inkling of how these changes will pan out.

But instead of indulging itself in public consultations and submission processes, commissioning reports and carefully releasing sections of the spectrum with highly prescriptive regulations, the government would be far better to leave the future of the Australian media up to the market.

There is no convincing reason why entrepreneurs, allowed to experiment with new technologies and business models, cannot amply deliver the services that Australian consumers demand now and into the future.

Submission to the Inquiry into the Broadcasting Services Amendment (Media Ownership) Bill 2006 and related bills

Introduction: Reform to the regulatory framework of the Australian media should be unambiguously directed towards liberalisation of the sector. It is important to place the relatively recent, and highly publicised changes in production, distribution and consumption of media made possible by communications technology in a context of long term and continuous radical media change. Technological and commercial innovation have provided Australians with a multitude of choice over the content we consume, the way we receive and display it, and our capacity to store it for future consumption. Not only this, but the cost of production has rapidly dropped for seemingly mature industries like print, which has allowed niche and specialist publications to flourish. Never before have Australians had access to so much information packaged in so many formats.

Available in PDF here.

Market The Massage, Not Media Moguls

The release of submissions to Communications Minister Helen Coonan’s media reform proposals merely confirm a few truisms about the debate over media ownership in Australia: The public is deeply ambivalent about the spectre of ownership concentration. And few commentators and organisations are willing to break the cycle of protectionism and regulation that has characterised the sector for the past century.

Much of the debate about the removal of cross-media ownership rules, and their proposed replacement – a minimum number of owners in each market – has missed the point. Competition law, rightly or wrongly, governs the sector to protect against monopolistic practices. But ownership regulations relating to broadcasting go beyond that to encourage structural diversity.

Why do we fear, as Senator Coonan’s media reform paper put it, “excessive ownership concentration”? An aim of the broadcasting law is the promotion of opinion diversity.

Access to this is one of the foremost assumptions of a democratic society. It is widely believed that to ensure people are adequately informed about their choices in a democracy, they require a wide range of information.

Given the large influence the media has on our democratic process, legislators fear a media mogul could unduly manipulate public opinion for their personal ends. With ownership limits, the Government tries to encourage “diversity”.

Unfortunately, we have not come far from the views of Robert Menzies who feared that “the most intimate form of propaganda known to modern science” could be controlled by “people who do not belong to this country”.

Senator Coonan has his spirit. Menzies was no lover of the free market and his Toryism is still reflected in the backward attitudes of the Liberal Party to media ownership.

The Government’s media changes will probably remove restrictions on foreign investment and ease cross-media ownership restrictions. While these changes go a small way to liberalising the industry, they do not challenge the widely held belief that moguls manipulate public opinion, to the detriment of Australia’s democracy.

Compare our relatively objective media with the highly partisan media of the 19th century and before.

Objectivity has not arisen because of ownership restrictions or the best efforts of legislators. Instead, it is a response to market demands through changing technology.

In the early 20th century, many media proprietors realised there was a greater market for a news media without overt partisanship. Technology in this period, from cheaper printing presses to radio and television, enabled them to capture that market. The notion of journalistic objectivity has been the result of these changes and consumer demand.

More recent changes in market structure could be pushing our broadcast media the other way. We often desire objectivity in reporting, but also enjoy reading highly partisan blogs or opinionated columnists.

Today’s proprietors face an explosion of technologies. Some are well appreciated, such as blogs on the internet. But some are not often recognised for how significantly they have changed viewing habits, such as the video recorder.

Despite their well-publicised views on political issues, the moguls, including Rupert Murdoch, have comparatively little influence compared with the all-powerful newspaper tycoons such as William Randolph Hearst and Lord Beaverbrook, who operated without substantial competition. Murdoch is no Citizen Kane.

Radical change over the past 30 years has inundated media companies with competition. The high capital costs that encouraged the media to package objectivity are being replaced by the extraordinarily low costs of cheap printing and the internet.

As any first-year marketing student will predict, media companies, big and small, are attempting to respond to this highly competitive environment by differentiating their product from competitors.

One effective way is the careful, studied introduction of political viewpoints.

Any assessment or assertion of bias in a media organisation has to take into account this fact – more often than not, bias is an intentional technique to attract and retain an audience.

