Information, Technology, and Innovation: Resources for Growth in a Connected World

CHAPTER 19

News

News is a particular kind of business. Subject to some textbook examples of information economics, newspapers at their best also enrich communities, sustain democracies by speaking truth to power, and occasionally build family dynasties. The migration from paper to the Internet has proven particularly challenging, with implications for all three of those defining characteristics.

Compared to old-school stockbrokers disintermediated by $10 trades or travel agents put out of business by online booking and electronic tickets, newspapers have been undone in other ways. The power of the traditional newspaper was its bundling, in economic terms, along two axes. First, subscriptions bundle content by time: Readers pay for daily delivery of papers whether they get read or not, for the sake of convenience. In addition, a daily paper contains bundled content that a given reader ignores: people of a certain age will remember how many hundreds of pages of a 1990s Sunday New York Times were thrown away untouched.

The sheer material wastefulness of the resource-intensive physical distribution model might have been an indicator that alternatives could flourish. Incumbents, not surprisingly, included smart, informed editors and publishers, many of whom were pillars of their communities. That such highly esteemed men and women could preside over a wholesale dismantling of a century-old model in a few short years provides one reason why the transition of news is such a compelling ...