Nieman Foundation at Harvard
HOME
          
LATEST STORY
The Washington Post now offers 20 weeks of paid parental leave; here’s what other U.S. news orgs provide
ABOUT                    SUBSCRIBE
July 24, 2009, 1:10 p.m.

Thinking about the economics of news over coffee

The Detroit Free Press recently staged a promotion with Panera, the baked-goods purveyor, that offers a nice lesson in the economics of charging for news. Patrons who purchased a cup of coffee could also grab a copy of the Freep for a penny. More than 1,600 people took advantage of the offer each day, according to the Newspaper Association of America, and single-copy sales of the Freep, which recently curtailed home delivery, remained elevated after the promotion ended.

Sounds like a smart promotion, but consider how it worked: charge for the coffee and give away the news. (They asked for a penny to count the copies as circulation under ABC’s recently loosened standards.) Economists will tell you that it’s easy to put a price on a private good like coffee because you can’t drink from my cup of joe once I’ve consumed it. But news is an information or public good, which means it lacks both rivalry (you can have the same news as me) and exclusion (you can obtain the news without paying for a newspaper). I’m cribbing here from Jay Hamilton’s book, All the News That’s Fit to Sell, which we discussed extensively in February.

There will always be a disconnect among the fixed costs of producing a newspaper (high), the value that society places on news (high), and the amount that economic theory says you can charge for an information good (nothing). So long ago, newspapers got into the business of selling a private good, its readers’ attention, to advertisers. That’s why the eyeball-maximizing penny press emerged in the 1830s and returned this year to Detroit.

POSTED     July 24, 2009, 1:10 p.m.
SHARE THIS STORY
   
 
Join the 50,000 who get the freshest future-of-journalism news in our daily email.
The Washington Post now offers 20 weeks of paid parental leave; here’s what other U.S. news orgs provide
The Wall Street Journal: 20 weeks. The New York Times offers 16 to 18 weeks for birth mothers and 10 weeks for non–birth parents.
Here’s how researchers got inside 1,400 private WhatsApp groups
They…joined them! Plus: YouTube beats Indian news organizations 65-to-1, and machines can make fake news pretty well, but it can’t detect it.
“Publishers are going to live or die based on their relationship with readers”: How Quartz is rethinking its membership offerings
“It’s more similar to an Audible.com subscription, where you’re getting access to this huge library of journalism, than it is to a daily news subscription.”