Aim the gun the right way

The last time Paul Farhi and I disagreed, it was about who’s to blame for the fall of newspapers (he found journalists blameless; I didn’t). We disagree about the same topic again. This time, he’s arguing – in an incredibly long American Journalism Review piece – that it’s the Associated Press’ fault for selling content to portals.

I’m going to suggest that you compare his analysis to that of Joey Baker, who writes a heavy metal rendition of Clay Shirky’s already-legendary essay on the economics of news.

Inherent in what Farhi writes is every old assumption about the economics of media, unchallenged by others and by the reality of a new reality. The notion is that portals were empowered by having the AP’s news and that this made it into a commodity (not the AP’s homogenization of the news, not the fact that knowledge, once known, is a commodity). But as the AP’s execs and defenders say in the piece, if the AP had not been there, Reuters would have been. Indeed, Reuters was. A

nd today, Reuters has shifted to a reverse-syndication model in which it gives headlines to portals for links back, which Reuters then monetizes (sharing revenue back for the value of the links). The AP, handcuffed by its paper-owners, can’t do that. The papers should be following Reuters’ example by giving the headlines in exchange for links, which they then monetize.

The AP is, indeed, hurting papers, but not the way Farhi thinks. It’s hurting them by cutting off links to the original reporting. That is how the link economy works. (Oh, and by the way, the big bad portals are themselves crumbling. One wonders which will die first: the papers or their supposed killers.)

The fallacy in Farhi’s argument is this: “When you give away the news, it becomes a commodity. When something becomes a commodity, you lose your pricing power. And that’s where we are today on the Web.”

Now see Joey Baker shooting that through such arguments – aka “the kool-aid of the bass-akwards mind fuck that the ‘old media’ folks try to sell you” – like a machine gun:

“Our economy is based on the trade of IP, and yet, paradoxically, the internet has made information practically infinite. Therefore, attempting to make money by controlling the amount of information is doomed to fail. Put another way: controlling the scarcity of something that isn’t scarce can’t work.”

There are more bullets in his gun:

History is not a good guide here: The internet is a fundamental shift from anything we’ve experienced before. It’s as revolutionary as the printing press and as radical as the written word. It’s both asynchronous and instant two-way communication.

There are however, fundamental laws. We just don’t know them all yet. The idea that you can delay, or should delay the transition to an internet based economy is just stupid. We’re here. Welcome to the future.

We depend on competition in our economy (fundamental law), which means that the first person to figure this out is going to make a boat load of money. Delaying, will guarantee you’re not that person.

There are two camps out there: folks … who think that there is some way that we can charge users for content just because we’ve always done it (we haven’t). And folks like me, who are convinced that the internet is such a fundamental shift to the economy and information management, that charging for basic content is just asinine.

The first of these commentators writes about media for The Washington Post. The second is a student. The first lives in the old world and understands its rules. The second lives in the new world and understands its rules. Who are you going to listen to about the future? It seems obvious to me.