This is the second portion of my interview with Jay Hamilton, author of this month’s Nieman Journalism Lab Book Club selection, All the News That’s Fit to Sell. We’re talking about Chapter 2, which is where the meat of the book begins. Jay uses the transition from party-affiliated to independent newspapers in the late 19th century as a way to look at how economic factors influence what many journalists would like to think are independent decisions of craft. A few points we discuss:

— Why it makes economic sense for so many people to ignore the news;
— What the Internet has in common with the mid-19th century;
— The role of fixed costs in a news organization’s distribution strategies.

Full transcript after the jump.

Josh: We’re talking about Chapter 2, and that’s the chapter in which you go through the evolution of nonpartisan newspapers in the 19th century — how the print press moved from being predominantly partisan to being more independent and more nonpartisan. What were the primary forces in that period that pushed newspapers in that direction?

Jay: Well, if you think about information markets, people demand four different types of information: consumer, producer, entertainment, and voter or citizen information. And the first three types of markets work pretty well. If you don’t get the information yourself, you don’t get the benefit. So if you want to buy a car, you go to Edmunds, you go to Consumer Reports, you learn about cars, you get a better car.

If you think about that fourth information demand, citizen or voter information, you and I could study up on global warming, but global warming policy isn’t going to get better just based on the individual actions of you or me. We are really not, in a statistical sense, the decider.

And for economists that means that most of us remain rationally ignorant about the details of politics and don’t consume or demand a lot of information about politics and government. And so that sets up this tension between what people need to know and what they want to know. And that tension has been solved in many different ways across time. A hundred fifty years ago, the parties, in part, subsidized the provision of information. So you had a partisan or party press.

And then around 1870, when you had the invention of the high-speed press — they were very expensive. They had high fixed costs. And to spread those costs across different people, people stopped being the Republican newspaper or the Democratic newspaper, they became independent. And that allowed them to reach a larger number of people, which allowed them to spread the cost of those presses across many different people.

So number one, it was the high fixed cost. It was the need to spread the cost of those high-speed presses across many different people. And then number two is the evolution of the advertising market, where you started to have national brands, people who wanted to come into communities and advertise.

And they found it cheaper and easier to deal with one large paper or two large papers rather than five or seven small papers. So those two forces generated. especially in the large cities in the United States. a big change between 1870 and 1880 in how people identified their paper.

Josh: That’s interesting. When you describe the rational ignorance of political issues on the part of a lot of voters, I think a lot of journalists — particular ones who cover the government, who cover these public policy issues — at some level they are conscious, and I know I was when I was a reporter, of writing for an audience that is different than the general audience of the newspaper.

I wrote a lot of stories about education policy in Texas, and I knew at some level that the main audience that those stories were intended for [was] the policy makers, who then might use the information that I found to make things better within the system. And the identification of an audience within that audience seems to connect with that economic theory you mentioned.

Jay: That’s right. First, you mentioned that you wrote for a newspaper — newspapers can offer a portfolio of stories. They don’t have to tell the same story to everyone at the same time, like a broadcast local news channel does today. So that meant you could have a large number of stories which were boring to a large number of people — but a segment of the audience could be attracted to it.

The next thing is you mentioned policy makers. If you go back and think about the four information demands: consumer, producer, entertainment, and voter — for some people news about politics is something they need to do their job, and so that’s a producer demand. And that’s in part why The Washington Post can specialize in coverage of government, because of its local market. In D.C., news about government and politics is producer information, just like financial information is producer information in New York City.

And the other thing about the market for public affairs — I think it comes from what I call the three D’s: duty, diversion, and drama. Some people believe they have a duty to vote, and those people also feel they have a duty to become informed. It is not an investment decision, really. They are not saying: I’m the marginal voter, I’m going to determine who is going to be the senator. They are saying: I’m a citizen, I vote because that is part of my identity. It is almost like a consumption act. So they demand news.