The internet gives people interested in political ideas more viewpoints than they would be able consume in a lifetime.

We live in an age of information and opinion abundance, rather than one where we need to be wary of the undue influence of media tycoons.

The reality is that no ownership regulation is going to prevent media organisations from chasing markets they consider to be profitable. Legislators should treat the media no differently than any other industry – neutral and respectful of the services they offer consumers.

It is unfortunate the Government, and many of the contributors to the media reform consultations, do not believe that.

Media regulations need massive, radical reform, not minor tweaking

The latest proposals for media reform do nothing but reinforce the corporatist approach that the government has taken towards the industry. Designed to entrench incumbents and ‘future-proof’ them against competition, references to dramatic changes in media brought about by information technology are mere wrapping around minor regulatory tweaks. The discussion paper released in March, Meeting the Digital Challenge: Reforming Australia’s media in the digital age, has been greeted by much press and industry as a bold reform agenda for the sector, but the reality is that the government’s proposals do not even scratch the surface of the reforms which are desperately needed.

The Government’s reforms do no justice to the massive, sweeping changes faced by media in Australia and around the world.

In this field, few commentators, regulators and policy-makers shy away from the term ‘revolution’. If the word was not just as uniformly applicable to so many other industries whose business models are under siege from cheap, ubiquitous, and steadily more powerful computing and communications technologies, then it would no doubt be appropriate. Few, areas of economic activity — if any — are immune.

The histories of media content, delivery, and technology have been histories where radical change is the norm, not the exception. The twentieth century saw dramatic changes in the format, delivery and content of a huge range of media, from the amateur radio and recorded sound of its first decade to the MP3 of its last. Numerous technological innovations have altered the way we consume, produce and interact with media. The transition of magazine printing from the older rotary press to offset lithography in the 1960s and 1970s 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 a 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.

To a degree, the regulatory environment which has evolved has reflected the constantly mutating forms of its target. Ever since the ill-conceived ‘sealed set’ radio scheme — where, after a government-business conference in 1923, licensed stations would sell receivers locked so that they could only tune into the licensee’s station — there has been little attempt to allow the market to determine the topography of the Australian media terrain. Originating with a progressive-era pact between government and business for an orderly and restricted radio network, similar frameworks have been adapted for each new technology as it entered the market.

As the 2000 Productivity Commission report into broadcasting services aptly stated, the Australian media ‘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’.

In praise of stupidity

Traditional media are commonly viewed through the traditional vertical ‘silo’ model—separate, distinct networks which do not interact. Content delivered over radio is distinct from content delivered at the news-stand, and both are distinct from content delivered over television. And the networks themselves are designed to deliver and interpret the specific content they were designed for. Radio is unsuited to being delivered over the television network. The resolution of a basic television signal is ill-suited for delivering text in bulk.

Australian regulation is built around this silo model. For instance, content requirements and quotas are platform-specific. Anti-siphoning regulations use business models as their determinant. And, most obviously, cross-media laws specifically regulate different networks — artificially restricting ownership and, implicitly, content sharing — in local markets.

‘Convergence’, the process by which multiple products — for instance, video, person-to-person communication and broadcast audio — are delivered over a single network (the Internet) has made this regulatory approach increasingly unsuitable. Instead, the Internet is governed by an ideal termed ‘end to end’ (or e2e). Writes Lawrence Lessig:

e2e says to build the network so the intelligence rests in the ends, and the network itself remains simple. Simple networks, smart applications. The reason for this design was simple. With e2e, innovation on the Internet didn’t depend upon the network. New content or new applications could run regardless of whether the network knew about them. New content or new applications would run because the network simply took packets of data and moved them along. The fundamental feature of this network design was neutrality among packets. The network was simple, or ‘stupid’ … and the consequence of stupidity, at least among computers, is the inability to discriminate. Innovators thus knew that if their ideas were wanted, the network would run them.

The neutrality of the Internet Protocol (IP), essentially just an agreement on how computers communicate with each other, has encouraged innovators to develop countless programs unimagined by the Internet’s architects. The ‘dumb pipe’ of the Internet, unlike the highly regulated silos of traditional media, just doesn’t know how to distinguish between any of these.

