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The problem of media concentration/deregulation “is usually treated as a series of unrelated problems, much like a cocaine addict who complains about his drug problem, bankruptcy, divorce, and encounters with loan sharks, but who never makes a causal connection between the items on the list”

Palko writes:

There’s a huge problem that people aren’t talking about nearly enough. . . . Think about all of the recent news stories that are about or are a result of concentration/deregulation of media power and the inevitable consequences. Obviously, net neutrality falls under this category. So does the role that Facebook, and, to a lesser extent, Twitter played in the misinformation that influenced the 2016 election. The role of the platform monopolies in the ongoing implosion of digital journalism has been widely discussed by commentators like Josh Marshall. The Time Warner/AT&T merger has gotten coverage primarily due to the ethically questionable involvement of Donald Trump, with very little being said about the numerous other concerns. Outside of a few fan boys excited over the possibility of seeing the X-Men fight the Avengers, almost no one’s talking about Disney’s Fox acquisition.

It didn’t used to be like this. For most of the 20th century, the government kept a vigilant watch for even potential accumulation of media power. . . . Media companies were tightly regulated, their workforce was heavily unionized, and they were forced to jump through all manner of hoops before expanding into new markets to insure that the public good was being served.

In short, the companies were subjected to conditions which we have been told prevent growth, stifle innovation, and kill jobs. We can never know what would’ve happened had the government given these companies a freer hand but we can say with certainty that for media, the Post-war era was a period of explosive growth, fantastic advances, and incredible successes both economically and culturally.

What Palko says all seems reasonable to me (and, based on the material in his blog, he seems to know a lot about the news media and entertainment industries). Many of you in the readership of this blog know a lot more about this topic than I do, though, and I welcome you to express your disagreement or refinement of these ideas.

But what really grabbed me in Palko’s post was this bit:

When it [the problem of media concentration and deregulation] does get discussed, it is usually treated as a series of unrelated problems, much like a cocaine addict who complains about his drug problem, bankruptcy, divorce, and encounters with loan sharks, but who never makes a causal connection between the items on the list.

Well put.

29 Comments

    • Dzhaughn says:

      Everyone plays that game, and frankly any treatment is far worse than the problem. (The illusion that media is or can be made free of this sort of influence is the true problem.)

      What really bugs me when it is those in public positions who offer selective access to information to journalists who tell the story in the desired fashion. This is, literally, on the front page of the NYT every day. I think trying too hard to stop it is a bad idea. (That said, we can probably do better than allowing, for example, the way that the Wheeler FCC apparently let Google rewrite their draft regulations.)

      If the LA Times doesn’t get to see Disney’s movies in advance that’s fine. If they want to complain about how they are no longer getting the favors that they used to and other media corporations still do, that’s fine too.

  1. Dale Lehman says:

    Media regulation (including telecommunications) has always been heavily politicized. Concentration has been occurring for a long time now, and economists have given it little attention – in fact, economists have been fairly tolerant of concentration overall. Part of this results from the fact that regulation has been far from perfect – the cure is often worse than the problem it was addressing. This is a prime reason why many people (speaking of industry experts now) believe net neutrality is poor policy. Unfortunately, part of the motivation is not so pure – many of these experts earn much of their living consulting for the same companies that benefit from concentration.

    Within the economics profession there is a belief that media production and dissemination companies (trying to cover the range from producing entertainment to delivering it to people’s homes/devices) are effectively in competitive industries. That view is not totally wrong – even with increasing competition, it is clear that satellite and cable, Verizon and AT&T, Disney and Amazon, etc. are intensely competing with each other. But what I believe people miss is that the nature of the competition is changing. As concentration increases, the competition is between bundles, “walled gardens,” and the like. This is a far cry from the textbook competition where services prosper or decline on the basis of their ability to satisfy consumer demands. I personally think the experts have erroneously (and to an extent purposely) ignored these dangerous trends. But the issues are complex and far from clear. My view is a minority view, and the prevailing view that competition is healthy in these industries – and better than attempts to regulate – has much merit. I am willing to acknowledge that although I don’t agree with it.

    Perhaps the real question is why these complex issues are rarely discussed among experts, except when they are paid large sums to be engaged in the regulatory and political process. And, if you look at their testimony, white papers, publications, etc., the data they use is generally not publicly available (it is highly proprietary, after all, in these “competitive” industries). In my mind, these practices are far more dangerous and costly than the myriad examples of poor social psychology research.

