Media diversity, advertising, and adaptation of news to readers’ political preferences

•The paper analyzes how media diversity is affected by advertising.•It is shown that the size of the advertising market determines media diversity.•There is higher media diversity when the advertising market is large.•Advertising can therefore increase media diversity. In this paper, it is analyzed...

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Bibliographic Details
Published in:Information economics and policy 2014-09, Vol.28, p.28-38
Main Author: Garcia Pires, Armando J.
Format: Article
Language:English
Subjects:
Advertising
Advertising media
Decision making models
Enterprises
Ideology
Marketing
Media diversity
Media rights
News
Political advertising
Preferences
Studies
Two-sided markets
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Summary:•The paper analyzes how media diversity is affected by advertising.•It is shown that the size of the advertising market determines media diversity.•There is higher media diversity when the advertising market is large.•Advertising can therefore increase media diversity. In this paper, it is analyzed how advertising can affect media diversity when news firms can adapt news to readers’ political preferences. In particular, in the model news firms can choose between a single- and a multi-ideology strategy (a point on the Hotelling line and a line segment, respectively). It is shown that the size of the advertising market is determinant for the equilibrium of the news market. When the advertising market is small, news firms maximally differentiate their political offers and do not adapt news to readers’ political preferences (single-ideology strategy). When the advertising market is large, news firms minimally differentiate their political offers and do adapt news to readers’ political preferences (multi-ideology strategy).
ISSN:0167-6245
1873-5975
DOI:10.1016/j.infoecopol.2014.06.001