Both economies of scale and limited markets tend to promote seller concentration.
Government intervention through state ownership, licensing, and import controls also promotes concentration.2 Seller concentration is a particular problem in relation to mass media because of the media’s central role in democracy. Concentration is also, of course, an economic policy problem. A major cross-sectional study of media ownership in 97 countries found that concentration was often high, media were fre-quently family or government owned, and that these factors were associated with poor outcomes, such as low rates of economic growth, poverty, and oppressive re-gimes (Djankov and others forthcoming). This study did not take an economic per-spective, so we do not know whether the extent of media concentration (or of family or government ownership) is greater or smaller than in other domestic industries of similar capital intensity in the same countries. Similarly, whether a causal relation-ship exists between media concentration and poor socio-political outcomes, and if so, in which direction it runs, is not clear.
The public good character of content can lead to other policy problems, as when government see imports of foreign or transnational media content as a threat to local culture or social norms. American motion pictures and, to a lesser extent, video programs, are often mentioned in this connection. The source of the difficulty is that 2. In Mongolia, for example, government controls on newsprint imports are a problem de-spite a great expansion in the number of newspaper voices since 1990 (Williams 1995).
competition to serve large and generally rich English-speaking audiences supports expensive and attractive content—content so attractive that it can surmount the ob-stacles of language and culture. Content produced initially for smaller national or local audiences must necessarily be less expensive and is less attractive to broader audiences. Developing countries without a common language or culture face special problems in this regard. In a competitive world the economics of mass media do not favor the survival of languages or cultures that are not supported by large popula-tions or substantial specialized economic demand. This is a consequence not of ad-vertent cultural imperialism by the more successful media, but simply of the superior ability of such media to deliver consumer satisfaction at an attractive price. Some nations choose to subsidize demand for local media content to offset such effects.
Threats to the preservation of local culture and language from foreign or the in-creasingly important transnational media (Pathania-Jain 2001; Shrikhande 2001) are not unique to developing economies. The same underlying economic forces also threaten local cultures and dialects, if not languages, in highly developed economies.
In 1909 New York City had about 85 daily newspapers, many in foreign vernaculars native to recent immigrants (Owen 1975, p. 70). Within a few decades New York had only a handful of surviving newspapers as advertisers found they could reach the same readership more efficiently through the general circulation press and readers were unwilling to pay for the increasingly expensive specialized press.
Media ownership often raises important policy issues. Government ownership of the press or of broadcast facilities may imply the absence of certain political free-doms. A concentration of media ownership among private citizens can sometimes reflect political power in the hands of an elite group. From an economic perspective, concentration raises concerns if it results in a monopoly or facilitates collusion lead-ing to increased prices and reduced output. Generally speaklead-ing, relevant economic markets for purposes of assessing threats to competition are much narrower than what is often called the marketplace of ideas. Concentration among, say, radio broad-casters located in a given city might, in principle, raise economic competition issues with respect to certain advertisers even if numerous other vehicles are available for the expression of ideas, including political dissent, such as television, the press, maga-zines, and online services. Where concentration is insufficient to raise concerns about competition policy, it is unlikely to raise significant issues in relation to freedom of expression. Thus even though many countries attempt to limit media concentration (OECD 1999; World Bank 2001, section 10.47), such efforts may be based on a too narrow definition of the marketplace of ideas.
Conclusion
Private mass media (the press) perform a key role in any system of government that features political liberty and accountability. Mass media are also critical to the flow
Media as Industry: Economic Foundations of Mass Communications 185
of economic information in an economy, including information that permits more informed consumption and production decisions. However, private mass media ex-ist chiefly to make profits from the sale of subscriptions and advertising. Except where government policy restricts entry, mass media are generally competitive rather than monopolistic in structure. Modern technology has tended to reduce distribu-tion costs, increasing the potential number of economically viable media and increasing the geographical scope in which they can be distributed profitably. This increases consumer choice and reduces the leverage of governments seeking to control content for political or cultural reasons.
References
Barrera, Eduardo. n.d. Mexico. Available on: http://www.mbcnet.org/archives/etv/M/htmlM/
mexico/mexico.htm.