    As an aside (but related idea): the current controversy over “net neutrality” is largely off-point in my opinion. I am not so worried about AT&T disadvantaging particular information/entertainment providers. That possibility cannot be dismissed, but the competition for the customer is also strong, and there is a counter-incentive to not lose the customer’s business. However, I think the real issue about net neutrality is that the regulatory paradigm that covered it (Title II regulation) carries the implicit threat of price regulation. Telecommunications companies (telecom and cable) do not want that possibility and will go to great lengths to ensure that their prices are beyond the reach of regulators. I believe the “real” issue about net neutrality concerns whether these prices are subject to regulators – the concept of impeding traffic is mostly a red herring. I would point out that this is a minority view (perhaps a minority of one).

    • Jonathan (another one) says:

      [Warning: no statistics talk herein.]

      As one of the guys whose motives you suspect, let me agree in part and disagree in part. I fully agree that the fight over net neutrality is largely off-point. And I agree that the specter of price regulation underlies part of the Title II fight, which is why all of the big guys agreed to implement no blocking a long time ago.

      But it isn’t just price regulation, not by a long shot. It is making ordinary business decisions subject to governmental adjudication instigated in most cases by competitors. That dramatically slows (and often completely negates) the innovation process. The FCC cannot operate at the speed of Internet businesses, and Internet businesses cannot run their businesses on FCC time.

      And it isn’t just net neutrality rules, but net neutrality rules applied only to ISPs. If my Amazon Echo only yields Amazon-approved answers, perhaps in return for a fee, that violates no rule at all of net neutrality, but has exactly the same cost to the consumer as if Comcast had done the same thing. When Amazon and Google and Apple compete by blocking each other’s services, the FCC is powerless (or it should be) because no one ever authorized any regulation of these companies, but the issues are many times the issues posed by ISPs. And to the extent that these issues arise from consumer trust (of Apple or Amazon or Google) it’s not even clear what the solution is.

      The biggest problem here is that getting the FCC involved in this stuff is that the losers are the little guys who can’t afford lawyers and experts. The irony over net neutrality is that Title II regulation, intended to beat up on Comcast, does no such thing, because Comcast can afford to represent itself at the FCC. It’s the little edge provider who wants to offer a new service that threatens one of the big guys that is in trouble, since their competitors can engender months of delay and costs by complaining under some grounds at the FCC, and Title II means that that complaint has to be taken seriously.

      We had enough time under Title II to see one of these investigations, the zero-rating investigation. God forbid that the uncarrier, T-Mobile, should be allowed to not count Netflix towards its data caps. Who exactly benefits from that? And what if some new movie service challenging Netflix decided to hook up with an ISP to gain market share? Why should that be illegal?

      • Dale Lehman says:

        In return, I will agree in part and disagree in part. Actually I agree with most of what you have said – except for the difference between what Amazon Echo does and what my broadband provider does. It is fairly easy for me to replace Amazon Echo with Google Whatever, but replacing my single broadband option with another literally would require me to move. Increasingly, that distinction is getting blurred. Consolidation + the changing technology are posing real dangers to would be competitors (smaller ones) as well as consumers. While I share your skepticism that FCC time (not to mention FCC politics) could improve matters, I don’t feel comfortable leaving it to the market. Surely it is a lack of imagination that we can’t find a better model than those two extremes.

        • Jonathan (another one) says:

          But you’re leaving the Google vs Amazon fight to the market, but not ISP?
          Competition for ISP services is already very large and growing. Broadband competition has been growing rapidly and the introduction to 5G will bring the wireless companies even more strongly than they are now. By contrast, your voice activated box competition has two companies, with really no serious competition pending. So that’s four big wireless companies, two satellite based ISPs and at least one, usually two and sometimes 3 wires-based ISPs for everyone. Are there individuals who might not have choice? Sure. But they are protected by the fact that pricing and policies happen in the aggregate.
          One of the things that fools people into thinking that there is little competition is the constant ratcheting up of what counts as broadband. I am cynical about this, I admit, but I’m convinced that this was purposeful. Moving broadband back down to 10 Mbps will by the stroke of a pen make things more “competitive.”

          • Dale Lehman says:

            10 Mbps would be heaven for the people that live in my area. There is 1 provider capable of that speed. 5G is an illusion here as well – 3G is difficult at most homes. And, I live in a Census Block Group that the FCC believes is 100% covered by 3 providers. But, we shouldn’t trade anecdotes, nor should we set policy on the basis of them. I would say, however, that the decision makers should occasionally get out of the urban areas to see what is actually happening on the ground.

