1 1 I N D E X 2 3 4 AGENDA ITEM: PAGE: 5 Welcome, Chairman Jon Leibowitz 3 6 Remarks by Paul Steiger 19 7 Remarks by Rick Edmonds 32 8 Remarks by Rupert Murdoch 43 9 Panel: The State of Journalism Today 10 and Tomorrow 58 11 Remarks by Arianna Huffington 119 12 Presentation by Ken Doctor 138 13 Presentation by Len Downie 150 14 Presentation by Lem Lloyd 163 15 Presentation by Josh Cohen 176 16 Panel: Emerging Business Models 17 for Journalism 190 18 Presentation by Mike Bloxham 262 19 Presentation by Susan Athey 275 20 Presentation by David Evans 288 21 Panel: Online Advertising and Consumer 22 Demand Trends 302 23 Conclusion 331 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 2 1 2 3 UNITED STATES OF AMERICA 4 FEDERAL TRADE COMMISSION 5 6 7 8 9 FROM TOWN CRIERS TO BLOGGERS: 10 HOW WILL JOURNALISM SURVIVE THE INTERNET AGE? 11 12 13 14 TUESDAY, DECEMBER 1, 2009 15 16 17 FEDERAL TRADE COMMISSION 18 601 NEW JERSEY AVENUE, N.W. 19 WASHINGTON, D.C. 20 21 22 23 24 25 For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 3 1 P R O C E E D I N G S 2 - - - - - 3 MS. DeSANTI: Good morning, thank you all for 4 coming. Could you please take your seats and we are 5 going to start now. 6 (Whereupon, the Minnesota Public Radio Future of 7 News video was played for the audience.) 8 MR. LEIBOWITZ: Hi there, I'm Jon Leibowitz, 9 Chairman of the Federal Trade Commission, hold on one 10 second while I put my papers and my coffee down and 11 that's a great little film. That's the first time I've 12 ever seen a clip of the Hindenburg without someone 13 saying, oh, the humanity. 14 (Laughter.) 15 MR. LEIBOWITZ: Anyway, I wanted to welcome you 16 all here today to the FTC workshop entitled How Will 17 Journalism Survive the Internet Age? Some cynics, of 18 course, have suggested a more ominous alternative, will 19 journalism survive the Internet Age? 20 Now, since the beginning of our republic, news 21 journalism has been essential to making democracy work. 22 By ensuring that citizens are well informed about civic 23 matters, news journalism helps create the informed 24 electorate that is vital to a well-functioning 25 democracy. Put simply, and I suppose I'm speaking to For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 4 1 all the journalists in the audience, regardless of your 2 platform, you help us make sense of an ever more 3 complicated world, you hold us accountable when we're 4 not doing our jobs properly, you provide a way for the 5 myriad of American voices to be heard, and you are 6 really the day-to-day champions of our First Amendment 7 values. But now journalism, at least in the traditional 8 sense, is in trouble. 9 New forms of competition in advertising are 10 disrupting the business model that has sustained most 11 journalism in the U.S. for more than 150 years. In 12 response, both incumbent news providers and new entrants 13 are searching to find the business models that will 14 enable them to thrive into the future. 15 Now, as we all know, many factors have driven 16 this change, including some self-inflicted wounds, but 17 in the long run, competition made possible by the 18 Internet is at the center of these changes. This kind 19 of disruptive competition is often called creative 20 destruction. It usually involves an innovative business 21 model, sometimes combined with new technologies, that 22 explodes past practices and gives long-term benefits to 23 consumers. That is certainly true, I think we can all 24 agree, of the Internet as a whole, which has brought 25 extraordinary and wide-ranging benefits to the American For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 5 1 people. 2 For journalism, however, the concern is that 3 creative destruction caused by Internet competition will 4 destroy more than it creates. Whatever the new business 5 models for journalism may be, and we've certainly seen 6 some glimmers of light in endeavors such as the voice of 7 San Diego, Talking Points Memo, and ProPublica, they are 8 aren't yet fully apparent, and/or fully sustainable, at 9 least in a broad sense yet. 10 At the same time, we're witnessing a 11 quantifiable, and some would say qualitative demise of 12 the old world order of news delivery. That's why it 13 remains an open question about whether the changes to 14 news gathering amount to creative destruction or simply 15 destruction. It seems to me that it's a little bit of 16 both. 17 We're here today to discuss these issues with 18 many of America's leading publishers, editors, writers, 19 media analysts, scholars, advertising executives and 20 consumer advocates. Some of you are beginning new 21 careers online, as citizen journalists, bloggers, or 22 publishers of news. All of you face a new job 23 requirement, to be an innovator in a shifting news 24 landscape. 