(UPDATED -- See below)
Matt Yglesias posts Tyler Cowen's "No Profits Here" Hypothesis:
[T]here was some productivity growth but much of it fell outside of the usual cash and revenue-generating nexus. Maybe you will live until 83 rather than 81.5 and your pain reliever will work better. In the meantime you will read blogs and gaze upon beautiful people using your Facebook account. Those are gains to consumer surplus, but they don’t prop up the revenue-generating sectors of the economy as one might have expected.
Good examples of this would have to include Wikipedia (which is hugely useful but doesn’t make anyone any money at all), Craigslist (which has revolutionized the way people do a lot of things but has done far more to destroy other firms’ revenue sources than to make money for itself), and much open-source software (where the absence of copyright-enforced monopoly profits make the product more useful, but less lucrative, than closed-source products).
The post hit me like a brick in the head -- because I suddenly understood what this implied for newspapers. Until now, I've been telling The Talented Videographer (who works for a major metro newspaper) to buck up; sure things are bad, but eventually, the newspapers will figure out a profitable model for going online and the ones that do (NYTimes, WashPo, HoustonChron) will survive. And my confidence was rooted in a general belief that the internet "revolution" was more an evolution -- a shift from print to digital economy that would only temporarily destabilize the growth of such industries.
What this argument suggests, though, is that the internet is revolutionary; that there are many areas where the internet may heavily decrease the amount of capital and economic activity a specific sector can support (e.g. advertising:Craigslist, encyclopedias:Wikipedia). And this, in turn means, that there may be no return to the heady days of print journalism -- with thousands of investigative reporters employed full-time across the country. We'll be left with AP, Reuters, and ten thousand bloggers -- and nothing else. And as much as I love blogs, you have to assume that investigative journalism will suffer (politicians and business leaders return calls if you're at a major paper, but a blogger? Click). I guess the next big question: will the public care when their dailies close? Will they notice an appreciable difference in lifestyle without this investigative citizen advocacy? I'm pessimistic.
On a side note, this was essentially David Simon's stated thesis with The Wire, except that he argued journalism had already died at the dailies. And as, according to Simon, "everybody missed" that central story, I'm not sanguine about the future of journalism.
Anyway, I emailed Matt, and he thinks that its the non-journalists at the papers who face extinction:
I’ve been writing about this on-and-off for a while but basically, yes, I think that part of the print-to-digital transition for periodicals will be a dramatic reduction in the total number of people earning a decent salary doing this stuff. But bleak as the outlook may be for news reporting as a profession, I actually think it’s the less reportery elements of the modern newspaper that will be in an even worse situation. In the not-too-distant future, I predict that we’ll have approximately zero professional movie critics. There’ll just be movie fans writing in exchange for the ability to attend critics’ screenings, and some kind of aggregator websites.
That makes sense; there's no reason, if all I want is an opinion, to rely on a newspaper -- blogs are faster and sharper. (Hence Dwight Silverman is considering starting an independent blog.) But even if I want my news from a journalist, will I be willing to pay for it? Where's the new institutional structure to house, train, and develop them? I don't think experience blogging--even at larger sites like Huffpo or Talkingpointsmemo--will suffice. The best journalist bloggers are bloggers who were trained and developed as journalists.
UPDATE: Dwight Silverman emailed me a cordial note to set me straight. While he'd consider setting up a indy blog IF (big if) he became a layoff victim, he's happy with his current situation (and who wouldn't be?). Goes to show that cocktail blog gossip ain't always the most accurate (see: Wonkette).
Oh, and in case Wonkette emails ... I really meant Rush Limbaugh.