We’re up to Chapter 6 in our video interview with Duke economist James Hamilton. He’s the author of this month’s Nieman Journalism Lab Book Club selection, All the News That’s Fit to Sell. In this chapter, Jay talks about the role prestige and personality play in how media is produced and consumed. Among the topics:

— The psychic return of owning a big-city newspaper;
— Why a journalists’ brand matters more in a fractured-media age; and
— How the Duke men’s basketball team qualifies as an economist’s “excludable good.”

As always, there’s a full transcript below the jump.

Josh: All right, we’re back with Jay Hamilton. We’re discussing his book, All the News That’s Fit to Sell. We’re at Chapter 6 right now, which is titled “The Change in Nature of the Network Evening News Programs”. In this chapter, you talk about prestige as a factor in the heyday of network news operations.

You have a great quote from the head of CBS telling the head of his news division: “They say to me: take your soiled little hands, get the ratings and make as much money as you can. They say to you, take your lily white hands, do your best, go to the high road and bring up prestige.”

I’m curious what you see as the role of prestige in the news market today. It seems — it sort of was a different era when, as you said, the original owners of networks were still alive and newspapers were family-owned, and it was a position of prominence in the community to be a publisher. Is there still a role for prestige in the media today?

Jay: Well, it could be defined in two different ways: prestige as serving the public good, or prestige as in fame. So let’s think about those two different things. There was a great study done in the 1980s looking at many different industries in the U.S., and they found that — two researchers, economists Demsetz and Lehn — found that in two types of industries family ownership was much more likely. And those two businesses were sports and the media.

And in both of those, the individual owner or family got a return — a psychic return — to owning the outlet. They had power within their city, and they could be seen as good citizens. Through tax law and many other factors, those individual owners disappeared — sold out to chains.

And it’s much less likely that the individual owner today is a person. It may be you or me through our declining mutual-fund holdings, or things like that. You do see it in The New York Times and The Washington Post — they have that dual stock structure where it’s still a publicly traded company, but the family has shares with more voting power. And that allows the family to derive some prestige.

The fact that we know who owns, who has that power at the time — the Sulzberger family, the Grahams at the Washington Post — the fact that we know their names shows that there’s still a prestige factor at play. Who else says that dual-stock structure? Rupert Murdoch, and interestingly, Google does too. So the prestige factor is still there — but in terms of doing something that is now profit maximizing, it’s less there today because you don’t have the family or individual owner.

How does fame factor in? In a world of five channels, you can surf pretty easily. In a world of — name the number of channels you have now in your particular outlet, potentially more than a hundred — brands, reporters become part of the story more, because the news changes every day. But if Katie is always there or Tom is there or Charlie’s there or Diane is there, that becomes a way for you to know what is in that news product.

News products are experience goods: In order to know what’s in them, you need to experience them. But that’s a chicken and egg situation. The way that news products have gotten around that is by creating brand reputations: We are going to show you information in the same way, and on television that means with the same person.

So in that sense, the returns to fame are actually greater today. What I showed in my book was that even as the ratings for network evening news were declining, the salaries were increasing — because the actual anchor played an increasingly important role in retaining your attention.

Josh: So what lesson would that give to an average working journalist who isn’t Dan Rather, who isn’t in that sort of an environment where — I understand that that return investment of the brand there. Do you think we are destined, as journalists act in self-interest, to less of the objective distant voice that has typically come in newspaper stories, for example? That were going to have more personality showing through, as journalists try to maximize their own profitability and their own salaries?

Jay: Well it depends on the location of your outlet. If you are in an outlet which is providing business news to people who want to make a decision, based on that information — the closer it is to an investment decision — probably the less likely that personality is gonna come into play.

The more that the information provision is about entertainment or a motive like that, the more room there is for the personality to play. One other thing, though, is if you look at the Times online, think about the proliferation of blogs on the site and the popularity of the opinion columnists there.

It wasn’t a surprise that when they tried the TimesSelect, the information they put behind the wall that you had to pay for was the most differentiated product they had. Which was their columnists — the idea that there aren’t easy substitutes for Paul Krugman and Maureen Dowd meant they could get a certain number of people to pay.

That was an experiment, and what they found was they got some people to pay, but by removing the wall they would get a lot more eyeballs in. In addition, when they balanced off the subscription fees verses the additional advertising revenue, they made the call, which I think is correct, that it’s better to take it down and let everybody read Tom Friedman.

Josh: In terms of maximizing the resources you have in a newsroom, one possibility might be creating more Paul Krugmans and more Thomas Friedmans — that is, more individual personalities in a news organization then people connect with. As opposed to the sort of the faceless city hall reporter who news organizations have traditionally had.

Jay: That’s exactly correct, and one of the things — there’s a great book, Information Rules, that talks about excludable goods. One thing I can do is give you information for free — and then create an avenue where you have to pay if you want something more.

So Tom Friedman’s columns are free, but if you want to read his book, you have to pay him — or if has going to come to your area that the person who is sponsoring him is probably paying him a speaker fee. So the fact there could be exclusion — so if you do not pay you do not get the book; if someone does not pay him, he may be less likely to show up for a lecture — what that means is that you give away information free, you create this brand about yourself, then you put yourself in a situation where somebody has to pay a conference fee or click on Amazon to buy your book. That creates an alternative revenue stream.

The very interesting point that you are raising is: How does that affect what comes out of my mouth, now that I need to create this separate revenue stream?

Josh: Particularly since in a later chapter, in Chapter 8, you talk about how journalists who have this dual identity of, say, a print life as well as a punditry TV life, how they use different language. They not only speak differently — they approach their subjects differently in different media when there trying to be the branded George Will as opposed to the prose stylist George Will.

Jay: That’s exactly right. But I have a hard time criticizing that because that pays university salaries for professors.

If you think about what we do, a lot of what we do, the information is giving away free via research. And then the way the university pays our salary is by setting up an excludable good — we’ll call it Krzyzewskiville and a set of classes. And you only get those if you pay a fee. And if any college-age people are watching, Duke has need-blind financial aid, so the fee isn’t as large as you might think.

Josh: Sorry about Wake Forest beating you guys last night.

Jay: It’s a long season.

Josh: Although I’m wearing Carolina blue and I’m showing my allegiance here. All right, after that brief basketball interlude, thanks very much.

Jay: Thank you.