Is the Internet Bad News? The Online News Era and the Market for High-Quality News
AbstractWe review and model the impact of the internet on the production and uptake of high- quality news. Our review of trends in the market for news suggests 3 stylized facts: i) particular quality news markets are dominated by merely a few providers, ii) demand for quality news appears stable, but provision of news has become specialized; mainstream news is decoupled from quality news, and iii) the dominant business model of internet news mirrors that of radio, television, and newspapers in that costs of news production are recouped via advertising. We build a stylized model that rationalizes these facts. Our model captures three conflicting effects: (1) economies of scale in the production of news lead to monopolies on particular markets, (2) easy access to information on the internet makes it cheaper to provide high-quality news and to disseminate it via the web, which increases the production of such news; and (3) the existence of bloggers and news aggregators who recycle the stories of news-providers reduces the effective property rights of high-quality news producers, thus forcing the business model of the internet to be advertising-based. For the most likely cases, our model would imply that the internet does not constitute bad news for the provision and uptake of quality news.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 15723.
Date of creation: May 2009
Date of revision:
News quality; Internet; Monopolies; Search Costs; Advertising;
Other versions of this item:
- Frijters Paul & Velamuri Malathi, 2010. "Is the Internet Bad News? The Online News Era and the Market for High-Quality News," Review of Network Economics, De Gruyter, vol. 9(2), pages 1-33, June.
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-06-17 (All new papers)
- NEP-CUL-2009-06-17 (Cultural Economics)
- NEP-ICT-2009-06-17 (Information & Communication Technologies)
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