Future Directions in Media Economics Research
Media Economics Workshop Roundtable
New Economic School, Moscow
October 28-29, 2011
Lisa George
Hunter College and the Graduate Center
City University of New York
Two Themes
• Economics of Digital Media Markets
• Media & Institutional Corruption
• Connections
Promiscuity is not a good thing in
relationships, but it’s a great thing in news.
− Arianna Huffington
Co-Founder & Editor-in-Chief
The Huffington Post
Promiscuity is not a good thing in
relationships, but it’s a great thing in news.
− Arianna Huffington
Co-Founder & Editor-in-Chief
The Huffington Post
TranslationAggregation of atomistic content enables consumption of
more information from more sources in greater variety.
Question: At what cost?
Aggregators, search and other new media institutions are central
to positive & normative understanding of media markets.
Industrial Organization of Media Markets
Traditional Media Markets
Digital Media Markets
New Media Institutions
•
Supply: Fixed supply costs, transport costs.
•
Demand: transport costs (tastes)
•
Ads: Vertically-differentiated advertisers
•
Models: Differentiation
•
Supply: Low fixed costs, proliferating content.
•
Demand: search costs, quality verification
•
Ads: Horizontally-differentiated advertisers
•
Models: Vertical Integration & Contracts
•
Transaction costs, consumer switching
•
Disintermediation
•
Quality Endorsement
•
Competition for advertisers
Illustrations
Comscore Media Metrix Data May 2008
Comscore Media Metrix Data May 2008
Consumer access of online media sites is highly diverse
Regressions on this data show that
holding viewing time constant, heavy
“searchers”:
•
Visit more unique media sites
•
Read fewer pages per site
•
Spend less time per site
New Media Institutions - Literature
• Demand
• Chio & Tucker (2010); DeSmet (2011); Dellarocas, Katona & Rand
(2010); George & Hogendorn (2011)
• Aggregators can increase participation and multi-homing, benefitting
small outlets at the expense of large ones, niche advertisers at the
expense of mass market ones.
• Supply
• Jeon & Esfahani- Platform specialization & quality investments.
New Media Institutions - Questions
How does disintermediation change the nature of content
produced and consumed?
• Intellectual property & investment incentives
• Content proliferation & excess entry
– When consumers must search, more content can lower welfare (Share
matters)
– Search engine incentives for content proliferation (competition)
• Meta-media (Kottke/Robotke)
• Superstar markets (outlet, journalist)
– When does disintermediation lead to less diversity in consumption?
• Unobservable quality and advertiser conflict
– Adverse selection & market collapse
• “New” News
– Can only search what you know
– Barriers to “new” news
What is really behind this picture?
News consumption is
declining, not shifting.
The share of “hard” news
consumed is shrinking.
We have not looked hard
enough at why.
Source: Pew Research Center for the People and the Press,
Ideological News Sources: Who Watches and Why. September 10,
2010. Sample size about 1500.
Media & Institutional Corruption
• Compelling political science literature on distortions of US
campaign finance regime and resulting tune-out (Lessig, Republic
Lost, 2011)
– Distortion of campaigning toward extreme voters (donors)
– Distortion of legislative agenda toward corporate (donor) concerns
– Measured by mismatch between values in surveys vs platforms and
campaigns
• Media Analogs
– Theoretical & empirical framework directly applies
• Advertiser bias & conflict – beliefs & demand
• Are outside options getting better, or news getting worse?
– Link between media & institutional corruption in political process.
• How closely does coverage match underlying consumer demand?
• Does coverage match the political agenda? Influence it?
• How informative is news?
– Advertiser bias
Conclusion & Research Links
• Theoretical framework for disintermediated markets
– What is the nature of content produced inside & outside of
the firm or platform
– Consequences for nature of content supplied and consumed
• Empirical characterization of content attributes
– Variety, quality, verifiability, “new” topics
• New welfare benchmarks
– Limits of consumption measures
– Informativeness
– Bias benchmarks – “Bias compared to what?