FTC Chairman Leibowitz questions how journalism will survive

In remarks this week at the opening of a two-day conference examining the business model for media, Federal Trade Commission Chairman Jon Leibowitz said it seems the bottom is falling out of the news business.
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The future of journalism and the economic underpinnings of the profession were the focus of a two-day conference sponsored by the Federal Trade Commission (FTC) in Washington, D.C., this week.

Areas as diverse as changes in the public’s news consumption patterns, shifts in where advertising dollars are spent, laws and regulations and media ownership and copyright protection were on the table.

FTC Chairman Jon Leibowitz set the tone for the conference in his opening remarks given Dec. 1. In his speech, “‘Creative Destruction’ or ‘Just Destruction’ How Will Journalism Survive the Internet Age?,” Leibowitz said the shift to the Internet by news consumers has created a perilous time for journalism “in which the bottom seems to be falling out of the news business.”

While the recession and the “debt overhang of highly leveraged media deals” account for some of the decline in the number of working journalists and an increase in the number bankruptcies of media companies, Leibowitz said, the Internet is at the core of an even more threatening disruption: declines in ad revenues to traditional media companies.

Quoting Pew Research, Leibowitz said ad revenue at local newspapers dropped 23 percent between 2006 and 2008, and local TV, radio and mass audience news magazines also “have seen troubling declines.” These declines in ad revenue directly threaten the continuation of robust reporting, without which society will suffer. “We still need journalists to be watchdogs and do investigative reporting, for example. But they cannot keep producing the news if they are not paid for their work,” he said.

While acknowledging the Internet delivers “momentous” benefits to news consumers, Leibowitz said it also means consumers may be getting a “free ride instead of paying the full value for what they are consuming.” Under such conditions, sellers have a hard time getting paid enough to continue producing the news, he added. What likely is needed is a new business model for journalism, but that won’t be easy, Leibowitz said.

During the conference, Rupert Murdoch, chairman and CEO of News Corp., took to task Internet sites that benefit financially from reusing the journalistic product of other news organizations without paying for the production of that content, according to media reports. However, Arianna Huffington, editor-in-chief of the Huffington Post, dismissed Murdoch’s criticism, saying that publishers benefit from increased Internet traffic directed from such aggregators to the Web sites of traditional media companies.

The FTC plans to conduct workshops in spring 2010 to examine various proposals, including special tax benefits or changes to antitrust trust restrictions, modifications to copyright law, new approaches to crossownership restrictions and even government subsidies, such as those public broadcasting receives, Leibowitz said.