If you get your economics wrong then so too will be your solution

Willy Hague is telling us about the decline of local newspapers. Important for local democracy and all that, doncha know. So, there’s a solution:

Such abuse of global dominance warrants some international solidarity — the UK could join with other countries to require links to local news, and payment for them, and levy serious fines for non-compliance. Here at home, the new Digital Markets Bill must be used to require the social media firms to negotiate with local papers.

Sigh. As we’ve pointed out before, this is not the correct solution for it’s also not the correct diagnosis of the problem.

We should, perhaps, just take a moment to marvel at the claim being made there. The search engines and social media sites must send traffic to the local papers because that benefits the local papers. And also, the same sources of that traffic must pay the local papers for sending them the traffic which benefits the the local papers. That betrays a certain confusion, no?

But that initial mistake. It’s not the social media companies which have sucked the revenues out of local papers. Newspaper economics did not work that way. The grand profit centre was always the classifieds ads section. Those classifieds have moved to Autotrader, Rightmove, Monster and Gumtree. That initial analysis has misdiagnosed which part of the internet cut the local papers off at the knees.

And therefore - and of course - the proposed solution is wrong.

So, err, let’s not do that then.