Bias in Advertising vs Subscription Driven Media

by on February 9, 2018 at 7:25 am in Books, Economics | Permalink

The excellent Andrew Potter at In Due Course writes:

When I was a student journalist, it was axiomatic that advertising was the biggest threat to independent media. Putting your livelihood in the hands of capitalists meant, ipso facto, doing their bidding.

Experience is a great teacher though, and when I started working as an editor at a newspaper, I was pleasantly surprised to discover that you didn’t wake up every day to a swarm of calls from outraged advertisers threatening to pull their campaigns if we didn’t smarten up….presumably because they didn’t really care. What they wanted was our audience, not the content.

But you know who does complain a lot? Subscribers do, endlessly.

Today, the great hope for mainstream news organizations is that subscribers will start doing something they’ve never done, which is pay for news. The New York Times seems well on its way to bending that revenue curve and replacing ad dollars with subscribers at a 1:1 ratio, and there’s similar hopes for the Washington Post, the FT, and maybe the Wall Street Journal….

…My suspicion is that [this] will lead to an increasingly polarized media environment, through more or less the same mechanism that leads to group polarization in social psychology. When a news organization relies almost entirely on its readership for its revenue, it will inevitably start to cater to what the owners perceive to be the political centre of gravity of that readership. And the readership will in turn make demands on the editors to shape the coverage in certain ways, which will tend to gradually shift that centre of gravity away from the middle, and towards the political extremes.

I’d add one more factor to Potter’s analysis. Since the advertisers care about eyeballs, advertisement-funded media are incentivized to produce more eyeballs. Such incentives tends to encourage lowest-common-denominator entertainment but also more political balance. Subscription-funded media, in contrast, face a tradeoff: subscribers want content that supports their world view so moderating the content to appeal to a larger audience will likely reduce the price that any one reader is willing to pay. Revenues are therefore larger with a smaller but more political extreme audience.

Addendum: Potter and philosopher Joseph Heath write at In Due Course infrequently but are always interesting. Here, for example, is a superb long-read by Heath, nominally about Iain Bank’s culture series but actually about more and well worth reading even if you don’t know the novels.

1 rayward February 9, 2018 at 7:33 am

Tabarrok: “Since the advertisers care about eyeballs, advertisement-funded media are incentivized to produce more eyeballs. Such incentives tends to encourage lowest-common-denominator entertainment but also more political balance.” Tabarrok is overlooking a very important phenomenon: the ability of certain advertisement-funded media (e.g., Facebook) to attract a wide spectrum of political partisans and then segregate each for purposes of delivering both content and advertising. We aren’t in Kansas any more.

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2 rayward February 9, 2018 at 7:59 am

Here’s how the media environment has changed: for years (long before digital media), I started each day by reading the Wall Street Journal, which was the best written and most accurate national news publication. That I may not have agreed with the editorial page was beside the point, because the contributors of the substantive articles and the contributors to the editorial page may as well have been from different planets. Of course, that was fom a time long ago and long since forgotten. Today, I read the NYT rather than the WSJ. The NYT makes an effort to provide both a balanced coverage of the news and a balanced coverage of political opinions, something that its liberal subscribers greatly resent. While my political views may lean left of center and the NYT editorial page is considered to lean left, my favorite contributors to the NYT editorial page are David Brooks and Bret Stephens, neither a bleeding heart liberal for sure. There’s hope for our future in publications like the NYT.

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3 RustySynapses February 9, 2018 at 8:35 am

+1. Almost exactly my experience. And the comments on the WSJ really got crazy years ago – I guess (based on this) maybe that’s the audience they want to cultivate, but it seemed like it was more than just a Murdoch/News Corp thing. If you read a lot of them it’s pretty crazy. Most hopeful fact is that maybe many are written by Russian bots.

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4 y81 February 9, 2018 at 10:06 am

That’s not my experience with the WSJ, which remains the only print newspaper I read. I haven’t noticed any bias in the news coverage, which seems very fair–certainly not right-leaning–to me. I don’t read the editorials, preferring to rely on online sources for opinions, namely Instapundit, Volokh, MR, neoneocon, McMegan, Apt11d, and Kevin Drum.

