Aggregators and the News Industry: Charging for Access to Content

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 rms in the online news industry. In equilibrium, rms randomise in their pricing strategies and this generates the cross- sectional mixture of advertiser and subscription funded models we ob- serve. The model also plausibly explains why pricing strategies dier 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 eects of aggregators on the news industry; although aggregators may harm rms, consumers may benet.