Press regulation and the economics of truth
6 January 2017
1. Why lies are more valuable than truth
Opponents of any form of press regulation often quote Milton:
"And though all the windes of doctrin were let loose to play upon the earth, so Truth be in the field, we do injuriously by licencing and prohibiting to misdoubt her strength. Let her and Falshood grapple; who ever knew Truth put to the wors, in a free and open encounter."
But what is a ‘free and open encounter’? Does the market for news of itself provide a free and open encounter? Are journalists free to investigate and write whatever they think important? Or do they have to first convince an editor? And is that editor free to decide what she thinks is important? Or does she have to be careful not to upset her proprietor or the advertisers that fund the newspaper? And can the editor decide what to publish on the basis of what is important? Or do they have to first decide what is entertaining and will win the attention that advertisers require? And does the dull truth always catch up with a wild rumour before it has done its damage?
Milton could not have considered many of these questions, although less than a century later Swift wrote:
"Besides, as the vilest Writer has his Readers, so the greatest Liar has his Believers; and it often happens, that if a Lie be believ’d only for an Hour, it has done its Work, and there is no farther occasion for it. Falsehood flies, and the Truth comes limping after it; so that when Men come to be undeceiv’d, it is too late; the Jest is over, and the Tale has had its Effect…"
And its ‘effect’ might be nothing less than determining the outcome of a US election.
Markets are brilliant mechanisms for allocating resources to where they are valued most, and usually to where they are most socially useful. But they only work when what people are buying in the market is the same thing that we want to be allocated. Journalism is not allocated by the market. The market that decides how journalism is allocated is not the market for journalism, but the market for advertising. Now perhaps more than ever people receive much of their written journalism for free. They pay for it mainly with their attention, which is a commodity that is then sold to advertisers.
In the past, when there were only a few mass media outlets, people had little choice of media entertainment, and this meant that media providers could force people into a bargain where they had to put up with interruptions in their entertainment in order to pay their attention price to advertisers. At the same time, because of the very limited choice of media entertainment in the home, public service broadcasters were able to nudge people into watching the news and other educational content, and thus collect a sort of 'attention tax' which like advertising, they paid in exchange for entertainment. Commercial broadcasters had fewer public service obligations, and so viewers effectively had a choice between entertainment either with a dose of advertising, or a dose of education. There was a general understanding that a healthy democracy required an informed public. Newspaper journalism also worked this way, by publishing newspapers with a mixture of entertainment and public service journalism.This was not paid for with public funds, but nevertheless journalists still saw themselves as providing a vital public service. [A 'good journalist' normally suggests someone who primarily serves the public interest, whereas a good lawyer, or a good lobbyist, primarily serves their clients well.]
Nowadays, it is very easy for people to avoid paying their attention tax since they can avoid not only advertising but also news and current affairs. More and more people consume both entertainment and journalism on the internet, and their attention can no longer be held hostage. Furthermore, the amount of choice means that competition for our attention is exceptionally fierce. And the competition is all about getting us to consume advertising, not to make us better informed citizens. The market has no rewards for that.
The responsibility to be informed citizens is now all our own. But we are not living up to that responsibility. Understandably, most people do not see the benefit to themselves of taking the considerable effort to understand the complicated issues of how we are governed, particularly when most other people do not make that effort. Arguably, we would benefit most individually when everyone else was very well informed, but we just amuse ourselves secure in the knowledge that society is looking after itself.
Competition drives ever increasing efficiency, and what the media is becoming more efficient at is catching our attention. Informing the public is an additional cost that the market does not reward. For journalism, the most efficient ways to capture our attention are usually to provoke us by making us surprised or angry. This is why the truth is at a competitive disadvantage. It can always be improved on to make it more surprising or enraging.
Perhaps eventually people will become more distrustful of advertising supported journalism, and will switch to subscription journalism that is less susceptible to these pressures. No doubt many will. Probably though most will not. More likely they will move further away from journalism altogether. Many are turning to non-advertising supported entertainment such as Netflix. These do not include journalism. The result will be a decreasingly well informed electorate, and the rise of the kind of politicians who benefit from public ignorance. 1
This is a classic market failure, and as such it can only be corrected by regulation: regulation that can hold the mass media to account and create an incentive for honest journalism. It is very much in the best interests of mass media organisations that rely on advertising to embrace independent regulation, because otherwise they are trapped in a race to the bottom that is destroying their own product and therefore eventually their industry.
