Comments for When sheiks and cheques shake the media

It is obvious that the media needs to rely on both sides of the two-sided platform to keep its revenue stream. The media thus has to satisfy the audience by publishing advertisements that are congruent with the content of the media, and the advertisers will thereby be satisfied as well as they target readers that are interested in their product/service. By doing so, the media will be biased due to their advertisers. The audience will then suspect this bias and might doubt the trustworthiness of the media. But if the media wants to remain objective, it might upset its advertisers. This was illustrated by the article about the Conrad hotel described in the post.

To me, if a media wants to remain objective, it shouldn’t write reviews or articles about their advertises. This basically means that the advertising content shouldn’t be congruent with the media topic. A problem then is that the media will have less advertisers as advertisers try seek an audience with the same interest as what they offer. Another problem would be that the audience would be bothered by the ads as they don’t interest them. Both problems lead to a same result: less revenue for the media due to either a loss of advertisers or audience.

There don’t seem to be a solution to this problem. However, I believe a strong media can survive with a small amount of ads that are not congruent with the topic of the media. I can give an example of a paper I read myself: The Economist. The ads in this paper have nothing to do with the content of the paper. Yet, people still buy the paper and advertisers still finance the paper. The reason for that is dual. On one hand, the audience still buys the paper because of its quality. On the other hand, the advertisers can still target their customers even though the paper has nothing to do with the ad. For example, you can usually find ads of the designer Louis Vuitton in The Economist. Although it isn’t a fashion magazine, Louis Vuitton can still target a segment of their customers as most of the readers of The Economist are business persons. Business persons are a segment of Louis Vuiton’s customers. All in all, the paper remains unbiased by advertisements, and advertisers are still happy.

When reading this post what caught most my attention was more about the selection of which events and stories are reported. Because in my country this is a very difficult matter, in Mexico there are just 2 big TV chains that are each bound with specific political parties, and when elections are near each one talks bad about the other party and good about theirs, and this happens with every story, for example the owners of one of this TV chains is also the owner of some Mexican football teams, and of course they only put the matches on air of their teams in their channels or in the news they talk bad about the other teams. So I grew up listening to my family complaining and always telling me never to trust the media and in school they always taught me to look it up from different perspectives and different sources.

I did a little search about this and found out that this type of bias is called a corporate bias, which is when stories are selected to please corporate owners of media and not advertisers in particular. I’m use to this happening in the media, but in my opinion it shouldn’t have to be this way. But the problem usually comes when people is not informed or doesn’t know about this bias that keeps happening, the majority of Mexicans grow up with this 2 if TV chains and truly trust them, so this is why the TV chains won’t change, because it is working for them, people continue to tune in to their channels and will continue to do so, until someday they can be educated about this issue. You can say that the government would like to interfere, but the problem is that the owners of this TV chains are almost the owners of everything important in Mexico, so the government won’t touch them. This is what we call a duopoly, in TV, radio, telephone companies, etc. If the owners see profit while having bias, they won’t stop, I’m sure this not only happens in my country but in many others where education is not always the best nor for everyone. So in my opinion what should come first is to inform and educate children in this matter, so that we can speak up and start having the truth spoken to us in the media.

After reading this article, the thing that holds my attention is the example mentioned concerning the car test: has the media an influence on the scores of a car or is it the contrary? Well it recalls me a similar example that takes place in the video game industry. It is indeed in the public domain that journalistic video games websites receives in advance triple A games from the editors. Triple A games are games in which a lot of money was put in during its conception. There is thus a high expectation to reach a considerable profit when these kinds of games are released on the market. Where it becomes a little bit wicked is when you realize that such games are almost reaching the highest note every time on the famous video games websites, even though sometimes there are not deserving it.
Before getting to the point, I want you to recall something: A typical video game test goes to different points like the scenario, the gameplay, the soundtrack, the graphics or the potential duration in order to rate it. For example, if a lambda game comes out, it will be rated on all those characteristics. Until here, there is nothing wrong. Let’s say now that the editor releases the lambda game II. Whether you like it or not it will automatically be rated in comparison of the first one. That is the testers could say that the gameplay has not changed or that the story is less mind-blowing than its elder one. It might then happen that Lambda II gets a lower score.

But the public begins to spot something inconsistent with this policy when it concerns triple A licenses. For instance, Activision holds the Call of Duty license. Whenever a new opus comes out, it reaches incredibly high sales (Can someone tell me why?). But when you look closer, there are no improvements between the latest episodes that came out. If we keep the same logic as before, the video games testers should then badly rate those lacks of improvements like they do for other games, the non-triple A ones. But they don’t. They keep saying that everything is “awesome” and that they can’t wait until the next one comes out. It is clearly implied that such websites are getting funds from the editors in exchange of a good rating for their game by the testers.
But seriously, it is like eating the same food over and over again. You get bored. You can even get angry when you see a game that proposes a lot of originality or a thinking-out-of-the box gameplay reaching bad scores or should I say “normal” scores. You get angry because innovation is then not correctly rewarded. Furthermore, you don’t see the point either to rely on the video game tests to buy your game. And what is than the point for editors to pay video game testers ?

