All of this has coincided with a module I teach on media economics, and specifically that part of the unit where we look at precisely the issues addressed in Shirky’s piece. The last time I taught this unit, in 2007, the students merely tolerated the section on newspapers, finding it difficult to engage with compared to the sections on the music, film and TV industries. Who can blame them? To the average 22 year old, a newspaper is something their parents might use, like hair dye or an orthopaedic girdle. But now, in 2009, the carnage in the newspaper industry is such that the students are transfixed, and eager to attain a grasp of the underlying dynamics.

The issue is where the economics of the crisis in newspapers affects the quality or otherwise of the journalism available to the citizenry.  The crux of Shirky’s critique is this:

Round and round this goes, with the people committed to saving newspapers demanding to know “If the old model is broken, what will work in its place?” To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke.

With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem.

What hasn’t stopped being a problem, however, is what that “something” is.  The newspaper is a coincidence of corporate property rights, advertising revenue and viable audiences.  The evidence that the accidental circumstances which gave rise to that coincidence were not only temporary, but are drawing to a close, is everywhere.   I agree with Clay Shirky that nothing will necessarily replace the newspaper, and indeed that it is foolish to try and predict what other forms may take its place.  However, the fact that journalism under corporate ownership has failed us so often for so long – with journalists in the run-up to the invasion of Iraq, and to the current economic crisis, often more akin to stenographers than seekers of truth – does not mean we should give no thought to what will replace it.  On the contrary, as Robert McChesney argues forcefully in Communication Revolution: Critical Junctures and The Future of Media, this task is one that urgently faces not just academics, policy elites and bloggers, but citizens in general.

There are those, especially within the newspaper business itself, who argue balefully that meaningful investigative reporting cannot survive without something like the current business model itself to sustain it – what Shirky dismisses as the “you’ll miss us when we’re gone” model.  On the other hand, there are those – they seem to have been around for ever, even if it is only 15 years or so – who evangelise breathlessly for the democratic potential of so-called citizen journalism.  As web technologies advance, as the web allows for (but doesn’t itself provide) greater degrees and varieties of participation, so the breathless excitement of the evangelists renews – bubbles, wars, recessions and stolen elections notwithstanding.

As ever, I will turn to the voice of reason, Yochai Benkler’s The Wealth of Networks :

Since the end of the 1990s there has been significant criticism of this early conception of the democratizing effects of the Internet. One line of critique includes variants of the Babel objection: the concern that information overload will lead to fragmentation of discourse, polarization, and the loss of political community. A different and descriptively contradictory line of critique suggests that the Internet is, in fact, exhibiting concentration: Both infrastructure and, more fundamentally, patterns of attention are much less distributed than we thought. As a consequence, the Internet diverges from the mass media much less than we thought in the 1990s and significantly less than we might hope.

These sobering words aside, Benkler’s overall view is one of cautious, evidence-based optimism for the online public sphere.  More recently, in a letter to The New Republic, he predicted its early features:

1. Surviving elements of the old system, unchanged, such as the BBC and the New York Times;
2. Small-scale commercial media (along the lines of Talking Points Memo);
3. New, volunteer-driven party presses;
4. Newly-effective nonprofits, like the Sunlight Foundation;
5. Individuals in networks

We may also point to other phenomena that may prove important.   As more and more media outlets, like The Guardian, make their API available, the scope for developers, activists, journalists and others to make use of such content in new and unpredictable ways increases exponentially.   This is a trend which should be supported, and public institutions, government agencies and private corporations encouraged to join.  The information that, in the 20th century, had to be dragged out of an organisation by the plucky journalist could, in the 21st, flow automatically across the internet if the public, legal and legislative pressure for it is in place.  Then what about all those journalists being laid off?  Are they all set to retire, or become florists?  I don’t think so.  Many will find new ways to put their talent, their contacts and their experience to good use.  Rupert Murdoch’s loss could yet be the New Journalism’s gain.

ITV is a quoted company with nowhere to hide, and its share price offers a daily reminder of just how bad things could get. It currently stands at 23.5p, less than a fifth of its 2003 flotation price, and could fall further when it announces its annual results next Wednesday, when it is likely to unveil more job losses and cuts in its £1bn programme budget. Saddled with a growing pension fund deficit and watching advertising revenues fall dramatically – they are thought to be down by up to 20% in the first few months of this year – its debt has been downgraded by credit agencies. The message to the government is an implicit one, even if ITV wouldn’t dare to utter it aloud: act now or we could go bust.

To which, if I were Culture Secretary Andy Burnham or his special advisor, I would be tempted to respond: so what?  ITV has long had the smell of feet about it.  ITV companies spent the 1990s focusing on merger and acquisition activity rather than viewers.  The network made a complete mess of its involvement in digital platforms at the turn of the decade, with disastrous results for the Football League as well as ITV.  Along the way ITV made the still-baffling decision to buy Friends Reunited, the once-promising forerunner of today’s social networking sites, indulged in extended public whining over the unpredicted commercial success of Channel 4 when it started selling its own airtime in the early 1990s, and has successfully lobbied for progressive relaxation of its regional and PSB obligations.

