News aggregators that consolidate information from different websites into a single
newsfeed of information have only recently become the subject of empirical research.
Using a data set that tracks users’ browsing behavior,
Athey and Mobius (2012) show
that a user’s adoption of the Google News localization feature is associated with an
increase in local news consumption.
George and Hogendorn (2012) use very similar data
to demonstrate that the adoption of geo-targeted news reduces the access cost of local
news but does not seem to have economically significant effects on local publishers.
In a similar context,
George and Peukert (2013) use data on monthly local and non-local
visits to news outlets online to demonstrate a positive mapping between group popula-
tion size in local markets and the consumption of national media over the Internet. In
addition, aggregated news and news collected from social media sources—so-called
“robot journalism”—may substitute possibly censored or biased traditional media as in
the context of the Arab Spring of 2010/2011, an issue that has not been systematically
studied so far.
Finally, one may argue that the threat of online cannibalization is more imminent for
newspapers than for magazines since the latter cover longer in-depth articles while the
former feature current news, which can also be called up on the Internet. Indeed, studies
that analyze newspapers tend to find negative effects of online companions on sales
(
Filistrucchi, 2005; George, 2008), while there is more heterogeneity in the results for
magazines (
Deleersnyder et al., 2002; Kaiser, 2006; Kaiser and Kongsted, 2012;
Simon and Kadiyali, 2007
). A systematic analysis of potential differences is yet to be
compiled, however.
9.8. THOUGHTS FOR FUTURE RESEARCH AND CONCLUSIONS
Throughout this chapter we have highlighted areas where further research would be
valuable. We now summarize some of these open research questions, and then offer
our thoughts on the future of print media.
Most of the fertile research areas for economists interested in newspapers and mag-
azines lie in how these media tackle the advent of the Internet. A basic problem in studies
of the competition between online and offline channels is identification. Previous studies
have generally assumed that the launch of an online edition is exogenous, which is clearly
less than ideal. A useful study would carefully estimate the causal effect of a newspaper or
magazine’s online edition on the sales and advertising revenues of the print edition. In a
similar vein, studies that examine the effect of online paywalls on offline reader demand as
well as on advertising are lacking so far, as are studies of news aggregators and robot
journalism.
On this note, we ask whether existing models of two-sided markets will be sufficient
to analyze the media properties of the future, which are likely to have hybrid structures
437Newspapers and Magazines
with significant numbers of both online and offline readers; indeed, there already exist
examples such as the New York Times, which now enjoys significant revenues from both
digital and print audiences, as well as from advertisers in both forms, but must grapple
with cannibalization and optimal pricing. Empirical researchers may have to devise
four-sided models of media, and also wrestle with issues of multi-homing which are often
intractable.
We have discussed a large literature on whether readers of print media view adver-
tising positively or negatively, but the empirical results are frustratingly inconclusive. It is
surprising that the answer to this question is not yet known, given that economists have
acknowledged the importance of feedback effects in two-sided markets; positive or neg-
ative feedback effects from advertising have radically different predictions for optimal
pricing in media markets. We previously alluded to the possibility that readers may view
advertisements differently in newspapers versus magazines, given that the latter targets
readers by content instead of geography and is therefore perhaps more likely to have
readers that derive a positive value from reading advertisements relative to them.
Research in this area would be an important addition to the literature.
Industry observers have long pointed out that online advertising revenues are tiny
compared with revenues in print media, even when normalized by the number of
readers. This appears to be a puzzle, although some explanations have been offered. Chief
among them are that online readers spend less time on a news website than they do with a
printed paper, and that switching costs online are extremely low. Moreover, a large por-
tion of the surplus in online advertising may be appropriated by firms that provide the
technology to track readers across websites, or by Google, which enjoys immense market
power in the online advertising market. Nevertheless, there has not yet been any system-
atic academic study of this issue. Research into this area will be of enormous importance,
given that many newspapers are now pinning their hopes of survival on generating a large
and loyal online readership, but this may be futile if advertising revenues remain low.
Research has long established that newspapers are an important driver of voter turn-
out and civic participation, as we discussed in
Section 9.2. Moreover, Gentzkow (2006)
showed that voting declined as newspapers were supplanted by television, since the latter
did not have the same effect on galvanizing citizens to participate in the electoral process.
An important question, therefore, is whether the same will be true with the Internet as
readers consume online content. One recent paper suggesting that this may be indeed the
case is
Falck et al. (2014).
Within the realm of traditional print media, two questions stand out to us. First,
there is little research on free print newspapers, perhaps because the lack of sales data
makes credible circulation figures difficult to obtain. Nevertheless, such newspapers
are extremely important in a number of large cities, particularly among users of public
transportation who are excellent captive audiences for advertisers. Moreover, the eco-
nomics of free print newspapers is similar to that of online media that do not impose
438 Handbook of Media Economics
a paywall, which applies to a large number of news sources. Understanding the impact of
free newspapers on market structure, and examining whether the advertising market
plays out differently in such media, is of direct economic interest and also provides a use-
ful benchmark with which to predict the evolution of online news competition.
Throughout this chapter, we have focused on the US newspaper industry, with a few
exceptions to cover print media in countries such as Canada, the UK, and Germany. As
we have emphasized, this is because the existing literature is so heavily focused on the
US—perhaps a common problem in Industrial Organization. Nevertheless, there is huge
potential for research into the media industries in other parts of the world, particularly in
developing countries where newspapers continue to thrive. Rising incomes and educa-
tion levels have led to a flourishing newspaper market in countries such as India. A fruitful
area of research would be a comparative analysis of print media across countries, a short
example of which we provided in
Table 9.1. To our knowledge, Zentner (2012) and
Cho et al. (2014) are among the only studies along these lines. Such a comparative analysis
is often useful for identifying interesting phenomena in certain countries, such as the
remarkable circulation figures in Japan that we described in
Section 9.3.1. In general,
the decline of newspaper markets in North America should lead to a natural interest
in how this industry operates in other countries, where similar declines are not yet
apparent.
We now offer some brief concluding thoughts on this industry. Newspapers and mag-
azines are easily the oldest of the major media that exist today. Print media have created
enormous value since their inception, even as they have evolved considerably from their
early days. Policymakers have long recognized that newspapers have a unique role in
the civic discourse of a country, and have important consequences for informing the
citizenry, encouraging electoral participation and providing a check on powerful forces
in government and business.
Yet, today, print media are struggling. Newspapers, in particular, have faced devas-
tating losses over the past two decades, even as magazines retain a stable position for now.
Given long-term trends, both in the sales of print media and in the advent of digital
media, it is hard to see how long printed newspapers will continue to exist, with the
exception of certain well-established brands.
It is possible, though by no means assured, that newspapers and magazines will tran-
sition to digital editions, and continue operating in a new physical form for the foresee-
able future. Indeed, for a number of periodicals, the online edition now provides the only
positive note, being one of the few areas on which readers and revenues steadily increase.
After faltering in the early years, a number of newspapers have now launched sophisti-
cated paywalls in conjunction with well-executed digital strategies, that actually have
readers willing to pay for content. And in fact, the advent of the Internet has clearly
helped some newspapers—well-known media names such as the Wall Street Journal,
the New York Times, and the Daily Mail have secured commanding positions in the flow
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