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Will the Internet Destroy the News Media?

Susan Athey, Emilio Calvano & Joshua Gans May 2011

Wednesday, 18 May 2011

The chart of doom

Newspaper  Ad  Revenue  (1980  $m)

Source:  Newspaper  Associa0on  of  America Wednesday, 18 May 2011

The chart of doom

Newspaper  Ad  Revenue  (1980  $m)
$30,000

$22,500

$15,000

$7,500

$0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Source:  Newspaper  Associa0on  of  America Wednesday, 18 May 2011

The chart of doom

Newspaper  Ad  Revenue  (1980  $m)
$30,000

$22,500

$15,000

$7,500

$0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Source:  Newspaper  Associa0on  of  America Wednesday, 18 May 2011

The chart of doom

Newspaper  Ad  Revenue  (1980  $m)
$30,000

$22,500

$15,000

$7,500

$0 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008

Source:  Newspaper  Associa0on  of  America Wednesday, 18 May 2011

Explaining the decline

Wednesday, 18 May 2011

Explaining the decline

Psychology (digital less effective)

Wednesday, 18 May 2011

Explaining the decline

Psychology (digital less effective)

Wednesday, 18 May 2011

Explaining the decline

Psychology (digital less effective)

Wednesday, 18 May 2011

Economic fundamentals

Wednesday, 18 May 2011

Economic fundamentals

Attention is still scarce ...

Wednesday, 18 May 2011

Economic fundamentals

Attention is still scarce ... and advertisers still want to access that attention.

Wednesday, 18 May 2011

Disruption

Wednesday, 18 May 2011

Disruption

The Internet has disrupted the traditional business model ...

Wednesday, 18 May 2011

Disruption

The Internet has disrupted the traditional business model ... need to wait for experiments to sort it out.

Wednesday, 18 May 2011

Disruption

The Internet has disrupted the traditional business model ... need to wait for experiments to sort it out. Most experiments rely on the ‘waterbed effect’ ...

Wednesday, 18 May 2011

Disruption

The Internet has disrupted the traditional business model ... need to wait for experiments to sort it out. Most experiments rely on the ‘waterbed effect’ ... but based on assumption readers choose content and advertisers sell access.
Wednesday, 18 May 2011

Only two facts

Wednesday, 18 May 2011

Only two facts

The Internet has facilitated consumer switching between outlets

Wednesday, 18 May 2011

Only two facts

The Internet has facilitated consumer switching between outlets There is imperfect tracking between outlets

Wednesday, 18 May 2011

Puzzles

Wednesday, 18 May 2011

Puzzles

Evidence that competition reduces ad prices

Wednesday, 18 May 2011

Puzzles

Evidence that competition reduces ad prices Outlets claim mergers will improve ad revenue

Wednesday, 18 May 2011

Puzzles

Evidence that competition reduces ad prices Outlets claim mergers will improve ad revenue For-profit outlets object to lifting of ad restrictions on public broadcasters

Wednesday, 18 May 2011

Puzzles

Evidence that competition reduces ad prices Outlets claim mergers will improve ad revenue For-profit outlets object to lifting of ad restrictions on public broadcasters Larger outlets earn higher ad revenue per consumer

Wednesday, 18 May 2011

Switching

Wednesday, 18 May 2011

Switching

Browsing

Wednesday, 18 May 2011

Switching

Browsing Free content

Wednesday, 18 May 2011

Switching

Browsing Free content Aggregators, social networks and search

Wednesday, 18 May 2011

Switching

Browsing Free content Aggregators, social networks and search

Wednesday, 18 May 2011

Tracking

Wednesday, 18 May 2011

Tracking

Switching alone does not explain the decline.

Wednesday, 18 May 2011

Tracking

Switching alone does not explain the decline. With no tracking or perfect tracking do not care where consumers are.

Wednesday, 18 May 2011

Advertising supply

Wednesday, 18 May 2011

Advertising supply

Two attention periods.

Wednesday, 18 May 2011

Advertising supply

Two attention periods. Two outlets with ad capacity per unit of attention, ai.

