Newspapers Cannot Afford to Reduce Supply

I touched over this in a previous post, but Nick Carr’s argument that newspapers should reduce supply is absurd. His argument seems to stem from the fact that multiple newspapers cover the same story – often using the same content. Unfortunately, he doesn’t consider the consequences of deliberately “reducing supply” when the barriers to entry are near-nonexistent. Bloggers will step in to fill the gap, providing news and commentary as newspapers reduce supply. If this wasn’t immediately obvious – because it’s been happening – consider that in order to reduce supply newspapers will necessarily have to cut staff. Where will that staff go? Most will enter other industries; but enough – and probably the best – who love journalism and think they can make money will self-publish. That is, they will start a blog. And they will bring domain expertise, writing experience, and so on to their blogs – which Google, as an unbiased middleman will treat the same as newspapers. Quality content will rise to the top – whether it comes from newspapers or not. Frankly, I think that newspaper companies as firms are on their way out – with the internet, inter-market transactions are cheap enough that you don’t need the economies of scale from having a firm. So, until someone figures out how to obtain economies of scale out of blogs, we’ll see a proliferation of small content-creators: journalists, analysts, etc as bloggers. But supply will never decrease. If anything, it will increase, junk and all, only to be aggregated and filtered by the middleman, Google. Trying to reduce supply will only cede the market to the bloggers.