Trading Facts: Arrow's Fundamental Paradox and the Emergence of Global News Networks, 1750-1900
Gerben Bakker

Novelty has been the key selling point of news agencies or organizations that came into existence from the late Middle Ages. The tangible product was insignificant (paper) or absent (visual telegraph). What mattered was the information that it contained: the newer the information, the more valuable it was. News agencies thus carried two aspects of fashion goods industries to the extreme: novelty, and an intangible value that was many times the value of the product's physical constituents. The nineteenth century saw the advent of news agencies that became well-coordinated global organizations with large networks of correspondents, such as Reuters, Havas, Wolff-Continental and Associated Press. Essential features of these agencies were substantial fixed and sunk set-up costs, high fixed operating costs, a marginal cost of supplying news to an additional customer of virtually zero, and the quasi-public good character of information, which had implications for the organizational form, marketing, and pricing. To solve Arrow's fundamental paradox of information, agencies adopted subscriptions, because this made the marginal price of news zero. The news networks were operated by unique organizations whose evolution interacted with new technologies. The paper investigates how the news agencies emerged, how they co-evolved with infrastructure firms, what business models they pioneered, and how they became encapsulated in an oligopolistic industry structure in the course of the nineteenth century.