The fractured media landscape we have today was already breaking apart two decades ago, and the economic models that underpin them predicted what we have today.
That’s the benefit of reading All the News That’s Fit to Sell, a 2003 book from James T. Hamilton, a well-respected journalism professor. I’ve read Hamilton’s work before, and this book was one I’ve long had on my list. I enjoyed the work, which is just as relevant 20 years later.
His research is helpful for my understanding of journalism models that I’ve spent my entire career working on. The book is also helpful for those interested in a dispassionate outline of the beginnings of the digital transformation of media – which we’re now fully immersed in.
Below I share notes for my future reflection.
Here are my notes:
- News consumers have a “rational ignorance” about how much they actually need to know. This is a well-established concept in political science: Most voters really will not influence any given election.
- Academics disagree about just how much news-knowledge readers need to improve democracy.
- In 2003, the top 5 of the country’s 100 largest newspapers have 21.5% of print circulation and 41.4% of web traffic. The web was already showing the benefit of scale.
- News production is a public good (no less valuable to additional users); an experience goods (need to consume it to evaluate it) and high-fixed, low-variable cost model.
- Those factors gave rise to the celebrity journalist, whose brand could remain constant even if the content might not.
- Anthony Downs (1957): people desire information for four functions: consumption, production, entertainment and voting (10)
- Downs’s voting information math that each voter informally makes: (Benefit of Candidate A versus Candidate B) times (increase in probability that the voter makes the correct decision) times (probability the vote is decisive in the election) minus (costs of becoming informed)
- Why do voters consume information about voting if the likelihood of them affecting change is so minimal? Three reasons: Duty (I should do it); Diversion (I like the horse race, like sports) or Drama (these people stories or issues pull me in)
- “Rational ignorance among consumers generates rational omissions among reporters.” (12)
- “Brands economize on uncertainty and search costs by presenting consumers with a readily understood approach to the news.”
- Harold Hotelling (1929) pioneered “spatial models” of decisions to offer products by answering the question: if two ice cream vendors could choose to locate on a beach field with hungry consumers, where would each locate?” They both go to the middle to split the beach.
- Anthony Downs (1957) brought spatial models to politics, which is more complex as more dimensions are added
- Author argues the five Ws about what news happens:
- Who cares about piece of information
- What will they pay to reach it, or what are others will to pay to reach them
- Where can publishers reach that audience
- When is it profitable to provide
- Why is it profitable?
- Author’s previous book Channeling Violence took a similar approach to how economic models inform TV news models.
- Market equilibrium in offering of soft and hard news: as costs rise or fall for each of these, the market will seek to maximize profit.
- Hard news produced for wealthy and educated readers then generates positive externalities (others can consume it)
- Consider how differently TV, newspaper and online media work. Each is more atomized than the last. TV must keep linear and chronological attention (you don’t skip around); the newspaper has sections and online it’s all broken apart.
- Authors of influential Information Wars, Shapiro and Varian (1999) show bundling goods can raise prices (about software but can be translated to news); They note that this explains examples like the combination of articles in the magazine and the combination of issues of the periodical into a subscription.
- An “Information cascade” is when people make decisions based on others without taking into account their own needs. This has been used to describe financial markets but can also describe news environments: a small initial group of consumers grow as later consumers follow their lead.(20) This is a classic ”experience good.”
- Journalists have a “herding instinct” (if others decide this is important, I should follow it too)
- Steiner (1952) showed how a monopoly might lead to more hard news coverage than more diverse news ecosystems. (Steiner Effect)
- On news publishers: “owners vary in the degree that they seek profits, public goods or partisan ends.” This explains the variety of how news ecosystems orient in a spatial model.
- Individual owners can pursue recognition, influence and civic altruism, which is why some push for local ownership.
- “In the late 19th century the rise of advertising, innovations and printing technology that increased the importance of scale economies and demographic changes in the size of the reading public made it more profitable for newspapers to adopt “objective “or non-partisan approaches to public affairs.” (25)
- News has large “first copy costs” and negligible additional costs
- “Individuals do not factor in the benefits to society of their civic knowledge when they decide how much they’re willing to pay for news goods”
- How do we combat rational ignorance, which predicts hard news will be under provided and underconsumed?
