I fully expect that most television journalists will not have dived into a copy of Switching Channels: Organization and Change in TV Broadcasting by Richard E. Caves. Freakonomics it is not.
But Caves is the guy (ok, Nathaniel Ropes Research Professor of Political Economy at Harvard) who suggested something that may be appealing to journalists when considering the news media’s current economic plight.
In Creative Industries: Contracts Between Art and Commerce — yes, another read that’s drier than Rupert Murdoch’s tear duct — Caves concerned himself only with music, movies and books.
He argued that “creative” economic activity has special characteristics (some of which may apply to the non-craft end of journalism):
- Demand Is Uncertain “nobody knows”
- Creative Workers Care about Their Product “art for art’s sake”
- Some Creative Products Require Diverse Skills “motley crew”
- Differentiated Products “infinite variety”
- Vertically Differentiated Skills “A list/B list”
- Time Is of the Essence “time flies”
- Durable Products and Durable Rents “ars longa”
I don’t think I necessarily agree with all of Caves’ assumptions. There are plenty of non-creative examples of workers economically over-investing (“caring”) in products or services (think McNulty in The Wire).
But he does start the ball rolling on trying to apply economic arguments to issues of quality and resourcing in the changes affecting the news media, in terms that have hitherto been discussed in rather woolly ways (e.g. journalism is a “public trust”).
Anyway, to cut to the chase, here’s Caves unpacking the demise of one part of the news media, broadcast news, which also embodied the most explicit “public trust” contract between government and media:
The broadcast networks have been to some degree diverted from profit-maximizing policies by a vague social contract with the government, implemented partly through the franchises held by owned-and-operated stations and partly by regulations of the FCC.
Because the broadcast networks and stations together long enjoyed monopoly rents, they could pay some heed to these social-contract provisions while retaining reduced but still generous profits…
As their main tribute to this social contract, each network had maintained an extensive news-gathering organization, a badge of “public trust,” bestowed on broadcasting by government license and worn with pride by the network news organizations themselves…
As often happens when profitable, oligopolistic industries must adjust to major adverse disturbances, incumbent managers were slow to overhaul their business strategies. The stock market thereupon exerted decisive pressure for a profit-seeking (profit-preserving) response.
Depressed stock prices attract raiders, leading to changes in the management of the networks…
This intensified pressure on the networks to maximize profits could have accounted for some of the moves to reduce quality, thus qualifying the role for the mechanism of endogenous fixed costs.
Sounds right to me. And maybe it will dry out some of our own wet and woolly thinking…