The media business shouldn’t be protected from antitrust | American Enterprise Institute
Traditional media companies (print and electronic) aren’t
known for being adherents of Adam Smith, but he saw them coming. In 1776 he
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. . . . But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
Smith foresaw the Save Journalism Project and HR
2054, the Journalism Competition and Preservation Act of 2019. As I wrote earlier,
the Project seeks public support for protecting the old media business model
against Big Tech. HR 2054 would give media companies an antitrust exemption to
collectively withhold content and negotiate prices with online distributors
with at least 1 billion monthly users, i.e., Facebook, Google, Yahoo, Bing, and
Tencent, but not Twitter.
This is exactly what Smith warned against. Here are some problems with the proposals.
Big Tech isn’t the cause of traditional media’s decline
Traditional media was on the decline long before the rise of
Big Tech. Newspaper circulation in the US peaked in 1984 and
had declined 14 percent before Facebook launched in 2004. Newspaper advertising
dollars peaked in 2000 in real terms and declined 8 percent by 2004. Evening
news viewership has been declining
since at least 1993 and declined nearly 30 percent by 2004.
Years before the advent of tech platforms, consumers were telling
the traditional media that their business model was doomed. The businesses
Antitrust exemptions won’t save traditional media
Government protections for decaying industries generally protect them from facing reality, but only for a while. The protections feel right to those trying to hold onto the past, but they are actually chains. The future belongs to those who adapt.
What happened to traditional media is that it lost its hold
on consumer attention, and thus its lock on advertising dollars. Consumers continue
to turn to traditional media more than social media for news: According to the Pew
Research Center, 49 percent of American adults get news from television, 33
percent from news websites, 26 percent from radio, 20 percent from social
media, and 16 percent from newspapers. Social media isn’t taking over news, but
it is becoming (or has already become) a better place to advertise than
traditional news media.
Antitrust exemptions will harm consumers
HR 2054’s antitrust exemptions will harm consumers by delaying innovations and possibly killing smaller media companies. The antitrust exemptions apply only to news providers that have “dedicated professional editorial staff that creates and distributes original news…” It’s hard to say how that will be interpreted, but its intent is clearly to exclude news contributors that old school providers view as threats.
And even new school providers that are included could easily
be marginalized in the collective negotiations and news restrictions.
Regulations generally work to the advantage of the large and influential,
protecting them from competition. Economists James Bailey and Diana Thomas find
that greater regulation is associated with industries having fewer and larger
firms and with larger firms having fewer competitive threats.
What should be done?
Government officials should listen to Smith and resist the
temptation of protecting a dying business model. Maybe they and old media
should think differently: What if Big Tech platforms are the future for news providers
that are willing to adapt?