Media Round Table - Background Papers

James Ledbetter
Editor-in-Chief, The Industry Standard Europe

We've heard about Indonesia, Mexico, China and South Africa, I'd like to discuss a country where democratic reform is drastically needed: the United States.

There's a section in Peter Ferdinand's paper where he asks: "Is the multiplication of commercial [Web] sites drowning out the possibilities for democratic debate and deliberation, even in established democracies such as the US?"

I felt a twinge of nostalgia when I read that, because that was the view of the Internet circa 1994 or 1995. The vision was that the Worldwide Web would let a thousand voices bloom, that it would make a publisher out of any individual who wanted to be one. The proliferation of these new information sources would, it was argued, threaten the established media order, which has been dominated by television, radio and print.

Six years into the Web, and I would argue that precisely the opposite has occurred. Internet media is, by and large, an adjunct of traditional media, not an alternative to it. Independent, Web-only publications, such as Salon and TheStreet.com, are foundering (indeed, I suspect that at least one of those publications will not last the year).

The Internet has been the site of one of the most rapid corporate takeovers in the history of modern media. There are many ways of illustrating that, but I will focus on one of the most dramatic. In March 2001, according to the Web measurement firm Media Metrix, Americans spent a total of 107 billion minutes online. Fifty percent of those minutes were spent on Web
sites controlled by just four companies. Think of that: 53 billion minutes spent on Web sites controlled by just four companies.

What are those companies? AOL/Time Warner, the world¹s largest media company; Microsoft, which is not exactly a tiny individual publisher; Yahoo, which is independently owned, although I wonder for how much longer; and Napster. Napster is a very interesting Web site which I¹m very fond of in many ways, but it¹s worth remembering that it is now partly owned by Bertelsmann, the German-based media conglomerate.

Why has this corporate takeover happened? There are many reasons for that, but I will focus on three related reasons. Number one, running a Web site is very expensive. I think the notion of a low cost of entry to the Web has been vastly overstated. Michael Kinsley, the editor of Slate‹-a Web-only magazine that is owned by Microsoft--was recently quoted saying that while Slate may save money by not printing on paper and mailing out magazines, it's also true that magazines do not have to employ half a dozen very expensive engineers whose job is to reinvent the printed page every day. I think anyone involved in running a Web site will attest that it is a very complicated, very expensive ongoing venture.

Secondly, outside of pornography, there is no self-sustaining business model for publishing on the Internet. Everyone (except The Wall Street Journal) who has tried to get readers to pay for Web content has failed, and abandoned that model. The only other way to make money is through advertising, which raises two problems: 1) it recreates all the pressures and limitations of traditional, commercially-supported media, and 2) in order to get advertisers, you've got to build a large audience, which is very expensive.

And that lead to the third reason: the Web is like a television with an infinite number of channels. Its audience is intrinsically fragmented, and its content is intrinsically expandable. That means that in order to attract and retain a significant number of readers, a tremendous amount has to be spent on advertising, marketing and integration with the offline world. In
the long run, the only people with deep enough pockets to afford that are the traditional media companies.

Thus, I will close with what I consider to be a fundamental paradox. The very strengths of the Internet-‹the fact that it can be accessed for free, that it is ungoverned, and has no limitation on the amount that can be published‹-also make it extremely vulnerable to domination by commercial media. And I submit that commercial media has only a passing, and usually marginal interest in democracy.