No, The Death Of Newspapers Does Not Mean An Age Of Corruption

from the let's-think-this-through-a-bit,-shall-we... dept

A few folks have sent in Paul Starr's long but thoughtful article in The New Republic, which worries that, thanks to newspapers dying, we'll be entering a new age of corruption, since no one will be watching government officials like investigative reporters have in the past. The article is well worth reading, and brings up a number of interesting points -- but, in the end, fails to make a compelling case for a number of reasons -- most specifically that it relies on both a faulty model of news production and a faulty understanding of economics. This isn't to knock Starr or the article, because the mistakes are subtle, but important.

The first mistake is in looking at news production itself -- and specifically investigative reporting. Starr seems to significantly overestimate how much investigative reporting newspapers do. In fact, investigative reporting is a fairly new phenomenon and has never been a major focus of newspapers. Those bemoaning the supposed "loss" of this function don't seem to recognize how little money has been put towards such investigative reporting in the past. As that second link suggests, most newspapers spend more on their comics pages than on investigations.

Furthermore, the article brushes off the fact that the increase in information out there, and the ability for almost anyone to consume different media, means that a lot more people can participate in the process itself. Starr does mention some of this, but seems to brush it off without a deeper investigation. And that leads to quotes like the following:

Altogether, according to the governor's office, the number of full-time statehouse reporters in New Jersey has fallen from more than fifty to fifteen in the past decade. That is a lot fewer pairs of eyes to keep watch over state agencies.

Which of course assumes that the only people who can monitor government agencies are reporters. That's simply not true. There are many more "eyes" watching over state agencies -- it's just that they don't do it as a full-time job. That doesn't mean that as a group they're somehow less effective. If well organized, they can be much, much, much more effective -- enabling multiple people to assemble different pieces of the puzzle and work together as a team to unearth problems. This is often brushed off as useless because some of those people might be "biased" or have an "agenda," but, in practice, that issue is often negated. Those with obvious biases or agendas are usually pretty quickly outed.

So, while the nature of the beast may change, there's little evidence that corruption will suddenly be free to roam. Especially in the political realm, where there's so much interest in digging up "dirt" on opponents, it's increasingly hard to keep corruption secret.

The second mistake is much more subtle and quite easy to understand. It's in focusing on the idea that "news" is somehow a public good. Much of the discussion, then, about public goods is based on an older understanding of public goods and what that implies from an economic standpoint. But, that thinking on public goods has gone through something of an economics revolution in the last decade or so, with much of the research being so recent that plenty of well-known economists are still digesting it. The claims that public goods are necessarily "under-produced," because there isn't enough incentive for private providers to supply them, knowing that there will be free riders, is looking less and less true -- especially when it comes to information.

That mistake is based on a simple misconception (which many still hold), that the business model needs to be about the public good itself. When the product is information, that's not true. You can use the information itself to create different business models, by effectively bundling the information (or infinite) good with a corresponding scarcity. In fact, that's exactly what newspapers have done for years, in reality. They've used the information to attract a community -- and then sold that community to advertisers. The problem newspapers face isn't that they're producing a public good -- it's that they never fully realized that they were selling their community's attention, and were unprepared when that community found other places to go.

Starr, unfortunately, only focuses on "non-market" production of public goods, using Yochai Benkler's excellent discussion on "The Wealth of Networks." That's a useful starting point, but it's hardly the end of the discussion. Through bundling and creative business models, you can very much create very strong market production of such infinite goods (which are misnamed "public goods"). The issue is just setting up those proper business models, and we're starting to see more and more examples of those pop up every day.

When you correct for both of these mistakes, you realize that the widespread participation of the community, combined with newer business models for the production of such infinite goods, allows such "investigative reporting" to be done more cheaply -- while actually providing an even larger revenue stream. I recognize that last statement seems like a bit of a leap of faith (especially to those who are worrying about dying newspapers), but as you look through the economic evidence, it's difficult to find a market that wasn't greatly enlarged by the injection of more "infinite goods," combined with a more efficient system for participation.

Don't fear the changes that are coming. They may take a little while to sort out, but the opportunities are huge, and they will be too tempting for some to pass up.

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