Searching for a New Economic and Democratic Model for Media

The suggestive title of the book, Saving the Media. Capitalism, Crowdfunding, and Democracy, issued by the publishing house Comunicare.ro, creates a little skepticism but also a certain hope about finding solutions for reinventing the media. Note that the author of the study, Julia Cagé, a doctoral graduate of Harvard, is a French economist specializing in political economy and media economics, and she teaches this discipline at Sciences Po University in Paris. Familiar with both Western European and American media realities and drawing upon statistical data on the latest developments, the researcher is not limited to in-depth analysis but also proposes a new economic model for democratic media that aims to guarantee both its freedom and independence.  The book was published by the prestigious publishing house Seuil in 2015 and has so far been translated into 11 languages for international circulation and in 2016 received the special prize of the  Association of Journalism and Citizenship in France at Prix des Assises. An advantage of this book is its small size (134 pages) inviting those interested to visit the technical annex available online where the sources and methods used as well as other useful information are presented in detail.
 
 Crisis of information

It is known that independent and objective information is like oxygen for a healthy democracy. But today, information is in danger, and “not only the journalists but also the information only they can produce is in danger.”[1]

While employees are being dismissed in print media, online information sites are hiring all sorts of specialists. Of course, interesting links, online videos and animated graphics allow us to better understand topics, but these digital possibilities do not complement content based on quality information and can instead damage it. The author recalls that the Internet, like all the media before it, feeds primarily on print media. The fact that the evening news is presented with Le Monde on one’s lap is almost proverbial in France. In the USA, about 80% of the links on websites, blogs or social networks send the reader to traditional media.  

Reducing investments in print media leads to a decline in the quality of information and thus represents a danger to democracy. A media paradox is taking shape: “A small number of actors (0.14% of France's active population in 2013), with a relatively low share in the economy and based on an even smaller number of employees, reach an extremely broad public and can influence it in making decisions that are essential for the proper functioning of democracy.”[2] Thus, the model of the joint-stock company and of self-financing through sales and advertising proved unable to meet the challenges the media faces today. This model in conditions of competition has led to a reduction in costs and to the replacement of information with infotainment and entertainment to the detriment of the public.

End of illusions

In search for a new media model, we need to clarify the causes of the crisis as well as the new social and economic realities. Julia Cagé names these causes in a very suggestive way as illusions; one of the most important of them would be the advertising illusion. This becomes the guarantor of the freedom of the media in the Anglo-Saxon world, but at present the media can no longer live from advertising. The author makes an X-ray examination of the markets in the USA, France and Germany based on statistical data and shows us that the heavenly mana represented by advertising is decreasing and the share of the media in the total expenses for advertising has decreased. In France, for example, the share of advertising in newspapers since 2000 has decreased from 45% to 35%. Starting in 2006 in the USA, the share of advertising in newspapers has been decreasing even taking into account digital advertising.

We will analyze another one of the illusions mentioned by the author: the audience of millions of Internet users and state-supported media. Statistical research shows that newspapers fail to make a profit from their digital audiences, even when they pay. The income from advertising generated by a print media reader is 20 times higher than that generated by an online reader. According to the author, emphasis should be placed on quality so that readers will be motivated to pay for content given that in the future most of the income generated by newspapers will be obtained from subscriptions and sales at the newsstand. Paid content is the future of an industry where advertising will occupy an increasingly smaller share (41% of USA newspapers are not freely accessible because they have limited access by payment).

Subsidizing the media by the state in order to maintain political pluralism is also an illusion. Even if in France the media gets many complex subsidies, the author believes they should be reformed. Currently, most of the print and online publications benefit from the super low VAT and preferential fees for mail, including for entertainment media, while a simpler and clearer system would be reserved only for general and political media.

The subsidies are a quite small share of the income of newspapers (in general, less than 5%). A faithful analysis of the taxes, fees and social contributions paid by the newspapers to the state shows that they greatly exceed state subsidies. At the same time, the researcher offers the example of universities and research centers that benefit from public funding that is significantly greater than the taxes they pay and also from other income obtained from public aid. She also believes that the media could take this as an example. We are witnessing the development of the idea that the future of the media is about the non-profit sector, and wealthy donors who invest millions in the media should be exempt from taxes.

Read the full article here. 

For Mass Media in Moldova magazine: Ludmila LAZAR