According to Ellman and Germano (2007) advertising influences the objectiveness of reporters in monopolistic markets. Surprisingly in a competing market there is a positive correlation between the number of ads and accuracy of reporting. To bypass this objectiveness problem advertisers shouldn’t target papers with too accurate or sensitive subjects. This leads to poor coverage of important topics and that’s why media competition should be regulated when there is too much advertising. But there is a problem with this regulation, profit loss. Banning some of these ads will decrease revenues for magazines and newspapers. That’s why other solutions have to be explored through further studies. An interesting topic for further research is to use the global warming issue to test if automobile advertising can cause bias.

Unfortunately it is very difficult to give a personal opinion, and even harder to find a solution to this problem. It is almost impossible to be fully objective in an article or a comment about a company that buys ad space in the same newspaper. Because if it’s a negative comment your objectiveness will probably chase the advertiser away, causing revenue losses. This is the same result as before in Elman and Germano’s paper (2007) when banning ads to coverage of important issues.

The only solution I could find to ensure accuracy is to prevent advertising in magazines that review the same product category. For example ads for iPhones should be prohibited in tech review magazines, but ads for shoes would be allowed. But this means advertising isn’t targeted anymore, thus less effective. So the only conclusion I could make is not to trust reviews for a source advertising for the same product.

Reference:
Ellman, M., & Germano, F. (2007). What do the papers sell?. Rochester: Social Science Research Network.

Regarding this post, I have decided to give my own opinion about the matter.
First of all, I reckon the network effect on the different media forms is pretty obvious and inevitable. Indeed, as stated in the article, without readers/viewers/audience, there would be no media (newspaper, magazine, radio or television channels), as advertisers would not be interested to pay and not be seen/heard/read. But with too much and/or uninteresting advertisings, viewers would turn away from those media and they would eventually die. Thus, I completely recognize the point made in the article about the indirect network effects of audience and advertisers on the media.
But how could we find a solution to this problem ?
One of them would be for the government to abide advertising in the media. But, then, those media would mainly depend on either government fundings, either on higher fees to continue to subsist. The problem with the first solution is that the media would then be even more politicalized, as their fundings may depend on choices made by the in place government, which would then create an even worse bias in our information alternatives, as each media would want to please the government’s wing n place at that time.
The problem with the second solution would be that following the media would then be unpayable for the alpha citizen, which would be a worst case scenario in our information based society.
From my point of view, advertising in the media is inevitable and should not be controlled by the state.
But I also reckon media must be able to gain audiences by setting up ad-free time-slots. Even though this is a personal preference, I think it may be a good strategy for a media channel (I am more speaking of a radio or television channel) in order to gain audience and build its loyalty. Taking a personal example, I now really like to turn on to the French public media between 6pm and 8pm, just because they are not allowed to air any ads during that time period. But that has also caused me to turn more and more to France 2 or France 3 during the day.
I reckon this might thus be a viable solution even for private media channels, that would then need to sacrifice a little of their profits (public channels being partially funded by the state, it is easier for thel to do so), in order to gain audience fidelity and thus increase their positive network effect on advertisers even more.

Now, as to my opinion on the two presented matters, it outrages me on one side to see that the media are so corruptible, whether it be by a hotel group, a car company or a political party – to take another example -, but it also does not surprise me at all.
The magazines stated in the article are specialized magazines, thus targettng a specialized audience and targeting specific advertisers. Thereby, their network is less broad than other lifestyle or news magazines, and their network effect is thus more fragile. Because of that, advertisers will not only look at how many readers/audience they have, but also at what they say, and will then take action if it does not please them. The main problem being then that, their client and advertisers base being way smaller, losing a group of any of them can – at term – be fatal for a magazine.
But even though I do not agree with those behaviors coming from partners, clients or magazines – that are supposed to be fully objective in their publications and decisions -, I do think this is inevitable. In a way, it goes the same way for politically colored newspapers, which would lose a lot of their audience if they do not please them, or lose some fundings if their articles don’t go in the same direction as the political party that supports them and that will thus put a bit of their objectivity aside in order to keep their profit base and their network effect as high as possible.

