Friday, February 10, 2017

The Shattered Mirror just broke into a million pieces

Criticism is piling up of the Public Policy Forum’s controversial new report, The Shattered Mirror. The first round was of the knee jerk variety, which is what the daily press specializes in. A second round of analysis is now under way by academics, who are by nature more contemplative and less reactive. I was a bit hard on the report, which was authored by former Globe and Mail editor Edward Greenspon, in an entry posted earlier this week on my old blog, Greatly Exaggerated, calling it “more like a funhouse mirror.” My 2014 book Greatly Exaggerated: The Myth of the Death of Newspapers produced reams of data to show that newspapers in Canada and the U.S. were still making healthy profit margins. (They still are.) The Shattered Mirror nonetheless goes to great lengths to perpetuate the myth that newspapers are “bleeding red ink.” (As do others.)

My new book, The News We Deserve: The Transformation of Canada’s Media Landscape, to which this blog is dedicated, looks at exactly what has brought our news media to near banana republic status. I mainly blame our absurdly high levels of media ownership concentration, which the federal Competition Bureau has failed to halt or even challenge, and majority ownership of Canada’s largest newspaper company by U.S. hedge funds in contravention of our foreign ownership limits, which the erstwhile Harper government chose not to enforce. The Greenspon report dismisses concentration as a problem, fails to even mention foreign ownership, and gives the Competition Bureau a pass.

Now Carleton University media economist Dwayne Winseck has weighed in with a scathing but lengthy analysis on his blog Mediamorphis, calling the report “badly flawed” because it “cherry-picks evidence and gooses the numbers” to make its case. This, of course, is what think tanks like the Fraser Institute do – start with predetermined policy conclusions and muster enough evidence to support them while ignoring evidence that doesn’t. Chief among The Shattered Mirror’s crimes, according to Winseck, is exaggerating the online bogeyman.
There is . . . an acute sense of threat inflation that hangs about it. The extent to which Google, Facebook, Silicon Valley and “the Internet” are made the villains of the piece is both symptomatic of how the report tries to harness such threats to preordained policy ends and a framing that undermines the report’s credibility.
Not only does The Shattered Mirror dodge the issue of media ownership concentration, notes Winseck, it also overlooks the impact of the 2008-09 financial crisis, which brought a sharp drop in advertising from which our news media have yet to recover “and likely won’t.” Besides, he adds, “advertising is no longer the centre of the media economy, and [is] receding ever further from that role by the day, so hinging a policy rescue on recovering so-called lost advertising is out of step with reality and likely to fail.”
As the bottom on advertising revenue falls out that source of subsidy will have to be replaced by another if we really are concerned about getting the news we deserve – trying to wrestle money out of Google and Facebook (the report’s central policy proposal) won’t cut it.
Winseck, who closely tracks media industries through his Canadian Media Concentration Research Project, is critical of the PPF report’s focus on the “fake news” fad and finds it generally alarmist. “The language about ‘vampire economics’ is overwrought,” writes Winseck. “Such things give a tinge of moral panic to the report, and taints the analysis and policy proposals.” Data presented in the report to paint old media as declining and even failing is highly misleading, according to Winseck. “Its fixation on advertising revenue, for instance, assumes that it has always been an integral part of the natural journalistic order of things. It has not.” A drop in conventional television revenues noted in the report is “misleading,” according to Winseck, in light of the lush profits being raked in by the broadcasting behemoths overall, such as Bell’s “eye-popping” 40 percent return on revenue.
Bell is the biggest, vertically-integrated TV operator in Canada by far, accounting for roughly 30% of all TV revenues and 28% of total revenue across the network media economy. Ignoring conditions at a company with this clout across the media economy is negligent, but also part of a tendency in this report to selectively invoke a small part of the picture to fill in a portrait of catastrophe of a larger kind. . . . The report is chock-a-block full of such examples, which lends to the impression that the report’s authors are goosing the numbers.
Likewise the report’s claims about collapsing newspaper circulation and journalism job losses. Its claim that between 12,000 and 14,000 journalism jobs have been lost since the 1990s relies on headlines and union data that “do a great job chronicling jobs lost but a poor one at keeping track of those gained.” Statistics Canada data “depicts a wholly different picture,” showing that the number of full-time journalists in Canada actually increased from 10,000 in 1987 to 11,631 in 2015. “Once again consistent with a pattern, the authors ignore this data completely.” My take on this is that there is no doubt mainstream media have suffered massive job losses due to cutbacks brought by plunging revenues, but digital media have proliferated, albeit with less well-paying and secure positions. And who knows how many of those new “journalists” actually pump out sponsored content a/k/a native advertising that is designed to look like news but is actually paid for by advertisers.