Crawford, Gregory. 2001. “The Discriminatory Incentives to Bundle: The Case of Cable Televi-sion.” Working paper. Duke University, Durham, North Carolina.
Djankov, Simeon, Caralee McLiesh, Tatiana Nenova, and Andrei Shleifer. Forthcoming. “Who Owns the Media?” Journal of Law and Economics.
Hollifield, C. Ann. 2001. “Crossing Borders: Media Management Research in a Transnational Market Environment.” Journal of Media Economics 14(3): 133–46.
Kaiser, Robert G. 2001. “The Rise of a Press Baron: An Unlikely Entrepreneur Builds Buryatia’s Biggest Weekly.” The Washington Post, August 13.
OECD (Organisation for Economic Co-operation and Development). 1993. Competition Policy and a Changing Broadcast Industry. Paris.
———. 1999. Communications Outlook. Paris.
Owen, Bruce M. 1975. Economics and Freedom of Expression: Media Structure and the First Amend-ment. Lexington, Massachusetts: Ballinger.
———. 1999. The Internet Challenge to Television. Cambridge, Massachusetts: Harvard University Press.
Owen, Bruce M., and S. Wildman. 1992. Video Economics. Cambridge, Massachusetts: Harvard University Press.
Pathania-Jain, Geetika. 2001. “Global Parents, Local Partners: A Value-Chain Analysis of Col-laborative Strategies of Media Firms in India.” Journal of Media Economics 14(3): 169–88.
Shrikhande, Seema. 2001. “Competitive Strategies in the Internationalization of Television: CNNI and BBC World in Asia.” Journal of Media Economics 14(3): 147–68.
Steiner, Peter O. 1952. “Program Patterns and Preferences and the Workability of Competition in Radio Broadcasting.” Quarterly Journal of Economics 66(May): 194–223.
Williams, John W. 1995. “Mass Media in Post-Revolutionary Mongolia.” Principia College, Elsah, Illinois. Processed.
World Bank. 2001. World Development Report 2000/2001: Attacking Poverty. New York: Oxford University Press.
10
The Legal Environment for News Media
Peter Krug and Monroe E. Price
There are many steps to shaping an effective democratic society, and the formation of media law and media institutions is one of the most important. Too often, govern-ments undertake efforts to build effective media systems that advance democracy without sufficient understanding of the many aspects of the legal environment that influence this process. We seek to identify certain components of the complex legal process that contribute to an environment that enables media to advance democratic goals. A number of factors indicate whether a free and independent media sector can flourish, for instance, the general level of literacy; the signals to a society that a criti-cal, informed perspective for shaping political leadership is welcomed; the nature of the electoral system; and the stability and nature of the institutions that make the production and distribution of information possible.
Among the key elements, complementing others, is a set of legal institutions, that is, the law-related aspect of an enabling environment. The nature of the legal envi-ronment—the cluster of laws, legal institutions, and legal actors—in which news media operate obviously has a profound impact on the degree to which journalists and news organizations are free to engage effectively in gathering news and dissemi-nating information and ideas.1 Consideration of a satisfactory legal enabling envi-ronment for effective news media activity must encompass issues such as media ownership and the role of civil society in addition to the specific elements of the legal system itself.
This chapter focuses primarily on aspects of legislation in a legal enabling envi-ronment for news media activity. In this regard, four aspects of the legal setting in which news media operate warrant our attention: news gathering; content-based
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1. In this discussion the term journalist is used to encompass print media publishers and electronic media owners and executives, as well as editors, commentators, and reporters.
regulation; content-neutral regulation that has the potential to influence content in-directly; and protection of journalists in their professional activity, including protec-tion against physical attacks.
Our review is based largely on a set of rules and principles that have evolved in and characterize media law practices in Western democracies, but also take into ac-count practices that have been adopted in a wide variety of global settings, including certain of the more successful post-Soviet transition countries. The adoption of for-mal laws is never a guarantee that they will be fully and generously implemented in practice, even in the most advanced democratic societies. Many are the states in which well-drafted laws languish because the environment for implementation fal-ters. Indeed, the whole concept of an enabling environment implies that specific laws exist in a context in which the spirit of the laws is engaged and the processes for realizing their impact are implemented.