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Traditional media companies (print and electronic) aren’t known for adhering to Adam Smith, but he saw them coming. In 1776 he wrote:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. . . . But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.
Smith foresaw the Save Journalism Project and HR 2054, the Journalism Competition and Preservation Act of 2019. As I wrote earlier, the project seeks public support for protecting the old media business model against Big Tech. HR 2054 would give media companies an antitrust exemption to collectively withhold content and negotiate prices with online distributors with at least one billion monthly users — that is, Facebook, Google, Yahoo!, Bing, and Tencent, but not Twitter.
This is exactly what Smith warned against. Here are some problems with the proposals.
Big Tech isn’t the cause of traditional media’s decline
Traditional media was on the decline long before the rise of Big Tech. Newspaper circulation in the US peaked in 1984 and had declined 14 percent before Facebook launched in 2004. Newspaper advertising dollars peaked in 2000 in real terms and declined 8 percent by 2004. Evening news viewership has been declining since at least 1993 and declined nearly 30 percent by 2004.
Years before the advent of tech platforms, consumers were telling traditional media that their business model was doomed. The businesses didn’t listen.
Antitrust exemptions won’t save traditional media
Government protections for decaying industries generally protect them from facing reality, but only temporarily. The protections feel right to those trying to hold onto the past, but they are actually chains. The future belongs to those who adapt.
Traditional media lost its hold on consumer attention, and thus its lock on advertising dollars. Consumers continue to turn to traditional media more than social media for news: According to the Pew Research Center, 49 percent of American adults get news from television, 33 percent from news websites, 26 percent from radio, 20 percent from social media, and 16 percent from newspapers. Social media isn’t taking over news, but it is becoming (or has already become) a better place to advertise than traditional news media.
Antitrust exemptions will harm consumers
HR 2054’s antitrust exemptions will harm consumers by delaying innovations and possibly killing smaller media companies. The antitrust exemptions apply only to news providers that have “dedicated professional editorial staff that creates and distributes original news.” It’s hard to say how that will be interpreted, but its intent is clearly to exclude news contributors that old school providers view as threats.
And even new school providers that are included could easily be marginalized in collective negotiations and news restrictions. Regulations generally work to the advantage of the large and influential, protecting them from competition. Economists James Bailey and Diana Thomas find that greater regulation is associated with industries having fewer and larger firms and with larger firms having fewer competitive threats.
What should be done?
Government officials should listen to Smith and resist the temptation of protecting a dying business model. Maybe they and old media should think differently: What if Big Tech platforms are the future for news providers that are willing to adapt?
Government officials should resist the temptation of protecting a dying business model. They and old media should think differently, and consider whether Big Tech platforms are the future for news providers that are willing to adapt.
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