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FTC talks: Tom Rosenstiel, James Hamilton, Henry Waxman, Matthew Getzkow, Karen Dunlap

This is the jump page for rough, contemporaneous notes of the second day of the U.S. Federal Trade Commission workshop: "From Town Crier to Blogggers: How Will journalism Survive the Internet Age," held Dec. 1-2, 2009, in Washington, D.C., at the FTC's 601 New Jersey Avenue offices. Your scribe is Bill Densmore, a fellow at the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. Of course we've tried to provide accurate quotes and summaries. But the FTC has stenographers recording all of the testimony and that should be your definitive source. The home page for this coverage is http://www.newshare.com/wiki/index.php/ftc


Tom Rosenstiel

they could cut the cost of their print and distribution by more than 40%, but you would be eliminating 90% of your revenue.

"So the question for the media is is there a new economic model to subsidize this reporting online -- are their new economic commercial models that can be invented."

"That revenue is like the sand in an hourglass. The amount of sand is the amount of time the newspaper industry has left to figure out what it's economic model is. Once these institutions vanish, it will be very hard to recreate them."

Do we care that newspapers will disappear? He thinks we have a stake as a civic society in the values that reside on those organizations. That news is there to inspire public discussion; that journalists have their first loyalty to the citizens in a community, not even to their employer. That they are not interested in a political outcome. That they are there to report news accurately and in proportion and context.

"What's growing in the reporting sphere is more self-interested reporting . . . that has as its goal to manipulate or shape public discussion to a particular outcome . . . so I think we have an interest in subsidizing an independent press that works in spirit on behalf of all citizens. That is the question on the table: How do we continue to have what we think of as an independent press."

Jay Hamilton: Duke University

Journalists rarely worry about maximizing profits. The set of stories that survive, the news outlets that survive will be determined by the answers to those five economic W questions.

If you think about the economics that drives news and information, think about the demand side. What's the information that people demand? Anthony Downes studied this:

  • Producer information
  • Consumer information
  • Entertainment
  • Citizen/voter information

The last type of information "is subject to a market failure." The fact that your vote has a low statistical probability of determining the outcome of an election means that even if you care about an election, many people chose to remain rationally ignorant about an election. "It goes against the Jeffersonian concept of democracy, but it is an important thing to acknowledge."

Where is the demand for political reporting? It has to do with the problem of rational ignorance.

He thinks of it as duty, diversion, drama. He takes his kids to vote. For some people CSPAN is like ESPN. He keeps track of scandals and political horse races.

A public good is something that be consumed over and over without loss of value. He lives in Raleigh-Durham. In 2008, the News and Observer spent $280,000 to produce a story over four days on the probation system in North Carolina. A total of 580 people had been murdered by people out on probation over a decade.

"Three years from now, there will be people walking around the Raleigh-Durham area who will not be murdered because of the story the News and Observer did."

"The main problem with the market for public affairs reporting is the news organizations cannot fully monetize the benefits.

Let's examine other motives: NOn-profit media taps into a different motive. 150 years ago partisan information solved the market failure. Thirty years ago, news organiztions were owned by people; that provided psychic benefits.

"Is there a market failure? I think there is."

"Benefits that a news organization cannot monetize."

Part lowering cost -- computational journalism, part of it raising the return to people who are interested in public affairs.

U.S. Rep. Henry Waxman of California

Waxman is chairman of the House Energy and Commerce Committee. He has been focused on health care and climate-change legislation. His committee has jurisdiction over the Federal Trade Commission.

"A significant and troubling trend is occuring in the media . . . (a threat to) the continued existence of a mass of quality journalism."

His generation took newspapers for granted. They are now facing a structural threat to the business model that has sustained them. Newspapers relying of advertising revenue have been particularly hart it.

"We are seeing this market failure go on and on and one."

"It is not certain it can generate revenues of such an extent" as to replace anything close to journalism as we've know it. He calls the change structural, not cyclical. Revenues will continue to be squeezed and we'll see audiences fragmented in direction proportion to the number of URL addresses.

This has implications for democracy. He suggests six things Congress might look at:

  • Establishment of new legal and tax structures for publishers
  • More philanthropic support for media outlets
  • Re examination of antitrust laws
  • Review of cross-media laws that might constraint commercial vitality
  • Exploration of new sources of journalism from universities to hyperlocal web-based journalism
  • Prospect of public-funding for quality journalism to preserve critical assets devoted to public media

Now, Congress responds to market failures," says Waxman. He says the health bill is an example -- trying to find ways for millions of Americans to get health coverage when they can't afford it or have pre-existing conditions.

