Creative Destruction

October 11, 2007

Newspapers Relegated to the Dustbin of History

Filed under: Blogosphere,Business,Economics,Media Analysis — Adam Gurri @ 6:29 am

Note: the following is a paper I wrote for a Microeconomics class, which is why the language is a bit more formal than usual. This paper may also be viewed as a PDF file.

When the last newspaper goes bankrupt, people will be better informed. This is counterintuitive only if you hold to the popular misconception that newspapers developed as an institution in order to filter out all but the highest quality information. The problem that newspapers address is reality is not one of quality, but one of distribution. They utilized mass-production in order to provide consumers with a cheap medium with a wide variety of content. This was a highly efficient solution to the problems of the printing press, but the internet is rendering such problems obsolete. As a result, the newspaper model will rapidly be overtaken by more effective online alternatives.

The incentives provided by the newspaper business model are unnecessary for the production of content. As pointed out in Price Theory and Applications, “Some people are willing to create without material reward, simply for the pleasure and glory.” (Page 330) This is as true for nonfiction writing as it is for creative works—writer William Zinsser famously categorized nonfiction as a type of literature. The fact that content is produced for pleasure does not imply that it will be poor in quality, either. The reason is simple—often people who have a passion for something will invest a great deal of time on it. Whether it’s spent on research or taking art classes, it refines the tools that they will have available to produce content later on.

In some cases, they may be indulging in extracurricular pursuits on topics related to their profession. Tyler Cowen, of Marginal Revolution, is but one of many economists who write on weblogs, or “blogs”. Since his professional career is dedicated to accumulating information on a particular subject, the marginal cost of finding relevant information for a new publication in his field is significantly less than it would be for a non-economist. In fact, it’s safe to say that it would cost a journalist far more to produce something of comparable quality on the subject. In the world of nonfiction, newspapers cannot compete with their online alternatives—Cowen is but one example of the professional blogging in his spare time. Eugene Volokh, of The Volokh Conspiracy, is a professor of law who offers far more educated insights than a newspaper could hope for, without asking for any subscription fee.

In terms of specific content, newspapers are simply unable to compete. Webcomics are abundantly available, free, and popular. Crosswords and Sudoku puzzles are numerous, as are puzzle games of every imaginable variety. Photosharing websites such as Flickr allow for the dissemination of photographs of far more diverse subjects than newspapers ever provided. Perhaps most significantly, websites such as Craig’s List are providing substitutes for the Classified Ads pages.

The myth of the fact-checker aside, the content creation aspect of the internet does not actually come in direct competition with newspapers in and of itself. For newspapers in fact provide not high quality content, but variety in a world where the time to accumulate various sources is scarce. Just as the price system economizes the distribution of information that is fragmented across many minds, so too do newspapers economize the access to certain categories of content that would otherwise be fragmented across many different specialized publications.

What newspapers offer is not authority, but a bundle, in which quality must to a certain extent actually be traded off for variety. For this reason, the fact that an article in Nature magazine on Climate Change may be more accurate than an article in the New York Times does not necessarily make the former a threat to the latter. A newspaper competes, not on the quality of a particular article, but on the quality of the bundle it offers as a whole. So while the New York Times may not be concerned with whether or not a particular article is as accurate as an article in Nature, it probably has to be concerned with whether or not it provides a higher quality product, with greater variety, than the Los Angeles Times.

What newspapers truly have to fear from the internet, then, is the fact that it gives consumers to ability to customize their own bundles of content. For almost as long as there have been web browsers, there have been “bookmarks”, which allow users to save the location of their favorite websites. More recently, websites such as del.icio.us have given users the ability to “tag”not only to save locations, but to provide categorical data “metadata” about those websites. This means that even if a user saves a massive amount of bookmarks, all they need to do to locate a particular one is search for the particular word or words that they “tagged” it with. For instance, one might tag Marginal Revolution, with both words in the title, then “Tyler”, “Cowen”, “economics”, and “blog”, and be relatively confident that it could be found again by searching any combination of those words, even if there are a thousand other websites bookmarked.

Another tool is the feed aggregator, such as Google Reader, that allows users to subscribe to the content of many different websites and access it all in one place. The setup is then almost like a custom made newspaper; you can subscribe to your favorite blogs, webcomics, even online newspapers, and you can access them all in one place, which signals you which of them have updated. Unlike physical paper, however, you don’t have to waste storage space if you ever want to access old content. You can simply scroll back to old updates.

