If you’re saying that content is the bait that gets readers’ attention, which is then sold to advertisers, that strikes me as unremarkable, and pretty much a description of the traditional model.

Yes. You got it. I’ve said over and over again there’s no “new economics” here. It’s all just about better understanding old economics.

The only difference I see is that you have defined content (or, as you would likely say, the market has defined) as an infinite good.

No. No one “defines” an infinite good. It’s a fact of nature. If the good can be copied at zero marginal cost, then it is an infinite, rather than a scarce good. It’s a fundamental property of the good. It has nothing to do with definition.

That still doesn’t make it an infinite good – there is a real cost of production that has to amortized over a less than infinite number of copies. You either have to charge *something* for some of the copies, or you have to shift the cost to some pther product.

PRODUCTION is a scarce good, but once it’s produced, it’s an infinite good.

That’s why we think business models that charge for production of content often do make sense (hell, it’s our business). But once that content is created, then it’s an infinite good, and thinking you can charge for it is a dangerous business model.

And… amortization is an accounting issue, not an economic one. Mixing them up gets things confused.

But, yes, the idea is that you are shifting the costs to some other product. That’s the whole idea behind these business models. You focus on charging for the scarcities and using the infinite goods to make those scarce goods more valuable. The more content you can use to attract a bigger/better audience, the more you can sell their attention for.

If your answer is advertising, and your argument is ‘it still works, but old media sucks at it’ then we haven’t come very far.

Well, yes, and “no.” When I talk about “selling the attention” of your community, I am talking about a very different form of “advertising.” It’s not about “advertising” at all, but about creating compelling content that advertises something:

http://www.techdirt.com/articles/20080318/004136567.shtml

So, I think once companies realize both of these things, they can start to put together business models that thrive.

I don’t understand what you mean by “most news organizations aren’t prepared to compete to retain people’s attention, so they’re losing it.” Retain in what way? I’m not trying to be obtuse – I’m just not sure whether you’re saying most news isn’t interesting enough, or that news organizations need to be something else to retain peoples’ attention or whether your point is something else entirely.

Traditionally, you could be pretty confident that a certain (large) percentage of people in a specific community would read the newspaper. It was, to some extent, a captive audience. That made it much easier to sell ads (bad ads…). That was the business model.

But today, the audience isn’t captive. They have many choices for what they read and how they participate and interact with the news. So, that captive audience has dispersed somewhat… and those who remain find the bad advertising so irrelevant that it gets pushed down in value even more.

So, what news organizations should be doing is focusing on really providing *value* to communities so that they stick around, and then focus on selling that community’s attention in ways that are *also* valuable to the community.

For example: here at Techdirt, we’ve built up an interesting community in part by giving them a voice, rather than just talking to them. And, then we built the Insight Community on top of that so that companies could *get insight back* from our community.

So, we have the attention of the community, but rather than just focusing on inundating them with bad ads (yes, we do have some, but it’s small and decreasing) we focus on *connecting* them with companies in a way that all parties value the exchange — even paying some members of the community for their insights.

This is a fascinating debate, and I want to throw down a thought for you. Maybe ‘free’ is not an eternal value – maybe the exact opposite will happen if one or two news organizations break in the direction of paid content, and there’s an efficient mechanism for paying for that content.

I doubt that would have legs. The infinite nature of digital content means that, in a pure economic sense, the most efficient price in the market is $0. There are a number of reasons for this, but one of the important things to understand in recognizing efficient market theory is that an efficient market also provides the largest amount of opportunity.

So, the biggest overall opportunity to make money is actually when the price of the infinite good is zero, which boosts the value of a variety of other scarce goods. The job of a smart business these days is to figure out how to position themselves to capture as much of those scarce goods as possible. Some they won’t be able to capture (externalities). But plenty of it they can capture, because they’ll control many of the important scarcities made more valuable by the infinite goods (including, by the way, the reporters…).

I never, ever would have thought of paying directly for something as pedestrian as a mainstream newscast – but lately, I’ve thought I might pay something for, say, the CBS Evening News if it had fewer commercials and a little more content.

Which would just present an opportunity for someone else to create a better newscast for free, that is paid for in other ways… Which is why price always gets pushed to marginal cost in a competitive market.

Interesting discussion by the way!