News Media Profit: Part 2b

Summary

The video explores how news media organizations manage their economics, focusing on how they maximize income and minimize costs. It discusses the pressures of verifying information due to high costs and institutional pressure to publish quickly, and the use of 'flack'—a strategy where media avoids lawsuits from powerful organizations by steering clear of controversial stories. It also highlights the importance of economic scale in the media industry, where owning multiple outlets reduces costs and increases profits. The overall structure of the news industry, driven by economic incentives, significantly impacts the quality and reliability of the information available to the public, with direct consequences for democracy.

Takeaways

• 😀 News outlets face institutional pressures that push them to prioritize publishing stories quickly, often at the expense of verification.
• 😀 The cost of verifying information is prohibitive for news organizations, especially given the need to constantly produce content.
• 😀 'Flack,' a concept from Noam Chomsky's propaganda model, refers to the backlash from well-funded, organized groups that threaten lawsuits, which can financially damage media outlets.
• 😀 News outlets are more likely to avoid covering stories that could lead to lawsuits from powerful, well-organized groups due to the potential financial consequences.
• 😀 Legal threats, whether successful or not, lead to increased costs for media outlets, which they strive to avoid in order to maintain profitability.
• 😀 News organizations tend to avoid covering stories that might anger poorly organized, less-funded groups since they do not have the resources to bring about significant legal repercussions.
• 😀 News outlets may cover a story if the potential financial gain from the story outweighs the cost of a lawsuit, creating a balance between risk and reward.
• 😀 Economies of scale play a crucial role in reducing costs for large media organizations. The bigger the media organization, the more it can consolidate resources and cut costs across multiple outlets.
• 😀 By owning multiple outlets, such as newspapers, radio stations, and TV programs, media companies can spread their fixed costs and increase profitability.
• 😀 The economic pressures on news organizations often lead to a reduction in news quality and diversity, which impacts the democratic process by making it harder for citizens to access accurate, independent information.

Q & A

What is one of the main economic pressures on news media organizations?

One of the main economic pressures on news media organizations is the prohibitive cost of thoroughly verifying all the information they report. This often leads to news outlets prioritizing speed over accuracy.

What is 'flack' in the context of the news media?

'Flack' refers to either real or anticipated feedback from groups that are well-organized, well-funded, and have interests contrary to the news being reported. This feedback may include legal threats or public backlash.

How does the potential for flack affect the way news outlets report stories?

News outlets tend to avoid stories that may attract significant flack, especially if they risk legal action or other consequences that could harm the outlet’s financial stability.

Why are news organizations particularly cautious about lawsuits?

News organizations are cautious about lawsuits because they are expensive. Even if they win, they have to bear the costs of legal representation and court proceedings, which can be financially burdensome.

What is an example of an economic principle applied in the news industry?

An example is 'economies of scale,' where larger organizations can reduce costs by centralizing operations. For example, purchasing multiple newspapers or media outlets can streamline staff and operations, saving money in the long run.

How does the concept of 'economies of scale' apply to news media?

As media companies grow and expand, they can cut costs by consolidating resources and operations across different outlets, such as newspapers, radio, and TV stations. This reduces the cost per unit of production, making it more profitable.

Why might a news outlet choose to cover a potentially risky story despite the possibility of flack?

A news outlet might choose to cover a potentially risky story if the financial reward from the story, such as increased readership or ad revenue, outweighs the costs of a lawsuit or negative repercussions.

How does the concentration of media ownership affect news reporting?

The concentration of media ownership leads to fewer independent outlets, which can result in a homogenization of news coverage. Larger companies can control more outlets, which may limit diverse perspectives and critical reporting.

What role do well-funded and organized interest groups play in news coverage?

Well-funded and organized interest groups can exert significant influence on news coverage by threatening legal action or public campaigns against media outlets that report stories detrimental to their interests.

What is the democratic implication of the economic pressures on news organizations?

The economic pressures on news organizations, such as cost-cutting and the influence of powerful interest groups, can lead to biased or incomplete reporting, which has serious implications for the democratic process by misinforming voters.