Circulation trends for daily newspapers, according to Winseck’s data going back to 1971, are similarly “not the catastrophe that The Shattered Mirror makes them out to be.” He has the same problem I have with the plummeting graph of newspaper sales per household (left), which the PPF report predicts will fall from 18 in 2015 to only two by 2025. “By this measure, the relentless decline and seemingly inevitable outcome look really, really bad – catastrophic even,” writes Winseck. But sales per household are increasingly less relevant as the number of households soars because people are increasingly choosing to live alone. Winseck performs an extensive analysis of historical newspaper circulation data to show that the Public Policy Forum has grossly exaggerated the decline of newspapers. The report, according to Winseck, “has selectively chosen a measure that paints the worst-case scenario.” This type of intellectual dishonesty might be common practice in the world of journalism from which Greenspon comes, but it won’t get past a scrupulous scholar like Winseck. My own research has found that newspapers have deliberately cut back on circulation in order to save on expenses because they actually lose money on every copy they sell.

Of course, they make it all back and more in advertising, which has undeniably been in freefall, declining 40 percent from 2008-15. “This is bad,” admits Winseck, but nowhere near as bad as portrayed in the PPF report. “Thus far, none of the measures reviewed leads to a ‘good news story’, but each of them in their own way change the magnitude, timing and potential causes of the problem.” Blaming the misfortunes of newspapers on the Internet as the report does is misguided, he claims. “There is no downward spike in the fortunes of the press on any of these measures that coincides with when the internet takes off.”
Given this, the internet – and Facebook and Google – cannot be the villain of the piece that The Shattered Mirror (and so many lobbying the government from the “creator” and “cultural policy” groups) makes it out to be. In fact, this is not news. While such claims are common, that they are wide of the mark is well known.
Media economists such as himself and Robert Picard have been pointing this out for years, notes Winseck, but the facts don’t seem to have seeped through to Ottawa. “That neither circulation nor revenue dives downward with the arrival of the internet cuts to the heart of the central claim in The Shattered Mirror. Yet, like so much of the evidence that does not fit its ‘sky-is-falling-because-foreign-internet-giants-ate-Canadian-news-media’s-lunch’ rhetoric, this evidence doesn’t make the cut. If all of this is correct, we must also change our diagnosis and policy proposals accordingly.”
Not only does newspaper revenue not spike downwards with the advent of the internet, the onset of economic woes for advertising supported media do not coincide with the time frames that the Public Policy Forum report identifies, typically 2005 or 2006 for newspapers and ‘recently’ for TV. The upshot of its misdiagnosis is to effectively carry on with the ill-fated case its authors want to make while avoiding another possible – and I believe far better — explanation for the woes they describe: the impact of the financial crisis in 2008 and economic instability that has followed ever since.
It was the recession, not the Internet, that diminished the newspaper industry and caused television to shift from advertising to a subscription model, stresses Winseck. “None of this is a mystery, except to those who work the policy apparatus here in Canada, and there is no mention of it in The Shattered Mirror.”  This fact has also been lost on “the myriad of groups vying to shape the outcomes” of the Heritage ministry’s ongoing review of the lush Cancon industry. “Beyond this cloistered community, however, the fact that the fate of advertising-based media turns tightly on the state of the economy – and indeed, is something of a canary in the coal shaft for it – is reasonably well known and discussed by media economists from across the political spectrum.”
In sum, it is a mistake to focus on a ‘silver bullet’ explanation of complex issues like the one before us. The fixation on the negative impact of the internet and the two villains of the piece, i.e. Google and Facebook, is misplaced. In short, advertising revenue has taken a nose dive because the economy has been shattered not because Tyrannosaurus Digital Media Rex Google and Facebook ate the news media’s lunch.
