Wall Street Journal columnist Holman Jenkins has a terrific, wide-ranging interview with Google CEO Eric Schmidt in today's paper that is well worth reading. One thing worth highlighting is Schmidt's comments on the "economic disaster that is the American newspaper." He argues that, "The only way the problem [of insufficient revenue for news gathering] is going to be solved is by increasing monetization, and the only way I know of to increase monetization is through targeted ads."

Absolutely correct. It's a point that Berin Szoka, Ken Ferree and I tried to make in PFF's mega-filing in the FCC's "Future of Media" proceeding in early May, and Berin and I stressed it in even more detail in our piece on"Chairman Leibowitz's Disconnect on Privacy Regulation & the Future of News." The key takeaway: If Washington goes to war against advertising -- and targeted advertising in particular -- then there will be no future for private news. As we stated there:

The reason for the indispensability of advertising is simple: Information (including news and other forms of "content") has "public good" characteristics that make it is very difficult (and occasionally impossible) for information-publishers to recoup their investments. Simply put, they quite literally lack pricing power: Whatever they charge, someone else will charge less for a close substitute, inevitably leading to "free" distribution of the content, even though the content is anything but free to produce. Advertising is the one business model that has traditionally saved the day by rewarding publishers for attracting the attention of an audience.

Thus an attack on advertising is an attack on media / news itself. And yet Washington is currently engaged in an all-out assault on advertising, marketing, and data collection efforts / business models.

Incidentally, Google recently submitted comments with the Federal Trade Commission in reaction to its Staff Discussion Draft about the future of journalism and laid out their views on many of these issues. More importantly, as summarized on pg. 30 (of the pdf) of this Newspaper Association of America filing to the FTC, Google has proposed an interesting monetization model that utilizes Google Search, Google Checkout and DoubleClick ad server, "to build a premium content system for newspapers." Worth checking out. Kudos to Google for taking these steps and to Schmidt for again stressing the importance of targeted advertising for the future of media.

Interesting article in the New York Times today about how the radical media activist group Free Press is now working with an organization called The Harmony Institute toward the goal of "Adding Punch to Influence Public Opinion." The way they want to "add punch" is through entertainment propaganda. The Times article notes that Harmony's mission is "aimed at getting filmmakers and others to use the insights and techniques of behavioral psychology in delivering social and political messages through their work." And now they want to use such "behavioral psychology" and "political messaging" (read: propaganda) techniques in pursuit of Net neutrality regulation.

More on that agenda in a second. First, I just have to note the irony of Harmony's founder John S. Johnson citing "The Day After Tomorrow" as a model for the sort of thing he wants to accomplish. According to the Times interview with him, he says the movie's "global warming message [and] rip-roaring story, appeared to alter attitudes among young and undereducated audiences who would never see a preachy documentary." I love this because "The Day After Tomorrow" was such a shameless piece of globe warming doomsday propaganda that it must have even made the people at Greenpeace blush in embarrassment. After all, here is a movie that claims global warming will result in an instantaneous global freeze (how's that work again?) and leave kids scurrying for the safety of New York City libraries until a quick thaw comes a couple of weeks later. (Seriously, have you seen that movie? That's the plot!) So apparently we can expect some pretty sensational, fear-mongering info-tainment from Harmony and Free Press.

But here's what's better: Do you know who produced "The Day After Tomorrow"? Oh, that's right... Rupert Murdoch's News Corporation financed and distributed that movie!! The man that Free Press casts as the nefarious media overlord set to take over all media and program our brains gave us the greatest piece of radical environmental propaganda of modern times. Now, which does that prove: (A) Rupert Murdoch is hell-bent on programming our minds to embrace a sweeping global warming regulatory agenda, or (B) Rupert Murdoch is out to entertain people and make money? If you answered B, congratulations for being a sensible person. If you answered A, then click here now to start giving money to the Free Press!

OK, so let's get back to Free Press and what they are up to with the Harmony Institute (which I originally thought was an online dating site). Free Press apparently hired Harmony to research public attitudes about Net neutrality and how to influence them. Harmony's Johnson tells the Times they got interested in the Net neutrality because Free Press and the Pacific Foundation paid them handsomely to do so. And it appears Free Press got their money's worth.