It is important to emphasise though that this regulation is for organisations in the business of selling people's attention. It does not regulate freedom of expression.
2. PrivacyEven when something is the truth, that doesn’t make it public property. Privacy is essential both to business and to politics, and also to individual liberty. Every one of us has a private side that we entrust only to our closest intimates. We respect each others' privacy too. We don’t sneak into our neighbour’s house or go through their rubbish to see if we can find any gossip. But some newspaper editors argue that because people buy the newspaper, they thereby signal their approval for whatever it has done to obtain the content. However, most people would agree that there is a world of difference between the sort of nosey curiosity we all feel when we flick through the gossip pages of a newspaper, and actually stalking people with a long lens camera, which we would never even contemplate.
We do buy these newspapers to read the gossip, and we don't often give a lot of thought as to how it found its way on to the page. We also don't feel responsible for getting it on to the page. After all, if individually we decide not to buy it, it is still there on the page, so it's very difficult to recognise that it only gets there because 'we' buy it. But 'we' is not you or I, it is a mass of people, and what we do individually doesn't have much impact on what everyone else does. If I felt that my individual decision of whether or not to buy the paper would determine whether or not they followed someone or other half way round the world trying to take pictures of them getting changed, and the photographs were captioned 'this story is brought to you thanks to Horatio Mortimer', I certainly wouldn't buy it, and neither would most readers. Certainly not enough of them to make it economically viable.
Because we feel individually powerless to prevent their unwarranted intrusions, newspapers can take advantage of us. They can make a profit from doing things on our behalf that we will pay for but do not condone. We therefore need a mechanism that enables us to coordinate. In other words we need rules to stop them.
3. But these intrusions are against the law. Why can't the courts deal with them?
Taking a newspaper to court is extremely expensive. Even if you win record damages, you end up losing money. Furthermore, when it comes to privacy cases, you are forced to re-expose yourself in court. Newspaper editors are fully aware of this lose-lose dilemma that their victims face and take advantage of it. After publication, very few people will pursue legal action.
The exorbitant costs of legal action can be easily abused whenever there is a significant imbalance of wealth between the parties. So large firms and also powerful plutocrats are able to intimidate small newspapers into refraining from investigating them. This has a serious chilling effect on the role of the press in holding the powerful to account.
Independent regulation addresses this problem through the provision of an arbitration service, which prevents wealthy parties from weaponising legal costs.
4. But since regulation is clearly in the interests of the newspapers themselves, why can't we trust them to run their own regulator?
It is in the long term interests of newspapers to have independent regulation, but in their individual short term interests, the picture is less clear. Having survived the intense competition for attention capture, the best selling papers have become extremely efficient at producing the kind of ‘news’ that has become the only way to win attention on the web. If there are shortcuts that make the process more efficient then competition will force the industry to take them. So when there are no penalties for breaking the rules, then in effect there are penalties for not breaking the rules. Their business model is now designed to break the rules, and from their perspective, if the rules were enforced, their business model would not be viable. Those who run these newspapers are those who thrive in that culture. It is not surprising therefore that they might feel threatened by regulation that is aimed at changing that culture.
Resigning from chairing the Committee that governs the journalists code of conduct last month, Paul Dacre, the editor of the Daily Mail, said :
“it’s a bitter irony that while print media, which is declining, is more tightly policed than ever, rampant internet journalism is utterly unregulated – unless of course a website belongs to a newspaper group”
Perhaps his implication is that regulated media will decline because it will not be able to compete with unregulated 'rampant internet journalism’. In other words, actually following the rules that his own committee has drawn up would put his newspaper at a competitive disadvantage.
