The Finkelstein Review's fatal flaws

By David Walker (Google profile)

First published at Club Troppo

“Make the media more accountable for their sins, and worry less about new technologies and freedom of speech”.

That’s a one-line summary of Ray Finkelstein’s Independent Media Inquiry.  It argues for a new system of media regulation to apply to journalists, commentators and most of the Australians who contribute to online news and opinion. It wants a government-created News Media Council to set standards for all media – broadcast, print, online. When necessary, that Council should “require a news media outlet to publish an apology, correction or retraction, or afford a person a right to reply”. And when the media outlet won’t comply? Normal contempt of court rules would apply. So eventually, an editor would spend some time in a jail cell.

The report is already copping it from the management of Australia’s major print media groups, who see themselves as its targets. I’m writing more out of interest. I’m involved in the media, as chief operating officer of the online publishing firm WorkDay Media. But WorkDay Media has always been happy to make corrections and grant prominent rights of reply; it has even tried to join the Australian Press Council. As a business manager, there’s nothing in the report that worries me.

There’s a lot to admire, too. I have done enough report-authoring to be impressed by the speed with which Finkelstein and his team (mostly lawyers) marshalled their arguments into something at once informed and understandable. It’s a good introduction to Australian media regulation issues, it appropriately handballs the issue of print media industry assistance to a Productivity Commission inquiry, and it seeks to align the jarringly different treatments of broadcast, print and online media.

But for all that, the Finkelstein report remains a flawed 468-page attempt to justify new government regulation of media. Four flaws, in particular, make it unconvincing.

1. Deploying the accountability dodge

The first question about this inquiry has always been: why now? Why should Australia introduce new media accountability regulations just when the Internet has delivered a huge new source of media competition?

Of course, one answer might be “because Bob Brown wants to restrict News Limited and the federal government at least wants to frighten it”. But you can’t make that the philosophical basis for a government inquiry. And besides, the fact that an inquiry has a political motive does not prevent it coming up with useful conclusions; all inquiries are founded with politics in mind.

So: why now? Finkelstein’s answer is first that there is an “increasing and legitimate demand for press accountability”, and second that the federal government must accommodate that demand. He has plenty of evidence for the first point, much of it drawn from public opinion research.  Trust in the media is relatively low and may be declining, many voters think the media use their power irresponsibly, most people think various media outlets report inaccurately, journalists often recycle press releases, and sometimes media seem to be pursuing the agendas of vested interests (ranging from poker machines owners to the Victoria Police) or overstating things such as the likely effect of the carbon price on household budgets. The call for accountability is the report’s keystone, the piece of rock which keeps everything else from falling down.

But calling for accountability only suggests we need some rules. It does not tell you what those rules should be.

Setting down those rules is hard. Nevertheless, if you’re serious about accountability, that’s what you have to do.

If you’re going to call the media or anyone else to account for their intrusions into people’s privacy, you must write a rule defining how privacy works and when breaches are actionable. That has turned out to be very hard to do. One person’s intrusion into personal anguish is another person’ powerful statement about society. Think about the famous photo of the napalmed girl running down a Vietnamese road. She is an icon who helped change the course of history; she is also a person, Phan Thi Kim Phuc. What was her right to privacy on that day in 1972?

The same is true of media bias. One person’s climate change denial is another person’s crusade for the truth. One person’s obsessive pursuit of the pharmaceutical industry is another person’s brave campaign against thalidomide. Before you hold a media outlet accountable for bias, you must actually set out rules which define bias.

But writing down rules is exactly what Finkelstein does not do. Instead, Finkelstein dodges. “Standards of conduct which would govern the news media should be developed by the News Media Council,” he declares.

Hold on. Since there are to be legal sanctions for breaching these “standards”, they are actually laws. The obvious thing to do is to have parliament write them, not some appointed executive-council. That’s how the country is supposed to work.

Self-regulation is a lousy second-best option for extracting good behaviour from a group off people. But there are good reasons why it is such a common solution in the media industry across the globe. One reason is that real regulation is so fraught. Some things are harder to regulate than others, and media matters are harder than most. For all its lousiness, media self-regulation may be the least awful option we have.

2. Ducking the Jefferson challenge

Finkelstein was also charged with credibly assessing schemes of regulation against their potential to restrict press freedom. Again he falls short.

The extreme view of press freedom, much beloved of media companies but no less powerful for that, comes from Jefferson:

“Our liberty depends on the freedom of the press, and that cannot be limited without being lost.”

UK and US governments confronting similar media regulation issues have shied away from regulation on just these grounds. Jefferson’s claim is at the heart of the inquiry’s challenge, and Finkelstein would have done something worthwhile by grappling with it. It’s genuinely tough. Instead he quietly denies it. He claims the potential damage to free speech can be traded off against the advantages of limiting it.

The dimensions of the trade-off are only lightly assessed. Instead the report observes various ways in which free speech is currently restricted – crying “fire” in a crowded theatre, revealing defence secrets, publishing child pornography etc. The report then implies that since free speech is already restricted, further restrictions are not such a big deal. Not only that, but apparently the Australian press “accepted the idea of press regulation by having set up the [Australian Press Council]“. That might be news to them.