As the content is divorced from the infrastructure that provides it, the Internet is infinitely expandable. There is no theoretical limit upon how many devices can connect to the Internet, subject to realizable minor adjustments such as IPv6 (Internet Protocol version 6.)

Stuck in the silos

But Meeting the Digital Challenge, despite its ambitious title, shuns any major realignment of media policy towards this new environment in favour of minor and insubstantial readjustments. Most clearly, the paper indicates a continual focus on what can only be described as a textbook example of government’s mis-regulating a new technology, digital television. Digital television is a perfect example of the poverty of the silo model of regulation, indeed, of regulation in the sector as a whole.

A new Digital Action Plan is intended to spur along take-up of digital television, and is likely to provide for a switchover period sometime between 2010–2012, having admitted that the previous deadline of 2008 was unrealistic.

Although the discussion paper is scornful of a ‘purely market based’ approach, it is the rejection of market processes that has left the transition bogged down in its technological quagmire. While ostensibly trying to encourage takeup of the new technology, content restrictions which force networks to simulcast the same content on both digital and analogue television remove the natural advantage that new forms of media have – the capacity to show something new. Instead, for most people, the investment in a set-top box or television capable of receiving the new signals will provide merely an increase in picture quality.

Digital television needs to add value for consumers, value above its ‘digital’ attribute — which is not inherently good in isolation. But instead of addressing this key issue, proposals for a Digital Action Plan focus on measures to stimulate take-up while most existing restrictions remain in place — including digital television awareness campaigns, compulsory labelling for analogue receivers, and financial assistance for those who cannot afford the new-fangled technology.

It is good that the ABC and SBS have been allowed to provide multi-channelling on their digital spectrum — why could not similar measures be taken for the far more popular commercial networks? It is unlikely that this relaxation will be sufficient to reverse the national apathy to a technology which the government bodies are so enthusiastic about.

The only reform is radical reform

But both government and regulators need to face the fact that, even if they get the switchover perfect from here on in, and the regulatory environment is at its theoretical most effective, digital television is unlikely ever to be the cornerstone of Australian media. That ship has long sailed.

It is not even appropriate to call media delivered over the Internet ‘next generation’ — new services such as Google Video and iTunes, delivering television and video content on demand for negligible cost, may be the thin end of the wedge, but they are fully functional and increasingly popular.

On the same day that Communications Minister Helen Coonan released the discussion paper, Apple’s iTunes — which had already sold 1 billion music files worldwide, and was offering television programmes such as Lost and Desperate Housewives — offered its first movie for purchase and download. The on-line retailing giant, Amazon, will soon offer movie downloads, and Google Video has been offering classic films since the start of the year. (And this is all before accounting for the massive, virtually unmeasurable peer-to-peer networks trading in current international television programmes and films.)

Unlike digital television, the advantages of these new services are clear – providing content free from quotas, timetables or geographic borders. Even in its infancy, the Internet commands significant ground in consumers’ entertainment choices. The low price of Internet usage obscures its significance as an entertainment competitor, but a recent National Bureau of Economic Research paper, ‘Valuing Consumer Products by the Time Spent Using Them: An Application to the Internet’, showed that, in the United States, around 10 per cent of all leisure time was spent on the Internet.

This is before on-demand television and film services have begun to take effect — most services have been launched in early 2006. Once it gains even the moderate popularity commanded by music downloading, and across a wider demographic, the real ‘digital challenge’ will become evident.

Therefore, whether the government recognizes it or not, the only regulatory framework that can fulfil the objectives of the Broadcasting Services Act — particularly, diversity of content and ownership, quality, competition and even development and reflection of Australian national character — is one that allows entrepreneurial investors to roll out high speed end-to-end networks free from government interference.

Rather than promoting services with dubious value, the government would do better to radically deregulate media industries to level the playing field across the sector — reducing distinctions between types of network, and recognizing that, regardless of whether the service traditionally delivers only sound, or only television, they now compete with a technology uniquely suited to delivering entertainment.

Any regulations which apply to one form of media should, by rights, apply to any other. Mismatched regulations artificially cripple legacy networks at the very moment that they need maximum flexibility to compete.

Regulations which restrict content need to be quickly reassessed. Australian and local content quotas, whatever their nationalistic intent, are meaningless on an end-to-end network — there is no way to measure 55 per cent of infinity, and even if there were, no mechanism by which Australian regulators could enforce it on a global entertainment service such as iTunes.