Winseck sees in Greenspon a “willful refusal” to deal with media industry structures in Canada, which are “wholly ignored” in the report. “These examples are not innocent,” he claims. “They are part of a process of ‘threat inflation’ with the aim of buttressing the case for the policy recommendations on offer.” While exaggerating some threats, the report downplays a major problem, according to Winseck. “The Shattered Mirror also gives short shrift to the idea that media concentration and the structure of the communication and media industries might be a significant factor giving rise to the woes besetting the news media.” By overplaying, as the report does, the threat posed by Google and Facebook “the effect is to minimize the extent to which media concentration and the uniquely high levels of vertical and diagonal integration between telecoms-internet service providers and other key areas of the media, especially television, have given rise to homegrown problems rather than the debilitating ‘vampire economics’ imported from afar.”
One must also look at trends over time, and in comparison to other parts of the world. The Shattered Mirror report does nothing of the sort, and so it paints a picture sloppily with a broad brush, declaring that media concentration is not a problem when it feels fit to do so, but a worrying concern where that suits its purposes, i.e. in the areas that Google and Facebook dominate. Ultimately, there is no overarching sense of how everything fits together, and so the image drawn is arbitrary, and wholly dependent on the whims of the observer.
According to Winseck, “it is folly to willingly turn a blind eye to high levels of media concentration and the peculiar structure of the media industries in Canada . . . because the costs of bulking up have had devastating impacts.” The PPF report “gives us a whiff of the costs in terms of journalistic and editorial jobs lost, but nowhere does it connect the dots. Of course, having ruled these issues “off-limits”, what should we expect?” That the PPF report “willingly walked away from these issues,” adds Winseck, “is stunning, and naïve.”
In doing so, it walks away from an impressive body of research from around the world that says that these issues are important, extraordinarily complex, and foundational to understanding the emerging digital media environment.
So how does everything fit together? Why would the PPF report paint such a misleading picture of Canada’s media industries? Why are some issues, such as media ownership concentration, “off-limits?” It might have something to do with those lush profits mentioned earlier. In addition to Bell’s whopping 40-percent profit margin, notes Winseck, fellow media giants Shaw (42 percent), Rogers (38 percent), and Quebecor (37 percent) are also raking in profits at about four times the rate in other Canadian industries. “These observations are at odds with the story of doom and gloom that permeates The Shattered Mirror.”

The answer might lie in what the late Canadian media economist Dallas Smythe and Tran Van Dinh of Temple University identified as “the ideological orientation of the researcher.” I have found in my research on Canadian media that the research and policy agenda has been steered by some academics with an ideological agenda, whose schools often then get a slice of the money that trades hands in media takeovers. “All of us have our predispositions,” noted Smythe and Van Dinh in 1983, “either to criticize and try to change the existing political-economic order, or to defend and strengthen it. The frequent pretense of scientific ‘neutrality’ on this score is a delusion.” Those who are prepared to defend Big Media get jobs and research funding. Others don’t. It’s that simple. Winseck knows this only too well, and in an attempt to convey that message he points to who was behind the report.
That the report refuses to engage with media concentration and the peculiar structure of the media is not surprising given that many of those surrounding its lead author, Edward Greenspon, in the development of this report have not just sat back and taken arm chair academic views on these matters but have been leading cheerleaders for the processes of consolidation in Canada that have got us to where we are.
Winseck declines to identify the cheerleaders, instead urging readers to do their own research. “The industrious reader need only consult the list of acknowledgements to sort out who is who and draw their own conclusions. Given all this, that media concentration wasn’t on the agenda is not surprising. It’s still a pity, though, because the issues are serious.” Perhaps his discretion is wise. After all, look at where my propensity to name names and point fingers has gotten me. I am currently teaching at the University of Malta, having for some reason been unable to secure an appointment at any journalism school in my Home on Native Land despite some absolutely stellar credentials. I guess that means I have less to lose than Professor Winseck, so being an industrious reader I’ll take it from here.

