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As giant platforms rise, local news is getting crushed
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Oct. 21, 2013, 9:53 a.m.
LINK: www.nber.org  ➚   |   Posted by: Joshua Benton   |   October 21, 2013

There are, as they say, only so many minutes in a day. So if we’re spending more and more time online — breaking news alert! we are — that time has to come from somewhere.

This new paper from Scott Wallsten of the Technology Policy Institute (PDF here) looks at what online media seems to be replacing in our daily lives. The biggest losers: work, sleep, and TV.

I find that, on the margin, each minute of online leisure time is correlated with 0.29 fewer minutes on all other types of leisure, with about half of that coming from time spent watching TV and video, 0.05 minutes from (offline) socializing, 0.04 minutes from relaxing and thinking, and the balance from time spent at parties, attending cultural events, and listening to the radio. Each minute of online leisure is also correlated with 0.27 fewer minutes working, 0.12 fewer minutes sleeping, 0.10 fewer minutes in travel time, 0.07 fewer minutes in household activities, and 0.06 fewer minutes in educational activities.

Wallsten has a bit in there on the impact on the news business:

To be sure, the online version of the newspaper must generate additional consumer surplus relative to the offline version or the newspaper industry would not be losing so many print readers, but not all of time spent reading the paper online reflects the incremental value of the Internet. Additionally, at a price of zero the activity might attract more consumers than when the activity was paid, or consumers might read more electronic books than paper books because they prefer the format or because e-books are so much easier to obtain. But even if lower prices increase consumption of a particular activity, the cost of that additional consumption is time no longer spent on another activity.

Activities that once required payment but became free, such as reading the news online, represent a transfer of surplus from producers to consumers, but not new total surplus. Of course, these transfers may have large economic effects as they can lead to radical transformations of entire industries, especially given that consumers spend about $340 billion annually on leisure activities.

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