Changing Times

Jun 26, 2011 • Businesses, Demand, Supply, and Markets, Economic History, Innovation, Thinking Economically • 202 Views    No Comments

Not so long ago, the NY Times depended on ads, help wanted, real estate revenue. Now we have craigslist and monster.com. An Op-Ed Column could be read only on the Op-Ed page. Now, anyone can copy and share an article. And, in those multiple newspaper holders that open after you deposit your money, you would only take one and slam it shut. Now, we have our computers and iPads and Twitter.

A new documentary film “Page One: Inside the New York Times,” is actually more than a story about one newspaper. The movie describes the obliteration of an industry. Reflected by bankruptcy crises for Chicago, Denver, New York, San Francisco, Philadelphia, and other big city newspapers, the old fashioned way of reporting the news just is not working. On the revenue side, traditional sources of money have gone while on the news side, they no longer have an exclusive product.

So, what will happen?

Described in 2009 by NYU media professor Clay Shirky, the revolution is rather similar to the impact of the printing press in 1500. Shirky tells us that most narratives focus on life before and after the printing press. One book, though, The Printing Press As An Agent of Change, answers, “How did we get from the world before the printing press to the world after it?” Summarizing, Shirky says the transition was “wrenching” because “old stuff gets broken faster than the new stuff is put in its place.”

According to Shirky, we do not know how we will replace the old newspaper model of doing business. We don’t know who will go to city council meetings and war zones. We do know, though, that the old time economics of print journalism no longer exists. And, for that reason, I recommend “Page One: Inside the New York Times.” It presents fascinating questions that have not yet been answered.

The Economic Lesson

In Capitalism, Socialism, and Democracy (1942), Joseph Schumpeter (1883-1950) explained what propelled capitalism and what would destroy it. Entrepreneurs sparked capitalism’s ability to grow and provide better standards of living. Calling the process creative destruction, he predicted new firms with new ideas would replace old businesses. Ultimately though, Schumpeter believed that capitalism would die because an affluent intellectual class would emerge that challenged its existence.

An Economic Question: How might you apply the concept of creative destruction to the newspaper industry?

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