Ideas@TheCentre
A penny for their thoughts?
Deutsche Bank this week issued a valuation for Fairfax that included a nil valuation for its metropolitan print business. It is easy to point the finger at the Fairfax management and board for this outcome, but that is far too parochial an explanation. Newspapers around the world are facing similar issues.
It remains to be seen whether print media can be transformed into new and profitable business models based on paid subscriber content. However, any such transformation faces a significant constraint that was disguised by the old model: few people are prepared to pay very much for what journalists write. It is a reality journalists are understandably reluctant to accept.
Journalists cloak themselves in themselves in the mantle of democracy, but while a free media is essential to democracy, the traditional role of journalists as intermediaries and interpreters of information has been greatly diminished by the same forces that have undermined the old media business models.
For every Woodward and Bernstein, there are many more journalists who have been captured or compromised by their relationships with politicians and other institutions they are meant to scrutinise. The old media business models in many cases helped sustain these cosy relationships.
Far from being friends of free speech and media competition, many journalists have a long-standing record of support for increased regulation by government. They would prefer to answer to government regulators than to proprietors and shareholders because a competitive marketplace for speech and ownership and control of equity capital exposes them to greater competition and accountability.
Now that barriers to entry have collapsed, journalists are facing the same competitive pressures as their traditional proprietors. They will increasingly have to sell their product directly into a much more competitive marketplace for ideas and information. In the long run, this should make journalists better friends of free speech and more effective in scrutinising politicians, business and other institutions.
Dr Stephen Kirchner is a Research Fellow at The Centre for Independent Studies and a Senior Lecturer in Economics at the University of Technology Sydney Business School.
