Video: Independence and Quality of Mass Media in the Internet Age (ERC Starting Grant)

Ruben Durante is the recipient of a European Research Council Starting Grant for his project, “Independence and Quality of Mass Media in the Internet Age.”

Video: ERC project overview

ERC project in more detail

The Internet has revolutionized the way information is produced, disseminated, and consumed, and has transformed the media environment in two ways:

  • Directly: through the advent of online media
  • Indirectly: by changing the conditions in which traditional media operate

While extensive research has focused on the first aspect, the second remains largely unexplored, limiting our understanding of the ultimate consequences of the Internet for society and democracy.

My project aims to provides a broader and unified framework to examine how the Internet is reshaping the media environment, and what are the deep implications of these changes for the quality of journalism / the independence of mass media / and, ultimately, the information citizens have access to.

Despite the initially optimistic expectations on how new and traditional would fruitfully interact with each other, the impact of Internet on traditional media has been quite disruptive.

Online platforms – such as Google, and Facebook – have diverted enormous advertising resources away from traditional media companies, particularly newspapers. The resulting financial difficulties have led numerous newspapers to close down, cut staff, or drastically rethink their organization.

Data for the United States indicate that between 2000 and 2014 advertising revenues of daily newspapers declined by over 40%, and number of total newsroom workers by 40%. A similar pattern holds for European countries, as well as for radio and broadcast TV.

These transformations generate two concerns.

On the one hand, shrinking budgets and staff can undermine the ability of newspapers to produce original and high-quality content, and to engage in high-risk activities, such as investigative journalism. This is especially problematic since most news stories still originate from newspapers and other traditional media, while new media produce little original news and mainly repackage information gathered by others.

On the other hand, financial distress can make media more vulnerable to the influence of special interests who —through ownership, advertising, or other means—attempt to ensure reporting is in line with their own agendas.

The risk that corporate interests may influence media editorial policy is compound by the fact that the amount of corporate resources invested d in public relations has grown steadily, and that corporate press releases increasingly find their way into media coverage.

The deterioration of media quality and independence also risks harming citizens’ trust in the media—which is today at an historical low—and fueling the belief that media are in the hands of special interests.

Despite the importance of this issue, direct empirical evidence on how shrinking revenues influence the functioning of traditional media is scant and largely anecdotal. My project aims to fill this gap by producing novel and rigorous evidence on at least three aspects.

How does competition from online platforms influence traditional media companies and the content they produce?

Our analysis will look at daily newspapers in the United States, and will examine how the impact on the industry the entry of Craigslist, the world’s largest online platform for classified advertising.

Following its introduction in 1996, Craigslist, which offered free and more efficient alternatives to paid ads, gradually spread across the U.S., disrupting the local market for classified ads, on which many local papers had heavily relied upon until then.

Exploiting the timing of the introduction of Craigslist across U.S. media market, and differences in how much different newspapers relied on classified ads before then, we will examine how reduced ads revenues influenced newspapers along several dimensions:

  • Advertising revenues and circulation
  • Size of newsroom workforce
  • Distribution of reporters across topical areas
  • Number of statehouse reporters
  • Staff workload
  • Accuracy of reporting
  • Originality of content (self-produced vs. copied from news-wires or press releases)
  • Coverage of corporate actors (self-produced vs. copied from news-wires or press releases)

How do advertisers influence coverage in the mass media?

The second module looks at the relationship between mass media and advertisers. In particular, we examine whether mass media bias news coverage in favor of advertisers—possibly due to the concern that companies may withdraw their spending in response to hostile coverage—and how this has evolved due to competitive pressure from online platforms.

Identifying the causal effect of ad spending on coverage is challenging, because media can decide to slant news to cater to the preferences of both advertisers and readers, and since most of the times these are aligned.

To address this concern we focus on a situation in which the preferences of advertisers and readers go in the opposite way. Precisely we look at the relationship between ad spending by car manufacturers and news coverage of car safety recalls. On the one hand, since safety recalls can hurt a company’s reputation, manufacturers should prefer less coverage. On the other hand, consumers should demand more information about the safety risks associated with the recalls, especially if they own or intend to acquire a vehicle of the affected brand.

To study this issue we look at the relationship between advertising spending by car manufacturers and news coverage of car safety recalls. This case provide an excellent testing ground as manufacturers would prefer less coverage of events that may hurt their reputation, while consumers would like more information about the safety risks associated with recalls.

Focusing on all safety recalls issued in the U.S. between 2000 and 2014 and looking at ad spending and coverage of recalls on over 100 US newspapers, we will tackle the following questions:

  • Do newspapers underreport on the recalls of their advertisers?
  • Does competition reduce pro-advertiser bias?
  • Does financial distress due to lower ad revenues increase pro-advertiser bias?

What is the influence of banks on traditional media outlets?

Our third module examines the relationship between mass media and banks, a key issue that the political economy literature has largely ignored.

The media play a key role in informing citizens about financial issues and in exposing banks’ misconduct. Yet, as the financial conditions of traditional media outlets deteriorate, media companies become increasingly dependent on creditors, and potentially vulnerable to their pressure, with potentially important implications for the quality of the public debate on these issues.

The project investigates the influence of banks on the press in the context of recent European sovereign debt crisis.

Specifically, it aims to test whether newspapers connected to banks with higher exposure to the sovereign debt of troubled southern European countries provided different coverage of the crisis and of the debate over possible crisis-management measures.

The main hypothesis is that newspapers linked to banks that had more to lose from measures that could result in bank losses – e.g., total or partial default – would be especially critical of these options, and more forceful at arguing for solutions.

To assess the connections between media and banks in the most comprehensive way, we will collect information on three dimensions: ownership / advertising / and lending. Hence a bank will be deemed to be connected to a bank if it is owned by the bank, if it has a regular advertising relationship, or if it the bank is its lender.

The main analysis will focus on the top general-interest and financial newspapers in France, Germany, and the UK, three countries whose commercial banks were initially exposed, to various degrees, to risky sovereign debt, and where intense public debate over different crisis-management solutions emerged.

We also plan to examine how media/bank connections influence news coverage of other information that may be detrimental to banks’ reputation, such as bank scandals, bank losses and non-performing loans. In this case our analysis will not be limited to France, Germany and the UK but will extend to all European countries.