25 We expect to learn a great deal from you, and For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 6 1 the Commission appreciates your willingness to share 2 your experiences with us. 3 So, why are we doing this workshop? I should 4 say, I was reading a blog last night that asked this 5 very, very legitimate question, it also complained that 6 we didn't post our agenda in HTML format, only in PDF, 7 and I know it's early in the morning, but that was a 8 joke. 9 (Laughter.) 10 MR. LEIBOWITZ: He really did, he complained 11 that we didn't post our agenda in HTML format, only in 12 PDF, and we're going to look into that, too. 13 Well, the Federal Trade Commission is well known 14 for its law enforcement activities in the competition 15 and consumer protection areas. Also important, but 16 perhaps less well known is the policy function that 17 Congress assigned to the Federal Trade Commission since 18 our inception in 1915. Both Woodrow Wilson and Louis 19 Brandeis, two of the principal architects of the 20 Commission, endorsed this Commission before Congress in 21 testimony in 1914 and 1915, and I think in the longer 22 version of my speech, we have excerpts from their 23 testimony, or in Wilson's case, a joint speech to the 24 joint session of Congress. 25 Lawmakers agreed with this vision, they gave our For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 7 1 agency under the FTC Act the jurisdiction to investigate 2 and make public new developments in the marketplace, and 3 where appropriate, make legislative recommendations. 4 For decades, the FTC has embraced this policy role. 5 From a study of radio broadcasting in the 1920s 6 that influenced passage of the Federal Communications 7 Act of 1934, creating the FCC, to more recent reports on 8 subjects as diverse as health care competition, in which 9 many of you know we are very, very involved, patent 10 reform, and behavioral marketing. 11 With this workshop today, we continue to fulfill 12 that Congressional, or Wilsonian mission, to bring out 13 facts in the marketplace. Make no mistake, we are 14 living through a period of extraordinary change in which 15 the bottom seems to be falling out of the news business 16 as consumers shift their habits in acquiring news. This 17 is not to say that all news organizations are 18 experiencing these forces at the same time, and in the 19 same way. Newspapers, overall, were profitable in 2008. 20 Consumers still used TV as their primary news source, 21 but major changes are under way, and the facts are 22 striking. 23 News rooms across the country have cut staff. 24 The Pew Research Center's 2009 report on the state of 25 the news media projects that by the end of 2009, the For The Record, Inc. (301) 870-8025 - www.ftrinc.net - (800) 921-5555 8 1 news rooms of American dailies may employ between 20 and 2 25 percent fewer people than in 2000, with higher losses 3 at big city metro dailies, including leading papers like 4 the Washington Post, where my wife happens to work. 5 You can't walk into a meeting at the Los Angeles 6 Times, like I recently did, without feeling a sense of 7 shock of the row after row of empty desks in what was 8 once a bustling news room. 9 The shuttering of a foreign bureau, or office 10 covering the state house or covering city hall may be 11 less apparent, but it is no less problematic. Local 12 newspapers have failed in greater numbers than we have 13 seen in a long time, and the loss of a local newspaper 14 can be devastating to a community. 15 To be certain, short-term factors have played a 16 significant role in the cuts at news rooms, including 17 the current recession, and the debt overhang from some 18 highly leveraged media deals. But at the core of these, 19 is this: The Internet is dramatically reducing 20 advertising revenue for news organizations.