Over at MediaFreedom.org, a new site devoted to fighting the fanaticism of radical anti-media freedom groups like Free Press and other "media reformistas," I've started rolling out a 5-part series of essays about "The Battle for Media Freedom." In Part 1 of the series, I defined what real media freedom is all about, and in Part 2 I discussed the rising "cyber-collectivist" threat to media freedom. In my latest installment, I offer an analytical framework that better explains the major differences between the antagonists in the battle over media freedom.

Understanding the Origins of Political Struggles

In his many enlightening books, Thomas Sowell, a great economist and an even better political scientist, often warns of the triumph of good intentions over good economics. It's a theme that F.A. Hayek and Milton Friedman both developed extensively before him. But Sowell has taken this analysis to an entirely differently level in books like A Conflict of Visions: Ideological Origins of Political Struggles, and The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy. Sowell teaches us that no matter how noble one's intentions might be, it does not mean that those ideas will translate into sound public policy. Nonetheless, since "the anointed" believe their own intentions are pure and their methods are sound, they see nothing wrong with substituting their will for the will of millions of individuals interacting spontaneously and voluntarily in the marketplace. The result is an expansion of the scope of public decision-making and a contraction of the scope of private, voluntary action. As a result, mandates replace markets, and freedom gives way central planning.

Sowell developed two useful paradigms to help us better understand "the origins of political struggles." He refers to the "constrained" versus "unconstrained" vision and separates these two camps according to how they view the nature of man, society, economy, and politics:

"Constrained Vision"	"Unconstrained Vision"
Man is inherently constrained; highly fallible and imperfect	Man is inherently unconstrained; just a matter of trying hard enough; man & society are perfectible
Social and economic order develops in bottom-up, spontaneous fashion. Top down planning is hard because planners aren't omnipotent.	Order derives from smart planning, often from top-down. Elites can be trusted to make smart social & economic interventions.
Trade-offs & incentives matter most; wary of unintended consequences	Solutions & intentions matter most; less concern about costs or consequences of action
Opportunities count more than end results; procedural fairness is key; Liberty trumps	Outcomes matter most; distributive or "patterned" justice is key; Equality trumps liberty
Prudence and patience are virtues. There are limits to human reason.	Passion for, and pursuit of, high ideals trumps all. Human reason has boundless potential.
Law evolves and is based on the experience of ages.	Law is made by trusted elites.
Markets offer benefit of experience & experimentation and help develop knowledge over time.	Markets cannot ensure desired results; must be superseded by planning & patterned justice
Exponents: Aristotle, Adam Smith, Edmund Burke, James Madison, Lord Acton, F.A. Hayek, Ludwig von Mises, Milton Friedman, James Buchanan, Robert Nozick	Exponents: Plato, Rousseau, William Godwin, Voltaire, Robert Owen, John Kenneth Galbraith, John Dewey, Earl Warren, Bertrand Russell, John Rawls

Earlier this year, while I was preparing this mega-filing to the Federal Communications Commission in its "Future of Media" proceeding, I read Uninhibited, Robust, and Wide-open: A Free Press for a New Century, by Lee C. Bollinger, who is the president of Columbia University. I had planned on reviewing it since I try to review almost every book I read, but it was hard for me to believe that anyone would take this book too seriously, so I just moved along.

I hate to be that dismissive of any text but this is a book, after all, that proposes the creation of a massive U.S. propaganda machine. Bollinger doesn't just want our government to help out a bit at the margins like it currently does; he wants the State to get under the covers, cuddle tight and become intimate lovers with the Press. And then he wants the Big Press to project itself more, especially overseas, to compete with other State-owned or subsidized media enterprises. Again, it's a propaganda machine, pure and simple. In a new Wall Street Journal editorial today entitled, "Journalism Needs Government Help," he argues:

To me a key priority is to strengthen our public broadcasting role in the global arena. In today's rapidly globalizing and interconnected world, other countries are developing a strong media presence. In addition to the BBC, there is China's CCTV and Xinhua news, as well as Qatar's Al Jazeera. The U.S. government's international broadcasters, like Voice of America and Radio Free Europe, were developed during the Cold War as tools of our anticommunist foreign policy. In a sign of how anachronistic our system is in a digital age, these broadcasters are legally forbidden from airing within the U.S. This system needs to be revised and its resources consolidated and augmented with those of NPR and PBS to create an American World Service that can compete with the BBC and other global broadcasters.

China's CCTV and Xinhua news? Qatar's Al Jazeera? Really?! As Jeff Jarvis rightly asks in his terrific response essay, "No American BBC,": "In what sane world is the Chinese government's relationship with news a model?" Indeed, this is frightening stuff. Has Bollinger not studied the Chinese system of state media meddling? Needless to say, it's not pretty. And while I would agree that the BBC model shows that some State-funded media can be quite impressive and free of most meddling, that's not been the case across the board.

