Aggregators and the News Industry: Charging for Access to Content

33 Pages Posted: 24 Nov 2011

See all articles by James Rutt

James Rutt

University of Cambridge - Trinity College (Cambridge); University of Cambridge - Faculty of Economics and Politics

Date Written: October 2011

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.

Keywords: Internet, Newspapers, Aggregators, Paywalls

JEL Classification: L11, L13, L82

Suggested Citation

Rutt, James and Rutt, James, Aggregators and the News Industry: Charging for Access to Content (October 2011). NET Institute Working Paper No. 11-19, Available at SSRN: https://ssrn.com/abstract=1958028 or http://dx.doi.org/10.2139/ssrn.1958028

James Rutt (Contact Author)

University of Cambridge - Faculty of Economics and Politics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom

University of Cambridge - Trinity College (Cambridge) ( email )

United Kingdom

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