Can the Web beat Big Media?

FCC czar Michael Powell says new technologies will let diversity flourish even as giant corporations consolidate their control over TV and newspapers. Dream on.

Published May 21, 2003 7:30PM (EDT)

Michael Powell, the chairman of the Federal Communications Commission, is an anachronism. The things he enjoys -- deregulation and new technology -- are icons of a bygone era, a gilded age that long ago lost its luster. But Powell remains a believer; in just about every speech he makes, he extols the virtues of the Internet or cellphones or Wi-Fi or TiVo.

"Something really different has happened, and it is more than an aberration," Powell said in a speech in late April. "We have, I think, witnessed the arrival of something new -- a defining tenet around which to organize our thinking, our industrial activity, and our conception of the public interest. It is technology -- not classic economics, not political science, not law, but physics, biology and chemistry." The rhetoric is not unlike much of what we heard on CNBC in 1999: The world has changed. The old rules no longer matter. Let's get rid of them.

The rules Powell has been itching to scrap are those that place ownership limits on companies that own newspapers and television stations. To ensure that a few companies don't control all of the nation's news and entertainment, the FCC has long capped the number of outlets a single media firm can own both nationally and in local markets. But Powell thinks the regulations are outdated. He says that current restrictions don't take into account technological improvements in media delivery -- such as cable and satellite TV and the Internet -- that have allowed many more sources of information to enter our homes.

On June 2, Powell and the four other FCC commissioners will vote on a plan to significantly loosen the rules, allowing the country's largest newspaper and TV companies to greatly increase the number of outlets they own. The commission's three Republican appointees (including Powell) are expected to vote in favor of the proposal, ensuring its passage.

Critics of the plan fear that it will lead to an ever more concentrated media world, one in which much of what we see, hear and read is controlled by a handful of mega-corporations. "I think we could give a significant shot in the arm to further consolidation in an industry that has [already] undergone significant consolidation" in the last few years, says Michael Copps, one of the two Democrats on the commission. "I don't think we understand quite how significantly the industry has been altered and we haven't projected out what further consolidation will mean. We don't know where we are and we don't know where we're going."

But Powell's argument that technology will free us from the grip of media oligarchs is, at least at first, an intriguing and attractive claim. He is not obviously wrong. During the past decade, at the same time that TV, radio and the newspapers have become the domain of a cozy club of barons, we've seen the Web grow into a serious rival to the traditional media, providing ordinary Americans with news sources from which they'd long been cut off. As recently as the 1980s, someone in middle America would get news from fewer than a half dozen services -- the three broadcast networks, a newspaper and maybe a local radio station.

Everything's different now. Now we drown in media: the hundreds of channels on our televisions, all the world's newspapers at our fingertips, Web-only publications like this one, the millions of songs on peer-to-peer networks, and blog after blog after blog of bloviation, all of it always on, always buzzing, inescapable. And these new media have made an impact on the real world. The Web now routinely mobilizes people who don't enjoy much access to traditional outlets (think of the antiwar movement, to name one of many online campaigns), and it was pivotal to the impeachment of a president and the downfall of a Senate majority leader.

So, given the power of the technology, one may reasonably ask: What harm can come of Powell's plan to let the big guys get bigger if the rest of us, the little guys with laptops and Wi-Fi, can simply steer around the monopolies?

But when you set out to answer that question, it's hard to find anyone in the media world -- aside from interested parties -- who can furnish serious proof that new technologies are shaking the foundations beneath the entrenched media giants. If anything, the Web and cable and satellite have expanded the reach of media conglomerates. Ninety percent of the top 50 cable channels are owned by media giants. Every single one of the top 20 news Web sites is under the thumb of a media giant.

It's true that the Web has allowed unprecedented diversity in media, and simply looking at the most popular Web sites doesn't quite capture the broad range of views the medium allows. Folks who congregate at sites like Indymedia, on the left, and Free Republic, on the right, were essentially out in the cold in those lonely pre-Net days.