Wednesday, 18 May 2011

Advertising supply

Two attention periods. Two outlets with ad capacity per unit of attention, ai. If they have opportunity to choose, consumers select outlet i with probability xi.

Wednesday, 18 May 2011

Advertising supply

Two attention periods. Two outlets with ad capacity per unit of attention, ai. If they have opportunity to choose, consumers select outlet i with probability xi. In a given period, the probability that a consumer can choose is ρ.

Wednesday, 18 May 2011

Advertising supply

Two attention periods. Two outlets with ad capacity per unit of attention, ai. If they have opportunity to choose, consumers select outlet i with probability xi. In a given period, the probability that a consumer can choose is ρ.

Dil = xi − xi (1 − xi )ρ D s = 2 ρ x1 x2

Wednesday, 18 May 2011

Advertising supply

Two attention periods. Two outlets with ad capacity per unit of attention, ai. If they have opportunity to choose, consumers select outlet i with probability xi. In a given period, the probability that a consumer can choose is ρ.

Dil = xi − xi (1 − xi )ρ D s = 2 ρ x1 x2

i's ad inventory = Dil 2ai + D s ai

Wednesday, 18 May 2011

Advertiser demand

Wednesday, 18 May 2011

Advertiser demand

Advertisers want to impress each consumer once over the two periods …

Wednesday, 18 May 2011

Advertiser demand

Advertisers want to impress each consumer once over the two periods … and have heterogeneous values (v) on impressing consumers with distribution F(v); assumed to be U[0,1].

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

Wednesday, 18 May 2011

The impression game

Morning

Afternoon

Outlet 1

Outlet 2

If Starbucks single-homes, it misses impressions. If Starbucks multi-homes, it wastes impressions.
Wednesday, 18 May 2011

The advertiser’s dilemma

Custom analysis of data provided to authors by ComScore of 30 recent large, cross-outlet campaigns

Wednesday, 18 May 2011

The advertiser’s dilemma

Wasted Impressions

Custom analysis of data provided to authors by ComScore of 30 recent large, cross-outlet campaigns

Wednesday, 18 May 2011

Solving the dilemma

Wednesday, 18 May 2011

Solving the dilemma

No switching

Wednesday, 18 May 2011

Solving the dilemma

No switching No tracking

Wednesday, 18 May 2011

Solving the dilemma

No switching No tracking Coordination in time

Wednesday, 18 May 2011

Solving the dilemma

No switching No tracking Coordination in time Pay per click

Wednesday, 18 May 2011

Solving the dilemma

No switching No tracking Coordination in time Pay per click Perfect tracking

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i

θ i = Dil + 1 D s 2

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i Multi-Home

θ i = Dil + 1 D s 2

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i Multi-Home

θ i = Dil + 1 D s 2
l 3 θ12 = D1l + D2 + 4 D s

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i Multi-Home Multi-Home (2 on i)

θ i = Dil + 1 D s 2
l 3 θ12 = D1l + D2 + 4 D s

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i Multi-Home Multi-Home (2 on i)

θ i = Dil + 1 D s 2
l 3 θ12 = D1l + D2 + 4 D s

θ12 = 1 ′

Wednesday, 18 May 2011

Missed & wasted impressions

Expected Unique Impressions

Single-Home on i Multi-Home Multi-Home (2 on i)

θ i = Dil + 1 D s 2
l 3 θ12 = D1l + D2 + 4 D s

θ12 = 1 ′

θ12 ≤ θ1 + θ 2 = θ12 for ρ > 0 ′
Wednesday, 18 May 2011

No switching

Price

Multi-homers (1 impression)

Quantity (Impressions)

Wednesday, 18 May 2011

No switching

Price

Supply

Multi-homers (1 impression)

2a Quantity (Impressions)

Wednesday, 18 May 2011

No switching

v=1

Price

Supply

Multi-homers (1 impression)

2a Quantity (Impressions)

Wednesday, 18 May 2011

No switching

v=1

Price

Supply

Multi-homers (1 impression)

