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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," LSE Research Online Documents on Economics 59304, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:59304
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    File URL: http://eprints.lse.ac.uk/59304/
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    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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