Is there a solution to those biases in the media ? I don’t think so. As long as they will depend on and drive for profit, biases will still subsist. But, fro my point of view, it is a very good thing that such biases, changes of opinion or abuses are being pointed out by other media, official authorities or the public. I think that is just what is needed for the public to keep an open mind and a certain objetivity about what happens around them and what they have juste read/watched/eard and thus learned.

According to theory, a market is two-sided if there are externalities between the two user groups of a platform. There is a relation of dependence between the two sides because the behavior of one group influences positively or negatively the decisions of the other.
In this situation, “The Bulletin” looks like the platform; the first group are the advertisers and the second group are the hotels mentioned, which distribute the magazine to the target readers. Advertisers have more interest to invest if the magazine is largely distributed; especially as their profits comes from the audience.

As far as I am concerned, I think advertisers are more dependent on the audience than the reverse. Indeed, we can notice “there is a disproportion between the scale of readership loss and the economic consequences for the magazine”.
These hotels constitute the readers that advertisers value the most, which could explain the decision of the three hotels to cancel immediately their subscription because of their bigger power in this relation. At this sense, this market doesn’t seems to be entirely two-sided.

The fact that the story was already released in Belgian and International press without scandales raises effectively the question of the freedom of this magazine. In my opinion, the magazine is therefore located in a deadlock; knowing the power of such hotels. The magazine has to be careful of what it releases, while continuing to inform readers about what’s happening in the country. Indeed, it’s sustainability is based on the audience and the risk of loosing it, which is highly linked to its relationship with powerful hotels.
The question that remains is the following: what impact does this will have on the content and quality of the information revealed by the press, and how the magazine could find a way to get a competitive advantage to counter this threat?

To introduce my comment, I would like to give my point of view over media bias. I think that nowadays, there are no media without bias. There is so much pressure from every stakeholder than media could not be unbiased. Furthermore, even without those pressures, the simple fact that a journalist has his own point of view will induce bias in his paper. At the end of the day, I don’t think it real matters if this bias is reasonable. It is what Gal-or et al. (2012) say when they expose, in their introduction, the theory from Mullainathan and Shleifer which says that people are seeking for newspaper that follow their believes. We can easily see the bias that occurred in this situation and I think that a good example is belgian newspapers when it comes to politics. On the last elections, we could see in newspaper from Wallonia that the sum of vote gained by independentist (officially or unofficially but well known) was more than 2/3 of votes in Flemish region. This information would never make a subject of an article in Flemish newspaper because the readers do not want to be seen as separatists.

I read the article from Gal-or et al. (2012) who went further than MS by adding in their research the advertising as a source of revenue. The study points out three effects. First, having a new source of revenue diminish the impact of subscription fees. The second effect is that newspapers “may moderate slanting in order to appeal to readers having moderate beliefs” because more readers allow them to ask more advertising fees. Then, the third effect is that advertisers want to target receptive readers so they make pressure for better match. In my view, the first two effects are conflicting : we say in the same time that we have less and more influence from the readers. I think that when we add source of revenue, we always diminish the influence of stakeholders. In addition to that, nowadays, we can make targeted advertising. We can see that with websites like facebook.com. With that system, there is always match between reader and the message of the advertising. This implies that the third effect from Gal-or et al. does not concern those websites.

To conclude, I think that when the bias is controlled and not so important, it is not a problem. Readers just have to be aware of it and diversify their sources of information