            I have to agree with you regarding the lack of competition for voice activated boxes (and I would extend it to ISPs as well). On a related matter, I don’t believe “bundling” is well understood, particularly in how it impacts competition. Economists have a long history of being skeptical about bundling, although most of their regulatory work is kind to it. I am somewhat horrified at what bundling has become. Witness “Sling TV” who advertises “a la carte TV” but actually offers two packages (bundles!) of channels. It seems that nobody knows what absence of bundling looks like any more (and I’d say this extends beyond TV to a myriad of consumer retail experiences).

            Sorry for hijacking the thread a bit by going off topic.

          • I get my wireless service through Ting, and MVNO which has one of the sanest pricing structures available. Asymptotically for large usage, they charge $10/gigabyte for data. Under this pricing structure the data I used from my home ISP in the FIRST FIVE DAYS of my current billing cycle would cost $270. So unless you call someone who charges 10x as much as the wired competition a competitor… there really is no competitor.

            wireless services offer a different service: always available small sips of data. If you go wireless as your main ISP, next time you need to run Windows Update on 20 desktop machines or install Debian on a small business server to fit Stan models… you’d have to pay more for the data than the computer originally cost.

  2. lewis says:

    … the cocaine-addict metaphor is dumb

    Palko apparently feels he’s discovered a “huge {root} problem” of media-concentration that many people have somehow missed.
    As a cure, Palko longs for past glory days when “the government kept a vigilant watch for even potential accumulation of media power. . . . Media companies were tightly regulated… insuring that the public good was being served.”

    This is standard left-progressive pap — noble government regulators must save us from the evil capitalist businessmen & monopolists.

    In fact, federal/state/local regulation (market interventions) caused this media-concentration. There are no ‘natural monopolies’ and artificial monopolies can only be sustained by government coercion in markets.

    This dichotomy of left/right economic views has been around a very long time — Palko brings nothing at all to the debate. Near hysteria on the left over NetNeutrality repeal has been quite amusing.

  3. Andrew says:

    Dale: Thanks for the context; that’s helpful.

    Lewis: Palko’s not claiming that he’s discovered the problem; he’s just saying that the general problem is being reported as a bunch of separate problems. I agree that Palko’s analysis is all conditional on it being a problem. Regarding your political analysis: Palko and others who are writing on these issues are not characterizing government regulators as “noble” or businessmen as “evil”—and, for that matter, people who oppose media regulation do not characterize regulators as “evil” or businessmen as “noble.” On both sides, the argument is about economics and politics.

    • psyoskeptic says:

      No natural monopolies? So… the fact that I have only one power provider isn’t a natural monopoly based on a first mover advantage that would require government legislation to change? The phone companies used to be like that too until it was mandated that the phone company must lease access at a fair rate.

      and ISPs…

      • Anonymous says:

        No natural monopolies?

        Some people do argue that (afaict it amounts to saying monopolies cannot survive very long):
        https://mises.org/library/myth-natural-monopoly

        So… the fact that I have only one power provider isn’t a natural monopoly based on a first mover advantage that would require government legislation to change?

        If solar, etc was cheap enough why wouldn’t you switch? Why wait for some legislation?

        The phone companies used to be like that too until it was mandated that the phone company must lease access at a fair rate.

        and ISPs…

        How many people even use a house phone anymore? Actually wireless broadband can probably already replace the local ISP for the many people who only really use a tablet/phone for internet.

        • Kyle says:

          I don’t know about natural monopolies, but there seem to be a potentially limitless number of natural cartels (e.g. poultry, insulin). If you’re a tiny new entrant, you have every incentive to compete aggressively on price to gain market share and grow profits. On the other hand, if you already have a big chunk of market share and sell an undifferentiated product into a market with a few other big competitors, a price-slashing race to the bottom is bad for profits and very risky. There seem to be a few industries that have figured out they can win this prisoner’s dilemma by raising prices in lockstep. The poultry industry has an extensive industrial data sharing service called AgriStats that keeps all the big producers assured there’s no cheating (i.e. competition). Google a graph of humalog v. novolog price and lantus v. levemir price and see the lockstep price bumps. Of course price fixing is supposed to be illegal, but it is apparently quite profitable until you’re stopped. Even if we dropped government regulation of drug purity just to ease entry of competitors, the more formidable obstacle is often getting your drug listed on the hospital or PBM formulary. The big incumbent can threaten to revoke the rebates on their 20 drugs if the hospital/PBM lists your cheaper alternative for 1 drug with preferred status or at all.

