Advertising and a democratic press.

• Author: Baker, C. Edwin

The First Amendment, adopted in the wake of the colonists' resistance to the British Stamp Act,(1) protects the press from "abridgement" of its freedom by government. The thesis of this Article, however, is that despite the potential danger and occasional occurrence of governmental censorship, private entities in general(2) and advertisers in particular constitute the most consistent and the most pernicious "censors" of media content. Organized private power is today the most serious threat to a free and democratic press. Consequently, existing structures and behavior of private power centers prevent the media from adequately serving the needs of a democratic society. Thus, although advertising can be viewed as the life blood of free media, paying most of the costs and thus making the media widely available, this Article examines advertising as a threat to a free and democratic press.

Once advertising is seen as a powerful censor and task master that systematically undermines a free and democratic press, a host of questions arise. Which of advertisers' relations with the media are objectionable? Do they violate existing laws? Are new regulations desirable? Constitutional? Would a tax on advertising in the mass media be desirable, for example, as a means to reduce the influence of advertisers over media content? Constitutional? Might answers depend on how broadly the tax is applied? Or on the use of the resulting tax revenue?

The Stamp Act was not the last tax on newspaper advertising. For good or bad reasons, advertising taxes are often proposed. During the Civil War, Congress raised revenue by taxing newspaper advertising.(3) Florida recently adopted a tax on various services including advertising, but underestimated the power of the advertising lobby, which quickly forced repeal.(4) The Bush administration proposed, but quickly abandoned, a plan to limit the deductibility of advertising expenses.(5) Academics have proposed a progressive tax on newspaper advertising as preferable to the Newspaper Preservation Act's "joint operating agreements" as a means of promoting newspaper competition.(6) Many states are currently considering extending existing taxes to either newspaper sales or newspaper advertising.(7) Likewise, our history provides many examples of regulation of advertising--regulations that were constitutionally unquestionable as long as the commercial speech was not protected by the First Amendment.(8)

Powerful policy arguments against such taxes, as well as other government regulations of advertising, emphasize that advertising pays the largest part of the bill for our "free press."(9) By "subsidizing" the press, advertising makes mass media broadly available. This subsidy enables the media to engage in the expensive enterprises of gathering, shaping, and distributing news (and entertainment). Advertising is so important to the press that Germany, which views only the print media and not broadcasting as the "real" press, gives constitutional protection to the print media's reliance on advertising.(10)

Still, could it also be that advertising undermines a free press? Defenders of advertising's present role usually grant that, like most social practices, advertising has negative as well as positive aspects. Advertising itself often provides useful information to consumers and promotes purchasing behavior that may stimulate the economy. It also, however, often distorts facts, promotes contested consumerist values and contested visions of social life, of women, of men, and of our needs and their solutions.(11) Neither the form nor content of advertising's messages have unambiguously desirable consequences for social life. Nevertheless, in this article I want mostly to put aside issues concerning the good or bad of advertising's own content. If there are negative effects, presumably the government should deal with them, if at all, with regulations directed at the specific objectional contents.(12) I suspect that a broad consensus assumes that any other, more systemic, negative effects of advertising should be accepted because these effects will be vastly outweighed by the overwhelming benefit of making mass media widely available.

The primary purpose of this essay is to evaluate this assumption: that on balance the existing contributions of advertising to the mass media are positive and that broad regulatory restrictions or tax burdens would be undesirable. Parts I and II will consider the effect of advertising on media's non-advertising content and on the distribution of media content. Part III will consider the insights that an economic efficiency analysis sheds on the observations of Part I and II. These first three sections find serious problems with the current advertising-based system. Thus, Part IV begins the necessary task of designing proposals that respond to these problems. Since any legislation dealing with the press immediately raises First Amendment questions, Part V considers the constitutionality of the proposals described in Part IV.

Of course, to criticize effects of advertising on the press implies some image of proper press performance. My evaluative standpoint will be that of creating or maintaining a democratic, free press. The focus is on the role of the press in serving democracy. This standpoint reflects what I assume is a central element of the constitutional justification for extending protection to the press as an institution rather than merely protecting the press as an element of the individual's autonomy right of self-expression. Of course, this justification for protection is instrumental--the value and significance of institutions lie in how they serve human values and interests.(13) Here the policy concern is: what type of press, what type of mass media, will adequately serve a free and democratic society?

Obviously, this evaluative perspective will be influenced by the conception of democracy adopted. An elitist conception may require most centrally a press that performs the "checking function," capable of exposing abuse of power.(14) A more robust conception of "participatory" democracy would require additional press functions, possibly suggested by the slogan: "the public's right to know."(15) Depending on whether the more broad-based conception of democracy emphasized a republican common dialogue or, alternatively, the diversity of groups each with their own concerns, the nature of optimal press segmentation would vary.

The necessary specificity of the description of either democracy or the corresponding conception of an ideal press depends on the evaluation issues at stake. For purposes of this Article's claims that advertising undermines a democratic press, I implicitly assume only that democracy involves the possibility of broad-based popular participation of people with diverse inclinations. Therefore, I use "democratic" (or "free and democratic") to modify press in order to emphasize two dimensions of output: (a) availability--a press is more democratic the more its products are widely available; (b) content--the content of a democratic press should serve the diverse desires or, somewhat more controversially, the diverse needs of the various elements of the democratic society. The "democratic" aspect of the press relates both to circulation and to provision of "uncensored" information and opinion that readers desire or need. A democratic press should be both responsive and pluralistic in its communications.(16)

1. ADVERTISING'S FINANCIAL SUPPORT FOR A DEMOCRATIC PRESS

   1. Advertising as a Subsidy

      Advertising in the media confers obvious benefits. First, but beyond the scope of this paper, are benefits to the enterprises that advertise, to the buying public that relies on advertising for information about transaction opportunities, and to the economy as a whole due to advertising's stimulus to economic activity. Often, readers and viewers are as interested in the ads as in the media's non-advertising or "editorial" content.(17) Of course, rather than providing these benefits, advertising sometimes imparts misinformation that is injurious both to the public and the economy. Moreover, normative assessments of our consumer society and of advertising's role in creating and maintaining it are contested. I put these issues aside.

      Second, the newspaper industry obtains 60 to 80% of its revenues from advertising.(18) Advertising pays a large portion of the costs of supplying the public with newspapers.(19) For a democratic press this advertising "subsidy" may be crucial.(20) Without advertising, the resources available for expenditures on the "news" would decline, predictably leading to an erosion of quality and quantity. The cost of the "news" to the public would increase, thereby restricting its "democratic" availability.

      This assessment of advertising may seem uncontroversial--the implication of simple economic logic. Both advertisers and readers are willing to pay for and both benefit from the same product, a newspaper combining editorial content with advertising, getting into the hands of the reader. The reader, who may be either relatively indifferent to or desirous of advertising, is willing to pay some amount for the newspaper. In contrast, the advertiser's goal is for the reader to read the advertising content. Therefore, in addition to paying the costs of advertising content, the advertiser is willing to pay part of the cost for editorial content to obtain readers for the medium containing the ads. The advertiser will even pay extra for more expensive, "high quality" editorial content if it attracts a particularly desirable readership.(21) Having established that both purchasers are willing to pay for editorial content,(22) surely not collecting from one of two potential "joint" purchasers of a product would cause the seller to receive less for the product. Any blockage of sales to the advertiser would produce an inefficient contraction of the...