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Aggregators, search and the economics of new media institutions

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  • George, Lisa M.
  • Hogendorn, Christiaan

Abstract

Proliferation of content on the internet offers consumers access to more sources than had been possible with traditional media. Disaggregated content also increases the relevance of targeting for advertisers. But at the same time, search costs increase the role of intermediaries in media consumption in ways that are poorly understood. This paper studies the effects of search technology and aggregators in digital media markets. A simple model shows how these institutions can alter both market participation and the number of sites visited, which in turn affects equilibrium prices and profits in the advertising market. When consumers have a taste for variety and advertisers are horizontally differentiated, intermediaries can alter advertising strategies in ways that reduce the value of targeting. The results offer both positive and normative predictions about the value of new media institutions for consumers, advertisers and media outlets.

Suggested Citation

  • George, Lisa M. & Hogendorn, Christiaan, 2012. "Aggregators, search and the economics of new media institutions," Information Economics and Policy, Elsevier, vol. 24(1), pages 40-51.
  • Handle: RePEc:eee:iepoli:v:24:y:2012:i:1:p:40-51
    DOI: 10.1016/j.infoecopol.2012.01.005
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Blanka Škrabić Perić & Petar Sorić, 2018. "A Note on the “Economic Policy Uncertainty Index”," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(2), pages 505-526, June.
    2. Joan Calzada & Guillem Ordóñez, 2012. "Competition in the news industry: fighting aggregators with versions and links," Working Papers 12-22, NET Institute.
    3. de Cornière, Alexandre & Sarvary, Miklos, 2020. "Social Media and the News: Content Bundling and news Quality," TSE Working Papers 20-1152, Toulouse School of Economics (TSE).
    4. Matthew Ellman & Tomás Rodríguez Barraquer, 2016. "Strategic grouping and search for quality journalism, online versus offline," Working Papers 16-21, NET Institute.
    5. Lesley Chiou & Catherine Tucker, 2017. "Content aggregation by platforms: The case of the news media," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(4), pages 782-805, December.
    6. Jeon, Doh-Shin, 2018. "Economics of News Aggregators," TSE Working Papers 18-912, Toulouse School of Economics (TSE).
    7. Doh-Shin Jeon & Nikrooz Nasr, 2016. "News Aggregators and Competition among Newspapers on the Internet," American Economic Journal: Microeconomics, American Economic Association, vol. 8(4), pages 91-114, November.
    8. Anna D'Annunzio & Antonio Russo, 2017. "Ad Networks and Consumer Tracking," CESifo Working Paper Series 6667, CESifo.
    9. Garcia Pires, Armando J., 2014. "Media diversity, advertising, and adaptation of news to readers’ political preferences," Information Economics and Policy, Elsevier, vol. 28(C), pages 28-38.
    10. Alaoui, Larbi & Germano, Fabrizio, 2020. "Time scarcity and the market for news," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 173-195.
    11. Stühmeier, Torben, 2012. "Target Advertising and Market Transparency," VfS Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62021, Verein für Socialpolitik / German Economic Association.
    12. Joan Calzada & Ricard Gil, 2020. "What Do News Aggregators Do? Evidence from Google News in Spain and Germany," Marketing Science, INFORMS, vol. 39(1), pages 134-167, January.
    13. Hong, Sounman, 2012. "Online news on Twitter: Newspapers’ social media adoption and their online readership," Information Economics and Policy, Elsevier, vol. 24(1), pages 69-74.
    14. Anna D’Annunzio & Antonio Russo, 2020. "Ad Networks and Consumer Tracking," Management Science, INFORMS, vol. 66(11), pages 5040-5058, November.
    15. George, Lisa M., 2016. "Mobile, Media & More: Contributions and Developments at Information Economics and Policy," Information Economics and Policy, Elsevier, vol. 37(C), pages 1-2.

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    More about this item

    Keywords

    Media; Internet; Targeted advertising; Search; Two-sided market;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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