Too much ink is spilled telling us how the American newspaper business is dying. The major reason for this economic change being covered as no other is that the journalists spreading said ink are the people losing their jobs. In employment terms, the industry has halved in a mere couple of decades — this will get writers writing, yes. Thus, we get the anguished pieces insisting that something must be done.

The reason for the industry's decline is obvious: the Internet. But near all are missing what the Internet has actually done. As a result of that, they’re also missing what’s going to happen — essentially, that the U.S. press is going to become much more political, in both party and sociopolitical terms. For what is happening is what did happen in the U.K. about a century ago, and the best bet is that the outcome will be the same as a result of the same economic incentives.

The reality is that yes, the Internet came and ate a lot of the advertising revenues — but much more importantly, it abolished geography as a limitation to distribution. It is from that the changes will flow.

Traditionally, a U.S. newspaper relied upon three revenue streams, roughly one-third each: subscriptions, commercial advertising, and classifieds. First, the Internet ate the classifieds (see Craigslist), then moved on to some of that display stuff. It is this which is blamed for the decline of the industry and the associated calls that Google and or Facebook should cough up some money to revive it.

Much more important, though, is geography. The U.S. is a big country. You could drop the average European country into it and not really notice. A result of this is that U.S. newspapers were, largely speaking, a series of regional monopolies. This was down to the same network effects that people use to complain about Facebook today. Once you’re getting the majority of the classifieds in an area, for example, you’ll end up getting almost all of them. People read the section because that’s where the ads are, people advertise there because the readers are there, and so on. And as above, classifieds were a very important part of newspaper financing.

But note my point here about those regional monopolies. Apart from the very largest cities, there was usually only the one major paper. And there was another one of those every ... well, that’s the geography-dependent part. The U.S. rail network has never been very fast at the distribution of either goods or people. It's optimized for bulk commodities like coal, iron ore, and the like. But getting something printed this evening to somewhere 400 miles away before breakfast? Not so much. Thus, each major urban center, perhaps some hundreds of miles from the next, had its own newspaper ecology.

Now along comes the Internet. Our local monopolies created by geography are now broken. It’s that, much more than the loss of one or more revenue streams, which is leading to the change. We simply do not need 50 or 200 major newspapers all trying to tell their readers about everything. It can be, and therefore will be, managed with very much fewer than that.

Which is where the comparison to the U.K. newspaper market comes in. Britain has been a national — in the sense that the U.S. is only just becoming — newspaper market for well more than a century now. Since the rail network meant that, in this much smaller place, one printing plant (although there were often two geographically spread) could serve, on a daily basis, the entire country. Which is what then happened.

At which point, there are roughly a dozen national newspapers, all competing equally across geography. What happens then is that the competition comes from the political, or if you prefer social, leanings of the papers themselves. Instead of claiming impartiality (a profession trending 90 percent liberal isn’t going to be impartial), American newsprint likes to pride itself upon the market swings entirely the other way. In the U.K., there are definitely left-wing (the Guardian, the Mirror) papers, equally right-wing papers (Telegraph, Sun), middlebrow (Mail, Express), high-culture (Guardian, Telegraph), low-culture (Mirror, Sun), and so on.

In effect, instead of multiple newspapers competing upon geography, we’ve got many fewer but greater competition on the basis of socioeconomic view — arguably something which leads to much greater diversity because that’s what the competition is dependent on, the diversity of viewpoints.

Interestingly, almost none of those newspapers carry anything but the sparsest amount of classifieds. A century ago, they dispensed with that revenue stream which U.S. papers are just struggling with the loss of.

Which is pretty much what my prediction for the future of the American newspaper is. Some dozen or so — this is a reasonable guess at the number of segments of social and economic viewpoints we can divide society into — titles or mastheads competing with each other for that national coverage. Most of the rest of the industry will either go bust or retreat into being very local reports about flower-arranging classes. After all, why not? That is what did happen the last time the same industry faced the same economic pressures.

It is also why I don’t worry about the death of the American newspaper. It’s the death of a particular economic model, one that came about because of the geographic isolation of much of the country. Now that series of local monopolies is being broken up, the output of the industry is going to be much better. After all, we do think that direct competition for our grocery money, our car cash, our retail resources, etc., is what continually improves the supply of those things.

Now that the major newspapers are competing with each other nationwide it’ll make them better too, right?

Tim Worstall (@worstall) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.

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