Attitude Adjustment

How the Internet could usher in a new golden age of consumer journalism

Like the air that sustains life, facts that would help hard-pressed consumers are all around us. Instead of gathering and delivering such facts, however, we often leave subscribers gasping for useful information. And so their numbers dwindle.

Americans tend to consume all their income these days, and sometimes more than their income, which is shrinking. They are in a daily battle to spend and save wisely. Strong anecdotal evidence suggests that they love the kind of hard consumer reporting that would serve as an ally. Yet, as Trudy Lieberman details above, the press has moved away from such coverage.

It’s a missed opportunity, especially in the digital age, when evolving technology and the rise of social media potentially magnify the power of the consumer and also magnify the potential of consumer journalism, including making possible new ways to hear consumers’ thinking and complaints, and new ways to reach and inform audiences.

Publishers take note: circulation at Consumer Reports, the flagship of consumer journalism, is rising impressively. Its dead-tree edition now sells nearly 4.5 million copies a month, up 15 percent from 2005. Newsstand sales run to more than 189,000 copies a month, up two-thirds in two years. The online edition has more than three million paid subscribers, far more than even The Wall Street Journal, many of whose subscribers put the cost on their expense accounts. Small, consumer-oriented Web sites, too, as we will see, are gathering lots of eyeballs. It makes common sense now that audiences hunger for news that affects their lives, their pocketbooks, and their quality of life, news that sheds light on complex business practices that can gouge their wallets, and news about government actions that withdraw consumer protections from their families.

Covering these issues does not require a vast new investment in newsrooms. The Internet provides quick and easy access to documents that were once costly to obtain. In many jurisdictions, complete court records are online, as are extensive corporate disclosures to the Securities and Exchange Commission, databases on all kinds of subjects that seldom get scrutinized by reporters—from toy recalls by the Consumer Product Safety Commission to studies and inspector- general reports on how consumer agencies perform.

The Web also makes possible graphics and interactive features to engage readers, and provides tools to reach new audiences and to quickly spread important information. And newspapers have an immense advantage in their staffs of trained reporters, who know how to hunt down facts, check and cross-check them, and organize them into meaningful articles. The trick is in how those resources are deployed.

But the larger trick here is a change in perspective about what is news, a move to frame it more in terms of audiences than sources. When you examine the way newspapers tend to frame some stories, it prompts questions about what audience is being addressed, and whether the way the news is written builds audiences or, by appealing primarily to narrow interests, shrinks them. A few dailies have made small steps in the right direction; the Baltimore Sun and the Hartford Courant, for example, remade their Sunday business sections last November to be more consumer-oriented. The Sun drew on a remake a decade earlier at The Tampa Tribune. But journalism in general has a lot of work to do.

Consider the coverage of proposed airline mergers, such as the pending deal between Northwest and Delta, the nation’s third- and fourth-largest airlines by revenue. Reports typically focused on the problems of the airlines, whose owners want to raise fares by reducing competition. Yet most readers are passengers, and they care about ticket prices, which tend to rise when competition lessens. Consumers also care about legroom, frequency of flights, whether getting home requires a change of planes, rapidly escalating charges to change tickets (up sixfold from $25 a decade ago to $150 at most airlines today), and new charges for such services as checking a suitcase or getting a drink of water. But such consumer interests too often tend to be relegated to the middle or end of reports of proposed airline mergers, if they are mentioned at all.

Another example: banking stories in newspapers typically take the perspective of bank owners, even though few readers own banks or even bank stocks, while nearly everyone has a bank account. Subprime-mortgage stories focus more on whether companies that make loans and guarantee them will fail than on their customers. Many reporters do write about soured mortgages, but few reporters examine why 20 percent of subprime loans were made to people who qualified for cheaper prime mortgages, a story rich with opportunities to engage readers about price gouging, deceptive sales practices, and regulatory failings. Journalists rarely cover increases in bank fees, such as the stiff 3 percent charge that one of Warren Buffett’s banks, M&T, recently added to purchases made outside the United States, a fee that is on top of existing transaction and currency exchange fees. Likewise, changes in rules that give banking customers fewer rights—by reducing their time to complain about errors or making it harder to obtain copies of documents, or otherwise tilting the table—rarely attract coverage.

Perhaps no clearer example of narrow perspective that focuses on the smallest possible audience instead of the largest is found in the routine annual stories about how much money casinos win from slots and table games. Readers who gamble far outnumber those who own or even work in casinos. So why are these numbers reported as how much casinos won instead of how much money players lost?

One of the most powerful and enduring raps on mainstream media is that it identifies too much with the people and institutions it covers and too little with the readers who pay good money for subscriptions. Readers (and listeners and viewers) expect and deserve information that serves their interests, information that ever larger legions of publicity agents are paid to direct reporters away from, and toward what the business or government agency prefers.

