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Aggregators, search and the economics of new media institutions

  • George, Lisa M.
  • Hogendorn, Christiaan

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.

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Article provided by Elsevier in its journal Information Economics and Policy.

Volume (Year): 24 (2012)
Issue (Month): 1 ()
Pages: 40-51

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Handle: RePEc:eee:iepoli:v:24:y:2012:i:1:p:40-51
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505549

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