Newspapers increase use of co-opetition practices

U.S. newspapers are increasing their use of co-opetition practices, that is, cooperating with competitors to reduce costs, create synergies, or reduce risk in new markets. Such activities are permissible if they are not designed to create cartels or control prices for advertising or circulation.

The latest example occurred this week when the Boston Herald announced an agreement with the Boston Globe for its competitor to print and deliver the Herald. The move creates cost savings for the Herald by allow it to cut printing, trucks, and delivery personnel, while simultaneously creating production and distribution economies and an additional revenue stream for the Globe--a win-win for both companies.

Such service agreements do not violate antitrust laws because the papers remain independent, set their own prices, and create their own content. If papers were to engage in such actions they would have to apply for an antitrust exemption under the Newspaper Preservation Act (see John C. Busterna and Robert G. Picard, Joint Operating Agreements: The Newspaper Preservation Act and its Application. Ablex, 1993), but those agreements have not proven successful in the long run.

The Boston agreement comes on the heels of numerous printing agreements, including that of the Chicago Tribune and Chicago Sun-Times, that have been made among publishers in the last couple of years.

Another example of co-opetition is seen in the 59 newspaper and information companies—including New York Times Co., McClatchy Co., Washington Post Co., E.W. Scripps Co., A.H. Belo, and Associated Press—that have now banded together to create NewsRight to track use of digital content and ease its licensing. By cooperating with each other, the companies have brought more than 800 content sites into the operation and created a significant player in the digital industry.

Daily newspaper companies have historically disliked cooperation unless it was absolutely necessary—as in the case of news services. The new types of cooperation emerging show that the preference to go it alone is being eroded by contemporary financial conditions and the difficulties of operating independently in the digital environment.

Convoluted Views about Media Ownership Inhibit Effective Policy

I was recently reviewing the effectiveness of media ownership policies and regulations and was struck by the limited success they have achieved during the past 50 years in Western nations.

There seem to be two central problems with ownership regulation efforts: ownership really is not the issue that we are trying to address through policy and we have convoluted views of ownership.

Media ownership is not really what concerns us, but is a proxy of other concerns. What we are really worried about is interference with democratic processes, manipulation of the flow of news and information, powerful interests controlling public conversation, exclusion of voices from public debate, and the use of market power to mistreat consumers. It is thus the behavior of some of those who own media rather than the ownership form or extent of ownership that really concerns us.

This is compounded because media practitioners, scholars, and social critics have highly convoluted views about ownership and most have complaints about all forms of ownership. It is thus nearly impossible to identify a preferential a form or extent of ownership.

We don’t like private ownership of media because proprietors can use them pursue their private interests; we don’t like corporate ownership because companies can put profit goals ahead of social goals; and we don’t like having just public service media because they doesn’t provide enough choice and are often limited in their ability to pursue political agendas--a function important in democracy.

We don’t like big companies because they can be arrogant and unapproachable and because they can control content as well as markets; we don’t like small companies because they can’t provide the range and quality of content we desire and because they sometimes can’t withstand pressures from powerful interests.

We don’t like foreign owners because they don’t share our identity, don’t represent who we are very well, and can bring foreign influences that affect national sovereignty; we don’t like domestic owners because they can be too close to those with domestic social and political power.

The list of ownership we do not like—and the fact that most regulation is promoted because of particular proprietors we disliked—makes it difficult to fashion effective policies. We are stymied because no ownership form itself is good or bad and they all have advantages and disadvantages. And there are examples of good and bad owners under all the forms of ownership.

Using ownership regulation to control the behavior of bad owners can only somewhat limit the scope and scale of their activities, not address their poor behavior. It is like permitting higher levels of crime in one area of town as long as it does expand into other areas.

If we are to effectively address our real concerns, we need to develop better mechanisms for influencing behaviour and we need to stop ineffectively regulating ownership just because it makes us feel like we are doing something.