I've been so busy trying to cover breaking developments related to Washington's new efforts to "save journalism" (FTC) and steer the "future of media" (FCC) -- see all my recent essays & papers here -- that I forgot to do a formal book review of the book that is partially responsible for whipping policymakers into a lather about this issue: The Death and Life of American Journalism, the media-takeover manifesto by the neo-Marxist media scholar Robert W. McChesney and Nation editor John Nichols. Their book is horrifying in its imperial ambitions since it invites the government become the High Lord and Protector of the Fourth Estate. [For an in-depth look at all of McChesney's disturbing views on these issues, see: "Free Press, Robert McChesney & the "Struggle" for Media."] Anyway, I put together a formal review of the book for City Journal. It's online here and I've also pasted it down below.

_____________________

A Media Welfare State?

by Adam Thierer

Imagine a world of "post-corporate" newsrooms, where the state serves as the primary benefactor of the Fourth Estate. Billions flow from bureaucracies to media entities and individual journalists in the name of sustaining a "free press." And this new media welfare state is funded by steep taxes on our mobile phones, broadband connections, and digital gadgets.

Sound Orwellian? Well, it's the blueprint for a press takeover drawn up by Robert W. McChesney and John Nichols in their new book, The Death and Life of American Journalism. McChesney, the prolific neo-Marxist media scholar who teaches at the University of Illinois at Urbana-Champaign, and Nichols, a journalist with The Nation, aren't shy about their intentions. Along with Free Press, the absurdly misnamed regulatory activist group they co-founded, McChesney and Nichols outline a self-described "radical" agenda for what they hope will become a media "revolution." And, shockingly, some folks in the Obama administration are listening.

So, I'm sitting here at today's Federal Trade Commission (FTC) workshop, "Will Journalism Survive the Internet Age?" and several panelists have argued that private "professional" media is toast, not just because of the rise of the Net and digital media, but also because the inherent cross-subsidy that advertising has traditionally provided is drying up. It very well could be the case that both statements are true and that private media operators are in some trouble because of it. But what nobody seems to be acknowledging is that our government is currently on the regulatory warpath against advertising and that this could have profound impact on the outcome of this debate. As Berin Szoka and I noted in a recent paper, "The Hidden Benefactor: How Advertising Informs, Educates & Benefits Consumers," the FTC, the FCC, the FDA, and Congress are all considering, or already imposing, a host of new rules that will seriously affect advertising markets. This article in AdAge today confirms this:

The advertising industry is heading for a "tsunami" of regulation and is at a "tipping point" of greatly increased scrutiny, warned a panel on social media and privacy at the American Advertising Federation conference here [in Orlando].

The reason this is so important for the ongoing debate about the future of media and journalism is because, as Berin and I argued in our paper:

Just a reminder that tomorrow the Federal Trade Commission (FTC) will be hosting the 3rd workshop in its ongoing event series, "Will Journalism Survive the Internet Age?" This workshop will feature various experts discussing the FTC's 47-page "staff discussion draft," which outlines "Potential Policy Recommendations to Support the Reinvention of Journalism." In these two recent essays, I discussed the controversy surrounding some of the recommendations in that discussion draft:

• Growing Opposition to FTC "Saving Journalism" Media Takeover Blueprint, by Adam Thierer, June 9, 2010


• FTC Draft Plan to "Save Journalism" Drawing Scrutiny; Raising Concern, by Adam Thierer, June 4, 2010

According to this press release announcing the event,"The workshop is free and open to the public, but space is limited and attendees will be admitted on a first-come basis. The workshop will be held at: The National Press Club, 549 14th Street NW, 13th Floor, Washington, DC. Members of the public and press who wish to participate but who cannot attend can view a live webcast. A link will be available on the day of the workshop at: http://www.ftc.gov/opp/workshops/news/index.shtml."

