Free-Market Magic Will Save Newspapers Any Day Now

The Financial Times editorializes about the future of newspapers like the Financial Times:

Perhaps some of the reporting done up to now by for-profit papers will in future be funded by foundations or trusts. But the industry should not lose faith in the free market. When people really want or need something, they will pay for it, one way or another.

"When people really want or need something, they will pay for it, one way or another." This argument comes up a lot when the future of journalism is on the table, and maybe it has some merit. But it's really a fairly limited principle, isn't it?



If you were to conduct a poll and ask, "Do you want or need a relatively clean environment?" I'm sure you would find that most people do, in fact, want a relatively clean environment. Yet it's pretty clear that most people are not willing to pay for it, which is why the government is on the verge of stepping in and setting a price for carbon. Maybe that's what the FT means when it says people will pay for something "one way or another." But if your free-market principles include, I dunno, "letting the government set an artificial price floor" then they are loose principles indeed.

I don't think the market for news is like the market for clean air. But nor is it like the market for cucumbers or airplane tickets. Information markets are beset by all sorts of failures and potential failures. (Here are two: It's easy for free riders to absorb the benefits of new information without paying for its production. And even if I am willing to pay for the production, I might not appreciate the full social benefits -- better policy, more accountable government, etc -- of that consumption.) So why are people so confident that the magic of the market will step in solve the newspaper industry's problems?