Mises Wire

Home | Blog | The Market for News

The Market for News


Historically, newspapers have made money in two ways. They make money from readers, and they make money from advertisers. Originally, most of the money that newspapers made came from readers. In the late 19th century and early 20th century the old newsboy sales model was based on incentives to move as many newspapers as possible at the highest possible price. Advertising was a source of revenue, to be sure, but not the primary source.

Over time, the emphasis would shift away from revenue provided by readers and toward advertiser revenue. Eventually, advertiser revenue would make up at least 70-80 percent of all revenue. Essentially, newspapers gave up on getting the readers to cover the full cost of the news a long time ago. The daily cost of a newspaper subscription is, more often than not, well below the cost of producing a paper copy of a newspaper. Until the last few years, the real money was to be made in advertiser dollars.

But with the significant decline in circulation (see here) advertisers know that they get less bang for their buck every month that circulation drops.

So, one day, after years of plummeting circulation and revenue, the newspapers suddenly realized they’d better get the readers to start paying for the news. Their most brilliant ideas revolved around erecting pay walls around content. In other words, the newspapers, to solve their revenue problem, returned to a revenue model that hadn’t been used in decades. It hasn’t been working out.

Mashable today carried a nice piece on some newspapers that are finally starting to look at innovative ways to make money. Primarily, they’re finding ways new ways to make money off of advertisers.

The new innovation that some papers are showing results from the fact that some papers are finally starting to come to grips with reality. The new reality is that news can and will be produced without traditional newspapers.

For the last several years, the entire business model of the newspapers seemed to be, to paraphrase Clay Shirky, “you’ll miss us when we’re gone, so give us money,” which wasn’t a rock-solid strategy to say the least.

But other organizations have already moved in to displace them. As the Mashable article notes, laid off journalists from closed and downsized papers have started to produce their own news. Here in Denver, at least one online newspaper aggregates news from a variety of blogs written by former newspaper writers and other bloggers. The blogs are sometimes funded by private firms, such as in the case of this real estate blog.

It has become clear that journalism will be funded, but that the new reality is far more decentralized, complex, and competitive.

The days are gone when one could ask “did you read the paper today” and everyone could discuss the same few news stories selected by even fewer news editors. Today, people can get the news they want, and different people are interested in different things. The market loves this kind of diversity and will move in to serve it in even more diverse ways.

The market is currently in transition, and transitions in the market produce winners and losers, but we’re not sure yet who the big winners are in this. The losers are already pretty obvious. Capital needs to be moved to where it is demanded. That is to say, it will be moved away from physical printing presses and old-timey newspapers and toward new innovative leaders in delivering news. Some newspaper organizations will learn to make money from this, and many will not.

Follow Mises Institute

Add Comment