Let’s look at that list of Acknowledgements. Following a two-page Afterword in which Greenspon chronicles how journalism “allowed a shy kid to find his voice,” starting at the Lloydminster Times, he thanks the “hundreds of people” who provided input into his report. The four principal researchers were Chris Dornan, Winseck’s colleague at Carleton, Taylor Owen at the University of British Columbia, Colette Brin at Université Laval, and Elizabeth Dubois at the University of Ottawa. I recognized only half of those names. Dornan is a former director of Carleton’s journalism school and is now its graduate supervisor. He is a go-to guy when the news media need an academic to comment on how media ownership concentration is nothing to worry about. I took him to task in Greatly Exaggerated for downplaying Postmedia’s takeover of Sun Media in 2014. “Worrying that a smaller and smaller number of companies own a larger number of newspapers is kind of beside the point,” he told the Canadian Press, “because the newspapers themselves have been eclipsed in their social, political and economic prominence by the new digital concourses of communication.”

Brin was associated with the erstwhile Canadian Media Research Consortium, which I have savaged over the years for its work on behalf of media owners. Read about that here.  I did not recognize the name Taylor Owen, but then he just started as an assistant professor at UBC’s j-school, which I have vivisected for a decade and a half in protest of its corporate apologism. (Read the latest on that in The News We Deserve. This article is from 2004.) Owen is quoted throughout the report as an expert in online news. He has a website with his latest writings on things like Virtual Reality. (This is journalism?) Dubois is another assistant professor Internet expert fresh out of school, albeit Oxford. Her contribution to the report is unclear, as she is not quoted, but her research apparently revolves around “how technology may be leveraged to increase democratic accountability and engagement.”

Pollster Allan Gregg of Tragically Hip fame led the report’s polling efforts, aided by Natalie Turvey, who is executive director of the Canadian Journalism Foundation, and Chris Waddell, who is both a Carleton professor and a CJF board member. The CJF, as I noted in my 2007 book Asper Nation, was founded in 1990 by corporate executives who, according to the National Post, felt that Canadian business was “getting a raw deal from a wildly pinko media whose primary objective was to trash the corporate sector.” Its top executives wrote letters supporting Bell’s 2000 takeover of CTV, and it was present at the CMRC’s conception, although the Post’s conflict of interest revelations shamed it out of participating overtly in its parenting.

Some of those acknowledged in the report are journalists and journalism educators who do good work, but others stick out like a sore thumb, such as Jonathan Goodman, global managing partner of the multinational strategy consulting firm Monitor Deloitte, and Peter Donolo, vice chairman of PR firm Hill+Knowlton. The latter company is perhaps best known for faking the “babies ripped from incubators” story that helped turn U.S. public opinion in favor of invading Kuwait in 1990. Ken Goldstein, president of Winnipeg’s Communic@tions Management Inc., is listed as one of those having been “particularly patient in helping us understand industry numbers.” In a recent blog entry, I labeled Goldstein “Canada’s chief media apologist.” His prediction that newspapers have only a few years left was given prominence in The Shattered Mirror.

In addition to $200,000 in government funding, the PPF report received $70,000 in private funding. It came from the journalism-oriented McConnell, Atkinson, and Max Bell foundations, as well as from corporate donors CN, TD Bank, Ivanhoé Cambridge, and Clairvest Group. The 2016 PPF report Does Serious Journalism Have a Future in Canada?, by Madelaine Drohan of the Economist, on which The Shattered Mirror relied in part, was researched and/or written during a fellowship funded by the Royal Bank.

So there you have it – glass and blood all over the floor. Now that you have some more background to the report and where it came from, you can make up your own mind if Winseck is right about it.

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