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Aggregators and the News Industry: Charging for Access to Content

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Abstract

The Internet has drastically altered the nature of competition in the news industry. This article develops a model of price and quality competition between firms in the online news industry. In equilibrium, firms randomise in their pricing strategies and this generates the cross- sectional mixture of advertiser and subscription funded models we observe. The model also plausibly explains why pricing strategies differ across content areas. Finally, an important part of my explanation is that aggregators, such as Google and Digg.com, allow consumers to search amongst articles and direct consumers towards high quality articles. The model's results have implications for the ongoing public debate about the effects of aggregators on the news industry; although aggregators may harm firms, consumers may benefit.

Suggested Citation

  • James Rutt, 2011. "Aggregators and the News Industry: Charging for Access to Content," Working Papers 11-19, NET Institute, revised Sep 2011.
    • Handle: RePEc:net:wpaper:1119
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    Cited by:

    1. Peitz, Martin & Reisinger, Markus, 2014. "The Economics of Internet Media," Working Papers 14-23, University of Mannheim, Department of Economics.
    2. Joan Calzada & Guillem Ordóñez, 2012. "Competition in the news industry: fighting aggregators with versions and links," Working Papers 12-22, NET Institute.
    3. 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.
    4. 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.
    5. Alexandre de Corniere & Miklos Sarvary, 2017. "Social Media and the News Industry," Working Papers 17-07, NET Institute.
    6. Jeon, Doh-Shin, 2018. "Economics of News Aggregators," TSE Working Papers 18-912, Toulouse School of Economics (TSE).
    7. Alexandre de Cornière & Miklos Sarvary, 2023. "Social Media and News: Content Bundling and News Quality," Management Science, INFORMS, vol. 69(1), pages 162-178, January.
    8. Alexandre de Cornière & Greg Taylor, 2014. "Quality Provision in the Presence of a Biased Intermediary," Working Papers 14-06, NET Institute.

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    More about this item

    Keywords

    Internet; Newspapers; Aggregators; Paywalls;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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