          With limitless time and capital, all cartels and monopolies will be disrupted. But if it takes 10 years or a generation, people might demand a political response rather than a capitalistic one. Especially if they feel that business is already playing in politics. Private enterprise excels at creativity and innovation. Don’t underestimate their creativity when it comes to undermining competition.

          • Anonymous says:

            Do you realize your examples of “natural cartels” are from two of the most highly regulated markets in the world: food and healthcare in the US?

            I mean it is pi = 3 levels of regulation, poultry is not even legally considered an animal in the US. It is illegal to open a hospital unless the already existing hospitals approve of it (the reasoning goes: if there are too many hospitals, they wouldn’t make enough money, so they would overcharge the patients).

            I’m not even arguing either way on their existence, but it should be obvious that such examples will not be useful for convincing anyone about natural monopolies/cartels.

            • Andrew says:

              Anon:

              I’m not getting into the economics debate here, one way or another, but as a political scientist I will just say that the absence of government is in no sense a “natural” state.

              • Anonymous says:

                Ok, but I think you are the only one who has mentioned “absence of government”. I agree with your implication that “natural” should be defined though. I actually have never used that term myself.

  4. Bob says:

    Palko wrote:

    . For most of the 20th century, the government kept a vigilant watch for even potential accumulation of media power. . . . Media companies were tightly regulated, their workforce was heavily unionized, and they were forced to jump through all manner of hoops before expanding into new markets to insure that the public good was being served.

    Well, not exactly. The government heavily regulated many aspects of broadcasting and cable television. But,newspapers and magazines were pretty much left alone except for (1) antitrust issues and (2) joint ownership of broadcast stations and newspapers. Even so, the broadcast/newspaper cross ownership rules were adopted by the FCC in 1975—long after many newspapers had evolved into broadcasting powers.

    I am not aware of any regulatory hoops that the Wall Street Journal needed to jump through to bring out a national edition. The same for Gannett and USA Today. You can start up a cable network today—you just need to convince cable companies to carry it. TBS, BET, HBO and CSPAN didn’t need licenses from the FCC to go into business.

    Bob

    • Mark Palko says:

      1. “Most” is an important qualifier in that passage. By the 1980s, the tide was shifting away from regulation and antitrust enforcement. I’d mention the fairness doctrine repeal in 1987 but I don’t want to open that can of peas.

      2. That said, none of the cable channels you mention would have raised the kind of ownership issues we’re talking about here. All but one were individually owned at the time (big media companies didn’t start scooping them up seriously until the 90s). HBO was part of Time Inc., a major media company to be sure, but not a dominant player in broadcasting. It wasn’t until the merger with Warner Communications that the antitrust issues got troubling.

      3. Most of the examples in my post did focus on broadcasting, but the most prominent did not. The Paramount case showed the government was willing to break up vertical integration if it stifled competition and did not serve the public good. The officials who approved the merger of Comcast and NBC-Universal were clearly operating under different standards.

      4. Newspaper ownership was less regulated at least in part because concentration was less of an issue. For most of the 20th century, competition was fierce, barriers to entry were relatively low, and there was a great deal of local ownership. The issue was not, however, ignored. As late as the 70s, new restrictions on crossownership (specifically newspapers owning radio and television stations) were being put into place. Furthermore, there was a great deal of concern and public debate about the rise of newspaper barons and the potential for abuse of power. Check out David Nasaw’s ”The Chief.”

  5. Thanatos Savehn says:

    “Rosebud”

  6. Tom says:

    He also conflates Facebook/Twitter with regulated news organizations throughout the 20th Century. As Bob pointed out, newspapers were allowed to compete except for the monolithic view of broadcasters and newspapers in a single market. It wasn’t that the comics in the newspaper needed to be protected from cartoons on tv (Disney/Fox example). In my opinion, Facebook/Twitter shouldn’t be anyone’s source of “news” and that is the larger problem. It is unclear to me that absent regulation the Washington Post would start publishing the stories that were found on FB/Twitter.

    • David18 says:

      “In my opinion, Facebook/Twitter shouldn’t be anyone’s source of “news” “

      I complete disagree. I follow certain twitter feeds of reliable people with different opinions which are not voiced by main stream media such as NYTimes, Washington Post, …

  7. David18 says:

    Twitter and Facebook have helped to decentralize media and to undermine the dominance of major news organizations which is a good thing. It used to be that it took years of career to work one’s way up the ladder to write for the NYTimes, WaPo, etc. and to be heard. This of course, has a censoring effect.