- -lower the cost of information production and access (FOIA,)
- -change of the property rights of broadcasters cable operators (Mark Fowler: “The public’s interest defines the public interest.” (Fowler also called the TV “a toaster with pictures”)
- -Tax and subsidy provisions for information (foundations and tax code)
- -public provision of information (Open data)
- -regulation of ownership structures
- -antitrust enforcement
- Though we often talk about covering the news objectively as an ethical or professional norm, objective news coverage is a commercial product that emerges from market forces.” (37)
- In 1870, of the daily newspapers in the 50 biggest US cities 13% identified as independent of either Democratic or Republican parties, with 26% circulation; by 1880 the number was 34%, including 55% of circulation, and by by 1900 47% of dailies call themselves independent.
- Among newspapers with circulations in the top 10% of those analyzed, independent papers accounted for 25% of circulation in 1870 and 75% circulation in 1880. Bigger cities and bigger newspapers turned independent or non-partisan sooner and faster because they were able to accumulate more advertising revenue to reduce subscription costs which garnered more audience which grew more advertising.
- Downs says therefore different types of information evolved: entertaining stories, information that helps producers make business decisions, data that help consumers make purchase decisions and information that helps a person make political decisions
- George and Waldfogel (2000) Black residents read more papers in cities with more blacks (presumably because the product better reflects them)
- New printing technology that allowed much larger print runs (25k in an hour, etc) changed the game: in 1835, the Sun and Herald ushered in the penny press, focused on crime and largely avoided (partisan) politics
- Horace Greeley founded 1841 the New York Tribune to be a different kind of independent: to take the right stance regardless of party affiliation. This largely represents the 20th century ideal (46)
- In 1879, the Cleveland Press editor said: “the independent newspaper is always a more profitable concern than the party organ, no matter how successful the latter may be” 47
- In 1946, the Philadelphia Ledger added a “Hoe double-cylinder rotary printing press” that produced 8k sheets an hour; by 1875, its successor did 25k. These heavier machines were far more expensive, from a few thousand to $80k+, which made small party presses less effective; it was an era of consolidation and larger operators with more mass appeal
- Associated Press and others sharing copy across the country (with different political affiliations and cultures) further defined nonpartisan writing
- 44% in 1879 was ad revenue for newspapers and periodicals, then 54.5% by 1899 (49)
- Philadelphia firm NW Ayer and Son published three American Newspaper Annual with circulation numbers to help advertising buyers
- Between 1870-1900, independent outlets using the English language merged and became increasingly dominant, adding reporters to cover Congress, a proxy metric for investments in journalism
- “Press independence emerged as a commercial product in predictable times and places” 70
- Women 18-34 demographic was a valuable “marginal” viewer (38%) of nightly news (not regular watcher but occasional, and hooked by individual stories), and they are more liberal than average. This structural reason is why they were less likely to call media biased but older men were highly likely to.
- “The candidate ratings reported by regular voters were nearly the same as those reported by marginal voters” (75) with less information and following less closely, less engaged put many national politicians on a left-right political spectrum similar to more engaged voters. Why such little difference?
- “If news directors are assembling an audience by selecting topics, economics predicts they may at the margin try to pull in the occasional viewer rather than try to make the core viewer happier.” (93)
- “Media bias as product differentiation”
- “Those who participate more in politics are more likely to consume news about politics.” Not the other way around. 111
- “It is still the case that the Clinton voters with the least political knowledge do not express more regret, that is, disapproval of his job handling.” (120) using Pew data showing less engaged voters and more engaged have similar amounts of approval and regret on their voting (though less knowledgeable have higher rates of uncertainty later)
- Author used DICTION program for sentiment analysis: News programs that used more self-reference terms (I, me, mine), more complex language and more collective nouns (teams, companies, orgs, countries); women drawn to human interest stories of people , health and family (131) Stories of danger and hardship drew all demographics
- “Local crime rates have almost no statistically significant impact in explaining the amount of coverage devoted to particular types of crime in a city.” (139)
- Correlation to a city’s Time subscription rate to hard news: “As the percentage of residents subscribing to Time magazine increased, papers were more likely to add stories about poverty, Medicaid, soft-money political contributions and campaign finance reform… As People magazine subscription percentage is increased, editors were less likely to cover Medicaid… Areas with higher Playboy subscriptions had fewer discussions of food stamps and Medicaid in their newspapers” (151)
- “The real world incidence of poverty in food stamps is actually negatively correlated with newspaper coverage. The higher the level of family assistance payments or food stamp payments in a city, the lower the number of stories about poverty or food stamps in the paper” Contrast that with: AIDS and unhealthy air both did correlate to grater coverage of both.