But regardless of the platform, the most popular content remains in the keep of a small and shrinking bunch. Why is this so? The answer is obvious, say critics of deregulation: A firm that owns a great swath of the traditional media has phenomenal leverage on new platforms. A Web site may be great -- but it becomes even greater, and only really valuable, when you also own TV stations and newspapers, a situation that Powell's rules will exacerbate. "Having a lot of people jumping around with Web sites doesn't prove that a monopoly doesn't have power," says Robert McChesney, a media scholar at the University of Illinois at Urbana-Champaign. "If in fact the growth of all these Web sites and cable channels and satellite radio and blogs and instant messaging -- if it meant that owning a TV station didn't give you any power, why would people be spending $300 million buying a TV station when they could build a hundred Web sites instead?" Why? Because TV still matters. Newspapers still matter. And the Web, while it's growing in importance, is still no match.

If you read through Michael Powell's speeches on the FCC Web site, you see a man who talks as if he knows, and loves, technology. He speaks in the hip-geek way of boomtime CEOs, invoking the familiar buzzwords of the new economy. "Empowerment" and "innovation" will be the guiding principles of our "revolutionary" time, he says.

He makes references to literature and pop culture. In one speech in Seattle in April, Powell alluded to everything from "The Matrix" (he said that the tech revolution pointed out a "warp in the Matrix" controlled by big media) to Bette Midler to Brer Rabbit to the philosopher Hegel.

He did acknowledge that the salad days of the Internet revolution are over. "Now we are doing our penance," he said in the speech. "We secretly enjoy watching 25-year-old millionaires crumble and return to jobs at the Dairy Queen dishing out soft-serve cones." But the current slump in the technology economy, to Powell, is only temporary. "The microchip continues to increase in speed at an amazing rate. Memory continues to double and triple, while the cost of producing it all falls. Optical technology surges forward as photons continue to overtake electrons and take us into Mr. Einstein's speed-of-light world. The technology revolution is developing its roots. It is not a fluke. And, it is finally going to change the nature of how communicating and communication policy will evolve from here on out."

Powell was not available to speak to Salon for this article, but there is some evidence that he does have a genuine appreciation for all things new. In January, he made headlines in the trade press when he told an audience at the International Consumer Electronics Show that he loves his TiVo. While Hollywood executives have criticized TiVo for allowing viewers to skip commercials, Powell called the device "God's machine." "I can't wait to walk in the house each day to see what it's recorded for me," he reportedly raved.

But critics of Powell's deregulatory ways say that the chairman's faith in technology is just a ruse, a public justification for what is clearly a gift to moneyed interests. "It's convenient to say what he says. I'm sure he believes this stuff, and maybe this ideology makes Powell sleep better at night," says McChesney, the founder of Free Press, a group that's mounting a campaign against Powell's new proposals. "But this is just crony capitalism. I doubt he's wrestled with the issues I've raised one iota."

That's the chief complaint against Powell's argument that technology is undermining the power of big media -- there is no evidence for it. "This is a fallacious analysis of the media marketplace," says Jeffrey Chester, executive director of the Center for Digital Democracy, a group that has campaigned against media concentration. "The FCC under Powell has not conducted any kind of sufficient inquiry into this matter. They have a Don't Ask, Don't Want to Know philosophy."

The FCC denies this accusation. An agency official called the current rules "unenforceable," noting that courts have repeatedly struck them down. The official said that the FCC's Media Bureau staff, which designed the proposed rules, compiled a vast record of research to back up the regulations in order for the agency to more effectively defend the rules in court. And if critics say that there's no evidence to support changing the rules, the official asked, where's the evidence that says the current rules are OK?

The truth is that the studies commissioned by the FCC point to an extremely complex issue, one that doesn't lend itself to easy answers. How important is the Internet for people's "news consumption"? The studies show that, compared with TV and radio, it's not that important, at least in terms of popularity. But they can't quantify the Web's tendency to inspire the bigger media, or to organize media events -- as occurred in the Trent Lott case and the antiwar movement. Even if most people get their news from the big media firms, those companies are at least pressured, these days, to compete against the media on the Web.

