The simple rise of the New Media and the painful, confusing decline of the Old Media

Judge Posner in his piece Bad News in the NYT, and Bill Keller in his response are both partially right about the rise of the New Media and the decline of the Old Media. Posner offers an explanation for the growth of the New Media that features lower costs as a driving force. Keller rejects the notion that Old Media’s alleged shift to the left has been driven by economic interests. Both are partially correct. Here Posner offers the explanation of lower costs as the “why” of the rise of the New Media:

The why is the vertiginous decline in the cost of electronic communication and the relaxation of regulatory barriers to entry, leading to the proliferation of consumer choices. Thirty years ago the average number of television channels that Americans could receive was seven; today, with the rise of cable and satellite television, it is 71. Thirty years ago there was no Internet, therefore no Web, hence no online newspapers and magazines, no blogs. The public’s consumption of news and opinion used to be like sucking on a straw; now it’s like being sprayed by a fire hose.

Posner mentions deregulation, but does not emphasize it; he moves quickly to the internet age, where low costs multiply options exponentially. But this is not historically correct. It is deregulation that has spurred the growth of the New Media, as it has done in many industries in America over our history.

Deregulation: Good for the Innovators at the Expense of the Older, Legacy Companies

Deregulation inevitably results in lower costs, higher quality and more choices for the consumer, when it is properly done, in industry after industry.

— The airline industry, deregulated in 1978 through the work of Alfred Kahn, has seen accident rates halved and prices dramatically lowered through new entrants like Southwest, Jet Blue, WestJet, and others.

— The telecommunications industry deregulation began on January 1, 1984 as the result of the Judge Harold Greene’s settlement of a government lawsuit against AT&T, and led to the reduction of long distance rates by 80% and the dramatic growth of the RBOC’s, MCI, Sprint, and other choices for consumers.

— The express delivery inustry was potentiated through Senator Thomas Eagleton’s 1979 creation of an “urgent letter” exemption to the USPS’s monopoly on mail delivery. Today, FedEx alone, which barely existed in 1979, has sales of over $25 Billion.

Deregulation is not a friend to the former monopolies or oligopolies once protected by government fiat. Once they are subject to the creative destruction of capitalism and competition, they generally suffer long and painful declines. TWA, United, Continental, US Air, PanAm, Eastern all filed bankruptcy, some twice. AT&T, a shadow if its former self, was booted from the Dow Industrials last year, and replaced by one of its former subsidiaries, Baby Bell Verizon Communications. The US Postal Service is a perennial story of cost-bloat and revenue squeeze.

Note that the legacy players in each industry have had decades to get their acts together to compete in the deregulated environment, but in case after case, they fail to do so. The reason for this is primarily cultural: heavily regulated and monopolistic companies become risk-averse, slow moving, complacent, often arrogant and insular, and over a long period of time, they attract and promote managements who are comfortable in this atmosphere. When faced with a radically new and competitive environment, they have little way to implement an institutional response to the upstart competition, and they are often dismissive of the upstarts. (We have written at length on this topic here.) This is not a criticism of anyone in particular at the New York Times, certainly not Bill Keller — it is simply that the most enduring thing about large, once dominant companies, is their culture. We will discuss the Keller piece a little further on.

Deregulation of Conservative Political Speech

The deregulation of conservative political speech occurred in 1987 with the FCC’s repeal of the so-called “fairness doctrine,” which required that controversial viewpoints on one side of an issue be balanced with an opposing perspective. The fairness doctrine’s constitutionality had been tested and upheld by the U.S. Supreme Court in a landmark 1969 case, Red Lion Broadcasting v. FCC (395 U.S. 367), but was fairly consistenly weakened in subsequent rulings prior to 1987.

As a result of deregulation, on August 1, 1988, Rush Limbaugh began the creation of the modern talk radio industry, when he debuted on over 300 radio stations in his syndicated program. Today, Limbaugh estimates that his audience comprises over 20 million listeners a week on over 600 stations. More importantly for the spread of conservative discussion, there are now over a dozen large synidicated conservative programs, as well as many more local ones, spanning the hours of 6am Eastern through 9pm Pacific. We have estimated the audience for conservative political talk radio at over 60 million listeners, though the primitive data collection methods of Arbitron make estimates very difficult.

Whether the number is more or less than 60 million does not matter; in any event the number is very large compared to the previous outlets for conservative thought such as National Review, whose circulation is 150,000. Moreover, talk radio is a participatory environment, with much agreement but also much debate, and this is the key to Limbaugh’s accomplishment. Conservative talk radio is a national, virtual community of certain ideas and values, for people who had often previously felt themselves to be disenfranchised from the national debate as it was framed on the network news programs.

Deregulation created the market opportunity for the creation of the political talk radio industry by Rush Limbaugh, not lower costs, though, through syndication, these played a supporting role. On the other hand, dramatically lower costs, particularly through the internet, have spawned the blogosphere, but that is the third chapter in the development of the New Media, following talk radio and Fox News on cable. But all in all, the beginning of the rise of the New Media — which was just the re-creation of national radio programs that had existed decades earlier — was the filling of an unmet demands of a large conservative market, made possible by deregulation and the personality and force of one man.