- “Cities with more computer programmers had more stories about computers during 1998”
- [From early 2000s] this Pew survey, 55.8% of respondents reported they regularly watch local television news compared to 29.9% who say they watch the national network evening news
- Research did not find Gore/Bush sentiment coverage differences between TV stations despite endorsements
- In 1969, the average American household had 7 channels — few options. In that era, the FCC reviewed how much public affairs information stations offered as part of license renewal, so that kind of reporting was an informal way to protect a near monopoly. At the dinner hour, fully one-third of households tuned into one of the three network evening news programs — an advertising strength resulting in a “highly profitable oligopoly in TV news”
- By 2000, the average American household had 63 channels and though network news still commanded 23% of regular viewership, those programs shifted to more soft news and celebrity anchors to attract those views, as most stories were already known (because of an increased news cycle).
- From the 1960s into 1970s, “High quality news could be seen as the price that networks paid for their licenses.”
- James Aubrey the president of CBS television from 1959 to 1965 called the head of the news division: “they say to me ‘take your soiled little hands, get the ratings and make as much money as you can.’ They say that you “Take your lily white hands, do your best, go the highroad and bring up prestige.”
- Arthur Taylor president of CBS from 1970 to 1976 thought making profit in the news division would hurt their ability to say to the FCC in defense of their license: “well I do make all this money, but on the other hand, I have to be able to support our big loss leader, the news division.” (164)
- Describing the actions of CBS chairman William Paley evening news executive producer Tom Betag recalled “there was a time when Paley was asked before the stockholders ‘how dare you lose $6 million a year on news?’ And Paley said ‘because I like what that $6 million buys me.’ It bought him respectability. It bought him to the ability to go before Congress and every time he got beat up on the Beverly Hillbillies he’d say “yeah but I take a loss every year on Walter Cronkite. I do that as a public service and gave the corporation a sheen of cachet.”
- In a 1976 memo, CBS news President Richard Salant said “We in broadcast journalism cannot, should not, and will not base our judgment on what we think viewers and listeners are most interested in.”
- In the early 1980s a shift began as network news reduced its coverage of the federal government. As CBS News division head Van Gorden Sauter put it “We move the broadcast out of Washington. We emphasize stories from across the country, where we could tell national stories to a human experience in human perceptions more than through statements of bureaucrats and politicians.” (165)
- Dan Rather described the move to the “back fence” principle: what would neighbors talk about, the birth of a Royal baby, the Falklands dispute or events in the Middle East? It’s the birth of the royal baby, he said.
- In 1990, there was a battle: Dan Rather called Tom Brokaw’s NBC Nightly News as “news lite,” which set off a war of words (167)
- Even “news you can use” strategy of personal finance and health was derided as soft news (part of the hard/soft continuum)
- In 1986, ABC moves World News to 6:30p so Jeopardy could air at 7p, other stations followed. The game show too precedent
- In 1986 CBS News president Howard Stringer said “the dreadful dilemma is that we want to cover the news as effectively and comprehensively as before, but… You feel the hot breath of debtors prison.” Staff and bureaus were cut in 1980s
- Cable competition in deregulation did not have a statistically significant impact on whether the key congressional votes tracked by Congressional Quarterly were covered on the nightly news.” (187)
- …” however coverage of each hard news story was a much lower in the years when television was deregulated”
- 1984: A changed regulatory environment, one in which the FCC gave a signal to stations that public affairs content will not be measured and license renewal will be nearly automatic.” (In 1987, the FCC’s fairness doctrine was essentially revoked.)