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5 Ray Lopez February 9, 2018 at 10:38 am

That seems to be a fair and balanced view of the WSJ. Aside from the Peggy Noonan Oped pieces, and others of predictable alarm, it’s pretty good, as is WaPo and the NY Times. I did drop my WSJ subscription (online) when they started insisting a while ago (about 10 years ago I guess) that you use your real name instead of a nym. My Ray Lopez nym, was rejected, and dropped my subscription. As I told the editor by email, I am prominent (as a member of the 1%), and I don’t need people tracing my online opinions to my real life persona (even though there’s a few people online who would know the real Ray Lopez).

Bonus trivia: Straight To Hell by Lefevre is a GenX version of K. Lewis’s “Liar’s Poker” and is really entertaining, and sounds plausible from what I know of Wall Streeters.

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6 Anonymous February 9, 2018 at 10:40 am

rayward is onto something here, with captured eyeballs less aware that they have been sorted.

For what it’s worth, I start each morning with memeorandum, which gives me an idea of what everyone else is reading. I hope it keeps me from being sorted.

https://www.memeorandum.com/m/

Then MR and Twitter.

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7 Anonymous February 9, 2018 at 10:47 am

For those who don’t know, memeorandum is algorithmic, not edited. The top story on their page is the most referenced at the moment. In the old days the reference count was purely from blogs. A quick search did not turn up any modern internal details.

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8 rayward February 9, 2018 at 10:47 am

I’m pleased that at least one reader focused on the point of my original comment; indeed, I regretted making the second comment because it has obviously been a distraction.

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9 Engineer February 9, 2018 at 12:11 pm

I think you make a good point here – public and upfront political orientation / bias is one thing, but for a supposedly apolitical source to customize content ala google ads is much more insidious.

Major branded sources (say the NYT) would probably have a hard time with a sub-rosa Left and Right edition, because people refer to NYT content. I suspect a more subtle curating of the presented content is more of a problem; e.g. the NYT Left just doesn’t report or attribute the crimes committed by certain groups, NYT Right doesn’t report crimes committed by other groups.

Everybody then thinks they are getting the full story, fairly reported without fear or favor.

Of course, a lot of people think the NYT today is already NYT Left.

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10 Anonymous February 9, 2018 at 12:19 pm

Speaking of tailored crime reporting ..

https://twitter.com/elisefoley/status/961980020775440384

11 Mark B February 11, 2018 at 5:50 pm

In the UK there seems to be an attempt at Left and Right edition. Trinity Mirror the owners of the Daily Mirror a left wing paper have bough the Daily Express a right wing paper. They have said they will keep separate political teams but I have seen suggestions that they might consolidate some teams like sports.

12 stasi February 9, 2018 at 7:59 am

seems plausible, as an example here, the FT went all in on Britain staying in the UK. Bad bet. It has almost no sustainable position left other than to charge it’s remoaning subscribers to tell them that they were right to be wrong and that we’re all going to hell in a handcart.

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13 Dain February 9, 2018 at 11:35 am

“Remoaning.” Nice.

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14 Sean Hughes February 9, 2018 at 8:03 am

Isn’t this what Gentzkow and Shapiro proved out a bit in 2010?

Paper here: https://web.stanford.edu/~gentzkow/research/biasmeas.pdf

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15 derek February 9, 2018 at 8:32 am

I had this discussion last week with a friend. There is something else that is far more interesting.

When media had to cater to a large market, they ended up having to represent the opinions of the large market. Roughly. The tensions between the journalists and the editors and the production people and the sales people kept a lid on things. So typically readers would find the news roughly representative of their experience.

As a result, the media was considered a proxy for public opinion by politicians, and what was printed on the front page was life or death in political terms.