But much of this could be called speculation, because technically, the FCC's plan is a secret. Powell has not waived a restriction prohibiting the public from seeing the few-hundred-page-long document, so "I can't tell you what's in this item that's on my desk, or somebody might prosecute me," says Commissioner Michael Copps. (Powell has defended this process, calling it standard operating procedure for the FCC. Several members of Congress -- including many Republicans -- have asked Powell to be more open about the review, but in a letter to them in January, Powell wrote, "I assure you, again, that if, in our sound judgment, further comment on any specific rule changes in this proceeding is required, we will seek it. I understand that many would appreciate the opportunity to see each specific proposed rule change prior to adoption, but we do nothing radical by declining the invitation.")

Details of the plan have, however, been leaked to some in the press, and the new rules seem to correspond with what many industry insiders have long expected. The proposal would allow a single company to own enough stations to reach 45 percent of the nation's TV viewers, an increase from the current 35 percent. The plan would also let a firm own both a TV station and a newspaper in the same local market, a situation currently proscribed. And firms could now own three TV stations, up from two, in a single large market.

The proposed rules are not as far-reaching as some had feared; Powell had been rumored to want to completely eliminate the national cap, so the 45 percent number -- which reportedly came after intense negotiations between Powell and Kevin Martin, another Republican member of the commission -- has been seen by critics of deregulation as some small comfort. But according to insiders, the Democrats on the FCC played no part in these negotiations; the rules were handed to the two Democrats for the first time on May 12, leaving them less than a month to consider the proposals.

"That's business as usual with the commission," Copps says, "but this issue is too important for business as usual. It could be that we've gotten a bit shoddy. The FCC has abdicated its responsibilities to the public. We have some outreach responsibilities: It goes beyond putting it in the Federal Register where only the lobbyists see it, if you're dealing with something this important."

Powell has said that the "public interest is about promoting diversity, localism, and competition," but one of the main worries the Democrats on the commission have about the new plan is that it could reduce the number of voices speaking out about local issues. The proposal would allow a newspaper in a certain town to buy up a TV station in that town (or vice versa), possibly resulting in the two operations merging their newsrooms into one entity and reducing the competitive spirit that usually leads to better journalism.

"If you take a newspaper industry that has become significantly concentrated and you put that with a broadcast market that has become significantly concentrated, how does that promote localism and diversity?" Copps asks. "How does marrying the monopoly to the oligopoly enhance localism and diversity?"

The Internet is an unlikely prospect for rescue here. Media scholars have long debated about whether the Web is a local or national medium, but it's clear that when it comes to local news, people don't think of the Web as the place to go to first. For one thing, there really is no business model for building an independent news site focusing on local issues.

"There have been many attempts to create Web-based local publications," says Martin Nisenholtz, the CEO of New York Times Digital. "The problem is that in most cases the economics of supporting a single Web-based publication without a broadcast or newspaper adjunct is just impossible. You would like to see business models for entrepreneurial publishers, but -- I don't want to touch on a nerve here, but you work for and the economics of what you do as a national publication have been very difficult. Imagine what it's like to do that for a local community."

Another problem that has dogged independent sites on the Web is a dearth of advertising dollars. It's not that advertisers don't like marketing on the Web; instead, advertisers tend to want to spend all their money only on the sites that get the most traffic. (This is not how it works in the print world, where even small magazines may get big-name advertisers interested in attracting a select group of customers.) The top 10 or 20 Web sites -- those owned by major corporations -- get most of the ad dollars while the rest of the Web struggles. This creates tremendous pressures on small and independent sites to become affiliated with large portals, a situation that Powell doesn't seem to have considered.

Jonathan Adelstein, the other Democrat on the FCC, says that studies commissioned by the agency prove that when it comes to local news, people look to TV and newspapers, not the Web, for their information. In September, Nielsen Media Research asked people what sources they most rely on for local news. Almost 85 percent said they watched TV, 63 percent said they read the newspaper, and a third of them listened to the radio. Fewer than 20 percent of those surveyed said they used the Internet for local news. And that makes sense, Adelstein says. "Take Slate. It's a nice voice, but I'm not going to find out what's going on in the Arlington City Council by going there. Where do people get that information? That hasn't changed. Even though there's 200 channels from cable, which one are you getting your local news from? Your broadcast station. If we allow more national ownership of these stations, we worry we'll be cutting off local voices."