Anti-siphoning and anti-hoarding provisions have necessarily disadvantaged new media networks like pay television and digital television by providing incumbents with privileged access to ‘premium’ content. It is more worrying that, as the Chairman of the ACCC has intimated, premium content on so-called ‘third generation’ mobile networks and broadband services could be considered competition bottlenecks. Rather than further entrenching this regime by tweaking ‘loopholes’ as the discussion paper does, a forward-thinking media policy would look carefully at the rationale for anti-siphoning. Releasing popular content from restrictions such as these would encourage migration to new services far more than a top-down Digital Action Plan ever could.

Meeting the Digital Challenge allows for greater flexibility in foreign and cross-media ownership, but significant restrictions still remain. Even before the Internet became a significant challenge to the market share of traditional media, the regulated diversity of ownership is a strikingly indirect method of ensuring diversity of content — editorial or otherwise. As consumers migrate to an infinitely expandable network which allows for unlimited entrants in a global entertainment market, artificial restrictions on ownership in Australia make less sense. Media companies no longer face competition from a restricted set of similarly protected competitors, but from IT upstarts across the world. The sector, and consumers, could benefit from a radical liberalization of the market.

It is unfortunate that the Government has skipped the chance to push through radical reforms of the media sector, at a time when the need for such reform is evident. Forward-thinking deregulation is not a pipe-dream in this area—every newspaper across the country has emphasized the ‘revolutionary’ potential of the Internet—but what remains is for the Government to take the same leadership it has shown in other areas such as industrial relations, rather than to kowtow to the largely protectionist media industry.

Releasing popular content from restrictions would encourage migration to new services far more than a top-down Digital Action Plan ever could

Submission to Meeting the Digital Challenge Discussion Paper on Media Reform Options

Introduction: The Australian media is heavily regulated by a wide range of legislation and industry codes. Ownership, content, structure and reach are all subject to government interference. These regulations are complemented by numerous government interventions and subsidies – film financing, public broadcasting, arts grants, tax concessions. The Productivity Commission report into broadcasting services argued that the current approach ‘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.’

The regulatory and subsidy labyrinth has been a recipe for inefficient and inequitable outcomes. It represents failures in Australian governments’ attempts to manage the introduction of new technologies and services, to foster‘diversity’ and equal access and unnecessary measures to prevent monopoly.

Relatively recent far-reaching technological changes in media content production and delivery have exacerbated the adverse efficiency effects of this unsatisfactory policy progression. The upshot has made it more urgent to implement a major adaptation of the sector’s regulatory framework. As the Institute of Public Affairs has long been involved in the economic, social and political debate over media and communications policy, we welcome the chance to comment on the government’s media reform discussion paper in the light of these developments.

View in PDF here.

Submission to Future use of unassigned television channels

Introduction: Australian spectrum policy is largely characterised by a ‘command and control’ approach to allocation. Government allocates rights, conditions of their use, and the services which may be provided. Such rights can rarely be traded, and are subject to continuous government supervision and regulation. Such a top-down approach is ill-suited to managing the implementation and diffusion of technological innovations, nowhere more so than in the field of communications and information technology. While such a framework may satisfactorily – although certainly not ideally – manage a limited and static array of services, its capacity to manage the allocation of new and future technologies is limited.

Available in PDF here.

ACCC Paying Lip-Service To Innovation

Australian Competition and Consumer Commission chairman Graeme Samuel now argues that content is the determining factor in whether a media company is being anti-competitive. (“Consumers the key to media revolution”, AFR, November 18).

Samuel says that the bar for monopoly has been substantially lowered. Now all it takes is an assessment that a company is acquiring too much premium content – sporting content, obviously, but movies as well. This judgement will continue to change as tastes do. He mentions tennis, AFL, rugby and cricket, but not soccer, which is now about as premium as you can get.

But it is the capacity for companies to make exclusive content deals that encourages entry into new, developing markets. If the ACCC punishes companies that it deems too enthusiastic in offering value to consumers, it will only make these consumers think twice about adopting the new technologies at all.

Why would the ACCC warn companies off experimenting with new products and services? Samuel may think that he is protecting competition, but by arbitrarily punishing companies he is punishing consumers and stifling innovation.

