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The Impact of Internet on the Market for Daily Newspapers in Italy

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  • Lapo Filistrucchi

Abstract

Recent years have seen a surge in websites that provide news for free and, up to the end of 2001, daily newspapers in Italy have shown a growing trend towards making available online for free; the exact articles published on paper. To assess whether on-line news and traditional daily newspapers are substitute, complement or independent goods, I model the choice between different daily newspapers as a discrete choice among differentiated products. Considering the availability of a website as a newspaper characteristic and controlling for other observable and unobservable characteristics of newspapers and of the outside good, I estimate a logit model of demand on market level data from 1976 to 2001 for the main national daily newspapers in Italy. Results suggest that opening a website had a negative impact both on the sales of the newspaper who opened it and on those of its rivals. I calculate the implied short-run and approximated long-run losses in both sales and profits and provide some evidence of the additional negative effect stemming from the general availability of Internet and on-line news. Results also contribute to explaining why, starting from the end of 2001, many publishers introduced a fee to read on-line the paper edition of the newspaper.

Suggested Citation

  • Lapo Filistrucchi, 2005. "The Impact of Internet on the Market for Daily Newspapers in Italy," Economics Working Papers ECO2005/12, European University Institute.
    • Handle: RePEc:eui:euiwps:eco2005/12
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    Cited by:

    1. Affeldt, P. & Argentesi, E. & Filistrucchi, Lapo, 2021. "Estimating Demand with Multi-Homing in Two-Sided Markets," Other publications TiSEM 1317bf39-d02e-4f61-a34f-e, Tilburg University, School of Economics and Management.
    2. Liang, Che-Yuan & Nordin, Mattias, 2012. "The Internet, News Consumption, and Political Attitudes," Working Paper Series 2012:14, Uppsala University, Department of Economics.
    3. Aubert-Tarby, Clémence & Escobar, Octavio R. & Rayna, Thierry, 2018. "The impact of technological change on employment: The case of press digitisation," Technological Forecasting and Social Change, Elsevier, vol. 128(C), pages 36-45.
    4. Valerie-Anne Bleyen & Leo Van Hove, 2010. "To Bundle or Not to Bundle? How Western European Newspapers Package Their Online Content," Journal of Media Economics, Taylor & Francis Journals, vol. 23(3), pages 117-142.
    5. Ulrich Kaiser & Hans Christian Kongsted, 2005. "Do Magazines' "Companion Websites" Cannibalize the Demand for the Print Version?," CAM Working Papers 2005-07, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    6. 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.
    7. George Lisa M, 2008. "The Internet and the Market for Daily Newspapers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-33, July.
    8. Richa Sharma Vyas & N. P. Singh & Shilpi Bhabhra, 2007. "Media Displacement Effect: Investigating the Impact of Internet on Newspaper Reading Habits of Consumers," Vision, , vol. 11(2), pages 29-40, April.
    9. Elena Argentesi & Lapo Filistrucchi, 2007. "Estimating market power in a two-sided market: The case of newspapers," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1247-1266.
    10. Luis Alberto Zuleta J. & Sandra Zuluaga & Alejandro Becerra & Astrid Bermúdez, 2009. "Efectos de la coyuntura y de las tendencias tecnológicas sobre los diarios impresos en Colombia," Informes de Investigación 9061, Fedesarrollo.
    11. Alejandro Zentner, 2012. "Internet Adoption and Advertising Expenditures on Traditional Media: An Empirical Analysis Using a Panel of Countries," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(4), pages 913-926, December.
    12. Andres, Luis & Zentner, Alejandro & Zentner, Joaquin, 2014. "Measuring the effect of internet adoption on paper consumption," Policy Research Working Paper Series 6965, The World Bank.
    13. Ambarish Chandra & Ulrich Kaiser, 2014. "Targeted Advertising in Magazine Markets and the Advent of the Internet," Management Science, INFORMS, vol. 60(7), pages 1829-1843, July.
    14. 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.
    15. Kaiser Ulrich, 2006. "Magazines and their Companion Websites: Competing Outlet Channels?," Review of Marketing Science, De Gruyter, vol. 4(1), pages 1-26, August.
    16. Marco Toledo Bastos & Gabriela Zago, 2013. "Tweeting News Articles," SAGE Open, , vol. 3(3), pages 21582440135, September.
    17. Cho, Daegon & Smith, Michael D. & Zentner, Alejandro, 2016. "Internet adoption and the survival of print newspapers: A country-level examination," Information Economics and Policy, Elsevier, vol. 37(C), pages 13-19.
    18. Simon, Daniel H. & Kadiyali, Vrinda, 2007. "The effect of a magazine's free digital content on its print circulation: Cannibalization or complementarity?," Information Economics and Policy, Elsevier, vol. 19(3-4), pages 344-361, October.

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    More about this item

    Keywords

    daily newspapers; Internet; websites; substitution; discrete choice models; product differentiation; dynamics; market level data;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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