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Will the Internet Destroy the
News Media?Susan Athey, Emilio Calvano & Joshua Gans
May 2011
Wednesday, 18 May 2011
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The chart of doom
Source:NewspaperAssocia0onofAmerica
NewspaperAdRevenue(198$m)
Wednesday, 18 May 2011
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The chart of doom
Source:NewspaperAssocia0onofAmerica
1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008
$0
$7,500
$15,000
$22,500
$30,000
NewspaperAdRevenue(198$m)
Wednesday, 18 May 2011
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Explaining the decline
Wednesday, 18 May 2011
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Psychology (digital less effective)
Explaining the decline
Wednesday, 18 May 2011
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Psychology (digital less effective)
Explaining the decline
Wednesday, 18 May 2011
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Psychology (digital less effective)
Explaining the decline
Wednesday, 18 May 2011
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Economic fundamentals
Wednesday, 18 May 2011
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Attention is still scarce ...
Economic fundamentals
Wednesday, 18 May 2011
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Attention is still scarce ...
and advertisers still want to access that
attention.
Economic fundamentals
Wednesday, 18 May 2011
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Disruption
Wednesday, 18 May 2011
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Disruption
The Internet has disrupted the traditional
business model ...
Wednesday, 18 May 2011
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Disruption
The Internet has disrupted the traditional
business model ...
need to wait for experiments to sort itout.
Wednesday, 18 May 2011
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Disruption
The Internet has disrupted the traditional
business model ...
need to wait for experiments to sort itout.
Most experiments rely on the ‘waterbed
effect’ ...
Wednesday, 18 May 2011
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Disruption
The Internet has disrupted the traditional
business model ...
need to wait for experiments to sort itout.
Most experiments rely on the ‘waterbed
effect’ ...
but based on assumption readers choose
content and advertisers sell access.
Wednesday, 18 May 2011
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Only two facts
Wednesday, 18 May 2011
O l t f t
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The Internet has facilitated consumer
switching between outlets
Only two facts
Wednesday, 18 May 2011
O l t f t
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The Internet has facilitated consumer
switching between outlets
There is imperfect tracking between
outlets
Only two facts
Wednesday, 18 May 2011
Puzzles
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Puzzles
Wednesday, 18 May 2011
Puzzles
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Puzzles
Evidence that competition reduces ad prices
Wednesday, 18 May 2011
Puzzles
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Puzzles
Evidence that competition reduces ad prices
Outlets claim mergers will improve ad revenue
Wednesday, 18 May 2011
Puzzles
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Puzzles
Evidence that competition reduces ad prices
Outlets claim mergers will improve ad revenue
For-profit outlets object to lifting of adrestrictions on public broadcasters
Wednesday, 18 May 2011
Puzzles
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Puzzles
Evidence that competition reduces ad prices
Outlets claim mergers will improve ad revenue
For-profit outlets object to lifting of adrestrictions on public broadcasters
Larger outlets earn higher ad revenue per consumer
Wednesday, 18 May 2011
Switching
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Switching
Wednesday, 18 May 2011
Switching
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Browsing
Switching
Wednesday, 18 May 2011
Switching
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Browsing
Free content
g
Wednesday, 18 May 2011
Switching
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Browsing
Free content
Aggregators, social
networks and
search
g
Wednesday, 18 May 2011
Switching
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Browsing
Free content
Aggregators, social
networks and
search
Wednesday, 18 May 2011
Tracking
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Wednesday, 18 May 2011
Tracking
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Switching alone does not explain the
decline.
Wednesday, 18 May 2011
Tracking
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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
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Wednesday, 18 May 2011
Advertising supply
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Two attention periods.
Wednesday, 18 May 2011
Advertising supply
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Two attention periods.
Two outlets with ad capacity per unit of attention, ai.
Wednesday, 18 May 2011
Advertising supply
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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
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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
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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.
Di
l = x
i− x
i(1− x
i)ρ
Ds= 2ρ x
1 x
2
Wednesday, 18 May 2011
Advertising supply
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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.