Such arguments as this betray the fact that the ACCC is merely paying lip-service to the possibilities of new media, rather than understanding its revolutionary consequences.

Myths of the Corporate Media

Conventional wisdom places the print and broadcast media on a knife’s edge between two mutually exclusive requirements — the requirement to provide citizens with a challenging, informative and independent media, versus a desire to express the interests of ‘big business’ and make a profit. We are continuously told that both the broadcasting and the print media are increasingly driven by the profit motive. Independence, quality and diversity versus business interests — like Kipling’s East and West, never the twain shall meet. We are told that the media is irrevocably biased against ‘progressive voices’. Our very own Australian media mogul, Rupert Murdoch, is more dangerous to civil democracy than Citizen Kane ever could be. His Fox News is not merely biased, but actively partisan. (The far-left moveon.org proclaims ‘The Communists had Pravda. The Republicans have Fox’.)

Around the world, much of this is blamed on media deregulation in the 1980s and 1990s. In Australia, the 1992 Broadcasting Act, which created the Australian Broadcasting Authority, moved the media in the direction of a market-based, less interventionist approach to media regulation. While we maintain stringent local content quotas and cross-media ownership regulations, critics assert that the media is consolidating into fewer and fewer giant transnational cartels, and producing entertainment that is homogenous, bland and uncritical. Despite such heavy regulation, our media is less ‘diverse’.

What is diversity?

In February 2003, The Guardian conducted an analysis of the editorial line on the Iraq War in all 175 Murdoch newspapers around the world. It argued that each one supported American involvement in that conflict, and that they:

all are singing from the same hymn sheet. Some are bellicose baritone soloists who relish the fight. Some prefer a less strident, if more subtle, role in the chorus. But none, whether fortissimo or pianissimo, has dared to croon the anti-war tune. Their master’s voice has never been questioned.

Australian media policy is aimed at encouraging the diversity that The Guardian claims News Ltd’s coverage is lacking. The 1992 Act states as one of its objectives that its aim is to promote a ‘diverse range’ of broadcasting services offering education, information and entertainment.

But quantifying diversity is not as simple as listing whether a newspaper supports or opposes the War in Iraq. A glance over the Melbourne television guide presents an extremely wide range of genres — drama, sitcom, reality, sport, news & commentary, music, documentary — each of which can be divided further into its own subcategories. It would be hard to argue that both Rove Live and SBS’s current affairs programme The Cutting Edge would have a ‘homogenous’ political viewpoint. Even the difference between viewpoints expressed in Neighbours and Home and Away can be significant enough to warrant a ‘diverse’ rating.

When is content sufficiently diverse? Does the mere fact that a programme is broadcast in another language qualify it as diverse? If every newspaper were published in a different language, yet held the same editorial line on contentious political issues, would this be sufficient? While these examples may seem facetious, they highlight the ambiguous nature of the cries for diversity in our media. Media diversity is widely advocated for a host of social and cultural reasons, yet few participants in the debate are willing to address the practical applications.

The inelegance with which local content rules try to enforce a one-sided diversity attests to a simple fact — these appeals are more often than not either veiled protectionism or attempts to silence opposing viewpoints.

In reality, we are experiencing an age of unparalleled media variety. If diversity of opinion is what critics desire, then they should take solace in the multiplicity of content provided by the explosion of entertainment options. In Australia, there are 259 commercial radio stations, and more than 2,000 community and narrowcast stations. Cable television offers a massive range of stations, and TV programmes, from Nickelodeon to the Australian Christian Channel and from BBC World to Fox News. DVDs, podcasting, satellite radio, not to mention the Internet, provide more media options — and more diverse voices — than it is possible to survey.

Their master’s voice?

Does the ownership of broadcast and print services even matter? It is constantly suggested that media services are being consolidated into massive international conglomerates, and that these serve to exclude ‘voices’ which diverge from their corporate view.

But the relationship between ownership and content is far more complicated than is generally acknowledged. Communications researcher Benjamin Compaine’s recently released paper ‘The Media Monopoly Myth: How New Competition Is Expanding Our Sources of Information and Entertainment’ argues that, in the United States at least, there is no reason to suggest that corporate ownership is having a deleterious effect on the quality and diversity of programming.

