Monday, February 23, 2009

The vanity that killed the daily newspaper

Avoiding specifics, because they are not important here, one family member's recent desire collided with one piece of that family member's furniture, which promptly led to a whole lot of falling dominoes.

The family member was not my wife, although she did cause dominoes to be lying around all over the place.

Meaning, in case it is not bloody obvious, that we had a lot of stuff best shoved over the side. The last time this happened, we tried the classified ads in the local paper.

Lack of cheapness matched lack of results.

After that, we hauled stuff over to the Soviet Army (aka Salvation Army, but when my daughter was little she spoonerised it, and it has been Soviet Army to us ever since). Which got us the same results as the first time, without the intervening bother of writing and buying a classified ad.

With this gross weight reduction exercise, though, we had enough stuff of insufficiently little value that perhaps we could have other people pay us to haul it away.

Cue the intra-cranial ding, which alerted me to the presence of a word sloshing about in my mental bilges, but about which I had hardly, until that moment, given a moment's thought: Craigslist.

After a few minutes of camera work and a few more of massaging a little text, I got the ads up.

In less time than is required to make even an amateurish peanut butter & jelly sandwhich, two things became glaringly obvious

The prices I set were waaay too low -- I would make a cr*ppy capitalist. Anchorage is a smallish town. Despite that, we got the better part of a hundred emails offering to come immediately with cash in hand.

Second, our vanity etc. demonstrated what is really killing the newspaper industry. Never mind the lazy, incompetent, ignorant and biased reporting1. All true, but not the real problem, since most people themselves are so lazy, incompetent, ignorant and biased as to not know the difference.

I'm going to hazard a guess that that subscription revenue really only covers printing and delivery costs. That means ad revenue is what keeps newspaper operations going.

I'm going to further guess that of ad revenue, the classifieds accounted for 20-ish percent: Craigslist put the hole below the waterline, singlewebpagedly causing classified ad revenue to sink faster than a greased safe.

The newspapers could replace bad management, or conclude reporting actually matters.

But there is no competing with fast, free, and with pictures.

Which means the real question facing newspapers is how to cope with a permanent reduction in revenue per column inch. It is perhaps worth nothing that this echoes, nearly syllable-for-syllable, how the internet and bandwidth caused airline revenue per passenger mile to plummet.

There was not a comfortable answer for the airlines; there is no reason to suspect there will be one for newspapers, either.


Blogger Harry Eagar said...

Yeah. Welcome to the real world.

'Sfunny, though, that libertarians-Hayekians, who generally dote on property rights, throw them overboard when it comes to the Internet. It's like a snake to a bird.

Classifieds are the most profitable part of a newspaper's operation, except for legal ads.

The problem with Craigslist is the problem with CB radio: Nobody is responsible for anything. You probably want to keep your daughter away from it.

Really nasty things in Craigslist.

February 24, 2009 9:53 AM  
Blogger Susan's Husband said...

What property rights are we Hayekians throwing overboard in this case?

There was nothing stopping newspapers from creating a Craig's List equivalent, with the advantage of some editorial effort to cleanse the lists of the sort of things Mr. Eagar mentioned. However, that would require the acceptance of overall reduced revenues and, like the music industry, that was considered unacceptable. But that didn't stop the effect, it just meant newspaper would end up with nothing instead of something.

The open question is, could a newspaper like organization reduce costs enough to compensate for the reduced revenues? Unfortunately for the industry it seems saddled with the same level of perceptiveness and planning capability as the American auto industry.

February 24, 2009 11:40 AM  
Blogger Mike Beversluis said...

Yeah, I'm not sure where the loss in property rights comes in - The newspapers were the only ones allowed to list ads?

Just like the rest of the internet, there's nasty stuff in the craigslist personal ads and forums, but no need to go in those sections for used furniture. Actually, that's just like the local papers - whose back pages are filled with escort service ads. Not a place to let your daughter in either.

My parents, as mild as milk as they come, regularly buy and sell such on craigslist, and they love it.

OTOH, Megan McArdle had a post the other day about how the rapid rise in 2nd-hand furniture has apparently lead to the alarming spread of bed-bugs. But I've heard, equally apocryphally, that there is quite the epidemic in hotels too, so no CL required there.

February 24, 2009 11:59 AM  
Blogger Harry Eagar said...

No escort ads in my newspaper. No cigarette ads, either.

The Craigslist classifieds are not an example of theft, but everything else newspapers produce is routinely stolen, to a deafening silence from the Hayekians.

SH is right, though, no way newspapers can reduce costs to meet reduced revenue -- and continue to put out the superior product they do put out.

Welcome to the market.

February 24, 2009 4:07 PM  
Blogger Hey Skipper said...

Having never used CL, I had no idea -- hadn't given it any thought really -- about disgusting content. However, from my very limited experience, if I am looking for furniture, the only thing I will find is furniture.


... but everything else newspapers produce is routinely stolen, to a deafening silence from the Hayekians.

Which, presuming it is true, means what?

Having read Hayek, and found him persuasive, I guess that makes me a Hayekian. My "silence" is due solely to the profound inability to conceive of anything like a solution.

SH is right, though, no way newspapers can reduce costs to meet reduced revenue -- and continue to put out the superior product they do put out.

Why do I think "superior" belongs in scare quotes?

Local news seems pretty good. Anything beyond that, and it seems that accuracy is purely a matter of chance. Early coverage of the commuter crash in New York couldn't even get the basics right: USA Today graphics used a 737 instead of the plane they mentioned in their own story.

The latest AGW scare story is about how warming must be true and bad because bird ranges are expanding northward. No mention of alternate hypotheses, of which several come immediately to mind.


You say "welcome to the market". What is the alternative?

The parallels with the airline industry are striking.

February 24, 2009 4:49 PM  
Blogger Ethan Smith said...

This comment has been removed by the author.

September 01, 2014 8:18 AM  

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