Consider an example of this subtle bias toward sources, shown in a July report by Martin Foster in the International Herald Tribune about how four Japanese electronic giants—Sony, Matsushita, Hitachi, and Toshiba—are starting to work together instead of competing. Foster wrote: “As many as 10 major Japanese electronics companies have continued to vie for market share across a range of business lines. That results in duplication, waste, and excessive fragmentation of the market, ultimately hurting customers, analysts say.”

Analysts no doubt say that, but what they are describing is profoundly at odds with the theory of market capitalism and the idea of competitive markets. Businesses always hope to avoid the rigors of the market by artificially eliminating competition so they can raise prices, as Adam Smith warned when he broke the news about the benefits of competitive markets in 1776, news that evidently did not reach Foster or his editors.

Journalists need to understand both the economic damage the Internet does and the new benefits it confers. The Web is the kind of technology that changes everything. The economist Joseph Schumpeter called this process “creative destruction,” to explain both its harm and its benefits.

The Internet damage is on the business side, where it is steadily destroying the economic model that for two centuries sustained newspapers, created many vast fortunes, and financed generations of journalists. Much thinking needs to be done about this, of course. At the same time, it is important to understand that the Internet is not destroying the audience for newspapers. In fact, the Internet is growing the audience for news. It is also changing audience expectations, as bloggers and others, not bound by newsroom traditions, explore new ways to report facts and imbue them with meaning. The old pyramid style of news reports that facilitated logical last minute trims in the days of cold type, as well as the more recent story style, which often sacrifices substance and details to narrative, do not appear to translate all that well to the digital environment.

The Internet also makes it possible to disseminate ideas quickly and to new audiences. That is just what an angry blogger named Jeff Jarvis demonstrated in the summer of 2005 after his new Dell laptop turned out to be a lemon. Jarvis is a former reporter turned journalism professor at City University of New York, and media consultant.

Jarvis tried and tried to get Dell to fix his faulty machine, calling an 800 number and then enduring long stretches on hold, broken by ill-trained “customer-service representatives” who transferred him to another help desk only to have the line go dead. Jarvis eventually got mad as hell and announced on his blog, BuzzMachine, that he was not going to take it anymore. Almost instantly, word of his woes in “Dell Hell” spread across the Web, and legions of angry Dell customers opened their windows, leaned in, and said they, too, were mad as hell and were not going to take it anymore. Dell heard the complaints and quickly responded to Jarvis.

What happened next illustrated both the power of vigilante consumerism on the Internet and a problem news organizations need to consider if they want consumer journalism to resonate with readers. Dell solved Jarvis’s problem, just as other companies have been quick to pay attention to what some call A-list bloggers. But in this case Dell also changed its policies on servicing its computers, extending a benefit not just to one customer whose problem drew a spotlight, but taking a systemic approach.

Solving one reader’s problems is not hard-edged consumer reporting, just consumer advocacy with a barrel of ink (or electrons). Getting the attention of companies, governments, and nonprofits so they respond to problems with systemic solutions and changes in policy is the very definition of hard-edged consumer coverage. And using the Web to encourage such systemic reform—on subjects from computer service to health care to the regulation of consumer credit—is rich with promise.

Another indication that thinking, not spending, is key to good consumer reporting comes from the Web site Consumerist, a lightly financed part of the snarky Gawker family of sites. While many newspapers run product reviews, especially of electronic gadgets and software, Consumerist stays away from such critiques. Instead, it solicits stories from readers. “We get tips from readers, so a lot of what we put up is original because it comes from reader e-mail,” says editor Ben Popken, who heads a staff of seven, just four of them writers who get paid largely by how often their pieces are viewed.

One of those recent tipsters was Vincent Ferrari of New York City, who, like many people, discovered it was virtually impossible to unsubscribe when AOL was a paid Internet service. Ferrari eventually taped one of his conversations with AOL customer-service agents in 2006. Consumerist alerted its audience by posting Ferrari’s audio file, an experience that resonated with so many people it was covered as news by many bigger organizations. (AOL eventually dropped its pay model.)

Then there was the case of the peeping geeks, surely a story to interest readers who sometimes need a computer repaired. Popken’s staff heard that when people hired Best Buy’s Geek Squad to fix their computers, their personal photos, especially naughty photos, were being copied and, in at least one case, posted on the Internet. Robert Stephens, the Geek Squad’s chief inspector, reached out to Consumerist and asked for the name of the employee who posted the photo. Popken refused, “because they would have then said it was just one bad apple, the one-in-a-million bad apple,” and Popken had by then heard enough reports that he believed snooping was widespread. Geek Squad soon undertook a broad inquiry, including stings to catch the information-stealing employees, and also adopted a policy of telling its workers not to snoop.

