Sunday, April 30, 2006

The Future of the News Media, Part 3

Laurence Simon has an outstanding post today on the crew required to produce TV newscasts. It tells you part of the reason that the Mainstream Media (MSM) is a failing business model.

Profits are income minus expenses. Laurence's post tells you how high the expenses are for the MSM. Compare that to your standard blogger, such as those on the MilBlog Wire Service. A digital camera, an internet connection and a computer are all a subject matter expert (SME) needs to become a content provider.

Yesterday I went and took photos and did interviews at a local Special Olympics event for my next World of Good post. Cost to me: 10 miles on my pickup truck and 5 hours of my Saturday. I will provide equal or better coverage of the event than the MSM. There just isn't that much expertise required to cover a Special Olympics.

The Internet gives us access to all kinds of SMEs. We can compose our own newscasts sitting at our PCs any time we want by surfing over to our favorite blogs or message boards. I spent much of yesterday reading the New Orleans Saints boards to learn about the NFL draft. The MSM can't compete.

This tells us that there is no longer a high barrier to entry to become a news content provider. In the past, everyone needed the personnel, gear and expertise Laurence describes in his post. Such a market is called an oligopoly and it gives the providers great discretion over pricing. Another example of this is the oil industry. It takes billions of dollars to set up a refining and distribution system. That's why there are so few oil companies.

Instead, news content providers are quite nearly a perfect free market. There is very little barrier to entry and the consumers have access to a huge selection of providers. Companies built to compete in an oligopoly are doomed in this case. They just can't cut their expenses enough to survive.

I recently cancelled my subscription to the San Diego Union. It had nothing to do with politics or any kind of boycott. I just don't need them any more and I don't want to spend money on them. I will never go back. meanwhile, they still have to run printing presses and pay reporters and editors and a large cast of characters.

There are still a few portions of the MSM that have high barriers to entry and cannot be replaced easily. One would be helicopter video coverage of natural disasters. Anything requiring specialized equipment and knowledge. Other than that, the MSM's decline should not stop for a long, long time.

Previous essays on this are here and here. Random posts on stories the MSM completely screwed up are here and here and here.

I also wonder if bad news really sells.

The Anchoress has a great post discussing the obsolesence of the MSM with respect to the conflict in the Middle East.

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