Di
l = x
i− x
i(1− x
i)ρ
Ds= 2ρ x
1 x
2
i's ad inventory = Di
l 2ai+ D
sa
i
Wednesday, 18 May 2011
Advertiser demand
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Wednesday, 18 May 2011
Advertiser demand
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Advertisers want to impress each consumer once over the two periods …
Wednesday, 18 May 2011
Advertiser demand
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Advertisers want to impress each consumer once over the two periods …
and have heterogeneous values (v) on impressingconsumers with distribution F (v); assumed to be U[0,1].
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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Morning Afternoon
Outlet 1
Outlet 2
Wednesday, 18 May 2011
The impression game
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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
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Custom analysis of data provided to authors by
ComScore of 30 recent large, cross-outlet campaigns
Wednesday, 18 May 2011
The advertiser’s dilemma
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Custom analysis of data provided to authors by
ComScore of 30 recent large, cross-outlet campaigns
Wasted
Impressions
Wednesday, 18 May 2011
Solving the dilemma
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Wednesday, 18 May 2011
Solving the dilemma
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No switching
Wednesday, 18 May 2011
Solving the dilemma
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No switching
No tracking
Wednesday, 18 May 2011
Solving the dilemma
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No switching
No tracking
Coordination in time
Wednesday, 18 May 2011
Solving the dilemma
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No switching
No tracking
Coordination in time
Pay per click
Wednesday, 18 May 2011
Solving the dilemma
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No switching
No tracking
Coordination in time
Pay per click
Perfect tracking
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on i
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on iθ
i
= Di
l +
1
2
Ds
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on i
Multi-Home
θ i
= Di
l +
1
2
Ds
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on i
Multi-Home θ 12= D
1
l + D
2
l +
3
4D
s
θ i
= Di
l +
1
2
Ds
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on i
Multi-Home θ 12= D
1
l + D
2
l +
3
4D
s
θ i
= Di
l +
1
2
Ds
Multi-Home (2 on i)
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on i
Multi-Home θ 12= D
1
l + D
2
l +
3
4D
s
θ i
= Di
l +
1
2
Ds
Multi-Home (2 on i) ′θ 12= 1
Wednesday, 18 May 2011
Missed & wasted impressions
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Expected Unique Impressions
Single-Home on i
Multi-Home θ 12= D
1
l + D
2
l +
3
4D
s
θ 12
≤ θ 1+θ
2= ′θ
12for ρ > 0
θ i
= Di
l +
1
2
Ds
Multi-Home (2 on i) ′θ 12= 1
Wednesday, 18 May 2011
No switching
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Quantity (Impressions)
Price
Multi-homers
(1 impression)
Wednesday, 18 May 2011
No switching
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Wednesday, 18 May 2011
No switching
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
v = 1
Wednesday, 18 May 2011
No switching
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
v = 1
v = p
Wednesday, 18 May 2011
No switching
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
v = 1
v = p
Wednesday, 18 May 2011
No switching
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
v = 1
v = p
p
Wednesday, 18 May 2011
More switchers
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
v = 1
v = p
p
Wednesday, 18 May 2011
More switchers
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
v = 1
v = p
p
Wednesday, 18 May 2011
More switchers
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
↑ Ds ⇒↓ p
v = 1
v = p
p
Wednesday, 18 May 2011
High switchers
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 1 MH 2 on 2
v = 1
v = p
p
Wednesday, 18 May 2011
High switchers
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 1 MH 2 on 2
v = 1
v = p
p
Wednesday, 18 May 2011
High switchers
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 1 MH 2 on 2 ↑ Ds ⇒↑ p
v = 1
v = p
p
Wednesday, 18 May 2011
High switchers
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Quantity (Impressions)
Price
2a
Supply
Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 1 MH 2 on 2 ↑ Ds ⇒↑ p
if a high
v = 1
v = p
p
Wednesday, 18 May 2011
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Incentives to adopt perfect tracking
Low ad capacity (a)
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Profits
Imperfect
Tracking
Ds
Wednesday, 18 May 2011
Incentives to adopt perfect tracking
Low ad capacity (a)
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Profits
Imperfect
Tracking
PerfectTracking
Ds
Wednesday, 18 May 2011
Incentives to adopt perfect tracking
Imperfect
T ki
High ad capacity (a)
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Profits Tracking
Perfect
Tracking
Ds
Wednesday, 18 May 2011
Incentives to adopt perfect tracking
P fi
Imperfect
T ki
High ad capacity (a)
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Profits Tracking
Perfect
Tracking
Ds
Wednesday, 18 May 2011
Incentives to adopt perfect tracking
P fit
Imperfect
Tracking
High ad capacity (a)
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Profits Tracking
Perfect
Tracking
Ds
Wednesday, 18 May 2011
Public broadcasters & blogs
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Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
decrease available ad
capacity in the market …
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
decrease available ad
capacity in the market …
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
decrease available ad
capacity in the market …
and reduce adverse effect
of switching …
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
decrease available ad
capacity in the market …
and reduce adverse effect
of switching …
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
decrease available ad
capacity in the market …
and reduce adverse effect
of switching …
Causing impression pricesto rise.