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

No switching

v=1

Price

Supply

Multi-homers (1 impression)

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

No switching

v=1

Price

Supply

Multi-homers (1 impression)

p

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

More switchers

v=1

Price

Supply

Multi-homers (1 impression) p
SingleSinglehome on 1 home on 2

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

More switchers

v=1

Price

Supply

Multi-homers (1 impression)

SingleSinglehome on 1 home on 2

p

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

More switchers

v=1

Price

Supply

Multi-homers (1 impression)

↑ D s ⇒↓ p

SingleSinglehome on 1 home on 2

p

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

High switchers

v=1
MH 2 on 1 MH 2 on 2

Price

Supply

Multi-homers (1 impression) p
SingleSinglehome on 1 home on 2

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

High switchers

v=1
MH 2 on 1 MH 2 on 2

Price

Supply

Multi-homers (1 impression) p
SingleSinglehome on 1 home on 2

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

High switchers

v=1
MH 2 on 1 MH 2 on 2

Price

Supply

↑ D s ⇒↑ p

Multi-homers (1 impression) p
SingleSinglehome on 1 home on 2

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

High switchers

v=1
MH 2 on 1 MH 2 on 2

Price

Supply

↑ D s ⇒↑ p
if a high
p

Multi-homers (1 impression)

SingleSinglehome on 1 home on 2

v=p 2a Quantity (Impressions)

Wednesday, 18 May 2011

Incentives to adopt perfect tracking Low ad capacity (a) Profits

Ds

Wednesday, 18 May 2011

Incentives to adopt perfect tracking Low ad capacity (a) Profits

Imperfect Tracking

Ds

Wednesday, 18 May 2011

Incentives to adopt perfect tracking Low ad capacity (a) Profits Perfect Tracking

Imperfect Tracking

Ds

Wednesday, 18 May 2011

Incentives to adopt perfect tracking High ad capacity (a) Profits

Imperfect Tracking

Perfect Tracking

Ds

Wednesday, 18 May 2011

Incentives to adopt perfect tracking High ad capacity (a) Profits

Imperfect Tracking

Perfect Tracking

Ds

Wednesday, 18 May 2011

Incentives to adopt perfect tracking High ad capacity (a) Profits

Imperfect Tracking

Perfect Tracking

Ds

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content …

Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content … decrease available ad capacity in the market …

Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content … decrease available ad capacity in the market …

Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content … decrease available ad capacity in the market … and reduce adverse effect of switching …

Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content … decrease available ad capacity in the market … and reduce adverse effect of switching …

Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content … decrease available ad capacity in the market … and reduce adverse effect of switching … Causing impression prices to rise.
Quantity (Impressions)

Wednesday, 18 May 2011

Public broadcasters & blogs

Price

Supply

Blogs and other non-ad content … decrease available ad capacity in the market … and reduce adverse effect of switching … Causing impression prices to rise.
Quantity (Impressions)

Wednesday, 18 May 2011

Positional advantages in advertising markets

Wednesday, 18 May 2011

Positional advantages in advertising markets

Content quality

Wednesday, 18 May 2011

Positional advantages in advertising markets

Content quality

Paywalls

Wednesday, 18 May 2011

Positional advantages in advertising markets

Content quality

Paywalls

Magnet content

Wednesday, 18 May 2011

Asymmetric Quality

x1 = x2
Low Ds v=1 v=1
MH 2 on 1 MH 2 on 2

High Ds

Multi-homers (1 impression)

Multi-homers (1 impression)

SingleSinglehome on 1 home on 2

SingleSinglehome on 1 home on 2

v=p

v=p

Wednesday, 18 May 2011

Asymmetric Quality

x1 > x2
Low Ds v=1 v=1
MH 2 on 1 MH 2 on 2

High Ds

Multi-homers (1 impression)

Multi-homers (1 impression)

SingleSinglehome on 1 home on 2

SingleSinglehome on 1 home on 2

v=p

v=p

Wednesday, 18 May 2011

Asymmetric Quality

x1 > x2
Low Ds v=1 v=1
MH 2 on 2

High Ds

Multi-homers (1 impression)

