News Is Valuable, But Value And Price Are Two Separate Things

from the a-little-economics-lesson dept

This past weekend, David Simon, the executive producer of HBO's The Wire, and a former newspaper reporter, had an opinion piece in the Washington Post decrying the state of the newspaper business, saying:
"Isn't the news itself still valuable to anyone? In any format, through any medium -- isn't an understanding of the events of the day still a salable commodity? Or were we kidding ourselves? Was a newspaper a viable entity only so long as it had classifieds, comics and the latest sports scores? It's hard to say that, even harder to think it. By that premise, what all of us pretended to regard as a viable commodity -- indeed, as the source of all that was purposeful and heroic -- was, in fact, an intellectual vanity."
It's a rather common refrain, but to understand the challenges the newspaper business faces, it's important to dispel some of the myths that are a part of that refrain. The first is a concept that is quite important, but often gets lost: price and value are two separate things. They are not the same. Value drives demand -- but price is set by the intersection of demand and supply. If supply is abundant, it's not going to matter how valuable your product is, price will get pushed towards zero. So, Simon is incorrect in thinking that news isn't valuable or that it was an "intellectual vanity" to think so. News and reporting are valuable. The problem, though, is that it's quite abundant these days, and so the price that people are willing to pay gets pushed towards zero.

That's not necessarily a bad thing. While Simon goes on to complain about the state of news coverage today, the problem isn't that people don't value the news, but that the people who run newspapers haven't figured out how to properly adjust to the marketplace they're facing. We're seeing plenty of evidence that there's lots of money to be made in the news business, for those who understand how the market is changing and how to embrace it. There are plenty of ways to provide news the way people want to consume (and interact with) the news, rather than doing it the same way it was done for decades. It's not that news isn't valuable. It's that newspapers haven't figured out how to adapt to the changing market.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Jan 23rd, 2008 @ 7:42am

    an intellectual vanity
    Get over yourself. "Boo hoo, I can't get free tickets to broadway anymore, and I actually have to work 20+ hours a week now.
    In any format, through any medium -- isn't an understanding of the events of the day still a salable commodity? Or were we kidding ourselves?
    No, not in any format or any medium. That's like whining because you can't make a living as a town crier anymore. Times change. Either change with the times, or get the hell out of the way.

     

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  2.  
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    Anonymous of Course, Jan 23rd, 2008 @ 8:13am

    Wrong o Anonymous Coward

    Actually, town crier is how the papers will make
    a living.

    My local news paper was going down the drain,
    containing a few wire news service pieces,
    automobile sales advertisements and supermarket
    coupons. Who needs that, subscriptions plummeted
    and advertisers went elsewhere.

    Then they realized that there is something they
    can do better than the rest. Report on local
    issues, dig up the local dirt, print the police
    blotter. People love hearing about their
    neighbors and community.

    So a return the roots of town crier saved the
    local paper and everyone lived happily ever after.
    Except the criminals that get their photos published
    in the paper.

     

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  3.  
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    Anonymous Coward, Jan 23rd, 2008 @ 9:25am

    Re: Wrong o Anonymous Coward

    But if the local paper has a web site, they'll also be giving away that same local "crier" content for free. Otherwise, they'll place a pay barrier to the content online or they'll just choose not to have a web site.

    If they choose not to have a web site, it won't be long before some other local person decides to make a web site for the local news.

    Either way, just because the supply of local news is still limited doesn't mean it always will be - eventually even the local news will be infinite supply, and the printed medium will have to value itself by being a very high quality birdcage liner.

     

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  4.  
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    Thom, Jan 23rd, 2008 @ 9:27am

    sigh

    I guess the Washington Post didn't appreciate the comments being left because they're already closed. What a shame these "journalists" don't want to listen - they might learn why they don't matter anymore.

    They're more interested in sharing their opinions or someone else's talking points than they are in writing about reality or researching, discovering, and printing the truths behind these things.

    Why should we pay for regurgitated content that we can get at any of hundreds of Internet sites for free? If they'd do the jobs of real journalists the content they created would be unique to them and worth our dollars.

     

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  5.  
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    Cixelsid, Jan 23rd, 2008 @ 9:39am

    Re: sigh

    Haha, I find it hilarious that they still believe in the whole "He who controls the news controls the world" bit and by censoring the voices of their dissenters they squash all and any arguments to their opinions.

    Welcome to the Internet, check in your preconceptions at www.2girls1cup.com

     

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  6.  
    identicon
    Rose M. Welch, Jan 23rd, 2008 @ 2:42pm

    Advertising, Anyone?

    I'm 'paying' for my site view everytime I click on an ad contained on the site. I have not yet seen a news site, or for that matter, any kind of new source whatsoever that didn't have some kind of advertising area. Local papers in my area are about .50 cents each. You can't tell me that they made alot of profit on that after they covered printing and the employees who run the printing. But they made a ton of money from my store and from other people who advertise.