In fact though, the Crime and Courts Act covers ‘news publishers’ which it does not restrict to the print media. It prescribes an incentive for all large news publishers to join an independent regulator. (It excludes websites of broadcast media, which are already subject to much stricter regulation). That incentive is designed to remove that competitive disadvantage, and make it economical to join an independent regulator. Is Dacre complaining that the internet-only news media have not signed up to his sham regulator IPSO? Why would they? There is no incentive.
The main reason they oppose regulation though is that the newspapers wield huge unchecked and unaccountable power. They will continue to wield power, but often the powerful do not like to be checked.
5. Public Trust
Perhaps the single biggest threat to democratic society is the evaporation of public trust. Trust in public institutions has been undermined by all manner of exposures of betrayals, from MPs expenses to police discrimination and cover-ups, to child sex abuse within public institutions. Public trust itself though depends on the exposure of such abuses, which can then lead to the cleaning up of those institutions. But if the public loses trust in its own information, then that process breaks down.
When lies are more valuable than truth, people have no way of knowing what to believe, and then they are utterly disempowered. All kinds of conspiracy theories become plausible, and evidence against them loses all credibility.
The public are losing trust in journalism. In 2006, a YouGov poll found that 37 per cent said they trusted national newspaper journalists to tell the truth. A YouGov poll last month found that that number had fallen to 18%. We are on the verge of an information civil war. Independence, objectivity and neutrality are themselves being destroyed. In a civil war, there are no disinterested parties.
In times of chaos, people turn to authoritarians. Regulation is coming. But unless something is done now, it won’t be independent.
In Russia in the 1990s the collapse of Communism and the lawless shock therapy privatisations that followed left the media in the hands of the oligarchs. The oligarchs used their media empires to discredit each other and to protect their own business interests. A major news outlet was a dangerous thing to attack. Meanwhile, all the horrors of Soviet rule were flooding into the light. At the moment when people most needed to have confidence in their information, the media plunged into a savage lawless war of lies and ‘Kompromat’ blackmail. The social and economic disintegration posed a real danger that the voters would bring back the communists. The oligarchs came together and used their media armies to keep Yeltsin in power and eventually install Putin. Putin, unlike Yeltsin, had little regard for liberal democracy and moved swiftly to confiscate their media weapons, well aware that what had brought him to power could equally well sweep him away.
Britain is not Russia, where public trust was perhaps uniquely fragile, but the lawless internet, which is now the locus of the public sphere (if there is such a thing), presents many of the same dangers. Public institutions are under attack. People are losing faith not only in the people that govern them, not even only in the whole system that chooses them, but in the information that they have about that system. Public trust is society. It is the prerequisite for all other social activity from business to government. And information trust is the most fundamental element.
6. Independent regulation
People do not trust the newspapers to regulate themselves. Neither will they trust the government to regulate them.
There is a huge difference between state regulation, and state recognition that a regulator is independent. However, many people quite reasonably worry that the process of recognition of independence could be abused by the state to impose a regulator that is not in fact independent, but is really doing the bidding of the present government, and tilting the media in favour of their agenda. For this reason, the Royal Charter includes a number mechanisms to prevent government interference.
The Royal Charter has established a 'Recognition Panel’. But it did not appoint the members itself, instead it required the Commissioner for Public Appointments, under his own strict guidelines for openness and independence, to appoint an ‘Appointments Committee’. That committee must be composed of independent people, neither politicians nor affiliates of the news media. The Appointments Committee then appoints the independent members of the Recognition Panel.
The Recognition Panel looks at the definition of independence for a regulator as defined in the Royal Charter and then decides whether a regulator that asks to be recognised meets the criteria. The criteria includes provisions that guarantee independence both from the newspapers that will be regulated and from political interference. As well as being independent, an applicant for recognition must also meet criteria for being a regulator. Those criteria are derived from the Editors Code of Practice, which is the code that the newspapers have drawn up themselves. Finally, in order to be recognised, it must provide a low cost arbitration service, which is a crucial element of providing access to justice, and stopping those with large financial resources from gaming the system.
Since there is an economic cost to abiding by the Editors' Code of Practice, regulation cannot work unless it includes some economic incentive to offset that cost.
