Top House Democrat Laments Online News Woes

Online news and government

A prominent House Democrat on Wednesday said that the dissipation of traditional news outlets threatens to leave a void in an institution of considerable civic value, warning of the adverse effects that will follow as a shrinking industry can dispatch ever fewer journalists to hold businesses and governments accountable.

Speaking at a Federal Trade Commission forum on journalism in the digital age, Energy and Commerce Committee Chairman Henry Waxman spoke of the “troubling trend occurring in the media sector” as a market failure, saying that the government has a role to play, though he remains unconvinced by any of the policy proposals currently on the table.

“The newspapers my generation has taken for granted are facing a structural threat to the business model that has sustained them,” Waxman said. “We cannot risk the loss of an informed public and all that means because of this market failure.”

Waxman’s concern is based on the premise that in spite of the proliferation of online and cable news coverage, newspapers still account for the lion’s share of the original reporting that drives the news cycle.

It further accepts that the Internet has yet to show itself capable of supporting the extensive news gathering operations that produce stories that carry a high civic value.

Those stories are often fundamentally unsexy, dreary slogs about bureaucratic ineptitude, local health hazards or corporate avarice that can take weeks or months to report, but that can, on occasion, spark a public outrage and effect a significant change for the better of the community.

The problem is that online advertising nets news organizations a fraction of its print counterpart, but consumers are increasingly abandoning the printed medium while advertisers find new ways to deliver their messages to consumers.

“The Internet has decoupled advertising from news,” said Tom Rosenstiel, director of the Pew Research Center’s Project for Excellence in Journalism. “Many advertisers no longer need the news to reach their audience.”

Rosenstiel estimates that newspapers currently net about 90 percent of their revenues from their printed editions, with the remaining 10 percent coming from the Web. The costs of printing and distributing the physical newspaper total around 50 percent of overall expenditures. That means that a transition to an all-digital format, while it would reduce costs considerably, would also eviscerate a far greater portion of a news operation’s revenue, with the inevitable result of smaller news staffs and sparser and more superficial coverage.

“We used classified advertising to subsidize coverage of the zoning commission,” Rosenstiel said of newspapers’ traditional cash cow.

That’s what Waxman means when he refers to market failure.

“Congress responds to market failures,” he said. “Government’s going to have to be involved in one way or another.”

He made it clear, however, that advocates of the various policy proposals circulating will have to present a compelling case that addresses the many concerns that arise with greater government involvement in the media.

[cob:Special_Report]Chief among them is the fear that news outlets beholden to policymakers for their survival would lose the critical function of accountability journalism Waxman and others are so convinced needs to be preserved.

He added that any proposal calling for greater funding for public media would need to produce a workable model for where the money will come from.

Other suggestions have included relaxing media ownership regulations and various adjustments to copyright, antitrust and tax laws to give news organizations a more sustainable position.

“I have an open mind in all these different proposals,” Waxman said, though he cautioned that any proposal would need to garner a broad consensus throughout the industry, as well as among lawmakers on both sides of the aisle — no easy feat.

He also acknowledged that the current transformation of the media landscape is an inexorable process, and the loyal readerships that newspapers have enjoyed are beginning to look like the remnant of a bygone era.

“Audiences will continue to fragment in direct proportion to the number of URL addresses,” he said. “It’s not our job to plug dykes and deny the evolution of media.”

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