Freed Reed writes today at LewRockwell.com about the death of print newspapers:
[N]ewspapers have lost control of the means of distribution. Before the web, you pretty much had to use the classified ads in the paper to sell your broken lawnmower, the personal ads to find someone to divorce, and the real-estate section to look for a burdensome mortgage. Now eBay is the national classifieds. Online dating services offer unlimited space for photos, text; online reality sites can carry far more information than a paper. These are important revenue streams. No revenue, no newspaper.Nowadays papers face a new kind of competition. Before, you read your local paper or, at best, one of a very few. You had no choice. Today people bookmark papers across the globe. What does this do to ad revenue? I’m not going to buy lettuce on special as advertised in The Jerusalem Post.
This story caught my attention because of an argument I had with the Department of Justice in 2003 over the Antitrust Division’s prosecution of Village Voice Media and New Times Media, the two largest publishers of free weekly newspapers. Village Voice and New Times had swapped newspaper assets in Cleveland and Los Angeles. In each case, one company’s paper dominated the market, while the competing newspaper faced insolvency. The exchange of assets essentially euthanized the weaker newspapers.The DOJ said this illegally eliminated competition in Cleveland and L.A. in the market for “alternative newsweeklies,” which the Antitrust Division defined as publications meeting “more than one” of the following criteria:
(i) it is published in a geographic area served by one or more daily newspapers to which residents turn as their primary source or sources of printed news; (ii) it is published weekly (or less frequently), and at least 24 times annually; (iii) it is distributed free of charge; (iv) it is not owned by a daily newspaper publishing company; and (v) it is a general interest publication that does not focus exclusively on one specific topic, such as music, entertainment, religion, the environment, or a political party or organization.
It’s curious that the DOJ would define a distinct market in terms of being an “alternative” to another distinct market. That should imply that the two markets, in fact, compete with one another, but of course then the DOJ would not have a pretext to intervene in the market at all.
The DOJ’s market definition is arbitrary and broad, yet several publications that met “more than one” of the criteria were excluded. The most obvious example is blogs, which are published in a geographic area served by one or more daily newspapers, they are distributed free of charge, and they are not owned by a daily newspaper publishing company.
(It’s also impossible to define a “general interest” publication. How general must the interest be? Would LewRockwell.com be considered general interest, as its writers discuss varied topics, or would be it a libertarian-specific publication?)
In its court filings, the DOJ said that true alternative newsweeklies, like the Village Voice, are “fueled by the typically ‘anti-establishment’ perspective of these publications which emerged during the 1960’s and 1970’s.” Thus, the government is claiming the power to intervene in markets when “anti-establishment”—that is, anti-government— viewpoints are not adequately represented.
The DOJ forced Village Voice and New Times to reopen the two newspapers closed by their asset swap under new owners approved by the government. This was to restore competition, the DOJ said. When I suggested the First Amendment prevents the state from forcing newspapers to reopen under the pretext of catering to particular (even “anti-establishment”) viewpoints, the DOJ shrugged it off. They said the antitrust laws overruled the First Amendment because “anti-competitive” behavior enjoyed no constitutional protection. This is quite convenient, since of course only the DOJ can define, ex post, what conduct is anti-competitive. Indeed, the lawyers for Village Voice and New Times told their clients that their asset swap was legal under existing antitrust doctrine. Indeed it was. The DOJ simply manufactured a new theory of antitrust liability—the idea that readers of free newspapers are legally injured if there’s insufficient competition among publications promoting similar “anti-establishment” viewpoints.
This brings me back to Fred Reed’s point about the competition between newspapers and Internet-based information services. The dynamic nature of the web overcomes the static market definitions that antitrust regulators cling to when building their cases. The Village Voice doesn’t just compete with its print rival New Times; it competes with “anti-establishment” blogs and websites containing real estate, classified, and personal ad websites.
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