Media in the digital age

Le Regard Libre N° 29 - Nicolas Jutzet

The debate is emotional. Often ideological. Rekindled by the election of Donald Trump and the focus on «fake news», the question regularly comes up: what place will technological evolution reserve for the press? In most cases, these concerns about the future of the press are quickly followed by calls for greater state intervention. Under the guise of good will and laudable intentions, these injunctions often conceal a regrettable paternalism. The fact remains that the industry has its back to the wall, and must find new solutions to get over it.

Anachronistic, the current situation is untenable

Economics justifies state intervention in a sector by the existence of a natural monopoly and/or a public good. A natural monopoly may exist because of the structure of a market. For example, if it allows increasing economies of scale (an additional product costs less to produce than the previous one) or if there are barriers to entry (impossible for a competitor to ’enter« the market, or just in a »niche«). These barriers may be regulatory, technical or geographical.

A market with such characteristics could, without state intervention, lead to a consolidation of supply that would jeopardize the diversity necessary for opinion-forming, as in the case of the media. Or, more generally, to the smooth running of the various democratic processes. The reality in the media sector is summed up by Avenir Suisse in a report: «When radio and television were first introduced, analog transmission, which dominated, led to a lack of available frequencies, representing a technical barrier to market entry for new competitors. The limited number of channels forced many states to create a public institution whose programming would almost inevitably have to be varied. With the arrival of digital technologies, cable networks, satellite and the Internet, the argument of rare frequencies has lost its value». The diversity present in the print media market is further proof that the citizens of our country like to have access to diverse sources of information. There is no trace of a natural monopoly.

The second criterion, the public good, can be summarized as follows: it is impossible to prevent a consumer from consuming the product/service in question (principle of non-exclusion). But also, if my neighbor consumes the service, it will always be available to me (e.g. the sun).

As mentioned above, this argument was valid as long as radio was broadcast in analog form. Everyone had access, as long as they had a receiver. But with technological evolution, it has become possible to «exclude» consumers through pricing. It's obviously the same for television and print media. The second criterion should therefore also be rejected.

For the disappearance of the licence fee

The future lies in the convergence of print, online and video. That's why the current situation is untenable. With the licence fee, we are distorting competition by massively subsidizing the SRG, while at the same time limiting its mission by restricting its online offering. Absolute nonsense. By doing so, we are preventing the creation of a model capable of surviving into the future. By restricting SRG online through legislation, we are condemning it to obsolescence. On the other hand, by granting an unjustified income via the licence fee, we are cutting off private publishers, who will be unable to stand up to the competition on television.

Even at a time when the traditional press is facing plummeting advertising revenues. The trend in recent years has seen advertising move online. Last year alone, advertising volume increased by 12% online, while declining by 12% in newspapers. With the development of «replay», which makes it possible to bypass advertising, a similar fate seems in store for broadcasting in its current configuration. The situation is certainly alarming. Responding by reinforcing the nonsense that already exists will not ensure «national cohesion» or the «survival of democracy» as the profiteers of the current system would have us believe, in a tirelessly arrogant and paternalistic tone, but will lead us into the wall.

The idea here is not to take a position for or against the SSR, private publishers, etc., but simply to call for the liberation of a distorted market. We need to give everyone, on an equal footing, the chance to try and identify the business model that will enable them to succeed in the digital revolution. To invent the media of tomorrow. With this in mind, the SRG's financial equalization model, which benefits linguistic minorities, could be a powerful selling point in a free market. Generally speaking, there is no doubt that, in view of the recognition of its work, as reflected in various reports, it will be able to carve out a place for itself in a market free of existing perverse effects...

To claim on the one hand, with figures to back it up, that its offer meets with the approval of the public, and on the other to explain that its existence would be impossible in a free market, is frankly not credible. All the more so since, by freeing up the market, SSR will have access to the growing advertising manna currently denied to its online offering.

The debate will have to take place, particularly in the context of the «No-Billag» vote; it would be a pity if it were to be suffocated by the emotional declarations of some. Could this factually inexplicable and ultimately populist «Angstmacherei» be hiding an unspoken truth?

Write to the author: nicolas.jutzet@leregardlibre.com