| 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. |