Academic journal article Atlantic Economic Journal

Newspaper Quality, Pulitzer Prizes, and Newspaper Circulation

Academic journal article Atlantic Economic Journal

Newspaper Quality, Pulitzer Prizes, and Newspaper Circulation

Article excerpt

Introduction

The news media play an indispensable role in democracy, transmitting the information that voters require to control government. The potential for government manipulation of the press has been recognized for centuries and freedom of the press was enshrined in the First Amendment to the U.S. Constitution. However, the First Amendment merely restrains government and does not address the organization of the news media most conducive to fulfilling its role in a democracy. Traditionally, the U.S. has relied on commercial news media, for-profit news organizations supported almost entirely through the market (advertising, subscriptions, and gifts from patrons). In recent decades, publicly traded corporations have acquired major commercial media in the U.S. Many journalists and journalism scholars question whether for-profit news organizations will provide the type of news citizens require as voters in a democracy [Croteau and Hoynes, 2001]. Cranberg, Bezanson, and Soloski [2001, p. 11] contend that:

   "Stock-market pressures have exacerbated the emphasis on revenue,
   margins, profits, and stock-price performance, forcing the companies
   to emphasize the aspects of newspaper operation that directly
   produce those results: lean staffing, low salaries, efficiency,
   orientation to advertiser preferences, definition of market and
   audience in terms of advertising-revenue yield, de-emphasis on mass
   audiences, de-emphasis on circulation revenues, and increased
   emphasis on advertising revenues."

Examples of the alleged clash between profit and journalism abound. Jay Harris resigned in 2001 as publisher of the San Jose Mercury News instead of imposing budget and staff cuts demanded by the Knight Ridder company. As one commentator noted, budget cuts such as this are demanded "not to meet payroll, not to pay debt service, not to purchase needed new equipment, but to meet Wall Street's relentless pressure" [Laventhol, 2001, p. 19]. Gannett reduced the news staff of the Asbury Park (NJ) Press by nearly 25 percent within a year of acquiring the paper [Roberts, Kunkel, and Layton, 2001, p. 8]. Rowse [2000, p. 32] notes of budget cuts, "It was all part of today's marching orders for the news business: spare nothing, even our most sacred public obligations, in order to fatten the bottom line."

Economics provides two possible reasons why the profit motive might conflict with the supply of quality news. The first is the low instrumental value of political information to voters, the theory of rational ignorance from public choice [Downs, 1957]. In an electorate of any size, any one citizen's vote has almost no chance of being decisive in an election, so the instrumental value of information on politics and current events is almost zero and less than the social value. Rational ignorance suggests for-profit media will supply less than the socially optimal quantity of news. (1) Yet the critics of for-profit news seem more concerned with the quality of the news supplied by commercial media than the quantity of news:

   "But the main concern of the media giants is to make journalism
   directly profitable, and there are a couple of proven ways to do
   that. First, lay off as many reporters as possible. Second,
   concentrate on stories that are inexpensive and easy to cover, like
   celebrity lifestyle pieces, court cases, plane crashes, crime
   stories, and shootouts" [McChesney, 1999, p. 54].

Consumers cannot easily observe the quality of news, which is a second challenge for the provision of quality news. News has the character of an experience good--where consumers do not observe quality before consuming the good--or a credence good--where the quality is not discernible even after consumption [Nelson, 1970]. Consumers cannot tell if a report has been confirmed from multiple sources, evaluate the reliability of unnamed sources, or know what stories have not been reported. …

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