Technology defines what is possible; economics defines what is feasible. As such, technological progress is often viewed as a liberating progress, one in which possibilities multiply, whereas economic forces are viewed as a constraint, a set of laws that limit what is possible, like the law of gravity that chains us to the ground.

In fact, neither view is wholly correct because changes in technology are not independent from the economic environment in which they occur, and the economic environment is not independent from the technological transformations that are taking place within it.

The word technology shares the same root as the word technique. A technique is a method, a way of doing something. Theoretically, at least, a technological change merely represents a change in the way of doing something and it does not necessarily mean a change for the better. In fact, the question of whether the Internet offers a way to improve news coverage is an important question to be asked.

Quality

Quality is the ratio of a product's utility relative to its cost. In order for a technology to be viewed as an improvement, that technology must ultimately improve the quality ratio, either by increasing the utility of the product, or by reducing the cost to produce it. In economic terms, utility is usually defined as the "want satisfying" ability of a product. The utility of a product satisfies some want or need on the part of the consumer, as determined by them. It need not be a rational want nor a sensible one. It's just an itch that needs scratching. Another way to think of utility is this: the degree to which a product or activity makes someone happy.

Economics is the study of how individuals and organizations choose to allocate resources in a world of limited resources. While strongly associated with money in most people's minds, the study of economics is not limited to the world of finance and business. The ultimate limited resource is time, and for most consumers, the question of media consumption is driven by a decision on how to best allocate their time in order to maximize their own happiness.

The economic impact of technological progress is measured by the improvement in the quality ratio of the product relative to the quality ratio of similar products (called substitutes by economists). This is important to remember because a consumer is always choosing among alternatives in a broader economic environment. Making your product better in terms of quality will not guarantee success.

Paper vs. Plastic

If we define a technological improvement as an improvement in the quality ratio, then we can better understand the relationship between technology and economics. I know someone who used to work for a paper bag manufacturer, the kind of paper bags that grocery stores use. He told me that he remembered when plastic bags first came out, they weren't concerned at all about the competition because paper bags were clearly superior to plastic bags. Paper bags hold their shape and don't tip and spill your groceries and they are much easier to carry. I asked him what happened and he said, "We went out of business."

The reason they went out of business is that they thought of quality exclusively in terms of features and when considering grocery bags in that light, I must say I agree that paper bags are much better than plastic bags. However, paper bags cost more than plastic bags do, such that the quality ratio of plastic bags represented an improvement to the consumer (the owner of grocery stores, in this case). At the end of the day, consumers would rather have cheaper groceries than all the purported benefits of paper bags.

News media have largely reacted to the Internet as a threat and have argued vigorously that newspapers are better than blogs and related e-paraphernalia. It is like the paper vs. plastic question, and journalists like to argue on the side of paper bags. Rather than defining the question so narrowly, journalists need to step back and look at the larger question from the news consumer's perspective and ask how they can provide more utility with better quality relative to their competitors.