Mitch McConnell, Chuck Schumer and Nancy Pelosi (Images: AP)

Here’s a little quiz for you: can you name 10 US politicians? What about the members of your state parliament? Which question is easier?

In 2020 we found out that state governments are more powerful than ever. At the same time we devoted ever more attention to US politics. Giving our precious democratic attention to elections in which we may not vote and lawmakers who make laws which don’t apply to us leaves us disenfranchised — and erodes the quality of our democracy.

Part of the reason for our fascination with the US is the slow motion car-crash appeal of watching Donald Trump destroy the world’s pre-eminent democracy. But his dramatic ascendancy and spectacular fall from grace (long may he tumble) are ever more available to us because of a pre-existing issue with the economics of the media.

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The economics of media have always been weird. But they are getting weirder.

When a media company wins just one more subscriber, it costs them nothing, and gains them a lot. Let’s explain that, and then look at how it affects what news we see.

Consider Crikey. If Crikey gets another subscriber it’s all positive. Pay $199 for a year’s worth of words and that revenue all hits the bottom line. The extra cost to Crikey of having another subscriber on the books is small. The website will be there anyway.

This is very different economics to a business like a restaurant. The customers are going to eat a certain amount of food, occupy a lot of time from the chef and the waiters, and when the table is occupied, that means they can’t get more customers in. Each customer has distinct costs and there’s a limit to how many you can serve.

This issue with online media is what they call zero marginal costs. Each extra (“marginal”) customer costs zero to serve. Free-to-air TV has the same basic economics. If you pop up an antenna, it doesn’t affect my signal.

When the economics are like this, it makes sense to lower the prices paid by customers and try to win the biggest possible audience. It leaves the market with a natural monopoly. For example, in free-to-air TV, a winning business model is to show cheap content and make it free to win a huge audience (consider the shopping channels).

Recognising the risk of every channel showing infomercials and endless re-runs of Friends, in the television arena the government has made local content laws. In online news, we don’t have them. Yet.

The competitive equilibrium in most online media is to have paywalls set at zero. The top six websites in Australia are all free, and growing fast:

The only way round this is to have truly unique content (the model pursued by Crikey and the The Wall Street Journal) and even then it’s a tough game because big players with no paywalls will erode your audience.

Industries with zero marginal costs are a problem because they do not generate the kind of competition that stop markets from treating consumers really badly. (Competition is imperfect in this respect, but it does something at least!) Ultimately, either quality or variety will suffer.

Consolidation matters

The relentless consolidation of media into a few global titles is a very real phenomenon with very real effects in Australia.

The Rouse Hill Times is closing, along with 100 other community papers, as explained by Mumbrella, while The New York Times grew its subscriber numbers at a ridiculous pace this year, as this Google search revealed:

How does this consolidation look on the ground? There are now far fewer Aussie journos. The Age and the SMH are basically one newsroom now. A big share of the content on their sites is wire copy (Reuters, AFP, Getty and Bloomberg are the other big winners of global media consolidation). We get much less local content designed for us and relevant to us.

I have a New York Times subscription. I also have a Wall Street Journal subscription. They’re cheap and the quality of the coverage is extremely good. An example is the NYT coronavirus coverage — it’s probably doing more to collate and present US coronavirus data than the US government itself.

But while the quality of its content is a delight, its focus is global at best and rigidly American the rest of the time. There is little on Australia, despite the recent creation of a small Australian bureau of the NYT. That’s a dangerous cycle. The more American content we read, the more we want.

Of course I maintain subscriptions to a load of local publications too — and they provide that local coverage, mostly. But even the Nine papers and Crikey like to write about US politics, because it has wide appeal. The economics of catering to niches is not good. If you write a story about a state issue, it gets a fraction of the clicks of a story on a national issue. And, on a site that has no paywall, a story on a global issue can get even more traction, so that’s what editors want.

This relentless cycle where Aussie readers care about AOC (Alexandria Ocasio-Cortez), Bernie Sanders, Nancy Pelosi and Josh Hawley and closely follow US senate races could be good if we had boundless attention. But we don’t. And state politicians can run riot absent the glare of the spotlight.

The solution is already in the federal government’s hands — the number one free news site in the country. They should make the ABC even more relentlessly local. This is a big chance to make the ABC even more indispensable, by funding much more state politics coverage but also more coverage at an even more local level. I’d love to see two reporters per council, covering what goes on in local government. The skulduggery and corruption in local councils is no doubt immense — and it almost all passes unnoticed.

The more local content we read, the more we will demand, it’s time we shifted our focus back home.

Do we pay too much attention to US politics? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication in Crikey’s Your Say column.

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Crikey is an independent Australian-owned and run outfit. It doesn’t enjoy the vast resources of the country’s main media organisations. We take seriously our responsibility to bear witness.

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Peter Fray
Peter Fray
Editor-in-chief
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