Wednesday, January 07, 2009

The NYT and the information theory of the leisure class, part 1/4

(Welcome Instapunditeers!  This is a long essay, put up in four successive posts, on the business model of the New York Times and how it can be seen to follow certain parts of Veblen’s theory of the leisure class. An abbreviated version of it was published at Pajamas Media online. This long version goes into more discussion of pricing under conditions of conspicuous consumption and luxury goods.)

The Information Theory of the Leisure Class, or,

A Requiem for my New York Times Home Delivery


Is it the politics, or is it the business model, and are they the same thing?

I am about to drop my Washington DC home delivery subscription to the New York Times. We’re going online for free.

Most readers surely wonder not why I would drop it, but instead why I hadn’t done it years ago or why I ever had it in the first place. It’s not cheap. It runs $53 a month – over $600 a year. But cut me a break – my wife is a native New Yorker, and even after a dozen years in DC, the Times is still the hometown paper.

It’s not the political content of the paper that is causing us to drop the subscription. Sure, I’m irritated that subscribing to the Times probably counts legally as a Democratic Party donation. I’m annoyed not so much by the Times’s relentless cramdown of its politics on the news pages, but the risible manqué that its “opinions” are “facts” – along with its suppression of discussion even remotely unfavorable to its candidate in this just-past election cycle. But this has been said a thousand times: what’s new in that?

Besides, I believe in reading widely across the political spectrum – this being one of the asymmetries between right and left wing intellectuals. The issue at bottom, with respect to keeping or not the hard copy subscription, is not the New York Times’s politics, but rather its business model and what it is doing to the content as a function of the newspaper’s price. The politics and the business model are intertwined in the creation and publication of content, true, but they are still not quite the same thing.

This, of course, against the well-publicized backdrop of the New York Times Company’s economic woes. Its corporate debt downgraded a few weeks ago to near junk status. Share price down around $7 today. Plunging revenues even outside the current recession. A sale-leaseback of part of the Times’s stake in its (overly-opulent) midtown headquarters (a wonderful real estate investment in better times in Manhattan, which will come again, but a great investment only if the Times mostly decamps to New Jersey). Some $400 million in debt repayment due in April. No, the Times is not indebted to remotely the same extent as, say, the now-bankrupt Tribune group under Sam Zell. The Times’s many enemies should give up the fantasy that it is somehow about to go under; it’s not. It has many problems, starting with Pinch Sulzberger deciding to break the unwritten pact of family-controlled-but-publicly-traded newspapers, viz., that the family would use its control only for editorial content, not to enrich itself at public shareholder expense. The rapacious Sulzberger family has been willing to keep Pinch in power provided that he continue paying out completely unsustainable dividends, at the expense of share price and value; well, even the dividend has finally been slashed. The New York Times Company might be ripe for a buyout by a private equity group, if the family were to splinter sufficiently – no one should doubt that the brand name has huge value, or that it is currently substantially discounted, weighed down by inept and greedy family management and the broader newspaper economic crisis. I have close friends who work at the Times, and I do indeed worry about them, their careers, and their families.

No comments: