I originally wrote this post at Credit Writedowns under a different title yesterday. I have changed the title to more accurately reflect what I am driving at in the post. Otherwise the post is exactly the same. The question is: which media companies will find their revenue streams threatened by the shift in the financial media landscape?
I made the case I espoused in "A few thoughts on the difference between blogs and news" for collaborative filtering as the major source of authority in the blogosphere. Just to recap what I’m talking about, I wrote:
My last thought is on how blogs gain authority/notoriety. When I began, I can tell you that no one knew me from Adam. I had zero authority, no readers, few connections. All I had was ideas, analysis and judgment…
And the same is true with pretty much every other econoblogger out there. What I see is a collaborative filtering in which the blogging community weeds out the more spurious information and the better analyses flourish. This is the future of the Internet in my view, because collaborative filtering harnesses the talents of the entire web in a more decentralized and less-hierarchical way.
The immediate reaction from within the panel came from James Ledbetter of The Big Money site at Slate Magazine. He said mine was a "stylized" view of the econoblogger ecosystem, which I think means I was overstating my case. Not all spurious information gets filtered out. Fair enough.
I want to make a few observations about this exchange. First, it occurred to me in retrospect that, as opinionated as I am, I have a tendency to speak in direct, declarative statements. I can leave people with the impression that I am absolutely certain of everything I say. It’s as if I don’t consider alternative views, or, if I do, only to ridicule them. A perfect example of this is the post "The Germans will not bailout Greece" from February. After I had written it, I was horrified at the strident tone and added an addendum at the end to tone it down:
I see it as unlikely that any deal – bailout via the EU, IMF bailout or backdoor help via quasi-fiscal measures from the ECB – can be reached unless Greece agrees to austerity measures. While this is the Eurozone – and that makes a difference – countries like Latvia will be looking to determine if Greece gets differential treatment. And Spain, Portugal or Ireland would then be next in line. Any agreement must take these factors into account.
Long story short: my goal in writing is to analyse and judge based on that analysis. It is incumbent upon me in so doing that I point out alternate views to promote a better understanding of how these events affect our economy, investments, business planning and lives. However, it is also incumbent upon you to read with some modicum of scepticism and provide pushback when I present you half-baked editorial of minimal value. And I believe you do that.
But, Martin Wolf is not so sure if this is how Americans at large look at the media and business and political institutions. During his segment, he indicated that Brits tend to be a sceptical lot. It’s as if they assume the media are lying or at least have an agenda. The same is true for how they approach the banks and politicians.Of course they are crooks, he might say. As with my views on the econoblogger ecosystem, this is a rather stylized point. But, it bears noting because a lot of the angst associated with this particular downturn comes from the loss of faith Americans have had in their institutions. The loss of faith makes the credit crisis the sociological equivalent of Watergate in my view.
So what does that mean for the financial media going forward? Honestly I haven’t a clue any more than any of the other pundits do (including Arianna Huffington, who opined on this issue). But my assumption is that the political news media are a template for what is to come in our sphere. There will be many fewer paid beat reporters and much more opinion. There will be more outsourcing via freelancing. And there will be a morphing of the blogosphere into the mainstream media. We see that via Reuters’ and the Wall Street Journal’s bloggers and FT Alphaville.
The question is whether the freshwater/saltwater ideological split amongst academics creates the same polarized environment we see in the U.S. political media. I hope not. But, I bet if you study links between top blogs you would see some of that already. This is something I fight against in my links.
I do think media outlets have lost a tremendous amount of credibility for cheerleading during the last two bubbles (you can see my reading list for some of the rare articles that showed an appropriate amount of scepticism). Ordinary citizens do not see the media as a neutral source of information. Rather, given the bailouts and record bonuses we have seen of late, increasingly the financial media is seen by the wider public as an organ of propaganda for the political and business elites. Within the business and financial community, this is not the case. So, as Chrystia Freeland of Reuters explained, financial news targeted to those communities at places like Bloomberg and Reuters will take on increasing importance.
Who are the losers then? The New York Times for one as they have the largest dependence on the general public to fund their business reporting. The Wall Street Journal (News Corp) and the Financial Times (Pearson) may then come next. I see fewer problems for the likes of Washington Post, Gannett, Hearst or any of the other big chains because they simply are not geared to the business sector.
In this kind of environment, will the quality of the news struggle? It seems likely. But, given the lapses we have witnessed on the credit crisis, quality has already taken a hit.