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
Public broadcasters & blogs
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Blogs and other non-ad
content …
decrease available ad
capacity in the market …
and reduce adverse effect
of switching …
Causing impression pricesto rise.
Quantity (Impressions)
Price Supply
Wednesday, 18 May 2011
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Positional advantages
in advertising markets
Wednesday, 18 May 2011
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Positional advantages
in advertising markets
Content quality
Wednesday, 18 May 2011
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Positional advantages
in advertising markets
Content quality Paywalls
Wednesday, 18 May 2011
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Positional advantages
in advertising markets
Content quality Paywalls Magnet content
Wednesday, 18 May 2011
Asymmetric Quality
Low D s High D s
x 1= x
2
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Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
v = 1
v = p
Multi-homers(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 1 MH 2 on 2
v = 1
v = p
Wednesday, 18 May 2011
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Asymmetric Quality
Low D s High D s
x 1> x
2
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Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
v = 1
v = p2
Multi-homers(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 2
v = 1
v = p2
v = p1v = p1
Wednesday, 18 May 2011
Asymmetric Quality
Low D s High D s
x 1> x
2
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Multi-homers
(1 impression)
Single-home on 1
Single-home on 2
v = 1
v = p2
Multi-homers(1 impression)
Single-home on 1
Single-home on 2
MH 2 on 2
v = 1
v = p2
Outlet 1 gains a positional advantage
in the advertising market
v = p1v = p1
Wednesday, 18 May 2011
Paywalls
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Wednesday, 18 May 2011
Paywalls
“No [it’s not a two way street with Google sending
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traffic] What’s the point of someone comingoccasionally 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
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Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
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Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2
l = x2
−x2 x1ρ 21
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2
l = x2
−x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2
l = x2
−x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2
l = x2
−x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments ↑ ρ 12,↓ ρ
21
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2
l
= x2−
x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Subscriptions
↑ ρ 12,↓ ρ
21
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2
l
= x2−
x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Subscriptions
↑ ρ 12,↓ ρ
21
↓ ρ 21
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2 = x2−
x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Subscriptions
Limited paywall
↑ ρ 12,↓ ρ
21
↓ ρ 21
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2 = x2−
x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Subscriptions
Limited paywall
↑ ρ 12,↓ ρ
21
↓ ρ 21
↑ ρ 12
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
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D2 = x2−
x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Subscriptions
Limited paywall
↑ ρ 12,↓ ρ
21
↓ ρ 21
↑ ρ 12
D1
l < D
2
l
Wednesday, 18 May 2011
Paywalls
D1
l = x
1− x
1 x
2ρ 12
l
ρ
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D2 = x2−
x2 x1ρ 21
Ds= (ρ
12 + ρ 21) x1 x2
Micropayments
Subscriptions
Limited paywall
↑ ρ 12,↓ ρ
21
↓ ρ 21
↑ ρ 12
D1
l < D
2
l
Paywalls may cause a positional disadvantage in advertising markets
Wednesday, 18 May 2011
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Wednesday, 18 May 2011
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Wednesday, 18 May 2011
Magnet Content
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Wednesday, 18 May 2011
Magnet Content
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Suppose that Outlet 2 has
limited content
Wednesday, 18 May 2011
Magnet Content
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Suppose that Outlet 2 has
limited content
... and so can only serve one
period of attention.
Wednesday, 18 May 2011
Magnet Contentρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Suppose that Outlet 2 has
limited content
... and so can only serve one
period of attention.
Wednesday, 18 May 2011
Magnet Content D1
l =
x1−
x1 x2
ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Suppose that Outlet 2 has
limited content
... and so can only serve one
period of attention.
