Markets in Everything: Newspaper Rentals

by on April 19, 2011 at 1:30 pm in Economics | Permalink

Addis Ababa, Ethiopia (CNN) Garum Tesfaye is one of Addis Ababa’s “newspaper landlords,” a group of entrepreneurs in the Ethiopian capital who rent out papers to people too poor to buy them…..

For 20 to 30 minutes, these readers can get their hands on a newspaper for a fraction of the price of having to buy it. If they keep the paper longer than their allotted rental time, they have to pay extra. A newspaper in Addis Ababa costs about six birr (35 U.S. cents) to buy. In contrast, it costs only 50 Ethiopian cents (less than one U.S. cent) to rent one.

1 Jack April 19, 2011 at 1:53 pm

I wonder how they maintain market segmentation. Wouldn’t most people prefer to rent? Then the newspapers would be in trouble.

I suppose transaction costs prevent this from being too widespread.

2 Rahul April 19, 2011 at 3:26 pm

Newspapers being in trouble does not bother the readers nor landlords.

3 Meg April 19, 2011 at 2:32 pm

File sharing, only with actual files…

4 Mike April 20, 2011 at 11:54 am

No, not at all. “File sharing” is duplicating the files. This is more like DVD rentals, a middleman buying DVDs solely to rent them out.

5 Alex April 19, 2011 at 2:32 pm

Six birr = $0.35 and 50 Ethiopian cents is less than $0.01?

6 Greg Finley April 19, 2011 at 2:38 pm

I was also thinking that transactions costs would doom this, but I guess not.

Couldn’t really happen in a country like the U.S., because 1 cent is essentially the same as 50 cents, even for the poorest U.S. citizens.

7 SteveX (formerly Steve) April 19, 2011 at 4:26 pm

Easy enough to test. Try tossing 1 cent into a street beggar’s cup and see how his reaction differs from the guy you just gave 2 quarters to.

8 Bogdan April 19, 2011 at 2:53 pm

It happens all over Africa, from what I have heard.

9 Sam April 19, 2011 at 3:03 pm

Re: Greg especially because I have a hard time believing that newspaper renters would rent out to 35+ people for 30mins each just to break even…

10 Kyle S April 19, 2011 at 3:20 pm

Six birr is six hundred Ethiopian cents, so renting a paper is one-twelfth the cost of purchasing one. 35 US cents divided by 12 is three cents, not less than one cent.

11 Bill April 19, 2011 at 3:24 pm

What you describe is the Libertarian Library.

12 spencer April 19, 2011 at 4:21 pm

Why not describe the market for single cigarettes are something equally alien to wealthy North Americans.

13 SweetMe April 19, 2011 at 4:26 pm

FYI most of the people who read the news paper looks for vacancy coz you will not buy all news paper to read ,and on
the other hand each news paper contain vacancy. so it is not about buying a newspaper ,it is about finding all information with limited time.

14 insider April 19, 2011 at 7:43 pm

This is the outcome of Prime Minister Meles Zenawi’s seasoned leadership in transforming the nation’s economy over the past couple of decades. Real per capita income has increased from $192 when Meles Zenawi took power in 1991 to about $435 in 2010. When people’s income increases their newspaper purchasing power declines??

15 Josh April 19, 2011 at 9:59 pm

Sounds like they all need bitcoins.

16 Mike April 20, 2011 at 11:56 am

How would they access them?

17 Ian April 20, 2011 at 9:55 am

I think I’d prefer newslord to “newspaper landlord”.

18 damper April 21, 2011 at 10:59 pm

Our company is engaged in the professional manufacturer of damper, air cylinder, oil cylinder, and hydraulic station. The company has many year’s production experience and strong technical power.

19 Shefaly April 23, 2011 at 4:50 am

Always fascinated to see how many business models are born out of addressing a market that has a “need” but not “purchasing power” (classic definition of “demand”) or the willingness to “buy” what they can “rent”. When I was a child growing up in India in the ’80s, we used to get many newspapers and magazines regularly at home. While we paid for 3 or 4 newspapers, and a few political magazines, there were some that my then-teenage sister was keen on that was never going to be “paid” for, e.g. film magazines. Our newspaper-delivery-wallah used to lend us the magazines for a fixed number of days and then charge us a tiny sum in our monthly bill. On Sundays he also delivered several other newspapers (Sunday newspapers are probably interesting in most countries) and take them back Tuesday morning. So the model is not new. The need and the product (perishable but not in the fruit-and-veg sense) together help make the model viable. It makes sense also because more people get to consume the content out of papers that may remain unsold and go into recycling anyway at the end of their very limited “shelf life”.

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