Introduction and Methodology Primer
Welcome to the Canadian Media Concentration Research (CMCR) project website.
Background & Scope
The CMCR project offers an independent academic, empirical and data-driven analysis of a deceptively simple yet profoundly important question: have telecom, media and internet markets become more concentrated over time, or less?
This is a perennial and controversial issue, with some charging that a handful of media giants dominate telecoms, media and internet markets while the opposing side argues that the question is no longer even relevant in the age of the internet. However, while opinions are rife, high-quality data on the issue is remarkably scarce, both in Canada and indeed worldwide.
The Canadian Media Concentration Research (CMCR) project addresses this gap through its data-driven analysis of concentration in more than a dozen sectors of the telecom-media-internet (TMI) industries in Canada:
- Wireline Telecommunications
- Wireless Telecommunications
- Internet Service Providers (ISPS)
- Cable, Satellite & IPTV Distributors,
- Broadcast Television
- Specialty and Pay television services
- Magazines and Periodicals
- Book publishing
- Search Engines
- Social Media
The project builds on work done by it’s principal investigator, Dwayne Winseck, since 2009 as the lead Canadian researcher in the International Media Concentration Research (IMCR) project. That study is led by Eli Noam, Columbia University, and includes thirty-plus researchers studying media concentration in as many countries around the world. This new phase of research is supported by a grant from the Social Sciences and Humanities Research Council and extends the coverage of trends in Canada up to 2016 and broadens the scope to include the film, music and book industries.
The effort arises from the conviction that we need to take the telecom, media and internet industries as important objects of analysis. It also serves as a stepping-stone to analyzing the growth of these industries over long periods and for assessing claims about the future of the media and that some traditional media – the press, television, music, for example – are “in crisis” by marshaling a systematic, comprehensive and long-term body of empirical data that will either support or contradict such claims. Ultimately, assembling such a body of data, and peering deeply into it, offers powerful insights into how all the bits and parts and moving pieces of the TMI ecology fit together, evolve and mutate over time, while also helping to illuminate the forces that are driving these processes.
In Media Ownership and Concentration in America, Eli Noam (2009) notes that creating a coherent portrait of media concentration is very difficult because of the lack of reliable information and because the issue is highly politicized. Much the same thing can be said about Canada. As Philip Savage (2008) observes, “the media ownership debate in Canada occurs in a vacuum, lacking evidence to ground arguments or potential policy creation either way” (p. 295).
To some, the idea that media concentration is still an issue in the age of the Internet is ridiculous. As Leonard Asper, the former CEO of bankrupt Canwest, quipped, “the media have become more fragmented than ever. People who think otherwise probably believe that Elvis is still alive”. MIT media economics professor, Ben Compaine (2005) offers a terse one-word retort to anyone who thinks otherwise: Internet. The democracy of the marketplace of ideas might be flawed, but is getting better not worse, he argues.
Critics, in contrast, see media concentration as going from bad to worse, depriving citizens of “democracy’s oxygen” or creating “Canada’s most dangerous media company” (Winter, 1997; Edge, 2007). Over the course of six editions, Ben Bagdikian (2004), for instance, has chronicled the decline in the number of media companies that control most of the media in the United States – and by extension, the global media – from 50 in 1984, to 25 in 1996 to just five by 2004. There are millions of web pages and blogs, online news outlets galore and thousands of television channels, he acknowledges, but media are organized hierarchically, with power concentrated at the top while other voices are just cries in the wilderness.
A third school uses quantitative analysis to examine reams of media content in a bid to comprehend the potential impact of media ownership and concentration on media content, mostly in terms of bias. The main finding of such research tends to be that the evidence is “mixed and inconclusive” (Soderlund, et. al. 2006).
A fourth school of thought sees the shift from the industrial media of the 19th and 20th centuries to the online digital media of the 21st century as entailing significant changes, but argues, as Tim Wu (2010) does in The Master Switch, that there are still very strong and recurring tendencies toward consolidation in many media industries. Noam (2009) similarly argues that core elements of online digital media might be more prone to concentration because digitization magnifies economies of scale and network effects in some areas, while reducing barriers to entry in others. As a result, he sees a two-tiered digital media system emerging in which many small niche firms revolve around a few “large integrator firms” at the centre of the network media universe (pp. 33-39).
In this view, there is no reason to believe that aspects of the Internet such as search engines (Google), Internet access (ISPs), online music sales (Apple), social media (Facebook), and devices (Apple, Google, Nokia, RIM, Sony Ericsson), are any less prone to consolidation than their predecessors. The key point of contention, however, and especially for critics of this perspective, is over whether such constellations of market power will prove to be stable over the long-run or transient, blown away in relatively short order by unstoppable waves of “creative destruction?” (ala Joseph Schumpeter), as Adam Thierer puts it.
The data generated by the CMRC project will help to shed light on these theoretical and normative debates. While we will not shy away from such debates, our main objective is to encourage multiple perspectives to interpret and debate the significance of what will be, to our knowledge, the most systematic, comprehensive and up-to-date body of data on the telecom, media and internet industries available in Canada.
One reason why there is so much debate over media concentration stems from poor definitions of what is meant by “the media”. In The Media Monopoly, Bagdikian (2006) defines things so vaguely that it is impossible to assess his pessimistic claims. In contrast, Compaine casts his net so widely as to make concentration disappear by indiscriminately mixing electronics, ICTs, media, telecoms and Internet industries together. Consequently, even the biggest media goliaths appear as tiny specks in the vast information universe.
