Cleveland partner David Marburger and his brother Daniel Marburger, an economist at Arkansas State University, were invited by the Los Angeles Times to author an op-ed on their theories regarding the current state and future of the newspaper industry. The article, "The Free Ride That's Killing the News Business," appeared in the publication's August 2, 2009, edition. Marburger and his brother recently produced analyses which concluded that the redistribution of news on thousands of websites across the Internet is hurting newspapers financially and that the fault lies with the Copyright Act.
According to the Marburgers: "Today, newspaper websites attract millions of readers, so why can't newspapers successfully compete online? After all, they still originate most of the nation's news. Part of the reason is that online ad rates don't begin to match print ad rates. Why? A big reason is what economists call free-riding. Practically anyone can start a website and get software that snags fresh online news from those who originate it. Website owners pluck the freshest, most interesting reports and quickly post condensed rewrites. That costs them little, and they then surround the rewrites with cut-rate ads."
The authors continue: "Competing with each other and newspapers for advertising, free-riders enter the market undercutting each others' ad rates until many of them can still profit, but newspapers, which bear the hefty labor costs of gathering the news, can't. Usually we all benefit when more efficient competitors enter the market and drive inefficient competitors out of business. But the Internet has not made 'new media' publishers more efficient at gathering news than their print counterparts. It has made them more efficient at taking news from their print counterparts and using it to compete while the news is fresh."
Click here to read the full article from the LA Times website.