Neue Zürcher Zeitung, March 24, 2005

An economic analysis of journalistic malfeasance
Media credibility has been undermined by a series of fabricated reports that have been uncovered recently. While some bad apples have already been taken off the information highway, there still seems to be a grey area where journalistic fraud apparently pays off. This article explores the current situation from an economic point of view.

While most sociologists, psychologists and scholars in communication studies look at why certain people engage in illegal activities; economists approach the issue from a different angle. They try and assume the role of those presenting deviant behaviour and ask if and when illegal activity yields results.

An individual’s decision as to whether or not to engage in illegal activities can be explored within the framework of “rational choice under uncertainty”. In what follows, using this approach, we shall examine journalism.

There are three possible and plausible causes for journalistic malfeasance: the opportunity to make more money, selective punishment and inadequate supervision on the part of editorial departments.

Causes:

The opportunity to make more money

The opportunity to make more money provides an incentive to engage in illegal activities. US economist Isaac Ehrlich proposed this positive correlation as early as 1973. Not surprisingly, the media has largely ignored his findings -at least as far as journalism is concerned.

The gap is huge between the top salaries of TV anchors and the tiny wages journalism’s foot soldiers get paid per line. This has increased pressure, particularly on freelance journalists, to open up new sources of income and has provided them with a greater incentive to abuse their positions, their networks and the other privileges that come with the job, in order to make more money or to find ingenious ways to finance their investigations.

Think of a financial journalist who makes the most of insider information, or the vibrant business conducted by some cultural affairs correspondents who sell advance copies of books on Ebay; both are excellent examples of how grey areas develop when breaking rules becomes the norm. From an economic point of view, journalists without a regular income tend to be more prone to corruption if there is little risk in breaking the law or violating ethical standards.

Lack of effective control mechanisms

As has been demonstrated in a number of scandals involving reputable media outlets, the risk of being caught is indeed small.

Time and cost constraints make day-to-day news coverage particularly vulnerable, as most outlets lack appropriate control mechanisms within their editorial departments. Implementing effective controls would entail additional costs, i.e. time and work, for already understaffed editorial departments. So the consensus among reporters continues to be that journalism is built on trust – a fundamental principle in any economic transaction and particularly important – given the fact that it reduces transaction costs in trade. But if you take a closer look, it is this basic foundation of trust that has become riddled with holes like in Swiss cheese!

Crude fabrications, however, are only the tip of the iceberg. The main problem creators are journalists, who report a story with a given slant or who carry out covert PR activities; or PR agents, who exploit journalists – with or without their knowledge – to push their own agendas.

In an attempt to build trust, companies and PR-agents provide gifts and small presents, and regularly offer more generous discounts or travel invitations (see: www.journalistenrabatte.de ). As a result, journalists engage in acts that do not yet qualify as crude fabrication or outright criminal corruption, but which may nonetheless damage journalistic credibility. This behaviour spreads like an infectious disease. The fact that a large number of these individual infringements go unpunished eventually leads to a kind of “common law” being established – and their frequent and repeated occurrence eventually undermines journalistic credibility.

Insufficient oversight by senior editors, and inadequate or non-existent control mechanisms within editorial departments has played an important part in most recent fabrication scandals in journalism. Newcomers who were particularly economical with the truth and with journalistic standards were given the chance by senior editors to “hit it big” with their articles. In some cases, seasoned journalists, too, betrayed the trust placed in them by their bosses, colleagues or their readership.

Selective punishment

In retrospect, we find that punishment has only had a selective impact and that journalism has only got rid of a small number of its rotten apples. True, serial counterfeiters such as Michael Born, Tom Kummer or Jayson Blair have been unmasked and no longer work for a newspaper. However, the celebrity status and attention generated by their spectacular acts of journalistic fraud was later marketed profitably in the media, as – taking advantage of the high profile they achieved through their central role in a media scandal- both Born and Blair have published books.

Tom Kummer, too, has had an impressive comeback. Before he bamboozled both the Süddeutsche Zeitung and the Swiss newspaper Tages-Anzeiger with fake interviews of Hollywood celebrities, he had already been shown the door by several other media outlets he had been working for. Last year he attempted a comeback as a freelance journalist for the Berliner Zeitung, as a columnist at the Berlin-based magazine Das Magazin and as the author of a cover story for the media journal Cover, which, tellingly, bore the title Loss of Reality, but he seems to have blown his second chance too. The Berliner Zeitung quit working with Kummer after it turned out that parts of a report published on 29 January 2005 were a word-for-word copy of a story which had been printed in SZ-Magazin in 1999.

