R Heath (and W Buffet) on the Economics of Dominance and Bundling

October 31, 2009

I was pleased to read Robert Heath’s comment on my recent blurt wrt to the un- and re-bundling of newspaper content.  In it, he directed me to a post of his in July.  Quoth Mr. Heath, citing the Oracle of Omaha, circa 1977:

The economics of a dominant newspaper are excellent, among the very best in the business world. Owners, naturally, would like to believe that their wonderful profitability is achieved only because they unfailingly turn out a wonderful product. That comfortable theory wilts before an uncomfortable fact. While first-class newspapers make excellent profits, the profits of third-rate papers are as good or better – as long as either class of paper is dominant within its community.” [emphasis added]

In other words, while it’s good to be the king, it’s best to be a monopolist.   I’ll repeat what I wrote a couple of weeks ago:  as recently as two decades after Mr. Buffet’s observation, a large Texas newspaper sponsored a softball team with “The Only Game in Town” stencilled on the back of their jerseys.

More recently, of course, Buffet changed his tune, citing the prospect of “unending losses” and saying that he wouldn’t buy most newspapers “at any price.”  Mr. Heath posits why:

The structure of any market in equilibrium is determined by a complex and recursive interplay of technology, economics, inertia (in the form of pre-existing business relationships) and sometimes regulation. In the short term, the last three factors are paramount; in the long-term, technology dominates.

I admire Mr. Heath’s writing and analysis, and am flattered that he stopped by.


From Radio Buttons to Clicks to Apps

October 29, 2009

As well constructed a paragraph on the electronics of content as you’ll ever see:

Why is it so hard for content makers to create value on the web? Because the web has evolved to minimize content makers’ ability to retain users. Thanks to the power of search, users can bounce from one site to another so effortlessly that it’s tremendously difficult for any one site to monetize their visits.

Arnon Mishkin writing for paidcontent.org on the power of the bundle.   What he leaves unsaid but is nonethless true is how painful it is when a content provider gets “unbundled.”     Newspapers = the Unbundled.  Jobs = the Rebundler.  It’s good to be the Rebundler.

The Reconstruction of American Journalism

October 25, 2009

In CJR,  WaPo vet Len Downie and Columbia J-School Professor Michael Schudson provide thorough treatment of the state of journalism.  While I don’t agree with all their recommendations, I couldn’t agree more with what I see has their underlying premise:

The days of a kind of news media paternalism or patronage that produced journalism in the public interest, whether or not it contributed to the bottom line, are largely gone.   American society must take some collective responsibility for supporting independent news reporting in this new environment–as society has, at mjch greater expense, for pub lic needs like education, health care, scientific advancement, and cultural preservation…

Well, Tom, That’s One Way to Look at It

October 16, 2009

Speaking in Hong Kong, AP honcho Tom Curley declares a surplus of news.   Which either means there is too much happening in the world, or that there are too many journalists.  Or, I suppose, both.  Well, gee–that’s a novel take.   It’s actually a little refreshing–so much for that “our first obligation is to the public”  hooey.  Out with all that hoary, maudlin sentimentality, and in with the modern.  When using words like “protect” and “defend,” we’re to understand that the AP–not some retrograde, Dewey-esque notion of a public–will now be on the receiving end of such bracingly active verbs.

Also, Mr. Curley has quite an affinity for the word “deserve,” particularly when the subject is first person plural, and the object is “money.”  

And so I ask again:  what industry ever bailed itself out of trouble by defeaturing the product and raising price?

Texas Observer on the Mystery of Latino Turnout in Texas

October 9, 2009

Dave Mann writes:

A new set of numbers, released in July by the U.S. Census Bureau, shows how far behind Texas has fallen in Latino voting. The Census Bureau estimated, based on the number of Spanish surnames on the voter rolls, that 38 percent of the Latino U.S. citizens over age 18 in Texas went to the polls in November 2008. That was a slight uptick from 2004, when 29 percent of eligible Latinos voted. But other states experienced huge surges in Latino voting last year. California saw about 57 percent of eligible Latinos vote in 2008, more than double the turnout in 2004. In Florida, 62 percent of Latinos turned out in 2008, nearly double the 2004 proportion. And Nevada’s turnout more than doubled, to 52 percent.

Steve Murdock attributes the low turnout to lack of union organizing in Texas and–oh by the way–a dearth of viable Latino candidates.  Notice how nobody even mentions any more the top of the “Dream Team” ticket–one Tony Sanchez.

Henry Cisneros’s name came up in conversation yesterday.  It’s interesting to imagine how different things might have been had he mounted a statewide race.

Burn the Past

October 9, 2009

I don’t know anything about photography.   But my friend Keith Kesler sent me this wonderful post written by one of his friends about the takeover of the field by the digerati.  Sounds familiar.

Matt Thompson’s 10 Questions to Reporters

October 4, 2009

If not for Matt Thompson, I doubt there would be a Texas Tribune (well technically speaking there’s still not one, but I’m assured that there will be soon).  It was Matt who got me thinking about the idea of context, and the lack of innovation in news presentation since the advent of large-scale content managment systems.   He was nice enough to spend some time with our team in Austin recently.  It was terrific.

This post represents a really good summary of a lot of Matt’s thinking.  Highly recommended.