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The economics of newspapers
The soon-to-be-working for the Center for American Progress Matt Yglesias writes:
The New York Times is known for its hard news coverage, but he observes that from a business perspective it's primarily a fashion and food publication that runs a small political news operation on the side. One issue of T Magazine, he says, pays for an entire NYT
And, of course, I would add that the broader logic of the internet is toward disaggregation of content -- the fact that newspapers cover such a wide array of content has to do with the economics of printing and distributing bundles of newsprint. In the future, fashion ads probably won't be able to cross-subsidize any bureaux anywhere. On the other hand, there may be a corrupting impact of some of this cross-subsidization -- I can't help but suspect that the importance of real estate advertising to papers may have distorted their coverage of the housing bubble on the way up.
Posted by Tyler Cowen on July 27, 2008 at 02:56 AM in Economics | Permalink
Comments
On the bubble: Why would advertising even have to distort the coverage? Newspapers are a small group telling a big group what is information important, or at least what is readily available. Why wouldn't this in itself have negative consequences for an assumption of a rational market based on individuals making individual decisions based on all information.
Posted by: Andrew at Jul 27, 2008 4:03:02 AM
I suspect that a healthy dose of competition amongst reporters, ideally and probably, prevents any 'negative consequences' (negative compared to what? no news?) from manifesting based solely on the nature of news. The question is whether the weakening revenues for newspapers have allowed the terms of trade to shift from the competitive and diverse individuals who run the paper, to the homogenous and amorphous interests of the advertiser.
Posted by: Andrew2 at Jul 27, 2008 7:52:36 AM
RE: How the Times makes money - I believe About.com has the highest profit margin of any of operating divisions of NYT Co. Given some of the company's other online operations, I wonder how long it will be before someone suggests that NYT Co. is a .com company with a print division on the side. (It'll be a ridiculous thing to say with a straight face even 10 years from now, but someone might.)
Posted by: Mike Moffatt at Jul 27, 2008 8:58:53 AM
That post by Yglesias reminds me of a long-ago comment by AJ Liebling, who said that the quantity of news we receive is dependent on the whims of a collection of downtown dry goods merchants. Now those merchants are called "Macy's."
For those interested, I did a column on unbundling at http://www.nytimes.com/2005/12/11/business/yourmoney/11cont.html
Posted by: Dan at Jul 27, 2008 10:42:39 AM
So, if the downmarket section of the newspaper subsidizes the investigative journalism and political coverage, does that mean that after disaggregation and unbundling we can look forward to a steep decline in detailed investigative reporting?
Posted by: Alan at Jul 27, 2008 5:31:40 PM
Is it disaggregation or dispersion? I see more granularity in the subject matter, but not necessarily less bundling of disparate subject matter.
Posted by: Michael F. Martin at Jul 27, 2008 8:19:16 PM
Is it disaggregation or dispersion? I see more granularity in the subject matter, but not necessarily less bundling of disparate subject matter.
Posted by: Michael F. Martin at Jul 27, 2008 8:19:36 PM
Is it disaggregation or dispersion? I see more granularity in the subject matter, but not necessarily less bundling of disparate subject matter.
Posted by: Michael F. Martin at Jul 27, 2008 8:19:43 PM
My understanding of the Times business model is not that the magazine pays for the NYT, but the Lakeland Ledger and all the other local papers they own pay for the NYT, which on its own breaks even at best. This may have changed with the Internet.
Posted by: Ted Craig at Jul 28, 2008 9:22:19 AM