In the past, consumers had to decide between the bundles offered to them by different newspapers, all or nothing. The tradeoffs that were made whenever it was decided to hire a particular journalist, or run with a particular story rather than an alternative, were taken on by the editorial staff. The consumer had no direct input in that process, and effected the outcome only insofar as competition between different newspapers made it clearer the sort of content consumers were interested in.

In a world where consumers make those decisions for themselves, however, the margin of competition will shrink to the level of content. In Price Theory and Applications, it states that content may be given away free of charge because “original composition may yield indirect material gains” (page 330) and it is for those gains that content producers on the internet will have to compete. The reason is that, as shown above, many people will produce content for no other reason than the pleasure of it, including high quality content. The market will be flooded with content, creating a stiff competition to be included in the bundles of consumers. Prices will be undercut until producers no longer even ask for money in exchange for the goods that they supply; merely the attention of consumers.

Those producers of content that are able to make a living off of that particular trade will be the ones who manage to obtain “indirect material gains” through the acquisition of consumers’ attention. In fact, this is already occurring. Webcomics predominantly offer their content for free, and the popular artists manage to make a living by selling merchandise. Successful comics such as Questionable Content and Penny Arcade sell a lot of Tshirts, with the latter even managing to sell large volumes of printed editions of their online works. Blogs have integrated Google Ads, which give them a small payment whenever their readers click on the ads. Glenn Reynolds, who gained fame through his highly popular blog Instapundit, wrote a book that sold quite well—safe to say far better than it would have, without the online fame he had achieved.

The end result is that consumers are able to eliminate the newspaper’s role entirely. They can experience a far greater variety of content than newspapers could have afforded to provide. At the same time, the sources of content will be engaged in a level of competition over quality that used to be relegated to the specialized publications, such as scientific journals. As people increasingly turn away from the old media, newspapers will go out of business one after another. When the time comes that the last one goes under, we will all already be much better informed. This trend will likely continue long after its timely demise.

(Cross posted at Sophistpundit)

24 Comments »

  1. newspapers make money from advertisement, not from circulation count. well, they make a little money from circulation count. the higher the count, the more they can charge for the ads, the more marketable they are in terms of convincing businesses to advertise.

    i used to work as a copyeditor at a daily. the space is first taken up by display advertisements, and what space i had left would be filled with news from my little corner of the world. as a copyeditor, i got the “leftovers” to play with.

    i enjoy reading newspapers. don’t like to sit in front of the ‘puter all day long. hurts my eyes.

    many newspapers go online now.

    Comment by greywhitie — October 11, 2007 @ 9:57 am | Reply

  2. Repurposing your academic papers as blog entries now? Is that even allowed?

    If I were grading you, this offering would be only slightly above average. The two glaring omissions are discussions of the fifth estate and the economic role of advertising in newspapers. A slightly less glaring omission is the differences between the news-gathering abilities of professional journalists vs. mere enthusiasts. I’d also like to see something about news as propaganda contrasted with blogs as free speech. Further, there is a latent assumption that the so-called wiki effect (or group mind or aggregate behavior of independent operators) surpasses the content value of newspapers, which I find unwarranted.

    All that said, I’m no fan of the MSM, and I do tend to agree that we’ll be better informed when newspapers are gone, but for reasons different from those you cite. Economic considerations will probably be what dooms the MSM, but I doubt that other media will fulfill the same roles. New media is something different, with aspects both good and bad.

    Comment by Brutus — October 11, 2007 @ 11:38 am | Reply

  3. A slightly less glaring omission is the differences between the news-gathering abilities of professional journalists vs. mere enthusiasts.

    Yeah, but we’ve had enough blogosphere triumphalism. We’re not going to kick around professional journalists, just because it turns out that the mob has more wisdom than the elders.

    Comment by Robert — October 11, 2007 @ 12:06 pm | Reply

  4. A slightly less glaring omission is the differences between the news-gathering abilities of professional journalists vs. mere enthusiasts.

    “news-gathering abilities”? What does that even mean?

