In the newspaper this morning there were a couple of articles that caused me to reflect on the level of understanding of the Digital Paradigm. The first by respected business journalist Fran O’Sullivan was about the consequences of the refusal of the Commerce Commission to approve a merger of media giant Fairfax and NZME. But the real focus of the article was about the effects that digital businesses are having on established organisations and the inroads that are being made to traditional funding models. The second was about Margarethe Vestager, the head of the Directorate General for Competition. That article was about the importance, at least to the EU, of the philosophy that a well-policed economy yields the largest and most widespread benefit for society. Some of the examples of steps that were taken involved digital economy giants like Apple, Google and Amazon.
By way of a very brief background, the New Zealand Commerce Commission has made a few waves lately by refused approval for two significant attempts by large media companies to merge. The first was Sky and Vodafone – a broadcaster and a communications company. The benefits of the merger for both companies were obvious. Access to a large well developed Internet provider (Vodafone) by Sky. Ability to enhance an established content delivery service with an established customer base (Sky, albeit content delivery methods are outdated but the merger would have changed that) by Vodafone. But no, said the Commerce Commission. For reasons expressed in a 140 + page decision, this was not a good idea.
The second attempt was a proposed merger between news media companies Fairfax (an Australian company) and NZME (publisher of the NZ Herald). Not a good idea, said the Commerce Commission once again, failing to see the dire state of the news media market but concerned that one company might have too much control over content, especially in an election year – conceptually, a lack of diversity in the news media market.
So that is the background. What Fran O’Sullivan complains about is the fact that the Commerce Commission overlooked or understated the impact of digital players like Google and Facebook on advertising revenue, and the effect that this is having on the viability of news media operations. And of course, a viable Fourth Estate is an important and critical feature of a modern democracy – prepared to hold authority to account, prepared to ask to hard questions, prepared to investigate and uncover malpractice of any sort in the corridors of power.
The focus of the article of the EU Directorate for Competition (EUDC) is mistrust of large corporates and one wonders whether or not that mistrust is the starting point or develops from an evidential foundation. Although there is a hat-tip to the market, it seems to me that the EUDC is about policing and control.
But common to both articles and especially to that of Fran O’Sullivan is a concern about the disruptive effects that new technologies are having on commercial activity. From the news media perception the concern is palpable. The old model is under threat. The solution, according to O’Sullivan is to regulate what she described as the oppressive behaviour of the digital corporates. She suggests that it is time that politicians woke up to the problem and cites steps that are being taken in Australia to examine the impact on public interest journalism of search engines and social media as well as an investigation into “fake news”.
The disruptive effects of new technologies have been going on for some time. We are well into the Digital Paradigm, but not so far out of the old pre-digital paradigm to be concerned that the past ways of doing things may not continue. We anchor ourselves in a comfortable past and really do not like change – especially when there are those who have the foresight and initiative to profit from disruptive change.
The news media provides an interesting model because in fact it is the child of the first communications technology paradigm shift – the printing press. I have suggested elsewhere that the Digital Paradigm is at least as significant, especially in the field of communications, as the printing press. And for some time it has been having a disruptive effect. Initially news media answered the new technology by putting news content online. Some providers set up paywalls for content – an attempt to continue to monetise what they were publishing. This is not a bad thing. You have to pay to buy a “kinetic” newspaper. Why not do the same online?
Convergence posed its own challenges as newspapers online began to include video content and broadcasters included text articles among their offerings. The question arises as to which standards apply to whom. Are broadcasters who make text available subject to the Press Council? Are traditional print media who make video available via a website subject to the Broadcasting Standards Authority? Since the Online Media Standards Authority (OMSA) was absorbed into the Press Council it would seem that the Press Council may be the answer to the regulatory convergence problem. The Government missed the opportunity presented to it by the Law Commission in 2013 to have a single media regulatory body – a very bad call in my opinion.
But the regulatory bodies that have been set up deal with content. The Press Council and the Broadcasting Standards Authority don’t deal with struggling or failing business models. The Commerce Commission could indirectly have done so but didn’t.
One option is to try and maintain the existing business model. As O’Sullivan suggests, bring the digital corporates to heel in the same way as the EUDC does. In this way they may not pose such a threat to the established model which may just manage to hang on for just a little while longer. But in preserving the existing model it is necessary to call on the coercive power of government. A protectionist perpetuation of a model that has had its day.
Another option is to recognise that the business models that underpin the news media and so-called public interest news media is the child of a paradigm that no longer exists. Unless the news media adapts it will die. And if this sounds like a call for evolution in the face of revolution – a sort of economic Darwinism – that is exactly what it is. The Digital Paradigm is so fundamentally different from what could be called the print or kinetic paradigm that news media companies are going to have to examine more than just content delivery but realise that they must examine, understand and utilise the underlying qualities of the new paradigm to develop their business models. And that takes a lot of thinking outside the box and a willingness to start again from scratch.
The result may be an entirely different method of news dissemination – not local but global. Multinational media companies are not unknown, even now but the business model and the way that business is conducted may be radically different from, say, Newscorp.
The third way may be based on the adage “if you can’t beat’ em, join ‘em” One of the targets of the EUDC has been Amazon. Amazon’s founder and CEO is Jeff Bezos. And Jeff Bezos bought the Washington Post for $250 million – and turned a legacy news media organisation around. Perhaps those who are concerned that the digital corporates are posing a threat to current news media business models should rather view them as an opportunity for change.