Waxman: Calls for consensus proposals

"Now I have an open mind in all of these proposals ... I see every reason for us to discuss all of these proposals," says Waxman. But he says there are two criteria proposals must meet:

  • There needs to be a consensus within the media community and the public that it is a good idea. ideas must emerge from a consensus.
  • The proposals need bipartisan support.

The internet is replacing the public square as the place in cities and towns of America where people go to discuss."

He notes an interview in which public television newscaster Jim Lehrer lamented there is much opinion about the health-care legislation, but few sourcies of faction information about what the bill says and would do. "And that's the issue, an ongoing critical mass of original reporting," says Waxman.

Professional report "helps us make sense of a complicated world."

"We have to figure out together how to preserve that kind of reporting."

Thinks government will 'have to be involved'

"I more and more think as we look at these various solutions, government is going to have to be involved in one way or the other."

For those who ask for money, exemption, tax treatments. "Eventually, government is going to have to be responsible to help resolve these issues and our whole society depends very much on reaching a solution to a problem which, like so many problems, if left alone, will not be solved by itself."

Matthew Gentzkow: Univ. of Chicago business school

Gentzkow is a Neubauer Family Faculty Fellow at the Booth School of Business.

He discusses a paper about research he's conducting. it is producing new data on entry/exit of U.S. dailiy newspapers from markets from 1869-2004.

"When newspapers close, fewer people vote." The first and only newspaper closing matters, if there are two or more papers and one of them closes, it doesn't matter much at all.

"When newspapers close, you see presidential turnout and local turnout but decline substantially."

However, since the introduction of television, there has been no detectible effect on presidential voting when a newspaper closes. That's because national television provides a huge amount of information about national politics.

He describes his data set. They take data on newspapers from directories produced since 1870. They digitized the directories at four-year intervals and are going to combine this data with county voting data -- from 1872 to 2004.

They follow the rapid growth of newspapers a gradual decline and flat period to 1980, and a slow drop since then.

"You couldn't look at that picture and see any trend related to the Internet." "The trends in circulation that are happening right now are trends that have been happening for a long time and there is no clear, detectible effect of the Internet."

There is a critical challenge in analyzing the data. Newspaper openings and closing are not random. Cities growing get newspapers; those that are shrinking lose papers. Voting responds to the same things as newspapers. They address this statistically in several ways to weight it out.

"Newspapers tend to enter communities where voter participation and turnout is falling," he says. Where population is growing, voter turnout is falling, generally.

First newspaper increases voter turnout by 1 percentage point. Among people who read the newspaper, that increase is 4 percentage points. Among those who read the paper who would not otherwise have voted, it is a 13 percentage point increase.

It is not a huge change, but it is significant, and it is large enough to affect the outcome of an election.

They have also studied ideological diversity and partisan effects.

Karen Dunlap, The Poynter Institute

She tells a story about the Times Herald Review, of Middletown, N.Y. And about Christine Young, a reporter for the paper, did a story about asfdasfd Jones. He spent 22 of his 53 years being bars.

During two decades she reported around the country but never forgot the murder and carried about information about Jones in a plastic basket. She decided to track down Jones. He was then in a prison 20 miles from her. She read volumes of transcripts, and talked to the mother of the victim, who thought they got the wrong man. The newspaper created a multimedia story and ultimately he was released.

The story required:

  • Investment of time
  • Report skills

She tells another story, about Don Bolles and Chauncey Bailey. Sandy Close and Dori Maynard convened the coalition. The continued reporting of the project "presents a stand against fears and shows a commitment to the community."

Okland is the base of Spot.us, and some of its stories show the worth of community engagement.

Tampa: The girl in the window. Seven-year-old girl, Danielle. Results of the story:

  • Childrens board -- a 30% increase in calls
  • Times website had a million page views -- a record
  • Calls to adoption agencies went up
  • Translated in seven languages / Tel Aviv/South Africa
  • Retirement funds sent to Danielle
  • People were shocked this could happen in the 21st century

"Journalism allows us to look in our our communities and see ourselves."

"Sometimes we lose track of the real (positive) effects of journalism." But there are some problems, too:

  • Poor reporting, editing, produced
  • Some communities overlooked or underrepresented
  • Some misquoting

She is worried we may have a lot of social interaction, "but may lose the news."

She is concerned we could move to more elite news, higher cost, consumed by fewer people. There is a huge social cost in that, including the possibility of social unrest.

Solutions? The public needs to be a part.