The economic incentive introduced in the Crime and Courts Act takes the form of allowing judges to impose the costs of both sides’ legal fees on a newspaper that blocks access to a low-cost avenue for redress, or equally on a complainant that decides to opt for expensive legal action rather than making use of an independent regulator of which the newspaper is a member.
Some people have claimed that this creates a no-risk environment in which all kinds of people with all kinds of dubious grievances will use the courts to attack the press. This is simply not the case. The Crime and Courts Act explicitly gives judges discretion on whether to impose such costs. The purpose is clearly to provide an incentive to stop newspapers from abusing the system, and in particular stop them from using the expense of taking legal action against a newspaper as a way to avoid justice. Equally though, the judges explicitly have the discretion to stop unreasonable or vexatious litigants from abusing the courts. Anyone with a complaint that might be considered unreasonable will be running the risk that the judge will make them pay their own costs.
8. How the checks and balances would work in practice
It is worth considering what the government would have to do if it wanted to use this system to try and bend the press to its will.
1. It could rewrite the rules of the Royal Charter. In order to do this it needs the approval of 2/3 of both houses of parliament. It would therefore be much easier to just legislate for a new state regulator, which it could more easily have done without the Royal Charter.
2. It could try to use its influence to ensure that only regulators that took a pro government view were recognised. In order to do this it would have to :
- Appoint a government stooge as Commissioner for Public Appointments
- Load the Appointments Committee with stooges.
- The Appointments Committee would have to load the Recognition Panel with stooges.
- The Recognition Panel would have to de-recognise any existing regulators.
- It would then have to recognise a pro-government regulator.
- Newspapers could then refuse to join the regulator and so the government would then have to change the law to withdraw the judges discretion in awarding costs, because judges are also independent, and if they were convinced the only available regulator was not actually independent, then they would not be obliged to award costs.
- And all of these stages would be judicially reviewed.
- And it would have to complete the whole process before it lost an election.
9. Max Mosley
Paul Dacre and other opponents of independent regulation have disingenuously claimed that the press is being forced to sign up to a regulator (IMPRESS) under the control of Max Mosley. The Alexander Mosley Charitable Trust (of which I am a trustee) is Max Mosley’s charity set up in the name of his late son, (who was a close friend of mine, and) who suffered from depression and died from a drug overdose in 2009.
The Trust donated funds to another charity over which Max Mosley has no control, with one condition, it must be used to fund a regulator that is recognised as independent.
In 2008, having won record damages from the News of the World for an unlawful intrusion into his private life, Max Mosley ended up £30,000 down even after the News of the World paid nearly all his legal costs. So under the current system a victim of illegal press intrusion has the option of either doing nothing, or taking the paper to court and at best losing £30,000 and at worst having to pay a legal bill of £900,000, while their private life is raked over again and again in open court. Whatever you may think about peoples’ right to a private life, the law as it stands is failing by any measure.
The reason that the Trust is willing to fund an independent regulator is simply that the newspapers will not. The recognition of any independent regulator triggers the cost provisions under the Crime and Courts Act. This establishes the economic incentive for newspapers to establish their own genuinely independent regulator. They are under no obligation to sign up to IMPRESS.
The fact that Paul Dacre has just now decided to resign from chairing IPSO’s Editor’s Code Committee is clearly because it makes it more difficult for them to make the case that IPSO is independent. It is difficult to make that case because it is wholly untrue.
Regulation without any incentive to comply is not regulation at all, and we do need regulation. In the past half century most people got their news from radio and television and it was regulated to be impartial and truthful. People of all persuasions saw more or less the same news and those 'facts' formed the shared premise for political debate. The press was not regulated and provided a forum for challenging those facts. Nowadays though, people get most of their news from the internet, and it turns out that the things they read and watch on the internet are mostly the internet versions of the existing media companies. Societies are polarising into different realities with no common ground. We need to reestablish informational trust. There will always be plenty of - probably too many - places on the internet where people can challenge the mainstream facts and read and express whatever extreme views they like. People need to know though that the mainstream news they read is being produced according to proper journalistic standards.
1. Research has shown that increased media choice can result in reduced knowledge of news and current affairs https://www.princeton.edu/pr/pwb/07/1112/book/