     

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  7.  
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    Anonymous of Course, Jan 23rd, 2008 @ 3:45pm

    Re: Re: Wrong o Anonymous Coward

    The newspaper I mentioned already has a decent
    internet edition, which is free, in addition to
    the printed paper.

    Yes, they make their money from advertising and
    I don't see that changing.

    The printed version may go away due to production
    costs but to me it's still a newspaper even if it's
    paperless. Format and all that jazz...

    I don't see the local news ever being in infinite
    supply because reporting it requires work. Going
    to town clownsel meetings, reading accident reports,
    attending gala opening events, bla-bla.

     

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  8.  
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    AG (profile), Jan 24th, 2008 @ 7:16am

    The Wire and The Paper

    David Simon is an immensely talented writer and producer, whose show "The Wire" falls somewhere between epic poetry and Shakeapearean drama. He is also the rare fellow who despite his success in television (he can now afford theater tickets for himself and all of us too), has not lost his edge.

    Simon's history lesson is true: there is a dying culture of newspaper reporters who follow the actual workings of local crime, business, and government with the same determination and passion that the mass media now devotes only to celebrity, scandal, and salaciousness. These people still exist, albeit in declining numbers, but their readers and publishers have either died off or been seduced by perky television news anchors.

    News may be abundant, but the persistence to cover boring city council meetings that actually determine the fate of the community is in short supply, as is a readership that feels so attached to its community that it cares deeply about these things.

    Another very talented writer, Mark Bowden, wrote a fascinating profile of Simon in The Atlantic. If you are interested in the newspaper business, watch this season of The Wire, and read this profile:

    http://www.theatlantic.com/doc/200801/bowden-wire

     

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  9.  
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    Derek Kerton (profile), Jan 24th, 2008 @ 11:33am

    Some Obvious Examples

    If Simon things that something valuable must also have a high price, he should consider:

    - while rafting I was kept underwater for about 30 seconds. Not too long, it may seem, but in that time, I came to understand the very high value I place on air. Yet when I broke the surface, I realized that air was free. Good deal.

    - while strolling around Europe, I realized that some cities are simply beautiful, have great architecture, parks, statues, culture. I had to pay to fly to Europe, but once there, I could extract all this value...for free.

    - a hug from your kids, a squeeze from your date. Lots of things of high value out there that are free.

    Get a life, Simon. A good one. You'll see that the Beatles and Shakespeare were right: Money Can't Buy Me Love, and 'all that glistens is not gold'. There is some correlation between value and price, but it has never been absolute.

     

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  10.  
    identicon
    Jason, Jun 4th, 2008 @ 6:57pm

    News and reporting are valuable. The problem, though, is that it's quite abundant these days, and so the price that people are willing to pay gets pushed towards zero.

    Actually, it's not that abundant. Here's what's abundant:
    1) Other services freely distributing the content produced by newspaper staff to an ever-wider audience without enabling the staff producing that content to gain economic reward for their efforts,
    3) Gossip and celebrity whoring, and
    2) Amateur commentary through blogs and other media that's predominantly in reaction to the content produced by the newspaper staff.

    There's very little original "news" being generated outside of traditional newspapers. Additionally, there's a huge societal benefit that comes from a news staff that is trained, that can research, fact-check and edit its content, and that has the resources to monitor and investigate important (though not "fun") aspects of society.

    I'll grant you that these skills and that level of integrity is often lacking (and has always been a struggle), but that doesn't make it any less necessary.

    Thomas Jefferson, while often lambasting the press for its inadequacies, also said that, if given a choice between government and newspapers, he'd choose newspapers. Why? Because a democracy cannot effectively functioned if the people who constitute that democracy are not well-informed.

    All of this reinforces my concern that you don't truly have a sense of what is involved in the production of quality content, be it news, research, or art.

    Your citation of "sports reporting" as evidence that journalism isn't in trouble misses a huge point: they're sports reporters. The deamand for entertainment is huge in this culture. But newspapers aren't solely about entertainment ... or at least, they shouldn't be.

    The founders were very concerned about having a national press, so much so that they specifically protected it. Do you think they did so because they were worried about sports reporters?

    The problem here is that economy alone should not dictate culture. This is another point you don't seem to recognize. There are many things we want, and many things the economy would support, but that aren't good for the society. There are also things we don't want, but that are necessary nonetheless. The law isn't designed only to protect what we want but also to protect things that are essential for a society to function. One could say that's the whole burden of the law: to balance individual desires against concerns for the society as a whole.

     

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  11.  
    identicon
    injection molding, Apr 30th, 2009 @ 4:58am

    Nice!!!

    Nice topic!!!

     

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  12.  
    identicon
    Resveratrol, May 21st, 2009 @ 3:43am

    Very valuable informations found here. thanks a lot and keep updating it.

     

    reply to this | link to this | view in thread ]

  13.  
    identicon
    tommy vig, Jan 10th, 2010 @ 1:58am

    non-subjective valuing

    carvalu.com
    google: tommy vig

     

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