    As it is, main stream media is underrepresented regarding people who live in The Midwest, who understood The Midwest, and who spoke with Midwesterners. The same is true of working class. It used to be that many journalists did not have college degrees. See the movie “His Girl Friday” (Clark Gable, Rosalind Russell) based on the play The Front Page. Nowadays, there are very few reporters or columnists that don’t have a college degree or that are working class. Instead, the elites are far over represented.

    It is for this reason, that few understood the Trump phenomenon resorting to ad-hominum attacks on Trump supporters (“deplorables”) instead of making an effort to understand why people were voting for him.

    One of those people who understand the phenomenon (as well as BrExit), Frank Thomas, although an American from The Midwest and author of one of 6 books that the NYTimes recommended for reading to understand Trump’s election, is a columnist for The Guardian in Britain and not The New York Times or Washington Post.

    The concentration of media started years ago well before the internet. There used to be many daily newspapers in NYC, now there are few.

    • Thanatos Savehn says:

      My oldest son gets his news from Reddit and has repeatedly impressed me with the speed and accuracy of ~some~ of its crowd-sourced news. My youngest has a YouTube channel in which he functions as sort of the Matt Drudge of slime news. If there’s a new and cooler way to make slime, or something crazier to fill with it, do with it, dump it on, etc. then he reports on it; and he has a few dozen (I know, but hey, he’s only 9) subscribers. They don’t think “news” mean what we think it means.

  8. Terry says:

    Question to all:

    Why is net neutrality issue so fiercely advocated?

    Does the fierceness come from a desire to give the government more of a say over the internet, presumably to keep bad companies from controlling it? The fierceness is clearly well organized, so what organizations are driving it?

    • Jonathan (another one) says:

      My two cents: it comes from a hatred of cable and telecom companies, or at least its traction does.

      Its intellectual origins come from the early tech community whose vision of order from linking disparate systems with open protocols was indeed brilliant, even if it is not capable of supporting the investment needed to create the Internet we expect to have in the future.

      Finally, the big edge providers, Amazon, Netflix, and Google see an opportunity to make money by pushing investment for someone else to pay for.

      So you have a combination of bad guys to hate, romantics who long for pure vision and can describe that vision eloquently, and some big guys to fund it all.

    • Most people have basically one ISP, an incumbent cable monopoly who has been historically protected from competition. They have an internet service, it provides some sort of speed, but it has no portions of the internet that aren’t accessible. Of course, it’s technologically trivial to cut people off from all but say Facebook, Twitter, Netflix, and Google. Or, you could offer all those with special caching servers and peering contracts at say 100 megabits/s and “the rest of the internet” at say 1Mb/s. If you want a “real” internet connection at 100Mb/s for the whole internet… it costs you say 8 to 20 times as much (instead of say $40/mo you’d have to pay say $300-600). Most people would stick with the walled garden, at $40/mo, the profitability would be huge, no infrastructure investment would be required, and it would be basically a horrible societal outcome. Yet, so many people have very very limited understanding of technology, and many wouldn’t even know what was going on.

      I used to think that was all baloney, it’d never happen. Then I spend a couple weeks helping an Iraqi set up a sophisticated bidirectional multi-queue quality of service scheme on his Linux based router, because he had basically exactly that: Fast connections to Google Drive, YouTube, and Facebook, and 1Mbit on a good day when the wind was blowing to the entire rest of the internet.

      Look, if I drive around my neighborhood only like 1 in 10 WiFi access points has anything other than the default SSID. Most people could be convinced to pay *more* for *less* by telling them it was actually just “an acceleration service for the sites they used most” or something like that.

      The fierceness comes from the fact that the people who work in the guts of the internet have imaginations and know how bad it could get.

      • Dzhaughn says:

        Most people actually have two ISPs. The second is their mobile phone provider. For those with only one ISP, it is probably the mobile phone provider.

        Could there possibly be different concerns in the two situations?

  9. Clive says:

    Reminds of of the impoverished who do everything to ensure their condition (parents not in stable marriage, indeed, father gone, no dedication to education, finding work, working hard, saving, not hanging out with crooks, junkies, alcoholics or dopes…all treated as independing problems by the authorities (as tho’ its their problem), but dots rarely connected.

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