Nisenholtz says that a merged news entity in a community can make for stronger local journalism, a sentiment echoed by many who support the FCC's proposed rules. (The New York Times Co., which owns newspapers and TV and radio stations all over the country, supports a repeal of the rule that prevents a company from owning a newspaper and TV station in the same market.) Nisenholtz pointed to the Sarasota Herald-Tribune, a New York Times-owned newspaper in Florida, which operates a community 24-hour news cable station that it started with the local Comcast cable service. The newspaper and the TV channel operate a shared newsroom, and articles from the newspaper and video from the TV station appear on the combined Web site. Nisenholtz said that the merged operation allows for a more robust news Web site, one that the newspaper, by itself, would not have had the resources to put together.

Citing another example where his firm might attempt to strengthen ties between its various properties in a local region, Nisenholtz pointed to Boston, where the Times Co. owns the Boston Globe and the Web site and also has a stake in the Red Sox franchise and the New England Sports Network, a popular local cable channel. The Times is a powerful presence in the city; Russell Lewis, the Times Co.'s CEO, told a conference last year that the "impressive combination of print, Internet and television platforms has enabled us to become the leading news and advertising media group in Boston, and we mean to keep things that way."

But when asked if that could be too much New York Times in one city, Nisenholtz shrugs off the question. "Part of the struggle I have with this issue is that it feels like so much speculation." What does it mean, Nisenholtz wonders, for one company to have "too much" of a footprint in a city? "There's a lot of emotion around this issue," he says. "If you ask if it's too much, you wonder, compared to what?"

But critics of the FCC's plan say there's something unnatural about local media coming under the ownership of national chains, and they worry especially that the new rules being considered by the FCC would make it even harder for alternatives on the Internet to spring up. "I'm really worried that we are on the verge of taking the potential and dynamism of the Internet and really choking it off," Copps says. "I'm worried about the intersection of distribution and content -- he who controls those things has a hammerlock on the information that's coming to the American people."

When he talks about the intersection of distribution and content, Copps is referring to the FCC's recent ruling on "open access," in which the agency did not require Baby Bell telecom firms to give their rivals access to local phone lines in order to provide broadband connections. The ruling was a Byzantine bit of telecom regulation, but the upshot, according to Powell's critics, is that a few firms can now effectively control the broadband content that comes into your home -- a situation that undermines all of Powell's rhetoric about the Web providing us with new media diversity.

"What will happen is that the economics of show business will shape the Internet economy," Jeffrey Chester, of the Center for Digital Democracy, says. "Those services owned by cable companies will be able to afford the kind of lightning-fast distribution that will be standard for broadband applications. My fear is that in the absence of policy safeguards, progressives and alternative media and civic sites will wake up too late to recognize that although people can reach us on the Web, by God we are slower and it costs us more to transport our messages. There will be a dimming and a gradual banishment of our views on the Internet. And it's a terrible error on the part of progressives and others to hold out for an imaginary redoubt such as wireless. Cable is the dominant medium, and there are just really three or four companies doing it, and we better ensure we have a voice there on the broadband Internet."

Chester's fear sounds alarmist -- by what mechanism could the corporate media stifle bloggers and alternative publications? But surprisingly, Glenn Reynolds, the proprietor of InstaPundit, a very popular, mostly right-leaning blog, says something similar. "Powell's theory is good as far as it goes," he says, "but as people try to tame the Internet, how long before the concentrated big media try to shut down guys like me? I'm not trembling over it -- but honestly, if you asked me 10 years ago if the DMCA was even possible, I'd say no way."

The media companies and telecom firms have tremendous political power, Reynolds notes; many of the technologies that Powell now lauds -- cable TV and the Internet specifically -- have thrived in spite of their efforts, not because of them. Whenever we see technologies that give people real power, technologies that significantly undercut the mass media's role in the marketplace and that cannot be tamed, the firms -- often joined by lawmakers and regulators -- inevitably attempt to shut those down. One needs no more proof of this, says Reynolds, than the story of Napster.

"I guess as a good free marketeer I'm supposed to be against these regulations on media," Reynolds adds, "but to be a good free marketeer you have to have a free market. And we don't. I guess if the Justice Department were enforcing antitrust laws against these big companies, then I'd be OK with them being big. But since that's not happening, I don't trust these guys."

