Clay Shirky on the economics of the demise of print

by on August 19, 2014 at 3:19 pm in Current Affairs, Economics | Permalink

He brings new life to a much-covered topic, here is one good bit of many:

Inserts are one of the last sources of advertising to resist digitization. They are also the next to go. Businesses like Cellfire and Find & Save are working on digital coupons; stores like Kroger’s and Safeway already offer online coupons direct to customers. This digitization is progressing as print circulation decays. Back in Roanoke, the Times was on the market for 5 years before it was bought; in that time the paper lost a quarter of its Sunday readers — 106,000 to 85,000 — and a third of its weekday readers — 96,000 to 65,000. This story too is being repeated all over the country. The print audience continues to defect to mobile, abandon the local paper, or die.

As digital alternatives become attractive while print circulation withers, business will start to shift their money away from inserts. When the inserts go, Sundays won’t prop up the rest of the week. When Sundays turn bad, the presses will become unprofitable.

The full piece is here, and for the pointer I thank Hugo Lindgren.

The Anti-Gnostic August 19, 2014 at 3:40 pm

When Sundays turn bad, the presses will become unprofitable.

Not to mention the US Pension Postal Service.

Anon August 19, 2014 at 4:59 pm

Shirky

andrew' August 20, 2014 at 6:18 am

I find tc with his duty to spell names correctly to be rather shirky.

Albigensian August 19, 2014 at 5:39 pm

Lots of luck getting coupon-clippers to go online to load coupons onto their loyalty cards.

I realize that part of the point of coupons is price discrimination (those who care enough about prices to make the effort to clip them get better prices than those who don’t), but digital coupons require more effort and more time, and if few use them then they’re not working, are they?

Jaldhar August 20, 2014 at 2:49 am

Why do you say this? all the local supermarkets have smartphone apps with the local circular for your zip code. My wife loads them up directly from the app. No need for fiddly bits of paper at all. My wife still buys the Sunday paper for the circular which contains manufacturers coupons but sometime she forgets and its not missed.

What else does a newspaper have to offer? Two out of three news stories are syndicated anyway, For other local news there is the city twitter feed and our neighborhood association has a facebook page. For rambling uninformed editorial rants there is the rest of the Internet. We don’t have any children playing high school sports. The comic strip selection is meh, the crossword is way too easy and we’re the wrong religion and age to enjoy the obituary notices. For this family the loss of our local paper would not be felt at all.

jerseycityjoan August 20, 2014 at 4:10 am

I won’t try to change your mind.

I will say why I see things differently. I think that newspapers add something. They have people who are paid to collect and write up events. They are an imperfectly neutral source but they at least try.

Local government, associations, local news bloggers etc. have their pluses but they also have minuses that come from being focused on telling their story and presenting their point of view in the best possible light, usually without mention of any opposing views.

Much of the commentary on the Internet seems to be dependent on newspapers. The writers will start with a link to a newspaper story and use the information from the newspaper as a base and then add things, then commenters add more. I do not see where that base of knowledge will come from if newspapers will disappear.

And I like the paper coupons too. Use them along with the digital coupons, get a double discount.

Nester August 19, 2014 at 8:28 pm

My supermarket eliminated the need to use a discount card – but the supermarket still runs sales. What is the logic behind killing the card and all the data it collected?

Cyrus August 19, 2014 at 9:59 pm

Now they can track very similar information from payment cards. The loyalty discount card became redundant.

Ray Lopez August 19, 2014 at 9:15 pm

Newspaper is dead? Pace Warren Buffett, who bought WaPo, a paper he used to deliver as a boy when he lived in the DC area. You can say it was a nostalgic decision by an old man, but Buffett has a good track record picking stocks (IMO he deals with inside information, probably legal, from the many sources he has from boards of directors).

The death of newspapers reminds me of the talk about the death of cigarette companies, it’s always greatly exaggerated. When I shorted MO (Philip Morris) I got burned since I believed the news about how cigarettes are a dying business, ergo cigarette companies are a bad investment–not true.

bxg August 19, 2014 at 10:19 pm

“Pace Warren Buffett, who bought WaPo, a paper he used to deliver as a boy when he lived in the DC area. You can say it was a nostalgic decision by an old man, but Buffett has a good track record…”

Hypothetically, suppose Buffet had the inside track to buy WaPo (already with a major Berkshire shareholding) but, in spite of this, in spite of the paper-route nostalgia, he declined and was vocally on record as having decided not to buy since it “wouldn’t work”. In this hypothetical world would you change your comment one bit, or would you just tweak your comment to have these alternate-world facts fit your preconceived answer? Just hypothetically, of course.

