When are inferior goods good enough?

The central question is why does the “good enough” theory advanced in the Wired article, as Vicky mentioned, not apply to online news in the sense of competing with traditional print? I think we’ve looked at some of the reasons in class already, but the fact that it’s free is generally one problem and that online advertising returns less than print advertising is another. Also, as Dr. Chyi mentions, it’s not ideal to read it particularly on mobile devices. NAA data also hints at the idea that online news is inferior: print sales start to drop off just ahead of the 2008 financial crisis. But if you’ve gotten your news online for free, can you go back to paying for it?

The music industry provides an interesting comparison to the news industry. Unlike news, the music industry fought getting online, filed lawsuits left and right against piracy, and only after a long fight started to embrace online business models. And now? Streaming services are nearly 40% of its revenue. So even if MP3s are inferior to CDs, they are slowly becoming the norm. The larger historical patterns can be found here. The industry has been actively seeking to monetize these goods. It tightened copyright protection and began dabbling in online business models to offer alternatives to piracy, and capturing some unmet demand. However, its revenue is dropping to pre-1990s levels, and worse if you look at the inflation-adjusted data.

The difference between music and news? People listen to music on their computers and mobile devices, but they do not necessarily read the news, or at least enough to pay for it online. The question is, as the economy recovers do news subscriptions go up? (I think it’s a safe prediction to say that magazine subscriptions will go up because, first of all, their value does not diminish the day after they are published). However, no one will go back to buying CDs because they likely no longer have a CD player. What can newspapers do? For one, look at the Yelp page for the Statesman, which is essentially a sounding board for subscribers complaining about its customer service, canceling their subscriptions. Their message? Online news may be inferior, but at least it gets delivered.