Giving the Audience What it Wants

Abstract:     
Media policy recently has moved dramatically toward deregulation. Probably the strongest and most persistent claim made in defense of this move is that the media should give the public what it wants. This anti-paternalistic goal is often (wrongly) asserted to be implicit in the first amendment and, in any event, to be good policy. And giving the public what it wants would be a result, it is continually asserted, of deregulation and greater reliance on markets.This article challenges that thesis, making three arguments. First, monopolistic competition, the economic model that best describes most media competition, can be systematically expected, at least assuming inadequate price discrimination, to drive out some media entities that are valued by the public (produce media products that the public would want if offered). Moreover, sometimes successful firms will produce less value than the entities that they eliminate would have produced - that is, competition undermines economic efficiency.Second, "what an audience wants" only makes sense economically if described in terms of some resource constraint. The normal constraint is that the purchasers (audiences or audiences plus advertisers) should pay the full cost of media products. Media products, however, routinely produce major positive and/or negative externalities. Consequently, under the standard of giving the audience what it wants, the result is too much "bad" (negative externality creating) media products and not enough "good" content.Third, the normal economic reliance on market measures - preferences expressed in purchases and based on the existing distribution of wealth - may be especially inappropriate as measures of value (or of what the audience wants) for some sorts of media products.Once developed, this critique has overt policy implications. Governmental media policies, which began in the eighteenth century but which recently have been subject to dismantling, can generally be expected to provide the audience what it wants better than the unregulated markets. In fact, the primary problem with the old regime was inadequate scope of government intervention in the media realm.

Working Paper Series