Paul Krugman was observing that even though the political coverage is the part of the media that people like to talk about, it's actually fairly marginal to the business. The New York Times is known for its hard news coverage, but he observes that from a business perspective it's primarily a fashion and food publication that runs a small political news operation on the side. One issue of T Magazine, he says, pays for an entire NYT European bureau.
And, of course, I would add that the broader logic of the internet is toward disaggregation of content -- the fact that newspapers cover such a wide array of content has to do with the economics of printing and distributing bundles of newsprint. In the future, fashion ads probably won't be able to cross-subsidize any bureaux anywhere. On the other hand, there may be a corrupting impact of some of this cross-subsidization -- I can't help but suspect that the importance of real estate advertising to papers may have distorted their coverage of the housing bubble on the way up.
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