Unless I am missing something, the FTC has still not posted an agenda or list of speakers, which is a bit strange. But apparently Rick Edmonds of the Poynter Institute will be participating. He's got a nice piece up over at Poynter Online ("FTC Future-of-Journalism Inquiry Wraps Up With Little Momentum for Major Intervention") summarizing some of what he'll say tomorrow. I particularly liked his conclusion, which echoes the call Berin Szoka and I have made for allowing continuing marketplace evolution and experimentation:

I recently stumbled across a Future of Media filing with the FCC that has aroused the attention of many on the Right. It was filed by the National Hispanic Media Coalition (NHMC), and has numerous "usual suspects" as co-signers (such as the Free Press, Benton Foundation, Common Cause, Rainbow Push Coalition, etc.). The bent of the filing is - there's a lot of "hate" speech out there, and the FCC should study it, exploring "non-regulatory ways to counteract its negative impacts."

According to the NHMC:

...[T]he current media landscape is a safe-haven for hate and extremism. Many communities and individuals do not have the information they want and need to intelligently engage in our democracy. This shortage of information is exacerbated by the vast media consolidation that has unfolded over the past two decades.

One statement in particular stood out:

...[H]ate, extremism and misinformation have been on the rise, and even more so in the past week as the media has focused on Arizona's passage of one of the harshest pieces of anti-Latino legislation in this country's history, SB 1070.

Without getting into all the conspiratorial stuff we see on the Internet - i.e., that groups like those represented within the filing seek mainly to shut down conservative talk radio - a couple things struck me when reading what NHMC had to say.

As I've noted here before, the Federal Trade Commission (FTC) has an ongoing proceeding asking "How Will Journalism Survive the Internet Age?" The agency has hosted two workshops on the issue and a third is scheduled for June 15th at the National Press Club. Recently, the FTC released a 47-page staff discussion draft entitled "Potential Policy Recommendations to Support the Reinvention of Journalism," which outlines dozens of proposals that have been set forth in recent years to "save journalism," "reinvent media," or support various forms of so-called "public interest programming." [I've embedded the document down below.] Although the FTC makes it very clear on the first page of the discussion draft that it "does not represent final conclusions or recommendations by the Commission or FTC staff [and] it is solely for purposes of discussion," the document is drawing scrutiny and raising concern since it might foreshadow where the FTC (and Obama Administration) could be heading on this front.

Some of those raising a stink about the FTC draft include: Jeff Jarvis ("FTC Protects Journalism's Past"); Rob Port ("Federal Government Considering "iPad Tax" To Subsidize Journalism"); Mark Tapscott: "(Will Journalists Wake up in Time to Save Journalism from Obama's FTC?"); and Andrew Malcolm of the Los Angeles Times ("Obama's FTC Plan to Reinvent America's News Media"), who says, "this FTC study is rated R for anyone who thinks the federal government, the object of copious news coverage itself, has no business deciding which sectors of the private media business survive and thrive through its support, subsidies and encouragement with things like tax incentives. Yet that's what this Obama administration paper is suggesting as another of the ex-community organizer's galactic reform plans." Ouch!

There's an inherent paradox in the Federal Communications Commission's (FCC) media ownership regulations and the new Notice of Inquiry that the agency has just launched looking into those rules. Like everything else the FCC has been doing lately, this NOI poses hundreds of questions about the topic at hand. In this case, the agency is interested in knowing what the impact of its byzantine regulatory regime for media ownership has been. Complicating matters even more is that fact that the FCC wants people to provide detailed answers about the impact of these rules on amorphous values like "diversity" and "localism." So, the agency asks, what has been the impact of the local TV ownership rule, the local radio ownership rule, the newspaper/broadcast cross-ownership rule, the radio/TV cross-ownership rule, the dual network rule, and so on, on the marketplace, competition, diversity, localism, etc.

But therein lies the fundamental paradox of the FCC's inquiry and the media ownership regulations in general: So long as the rules are preemptive and prophylactic in character, we will never get clear answers to the questions the agency poses. By definition, the agency's media ownership rules make experimentation with new business models illegal. It is per se criminal to enter into combinations that the agency has presumptively divined to be counter to "the public interest," whatever that means. Thus, we can never get definitive answers to the questions the agency poses when "the marketplace" isn't a truly free marketplace at all. It is a regulatory construct artificially constrained in countless ways.

So, what's the answer here? In a word: Antitrust. While I'm no fan of over-zealous antitrust regulation, it has one huge advantage over the media ownership regime that the FCC enforces: It doesn't preemptively seek to determine supposedly sensible market structures or ownership patterns. The threat of antitrust intervention can be a very dangerous thing, and wrecking-ball style antitrust interventions are rarely sensible, but at least the DOJ and FTC aren't turning the regulatory dials on a massive media marketplace industrial policy the way the Federal Communications Commission does with its media ownership regulations.