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Is the Internet Bad News? The Online News Era and the Market for High-Quality News

Paul Frijters () and Malathi Velamuri

MPRA Paper from University Library of Munich, Germany

Abstract: We review and model the impact of the internet on the production and uptake of high- quality news. Our review of trends in the market for news suggests 3 stylized facts: i) particular quality news markets are dominated by merely a few providers, ii) demand for quality news appears stable, but provision of news has become specialized; mainstream news is decoupled from quality news, and iii) the dominant business model of internet news mirrors that of radio, television, and newspapers in that costs of news production are recouped via advertising. We build a stylized model that rationalizes these facts. Our model captures three conflicting effects: (1) economies of scale in the production of news lead to monopolies on particular markets, (2) easy access to information on the internet makes it cheaper to provide high-quality news and to disseminate it via the web, which increases the production of such news; and (3) the existence of bloggers and news aggregators who recycle the stories of news-providers reduces the effective property rights of high-quality news producers, thus forcing the business model of the internet to be advertising-based. For the most likely cases, our model would imply that the internet does not constitute bad news for the provision and uptake of quality news.

Keywords: News quality; Internet; Monopolies; Search Costs; Advertising (search for similar items in EconPapers)
JEL-codes: L82 L11 L15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cul and nep-ict
Date: 2009-05
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https://mpra.ub.uni-muenchen.de/15723/1/MPRA_paper_15723.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/23199/1/MPRA_paper_23199.pdf revised version (application/pdf)

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Journal Article: Is the Internet Bad News? The Online News Era and the Market for High-Quality News (2010) Downloads
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