Thursday, July 02, 2009

Newspapers, user-generated content, and the cost disease

I was going to write something about Baumol's cost disease and its implications for Judge Posner's misguided proposal to ban linking/paraphrasing of newspaper stories, but then I found a good post explaining cost disease in the performing arts and applying it to newspapers, which also face greater constraints on increased productivity than other industries. (Though we can debate the extent to which tech allows more efficiency in reporting/editing/fact-checking etc., it doesn't seem as great as the extent to which tech allows Wal-Mart to decrease the price of paper clips.) If cost disease is the problem, then increased legal rights don't make much sense as a solution.

Interestingly, Wikipedia's article on cost disease points out that one of the solutions is increased provisioning of the good by volunteers or increased nonmonetary rewards. So we could see user-generated content, like cultural respect for journalism, as both cause and effect of the economic constraints under which newspapers operate.

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