- “Brand names and reputations will be important as signals about the potential content of sites,” the author writes in 2003 of the internet maintaining print publication standards. Though this has remained true (people still work for brand names), social media platforms and our individual friends carry more of that brand themselves (I read it on Facebook or I saw it in my friends newsletter)
- Of internet, he writes: “The implied fragmentation of the market may reduce common experiences and lead to the polarization of views among groups. The division of the audience into smaller groups may also reduce the revenues available for each outlet to produce a high quality product.”
- “If people get utility from self expression on the web, then content creation costs are reduced”
- Top five newspapers had 21.5% of circulation but 41.4% of all links (see author’s chart below)
- Use of links as an “information cascade” (198)
- Internet democratizing information: The top five zip codes for where authors live have 31% of the total, the mean of all was 2 but top was 69; in contrast, web pages authored in top 5 zip codes were 16% (200)
- Search traffic and ad rates for soft news terms like celebrities are larger than for hard news (which advertisers avoid)
- “What will news markets look like when information is costly to create but nearly costless to disseminate?” (213)
- “To learn what’s new in the world, you have to start with what’s old.”
- “The Network anchors deliver the news, they are awarded in the marketplace for delivering viewers to advertisers.”
- In a time of declining overall viewership and increasing our rates due to lack of large scale options salaries paid to network news anchors increased. In 1976, anchors, which include Walter Cronkite and John Chancellor earned something resembling $0.13 per thousand viewing households. By 1999, Dan Rather and Tom Brokaw were earning closer to $0.31, more than doubling.
- In 1980, 72% of television viewers watched the evening news by 2000 and the total is 44%
- News anchor salaries grew the fastest in the late 90s when audiences became increasingly fragmented because the network news anchor celebrity statue is more important to cut through noise
- In the author’s DICTION analysis, liberal-conservative pundits used more distinctive and divisive language on tv than in print (234)
- In 1972, Nobel Prize-winning economist Ken Arrow argued: The “public interest” does not exist (236)
- Amartya Sen has shown conflict in supporting individual freedom and efficiency
- Debates about media policy are impacted by preferred metric: voter participation (then give them more fear and shock!), number of voices or policy outcomes
- “A small set of economic concepts explains a particular set of characteristics of news products: public goods, experience goods, product differentiation, high fixed costs and low variable costs and positive externalities.”
- Some media consolidation in local markets brought new beats as papers worked to attract new readers rather than compete for existing ones (240)
- “Across cities Blacks are more likely to purchase newspaper in cities with more blacks (and hence more material targeting blacks)…
- As penetration of the New York Times increases in a city, readership of the local paper among college-educated people declines and the voting rate in local elections among wisdom declines.” (240)
- Among radio stations, informational programming expanded significantly once the FCC’s Fairness Doctrine was dropped ”suggesting a chilling effect if the option was “get it right” or don’t do it at all
- Existence value; some of us just like knowing that journalism can exist
- Three media models
- 1. Principal agent: news org on behalf of reader; legislator on behalf of constituent
- 2. Condorcet’s jury theorem: More of us make better decisions than one of us. Individuals have common goals but different information
- 3. Optimistic pluralism: we join movements we learn about
- Fractured media has meant less political participation and faith in the process (Bartels and Rahman 2000) and lowering political moderate participation (Baum and Kernell, 2001)
- As the NYT wins national readers, they vote less in local elections (George and Waldfogel 2001)
- Lyengar (1991) showed certain stories of poverty made it seem like a personal or social failing
- Deli Carpini and Keeter (1996): American civic knowledge has been low for 50 years (245)
- Lupia 2001 research shows we use crutches and shortcuts despite being a low information country on civic affairs
- The Kaiser Family Foundation was an early news funder, including of a program that taught real science behind ER episodes, leveraging that celebrity status
- In most benefit-cost analysis the benefits are harder to quantity than the costs because they’re often assessing market failures with positive or negative externalities
- Evaluation is effort not spent on implementation
- “A decision to wait for more research implicitly favors the status quo”
- Advertisers seek consumers, politicians seek voters and nonprofits seek minds to change
- At a 1984 hackers conference, Stewart Brand famously said: “information wants to be free”
- “Outcomes in media markets are really only the aggregation of millions of decisions by individuals about what to read and consume.” (263)