Instead of providing the media moguls with an uninterrupted outlet to spread corporate propaganda, the drive for profit increases the alternative voices available. Michael Moore’s self-promoting blustering aside, the vehemently anti-Bush documentary Fahrenheit 9/11 was financed and produced by Miramax — a subsidiary of Disney — and distributed by Lions Gate Entertainment, an enormous media conglomerate with interests in a wide range of industries. The film went on to become the highest grossing ‘documentary’ in history.

It could not be argued that Fahrenheit 9/11 played to any corporate message. On the contrary, the documentary was in fact strongly supported because it was an alternative message — and alternative, anti-establishment messages can be a great way to make money. Big business is regularly portrayed as a moral enemy — even by media executives themselves. A recent James Bond film, Tomorrow Never Dies, in which a megalomaniac media baron tries to foment war with China by sinking a British battleship, was produced by MGM, now a subsidiary of Sony Entertainment. It could not be argued that the media are producing mere corporate propaganda.

In Australia, Margo Kingston rails against the corporate ownership of media in her screedish Not Happy John: Defending our Democracy — published by the Penguin Group, which is owned by the massive Pearson Plc. Kingston’s book was enormously successful, and can be found in major, corporate bookstores around the country. To accuse the mainstream media of drowning out dissenting voices, while simultaneously having one’s book published by one of the largest publishers in the world, is absurd.

Media quality

There are some indications that media output produced by conglomerates is of a higher quality — although this is obviously much harder to pin down. The US-based Project for Excellence in Journalism has attempted to do just that by a range of methods for quantifying ‘quality’ journalism. One method consisted of surveying all the often ambiguous and contradictory academic literature on the subject and looking for general patterns. The study, which focused on newspapers, showed that most of the literature connected higher expenditure with higher quality — variously defined — and then consequently with higher circulation.

Another study ‘Does Ownership Matter in Local Television News?’ gathered together a panel of 14 industry professionals and asked them to rate, over a five-year period, the quality of news broadcasts in a variety of genres. The study found that, while smaller stations tended to produce higher quality newscasts than large network stations, the highest quality was produced by those whose parent company owned a newspaper in the same market.

The study found significant differences between newscasts depending on their ownership structure. For instance, cross-owned stations aired more than one side of a controversial story half of the time, compared with just over a third of the time for those with no horizontal interests. They also tended to rely less on syndicated feeds. Rather, the company, as a whole, did more of its journalism in-house. While there were a few complicating factors in the analysis, the study concluded that, by and large, cross-media ownership tends to produce better quality news broadcasts.

Media (de)consolidation

That media corporations are continuously merging into ever-larger empires has become an accepted truism by most commentators. Indeed, in Australia, the small number of owners with large profiles (Packer, Murdoch) helps to reinforce this impression. But, when considering the international context of media conglomerates, the opposite is the case. Certainly there are enormous media companies, but it is deconsolidation that is the trend. Right across the industry, companies are divorcing and restructuring at a rapid rate. Viacom, the corporate owner of, amongst other things, MTV, Showtime, Simon & Schuster and Paramount, is splitting into two entities at the end of June. Disney is splitting with Miramax. AOL and TimeWarner, who merged a few years ago to cries of doom from political commentators, are also considering separation after enormous losses. Even News Corp may be considering splitting up.

It seems that ‘synergy’, that cringe inducing slogan for media consolidation, is dead. Big media corporations, trying to cope with the new markets created by technology and diversity of content, are struggling to ensure profitability. Even before they announced their June split, Viacom had shed Blockbuster Video, which was threatened by Internet rental services such as Netflix, and the increasing consumer ownership of DVDs. Instead, a simpler business model is preferred in this new era — one which can quickly react to ever-changing demand.

Conclusion

This article has not directly considered the radical consequences that the Internet and its secondary technologies — such as bittorrent, podcasting and blogs, which, in a few short years, have suddenly democratized the media — will have on quality, diversity and ownership. But it is clear from the overview provided that the effect that ownership has on the media is by no means as opaque as many popular critics assert. The relationship between the drive for profit and the drive for quality or diversity is not a mutually exclusive one. The widely and enduringly held views surrounding the Australian and international media must be re-examined closely.