The Media in all its forms (audio, visual, audio-visual, print) is of outmost importance for the democratic process. It provides citizens with facts and analysis and thereby serves as the knowledge foundation for public deliberation and thus the creation of a public will that feeds into the political process and guides political decision-makers. According to a deliberative democracy theorist like Jürgen Habermas only wide and well-informed deliberation shall render our modern democracies truly worthy of support.
Needless to say, we are nowhere close to being Jean-Jacques Rousseau’s model citizens and in fact we are probably more accurately depicted by Anthony Downs’ concept of rational ignorance. Unsurprisingly then we today remain far off Habermas’ ideal state. Worse still, market forces alone might not create the right incentives for media companies to provide useful information. Why is that?
As mentioned in the blog post and other comments, business models that rely on advertising and sponsorship for the monetization of services might refrain media companies from expressing opinions that could offend advertisers and sponsors. Additionally, political problems, as opposed to technical problems, are ethical questions to which there is no one absolute, universally accepted answer. In order to preserve one’s reader- or viewership one might want to present the information in a way as to endorse the readers’ or viewers’ opinions. (Otherwise one might risk offending clients again.) The Sykes Committee report in the UK spotted that as early as in 1923, when it upheld the view that a well-designed licence fee funding scheme is more appropriate than monetisation through advertising to ensure that the BBC runs its operations free from political and commercial interference. To attain independence from viewership, BBC’s main revenue stream comes from TV license fees. Finally, misrepresentation of facts could be driven by other economic interests like alleviating threats of legal action (recall “The Insider” film, 1999, starring Al Pacino and Russell Crowe on the tobacco industry adapted from a true story), or perhaps economic-political interests, as presumably in the case of Rupert Murdock and Silvio Berlusconi using his Media Empire to push forth his political agenda. A fairly recent example of public intervention to ensure electoral impartiality in broadcasting is Ofcom’s (the UK communications watchdog) ruling ahead of the upcoming EP elections, forcing a number of broadcasters to transmit the UK Independence Party’s electoral campaign (The Guardian, 3/3/2014).
Finally note that the Media fulfils multiple purposes: It is there to entertain consumers; on top of that it informs citizens and can be used as a means to protecting and promoting cultural diversity. Although individuals are consumers and citizens at once, the preferences of the two identities are not necessarily aligned and one usually dominates the other. In TV broadcasting the former entity usually asks for movies, series and soap and reality shows while the latter wants documentaries, reports, political debates, and cultural broadcasting. It seems likely that content of unregulated TV broadcasters would tilt in favour of our preferences as consumers; at least this is what we experience with content displayed by private broadcasters. It is sometimes argued that our preferences as citizens are of a higher order than those as consumers because the social value attached to these are greater (see Ofcom 2006 and 2008). Since the externality attached to our media (in-)activity as citizens is not internalised, we do to little of that sort. These media products that address us as citizens belong to what was coined as merit goods by Richard Musgrave and potentially make a case for government intervention (This is if you leave the mainstream economics framework and accept that our choices are not necessarily aligned to decisions that would truly make us happy, thus offering a standard argument for paternalistic intervention).
At present, TVs figure amongst the prime means to reaching the whole population (while with current trends towards internet infrastructure deployment and PC penetration to the whole population this could change in the near future). Together the wide diffusion of TV sets and the possibility to use TV broadcasting for the dissemination of information and the promotion of cultural diversity and identities make a strong case for public intervention.
In view of facilitating the creation and operation of TV broadcasters that are exempt of political and commercial pressures and in order to promote plurality most developed countries have now accepted the idea that market forces alone are insufficient. Governments have established competition-like laws to ensure that diversity of opinions and truthful information is not threatened by market concentration (see Anderson and McLaren, 2012, for a formal analysis of media concentration; see also Alexander and Cunningham, 2004, for more references and an empirical analysis of media concentration and content diversity). Governments have also erected regulatory bodies and regulations in view of ensuring that so-called public service broadcasters pursue their mission (especially to inform, to promote cultural diversity and plurality of opinions) best. In this regard, it cannot be stressed enough how important it is to ensure that regulators are independent of government and commercial interference.
There are other instruments that can be used to steer public service broadcasters. Some countries have opted for banning advertising as is the case with the BBC in the UK facing an absolute ban and in the case of public TV broadcasters in Germany and France where ads are banned after 8pm. Other interventions include issuing broadcasting licences with benefits, e.g. in status and funding, in exchange for public service obligations like the provision of news, current affairs and cultural programmes, regional content (as with ITV, Channel 4 and Five in the UK).

Alexander, Peter J. and Brendan M. Cunningham (2004): “Diversity in Broadcast Television: An Empirical Study of Local News,” International Journal on Media Management, 6(3-4), 176-183.
Anderson, Simon P. and John McLaren (2012): “Media Mergers and Media Bias With Rational Consumers,” Journal of the European Economic Association, 10(4), 831-859.
Ofcom (2006): “Digital Dividend Review.”
Ofcom (2008): “Annex 11: Market failure in broadcasting,” in: “Consultation: Ofcom’s Second Public Service Broadcasting Review – Phase One: The Digital Opportunity.”
The Guardian, 3/3/2014: “UKIP deserves equal broadcast status with other parties, Ofcom says.”

Being successful either individually or being part of a successful media are the main diving forces for media bias. Media is a powerful tool which has influence on the political cultural and social attitude of its users. The main problem with media bias is that not always what is in the media is true. What we see or read is shown through another perspective and contains a variety of bias.

As already mentioned in the article many media corporations are associated with different political affiliation. The motives behind media bias are not only political but also economic. As Anderson and McLaren (2010), show media corporations may influence political outcomes through manipulating the presented information.

There is a real concern with media bias and if not regulated it might be very dangerous tool. Even if consumers are perfectly rational it is hard to escape from media bias.
However there might be a solution to this problem. With the development of technologies and Internet the information is more accessible and hard to manipulate. People have access to wide range of sources, not only linked to the official media, but also unlimited non-traditional information sources- blogs, social networks and ect.

Refference:
Anderson and McLaren (2010)