    I believe I addressed this in the section comparing how a Tyler Cowen writing on Economics, or a Eugene Volokh writing on law, has far more at their disposal than a journalist–who would be considered the amateur in either arena.

    Comment by Adam — October 12, 2007 @ 8:16 am | Reply

  5. many newspapers go online now.

    True, but online they face a much larger set of alternatives than they used to, and they’re unlikely to get the same share of consumers’ attention they’ve enjoyed up until now. And without attention, it’s only a matter of time before the ad revenues start disappear, as well.

    Comment by Adam — October 12, 2007 @ 8:38 am | Reply

  6. Adam wrote:

    “news-gathering abilities”? What does that even mean?

    I believe I addressed this in the section comparing how a Tyler Cowen writing on Economics, or a Eugene Volokh writing on law, has far more at their disposal than a journalist–who would be considered the amateur in either arena.

    An academic paper is not news. Nonfiction is not news. Blogging is not news — at least for 99% of us doing it. You and I might be able to aggregate and comment on preexisting news stories, but we’re not in a good position to gather and break news to the wider public. Typical news stories of phenomenological, though they’re veering into the opinion and commentary category more and more these days. Gathering that news frequently means developing and maintaining contacts and access to information. So unless you’re famous, an interview request made to someone in a position to provide news details for you to shape into an actual news story would be met with laughter, as it should be. Not many requests made by students get much traction, either. Newspeople, for all their problems, need to have their boots on the ground, as it were, rather than simply their butts in their chairs like we do.

    Comment by Brutus — October 12, 2007 @ 10:26 am | Reply

  7. if i wanted news on iraq, burma, the vietnam war, and so forth, i would rather hear from a journalist risking his/her life on the frontlines than from some lofty academic with his/her butt stuck in his/her chair, as brutus puts it.

    heed us wise elders, adam. you’re young and bright, but we’re more experienced, our wisdom stacked high and mighty, except maybe for robert, who is only a wise guy.🙂

    Comment by greywhitie — October 13, 2007 @ 6:16 am | Reply

  8. “Journalist” is a description of what someone does, not a special category of person. The best reporting from Iraq right now is coming out of bloggers who have paid their own way (or collected subscriptions) to do old-fashioned journalism.

    It’s not important where you publish or what the corporate structure is that pays your expenses in the field. What’s important is what you do. Regurgitate Pentagon or MoveOn press releases? You’re a hack, not a journalist. Go out and interview Iraqis and ride with convoys and talk to soldiers and try to make sense of it all? Hello, Mr. Murray, here’s your chair.

    The journalism of the future will not look much like the “journalism” of today. Sitting in a hotel room in the Green Zone and filing speculative dispatches does not add value; things that don’t add value don’t persist. There will be newspapers, because the newspaper is a convenient medium. The people writing for the newspaper will not be doing the same things or getting paid in the same way, however.

    Comment by Robert — October 13, 2007 @ 11:49 am | Reply

  9. if i wanted news on iraq, burma, the vietnam war, and so forth, i would rather hear from a journalist risking his/her life on the frontlines than from some lofty academic with his/her butt stuck in his/her chair, as brutus puts it.

    How about from actual Iraqis? Or actual soldiers? Or someone like Michael Yon, who, as you say, risks his life on the frontlines?

    In a world where everyone and their mother has digital cameras and access to free online publishing, you don’t need people to “gather news”. People “gather news” just by living their lives–you can get a far greater breadth of perspectives on any given event, and I’m not just talking about an academic sort of perspective; though you’ll certainly get those as well, if it suits you.

    You and I might be able to aggregate and comment on preexisting news stories, but we’re not in a good position to gather and break news to the wider public.

    “Wider public”? Who is this “wider public”? Why should anyone gather or break anything to this amorphous, faceless, “wider public”?

    No, what will happen is that we will all provide content in some form or another; information, a particular style, entertainment, what have you–and the “wider public” will then choose among the many sources of content and decide which to refer back to on a regular basis.

    The stories that spread, therefore, will not be “broken” to a “wider public”, but instead will spread due to network effects.

    The idea of needing to reach a mass audience is a layover from the industrial era; it will not be passed on to future generations.

