Gordon Campbell on the proposed media merger

Monopolies are bad for people, and bad for capitalism, too. Look at what happened in the late 1980s when a Labour government handed a state monopoly over to Telecom – which proceeded to screw its customers over prices, spent the bare minimum on new technology and blocked innovation for the best part of a decade, or more. Remember how many years it took before you were allowed to transport your existing phone number from one telco to another?

Telecom fought ‘number portability’ tooth and nail. It is what advantaged players do, within private sector monopolies or near-monopolies. They extract maximum profits from captive markets, and feed them to their shareholders. Innovation dies in that climate. Currently, there is no reason to think the proposed media mega-merger between Fairfax and NZ Media Holdings will be any kinder to the needs of society, or of its customers. That’s why competition policy - and the Commerce Commission – exist. Supposedly, they act to protect the public, and to save capitalism from its own worst instincts.

What is up for merger in this proposal? The Australian parents hope to complete the process by December. Here, Fairfax NZ publishes Stuff, the Sunday Star-Times, the Dominion-Post, the Press and a chain of community newspapers. NZ Media Holdings (NZME) publish the NZ Herald, Herald on Sunday, and Hawkes Bay Today. NZME also operates Newstalk ZB, Radio Sport, some music stations and iHeart Radio. Currently, NZME employs about 1800 fulltime staff, and Fairfax NZ about 1500.

As yet, there’s no indication of what titles and functions would be merged, how many jobs would be lost and what premises would be disposed of or retained. Regulatory approval has to be granted by the Commerce Commission before such details can be settled, or made public. However, the merger is plainly being driven by the quest for economic gains on labour costs, on rent, and on technology upgrades. Reportedly, a paywall is likely to be erected on the merged Stuff/NZ Herald website. In sum, the merger will mean that fewer journalists will be employed. Already stretched resources will be stripped. The media’s ability to do its job will further diminish. The public will have to pay more.

Quite reasonably, some people would probably say : could journalism possibly get any more debased than it is now ? Well….personally, I don't think that it is competition that has caused the debasement of journalism, or that a monopoly would in any way inspire those bosses left standing to re-discover their Fourth Estate mission. Monopoly ownership is likely to make a bad situation worse, for reasons I’ll try to explain.

Ultimately, does this desperate merger seem likely to succeed, even on its own terms? Probably not. Last month Fairfax NZ celebrated when the audience for their Stuff website hit the two million mark.

While substantial, this achievement continues to eat up Fairfax resources at a galloping rate for little economic return. Simultaneously, Fairfax continues to strip the traditional mast-head publications that employ the journalists that it currently uses (and will need even more in future) to feed the content to its digital site. This is a downward spiral, masquerading as a rescue mission. Inexorably, it means the online content will become ever more reliant on the p.r. and celebrity gossip industries.

In saying so, I’m not lamenting some past golden age of journalism. I’m not claiming that the merger will mean that journalism will no longer be able to Speak Truth To Power or Hold the Bastards To Account, or the other cliches du jour. Personally, that’s always seemed to be a romantic and self-aggrandizing view of the profession. Historically, there was never much of that work done even when – or especially when – journalism had the resources and opportunities to do it. Bastards were more often wheedled and flattered, than held to account.

The role of good journalism is less lofty, but it is crucial. At its best, journalism adds to public understanding of the (likely) consequences of our laws and policies. It tells us who benefits how - and why - and who is likely to be disadvantaged, and how, and why. Along the way, journalism needs to report the content of policy fairly and accurately, but it also has to evaluate the policy consequences fearlessly and intelligently. Otherwise, it becomes just a megaphone for the powerful.

That’s why the proposed merger should be resisted. It will leave fewer journalists on the ground to do this work. The media will be able to offer only an inferior, more superficial service to the public, who will almost certainly have to pay more for their access for it. How on earth can the Commerce Commission approve a merger that will so blatantly reduce competition and so obviously disadvantage the public ? Watch this space.

Lets just say that in the past, the Commerce Commission has applied a pretty relaxed competition test when it comes to monopolies and near-monopolies. In the 1980s and 1990s, if there was a chance that someone could even theoretically enter the market then…. boom ! Merger approvals were dished out like confetti. That corner dairy for instance, could theoretically offer a parallel service to those Aussie-owned supermarket chains so…. fine, no competition concerns were felt to exist.

In similar vein, the Commerce Commission could well choose to point to the mere existence of competition (however unequal) in the print/radio/online journalism markets in order to rationalize the merger. Lets imagine how this may play out : RNZ exists in radio and online, the ODT exists in print, and online….there’s a raft of scrappy, small websites that could be said to be rivals for any merged Stuff/NZ Herald website. Boom! Merger approved.

Competition would indeed exist, post merger. But the inequality of that competition also matters. Personally, I will be furious if the existence of Scoop, The Spinoff, and the ODT gets used by the Commerce Commission as the figleaf to approve this merger. To state the bleedingly obvious: the blogosphere does not have the resources to compensate for the reduction in competition (and the loss of journalistic resources) that will be the inevitable outcome of this merger.

Why not? Sure, online startups are lively, thriving and multiplying : there’s Scoop, The Spinoff, the Daily Blog, Kiwiblog, the Hard News stable, No Right Turn, The Standard, Pundit, the Dim-Post, Eric Crampton’s Offsetting Behaviour, Paul Buchanan’s 36th Parallel….to name just a few. Theoretically, the merger opens up a market opportunity for them. In reality, all of them will be damaged by the merger.

How come? Well for starters – and as this RNZ report explains here – and also here the blogosphere is poorly positioned to pick up the slack. It is run on a shoestring. It has few resources – or no resources at all, in most cases - to do news gathering. Its strength lies in its analysis and commentary; an essential role that the mainstream media has carried out timidly, or not at all. In other words, a genuine symbiotic relationship currently exists between the blogosphere and the traditional media. We rely on their news gathering and increasingly, they rely on our analysis and commentary. So… if there’s a decline in news gathering capacity, this will damage the ability of the blogosphere to carry out its valuable contribution to the public discourse.

And that’s even before we get to the arguments about how the merger will create a behometh able to exert market dominance.

Finally… why is it so hard to make money online? Back in more innocent times, it had seemed likely that advertising would make the shift from its traditional place on print/radio/television, and move to an online presence. Business as usual would resume. Theoretically, that could have happened. Except for the fact that Facebook, Google, BBC, the Guardian and other multinationals entered the frame, and began to offer New Zealand advertisers multiple spots at dirt cheap rates. To them, New Zealand is a market so tiny that the discounts barely register. Yet those multinationals have drastically slashed the advertising income available to local online startups.

Given that climate, online journalism has been forced to resort to other economic models, besides advertising. These include in some cases, a reliance on advertorial as an income stream. For others, it has involved finding innovative ways of monetising their intellectual property. For many, it has also included reader donations. Those trends can only accelerate. Over time, the public may have to regard the Fourth Estate in the same light as they treat their pay-TV bill ie, as an essential service that was once free, but which now has to be paid for on a monthly basis. But that’s another story.

Prince, Live

The death of Prince has seen a flood of quality live clips released online. Here are a couple of the best. First this acoustic set, which is musically brilliant, as well as heartbreakingly intimate:

And then there’s this epic, 20 minute definitive version of ‘Purple Rain’ …also a showcase for Prince, the master guitarist.

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