Kummer likes to think of himself as the ‘whipping boy’ in the whole affair. He says he has been, in effect, banned from working by the media. The argument may have a grain of truth to it. Andreas Leber, Christian Kämmerling and Ulf Poschard, former editors-in-chief at SZ-Magazine, as well as the former head of Tages-Anzeiger-Magazin, Roger Köppel, now editor-in-chief at the German newspaper Die Welt, all worked with Kummer at some point and thus share responsibility for his first big scandal. They turned a blind eye to Kummer’s concocted stories for much too long; even as clear and repeated evidence emerged suggesting questionable work practices, including a book published by Kummer in 1997 (i.e. long before he was caught) in which he elaborated on his working methods. His “exclusive” Hollywood interviews had become the hallmark of the magazines, and something his bosses were proud of.

A double scandal

Hence, there are two sides to the scandal. First of all, few people bother with the grey area between outright fraud and serious journalism where more profitable and less risky transactions are carried out every day. Second, editors, who fail to implement the necessary measures against journalistic fraud and malfeasance or who – maybe acting out of self-interest – tolerate, encourage or occasionally demand such behaviour, do not face stiff enough penalties.

Consistent with a world where journalists pursue their own interests, but confirming a trend which is detrimental to the interests of both the reading public at large and journalistic credibility, the following picture emerges: if serious cases of journalistic malfeasance are uncovered, especially cases of fraud and fabrication, those caught are “visibly” taken off the job. However, in cases where inadequate internal control and supervision lies at the heart of the problem, little will change and most media journalists will sweep it under the rug. Those responsible for such serious shortcomings can expect to escape harsh punishment. They might temporarily lose their executive posts, but tend to be back again in senior positions soon after. “Editors-in-chief never go to court.” Michael Hanfeld, media editor at the Frankfurter Allgemeine Zeitung coined this phrase recently at a work shop in Lugano, Switzerland.

No career setback

Several senior editors responsible for scandals have kept their careers moving full speed ahead. The reputation of German show host Günter Jauch, for example, barely took a knock despite his overall editorial responsibility for Michael Born’s fabricated story about Hitler’s alleged diaries, broadcast on Stern TV. Gerd Schulte-Hillen, chairman of the publisher Gruner + Jahr, held on to his post despite the fact that senior management at the publishing house significantly interfered with the editorial department and actively sought to acquire Hitler’s fake diaries.

In some extreme cases in the media business, even the perpetrators themselves get a career boost. In the 1980s, a journalist called Udo Röbel working for the tabloid Express guided a couple of hostage-takers past police lines through Cologne’s city centre. He got a great exclusive story! However, it obviously had come about using highly questionable methods. Nevertheless, Röbel’s efforts paid off for his career. It is hard to imagine his subsequent rise to the top job at Germany’s tabloid Bild without the hostage story. A major difference in Röbel’s case, however, was that he did not actually violate journalism’s basic rule of reporting the truth. He merely used questionable methods.

The way journalistic malfeasance is generally dealt with leaves much to be desired. This is partly because senior management often escape unscathed, and partly because rigid quality controls and, hence, effective error management have not yet made their mark in newsrooms in the German-speaking world.

Tolerance within the grey areas

Conclusion: ethical standards in journalism are – from an economic point of view – most likely to be successfully implemented and enforced if the numbers add up. Existing incentive structures and lax controls are not conducive to journalists playing by the rules. It is not outright fraud, but the subtle bending of rules within the grey areas mentioned above that is attractive. Among the main reasons why such behaviour has become mainstream is that the “attention dividends” that go with it are rewarded, instead of being punished, with increased circulation and higher ratings.

For the foreseeable future, however, Tom Kummer seems to have fallen from grace in the German-language media. The game he played with varying sets of journalistic truths, accurately detailed by the man himself in the trade magazine Cover, is now over; it is simply not journalism. Being the media’s rotten apple, Kummer is a bit of a tragicomic character. He succeeded in generating enormous media coverage, thus drawing undue attention to himself, not least because of a scathing portrait about him published in Germany’s Der Spiegel. Kummer’s shady dealings didn’t quite pay off as he might have wished, since the large “attention dividends” were always cashed in by others. “Expulsion from paradise” was the title of one of the last stories he was allowed to write for the Berliner Zeitung. A creative and talented writer, he might eventually find his way back to paradise as a fiction author.

Susanne Fengler / Stephan Russ-Mohl: Der Journalist als «Homo oeconomicus». Verlag UVK, Konstanz 2005, pp. 224, € 29, SFr. 49.80.

[Translation: Florian Faes]