An anecdote. The Canadian socialized health care system has the same cost curves as the US, starting at a lower baseline. When the limit to borrowing hit in the 90’s health care funding was affected; the shortcomings ending up on the front page of newspapers and leading the news broadcasts. Wait times, some family having to travel to a different province to get timely care, ambulance drivers unable to pass on their patients to overwhelmed emergency wards. Endless fodder that citizens would watch and read. The solutions were first to get the politician’s names off the news; there are no solutions here, only tough decisions. So in BC the management of the hospitals as well as allocation of funds was moved to a Health Authority model, moving all the decisions that affected people away from the Ministry of Health. So now the news is the IHA did this or that, made this decision or failed in this way, not the Minister of Health in the Cabinet.

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16 derek February 9, 2018 at 8:46 am

Further on this, politicians and political consultants needed to consider at all times how what they did or proposed would look on the 6 o’clock broadcast. Because enough people watched, and the way it was presented represented the audience, a large enough audience to matter to politicians.

The power that the media had corrupts absolutely, and the pronouncements of a unanimous media became equivalent to Papal Encyclical, endowed with authority. With similar risks as in medieval times if one didn’t go along with it.

Whenever I see a photo of Jim Acosta I imagine him with a backwards collar.

So with the change in the media environment comes a change in the power dynamics. Trump has managed something that I think is remarkable; he has removed the media from their position as arbiters of the morality of policy. He has been able to do that simply by convincing Republican congressmen and Senators that what gets on the front page of the Washington Post, or top billing on CNN isn’t watched or read by enough people to matter.

That is the most interesting effect of this change.

And equally interesting is as with the collapse of religious authority came the revelations of widespread sexual abuse, much of the #MeToo stuff has been about powerful media personalities.

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17 Art Deco February 9, 2018 at 9:17 am

And equally interesting is as with the collapse of religious authority came the revelations of widespread sexual abuse,

Of course, that never happened. Clergy saw a slow decay in their authority with some rapid adjustments and implosions in select locales.. The ‘sexual abuse’ wasn’t ‘widespread’, vis a vis the background rate in the society at large, and much of it was luridly exaggerated by people with agendas . The sexual misconduct allegations themselves weren’t contemporary in time with the reduction in religious authority except in Ireland, and the allegations referred to incidents in time periods wherein the implosion of the standing of the clergy was ongoing or had already occurred.

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18 derek February 9, 2018 at 9:58 am

You mean the background rate of people in positions of power where they were often alone with their victims? I’d go along with that. The difference being that the authority that came with their position bought them safety. When the authority collapsed, then the crimes of the statistically accurate numbers came out.

Last week in the details of the FISA warrant application, one point was very interesting. To show that the details of the dossier were worth considering was a news report of the same things. A media report by a reputed journalist was considered enough corroboration to spy on the campaign of someone running for president. It seems it was the same dossier with different lipstick.

My reaction was who in their right mind would trust what a journalist writes? Very much the same as who in their right mind would leave their daughter in the company of a priest alone for a few hours? Both of these were at one time considered very normal and even expected.

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19 clockwork_prior February 9, 2018 at 10:27 am

‘A media report by a reputed journalist was considered enough corroboration to spy on the campaign of someone running for president.’

You seem to be confusing a FISA warrant after Page left the Trump campaign (a figure first warned in 2013 about Russian intelligence contacts) with an American counter-intelligence investigation that started with information from an Australian government figure regarding a conversation he had with an American (who admitted to lying to the FBI).

The really interesting thing is that this timeline is explicitly detailed in the Nunes memo – using that information, there is absolutely no reason for anyone to be confused on these facts.

20 derek February 9, 2018 at 10:30 am

Not confused at all. I, unlike you, have no opinion on the merits because I don’t know enough.

My point was that the emanations of a journalist were considered trustworthy.

21 clockwork_prior February 9, 2018 at 10:46 am

‘I, unlike you, have no opinion on the merits because I don’t know enough. ‘

Well, it was obvious you did not know what you were talking about, as the quoted sentence was utterly wrong. Further, the dates, times, and names of these events are in the public record, including from Nunes – one need not have an opinion about facts, after all.

