Opinion

Felix Salmon

The Murdoch MacTaggart lecture

By Felix Salmon
August 30, 2009

James Murdoch is slightly younger than I am, but that doesn’t stop large chunks of his MacTaggart lecture from sounding as though they’re emanating from a veritable dinosaur. In an age where pretty much everybody agrees on the importance of increased regulation in the financial sector, it seems trite at best for him to equate any such impulses with creationism:

The consensus appears to be that creationism – the belief in a managed process with an omniscient authority – is the only way to achieve successful outcomes. There is general agreement that the natural operation of the market is inadequate, and that a better outcome can be achieved through the wisdom and activity of governments and regulators.

This creationist approach is similar to the industrial planning which went out of fashion in other sectors in the 1970s. It failed then. It’s failing now.

Actually, I can’t remember a time when there was less faith in the ability of the unfettered market to create successful outcomes, either in finance, where largely-unregulated financial institutions ended up needing hundreds of billions of dollars in state bailouts, or in journalism, where media outlets in general, and newspapers in particular, are dropping like flies, helpless in the face of the onrushing digital era.

While it’s pretty obvious that in a competitive marketplace, the cost of any good will fall towards its marginal cost — which in a digital world is free — Murdoch still feels happy proclaiming, against both evidence and common sense, that “it is essential for the future of independent digital journalism that a fair price can be charged for news to people who value it”. Does he really think that if the BBC went away, that would open up the door to charging for digital journalism online?

James should cross the Atlantic a bit more often. The dream of being able to charge a fee for digital journalism is one which should by rights have died long ago, but it’s being kept alive by dint of the sheer desperation of those, like James Murdoch’s father Rupert, who have convinced themselves that it’s the only way that their media properties are going to be able to continue to make enormous amounts of money.

Weirdly, all of this silliness comes in the context of what’s actually a really sharp and perspicacious lecture. James is quite right that state-sponsored meddling in the media universe is likely to do more harm than good, especially when the state’s market share exceeds 50%. The BBC is too big, and the Corporation really is overstretching, especially when it does things like buy Lonely Planet. And the regulators, in many ways, are even worse.

On the other hand, Murdoch himself has a monopoly on pay-TV service in the UK at least as strong as the BBC has on free TV, and the existence of any monopolist is prima facie evidence of the need for a strong regulator. Yes, the BBC should be smaller. But then again, so should Sky.

Comments
4 comments so far | RSS Comments RSS

Why’s the BBC “too big”? What is bad about it being the size it is, other than that other companies would like to make some money charging us for things the BBC does but can’t? What disbenefits accrue to me as a consumer from the BBC owning Lonely Planet (and presumably making money out of doing so, which goes to subsidise program making)? I don’t really grant Prince James his implicit thesis that there’s a duty for a state-owned company to be as small as possible, or that BSkyB has a right to be in businesses where it can’t provide as good a service at a lower price than the incumbent.

Posted by dsquared | Report as abusive
 

Felix,

And how do you propose that the regulator refrain from achieving the very goal which it is intended to prevent (monopoly or oligopoly)? In Canada we have the CFTC. In order to fund itself, it must charge its subordinates a fee. This fee is a near impossibility for any new entrant in the communications industry. So all that results is consolidation and near complete monopolization.

Regulation = Protection for big industry.

 

When is the regulation/restructuring of the financial system finally going to be framed less as “the government interfering with the market” and more (correctly) as “the government protecting its citizenry from corporations that are operating in malicious and predatory fashion”?

Posted by PM | Report as abusive
 

I can’t agree with your closing argument, that the BBC is de facto “too big”. Too big for what? Too big for whom? Too big to allow Murdoch to charge us to access The Times’ feeble website? And that’s a bad thing why?

 

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