The Market For News: 30 Years Back, 20 Years Forward

Although journalists may not explicitly consider economics as they cover the day's events, the stories, reporters, firms, and media that ultimately survive in the marketplace depend on economic factors. The decisions of producers and editors are driven by supply and demand: Who cares about a particular piece of information? What is an audience willing to pay for the news, or what are advertisers willing to pay for the attention of readers, listeners, or viewers? How many consumers share particular interests in a topic? How many competitors are vying for readers -- or viewers -- attention, and what are these competitors offering as news? What are the costs of generating and transmitting a story? Who owns the outlet? What are the owners' goals? What are the property rights that govern how news is produced, distributed, and sold? The answers to these questions emphasize that news is a commercial product.

Since the 1970s news coverage in the United States has shifted to an increasing emphasis on what people want to know and away from information they may need as voters. Three economic factors help account for this shift: changes in technology, product definition and differentiation, and media ownership. Most obvious are the technological changes affecting the way images and information enter households: the growth of cable television; the advent of the Internet; and the increased use of satellite technology to transmit news across continents and into homes. For a detailed description of these changes, see Hamilton (2004) and Hamilton (2005) the prime sources for my essay here.

In print and broadcast, there has been a substantial change in the content and style of news coverage since 1970. These product changes are numerous: a decrease in hard news (e.g., public affairs coverage) and an increase in soft news (e.g., entertainment, human interest stories); an increase in negative tone to cover elections; less focus on watchdog stories (e.g., those dealing with the operation of government); and an increase in the mix of opinion and interpretation in news coverage. These product changes also have many origins. Emphasis on cost cutting and profits has led to declines in international coverage. Competition across media and the pressure for product differentiation within a market have led some outlets to specialize in soft news. The drive to entertain can transform political coverage into horse-race coverage, with a focus on who is ahead in the polls and a tone that is often critical of candidates and events. In publicly traded companies, pressures to meet market earnings expectations can mean more focus on pleasing readers and viewers and less room for journalists to exercise their own news judgment. Changes in rules by the Federal Communications Commission have reduced station worries about whether views expressed on air are "fair" and removed specific requirements that broadcasters provide a minimum amount of public affairs coverage.

Change in ownership of news media outlets is a third factor affecting content. There are many theories about why ownership matters: publicly traded firms could be more likely to focus on profits than journalism properties (e.g., newspapers) owned by individuals or families; outlets owned by groups, whether a newspaper in a chain or a broadcast station owned by a network, may be less likely to identify with the problems of a specific city; and the concentration of ownership in a small number of firms may crowd out a diverse set of views.

From the perspective of a person interested in public affairs, the variety of readily available news sources that cover politics is much greater in 2006 than in 1970. A person in search of hard news can watch the NewsHour with Jim Lehrer on PBS (as do 2.7 million people each weeknight), read the New York Times (or the Washington Times ) on the Internet, and listen to National Public Radio. Raw data about the performance of government programs is available on the websites of nonprofits and government agencies. Interest groups and think tanks try to lower the costs of learning about politics for reporters and citizens. A question about campaign finance can be investigated at Opensecrets.org, which takes federal data from the FEC on political campaign contributions and makes it searchable by donor, candidate, or industry. The increasing use of information provision by the government as a regulatory tool has expanded the data available about private sector activity. Environmental reporters, for example, have made significant use of the Toxics Release Inventory, an EPA database that reports yearly pollution totals for more than 650 chemicals at the plant level.

The multiplication of news outlets on cable and the Internet means that an individual is more likely today than in the 1970s or 1980s to find a news outlet closer to his or her ideal news source. The creation of niche programming and content means you may be more likely to find what you want. But the division of the audience into smaller groups also means that any one channel may be less likely to attract viewers, less likely to amass advertiser revenue, and hence less able to devote resources to programming. There may be a tradeoff between finding a cable channel closer to your topical interests and the quality of programming that can be supported by the audience size. On the Internet, the drive of competition means that price eventually equals marginal costs (zero), so sites are searching for ways to generate revenue. This means that breaking news becomes a commodity essentially offered for free. The lack of revenue may mean that sites simply repeat readily available information rather than generate their own coverage. In a study of Internet content during the 2000 presidential primaries, the Committee of Concerned Journalists found that a quarter of the political front pages on Internet sites they studied had no original reporting. The time pressure to provide news generated by the Internet and the lack of resources to do original reporting may increase the likelihood that information cascades occur. When initial news reports get facts wrong, the tendency of reporters to rely on the work of others and the quick multiplication effects can mean that bad information propagates.

