Substack created an alternative to this business model by shifting the journalism tax from advertisers directly onto consumers. Now, instead of indirectly subsidising reporters’ careers by buying products from the companies that market them through print ads and TV spots, readers could pay them directly via the online marketplace of journalism that is Substack.
The problem with this model is obvious: it will never come close to producing revenue on the scale that mass advertising generated for media corporations. From the perspective of advertisers, of course, that’s a good thing: their profits aren’t being siphoned off by an industry they have nothing to do with. From the perspective of news consumers, though, it sucks. It means less journalism, and journalism of a much lower quality.
We have known since Varian and Shapiro wrote Information Rules that, although obtaining revenues for digital goods is a challenge, there are more choices than just advertising or subscription. In my early days of writing “Arguing in my spare time” essays, I favored the bundling model. But I have come around to seeing the value of the patronage model, or what Andrey Mir (mentioned using Mir’s longer surname by Woodhouse) calls “donscription.”
Authors want two things. We want money, yes, but we also want a wide following. On Substack, those are in conflict. You can have more readers if you have more free content. But you convert more readers to paying subscribers by putting more content behind a paywall.
Richard Audoly and others write,
Following both the dotcom recession and the GFC, the decline in the labor share during expansion is steeper than in earlier cycles. Moreover, unlike in pre-2000 episodes, the labor share does not meaningfully rebound later in the expansion.
The 21st century has seen soaring prices for houses and for equities. It has seen an increase in capital income relative to labor income. In which direction does causality run, or is it bidirectional?
Because currency is not a close substitute with other financial assets, if the government doubles the stock of currency it doesn’t cause the public to choose to hold 10% of their income as cash instead of 5%, rather they continue holding about 5% and NGDP doubles.
He has much more to say, in an essay about John Cochrane’s views. Like me, Cochrane emphasizes substitutability between money and other forms of government debt. But unlike me, Cochrane assumes that everyone is making forward-looking calculations about future government borrowing.
Used in isolation, demand-side tools will be partially absorbed by higher housing costs where supply cannot respond. The widening gap across income groups also demands attention; actions to increase supply—especially more affordable, entry-level homes—will help to bridge this gap.
…Continued cost and rate pressures in expensive MSAs will likely push co-residence back up,
Pointer from Kevin Erdmann. Once again, subsidizing demand and restricting supply gets the expected result: no more people in homes, but higher rents and prices.
Note that rent control is a two-fer. It subsidizes demand, by artificially depressing rents. And it restricts supply, but punishing anyone who would dare to build an apartment.
Developers aren’t avoiding Maryland because they don’t believe in the market. Some of these are fundamentally strong submarkets with real population and real demand. They’re pulling back because the math stopped working. Rent control is the clearest culprit. When policy caps what a stabilized asset can earn, it changes the return projection on every deal in the pipeline. The crane doesn’t show up because the spreadsheet says don’t. That’s not a complicated sequence of events.
substacks referenced above: @
@
@
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.