Friday, July 14, 2017 [Tweets] [Favorites]

Publishers and the Pursuit of the Past

Ben Thompson:

In short, aggregators are market makers […] Thus this solution: Chavern and the big publishers want permission from Congress to escape the perfect competition fostered by Aggregation Theory via collusion. The theory seems to be that, were the 2,000 newspapers party to this proposal able to present a unified front, they could force concessions from Google and Facebook that would make their businesses viable.

[…]

[The] truth is that newspapers made money in the past not by providing societal value, but by having quasi-monopolistic control of print advertising in their geographic area; the societal value was a bonus. Thus, when Chavern complains that “today’s internet distribution systems distort the flow of economic value derived from good reporting”, he is in fact conflating societal value with economic value; the latter does not exist and has never existed.

This failure to understand the past leads to a misdiagnosis of the present: Google and Facebook are not profitable because they took newspapers’ reporting, they are profitable because they took their advertising. Moreover, the utility of both platforms is so great that even if all newspaper content were magically removed — which has been tried in Europe — the only thing that would change is that said newspapers would lose even more revenue as they lost traffic.

[…]

In fact, this is the single most ridiculous part of this proposal: one of the issues Chavern wishes to collectively bargain with Facebook and Google about is “better support for subscription models”. In other words, Chavern wishes to bring in Facebook and Google as an aggregator in the one market — subscriptions — where newspapers actually have a viable business model.

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