Legitimacy through scarcity
On broadcasting licenses, natural monopolies, and the confusing landscape of media legitimacy in the digital age
The printed daily newspaper had a pretty fantastic economic profile a few decades ago: Not only did it have the broad and righteous legal protection of the First Amendment, it also tended towards natural monopoly. The costs of content creation were essentially fixed, no matter how many copies were printed, and newsstand or subscription fees generally covered the marginal costs of printing and distributing each incremental copy. Thus, the rewards tended to concentrate around a single producer who could assemble the publication with the broadest possible appeal across the community. High circulation begat high advertising rates, which in turn charged a positive feedback loop of profitability upon which to further entrench and expand circulation.
■ And when broadcasting licenses were kept scarce by the FCC, and ownership of those licenses was tightly regulated (seven each of television, AM, and FM stations, per owner, until 1984), similar effects held for broadcasting outlets, as well. It was good to be on the inside, and once an operator was entrenched, it was hard to displace them.
■ Media outlets in those times obtained much of their legitimacy through scarcity. There could certainly have been debates about quality of coverage, bias, or accuracy, but the legitimacy of the institutions themselves was basically sealed: One newspaper, a handful of radio stations, and usually three network television stations indisputably "spoke" for a particular community.
■ Fast-forward to today: Broadcast licenses are barely limited any longer, anyone can operate a streaming video channel, and newspaper circulations and revenues have effectively evaporated. Scarcity no longer confers legitimacy, because there is no supply-side scarcity anymore. (And that's killing the legacy media industry.)
■ What takes its place now is legitimacy via audience consent. Who speaks for a community? Which are the authoritative, legitimate media outlets in a place? You have to consult with the audience living there to get the answer. It might be the skeleton crew left at a legacy newspaper brand, like the St. Cloud Times, with a claimed staff of one. Or maybe it's a digital-only publication. It might be a podcast, a television station, a daily e-newsletter, or a particularly lively Nextdoor board.
■ To a degree, legitimacy-by-audience-consent is more defensible than legitimacy-by-scarcity. After all, the consent of the governed is what confers legitimacy to a government. But legitimacy-by-scarcity had the effect of forcing media to cultivate mainstream sensibilities; their economic power derived from having the maximum possible reach and appeal to the community as it existed.
■ Not so with media outlets operating without the constraints of scarcity. As has been well-documented, the quest for advertising efficiency rewards audience fragmentation: A small but homogeneous audience may easily command better advertising rates than a large but diverse one. These changes are both significant in size and consequential for questions of how we inform ourselves. The evolving landscape may end up highly satisfying for consumers (as it becomes easier to find outlets that suit us individually), but with less community-responsive legitimacy in total.