net.wars: Crossing the streams

by Wendy M Grossman | posted on 23 May 2003

Something alarming is about to happen. On June 2, the FCC is going to hold a vote to remove large amounts of regulation of media ownership in the US.

Wendy M Grossman

Five people get to vote - FCC chairman Michael Powell (son of Colin) and his four commissioners. Two of those commissioners are Republicans, and they are expected to support the proposals (which the FCC hasn't publicly published). The other two have gone on record opposing the secrecy and speed with which this vote is being held, as well as the gist of the proposals.

Deregulation has been the trend in both the US and UK for years. You can sort of see why: we have more and more media available. I can, sitting in my London office, choose to consume my Murdoch news on TV (Sky News), in a newspaper (The Times or The Sun), or in books (HarperCollins). Or I can consume my AOL Time-Warner news in magazines (Time), on the Internet (AOL, the CNN sites), or on TV (CNN), and then be entertained (Warner-Brothers TV and movie productions). Of course, in London there is also the BBC. But this nice little pair of pie charts shows what we're up against: increasing concentration.

Then again - and this is Powell's argument - we have the Internet. New technology will save us from media concentration, so regulation is no longer needed. Again, quite a few people have taken this argument to pieces because of two related problems. One: where a decade ago there were hundreds or thousands of small ISPs each selling its own service, now that everyone's moving to broadband providing service is increasingly the province of a small handful of companies, primarily cable and telephone companies: the Baby Bells, AOL, Comcast, and one or two more. As Farhad Manjoo points out in an article in Salon, the economics of the Web are against the provision of local news - at least, if that local news needs to be advertising-sponsored. Advertisers like massed ranks of eyeballs, not little niche markets, at least online. This may of course change as advertisers become more sophisticated in their use of new media, but the trend so far has been in the opposite direction.

Curiously enough, even in the short history of online media there are precedents. The early, proprietary days of CompuServe and AOL were marked by a distinct willingness to serve niche markets. The Tennis Forum on CompuServe, the World of Stoat on AOL UK - these were services that appealed to small groups of people. But they worked economically because everyone was charged per minute for access. As the amount the services could charge for access dropped, year by year, and advertising became a more and more important factor in the overall business, the emphasis changed dramatically. Small bands of users, no matter how loyal, obsessive, or active, were out. Mass appeal was in. All those niche services were promptly killed.

The Web is not developing in quite the same way. Shorn of the overheads of running an online service, a small outfit can, on the Web, create a viable content site with advertising and sponsorship revenues (plus, in some cases, selling T-shirts and other merchandise). It is not necessary to lose money on the scale of a Salon or be funded by Microsoft like Slate in order to provide a good news service. But so far the services that have succeeded in this way have tended to focus on technology news - the most dominant passionate interest on the Net. What will be viable in the long term is yet to be seen.

And that's the problem. It's been fashionable this week - for example, on Larry Lessig's blog -- to argue against Powell's belief by pointing out that Big Media is not scrambling to set up huge Web sites but fighting over buying TV and radio stations. Certainly. But in general the history of Big Media - especially Murdoch - on the Internet has been riddled with failure. The big successes on the Net - eBay, Google, Yahoo! - have in general come from people who were online in the early days and spotted a way to use the Net's unique qualities as a medium.

The big publishers, music companies, movie studios, and TV moguls all so far regard the Internet with great suspicion, and keep trying to remake it in their own image. They are far more likely to try to buy up anyone whose site shows signs of mass-market success than they are to create one of their own. Meanwhile, non-US organisations like the BBC can compete for US attention (as it did somewhat successfully in providing news about the Iraq war). They key is ensuring that the means of distribution (broadband) is not wholly owned by the content producers. You may remember this issue from 1948, when the courts ruled under anti-trust law that the movie studios had to divest themselves of the theatre chains.

So in the end, it all comes back to the FCC. If they are not going to regulate cross-media ownership on the grounds that the Internet will save us from media concentration, then they must act to ensure continued open access to the Internet's infrastructure. Preferably, they should take their cue from the World Wide Web Consortium, which this week took an important step this week by adopting a royalty-free patent regime, and do both.

Technorati tags:      

Wendy M. Grossman’s Web site has an extensive archive of her books, articles, and music, and an archive of all the earlier columns in this series. Readers are welcome to post here, at net.wars home, follow on Twitter or send email to netwars(at) skeptic.demon.co.uk (but please turn off HTML).