And in the age of youtube, you can actually watch someone, such as Rep. Gowdy, explain how what you wrote is incorrect – https://www.youtube.com/watch?v=R9OdAkH165w

Who cares about commentary or ’emanations’ when you can read a transcript of testimony or watch the one Republican who apparently actually read the classified FISA warrant before the release of the Nunes memo?

22 Harun February 9, 2018 at 3:20 pm

Carter Page actually worked with the FBI in 2013.

you’re really relying on outdated news. if you want to call obsfucation news.

23 MOFO February 9, 2018 at 11:27 am

“He has been able to do that simply by convincing Republican congressmen and Senators that what gets on the front page of the Washington Post, or top billing on CNN isn’t watched or read by enough people to matter.”

I think thats only half the story. He also fed the media an endless series of meaningless, gossipy stuff that they couldnt resist to the point where what appears on the front page of the Washington Post, or top billing on CNN really doesnt matter to most people. I mean, how many people really care what the president tweeted yesterday? Or what someone inside the WH might have said about Trump’s mental health? Or any in an endless series of other non-stories that take top billing every day?

The media were as much the architects of their own irrelevance as Trump was, he just led them down a path they wanted to go down anyway and were heading before he ever took over the WH.

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24 Anonymous February 9, 2018 at 12:07 pm

The American press had both blind spots (they thought fact checks mattered) and perverse incentives (they discovered that you could fill hours of air time with unchecked arguments).

This made them a strange combination of victim and partner to Trump. They could see the ruin, and their ratings bounce, at the same time.

Leaving us with shit like this as our reality:

https://twitter.com/JohnJHarwood/status/962005871101267968

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25 ladderff February 9, 2018 at 12:11 pm

So you got played, and lost, loser.

26 Anonymous February 9, 2018 at 12:17 pm

We all got played and we are all losers. Some of us fought it, that’s all.

27 MOFO February 9, 2018 at 1:06 pm

Ah yes, a tweet that links to a gossipy column that, in reality, tells us nothing of import but confirms its readers priors. An excellent example of what utter dross our media has become.

28 Anonymous February 9, 2018 at 1:28 pm

This is only the latest of dozens of reports that the president can’t make it through an intelligence briefing. This goes back to why Kushner was getting his own intelligence briefing in mid-2017. This ties to why Trump has friction with his briefers.

This is a BFD that the president can’t do the job.

It goes way back

http://www.newsweek.com/donald-trump-does-not-read-white-house-top-secret-intelligence-briefings-big-617515

29 Anonymous February 9, 2018 at 1:31 pm
30 Harun February 9, 2018 at 3:24 pm

I’m so old I remember when Obama didn’t do briefings either.

31 Anonymous February 9, 2018 at 6:17 pm
32 clockwork_prior February 9, 2018 at 8:41 am

‘and there’s similar hopes for the Washington Post’

The Post was pocket change for Bezos – he is seemingly interested in what makes DC run, not NYC.

Much like convicted felon Moon and the Washington Times, another paper that is likely unconcerned about profit per se, considering that it is still essentially owned by the Unification Church – https://en.wikipedia.org/wiki/The_Washington_Times

‘When a news organization relies almost entirely on its readership for its revenue’

I am guessing that the author is not familiar with the time when cities had competing papers, representing different political perspectives – and those competing paper’s revenue was based on their readership, with the number of subscribers determining their advertiser rates. An age already fading in the 70s, of course.

‘Such incentives tends to encourage lowest-common-denominator entertainment but also more political balance.’

Hearst would likely laugh at such a naive perspective, and Murdoch certainly did not build his global news empire on the idea of political balance (lowest common denominator is another subject, of course). And the tabloids as a class have never been worried about political balance.

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33 derek February 9, 2018 at 8:50 am

Murdoch simply catered to the interests of a market that was under served. A revolutionary idea that representing the interests and views of 50% of the population may be profitable.

