The paper offers an analysis of the critical issues facing today’s media and provides a policy proposal to safeguard the future of the media within the European Union (EU). The two existential problems identified in the analysis are (1) the proliferation of ‘fake news’ and, (2), the decline of suitable revenue models for media outlets. This paper subsequently offers a solution to both problems in the form of a dual-purpose EU agency. The envisaged agency would act as both a guardian and a financial supporter of quality news. As such, it would identify and sanction those entities found to be spreading false or misleading information. Moreover, it would also act as an accreditation service and provide financing to quality news outlets to better guarantee the provision of information as a public good within the EU.
The global media industry is in severe crisis. This crisis does not have a single cause and cannot be described with one sole characteristic. In fact, the whole system has been continuously disrupted and shaken by several interconnected developments such as the advent of the internet, the rise of online news, and the subsequent issues with financing news and questionable quality due to decreasing incentives to create original content. These developments increasingly put the media industry under heavy pressure; they threaten thousands of jobs as well as the public level of information, which itself is strongly related to the political sentiment and democratic environment of societies. Hence, not only the media, but our overall political system is at stake.
It is time to pull the handbrake and design adequate policies that make the future of the media a brighter one. More concretely, two strategic levers shall be targeted with our policy proposal: First, the further rise of so-called ‘fake news’ must be impeded such that citizens are able to trust their media without questioning the legitimacy and accuracy of information. Second, sound and original journalism must be rewarded to ensure the survival of journalistic talent and the drive for fact-based debates.
In the following, the two broad concepts of ‘fake news’ and financing of journalism are analysed more closely to derive precise issues which shall subsequently be tackled. In order to counter these issues, concrete policy measures are proposed to ensure a consequent and long-lasting amelioration of journalistic content within the European Union. Finally, limitations and concerns are expressed to flesh out the contextual frame for how the European future of the media may be designed by policy means.
“Journalism is what we need to make democracy work” – Walter Cronkite
Information and (fake) news
Just as water in the sea and air in the atmosphere, information is a public good. This odd comparison is not based on the virtual infinity of the three goods but on the shared characteristics of being (1) non-rivalrous (consumers do not suffer detrimental consequences if other individuals consume the same good) and (2) non-excludable (individuals cannot be excluded from consuming the good). Moreover, information is a crucial element of political participation and different scholars (e.g. Drago, Nannicini, & Sobbrio 2014; Gentzkow, Shapiro, & Sinkinson 2011; Strömberg 2004) have shown that access to media, and hence to information, increases electoral participation by raising awareness and increasing knowledge about relevant issues at stake.
However, the nature of information has been increasingly challenged over the last years, with ‘fake news’ making headlines and calling for public attention. The term itself became a buzzword and particularly gained wide prominence after potential connections to the infamous Brexit referendum and the 2016 US Presidential Election. So what are these ‘fake news’? According to Allcott and Gentzkow, they are “news articles that are intentionally and verifiably false, and could mislead readers” (2017, p. 213). More technically, the two economists describe them as “distorted signals uncorrelated with the truth” (p. 212), causing both private and social costs by making it difficult for consumers to assess the true state of affairs. Based on this definition, ‘fake news’ appear to be inevitably negative and bad for society. But is this always the case? Tambini (2017) created six clusters of news that have been labelled as ‘fakes’ in the past: (1) Wrong information distributed with a political goal (e.g. to promote/impair candidates); (2) false information distributed for financial gain; (3) parody and satire; (4) poor journalism based on groundless rumours or claims that were made up; (5) news that is correct but ideologically opposed or that challenges consensus; (6) news that challenges orthodox authority.
Tambini’s clusters amplify the fact that one cannot easily speak of one kind of ‘fake news’ and that even correct facts and claims can be subject to this allegation. So what counts as the truth and how easily can it be assessed? It certainly depends on the context and data. For example, the claims “more than two million refugees entered our country” (quantitative) and “our president was not born in our country” (objective) could be more easily factually assessed than the claims that “economic future is promising“ (qualitative) or “our president is stubborn” (subjective), which may hardly be subject to falsification. Nevertheless, investigation of this topic is crucial, given the high relevance of media quality on democratic systems and the grave developments in some societies where the majority of citizens lack the capacity to correctly differentiate fake news from verified content (Barthel, Mitchell, and Holcomb 2016). Moreover, it was found that teenagers even reject journalistic objectivity and rather prefer opinionated journalistic content (Marchi 2012). Low media literacy and preferences for partisan opinions are two alarming characteristics. Another key issue, is that citizens increasingly tend to distrust media, and the internet in particular (51% of EU citizens do not trust it) as well as social media platforms (62% of EU citizens do not trust it) (European Commission 2018c).
