What is news, in an economic sense?
Is it a good?
"Hey Rhonda, we're out of news, could you pick up some more on your way home from work?"
Maybe news is a good, something that can be consumed and held in your hand. But what is the actual good, the information or the product itself? When someone decides to purchase a newspaper, I don't think they're telling themselves, "You know, I could really use a stack of grey, inky papers." I think it's faulty to consider the delivery platform as the only good being bought and sold. It's true, to some extent, that some people prefer reading news in a newspaper and others prefer reading news via a mobile app on their smartphone, and sales of both items are counted as goods. But the platform itself holds no inherent value. In other words, the newspaper is worthless to the buyer if it contains no news. The reverse relationship is not the same, regarding the news content. The news content holds value even without the newspaper or mobile app and can be delivered in any number of ways. (Although, I suppose you could argue that news content NEVER delivered holds no value -- the most worthless kind of story is one nobody reads. But I think it is safe to assume that news would not be produced simply to sit on a shelf ... that's what dissertations are for.)
So if news content is the good being bought and sold, the object that holds value both for media producers and consumers, from what is it produced? In the news industry, producers have very little control over inputs. If you have ever worked in a newsroom during the summer, you know this is true. Schools are out, municipal governments take frequent breaks as people go on vacation, there are no major policy meetings, and news is super slow. And yet, people expect a stack of "news" delivered to their doorstep every morning. So we tell them the animal shelter is overrun and give updates on highway construction, ad nauseam. I've tried to think of a comparable industry, where goods are expected to be produced even when there are no inputs, and I can think of one. If you make cars, and there is a shortage of the chemical needed to make catalytic converters, then the cost for that input goes up. But if the chemical is completely unavailable, there's nothing you can do. You stop making cars. Not so with the news industry. You continue selling your product as if it provided the same value as yesterday's news, which is clearly not the case.
So the question is, how much sense does it make to run a "goods" industry when you have no control over the inputs? If on Monday, someone is assassinated, or someone has sex with the wrong person, business is good. If nothing like that happens on Friday, why are we producing the same number of news stories to fill the same number of pages as on Monday? The only reasonable perspective is that the "good" people are buying isn't only the news, it's also the newspaper (this makes far less sense when you consider a free website or a free mobile app -- there's no consumer expense, and so you simply would spend less time on the site or not even open the mobile app at all on the slow day). Which now makes this post circular and completely nonsensical.
In summary, that's what I think of news' business model: it's nonsense. Coming soon in Part II: Is news a service?
EDIT: Just thought of this comparison: the farm industry. That's another case where the production of a good (say, corn) is dependent on inputs that the producer has no control over (the weather, specifically, water). The farmer could buy all the water he needs to produce his crop, but that would drive prices so high that he would not be able to sell it, and people could not afford it. So what happens in this market? The farmer buys insurance, and the government heavily regulates the market with subsidies and other controls. So when a shortage of inputs creates a situation unfavorable for business, the farmer lets his corn die and we buy our corn from some other farmer who is not experiencing a drought. The farmer's insurance and the government pay his bills, so he's happy, and consumers don't experience a dramatic jump in food prices. This works because the nation has an interest in stable food prices, which may not be true for news.
Is it a good?
"Hey Rhonda, we're out of news, could you pick up some more on your way home from work?"
Maybe news is a good, something that can be consumed and held in your hand. But what is the actual good, the information or the product itself? When someone decides to purchase a newspaper, I don't think they're telling themselves, "You know, I could really use a stack of grey, inky papers." I think it's faulty to consider the delivery platform as the only good being bought and sold. It's true, to some extent, that some people prefer reading news in a newspaper and others prefer reading news via a mobile app on their smartphone, and sales of both items are counted as goods. But the platform itself holds no inherent value. In other words, the newspaper is worthless to the buyer if it contains no news. The reverse relationship is not the same, regarding the news content. The news content holds value even without the newspaper or mobile app and can be delivered in any number of ways. (Although, I suppose you could argue that news content NEVER delivered holds no value -- the most worthless kind of story is one nobody reads. But I think it is safe to assume that news would not be produced simply to sit on a shelf ... that's what dissertations are for.)
So if news content is the good being bought and sold, the object that holds value both for media producers and consumers, from what is it produced? In the news industry, producers have very little control over inputs. If you have ever worked in a newsroom during the summer, you know this is true. Schools are out, municipal governments take frequent breaks as people go on vacation, there are no major policy meetings, and news is super slow. And yet, people expect a stack of "news" delivered to their doorstep every morning. So we tell them the animal shelter is overrun and give updates on highway construction, ad nauseam. I've tried to think of a comparable industry, where goods are expected to be produced even when there are no inputs, and I can think of one. If you make cars, and there is a shortage of the chemical needed to make catalytic converters, then the cost for that input goes up. But if the chemical is completely unavailable, there's nothing you can do. You stop making cars. Not so with the news industry. You continue selling your product as if it provided the same value as yesterday's news, which is clearly not the case.
So the question is, how much sense does it make to run a "goods" industry when you have no control over the inputs? If on Monday, someone is assassinated, or someone has sex with the wrong person, business is good. If nothing like that happens on Friday, why are we producing the same number of news stories to fill the same number of pages as on Monday? The only reasonable perspective is that the "good" people are buying isn't only the news, it's also the newspaper (this makes far less sense when you consider a free website or a free mobile app -- there's no consumer expense, and so you simply would spend less time on the site or not even open the mobile app at all on the slow day). Which now makes this post circular and completely nonsensical.
In summary, that's what I think of news' business model: it's nonsense. Coming soon in Part II: Is news a service?
EDIT: Just thought of this comparison: the farm industry. That's another case where the production of a good (say, corn) is dependent on inputs that the producer has no control over (the weather, specifically, water). The farmer could buy all the water he needs to produce his crop, but that would drive prices so high that he would not be able to sell it, and people could not afford it. So what happens in this market? The farmer buys insurance, and the government heavily regulates the market with subsidies and other controls. So when a shortage of inputs creates a situation unfavorable for business, the farmer lets his corn die and we buy our corn from some other farmer who is not experiencing a drought. The farmer's insurance and the government pay his bills, so he's happy, and consumers don't experience a dramatic jump in food prices. This works because the nation has an interest in stable food prices, which may not be true for news.
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