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34 clockwork_prior February 9, 2018 at 10:31 am

‘Murdoch simply catered to the interests of a market that was under served.’

Australia, the UK, and the U.S.?

‘Murdoch simply catered to the interests of a market that was under served.’

You are familiar with Murdoch, right? Fox is a tiny part of his global news operation – and there is no question that in Australia or the UK, there was never 50% of any market being underserved.

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35 Ted Craig February 9, 2018 at 8:50 am

“I am guessing that the author is not familiar with the time when cities had competing papers, representing different political perspectives – and those competing paper’s revenue was based on their readership, with the number of subscribers determining their advertiser rates.”

Well, he has a degree in journalism, so I’m guessing he does. It’s kind of a 101 thing.

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36 clockwork_prior February 9, 2018 at 10:35 am

And yet, if he is under 40, he never actually experienced it. Admittedly, I do not know how old he is.

Having just checked, he seems to be maybe 40 or so years old, a couple of decades too young to have experienced cities (American cities, that is – he seems to be Canadian too) with competing newspapers representing different political perspectives.

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37 derek February 9, 2018 at 10:53 am

In Canada the situation you describe occurred only once, when the National Post went head to head with the Globe and Mail. It was glorious. But it didn’t last very long.

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38 Ted Craig February 9, 2018 at 12:16 pm

Personal experience or not, your statement that he is not familiar with the concept remains as absurd as when you typed it. Nice try to spin it on your part.

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39 Art Deco February 9, 2018 at 9:26 am

advertisement-funded media are incentivized to produce more eyeballs.

No, the incentive is to produce more eyeballs among people who might be in the market for their advertisers’ goods and services and who might be influenced by advertising. Which doesn’t generally include people past a certain age unless you’re hawking blood thinners and adult diapers.

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40 derek February 9, 2018 at 10:05 am

I thought you were a bit older. Newspapers had lots of advertising catering to a broad range of interests, from businesses to job postings, government postings, classified ads. Grocery store specials, etc. People got the newspaper to be informed and do their business and day to day activities, with the bonus of a bit of news and sports.

The change in the advertising and media markets has led to what you describe.

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41 schrager February 9, 2018 at 9:27 am

>>> “The excellent Andrew Potter at In Due Course writes” …. a very dumb essay.

Note his immediate dig at “capitalists”. And his outrage that noble “journalists” be subject to the same buyer/seller economic forces as everyone else. How dare the buyers of news products/services express any opinion/feedback to the sellers/producers of “news”.

Sellers should be immune from buyer influence (except for sterile $$ transaction) — crazy Capitalism has terribly hampered journalist & news business ………

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42 OldCurmudgeon February 9, 2018 at 10:09 am

>And the readership will in turn make demands on the editors to shape the coverage in certain ways, which
>will tend to gradually shift that centre of gravity away from the middle, and towards the political extremes.

I’m not sure that’s so bad….My general impression is that England has a handful of national newspapers, each aligned with one political party. That is, openly biased. The U.S. is organized as local monopoly provider that claim to be balanced, but seldom are.

IMHO, over the last ~10 years, the overall quality of the British reporting (and writing) has greatly exceeded that offered by the U.S. providers.

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43 Bill February 9, 2018 at 10:15 am

What do you fear more:

A wealthy capitalist who owns the local newspaper and supports one political party,

Or

Subscribers who’s subscriptions support the newspaper.

Would you rather have Rupert Murdoch and the Koch Brothers own or finance the newspaper, or would you rather have subscribers be responsible for the support of the newspaper.

I would rather be beholden to the subscribers rather than the Mercers.

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44 clockwork_prior February 9, 2018 at 10:37 am

Personally, it is quite enjoyable reading Koch sponsored media efforts.

And mocking them, of course.

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45 Sam Haysom February 9, 2018 at 10:51 am

You aren’t concise enough to ever mock anyone. You aren’t smart enough either but cart before the horse and all that.

