December 7, 2013


New York magazine is very successful. Its editor is very well regarded, and it wins lots of awards. It gets scads of Web traffic. It publishes magazine features that win the admiration of fellow journalists and has also become practically ubiquitous on social media. And, apparently, it still can’t pay the bills as a weekly publication. Hearing that New York magazine can’t make it as a weekly is, for a professional journalist, rather like being told that your teddy bear has cancer. How is that even possible?

The answer is that the circulation of print magazines is declining, while advertising revenue has taken a suicidal plunge. Companies who wanted to inform people about their firm’s activities used to have basically three choices: print media, television or radio. (OK, four if you count billboards.) These were all media companies, and they used the money corporations gave them to produce news.

Now companies have a lot more options. They have their own corporate website. They can try to create online ads that go viral, spreading news of their brand via social media. And, of course, there are lots and lots of Internet companies, such as Google Inc. and Facebook Inc., that companies can pay to spread their message. And what do those companies have in common? They are not, with small exceptions, in the business of producing content. Print media used to bundle content and distribution into one profitable package. Now that package has been unbundled — and print media got left with the part that doesn’t make much money.

But don’t blame Baumol’s Cost Disease.