Wednesday, 18 May 2011
Magnet Content D1
l =
x1−
x1 x2
D2
l = 0ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Suppose that Outlet 2 has
limited content
... and so can only serve one
period of attention.
Wednesday, 18 May 2011
Magnet Content D
1
l = x
1− x
1 x
2
D2
l = 0
Ds= x
2(1+ x
1)
ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Suppose that Outlet 2 has
limited content
... and so can only serve one
period of attention.
Wednesday, 18 May 2011
Magnet Content
Low x2
D1
l = x
1− x
1 x
2
D2
l = 0
Ds= x
2(1+ x
1)
ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Wednesday, 18 May 2011
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Magnet Content
Low x2
D1
l = x
1− x
1 x
2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1
ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = 1
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Wednesday, 18 May 2011
Magnet Content
Low x2
D1
l = x
1− x
1 x
2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1
ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v 1
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Wednesday, 18 May 2011
Magnet Content
Low x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1
ρ = 1
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v 1
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
Wednesday, 18 May 2011
Magnet Content
Low x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v 1
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1 v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v 1
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1 v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1 v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1 v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1
− x1
x2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1 v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p2
v = p1
Wednesday, 18 May 2011
Magnet Content
Low x2 High x2
D1
l = x
1− x
1 x
2
D2
l = 0
Ds= x
2(1+ x
1)
v = 1 v = 1
ρ = 1
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
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Multi-Home 2 on 2
Single-home on 1
Single-home on 2(2 impressions)
v = p2
Single-home on 2(2 impressions)
Single-home on 1
Single-home on 1(2 impressions)
v = p2
v = p1
v = p1
Wednesday, 18 May 2011
Profits
Magnet Content
0.15
0.20
Full content provider
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 141/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
Wednesday, 18 May 2011
Profits
Magnet Content
0.15
0.20
Full content provider
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 142/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
As limited content provider’s share rises, industry profits rise.
Wednesday, 18 May 2011
Profits
Magnet Content
0.15
0.20
Full content provider
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 143/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
As limited content provider’s share rises, industry profits rise.
Twice the return to magnet content than full content.
Wednesday, 18 May 2011
Profits
Magnet Content
0.15
0.20
I f T ki
Full content provider
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 144/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
Profits
Magnet Content
0.15
0.20
I f t T ki
Full content provider
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 145/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
0.15
0.20
I f t T ki
Full content provider
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 146/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
0.15
0.20
Imperfect Tracking
Full content provider
150 million US accounts
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 147/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
0.15
0.20
Imperfect Tracking
Full content provider
150 million US accounts
95% users visit once every 2 days
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 148/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
0.15
0.20
Imperfect Tracking
Full content provider
150 million US accounts
95% users visit once every 2 days
10% of US site visits
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 149/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
0.15
0.20
Imperfect Tracking
Full content provider
150 million US accounts
95% users visit once every 2 days
10% of US site visits
30% of US display ads
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 150/156
0.2 0.4 0.6 0.8 1.0
0.05
0.10
x 2
Imperfect Tracking
Limited content provider
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
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 151/156
Wednesday 18 May 2011
The efficient operation of advertising markets are dependent
upon consumer behavior.
Conclusions
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 152/156
Wednesday 18 May 2011
The efficient operation of advertising markets are dependent
upon consumer behavior.
A combination of consumer switching and imperfect tracking
Conclusions
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 153/156
can explain competitive effects in advertising markets for
news media.
Wednesday 18 May 2011
The efficient operation of advertising markets are dependent
upon consumer behavior.
A combination of consumer switching and imperfect tracking
Conclusions
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 154/156
can explain competitive effects in advertising markets for
news media.
Tracking technologies may assist in efficiency but adoptionfaces impediments.
Wednesday 18 May 2011
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 155/156
The efficient operation of advertising markets are dependent
upon consumer behavior.
A combination of consumer switching and imperfect tracking
l i i i ff i d i i k f
Conclusions
8/6/2019 The Impact of the Internet on Advertising Markets for New Media
http://slidepdf.com/reader/full/the-impact-of-the-internet-on-advertising-markets-for-new-media 156/156
can explain competitive effects in advertising markets for
news media.
Tracking technologies may assist in efficiency but adoptionfaces 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