Popken also showed how skepticism remains a valuable, if too-little-employed reportorial tool. When a blogger at his own site said that Wal-Mart was selling T-shirts with the “death skull” symbol from the caps of the Nazi SS, Popken spread the news through Consumerist. CNN, the Chicago Tribune, and others picked up the story, including Wal-Mart’s statement that it had no idea of the symbol’s past and that the T-shirts were being removed. Yet sixty-two weeks later, Popken’s staff reported that the shirts remained on sale at the Wal-Mart in Palmdale, California, a story it had pretty much to itself. Wal-Mart repeatedly threatened litigation over the continuing coverage, Popken said, but Consumerist reported not only that Wal-Mart’s statement that it had removed the shirts was untrue but that this was not the first time Wal-Mart had sold items linked to fascism. For example, in 2004, Wal-Mart bookshelves carried The Protocols of the Learned Elders of Zion, the infamous anti-Semitic creation of the secret police in czarist Russia.

Popken says that “instead of bringing the data from on high—this is what we have from these experts and this is what the company PR person says—we are taking it from the customers.” It is a perspective and technique that newspapers could employ to great effect—and with more balanced reporting standards—and which might help them match Consumerist’s success in getting two million unique visitors per month with a staff of just four journalists.

Another newspaper tradition that the Web challenges is the tendency to ignore stories broken by other newspapers. A good example of this comes from the Galveston County Daily News, which since 2005 has been digging into a state program that is supposed to result in lower costs for electricity for schools and other government agencies.

The story began with coverage of a Galveston Housing Authority board meeting at which a new reporter, Sarah Viren, listened carefully when officials took up a subject that would make the eyes of most editors glaze over: an electricity-supply contract. Soon Viren, joined by reporter Martin Schladen, was questioning how much money the Reliant utility in Houston was making from a deal that was supposed to supply cheap electricity to public agencies like the housing authority and schools. (Disclosure: Schladen wrote favorably about my latest book’s chapters on electricity pricing manipulations.)

The inquiries upset both the utility and Jerry Patterson, the state land commissioner, who used his own Visa card to pay $2,212.85 for a full-page ad headlined “The Galveston Daily News and Vladimir Lenin Have Something in Common.” It told readers not to believe what the paper had reported about the cost of electricity and who benefits. But publisher Dolph Tillotson stood by his reporters. The paper noted that the state refused to release documents on the costs and benefits of the program and, at one point, demanded $93,000 before reporters could see them. Eventually, Viren and Schladen got the documents, and they proved that the program not only did not make a profit or save taxpayers money, but actually cost taxpayers and may have produced big profits for Reliant.

The stories reported in Galveston affect virtually every resident of Texas. Yet, with the exception of a few pieces by R. A. “Jake” Dyer, the consumer reporter recently laid off by the Fort Worth Star-Telegram, and a few other scattered pieces, no other newspaper has dug deeply in what the Daily News found, or connected in some way to its reporting. “Reporters used to cover utility-rate cases and question the reason electricity or gas should cost more,” says Mindy Spatt, the publicist for the Utility Reform Network, a California consumer organization. “Now the newspapers just report that a rate case was approved and electricity will cost so much more per month.”

But the Daily News readers told the newspaper they were eager to read more about this investigation that affected their wallets by causing them to pay more than necessary in taxes for government agencies, Tillotson said.

Bob Jenks, executive director of the Citizens Utility Board, a consumer group in Oregon, said that coverage of utilities exposes a bias in news coverage that favors corporate interests. But when readers tell newspapers they want news that helps them keep their heads above the rising water, smart publishers and journalists listen. When the economy stands on the brink of what some warn could be a major downturn, possibly even a depression, readers are eager to know what went wrong, and what they can do to limit the collateral damage to their finances. And save their skins. Newspapers have ended nearly all beat coverage of consumer agencies that are supposed to make sure salmonella does not get into salads, E. coli does not infect hamburger meat, toys will not kill children and prescription drugs are effective.

When you are seen as a valuable ally of your readers in their daily struggles, they will more likely subscribe, and in turn help keep the vital newsrooms afloat. The Internet is, without doubt, slowly weakening the newspaper as we have known it by siphoning off much advertising revenue. But the Internet can also engage new readers and build audiences, without which there is no reason for advertisers to return.

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David Cay Johnston covers fiscal and budget matters for CJR’s United States Project. He is a reporter with 46 years of experience, including 13 at The New York Times; a columnist for Tax Analysts; teaches tax and regulatory law at Syracuse University Law School; and is president of Investigative Reporters & Editors (IRE). Follow him on Twitter @DavidCayJ.