    Comment by Adam Gurri — October 13, 2007 @ 8:55 pm | Reply

  10. Hmmm, looking over that comment, I feel sullied by the overuse of quotations marks.

    Comment by Adam Gurri — October 13, 2007 @ 8:56 pm | Reply

  11. ADAM:
    How about from actual Iraqis? Or actual soldiers? Or someone like Michael Yon, who, as you say, risks his life on the frontlines?

    GREYWHITIE:
    Anyone but lofty academics with their butts stuck in their chairs and their noses up in the air.

    Comment by greywhitie — October 13, 2007 @ 10:05 pm | Reply

  12. “The best reporting from Iraq right now is coming out of bloggers who have paid their own way (or collected subscriptions) to do old-fashioned journalism.”

    Is that really true? Michael Yon does reputable work, but who else? What am I missing?

    Comment by David Crisp — October 14, 2007 @ 12:12 pm | Reply

  13. Robert wrote:

    “Journalist” is a description of what someone does, not a special category of person. The best reporting from Iraq right now is coming out of bloggers who have paid their own way (or collected subscriptions) to do old-fashioned journalism.

    If we accept your first assertion, which I’m inclined to do, it risks stripping expertise from the process of reporting. And as I said before, access to information is an important consideration, especially considering that the lay reporter/journalist very likely has little access. By analogy, “musician” is a description of what some does, not a special category of person. Still, I’d much rather listen to someone who knew what they are doing rather than some wannabe with a mic.

    Citing Iraq as an example where the best reporting is by bloggers is rather exceptional, isn’t it? If the example had any widespread applicability beyond a war zone, what are the parallel examples in the U.S. not run by journalists or former journalists?

    Adam wrote:

    In a world where everyone and their mother has digital cameras and access to free online publishing, you don’t need people to “gather news”. People “gather news” just by living their lives–you can get a far greater breadth of perspectives on any given event, and I’m not just talking about an academic sort of perspective; though you’ll certainly get those as well, if it suits you.

    Every bit of information takes a perspective and is in that sense propaganda. However, an attempt at objectivity (as opposed to persuasion, for example) is needed for transmission of news. The first-person perspective of participants in events is frequently not a good perspective from which to report; sometimes it is. With blogs, there is little reason to adopt an objective perspective. A range of perspectives might inform better, but I doubt it.

    Adam wrote:

    The idea of needing to reach a mass audience is a layover from the industrial era; it will not be passed on to future generations.

    I don’t think so. First, you’ve got the era wrong. It came out of the 18th century, not the 19th. At that time in American history, Enlightenment thinkers were considering the things necessary to form and maintain a functioning republic with participation of those represented. That requires a literate, informed public. It’s a political and social statement, not an economic one borne out of the industrial era and the sale of newsprint. Obviously, things have eroded quite a bit since the heyday of the public sphere. (Just consider the charade that candidates’ debates have become compared to the Lincoln/Douglas debates.) Blogs are bringing some of that back, but changed. Most blogs establish only a niche market. For entertainment purposes, that’s fine. But then there is the role of the fifth estate, which you have yet to acknowledge.

    Comment by Brutus — October 14, 2007 @ 12:16 pm | Reply

  14. If we accept your first assertion, which I’m inclined to do, it risks stripping expertise from the process of reporting.

    There is no particular expertise involved in the process of reporting. There is considerable expertise in the field of investigative journalism; investigation requires deduction, induction, interrogation, research, etc. By and large, most journalists do not possess these skills and do not engage in investigative journalism; most published journalism is a regurgitation of material prepared by press agents and marketing professionals.

    Those are expertises we can struggle on without.

    And as I said before, access to information is an important consideration, especially considering that the lay reporter/journalist very likely has little access.

    Ironically, when I first read your comment, I was watching TV news (a rarity). CNN was reporting on the surge in Ron Paul’s candidacy, largely driven by amateur efforts. One of the segments was Paul being interviewed by a college-age blogger in the kid’s dorm room. I think that ‘access to information’, as you are using it, is simply the desire of the people with information to have their stories reported. They have a motivation to provide the information to anyone who will report it to an audience.

    By analogy, “musician” is a description of what some does, not a special category of person. Still, I’d much rather listen to someone who knew what they are doing rather than some wannabe with a mic.

    But of course. Who wouldn’t?