The main reason why one could term the contemporary period “the age of fake news” is indeed the rise of the internet as a platform for online news and the connected simplicity to share (mis)information at low cost and build ideological ‘echo chambers’ on social media (Williamson 2016). This spread of ideologically-biased views which often find no grounding in facts is a dire situation, especially given that last year 62% of European citizens consumed news online, whereas only 48% did so in 2013 (Eurostat 2017; Eurostat 2018). Moreover, the share of European citizens consuming news to derive insights about European political matters has increased from 26% in 2011 to 42% in 2017. On the contrary, consumption of printed news for such topics has decreased from 47% to just 36% during the same period (European Commission 2018a).
Unfortunately, fighting ‘fake news’ is not an easy effort and there is a narrow line between impeding the spread of misinformation and undermining the freedom of speech, which should per se allow for the dissemination of opinionated news. However, it is questionable how far originators of fake messages could and would go and at which point public intervention will be inevitable. Let us consider the extreme scenario of ‘news’ that deliberately misinform consumers in the attempt to undermine elections. In the age of cyberpower and information warfare, such a scenario is no longer fantasy and could pose an actual threat to national security.
This short paragraph leads to a quick conclusion: ‘Fake news’ is dangerous, however, free speech must be guaranteed and thus shutting down media outlets and networks spreading misinformation once is not an option. So, what are realistic options and which actors could intervene? For example, the Italian draft law (introduced in February 2017) obliges social media platforms to monitor their news services and imposes monetary fines for individuals spreading ‘fake news’ as well as prison for very serious offenses, e.g. ones that incite crime or violence (Tambini 2017). Another interesting case is China, whose government consequently penalizes the spread of ‘online rumours’ to impede consequent mobilizations of citizens that could pose a threat to the State Party’s approach (Ng 2015). While Italy indirectly intervenes by obliging media platforms and only penalizes grave infringements, China goes a radical judicial way that is highly questionable from a democratic standpoint.
As of today, the EU engages in different media-related projects within the Commission’s Directorate?General for Communications Networks, Content and Technology (DG CONNECT), which has a joint section for culture and media. In May, the Commission convoked a multi-stakeholder forum on disinformation, which consisted of a working group of representatives from relevant sectors (e.g. major online platforms and advertising firms as well as academia, media and civil society organisations in the role of fact-checkers). The aim of the working group was to draft a self-regulatory practice code on disinformation for online platforms and the advertising sector; however, it did not consider regulatory instruments that exceed self-governance (European Commission 2018b). Moreover, some dedicated EU organizations have started to work on solutions fighting the rise of ‘fake news’; for example, the East Stratcom Task Force of the European External Action Service (EEAS) has published the EU vs Disinformation campaign that addresses disinformation, in particular that originating from pro-Kremlin activists. Lastly, the Commission supports the European Centre for Press and Media Freedom (ECPMF), a non-governmental organization that wants to prevent malicious media developments for which it published the European Charter on Freedom of the Press, another instrument that is purely self-regulatory (ECPMF 2018).
Before elaborating an innovative transnational solution to the rise of ‘fake news’ that augments existing EU efforts, let us consider the second aspect our solution aims to alter: the financing of media.
No money, no reliable news?
The media industry has been suffering for a long time as a result of declining revenues. The trend towards digitalisation over the last decade has severely affected the industry. This has been to a large extent, a global event. In the US, advertising revenue plummeted from 65 billion dollars at the start of the millennium to 19 billion in 2016 (McLennon and Miles 2018). In Germany, more than 1000 media jobs were cut in 2013 (Cagé 2016). Similarly, in Britain, over 200 regional and local newspapers have closed since 2005 (McLennon and Miles 2018).