Multi-homers (1 impression)
Single-home on 1 Single-home on 2

v = p1 v = p2

Single-home on 1 Single-home on 2

v = p1 v = p2

Wednesday, 18 May 2011

Asymmetric Quality

x1 > x2
Low Ds v=1 v=1
MH 2 on 2

High Ds

Multi-homers (1 impression)

Multi-homers (1 impression)
Single-home on 1 Single-home on 2

v = p1 v = p2

Single-home on 1 Single-home on 2

v = p1 v = p2

Outlet 1 gains a positional advantage in the advertising market
Wednesday, 18 May 2011

Paywalls

Wednesday, 18 May 2011

Paywalls

“No [it’s not a two way street with Google sending traffic] What’s the point of someone coming occasionally who likes a headline they see on Google? Sure we go out and say we have so many millions of visitors. The fact is that there is not enough advertising in the world to go around to make all the websites profitable. We’d rather have fewer people coming to our websites but paying. They don’t suddenly become loyal readers of our websites.” (Rupert Murdoch)

Wednesday, 18 May 2011

Paywalls

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments

↑ ρ12 ,↓ ρ21

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments Subscriptions

↑ ρ12 ,↓ ρ21

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments Subscriptions

↑ ρ12 ,↓ ρ21 ↓ ρ21

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments Subscriptions Limited paywall

↑ ρ12 ,↓ ρ21 ↓ ρ21

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments Subscriptions Limited paywall

↑ ρ12 ,↓ ρ21 ↓ ρ21 ↑ ρ12

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments Subscriptions Limited paywall

↑ ρ12 ,↓ ρ21 ↓ ρ21 ↑ ρ12

D <D
l 1

l 2

Wednesday, 18 May 2011

Paywalls

D = x1 − x1 x2 ρ12
l 1 l D2 = x2 − x2 x1ρ21

D s = ( ρ12 + ρ21 )x1 x2
Micropayments Subscriptions Limited paywall

↑ ρ12 ,↓ ρ21 ↓ ρ21 ↑ ρ12

D <D
l 1

l 2

Paywalls may cause a positional disadvantage in advertising markets
Wednesday, 18 May 2011

Wednesday, 18 May 2011

One more thing ...

Wednesday, 18 May 2011

Magnet Content

Multi-Home 2 on 2

Single-home on 1 (2 impressions)

Single-home on 1 Single-home on 2 (2 impressions)

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

Magnet Content

Suppose that Outlet 2 has Single-home on 1 Multi-Home 2 on 2 limited content (2 impressions)
Single-home on 1 Single-home on 2 (2 impressions) Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

Magnet Content

Suppose that Outlet 2 has Single-home on 1 Multi-Home 2 on 2 limited content (2 impressions) ... and so can only serveSingle-home on 2 one (2 impressions) period of attention. Single-home on 2
Single-home on 1 (2 impressions) Single-home on 1

Wednesday, 18 May 2011

Magnet Content

ρ =1

Suppose that Outlet 2 has Single-home on 1 Multi-Home 2 on 2 limited content (2 impressions) ... and so can only serveSingle-home on 2 one (2 impressions) period of attention. Single-home on 2
Single-home on 1 (2 impressions) Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

Suppose that Outlet 2 has Single-home on 1 Multi-Home 2 on 2 limited content (2 impressions) ... and so can only serveSingle-home on 2 one (2 impressions) period of attention. Single-home on 2
Single-home on 1 (2 impressions) Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

Suppose that Outlet 2 has Single-home on 1 Multi-Home 2 on 2 limited content (2 impressions) ... and so can only serveSingle-home on 2 one (2 impressions) period of attention. Single-home on 2
Single-home on 1 (2 impressions) Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )

Suppose that Outlet 2 has Single-home on 1 Multi-Home 2 on 2 limited content (2 impressions) ... and so can only serveSingle-home on 2 one (2 impressions) period of attention. Single-home on 2
Single-home on 1 (2 impressions) Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2