An additional dilemma for hard news consumers is the economic pressures that may push some outlets away from offering the type of news they prefer. If advertisers value younger viewers and younger viewers demonstrate a higher willingness to switch channels, then broadcast programs may end up at the margins putting more soft news topics into previously hard news programs. This explains in part the increased emphasis on entertainment and human interest stories on the network news broadcasts. Media bias can also emerge as a commercial product, in at least two forms. If networks are targeting relatively younger female viewers, and these viewers express more interest in issues such as gun control and the problems of families with children, the network news programs may focus on traditionally Democratic (liberal) issues out of economic necessity. The development of niche programs on cable can also generate programs targeted at viewers with a particular ideology. The Fox News Channel, for example, attracts a relatively conservative audience and offers the cable news program with the largest audience: the O'Reilly Factor. The added variety arising from the expansion of cable programming means that viewers uninterested in politics can more readily avoid it. In 1996 viewers with cable who had low levels of political interest (i.e., had low levels of political information) were much less likely to watch presidential debates than viewers who had broadcast channels (Baum and Kernell 1999). Those who were not interested in politics but had only broadcast television did end up watching these debates, since their options were limited. The greater entertainment options provided by cable television also appear to affect who votes. Among viewers with high interest in entertainment programming, those with cable are much less likely to vote (perhaps because they able to avoid political programming by watching the many entertainment channels offered on cable; see Prior 2001).

How individuals react to current media content depends in part on whether it is targeted at them. Assessing the statement," People who decide what to put on TV news or in the newspapers are out of touch with people like me, " 10.7% of females 18-34 agreed with this statement versus 23.9% of males 50+ in a Pew survey conducted in 2000. This is consistent with older viewers, who are less likely to be the marginal viewers sought by broadcasters, being frustrated by content aimed at keeping younger eyeballs watching. Perceptions of media bias depend in part on product positioning and tastes. Conservatives are much more likely to say news programs that attract liberal audiences are biased, while perceptions of a news program ' s bias among liberals declines as the average audience for a show becomes more liberal.   The younger viewers valued by advertisers are more likely to see trends in news as positive, even as they are bemoaned by older viewers. When asked whether they thought hosts on news programs expressing strong political opinions was a good thing, 58% of those age 18-29 agreed versus 33% of those 65 or older. Asked to assess the growth of political news talk programs on cable, 53% of those 18-29 saw this as a good thing versus 35% of those 65+. Faced with the choice between hard and soft news, the audience clearly segments by age and gender. The majority of the viewers of the NewsHour with Jim Lehrer are 50+; the majority of the readers of personality magazines such as People are female; the largest audience for shows such as Entertainment Tonight or Access Hollywood comes from 18-34 year olds; and the vast majority of viewers of sports news on ESPN are male.

What do the next 20 years portend for news provision? Competition, product differentiation, and profit maximizing may continue to reduce the widespread provision of hard news. Yet there are a set of potential scenarios that favor the continued circulation of information about public affairs. These include: an increasing role for nonprofits, political parties, and the government in generation of information; reliance on motives of expression, among bloggers and citizen journalists; tapping the willingness to pay of a subset of readers/viewers for specialized information, whose creation might in turn benefit groups outside of those who initially consume it; reduction in the costs to determine the interests of and aggregate the attention of the consumers of particular types of knowledge, so their consumption of information on the web can be more readily monetized through targeted advertising; and the reduction in the production costs of covering hard news through technological advances that reduce the costs of reporting.

Changes in news markets from 1970 to today have brought new media, generated more diverse offerings, and added opportunities to find both hard and soft news. In pushing for the deregulation of broadcast television in the 1980s, FCC Chairman Mark Fowler declared famously, "The public's interest ... defines the public interest." The competition for interested audiences has clearly driven many of the recent changes in journalism. Whether in the future the aggregation of individuals pursuing the stories they want to know about will yield the type of information they need to know about as citizens and voters is a question to be pursued.

James T. Hamilton is Charles S. Sydnor Professor of Public Policy, Economics, and PoliticalScience at Duke Univesity.

REFERENCES

Baum, Matthew A. and Sam Kernell. (1999) "Has Cable Ended the Golden Age of Presidential Television?" American Political Science Review 93, 99-114.

Hamilton, James T. All the News That's Fit to Sell: How the Market Transforms Information into News. Princeton, NJ: Princeton University Press, 2004.

------. (2005). "The Market and the Media." In Geneva Overholser and Kathleen Hall Jamieson (eds.), Institutions of American Democracy: The Press. New York: Oxford University Press,.

Prior, Markus. "Avoiding Politics: The Relation of Entertainment Preference and Partisan Feelings" Paper presented at the annual meeting of the American Political Science Association, San Francisco.