It has been recognized for at least a decade that traditional bookstores and newspapers are essentially doomed by the growth of the Internet and digitization. Doomed also are postal systems, record albums, movie theatres, and most other traditional ways of providing information, entertainment, and other content to consumers. To take the US postal system as an example, after growing for many decades, the number of pieces of first class mail declined by 25% in past few years alone.
Even hard copies of books, newspapers, and films are beginning to go the way of bookstores and theatres. Millions of books and thousands of films are available online or in other digital forms, where they can be read or watched by almost unlimited numbers of consumers. Reading a book in digital form has a few disadvantages, such as it is more difficult to make notations in margins, although developments in software are making digital notations much easier. Moreover, with digitization one can have access to many books in a very light Kindle, or in an IPad that weighs only a few pounds, and also has many other uses.
One may lament the closing of many local bookstores, post offices, and movie theatres, and the sharp decline of giants in the newspaper business like the Washington Post, but the reasons for these changes are both clear and irreversible. Anyone with access to the Internet, and this access is rapidly growing worldwide, can much more readily order a book online than by going to buy it in a bookstore. Similarly, constant updates on the weather, sports, and news are more readily available online than from newspapers, or even from television.
Revealed preference clearly indicates that increasing majorities of men and women prefer gaining access to books, news, music, films, and other information and entertainment online through the Internet and in other digital forms. This is why they are shifting away from traditional hardcover books, movie theatres, and even DVDs, itself a new form of providing movies. Older persons who grew up reading books and newspapers often continue to do so, although even they are shifting to digital forms. However, the real trends are seen in the behavior of young persons, such as teenagers and the college students mentioned by Posner. They almost never read hardcopy books and newspapers, or listen to music through CDs because they increasingly read fiction and non-fiction, and listen to music, on the Internet and through other digital forms.
The effect of Schumpeter’s “creative destruction” mentioned by Posner is not to preserve traditional products or services, but to add to consumer welfare. Online services and other digitization have certainly helped consumers a lot, even if the passing of bookstores is lamented by those of us old enough to have the pleasure of discovering great books on some dingy bookstore shelves (One of the first books I discovered this way while a teenager was Henry George’s classic statement of the case for a single tax on land, “Progress and Poverty”).
But hardly anyone would lament the decline of the US postal system, which traditionally has provided surly service by overpaid employees, introduced few innovations in mail delivery, and frequently failed to deliver mail on time. Email is much more efficient than the appropriately called snail mail, which explains why email communication has grown so rapidly, even among older persons.
Piracy and copying of the digital content paid for by someone else is the most significant problem posed by digital provision of entertainment and other content. Piracy and copying generally reduces demand for the works of writers, filmmakers, singers, and other groups who depend for their livelihood on sales of their materials. The song and movie industries, for example, are in the doldrums partly because they are unable to collect much of the revenues on their works that are quickly pirated and copied. The IPod is an innovative technology that uses itunes to sell single songs cheaply, and thereby reduces copying and raises the revenue received by singers and writers of songs. Perhaps other innovations will help producers of movies, books, and newspapers, although so far newspapers have mainly tried unsuccessfully to collect considerable advertising and other revenue from their online editions and articles.