New study finds Internet not responsible for dying newspapers

June 11, 2014

We all know that the Internet has killed the traditional newspaper trade, right? After all, until the general population started interacting with the web in the mid-90s, the newspaper business was thriving—offering readers top notch journalism and pages of ads.

But a recently-published study finds that we may be all wrong about the role of the Internet in the decline of newspapers.

According to research by University of Chicago Booth School of Business Professor Matthew Gentzkow, assumptions about journalism are based on three false premises.

In his new paper, "Trading Dollars for Dollars: The Price of Attention Online and Offline," which was published in the May issue of the American Economic Review, Gentzkow notes that the first fallacy is that online advertising revenues are naturally lower than print revenues, so traditional media must adopt a less profitable business model that cannot support paying real reporters. The second is that the web has made the advertising market more competitive, which has driven down rates and, in turn, revenues. The third misconception is that the Internet is responsible for the demise of the newspaper industry.

"This perception that online ads are cheaper to buy is all about people quoting things in units that are not comparable to each other—doing apples-to-oranges comparisons," Gentzkow says. Online ad rates are typically discussed in terms of "number of unique monthly visitors" the ad receives, while circulation numbers determine newspaper rates.

Several different studies already have shown that people spend an order of magnitude more time reading than the average monthly visitor online, which makes looking at these rates as analogous incorrect.

By comparing the amount of time people actually see an ad, Gentzkow finds that the price of attention for similar consumers is actually higher online. In 2008, he calculates, newspapers earned $2.78 per hour of attention in print, and $3.79 per hour of attention online. By 2012, the price of attention in print had fallen to $1.57, while the price for online had increased to $4.24.

Gentzkow also points out that the popularity of newspapers had already significantly diminished between 1980 and 1995, well before the Internet age, and has dropped at roughly the same rate ever since. "People have not stopped reading newspapers because of the Internet," Gentzkow notes.

Explore further: Newspaper web ads not to blame for print advertising decline, research says

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not rated yet Jun 11, 2014
What the internet HAS offered is the opportunity to read the news that most interests us - such as our daily visits here for instance..

Also a lot of us have a lot less time now to sit down with a paper or magazine... all part of the increasingly frenetic (and less family-oriented) lifestyles we're leading, it seems to me..
not rated yet Jun 12, 2014
methinks the death of MSM journalism may be a wee bit of the reason - parroting and supporting without question government policies of endless wars - insane reliance of the Federal Reserve and the elimination of civil and individual rites - as the chap above says we can get more filtered and better perspective from the internet.
not rated yet Jun 12, 2014
By comparing the amount of time people actually see an ad, Gentzkow finds that the price of attention for similar consumers is actually higher online.

I'm not sure he's aware that there are quite a few people who never see any ads online (even though the ad people think they do).

The death of print news is probably more of a time thing. You only have x percent of your day to spend on reading news. The internet gives you access to more news in that time (you could listen to the news on one feedm have a live ticker somewhere that is geared towards your interests and read a site at the same people naturally chose the internet over print (and internet news can be more up-to-date...while print is...erm..yesterday's news at best.
not rated yet Jun 14, 2014
I hated newspapers! Not the content - the ungainly awkward size of them - folding and refolding to follow a story, or they were all over the table, or into your neighbor's seat on a plane - pulp paper and ink that rubbed off - whole sections of waste paper ads. I am probably better informed than ever before, being able to read stories from many sources, including newspapers, online. I could care less if physical newspapers are dead, as long as news organizations of all kinds, survive and thrive.

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