Multi-Home 2 on 2

Single-home on 1 (2 impressions)

Single-home on 1 Single-home on 2 (2 impressions)

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

Single-home on 1 Single-home on 2 (2 impressions)

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

Single-home on 1 Single-home on 2 (2 impressions)

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

Single-home on 1 Single-home on 2 (2 impressions)

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

Single-home on 1 Single-home on 2 (2 impressions)

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2 Single-home on 1 (2 impressions)

High x2

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2

High x2 v=1
Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2

High x2 v=1
Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2

High x2 v=1
Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2

High x2 v=1
Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2

High x2 v=1
Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

v = p2

Single-home on 1

Wednesday, 18 May 2011

D1l = x1 − x1 x2

Magnet Content

ρ =1

l D2 = 0

D s = x2 (1 + x1 )
Low x2 v=1
Multi-Home 2 on 2

High x2 v=1
Single-home on 1 (2 impressions)

Single-home on 1

Single-home on 2 (2 impressions)

v = p1 v = p2

Single-home on 2 (2 impressions)

v = p2 v = p1

Single-home on 1

Wednesday, 18 May 2011

Magnet Content

Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

Wednesday, 18 May 2011

Magnet Content

Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise.

Wednesday, 18 May 2011

Magnet Content

Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content.

Wednesday, 18 May 2011

Magnet Content

Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage.

Wednesday, 18 May 2011

Magnet Content

Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage. Evolution away from frequency and towards reach.
Wednesday, 18 May 2011

Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage. Evolution away from frequency and towards reach.
Wednesday, 18 May 2011

150 million US accounts
Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage. Evolution away from frequency and towards reach.
Wednesday, 18 May 2011

150 million US accounts 95% users visit once every 2 days
Profits
0.20

Full content provider

0.15

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage. Evolution away from frequency and towards reach.
Wednesday, 18 May 2011

150 million US accounts 95% users visit once every 2 days
Profits

10% of 0.20 site visits US
0.15

Full content provider

0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage. Evolution away from frequency and towards reach.
Wednesday, 18 May 2011

150 million US accounts 95% users visit once every 2 days
Profits

10% of 0.20 site visits US

Full content provider

30% of 0.15 display ads US
0.10

Imperfect Tracking Limited content provider

0.05

0.2

0.4

0.6

0.8

1.0

x2

As limited content provider’s share rises, industry profits rise. Twice the return to magnet content than full content. Higher return per reader due to positional advantage. Evolution away from frequency and towards reach.
Wednesday, 18 May 2011

Conclusions

Wednesday, 18 May 2011

Conclusions

The efficient operation of advertising markets are dependent upon consumer behavior.

Wednesday, 18 May 2011

Conclusions

The efficient operation of advertising markets are dependent upon consumer behavior. A combination of consumer switching and imperfect tracking can explain competitive effects in advertising markets for news media.

Wednesday, 18 May 2011

Conclusions

The efficient operation of advertising markets are dependent upon consumer behavior. A combination of consumer switching and imperfect tracking can explain competitive effects in advertising markets for news media. Tracking technologies may assist in efficiency but adoption faces impediments.

Wednesday, 18 May 2011

Conclusions

The efficient operation of advertising markets are dependent upon consumer behavior. A combination of consumer switching and imperfect tracking can explain competitive effects in advertising markets for news media. Tracking technologies may assist in efficiency but adoption faces impediments. In addition to deterring consumers, paywalls may cause outlets to have a positional disadvantage in advertising markets.

Wednesday, 18 May 2011

Conclusions

The efficient operation of advertising markets are dependent upon consumer behavior. A combination of consumer switching and imperfect tracking can explain competitive effects in advertising markets for news media. Tracking technologies may assist in efficiency but adoption faces impediments. In addition to deterring consumers, paywalls may cause outlets to have a positional disadvantage in advertising markets. Incentives to provide content move from full line provision to magnet but limited content provision.

Wednesday, 18 May 2011