Ray Lopez August 19, 2014 at 11:55 pm

Base not case is your argument. You must base your arguments (pun intended) on the base (baseline) not the case (anecdotes). But this is an un-moderated comments section of a popular blog. To answer your question, I would do as they do in econometrics, and tweak my n-th order polynomial equation model (“tweak your comment”) to fit the facts, backwards looking, to make my argument impeccable and unimpeachable–at least in hindsight. That the model might break going forward is always a going concern.

carlospln August 20, 2014 at 12:43 am

So, you’re ‘all in’, n’est-ce pas?

Which listed metro mastheads’ share registers?

bluto August 20, 2014 at 1:22 am

When Buffett bought the post, he was buying it for Kaplan, which did quite well. Notice it was Bezos not Buffett who bought the paper alone when they were split.

andrew' August 20, 2014 at 3:29 am

He also liked papers in part because they are a toll bridge between the readers and classifieds and because of the nature of classified ads having network effects they become winner-take-all making a single paper likely to dominate its area with a wide moat.

andrew' August 20, 2014 at 3:31 am

So, to think blue sky, if Bezos can somehow replicate this on a national or global level he might have a good paper investment. But it wouldn’t be because other papers were also good investments.

bartman August 20, 2014 at 12:26 pm

Buffett bought his stake in the Graham companies forty years ago, and recently sold the WaPo part. Buffett’s recent actions WRT the WaPo validates the thesis of the cited article, it doesn’t undermine it.

Buffett’s purchase of the Media General papers goes in the other direction, but that segment of the newsprint business hasn’t suffered nearly as much.

Tom August 19, 2014 at 10:01 pm

Techies love to bash newspapers. Missing in all these posts are any discussion of where our news is going to come from. Bloggers only comment on the work of others. Local TV and radio stations have very small staffs; in fact, they usually have to read the paper in the morning to decide what to cover. They normally only have enough staffing to cover an auto accident, someone at town hall, a sports team along with a weatherman. It will be very bad when the day comes that all of our news is either from a government voice/press release or a corporate press release.

RJ August 20, 2014 at 12:38 am

Real newspaper reporting is already dead. It died when reporters and editors decided to crusade for their politics (while pretending not to) instead of telling us what is happening.

The Original D August 20, 2014 at 2:43 am

Ah for the good old days of barons like Hearst, who never did political crusades. /s

andrew' August 20, 2014 at 6:49 am

This could be thought of as part of the monopoly premium.

It is not that “papers” won’t exist, it is that part and parcel of the wood pulp part going away is tied up with their monopoly and profitability.

chuck martel August 20, 2014 at 6:31 am

If Bezos made a smart move by buy the WaPo, does that mean that he’s buying newsprint and ink companies as well?

ChrisA August 20, 2014 at 6:38 am

@Tom
What is the “value” of news? In the old days (1980′s – 1990′s), I used to read the paper front to back. It took me an hour or so everyday. One day I realized that I was not actually learning anything useful from this and was actually wasting a whole hour a day. I stopped buying the paper and actually nothing bad happened. In fact I got less confused about the world and less upset by things I could do nothing about.

Mark Thorson August 20, 2014 at 8:19 pm

I stopped buying a daily newspaper in the 1980′s when I had a crisis getting rid of the old ones. Once they were tied into bundles and gotten rid of, I resolved never to let that happen again.

roadrunner August 20, 2014 at 7:56 am

Not sure what newspapers you read, in my travels most really suck.

I suspect that in most markets there is some obsessive sitting in his basement who is churning out work far superior to the local newspaper. In most markets, there is probably also some “insider” politics website which does analysis as well. Small towns get better coverage on blogs/facebook pages than local newspapers ever provided.

In my market (NJ), I find myself far better informed by the combination of the above than I ever was with newspapers.

Albigensian August 20, 2014 at 10:39 am

TV broadcasters are still in business because they can charge cable TV companies for carriage, and have the legal right to control digital distribution of what they broadcast. With the TV viewing audience as fragmented as it is, few broadcasters could support themselves solely on ad revenue.

Newspaper content is found all over the Web, on bloggers’ sites and endless aggregators’ sites, yet those who use this content do not have to pay for it.

So, perhaps newspapers’ salvation will happen when they find some way to charge for the use of their content. Simply charging for access to the newspaper’s Web site is not working, as access to a single online news source is just not worth all that much to most readers. But perhaps they will find some way to charge aggregators and bloggers for using their content?

Willitts August 20, 2014 at 11:05 am

Suppose print disappears. 100 years from now, a solar flare, EMP, or magnetar pulse wipes out electronics on Earth.

How well would we revert to the old technology? In other words, how dependent are we becoming on the new technology?

Mark Thorson August 20, 2014 at 8:27 pm

Nonsense. Within 6 months it will all be replaced by cheap stuff made in China. (Actually, the stuff wiped out by the EMP was also cheap stuff made in China, so this will be a short-term glitch, not the end of technology as we know it.)

Note that only one or two small nuclear bombs detonated above the atmosphere over North America will produce the same effect. Wise men in China must be thinking “How do we get DPRK to do this?”.

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