Meanwhile anyone with eyes to see could see the contours of the digital landscape emerging: a land where audiences would be increasingly spread across several hundred channels, where ITV1′s audience share fell below that of combined non-terrestrial channels over five years ago, and where subscription surpassed advertising revenue around the same time.  So Burnham might well follow up his “so what?” with “why does ITV’s current situation come as a surprise to nobody but ITV, and why did you fail to take more productive strategic action five, ten or 15 years ago?“.

Now broadcasting and competition policy obviously can’t be punitive in motivation, however tempting and well-deserved that may be.  We shall hear a lot in the coming weeks and months about the risks and benefits of the two options being floated by ITV chairman Michael Grade: merger with C4 and Five, or to change C4′s funding basis so that it no longer competed with ITV for advertising revenue.  As we see, ITV is hardly in a position to dictate its terms.

But what would British broadcasting, production and advertising markets look like if ITV were no longer around?  After all, its original mission, to provide viewer choice and competition for the BBC, became irrelevant long ago.  Jobs will be lost whatever happens: the status quo guarantees them, and both ITV’s preferred options depend on them.  If, however, ITV’s remains were to be donated for harvesting, with the BBC, C4 and Five catering to audiences and advertisers on the basis of redrawn, and presumably stricter PSB obligations, then the undoubted demand for original programming would still need to be fed, and the new premium placed on TV airtime would bring demand and supply more in the direction of equilibrium than they ever would in the presence of ITV.  The BBC’s significance in the future broadcasting environment will be greater than now whatever happens, and Channel 4 is surely a more vibrant and worthy survivor of the current balloon game than the wastrels at ITV.  If we’re being invited to think the unthinkable, then let’s do just that.

I’ll have more to say about this in a day or two.

TV types have followed the lead given by their music industry counterparts in pointing the finger at ISPs as the latest scapegoat in the Canutian struggle by copyright industries to preserve the disintegrating regime of rights.  Garrett begins his argument with a false analogy of neighbours stealing electricity from one another.  In one house live Garrett and his respectable copyright-holding chums.  Two doors down the road live an unspeakable family who have discovered a way of tapping into Garrett’s electricity supply by hacking into a cable which runs between the two houses through the house in between (home of the ISPs).  In this example, the rights holders are appealing in vain to the ISPs to stop their neighbours using their electricity without paying for it.

The analogy is as mistaken as it is inelegant.  Copyrighted works are just not like electricity.  First, the marginal cost of supplying Stephen Garrett’s TV shows, once the show has been produced and broadcast to one household, is low, and effectively zero.  Crucially, TV shows do not exhibit the key characteristic of rivalry, so that the ability of one household to receive and watch a show on TV is not affected by the fact that one household, or a million households, are doing so at the same moment.   On the other hand electricity, as any physics textbook might confirm, is absolutely subject to rivalry: once a kilowatt of electricity has been consumed – that is converted into heat, light, or any other form of energy – it is no longer available to that consumer or any other.  

So the cost of making a TV show remains unchanged whether one person or a million watch it; and whether those people pay to watch it or not.  Where Stephen Garrett might have done better to direct his argument is to be honest enough to acknowledge that the entirely artificial and context-specific conditions in which his industry developed in the 20th century are now changing.  Those conditions ensured that his TV shows were, if not rival, then excludable.   Initially, excludability was simply a function of the limitations of broadcast spectrum and the high cost of receiving equipment.  

Over time, in the UK, a complex broadcasting ecology was created by successive governments in which the BBC was funded by an enforced tax (the licence fee), and commercial broadcasters generated revenues by delivering mass audiences to advertisers.  Over the past couple of decades, conditional access technologies have allowed for new, purer mechanisms of excludability in the form of subscription and pay-per-view.  Such mechanisms have, conversely, ended the older problems of scarcity so that audiences and programme makers can engage via hundreds of channels rather than the handful possible via free-to-air terrestrial broadcasting.  As I said before, shroud waving is nothing new in the TV business, and Garrett’s predecessors in the 1980s and 1990s were equally shrill in their denunciation of these changes.

There is no question that the revenues which allow a FTA broadcaster like ITV or Channel 4 to invest in high cost domestic production are under threat.  A whole raft of technological, economic and demographic changes make the future of that kind of investment deeply uncertain.  But the downloading of TV shows by filesharers is only one, minor part of that much bigger, much more worrying, picture.  Furthermore, what makes Stephen Garrett’s argument particularly unconvincing, ultimately, is that the examples he provides (shows like Spooks, Hustle and Life on Mars), are those least under threat, for the simple reason that they are all broadcast by the BBC and therefore funded by the licence fee.  As any of the BBC’s commercial rivals will point out, the BBC thus enjoys the most secure long term funding base in the UK broadcasting industry.  For someone who is doing very nicely out of the licence fee, Stephen Garrett does his peers a disservice by crying wolf over filesharing.