TCS Daily


Blogging: An Economist's View

By James D. Miller - April 10, 2002 12:00 AM

Will the blogging boom be beaten back by big business? Blogging is a new Internet phenomenon where individuals write directly for their own web sites. Some bloggers have achieved massive success, attracting over 100,000 unique monthly visitors. Will these independent commentators survive, or will large media companies eventually crush and co-opt them in the struggle for dominance of the marketplace of ideas?

Bloggers are mostly solo commentators who bypass media firms and provide their services directly to the public. To analyze blogging's recent rise and current weaknesses we need to explore why everyone doesn't go the way of bloggers and work for themselves.

People work for companies when it's too difficult to provide goods and services directly to the marketplace. For example, print newspaper columnists could theoretically sell their works directly to consumers. They could go door to door selling their opinions for, say, two cents a copy. Obviously, it would be too difficult for a print columnist to physically distribute his writings directly to households. It's far easier for him to join a newspaper and rely upon the entire paper being sold to his readers.

Blogging has succeeded because it has made it possible for a solo web journalist to create and distribute his research, reporting, and written opinions. A few years ago a good writer who lacked programming skills would not have been able to create a decent news web site. The efficient way to publish news on the web was for journalists to band together in some media company and have this company provide the necessary computer expertise. Because of Blogger, it's now feasible for someone who is only mildly computer literate to create his own professional-looking regularly updated web site. Blogger has reduced the need for media companies because individual journalists can now physically produce and distribute their own content. Alas, Blogger has not eliminated the benefit to journalists of working for firms.

The weakness of solo blogging can be illuminated by considering why professors work for colleges. Imagine a world where there are no colleges, only professors. Professors would advertise their classes and students would pick which classes to take and directly pay their teachers. Professors could still issue grades and some organization could determine when a student has taken enough classes to qualify as a "college" graduate.

Information costs are the primary reason this solo operator model of higher education is impractical. It would be too difficult for a student to determine which professors are competent to teach. It's far more efficient for the student to pick a college and for the college to incur the information costs of assessing professors' abilities.

Blogger has not eliminated the informational costs to solo journalism and these costs represent blogging's greatest weakness. The proliferation of blogging sites makes it especially difficult for consumers to know which bloggers they would find interesting. True, bloggings are free, but it still costs consumers' time to determine if a blogger is worth reading.

Magazines help readers economize on information costs. Once a reader has decided which magazines to read he doesn't have to assess the competence of individual journalists. For example, you are presumably reading this article not because of my reputation, but because you respect the editorial choices of Tech Central Station. Knowing that this article is in Tech Central Station tells you a lot about its quality and content, and this information is valuable in deciding whether you should read it. Had I merely posted this piece on my blogging site you would have had to read much of it before knowing whether it was worth reading.

By making it easy to create a professional-looking web site, Blogger has actually increased information costs to solo web commentators. To understand this, consider that you learn a lot from a brick-and-mortar store's exterior. It's expensive for stores to maintain a professional-looking exterior, so you can be reasonably sure that if a store looks good from the outside, it's probably a serious operation. If professional-looking web sites were expensive to create you wouldn't find many devoted to incoherent ramblings. By making it possible for nearly anyone to easily create a nice-looking web site, Blogger has reduced the visual clues we otherwise get from a site's appearance.

Many people have overcome information costs and found their way to popular sites like InstaPundit, AndrewSullivan and asparagirl. I suspect, however, that the majority of these site's readers are dedicated news junkies who are willing to search out quality information. Most Americans are probably unwilling to incur the information cost necessary to determine which blogging sites are worth visiting and will instead rely upon media brand names.

There is a slight chance that the blogger informational problem could be solved by sites like InstaPundit which functions almost as a magazine editor does. InstaPundit seems to search out and link to worthy bloggings. A reader willing to rely upon InstaPundit's editorial judgments can venture into the Blogosphere without having to take the time to assess a plethora of bloggers.

I don't think that the InstaPundit approach will solve the blogging information problem, however. Companies spend billions each year promoting brand names. Brands are capitalism's solution to the problems of consumer information costs because they quickly tell you a lot about the branded products. Media companies incessantly promote their brands, and in this arena bloggers will never compete. Whatever you might think of advertising, the marketplace certainly believes that it's effective. Consequently, since bloggers are unlikely to spend the money necessary to seriously promote their sites, I suspect that solo bloggers will never provide significant commercial competition to big media companies.

I predict that the best bloggers will eventually join branded, heavily advertised web sites. Given the success of some bloggers, you might ask why this hasn't already happened. The reason that the top bloggers haven't been co-opted by big media is because the market for Internet content is currently anemic. Most people seem unwilling to pay for online (non-pornographic) content. Attempts to charge users for content by sites like Slate and Salon haven't yielded much profit. Also, since the Internet tech crash, online advertising rates have been very low. Consequently, even if a blogger can attract 100,000 viewers a month he isn't necessarily valuable to big media companies. We are therefore probably in the brief golden age of independent blogging where it's easy, but not profitable, for individuals to keep web logs.

Soon, I suspect, the Internet will become a more profitable place to operate. When it is again profitable to attract a wide audience, bloggers will be hired by media companies. While not all bloggers will "sell out" / "sign up" those that do will get the advantage of working under a media brand name and will consequently grow in popularity and influence. The expansion of high-speed Internet access also poses a threat to independent blogging.

Blogger makes it possible for someone with few computer skills to design a site which looks (and often reads) as good as The New York Times' editorial page. Employing web designers apparently doesn't do much to improve the look of a text-based site. When high-speed Internet access proliferates, however, professional sites will go multi-media and the solo bloggers won't be able to compete.

As more surfers get broadband access, companies will incorporate high-tech graphics, movies and sound into their news web sites. It seems unlikely that a single blogger could ever generate a multi-media site that could reasonably compare to one maintained by a media company.

A popular pioneer of Internet multi-media filled journalism is NakedNews.com. The Naked News journalists read serious news stories while, well... Interestingly, whereas bloggers can design a site that looks like the Times' editorial page, they have no hope of matching the technical quality of the Naked News netcasts. (Although it might be interesting, if not necessarily pleasurable, to see some of them try.) Surfers will undoubtedly prefer the bells and tassels of sexy high tech sites to static text-based blogging pages. Consequently, when corporate news sites start to employ the multimedia technology used by the Naked News people, popular bloggers will either have to sign on or wither in importance.

James D. Miller is an assistant professor of economics at Smith College. He keeps a blog at www.ConservativeEconomist.com.

For another take on blogging, click here.
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