We try to avoid such ambiguities by carefully honing in on roughly a dozen key sectors: e.g. wiredline & wireless telecoms; broadcast television; pay & subscription TV; cable, satellite & IPTV distribution networks; newspapers; magazines; radio; film; book publishing; music; Internet access; Search Engines; Social Network Sites; and online news sources. We obtain revenues for each sector and then add them together to arrive at a figure for the size of the network media economy in its entirety (approx. $34.6 billion in 2011, excluding wired and wireless telecoms, or just over $70 billion if we include those sectors). Once this is done, we gather revenue for each ownership group that has more than a one percent market share in each of the sectors covered.
Our main data sources are as follows:
(1) Revenues for specific media sectors are from: the CRTC’s Communications Monitoring Report (and predecessors), Pay and Specialty Statistical and Financial Summaries and Annual Aggregate Reports; Canadian Wireless Telecommunications Association’s Mobile Wireless Subscribers in Canada; Internet Advertising Bureau Canada’s annual online advertising revenue survey. Newspaper Canada’s Daily Newspapers: Circulation by Ownership Group; PriceWaterhouse Coopers Global entertainment and media outlook; and several Cansim Tables from Statistics Canada: 51111 Newspaper Publishers; 51112 Periodical Publishers; 51221-51223 Record Production, Distribution and Music Publishers; 51511 Radio; 51512 Television Broadcasting; 5152 Pay and Specialty Television; 51711 Wired Telecommunications Carriers; 517112 Cable and Other Program Distribution; 5172 Wireless Carriers; 51913 Internet Publishing, Broadcasting, and Search Portals
(2) For data about specific media enterprises, we use the following sources: corporate financial documents and annual reports, including for the CBC; CRTC’s Communications Monitoring Report; Financial Post’s Survey of Industrials, FPInfomart’s Historical Profiles (for publicly-traded companies). Where necessary, extrapolations are made based on standard industry measures such as Average Revenue Per User (ARPU), audience ratings and cumulative annual growth rates (CAGR). We include the CBC’s annual parliamentary funding envelope, whereas the CRTC and other sources usually do not. We do this because we believe that it is essential to capture all resources in the broadcasting ‘system’. This means, however, that our total revenues for television and radio are higher than figures published by the CRTC and others. This also means that the CBC’s market share appears to be higher by our calculation. In our commentary and analyses, sources are cited sparingly to avoid cluttering the text, but it will be evident which of these sources has likely been used for each figure, table, graph, illustration, etc.
Data for the years between 1984 and 2008 were collected at four-year cycles (i.e. 1984, 1988, 1992, etc.) and annually since then. After the data has been collected, we analyze concentration levels on a sector-by-sector basis, then combine each sector into three higher-level categories:
(1) network infrastructure industries (wiredline & wireless telecoms; cable, satellite & IPTV distribution networks; internet access);
(2) content industries (broadcast television; pay & subscription TV; newspapers; magazines; radio; film; book publishing; music);
(3) online media (search engines; social network sites; and online news sources).
We then scaffold upwards from there to give a portrait of the network media industries as a whole. At each step of the way, we use three common tools to assess media concentration levels over time: Concentration Ratios (CR), the Herfindhahl – Hirschman Index (HHI), and the Noam Index.
The CR method adds the shares of each firm and makes judgments based on widely shared standards, with four firms (CR4) having greater than 50% market share and 8 firms (CR8) more than 75% considered to be prima facie indicators of high levels of concentration.
The HHI method is more detailed and considered to be the ‘gold standard’ of analysis because it requires tallying up the market share of all players in a market rather than just the top four players in the CR method. The HHI method squares and sums the market share of each firm to arrive at a total. If there are 100 firms with a 1% market share each, than markets are highly competitive, while a monopoly exists when one firm has 100% market share.
The thresholds below are widely used as guides:
HHI < 1000 Un-concentrated
HHI > 1000 but < 1,800 Moderately Concentrated
HHI > 1,800 Highly Concentrated
The Noam Index divides the HHI score by the square root of the number of players in the market on the grounds that, regardless of how small, each entity constitutes a “voice” and thus a potential contributor to media diversity (Noam, 2009, pp. 26-30).
Overall, using multiple methods is a form of triangulation, a well-known strategy for improving confidence when dealing with difficult to assess and hotly contested issues in the social sciences and humanities. The more consistent the findings across each of the methods used, the more reliable the findings overall.
The CMCR project will regularly publish and update spreadsheets, blogs, briefing notes, annual reports, score cards and data visualizations. We will also create annual profiles of the “big four” vertically-integrated TMI giants in Canada – currently Bell, Shaw, Rogers and Quebecor, based on 2011 revenues – and the rest of the “big ten”. We will do the same for each media sector and the network media economy in its entirety. These profiles will be updated annually and serve as background to our discussions of the issues of the day.
To make the underlying data sets as accessible as possible, we will use Creative Commons licensing principles for non-commercial uses, while reserving the right to sell access to the data on commercial terms to others. Please feel free to contribute accurate, reliable and properly sourced data, which is especially difficult to obtain for the film, book publishing and music industries. We will include it in an open wiki that we intend to have in place for this purpose soon.
Ultimately, we hope that you find the CMCR project useful. We also hope that it becomes a valuable and authoritative resource for researchers, industry, policy-makers, the general public and anyone else who wants to do empirically-grounded, data-driven research and analyses of the digital and network media industries in the 21st century.