The reduction in the media industry’s revenues is having far reaching effects on the output of the industry. Newspapers worldwide are learning to cut costs, forgoing what is seen as unnecessary expenditure. The results of this are manifold. Firstly, in absolute terms, less journalists means less journalistic content gets produced. Without the willingness to invest in specialised reporters, many media outlets are showing an indifference to covering the same breadth of news they once did. Furthermore, media firms are refocusing on covering on the main national news. Many firms now see foreign bureaus, localised coverage and investigative reports as excessive expenditure. As such, the sheer quantity of quality news being produced has been steadily decreasing, with less varied output and less plurality of unbiased journalistic content.
The trend towards online news also has had other harmful effects. Journalism is an industry which requires a large initial investment. It has a high fixed cost with increasing returns to scale. In simpler terms, this means that the news outlets cost largely arise from the quality they invest in the output. Better and more varied content requires higher investment and hence more expenditure. However, costs remain rather static in relation to the size of the market served. In the digital sphere, this strongly disincentives the costly creation of original content. Instead, articles are often replicated ad infinitum from other news sources, often with little or no changes (Cagé 2016).
Furthermore, it is an illusion that the online advertising revenue streams can support media outlets in the long-term, despite the large amount of readership. Advertising revenue online has been steadily decreasing for years. This has been unfortunately timed with a huge increase in advertising supply, as the social media giants expand their portfolios. The combination of this demand and supply dynamic has led to a collapse in the price of advertising, diminishing the revenues of media firms further.
There are many implications arising from this negative assessment of the media’s fortunes. Firstly, trust in the media is receding, as a multitude of factors diminish the public’s faith in unbiased news. The fall in revenue from advertising online has led to the emergence of questionably ethical practices such as native advertising, which is the use of advertisements as part of the normal user experience. It is often poorly labelled and blurs the line between objective news and paid content. Such native ads now constitute 10% of the New York Times revenues from online advertising, illustrating how even the most prestigious publications are subject to such financial needs. It has been argued that the reliance of publications on practices such as native advertising diminishes public trust in the media (Carr 2013). As we envisage the survival and growth of the media in future years, we must formulate alternative methods for publications to support themselves, without risking the trust they possess with their readership.
This breakdown in trust between media companies and their readership has been accentuated by the increasing power of social media companies in the journalistic world. Companies such as Facebook, Twitter and Snapchat now decide who publishes what, to which audience, and how they get paid for it. We have entered a new era where news is filtered through opaque and unregulated algorithms. However, as the social media giants are generating high traffic, many publishers have decided to focus solely on them as a distribution channel (Bell 2016). In essence, this has led to a few unaccountable companies having significant control over the distribution of news. The combination of this unregulated and non-transparent field with the proliferation of fake news online has furthered the distrust which the public has in the media.
The decline of the media’s economic model has undoubtedly led to a reduction in the quality of the news. The media has clearly not adapted to the new economic forces and global trends facing them. The implications of this stretch far past the failure of any singular media entity. Instead, it poses a threat to democracy itself, as its foundation of a well-informed public dissipates. A well-functioning democracy requires a well-informed electorate, who have access to objective unbiased news on which upon to make their electoral decisions. If left unchecked, the decline in the media’s economic model threatens the continued functioning of our political system.
Public support for the press is widespread around the world. However, these subsidies are often insignificant in the context of their overall revenues. Subsidies as a percentage of gross newspaper revenues are no greater than 10% anywhere, and in general less than 5% (Cagé 2016). When placed in the context of overall net contribution to the economy, media companies generally pay more in taxes than they receive. This contrasts strongly with other participants in the knowledge economy such as research institutions and universities. As such, when formulating our responses to such a crisis in media, we must consider is the media as important to our society as those other participants. The authors of this paper believe so and argue that a greater government intervention into the sector is required.
On a European level, there have been several initiatives to provide quality news about European affairs. The EU has initiated projects wherein they support quality journalism while respecting the editorial independence of the project. In recent times, they have supported a European Data News Hub, created by Agence France-Presse (AFP), Deutsche Presse-Agentur (DPA) and Agenzia Nazionale Stampa Associata (ANSA). In addition to this, they have helped support the European Data Journalism Network (EDJNet) which aims to produce, share and publish data-driven content on European affairs (European Commission 2017).