3. Dismissing the marketplace of ideas

Finkelstein’s report says ( at page 45) that what it calls the “social responsibility” approach has underpinned media regulation over many decades now. That approach, Finkelstein says, was justified by the industrialisation of the press, the realities of 19th- and 20th-century media economics, and the growth of government.

Finkelstein goes on to note that the alternative to the “social responsibility” approach is a “libertarian” approach informed by “a belief in the ‘self-righting’ capacities of public debate to ensure that in rational and reasoned discourse, error would be vanquished”.

That analysis seems right. The logical next step would be to observe that this “libertarian” approach to media regulation is ripe for revival.

I’ve written previously on Troppo and in WorkDay Media’s submission to the inquiry (with Ian Rogers) in support of this approach to media regulation. Technological change is leading to an explosion of content that undermines the case for existing restrictions on publishers even as it undermines the economics of their businesses. Traditional media had a level of oligopoly power over information distribution. These days anyone can publish. There is in a sense no longer any such thing as “the media” – rather, there is a huge and messy range of information forms, sources and channels with different levels of reach, frequency, engagement, audience trust and motivation. The “marketplace of ideas” has never been closer to being fully realised.

But Finkelstein wants nothing to do with making the “marketplace of ideas” the basis of future media regulation. Yes, he admits, traditional media’s share of the audience’s attention may be falling. Yet for him, the “social responsibility” approach is somehow more necessary than ever. He sees the marketplace of ideas as based on dubious assumptions, as a naive notion which has been “widely criticised”. Oliver Wendell Holmes and John Stuart Mill may be famous names, but in Finkelstein’s view they’re well behind the times.

4. Downplaying the disruption

In order to dismiss the relevance of the marketplace of ideas, Finkelstein has to downplay the sheer scale of the transformation being wrought by technological change. And so he does. Even the report’s analysis of  print advertising’s recent commercial fortunes sometimes seems to say that nothing much is changing. For instance, it concludes (page 83) that “the available data do not lend much support to the speculation of a wholesale shift of classified advertising from newspapers to the Internet”. The report does note that online media is “leading to the creation of some pressure points in the [print media] industry”. Such a comment calls to mind a Monty Python scene, the one where the Black Knight suffers a series of pressure-point creation incidents.

Finkelstein and his advisors simply don’t understand online media and its repercussions. That’s apparent from the already infamous comment that the new regulatory scheme should apply to online news or opinion sources with “more than 15,000 hits a year”. That’s 41 “hits” a day.  This is ill-considered at two levels. As a technical metric, “hits” is famously vague and uninformative. At a practical level, 41 “hits” – be it 41 file requests, 41 unique visitors, 41 pageviews or 41 anything else – is  nevertheless clearly far too low. Such a cut-off line would give the government regulatory power over The Australian, the Sydney Morning Herald, my local Northcote Leader, WorkDay Media’s Banking Day and The Bank Investor titles, Club Troppo and all the other Ozblogistan titles, hundreds of other news and opinion outlets, and the personal blogs and Facebook pages of at least several thousand Australians.

This is farcically over-ambitious – one step up from attempting to regulate telephone conference calls and group emails.

The significance is not that this particular cut-off line will become law; it won’t. It significance is that no-one within the inquiry could point out its foolishness before the report went to press.

You get to a point, a few hundred pages in, where the report takes on an oddly 1990s air, as if the Internet was an insignificant technological sideshow, newspaper businesses were sailing along happily, and postmodernism, with its scepticism about “truth”, was the natural tool for societal analysis. “Accountability” is what matters, press freedom is just another competing claim, the marketplace of ideas is old hat, and technology hasn’t disrupted anything much yet.

In action: A political burden

None of the criticisms set out above means that Finkelstein’s plans would spell disaster for free speech in Australia. The phrase “Orwellian” is already featuring in the more heated critiques of the report, but Finkelstein has not designed Australia’s first Ministry of Truth. As the report points out, newspapers have always carried statements with which they did not necessarily agree – statements called advertisements. Mandated corrections and rights of reply are an annoying intrusion on media freedom. They’re not the road to a police state.

Indeed, if this report did get turned into actual law, the News Media Council would likely have an unhappy and limited life. It would start with questionable legitimacy, seen by many as payback to News Limited for its coverage of the current federal government and the Greens. It would probably be reluctant to make rulings, since every ruling would risk exposing it to a new torrent of criticism and the risk of having to enforce its rulings. Also, determining when a media item merits a correction or right of reply is a very tough judgement call. Over time the Council would occasionally force media outlets to print insincere retractions of controversial stories, it would be forced to make some impossible judgments, and it would eventually become a joke. At some point an editor would simply refuse to print a correction, the legal system would unhappily send him to spend a few days in the clink (an experience from which he would generate a torrent of interesting copy), and then the whole regulatory show would fall apart under the weight of its own overkill.