For some people C-SPAN is like ESPN. And I will plead guilty to that, and you probably would too. The details of politics are just inherently interesting. And then there is drama. Maybe some people won’t sit still if we are going to talk about the details of the stimulus plan, but if we could say how the stimulus plan is affecting somebody’s polls — who is up, who is down, what the political horse race is, a scandal, who paid their nanny, who paid their taxes — if we could look at politics through the prism of a horse race, that’s human entertainment, and that’s another way you get information delivered.

Josh: One thing I found interesting about this chapter was the parallel to what has happened in an era in which the fixed costs of producing information have radically dropped — how distribution of news and information online is essentially at a zero cost at this point, other than the production of the information. And at the same time, a lot of the real energy in new media, the examples that people point to like Talking Points Memo and others that have done innovative and interesting things — a lot of them are in openly partisan environments. They are liberal news organizations or conservative news organizations. Is the Internet essentially bringing us back to what it was like in the pre-1870 era?

Jay: That’s a great insight. It’s truth. Large fixed costs brought us objectivity as a commercial product, and the reduction in fixed costs is bringing back partisan news outlets. If you look at the cable channels, Fox is counterprogramming against a slight liberal media bias in the network news, which I think we’ll talk about a little bit later, but you’re exactly correct. If you look on the Internet, the small cost of setting up a website means that today you can get your world view reflected back at you at a much higher probability than the past.

Josh: Did you see a connection in your work between objectivity and hard news content? Because the partisan press was interested in producing information about public policy — it was just doing it from a partisan perspective. Does increased objectivity increase or decrease the amount of hard news being produced?

Jay: Well, it’s interesting. I think it creates a different type of news, in the following sense. If you think about — imagine media products were arrayed along the line, from left to right. What you are seeing now is more products spread across that line. And what I show in my book is that if you tell me where you stand on a left/right seven-point scale of liberal and conservative, I can place you on that line. Then if I look at the average liberalism and conservatism of who’s consuming a media product, I can put a newspaper or television show on that line. And then what I show in my book is that the greater the space between where you stand and where the average reader or viewer is of a program, the more likely you are to say that that program is biased.

Josh: I was on a TV show a couple weeks ago talking about people evaluating the Israeli-Palestinian conflict coverage, and those great studies done in the ’80s, about the exact same stories would be viewed as radically pro-Israel or radically pro-Palestinian — depending on the bias of the person or the perspective of the person who is doing the evaluating, even the same story.

Jay: That’s right, and I think that the reason that happens in part is because you don’t really pay a price to having mistaken political views. If you think about it, if I believed my car ran on water, after about a day I wouldn’t be going around town driving. And if I really wanted to watch a news source that told me it was going to rain every day, I would pay a price for that, pretty quickly. But if I want to believe different things about the way the political world works, because my own political decisions don’t have a large statistical impact on that, you could have a set of people of that were studied by the University of Maryland, where they looked at Fox News viewers and found that they were more likely to believe that Saddam Hussein was directly involved in 9/11, and that weapons of mass destruction had actually been found. Those two statements, most people would agree, are factually inaccurate. But if you do believe those statements, you personally don’t pay a price for believing that.

Josh: So it would seem like from what we’ve been saying, two routes to increasing the demand for hard news would be (a) to increase the stake somehow attached to people’s knowledge of hard news, which seems hard to do, or (b) to increase the duty factor that you mentioned, the people who view being informed as citizens, as part of their responsibility even if they don’t get a specific benefit from it.

Jay: Well, it’s interesting. So actually, if you ask me that direct question — how do you support a hard-news provision — the part that I’m really most interested in is accountability or watchdog coverage, because I think that’s the most at-risk to this rational ignorant problem, and it’s also the most costly. I think the policy items that should be on the table for that are: non-profit ownership or non-profit subsidies for the creation of information; something that I would call computational journalism, which is essentially lowering the cost of doing that type of investigative or accountability reporting; or better monetization today of the attention of people who are interested in hard news. And I think that’s going to involve a big debate about privacy — what you’re willing to let Google or Yahoo use about what it knows about you to deliver a higher advertising rate for a newspaper.

Josh: Ok. Well, we’ll get into that in future chapters. Thanks.

Jay: Thanks.