    Your error comes in where you think the competence and expertise are created. They aren’t taught in J-school (which is a joke on par with ed school). They’re acquired through the practice of journalism – through reporting on things and getting battered by critics and improving the next time. There is no differentiation between a blogger and a paid scribbler in this arena; both must learn through experience and practice, for there is no other route.

    Would you rather read a report by a compelling, literate, informed blogger, or a regurgitation of a Pentagon press briefing by a talentless hack reporter? Or, would you rather read a compelling think piece by a skilled reporter, or a blathering opinion piece by some schmuck blogger? In both cases, it’s the skill you’re responding to – not the professional label of the performer.

    Citing Iraq as an example where the best reporting is by bloggers is rather exceptional, isn’t it? If the example had any widespread applicability beyond a war zone, what are the parallel examples in the U.S. not run by journalists or former journalists?

    Name the topic and I’ll do the two minutes of Googling it would take to find the world-class bloggers who are reporting on the subject. And why would a war zone be “exceptional”? It seems to me that the environment of a war zone should be the optimum case for your perspective on this – where the trained professionals really need their skills to cut through the fog and get the real story. And yet, they aren’t the ones doing it. Hmm.

    Comment by Robert — October 14, 2007 @ 2:13 pm | Reply

  15. Robert: “Your error comes in where you think the competence and expertise are created. They aren’t taught in J-school (which is a joke on par with ed school). They’re acquired through the practice of journalism – through reporting on things and getting battered by critics and improving the next time.”

    Greywhitie: I know quite a few journalists. Can’t think of one who majored in journalism. It helps to have expertise in any other subject matter, be it English, History, Politics, etc. One of my bosses taught journalism, and his undergraduate major was in math. Dunno what his graduate major(s) were in. He’s not one to flaunt his fancy education. One of a few folks I know who don’t need to prove anything to anyone.

    Comment by greywhitie — October 14, 2007 @ 5:06 pm | Reply

  16. It is definitely a job where experience, expertise, and education all pay off.

    Comment by Robert — October 14, 2007 @ 5:11 pm | Reply

  17. Robert wrote:

    Your error comes in where you think the competence and expertise are created. They aren’t taught in J-school (which is a joke on par with ed school). They’re acquired through the practice of journalism – through reporting on things and getting battered by critics and improving the next time. There is no differentiation between a blogger and a paid scribbler in this arena; both must learn through experience and practice, for there is no other route.

    The first part I agree with (I never referred to J-school or made a strong appeal to authority). The second part, not so much. Traditional print media (newspapers are being discussed) are a different medium from blogging websites. They have different content, different values, and different readerships. Journalists who blog have different writing styles for their blogs and their professional activities. What makes good blogging isn’t necessarily or even usually what makes good journalism.

    Would you rather read a report by a compelling, literate, informed blogger, or a regurgitation of a Pentagon press briefing by a talentless hack reporter? Or, would you rather read a compelling think piece by a skilled reporter, or a blathering opinion piece by some schmuck blogger? In both cases, it’s the skill you’re responding to – not the professional label of the performer.

    Absolutely true. I don’t care much for the professional label, but the intent behind the activities in question and the wherewithall proper journalistic credentials and access provide can’t be waived away with a hypothetical superlative blogger contrasted with a hypothetical schmuck journalist. Of course there is going to be range in both endeavors.

    Name the topic and I’ll do the two minutes of Googling it would take to find the world-class bloggers who are reporting on the subject.

    Off the top of my head, journalistic services provided by newspapers but not yet covered by blogs include obituaries, public and legal announcements, crime blotters, the city beat (including things like council meetings, school board minutes, etc.), arts and cultural events (including reviews), and various collections of things (such as business, church, and media directories, as well as cartoons and columns) that would take much, much more time to suss out on individual blogs. While these examples may or may not take significant professional skills, they are full-time endeavors not well suited to someone blogging in his or her spare time. Obviously, there are areas that are well covered by blogs, including sports, national and international politics, and classified ads.

    And why would a war zone be “exceptional”? It seems to me that the environment of a war zone should be the optimum case for your perspective on this – where the trained professionals really need their skills to cut through the fog and get the real story. And yet, they aren’t the ones doing it.

