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Symposium 2015

Solution for Brave New Media World? How the Internet Spreads Information Across the Globe

The Challenge

Hardly any recent innovation has contributed as much as the Internet to making the world become globalized. With this new medium, information about nearly any topic can be distributed at high speed an ...

Hardly any recent innovation has contributed as much as the Internet to making the world become globalized. With this new medium, information about nearly any topic can be distributed at high speed and low cost, worldwide. This development most obviously has fostered international economic integration by lowering transaction costs. Moreover, it facilitates the transnational organization of political interests by providing efficient channels for mass communication. Eventually, new media might thus contribute to improving the provision of global public goods by equally spreading information on costs and benefits of related policy measures around the world, and helping to formulate demand accordingly.

However, the mere availability of new media does not necessarily guarantee an equal spread of information and better informed consumers, as a consequence. In fact, new media shift the costs of filtering information onto the user, and differences in the ability to do so may even increase the knowledge gap between the informed and the uninformed, within and between countries. If users find it too expensive to search and validate information from different sources, they might rely on biased information that match their preconceptions instead, potentially fostering ideological lock-ins. If individual costs of processing information are prohibitively high, consumers might even consume less information.

So, paradoxically, the new media may spread information globally, without improving the average consumers' deeper understanding of worldwide economic and political developments. While access to new media is the prerequisite for spreading information more equally, it is the new media consumers' patterns of usage that eventually determine whether progress in the information and communication technologies will result in more or less informed consumers.

A European Journalism Fund

The digitization of media content has caused revenues of media outlets to decline throughout advanced economies. Resulting cost-cutting measures are impeding the quality and the variety of journalistic products, particularly in areas such as politics and business reporting that are at the same time expensive to produce and essential to the functioning of market-democracies. In terms of independent quality journalism, digitization, therefore, leads to a troubling undersupply of the systemically highly important good transparency. From an economist’s point of view, digitization transforms journalistic content into products that are consumed in a nonrival way. It is, thus, straightforward to conclude that in an optimal world no one should be excluded from their consumption.

These public good properties lead to a perverse situation: mass demand through ubiquitous access—but severe undersupply. This is especially the case in the EU and the Eurozone as a whole: Even though pan-European media could now be accessible throughout the continent at very low cost, there still isn’t a supply of substantial quality and variety. While it is widely accepted that the EU, and the Eurozone in particular, need more political integration to survive in the long run, a European public sphere still is nonexistent. It is no exaggeration to state that cross-border media are a missing link to solving Europe’s troubles.

Digitization makes it comparably easy to bridge this gap and to provide the means to finance an adequate supply of pan-European media. This is a huge opportunity. Europe should grasp it, now. Three fundamental questions remain: How should this money be provided? Who should be the beneficiaries? And what could a distribution mechanism look like? Three debatable answers:

First, the means should be provided by a fund set up by big corporations, business associations, trade unions, etc. Such a corporatist solution is preferable to a tax-financed one which is rather prone to intense political pressure. In the short run, companies and other business entities may consider a situation with little interference by independent and investigative media as favorable. And indeed this seems to be the case at present: The more commercial journalism is coming under pressure by disappearing advertising revenues, the more business-leaders are inclined to increase the pressure. Threats to cancel ad campaigns have become common place. The German commission on corporate governance only recently published a joint statement by compliance officers who warned companies to refrain from using their newly acquired power over media outlets.

In the long run, though, a weak media system is not in the best interest of business. Quite the opposite. Overwhelming empirical evidence shows that the link between economic performance and the freedom of the press is rather strong, both on the company and at the national level. After all, a well-functioning media system provides the near-perfect information that economic models usually assume to prevail. Without free media, markets are prone to fail and the politico-economic process is bound to be strangled by vested interests; the prevalence of corruption is closely correlated to indicators of press freedom. Thus, independent journalism is an essential part of infrastructure, for the market economy and for democracy. As good corporate citizens, enlightened business-leaders should comprehend that they have vital interests in a functioning media environment. Just like foundations are increasingly eyeing journalism as a new field of action, a business-financed fund would be an alternative means to augment traditional media systems.

Second, the fund should be managed by a team of independent media experts. Independence from vested business interests is of the essence. Its governance structure should be designed accordingly. Shielding themselves against outside pressures and pursuing the best professional practices for their customers, i.e., the general public, has always been a key challenge for media companies.

In the past, they developed mechanisms to keep outside pressures in check and to foster journalism’s own ethical and professional standards. Processes of self-governance, designed to keep big business, law-makers and courts at bay, are central to the independence of journalism. These mechanisms include ombudsmen inside individual journalism outlets, who act as advocates for the users, as well as media councils at the national level that sanction misbehavior of individual media or journalists. Central to all of these approaches are transparency and publicity. Complaints by users are routinely published and internally investigated. Those who fail to meet the standards are publicly blamed. These sanctions actually work because, being an experience good, journalism’s success depends on the trust people put in it; to be in the pillory can be lethal to media brands.

The corporatist fund solution should be endowed with mechanisms equivalent to those developed and employed at traditional quality media. Furthermore, the broader the base of contributors to such a fund, the more diverse individual interests will be. If business associations and trade unions, companies from various countries and sectors are taking part, the more likely it is that they will effectively neutralize each other.

Third, eligible for funding should be private media outlets whose business models and journalistic track records are deemed fit to perform the task of pan-European reporting and would refrain from doing so without these additional funds. These could be traditional media companies that are branching out to the European public as well as journalism start-ups of the pro publica type (an investigative journalism outfit in the US).

Furthermore, as long as truly European mass media are absent, tools and services should be provided that help to transmit discourses across borders. These should help to limit the malfunctioning of the European public sphere that is still divided by national borders. Evidence shows that Europeans are increasingly noticing what’s going on in neighboring countries, but they do so by applying national lenses. As a result of the euro crisis and the refugee crisis, different nations discuss identical issues but the respective framing is different, leading to a host of misunderstandings and to political deadlock in Brussels. To bridge these communicative gaps, up-to-date big data-based methods could be applied to provide more transparency on national debates across borders.

Training journalists to develop European rather than national angles could be a third field of action for a European Media Fund. For traditional quality media the region of reference usually is the nation state. Only very few media have been able to apply a supranational view, though, like the Financial Times or the Economist, these tend to be British, looking at Europe from an elitist outsider’s perspective. Training professionals, or journalism students, to develop a comparative and inclusive view of Europe would be a valuable undertaking.

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