Markets Fail News

    by Benjamin Melançon
    March 18, 2008

    Thanks to Chris O’Brien’s challenge, serious talk of business models for journalism have come to the IdeaLab blog.

    Let’s pause a moment for an overarching view. Turn off the bright lights and stare into the empty studio.

    Markets – selling and buying at prices set by supply and demand – don’t work for news and information.


    Valuable news is a public good. All right, if you care about journalism, you already believed that. But news is also a public good in the sense economists use the term: once one person comes into possession of it, everybody can have it.

    Expensive investigative reporting in particular is undervalued in the market compared to its benefit to people. Soft news features, pictures, video, comics, opinion and all that is more about the experience than the facts have fared somewhat better.

    Although a networked digital world makes the picture starker, none of this is new.


    The economic model of journalism has always been broken, and the business of selling news has always been one of hacks and workarounds.

    Because information wants to be free, because market incentives break down for anything infinitely shareable, the public interest suffers from the underproduction and underdistribution of news. Perhaps even more so, the public interest has suffered from the subsidy of news – press releases, staged events, canned content, announcements, and access as much as advertising and underwriting itself – by corporations and governments that don’t necessarily share the public interest.

    The decoupling of news from its traditional means of support is an opportunity.

    With raised stakes, vastly raised difficulty, and I hope a clearer understanding of what we’re up against, I ask you to return to Chris O’Brien’s challenge to come up with more new business models for journalism.

    It’s only the future of the world at stake. Have at it in the comments!

    [Cross-posted to RootTruth.org]

    Tagged: economics idea incentive information markets news propaganda subsidy

    3 responses to “Markets Fail News”

    1. Expensive investigative reporting in particular is undervalued in the market compared to its benefit to people.

      I think it is vital to bear in mind that we aren’t talking just about benefit to “people” but benefit to democracy. Democracy doesn’t work if citizens don’t have access to real information about what is happening around them.

    2. I’m inclined to agree, although I think talking about people directly can keep the concept of democracy concrete.

      That is, democratic institutions are needed because of people’s rights to liberty, justice, and a pursuit of happiness that means a lot more than just property.

      And our present democratic institutions are so flawed – take the fact that U.S. government actions affect billions around the world, but only we citizens have even a tenuous claim on choosing who makes decisions, let alone making decisions ourselves – that I would feel compelled to define both democracy and citizen in far more expansive terms than currently exist.

      But your point remains unassailable: receiving accurate information (and not just access to if we define journalism as both investigation and dissemination) isn’t important primarily so we can benefit personally or professionally– it is paramount for self-government.

    3. Benjamin,
      I think you’re on the money here, so to speak. Our investigative work, our watchdog role, our ability to spot critical trends, have been vital to a healthy civic life and to democracy in general. It is why I still passionately believe newspapers are worth saving: They represent a model that at allows this type of reporting (even if the volume has diminished in recent years).

      The harder lesson for me in recent years is this: I’m not sure the readers/audience/users (did we ever get a consensus on what we’re calling you now?) ever really paid us for our journalism. They may have been paying for the coupons and other service that came with the newspaper, and just happened to get the journalism as part of the deal, which helped them be better informed as citizens.

      In that case, it may be essential to build a network of non-profits to ensure the continuation of this vital resource.

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