Mar

15

Newspapers’ woes

March 15, 2009 | 2 Comments | Joshua Gans

I have become quite interested in the fate of the newspapers recently (just as I stopped my own subscription to one of them). This blog post by Clay Shirky is much more than a mere blog post on the subject. The main thesis is that the newspapers in trouble because of competition — pure and simple — as entry barriers come down. A taste:

For a long time, longer than anyone in the newspaper business has been alive in fact, print journalism has been intertwined with these economics. The expense of printing created an environment where Wal-Mart was willing to subsidize the Baghdad bureau. This wasn’t because of any deep link between advertising and reporting, nor was it about any real desire on the part of Wal-Mart to have their marketing budget go to international correspondents. It was just an accident. Advertisers had little choice other than to have their money used that way, since they didn’t really have any other vehicle for display ads.

The old difficulties and costs of printing forced everyone doing it into a similar set of organizational models; it was this similarity that made us regard Daily Racing Form and L’Osservatore Romano as being in the same business. That the relationship between advertisers, publishers, and journalists has been ratified by a century of cultural practice doesn’t make it any less accidental.

The competition-deflecting effects of printing cost got destroyed by the internet, where everyone pays for the infrastructure, and then everyone gets to use it. And when Wal-Mart, and the local Maytag dealer, and the law firm hiring a secretary, and that kid down the block selling his bike, were all able to use that infrastructure to get out of their old relationship with the publisher, they did. They’d never really signed up to fund the Baghdad bureau anyway.

It is worth reading the whole thing.


Comments

2 Responses to “Newspapers’ woes”

  1. Jan Zimak on March 16th, 2009 10:37 am

    congrats on making move to the paperless lifestyle !

  2. MikeM on March 16th, 2009 11:26 pm

    Joyce Cary’s epic novel, “The Horse’s Mouth” somewhere mentions a little dog that trots up Threadneedle Street each morning to piddle against the great bronze doors of the Bank of England.

    Protagonist, Gully Jimson, imagines a morning when the dog trotted up the street and found that the great bronze doors had gone.

    I guess that’s how I’d feel if I trotted onto the web one morning and found that the web site of The New York Times had gone.

    The Ochs Sulzberger families, who own a controlling shareholding in the Times, may be prepared to accept a shrinkage (or even diminution) of dividends in return for maintaining its journalistic presence. But other shareholders are not so patient.

    Sam Zell, who made his fortune from real estate, bought the Tribune Company a couple of years ago. It owns The Chicago Tribune, the Los Angeles Times and a number of other newspapers. He lumbered the company up with a lot of debt. Now his initial bold statements about preserving journalistic integrity are being assessed by his bankers as not being worth the air they were spoken on.

    It does not look as though he will choose to preserve these properties as a philanthopic gesture.

    Shirky’s point is very clear: we see the old model break before (perhaps long before) we see the new model emerging.

    The music and video publishers are in the vanguard of stupidity: to sue their customers because they love your product so much that they pass it to their friends:

    To sue your potentially best customers?  The iTunes store proves that it does not have to be this way.

    But so far there is no iTunes equivalent to the rapidly diminishing Sydney Morning Herald, and I cannot imagine what one would look like.