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46 Selken// February 9, 2018 at 10:59 am

“What do you fear more”

I fear an intrusive behemoth central government controlled by just two corporatist political parties
I’d rather a much smaller transparent government where citizens had genuine control of its actions

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47 ns February 9, 2018 at 11:10 pm

You mean like the progressive movement at the state level? Libertarians, be careful what you wish for. It doesn’t seem to have occurred to you that citizens with genuine control over governance might choose a greater role for government.

Or maybe you should move to Switzerland. Then again, they still have a military draft.

INTRUSIVE BEHEMOTHS UNITE!! We might fight these corporatist redistributionists.

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48 MPS February 9, 2018 at 11:09 am

This dichotomy between the external view of the influence on advertising on journalism and the view from the inside of the company is also relevant to platforms like Facebook. Externally, people envision a company mindset dominated by servicing advertisers. Internally, the vast majority of people never think about the ads business. The company mindset is oriented around growing engagement and there is never any conflict with the ads business because ultimately all the advertisers care about is getting more eyeballs.

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49 WC Varones February 9, 2018 at 11:10 am

Social media is driving eyeballs to far-left and far-right news. Nobody shares moderate stories.

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50 Anonymous February 9, 2018 at 12:15 pm

There are quite a few studies on this, and I would say “far” sites have not wholly won (nor have trends really been symmetrical).

https://thesocietypages.org/socimages/2017/09/28/the-different-media-spheres-of-the-right-and-the-left-and-how-theyre-throwing-elections-to-the-republicans/

The sudden dominance of Breitbart in 2017 was a unique thing, now over?

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51 Anonymous February 9, 2018 at 1:15 pm

Ah, a more recent map of the media constellation:

https://twitter.com/Slate/status/961712273768185858

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52 edgar February 9, 2018 at 12:19 pm

“When the readers become the de facto owners, it can only lead in one direction, which is that paying for news will give us a media that is more partisan, not less.” Complete non sequitur. True, some peoplemay gravitate to their cocoons. But relatively unpolarized outlets like USAToday still survive. And people who do not have the time to waste on US media outlets can go elsewhere and enjoy much higher quality journalism. The BBC, for example, has a huge US following: http://www.adweek.com/tvnewser/bbc-world-news-is-posting-weekly-global-audience-records/330351 The “everybody panic, common people have independent opinions that are not controlled by their betters” argument is facile anti-populist elitism at its worst.

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53 john February 9, 2018 at 12:24 pm

While most comments here are insightful for their point it seems rather worthwhile to suggest that conflating institutions society supposedly relies on for reporting facts accurately and in an fair and unbiased way with institutions used for entertainment or social networking/communication is bound to result is some really bad inferences.

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54 Vivek Beniwal February 9, 2018 at 12:57 pm

Have we completely forgotten the existence of a tax payer funded media… i.e. the BBC… the Beeb… AKA… Auntie?? Makes sense, when the public broadcasting option in the US is weak, and only supported by the liberals (and thus exhibits a liberal bias).

I know why I upgraded my cable package – and why I even have cable… and that is because I like to get my news from BBC World!

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55 rayward February 9, 2018 at 1:36 pm

A general comment: the NYSE should consider closing at noon. What’s with the afternoon sell-offs? I’m a morning person and do my best work in the AM, but I don’t fall into a depression in the afternoon.

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56 jorod February 9, 2018 at 4:38 pm

When I was in school, teachers would bring in articles from newspapers for discussion. Do teachers do that anymore?

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57 Transnational Pants Machine February 9, 2018 at 5:57 pm

>Putting your livelihood in the hands of capitalists meant, ipso facto, doing their bidding.

Thank God the media dodged that bullet and decided to do the bidding of The State, because doing that is completely harmless.

Whew! Close one!

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58 ns February 9, 2018 at 11:18 pm

“Thank God the media dodged that bullet and decided to do the bidding of The State”

ROFLMAO. “The media” in singular form doesn’t exist anymore, that’s the one thing all media critics can agree on. That this nefarious media does the bidding of The State is laughable, except perhaps in those areas where the state has been neutered by regulatory capture.

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