Ryan McCarthy is a former editor of well-known media outlets: Ryan McCarthy on X: “Why are so many layoffs happening in journalism right now, in very good economy, across so many different newsrooms? Industry insiders I spoke to are starting to use a really grim economic term: market failure. Why does this term matter? 1/ https://t.co/w2BZ1S3W2w” / X (twitter.com)

More from the reposted tweet here.

He’s using the term “market failure” to mean the market is not delivering the outcome that he wants.

But that is not market failure. Examples of economic market failures:

1. The rise of a monopoly which blocks economic efficiency
2. The lack of incentives to prevent overuse of a resource. The example given here is a simple to understand illustration: if a lake is overfished, then there will be no fish in the future. The incentive then is to grab as much as you can, now, and the market pursues a path that leads to no fish, which is a market failure.
3. Externalities: you build a factory but don’t care about pollution because those “costs” are borne by other parties who have nothing to do with your factory.
4. Transaction costs (rather than the product/service/economic value) can skew our choices, which is the basis of Coase’s Theorem.

The media’s collapse is not a market failure but is a market success. Their business model is inefficient and is not delivering the products or services that consumers wish to have.

Trust in media: Media: Trust in media ties with all time low – Social Panic (coldstreams.com)

Market Failure definition: 02-market-failure.pdf (rasmusen.org). The author of that, Prof. Eric Rasmusen, added a comment to the above Tweet pointing out that what Ryan McCarthy is describing is not a market failure.