The internet and news media

Troppo’s Paul Frijters, too self-effacing to push his work on Troppo, has a new paper on the effect of the internet on quality news content.  I discovered it on a newsletter of new papers. Looks interesting, so I’ll have to have a closer squiz when I get the time.

Is the Internet Bad News? The Online News Era and the Market for High-Quality News
Date: 2009-05
By: Frijters, Paul
Velamuri, Malathi

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.

2 thoughts on “The internet and news media

  1. The last paragraph of the conclusions in this report is fascinating! The rest is no revelation. But it does pose a significant question.
    The investment in news operations by traditional newspapers has meant they have led the pack in hard news publishing, with a few notable television exceptions, for decades. TV and radio have habitually fed off these newsrooms, and now the internet and bloggers are doing the same.
    For “breaking news”, read:the morning papers have arrived in the office! Brings a new meaning to “This just in.”
    The difference is that, while TV, radio and newspapers have coexisted because media buyers decided they performed different tasks for their clients, online has eaten into the revenue streams which support expensive newspaper newsrooms, namely classifieds.
    Evolutionary? Certainly. Reversible – not really. Dangerous – yes…and no.
    Newspaper owners , now that the GEC has produced the tipping point where classifieds have deserted their print products forever, are slashing back reporting staff. The content which all media fed off for so long is being shut off.
    Rupert Murdoch and other owners are trying to change the model by suggesting paid-for sites containing the best exclusive content. As the authors of this report note, this puts important information in the hands of the few. But better in the hands of the few than no-one.
    The real question is: will the web, which has, with some notable exceptions, had a free ride and low cost content for so long, divert revenue to create hard news content as a traffic driver?
    I see “green shoots”. Some major sites now believe their news coverage has to be enhanced with “exclusives” and good, solid coverage. Their reporters are not just “aggregators”, but intelligent analysts and news breakers.
    When more sites pay for journalists who can not just copy or entertain, but create insights and exclusive news, and when these reports drive traffic (and advertising!), all those who believe in the importance of good, quality journalism can sleep easy in their beds!
    I’m optimistic!
    Peter Lynch, BigSplash Media

  2. Here’s an interesting case study:

    WASHINGTON (AFP) – Pop star Michael Jackson’s death marked a coming of age for the digital era as a website, TMZ.com, scooped the rest of the world’s media and millions around the world found out about it online.

    TMZ, a joint venture of Telepictures Productions and Time Warner’s Web portal AOL, was the first to report both Jackson’s hospitalization and death, leaving more established media outlets scrambling to catch up in its wake.

    News of Jackson’s death rocketed around the Web at cyberspeed based solely on the TMZ report, spread by posts on micro-blogging service Twitter, Facebook status updates and instant messages.

    The heavy traffic reportedly strained the servers of a number of websites, including Twitter, but they mostly held up under the heavy load.

    “Today was a seminal moment in Internet history,” TMZ co-owner AOL said in a statement.

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