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FTC talks: Lisa George, Hunter College economist

This is the jump page for rough, contemporaneous notes of the second day of the U.S. Federal Trade Commission workshop: "From Town Crier to Blogggers: How Will journalism Survive the Internet Age," held Dec. 1-2, 2009, in Washington, D.C., at the FTC's 601 New Jersey Avenue offices. Your scribe is Bill Densmore, a fellow at the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. Of course we've tried to provide accurate quotes and summaries. But the FTC has stenographers recording all of the testimony and that should be your definitive source. The home page for this coverage is http://www.newshare.com/wiki/index.php/ftc


George is an assistant professor of economics at Hunter College Her talk is about the costs of content production.

High first copy costs limt the number of papers that cna surive in any market.

Distribution costs: Newspapers are heavy. It takes a lot to move them around physically. That has shaped the small geographies of newspaper markets around the United States. There are still three times as many newspapers per capital than many European countries. That's because it was needed to get the news to people quickly. It also meant there were fewer papers in big cities.

"It essentially costs nothing to move information across space."

If you want to move information around costlessly, you are going to choose the best ones. This will mean more attention to a smaller number of writers. In economics this is a superstar market. With more attention focused on fewer players. This will happen in journalism.

It used to be that writers and journalists worked for newspapers. There was low pay and also a low risk of failure. Because of technology allows more and more direct contact, you would expect to see a disintegration of that tightly integrated newspaper firm.

There will be more wirters and experts interacting directly with the public. The New York Times hires experts rather than growing them in house and there is more attention online paid to people who are non-journalists. It means more of the returns, profits, value in writing will be captured by the writers and content producers rather than the media institutions, but there will be fewer of them.

Two-sided markets: Aggregators vs. content creators. There is value in the editorial function -- aggregating up editorial topics that you like. The NYTimes does it well for her but there are some blogs. These two sources of value have been combined in media firms, but there is no reason for there to be. Technology separates them.

Are micropayments the answer?

Advertisers care about reaching consumers. The value in the bundling is where advertisers will fund. Advertisers will focus on bundlers. The market for bundling is competitive now. Today, anybody can enter the market for bundling. So advertisers will be there. The crucial piece for the future is how to we capture the value for that content.

"I am a big supporter of micropayments. Penny per click.... there are some reasons why media companies are resisting it a bit, but the technology is there."

"There are reasons that this is actually a good shift."

Losing advertising-funded finance in favor of user-funded finance is a good distortion. Now the NYTimes starts a homes section because it appeals to advertisers.

"Advertiser funding if anything distorted journalism toward elites."

"What you read affects what you do."

What we are seeing is not a loss of attention. We see people consuming less local information and more national information. We are shifting information from local to national. For much of the 20th century, much of a criticism of the U.S. was that it was too isolationist.

A rabbi corruption case instantly made national news. "These types of stories have much more impact when the whole world can see them, not just locally."

She summarizes her trends:

  • Fewer papers, more content differnetiation, less geographic focus
  • Expanded freelance market
  • More bundling
  • Geographic vs. viewpoint differentiation
  • Advertiser vs. reader funding
  • Efficent pricing separates content from bundling values
  • Superstar journalism -- higher risk/reward
  • Local vs. global externalities.