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When I first started paying attention to business, in the late 90s and early 2000s, one of the background assumptions I learned was that newspapers were a great business because of classified ads, and that the Internet was inevitably going to take that away from them. It was a stark reminder that even an invincible-seeming business can be threatened by something that doesn't even style itself a direct competitor. It was a shock to learn, years later, that this wasn't actually true: newspapers were a notoriously tough business, one that went through serious attrition in the mid-twentieth century, and that classified ads really only got going from the 70s to the 90s when the typical city went from having multiple competing newspapers to having just one monopoly, which had immense pricing power for anyone who wanted to sell a house or get a date.

Similarly, airlines were synonymous with a tough industry that would chronically lose shareholders' money by the late 80s, but they were hot stocks in the 60s. When Phil Fisher wrote Common Stocks and Uncommon Profits in 1958, he assumed his readers already knew what the big growth industries were—aluminum and chemicals.¹ So, these things are prone to shifting, and industries don't stay high-growth forever.

But one thing that is pretty consistent, historically, is that hard news doesn't pay in a purely financial sense, except in cases where the news involves the price of financial assets and the pitch is that readers get them first, or get the most accurate numbers.

For a long time, the core business model of reporting news was to have some political agenda that would lead people to pay for certain kinds of news to be printed. This could be done in a direct way, where political parties funded pamphlets and periodicals to get their message across. It could also evolve organically: sometimes, local rich families would end up owning a mix of local assets, and would see newspapers as strategically valuable: if you've bought a plot of land and you want to get it zoned for something more profitable, it's convenient if you're also in charge of which mayor or aldermen gets endorsed, whose campaign gets covered, and just what that coverage looks like. This was part of the Los Angeles Times model in the early- to mid-twentieth century, at least according to The Powers that Be; various Booths and Chandlers had great timing in buying land just before it was going to get irrigated, get built on, etc., and the Times was there to cheer them on or deem their dealings not-newsworthy as appropriate.

That's not the only payoff news can have. They're often more beneficial for their owners when they pay an in-kind dividend in more abstract political influence rather than a regular dividend in cash. A single newspaper usually can't decide who gets to be President or what America's foreign policy should be (it took a concerted effort by both the Washington Post and the New York Times to decide who shouldn't be President and which wars the US should hurry up and pull out of). But they have influence, on the margin, which might be comparable to casting at least a few electoral votes. That's a long way away from being in charge, but it meant that Booths, Grahams, and Sulzberger-Ochses were able to cast heftier votes than the average person.

And that's appealing! You can be a well-meaning, civic-minded person who earnestly wants the best for the country and wields influence in order to help make that happen. But it's also gratifying if, after an election, the President-elect takes some time out from celebrating to call and say "Thanks." (The Houston Post endorsed Nixon in 1960 and Johnson in 1964. They got the call the day after election day.) There are people whose entire lives get defined by recapturing their first experience of wielding power behind the scenes like this.

And this is true throughout the business. It's electrifying to see your byline under a masthead that you and your peers respect. It's exciting to know that you can play a role in what counts as news, or how that news is presented. This is the kind of thing people accept big pay cuts to do, and at least some of their friends who picked banking or law are jealous.

But those lower labor costs are offset by the fact that hard news requires some combination of effort with an uncertain payoff, and travel to or relocation to sometimes inconvenient places. It's expensive to have a bureau in every major city, or to somehow get a reporter into a war zone. (Sometimes, the expense there is intangible, too: Mao was happy to host Edgar Snow once he was sure what angle Snow would take. Long after that, "embedded journalism" got invoked frequently in Iraq. But it's a fact of life that if you're going to get close enough to the action to see who's shooting whom, you're in the line of sight to get shot, and will probably last longer if you hang out with some practiced professionals in the not-getting-shot business.)

Meanwhile, news business owners are willing to tolerate a lower return on equity in exchange for influence, or the feeling of influence. And they have to! News is just a terrible idea for a product. It's depressing, it challenges consumers' views, if they disagree it feels like they're being subject to the worst half of an argument, and advertisers don't want their products to be touted in between a segment about a distant civil war and another one about a local riot (except maybe Palantir). Sports and celebrity gossip are just easier topics to sandwich in an ad for detergent or candy.

The usual tendency is for media organizations to move to lighter and lighter fare. Some of them keep doing serious news, out of some mix of institutional culture and the desire to keep employees happy; a very successful casual gaming and recipe conglomerate did some really solid reporting on how there came to be two Dan Sullivans on Alaska's senate ballot, for example. But the usual thing to expect is that the media sources you trust are either in decline or run by someone who isn't prioritizing their P&L.

But this creates a funny kind of hard-news ponzi scheme. I grew up reading a decent local paper (the St. Louis Post-Dispatch) and good national ones (WSJ regularly, NYT occasionally). The last two have done a decent job of staving off decline. But plenty of other people of my generation remember news being better (or they misremember; part of the idealism of youth is just being oblivious to being manipulated). And some people of this generation have enough wealth that resurrecting Time or keeping The New Republic alive for a while seems like a nice tradeoff and a fun post-exit retirement project. Which means that today's young people who are first getting curious enough about the world to read about current events are also getting a distorted view of whether or not well-reported stories are part of the natural order of things. They aren't! They're at least partly a result of a small number of wealthy people being blinded by nostalgia, and expensively recreating the outputs of a media ecosystem that was itself funded in part by an earlier generation of rich people accepting lower financial returns than they otherwise could have gotten. In that sense, other than a brief quarter-century period involving classified ads, the news business is best thought of as something like Halloween: one generation's effort to recreate its idealized memories of the past. The weird thing is, that works.

The Diff touches on media history fairly frequently; it’s a branch of applied epistemology in that we get most of our information about the outside world from the media and it’s helpful to know what incentives they have aside from keeping us well-informed.

• Learning from the death of the afternoon paper ($).

• Invisible media models ($).

• Newsletters can move markets.

• Here's The Diff's review of Halberstam's Powers That Be.

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1  One fun example of how much things change: the two great New York at a market peak novels, The Great Gatsby and Bonfire of the Vanities, both include a section where the narrator muses about what it's like to be in the bond business. Nick Carraway does bonds because he wants to fit in; Sherman McCoy thinks that trading bonds basically makes him a superhero.