While this support is important, we believe that Europe needs a solution that goes beyond disparate initiatives. We envisage a plan that will provide a healthy foundation for the flourishing of the media all around Europe. As such, we will detail our bold plan for the renewal of the media in Europe.
Solution: An EU initiative to ensure a bright future for journalism
In a nutshell, we propose to set up a European body that (1) provides a ‘fact-checking service’ by investigating potential ‘fake news’ and their effect on EU citizens, and (2) evaluates the quality of European journalism on the basis of news samples for the purpose of rewarding outstanding work with dedicated EU funds. This European body will further serve as an accreditation board for the media industry, comprising different kinds of people from society as well as political representatives from the transnational level, i.e., MEPs. The goal is to include all socio-economic classes and political tendencies, thus citizens of different age and social classes as well as politicians of all large parties (those in the European Parliament) must be represented. For simplicity, we shall from now on utilise the imaginative title of European Media Institution (EMI).
Scope of application and responsibilities
The EMI shall become an elementary part of the Commission's DG CONNECT and complement the existing role with the twofold responsibility of fighting the dissemination of disinformation and allocating dedicated funds for selected media outlets. By adding the two roles, already existing objectives such as the promotion of democratic principles and the support of investigative research could be further augmented.
The EMI will work as an independent ‘single source of truth’ for the following tasks:
Media outlets from all EU member states as well as accession states may apply in order to receive potential funding, accreditation (‘EMI seal of quality’) as well as dedicated awards, e.g. journalist of the month.
In addition, special funding dedicated to outstanding investigative journalism can be provided to corresponding media outlets – this funding shall be allocated by an independent jury of media researchers, thereby incentivising the proliferation of investigative journalism.
Even in the case of perfect objectivity and impartiality, those media outlets, interest groups or political parties who are not satisfied with a specific rating and consequent money allocations could criticize the European media institution as being partial. Although there isn’t always a legitimate reason, such critique has proven to be a natural element whenever public administrations intervene in the media industry. Another key question is whether it will be technically possible to consider social media algorithms, given that they are the root of filter bubbles and hence the reason ‘echo chambers’ exist. Based on this proposal, such an assessment is not technically possible and would demand an enlargement of the EMI.
Another problem noted during the policy formulation phase, was possible dispute settlement mechanisms to be included in the EMI. For example, processes would have to be included in case a media outlet contested its label as ‘poor quality news’, or ‘fake news’. The sheer plurality of voices in the modern-day media would ensure that disputes arise often. The independence and impartiality of such a settlement panel would have to be unquestionable.
Similarly, the granting of MEPs of 50% of the voting rights would also be susceptible to criticism. MEPs operate on a five-year term mandate, and there are ideological shifts in the European parliament with each new election. Ideally, the EMI would be impervious to ideological changes, however, it is not unreasonable to suspect that the rotation of the MEPs operating in the EMI would change its outlook. We hope that the inclusion of academics and public participation in the EMI process will suppress this fear somewhat. Regardless, we consider the impartiality of, and public trust in the EMI to be of paramount importance and would consider adjustments to the proposal to guarantee this.
Our analysis has shown that the rise of ‘fake news’ and their direct impact on electoral outcomes as well as the issue of financing journalism are two key deficiencies within a large crisis. Further adequate solutions to this crisis must be found, critical media literacy must be promoted with further means, e.g., a cohesive approach by educational institutions and the media industry could improve the situation. Similarly, we have investigated the funding issues within the media and found that the industry is suffering from a funding crisis. This is reducing the range of news covered, the depth in which they are covered and ultimately, the quality-level of our public discourse. In addition to this, it is contributing to a diminishment of public trust in the media. While both national and EU-level policy solutions exist, we believe these are not enough.
Our plan for the EMI will provide a holistic solution to the current woes affecting the media in Europe. It will provide a source of funding to quality newspapers. It will also act as a barrier against the creation and proliferation of fake news. We envisage that over the long term, it will allow media outlets to work with greater independence, and flourish throughout the EU. Moreover, the Commission should include the role of the media in its upcoming political priorities for the post-electoral agenda of the 2019-2023 period. Within the current 2015-2019 framework, one of the ten priorities regards democratic change, however, it solely focuses on administrative transparency and accountability.
As of today, we are less than six months ahead of the next European elections. Together, let us all aim to ensure the great future of journalism that European citizens deserve.
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