The other notable effect of turning the report into law would be to give journalists and commentators a close-up view of one of the commonest complaints about the current government: that it has been, especially under Kevin Rudd, too ready to pass new regulatory schemes in order to make very small differences to tough problems. Journalists have not always made much of this complaint. But they will make much more of it if they become its victims. The media and its member journalists are at least as self-interested as any other industry. And nothing will more delight Tony Abbott than to constantly feed their discontent – to paint Labor as the restrictors of free speech, to a media primed to believe it, from now until the day far in the future when he could repeal the whole system.

Many people have wondered what possessed the government to apply the can-opener to this particular worm dinner in the first place. The report itself (at page 15) fingers Bob Brown as the chief local instigator of the inquiry. The really interesting question, then, is this: If the government felt compelled to hold the inquiry to make Brown happy, will it now feel compelled to serve up some of the recommendations as legislation?

Communications minister Stephen Conroy has no doubt heard many times about the folly of arguing with people who buy their ink by the gallon. He and Gillard are in the business of denying Tony Abbott opportunities, not handing him new ones. They could gain much, at little cost but Brown’s disapproval, by chucking the whole thing out.

Notes on the review

• I strongly recommend everyone read Margaret Simons’ reading guide to the Finkelstein report, an object-lesson in how media should report documents like these. I disagree with her recommendation to put aside the philosophical reflections of section two, which to me drive everything else in the report, and with her praise for section three, which slightly mis-describes the state of the print media’s business. But I wish I could have written such a concise, accurate overview for people without the will or the time to read all 428 pages.
• Jonathan Holmes, whose coverage of the Inquiry has itself been fine journalism, has floated a fascinating theory about the report. Its recommendations, he suggested on Media Watch, may be designed not so much to bring about the creation of a News Media Council, but more to scare the newspaper proprietors into giving more respect and more funding to the existing self-regulation body, the Australian Press Council. In other words, the report might be a giant bluff. Maybe. My guess, though, is that if you’re writing 468 pages, you want to believe in your conclusions.
• The IPA’s Chris Berg looks over the curious structure suggested for the News Media Council: “one independent body, appointed by another independent body, most of whom will be appointed by a third independent body”.
• Jonathan Holmes sets out his considered reaction at The Drum; Finkelstein’s own reporting is cause enough for alarm. Finkelstein’s plan, he says, would “give statutory force to codes of conduct which by their very nature are fuzzy and hard to apply with precision”. Not only is fairness particularly hard to assess, but accuracy can be tough too. And Finkelstein has accidentally proved that point: several of his claimed examples of media harm were far less clear-cut than he claims . It usually isn’t easy to sit in judgment on media fairness and accuracy, even if you’re a former Federal Court judge.

The media cuts and Finkelstein's demise

In the torrent of words over the job cuts at Fairfax and News Ltd, not many people seem to have noticed that these events also further undermine the already teetering argument of the Finkelstein Review for a new system of media regulation.

How’s that?

Recall that the Finkelstein Review is founded on a downplaying of print media’s central economic problem. This problem is simply that print circulation and ad revenues are collapsing – and use of print media’s online versions is not close to making up the difference. As information economist Hal Varian noted of the US news industry in 2010: ”The average amount of time looking at online news is about 70 seconds a day, while the average amount of time spent reading the physical newspaper is about 25 minutes a day.”

The Finkelstein Review repeatedly declares this is not a problem:

• Page 62: “For newspapers, the internet is the latest in a series of major threats to their operation … On each occasion, while some consumers shifted their consumption to the new media, many changed their consumption patterns to encompass the old and new media in a complementary fashion. Some evidence is emerging that a similar process may be under way for the internet.”
• Page 83: “The available data do not lend much support to the speculation of a wholesale shift of classified advertising from newspapers to the Internet.”
• Page 99: “While online news sites are unable to extract an advantage from the traditional relationship between news content and specialist content, they have a long and successful history in producing specialist content that appeals to audiences. Either independently or in partnership with other interests, they could use that experience to their advantage in the establishment or development of specialist content websites and use them to secure online advertising.”
• Page 101: “Representatives of newspapers acknowledge the difficulties confronting them, but at the same time are confident their strategies will successfully transform and adapt their companies as major players in the new environment.”
• Page 101: “The Australian press is in no immediate danger of collapsing. The main media companies appear to be reasonably capable of dealing with the pressures facing them at least over the medium term. Nonetheless, some potential pressure points are becoming evident.”

Only by repeating over and over that all is well with the Australian press can the Finkelstein Review sustain the rest of its arguments: that the “marketplace of ideas” is an unsuitable foundation for for media policy, and that therefore we have to have laws to make the Few  Media Outlets act responsibly.

In fact print media in Australia is going through a very tough restructuring. Newspapers may well survive but they will be less dominant. The newspaper industry’s future is unclear, but the Few Media are clearly being replaced by the Many Media. And Finkelstein’s depiction of the media landscape is fading away in the glare of reality.

Footnote: I continue to expect and hope that out of Finkelstein and the convergence view we will get a somewhat strengthened Press Council. The online media company I work for, WorkDay Media, has now joined the Press Council, as have several other online media firms. Kudos to the Press Council for opening up to smaller organisations, one of the recommendations of WorkDay Media’s submission to the Finkelstein Review.