Economics of News (Not Newspapers)

At the "Changing Economics of News gathering in Berkeley, we're getting down to some fairly core issues. Rather than try to summarize what's happening, I'll just note key observations by panel members:

"I don't think today we know the magnitude of the market failure" in the loss of what's often called "hard news" reporting, says James Hamilton, professor of economics and public policy at Duke University. (His new book, All the News That's Fit to Sell", should be required reading in the industry.)

Are we returning to the economics of the 19th Century, when circulation (as opposed to advertising) provided the bulk of the revenues? Perhaps, says Albert Scardino of the Guardian.

News is becoming a service, not a product, says GBN's Katherine Fulton. Maybe we're heading for a world where great journalism needs patrons as opposed to traditional customers.

Craig Newmark says, "The effects we're having on the classified (advertising) market are pretty overstated." But he says the news business has lost trust. He's cautious about predictions, having predicted "lunar colonies."

Brad DeLong asks: Why is Bloomberg (which hired the Washington Post's excellent Federal Reserve reporter) more interested in covering the Fed correctly than the Post?

The New York Times' John Markoff says a discussion like this in five years will derive from near-universal access to high-speed data connections -- that the medium will determine a lot of the economics.

Sandy Close of Pacific News Service notes the explosion of ethnic media, a "hunger to be visible" in a world where mass media have failed to reflect society's realities. Small businesses are the advertising base.

Zephyr Teachout says we must create an architecture for civic involvement, including journalism -- but we need to combine real world activity with online work.

Reaching the new America is an enormous opportunity for emergent media, says Sandy Close. She urges multi-lingual jobs classifieds for craigslist, as an example of what's needed.

Fulton: We are at absolute takeoff point with "motion media" online, a shift in power to different kinds of institutions and citizens. The old institutions (and people) have a preservation mindset, while "the real game is innovation, not preservation" -- and will take place outside the current power structure. Is the Associated Press of the future a bottom-up phenomenon?

Kim-Mai Cutler, editor of the campus Daily Californian, notes that the news aggregators and portals -- such as Yahoo News -- are the current winners. Raises the question of how journalism will be paid for...

My take on the event: There are still many more questions than answers about future business models, but the writing is squarely on the wall. The industry that has provided high-quality journalism (amid the garbage) for all these years had better pay attention.

Comments

[Jack Krupansky]

You note that Brad DeLong asks: "Why is Bloomberg (which hired the Washington Post's excellent Federal Reserve reporter) more interested in covering the Fed correctly than the Post?" I think I actually know that answer to that one: the audience of Bloomberg (Wall Street professionals) has a more intense interest in the minutae of Fed tea-leaf reading than the overall Post readership. Sure, there are plenty of Post readers who valued his commentary and ruminations on all things Fed, but the hard-core demand for that expertise is clearly a Bloomberg kind of thing.

"Bond traders" hang literally on every single word uttered by "The Fed". Sure, lots of us depend on interest rates and would like to know where rates are going over the next while, but die-hard bond traders are laser-focused on each and every Fed utterance.

Incidently, take a look at the former Post columnist's comments on bubbles in his latest Bloomberg column.

The Post is simply a business like other businesses and has to judge the extent to which reader interest and demand for the services of advertisers will benefit from this or that columnist or reporter. Sometimes "cost-cutting" is an actual issue for companies, including "Big Media". And sometimes a company simply doesn't have the opportunity for career growth that their employees seek. That can be true even for the biggest and wealthiest companies.

-- Jack Krupansky

[Paul Conley]

I used to work at Bloomberg News, so I may have a little insight.
First, as Jack points out, the Bloomberg audience of money managers, high-net-worth folks, etc., is more interested in Fed policy than your average person.
Second, Bloomberg News has an advantage that the Washington Post and other news outlets do not. The news division is nothing more than a value-add to the core services of Bloomberg L.P. -- data and messaging. Users don't pay for news. In fact, users don't have the option to NOT get the news. All Bloomberg services are included and sold at a single price point. Bloomberg customers pay thousands of dollars every year for their terminals whether they want news or not. (By contrast, Reuters and Dow Jones sell varying levels of their services with multiple options.)
In short, Bloomberg News has an operating budget that dwarfs its rivals, while having no need to generate revenue to cover its costs. Data and messaging are valuable enough that Bloomberg customers pay more than enough to subsidize the news department.

[Joe I.]

Dan hope your grassroots journalism ideas flurish-

Well lets hope the "NEW" news sources are better than the lying sacks of sh** at the NY Times. This will blow up on the web. After the Blair fiasco here is another former NYTimes writer who did a piece for the Globe and was busted for complete fabrication....I read this article originally on a RSS feed and was upset by it. Now who knows. Perhaps the seal hunt is humane. Now I am going to cancel my NYTimes subscription due to what is not an isolated incident but looks like a culture in the NYTimes of lying and making things up....SHAME!!

Lets hope the "national" newspaper of the future is more credible!

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2005/04/15/national/a160551D63.DTL

[Dan Gillmor]

Joe, to a major degree the business relies on trust. The Globe got conned, it seems. That doesn't mean the Globe is corrupt, or that the Times has a culture like the one you allege (and I believe it plainly does not have that culture).