Howard Bashman, a lawyer who runs How Appealing, a fascinating blog that details virtually everything that occurs in the occult world of the federal appeals courts, is just the kind of person Michael Powell might hold up as testament to his idea that the Web gives the big media a run for their money. Several times a day, Bashman posts his dispatches on the appellate courts -- decisions he's found, decisions his sources (such as federal judges and their clerks) have told him about, his observations on the courts' processes, and links to basically everything else that might have to do with the law. Because he's thorough, prolific and accessible, Bashman quickly became required reading for people who follow the courts and even for those who just have a passing interest in law.

The site is a year old, and about 7,000 people visit it each day -- which doesn't sound like all that many until you consider who these readers are. "I know the folks at the AP read my blog for ideas," Bashman says. So do other journalists, for whom Bashman's site has become a one-stop shop for legal information. And due to the site's success, Bashman -- who works full-time as an attorney but who considers himself a kind of journalist -- has broken in. He's often quoted as an expert on appellate court processes, and he's been able to translate his success into other ventures; a piece he wrote for Slate is prominently posted on his site with the hopeful title, "My First Slate Essay."

So, considering his success, does Bashman think that he may prove Powell's point -- the Web has made it easy for people to break into media? No. He doesn't think so at all. Bashman notes that not everyone has access to the Internet or has the resources to do something like what he does. "People who have a weblog don't often have the resources to do independent reporting. I'm fortunate enough to cover a subject where material is freely released by federal courts," he says. But if you're trying to do some real reporting -- something that takes time and money -- you'd need more than a blog behind you.

And Bashman, too, worries that an increasingly consolidated media world may somehow hurt blogs like his. "The masses haven't discovered this aspect of the Web, and whether they do or don't following further consolidation will remain to be seen," he says. "Certainly the forces of the big media may not want that."

Powell frequently notes that it was not his idea to rewrite media rules -- it was Congress' idea. Under the Telecommunications Act of 1996, the FCC is required to perform a biennial review of its rules on media, and Powell says that Congress required the FCC to rigorously defend its actions. "Congress shifted the burden to the FCC, rather than the industry, to demonstrate the need for a rule," he said in a speech in March. "If we cannot conclude a rule is necessary, we are commanded to modify or eliminate it. And, we will have to do this exercise every two years. The congressional bias is for deregulation and the standard for maintaining a rule is an enormous hill to climb."

But perhaps the congressional bias is shifting. On May 9, several members of the House, both Republicans and Democrats, introduced a bill to cap the national TV ownership rate at 35 percent, which, if it passes, would reverse a rule the FCC might make in June. A few days later, Sen. Ted Stevens, R-Alaska, and Sen. Ernest Hollings, D-S.C., brought similar legislation to the Senate.

"While many of us in Congress had hoped that the FCC would recognize the serious consequences that could result from a laissez-faire approach to media ownership, it appears the message is not getting through," Hollings said in a statement.

It's a particular irony of this debate that the forces aligned against Powell's proposals are using the Internet, the technology Powell says reduces the need for media regulations, to make sure that those rules stay in place. The issue is big in blogland; Lawrence Lessig, the Stanford Law professor known for his articulate criticism of draconian copyright measures, recently took up the issue on his site, as have several other influential writers on the Web., the progressive group that spearheaded many antiwar activities, has been strongly campaigning against the rule changes, and there are many e-mail petition drives floating around.

In a strange way, then, don't such actions show that Powell is maybe a little right? The Big Media want the rules changed. But the small media, the spirited masses of the Web, are fighting against those changes, and they're showing that they can take on the big guys. The FCC has already received 18,000 comments on the proposal, almost all of them against it. Doesn't that prove that the big firms have lost their clout?

When asked, Don Hazen, the editor of AlterNet, chuckles. "The Web is a great tool," he says. "You can use it for a lot of things. You use it to fight the power. But it doesn't mean the big media aren't powerful anymore."

By Farhad Manjoo

Farhad Manjoo is a Salon staff writer and the author of True Enough: Learning to Live in a Post-Fact Society.

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