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How they made news pay: news traders’ quest for crisis-resistant business models

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  • Bakker, Gerben

Abstract

This paper discusses the problem, implied by Arrow’s fundamental paradox of information, of how to make money from news. To earn money from important news, news traders need to tell the potential buyer what it is, yet once they have revealed it, the buyer no longer needs to pay. This paper discusses how historically this paradox made it difficult for news agencies to profit from selling important news during crises, and how they gradually developed new business models in response. It examines these models and investigates how they interacted with market structure, resulting in just a few international news agencies dominating the international news supply.

Suggested Citation

  • Bakker, Gerben, 2014. "How they made news pay: news traders’ quest for crisis-resistant business models," Economic History Working Papers 59304, London School of Economics and Political Science, Department of Economic History.
    • Handle: RePEc:ehl:wpaper:59304
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    File URL: http://eprints.lse.ac.uk/59304/
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    References listed on IDEAS

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    1. Campbell, Gareth & Turner, John D. & Walker, Clive B., 2012. "The role of the media in a bubble," Explorations in Economic History, Elsevier, vol. 49(4), pages 461-481.
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    10. Diego García, 2013. "Sentiment during Recessions," Journal of Finance, American Finance Association, vol. 68(3), pages 1267-1300, June.
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    13. Gerben Bakker, 2005. "The decline and fall of the European film industry: sunk costs, market size, and market structure, 1890–1927," Economic History Review, Economic History Society, vol. 58(2), pages 310-351, May.
    14. Bhattacharya, Utpal & Galpin, Neal & Ray, Rina & Yu, Xiaoyun, 2009. "The Role of the Media in the Internet IPO Bubble," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 44(3), pages 657-682, June.
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    17. Bakker, Gerben, 2012. "Sunk costs and the dynamics of creative industries," Economic History Working Papers 49081, London School of Economics and Political Science, Department of Economic History.
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    21. Bakker, Gerben, 2006. "The Making of a Music Multinational: PolyGram's International Businesses, 1945–1998," Business History Review, Cambridge University Press, vol. 80(1), pages 81-123, April.
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    Cited by:

    1. Pierre Cotterlaz & Etienne Fize, 2021. "Information in the First Globalization: News Agencies and Trade," Working Papers 2021-02, CEPII research center.
    2. Pierre Cotterlaz, 2021. "Three essays on spatial frictions [Trois essais sur les frictions spatiales]," SciencePo Working papers tel-03436173, HAL.
    3. Bakker, Gerben, 2014. "Soft power: the media industries in Britain since 1870," Economic History Working Papers 56333, London School of Economics and Political Science, Department of Economic History.
    4. Pierre Cotterlaz, 2021. "Three essays on spatial frictions [Trois essais sur les frictions spatiales]," SciencePo Working papers Main tel-03436173, HAL.

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    More about this item

    Keywords

    news agencies - history; Reuters; Havas; the Associated Press; Wolff-Continental; ANP; Arrow’s fundamental paradox of information; business models; sunk costs; market structure - history; quasi-public goods/toll goods; financial crises; Kenneth J. Arrow;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • N80 - Economic History - - Micro-Business History - - - General, International, or Comparative
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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