    If “they” [trained professionals] aren’t “doing it” [providing good news coverage], my simple answer is that Iraq is a war zone, so many institutions and infrastructures aren’t functioning well any longer, if at all. So of course individual blogging activity is the best available alternative. That’s what makes the example exceptional and inapplicable to U.S. media, which are currently well-established institutions.

    Comment by Brutus — October 15, 2007 @ 12:01 pm | Reply

  18. Your list of services is a good list – and it’s a good argument for why newspapers will stick around. They ARE better than blogs at doing those things.

    None of which, by the way, are journalism.

    Iraq is a war zone, so many institutions and infrastructures aren’t functioning well any longer, if at all. So of course individual blogging activity is the best available alternative.

    Last time I checked, the New York Times and the Washington Post and CNN haven’t had their infrastructures blown up in Iraq. So why is Michael Yon doing the good reporting?

    Comment by Robert — October 15, 2007 @ 12:48 pm | Reply

  19. Every bit of information takes a perspective and is in that sense propaganda. However, an attempt at objectivity (as opposed to persuasion, for example) is needed for transmission of news.

    I couldn’t possibly disagree with you more🙂

    Do scientists attempt to be objective? No. They lay out their methodology; they provide their sources for public scrutiny, and then they openly, honestly, provide their interpretation and their argument.

    You don’t need an attempt at objectivity–in fact, all that’s done is distort the information, rather than aid in transmitting it. Journalists hide behind a veil of false objectivity, and unlike the scientists, they do not have to have their sources held to public scrutiny–for all the reader knows, they have no real sources whatsoever, as it’s rare that any are cited.

    Comment by Adam — October 16, 2007 @ 5:55 am | Reply

  20. So Adam, you’re OK with the possibility that the news of an event as reported by the NYT might be fundamentally different from news of the same event as reported by the WSJ? There’s no value in news institutions attempting to report what occurs dispassionately and objectively, unlike the press office of some political campaign or some pundit parked in his chair, sitting and spinning?

    Comment by Brutus — October 16, 2007 @ 10:11 am | Reply

  21. There is value in a dispassionate and (as best we can manage it) objective rendering of factual events. Considerable value, in fact. But the factual events are usually about 5% of the total story.

    I think Adam is going to have to be OK with it, as are you. The news of events have been reported in fundamentally different ways ever since Og and Zog the cavemen both breathlessly ran in different directions through the cave complex, Og informing the other cave people that Mok had unleashed a burning orange demon and should probably be killed as a deviant, and Zog reporting the discovery of the newest pinnacle in paleotechnology, Fire Mark 1.0.

    Comment by Robert — October 16, 2007 @ 10:47 am | Reply

  22. There’s no value in news institutions attempting to report what occurs dispassionately and objectively, unlike the press office of some political campaign or some pundit parked in his chair, sitting and spinning?

    I’d rather have someone be clearly opinionated, but cite all their sources, than feign objectivity, but provide no basis on which they can be held accountable for their rendition of the facts.

    Comment by Adam — October 19, 2007 @ 7:58 am | Reply

  23. Nice, Adam. I ask a simple question and you misdirect by offering a couple wild alternatives. (Well-sourced opinions without a basis in truth hold no value.) It’s not unlike Robert Hayes insisting that all these things that newspapers do well, which serve useful purposes, aren’t real journalism. The topic is whether newspapers will die out from irrelevance or the collapse of their economic model, not whether ideals of journalistic integrity are being upheld.

    I’m now in the awkward position of defending an institution that has clearly failed in the integrity department. But that doesn’t yet mean that everything newspapers provide is irrelevant or worthless. I don’t rely on newsprint for accurate information any more than you and Robert Hayes do (I’m guessing). However, the fat lady has not yet sung for newspapers for reasons I’ve argued in the comments above. Picking at details doesn’t IMO invalidate the broad sweep of my arguments.

    Comment by Brutus — October 19, 2007 @ 12:44 pm | Reply

  24. But that doesn’t yet mean that everything newspapers provide is irrelevant or worthless. I don’t rely on newsprint for accurate information any more than you and Robert Hayes do (I’m guessing). However, the fat lady has not yet sung for newspapers for reasons I’ve argued in the comments above. Picking at details doesn’t IMO invalidate the broad sweep of my arguments.

    It’s a fair cop🙂

    Comment by Adam Gurri — October 25, 2007 @ 6:59 am | Reply


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