The Keller Critique

It is easy to describe the rise of the New Media in simple terms. After all, what is so unusual in America about an entrepreneur recognizing a huge, unmet, market opportunity and filling that need? Thus the rise of a conservative mass media success story has, in retrospect, the air of inevitability about it. But the decline of the Old Media is much more complex, because organizations and bureaucracies do not easily or straightforwardly respond to market challenges — particularly organizations that have been dominant. No institution of the elite media has been more dominant and agenda-setting than the New York Times. We should expect the story of its decline to be as complex as the human drama it is. Here’s how Keller responds in part to Posner:

In [Posner’s] view, the news media are ”just satisfying a consumer demand no more elevated or consequential than the demand for cosmetic surgery in Brazil or bullfights in Spain.”….Of course we serve a market, and respond to our economic interests. Our economic interests lie with readers (of many political colors, contrary to blogospheric conventional wisdom) who have high standards, who care about the same things we do and who would quickly desert us if they thought we were one-tenth as unprincipled as Posner implies. We are unquestionably in the business of satisfying a customer demand, but our customers — both readers and advertisers — come to us precisely in the expectation of receiving something ”more elevated or consequential” than cosmetic surgery in Brazil. And we’re proud to be able to give it to them.

The saddest thing is that Judge Posner’s market determinism leaves no room for the other dynamics I’ve witnessed in my 35 years in newspapers: the idealism of reporters who think they can make the world better, the intellectual satisfaction of puzzling through a complicated issue, the competitive gratification of being first to discover a buried story, the pride in striving to uphold a professional code of fair play, the quest for peer recognition and, yes, the feedback from attentive and thoughtful readers. He makes no allowance for the possibility that conscientious reporters and editors are capable of setting aside their personal beliefs or standing up to their advertisers (and the prejudices of their readers) to do work they believe in.

I suppose the best refutation of the view that ”the media” are guided solely by narrow self-interest, however, is this: We published Posner.

Keller’s response to Posner is odd in this respect: while he denies that the Times has abandoned the middle and lurched to the left (or further to the left) to serve its ideological base, Keller offers no counter-theory for the massive decline in the Times’ readership. As we have pointed out on numerous occasions, the Times has hemorrhaged readers over the last decade. Though its circulation has only declined about 10% over the last decade because of increased national distribution, it has plummeted by 26% in its home market, and is now number three behind the Post and Daily News. Keller could in fact have dealt a blow to Posner’s argument by arguing that the NYT’s economic self-interest might have been better served by being more favorable to the Bush administration — both the Daily News and the Post endorsed Bush in 2004, and they are doing far better in their home market than the Times, about 1.4 million circulation versus 550,000 or so for the Times.

More Liberal, or More Openly Liberal?

We don’t know if the NYT is more liberal today than it was a decade ago. We rather think it is not. However, it is surely much more open about being liberal than it was a decade ago. We offer for your consideration some snippets from ombudsman Daniel Okrent’s famous piece last July:

Is The New York Times a Liberal Newspaper?
OF course it is.
— [A] liberal bias that infects not just political coverage but a range of issues from abortion to zoology to the appointment of an admitted Democrat to be its watchdog…
— [M]y concern is the flammable stuff that ignites the right. These are the social issues: gay rights, gun control, abortion and environmental regulation, among others. And if you think The Times plays it down the middle on any of them, you’ve been reading the paper with your eyes closed….
— The Times treats as strange objects to be examined on a laboratory slide (devout Catholics, gun owners, Orthodox Jews, Texans)….
— Start with the editorial page, so thoroughly saturated in liberal theology….

Okrent goes on from there, citing the cheerleading coverage of gay marriage in the Times, which is also mentioned by Posner. Or consider this amazing piece by the man who held Keller’s position just before him, Howell Raines, giving open advice to the Kerry campaign last year:

Two and a quarter centuries into its history as a nation, America has the most unfair tax system ever and the greatest gap ever between rich and poor. Even a real populist, however, would have trouble taking on these issues frontally. As Al From of the Democratic Leadership Council noted, Americans aren’t antagonistic toward the rules that protect the rich because they think that in the great crap-shoot of economic life in America, they might wind up rich themselves. It’s a mass delusion, of course, but one that has worked ever since Ronald Reagan got Republicans to start flaunting their wealth instead of apologising for it. Kerry has to understand that when a cure is impossible, the doctor must enter the world of the deluded.

Slap us silly, Mr. Keller, if we have a hard time believing that Raines’ extreme views about the “delusions” of Americans about “the great crap-shoot of economic life” might not work their way into a news story or two, or inform the assumptions underlying the stories. We agree with Keller that “conscientious reporters and editors are capable of setting aside their personal beliefs,” but how does one set aside the belief that America is an economic crap-shoot when reporting on unemployment, the minimum wage, or the outsourcing of manufacturing?


Judge Posner is correct that the growth of the New Media has been due to the lowered cost structure in information technology and deregulation, but he underweights the importance of deregulation in the first and critical phase of the rise of the New Media. Bill Keller is correct that the Times has not lurched left to protect its economic base — at least the circulation figures in the 31 counties surrounding Manhattan support that argument. Yet Posner’s economic argument gains better traction if you look at the national circulation figures for the Times. Finally, if the NYT is no more liberal than it was a decade ago, it surely is more comfortable openly identifying itself as liberal than it was then, which might support and undercut each man’s argument a bit.

The broad outlines of rises and falls will of course be explicable by supply and demand and market forces. Supply and demand is in fact a simple and effective explanation for the rise of the New Media. But the decline of the Old Media is full of eddies and currents that are not consistent with the overall flow of events. Still, the history of the declines of great institutions — from US Steel and General Motors to the New York Times itself — presents a picure of cultures that are very difficult to change, even after decades of faltering performance.

One Response to “The simple rise of the New Media and the painful, confusing decline of the Old Media”

  1. larwyn Says:

    Another post that should be column or a letter to the editor.

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