Monday, September 8, 2008

The Coming Media Revolution

All institutions become corrupt over time, and the way that they are recovered has to do with feedback and control. If feedback is available and control can be exercised by a well intentioned principal, the deviations toward corruption can be corrected. From the mid 19th to the early twentieth century, government in the US became increasingly corrupt. This was mitigated by a free press and by the availability of the frontier so that Americans could leave the political establishment. The flexibility to leave has kept New York City at a population of 8 million or so for 50 or more years as successive generations of immigrants have seen that the city does not function well and so leave. In the twentieth century media technology transformed media as radio and then television replaced once partisan newspapers. Many of the papers died, and the biggest ones, namely the New York Times and later the Washington Post, tended to reflect the views that at that time were most prevalent, namely Progressivism, particularly in its New Deal form. The television and radio stations also adopted the Progressive New Deal viewpoint because it was dominant when they were established between 1920 and 1960. As the number of liberal (in the nineteenth century sense) newspapers dwindled to nearly zero in the early twentieth century and the number of conservative-Progressive newspapers also dwindled, the newspapers as well as the radio and television news was dominated by the Progressive-New Deal point of view. By 1964, when Barry Goldwater ran for president, although he could capture a significant share of the vote, he lost in a 61% to 38% landslide to Lyndon Baynes Johnson. (Note that at its nadir, 19th century liberalism could attract almost 40% of the vote.)

The institutionalization of a viewpoint in a corporation is often called organizational culture. The views of the founders, to include not only the entrepreneur but the managers whom he appoints and the relations between the divisions of the new organization, shape the culture. The culture becomes ingrained and is difficult to change, even if a targeted effort is made. Philip Selznick first wrote about the problem of culture change in his "Leadership in Organizations" published int the 1950s. The idea was carried forward aggressively in the 1980s through such works as William Ouchi's "Theory Z" and is today a mainstay of management theory.

There were several factors that caused the institutionalization of the Progressive-New Deal point of view in the American media, the most important of which are (1) the nineteenth century liberal sources that resisted Progressivism ceased to exist or were taken over (as in the case of the Nation); (2) the media formed between 1920 and 1960 adopted the views of founders that were almost universally Progressive-New Deal; (3) the American education system has tended to re enforce this culture; and (4) hiring and promotional policies are inevitably linked to culture, and so there are powerful incentives for media operatives to adopt the Progressive-New Deal line.

Eventually, dysfunctional cultures create economic opportunities for entrepreneurs. As firms insist on a false reality consumers demand alternatives. This happened in Detroit in the 1960s, as a reading of John Delorean's and Patrick Wright's 1972 "On a Clear Day You Can See General Motors" reveals. Detroit has hung on for another 35 years, but new firms have gradually eroded their market share.

A similar kind of reality gap is occurring in a range of American industries. In finance, repeated failure, corruption and reliance on government bailouts are greeted with glee, as today's increase in stock market valuations at the news of the government takeover of Fannie Mae reveal. In automobiles, the American car makers still have not found a way to compete successfully with the Japanese after 35 years of indulgence. And in the news media, Progressive-New Deal bias in the media's news, inability to grasp the mindset of the "new conservatism" that is not so new, declining quality of Hollywood films and the invention of new technologies that leave the twentieth century media in the dust are not addressed.

The most recent gaffe is Oprah's refusal to invite a Republican candidate, Sarah Palin, onto her show even though she did invite the Democratic candidate, Barack Obama, onto her show (see photo from the Obamafile, h/t Bob Robbins). Oprah has shown bad judgment and bad ethics in using her position of trust as a talk show for partisan purposes. Oprah's viewers suddenly look foolish as it appears that they mindlessly follow Oprah's less-than-ethical whims.

Yet another example that came to my inbox today is Warner Todd Huston of the Stop the ACLU site's excellent analysis (h/t Larwyn) of a laughable San Francisco Chronicle story that claims to be about John McCain but is actually a vehicle to quote Barack Obama attacking John McCain. Ha, ha, the media clowns doing somersaults.

The question is why have no entrepreneurs stepped forward to arbitrage an increasingly inept media. Part of the reason might be the frontier of the new media, the increasing number of cable channels and the Internet. Also, the centralization of media ownership in a few large corporations that benefit from the Progressive-New Deal position and would logically favor a candidate like Obama would likely make it difficult for entrepreneurs to break into the old media. As well, the new media is doing quite a job as it is.

Nevertheless, I can't help but wonder if there aren't some good opportunities, as in a buyout of MSNBC.

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