Newspapers in Times of Low Advertising Revenues

We model the consequences on newspapers’ content and prices of a reduction in advertising revenues. Newspapers choose the size of their newsroom, and readers are heterogeneous in their ideal amount of journalistic-intensive content. We show that a reduction in advertising revenues lowers newspapers’...

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Bibliographic Details
Published in:American economic journal. Microeconomics 2019-08, Vol.11 (3), p.319-364
Main Authors: Angelucci, Charles, Cagé, Julia
Format: Article
Language:English
Subjects:
Economics and Finance
Humanities and Social Sciences
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Summary:We model the consequences on newspapers’ content and prices of a reduction in advertising revenues. Newspapers choose the size of their newsroom, and readers are heterogeneous in their ideal amount of journalistic-intensive content. We show that a reduction in advertising revenues lowers newspapers’ incentives to produce journalistic-intensive content. We also build a unique dataset on French newspapers between 1960 and 1974 and perform a difference-in-differences analysis exploiting the introduction of advertising on television, which affected national newspapers more severely than local ones. We find robust evidence of a decrease in the amount of journalistic-intensive content produced and the subscription price.
ISSN:1945-7669
1945-7685
DOI:10.1257/mic.20170306