Nieman Foundation at Harvard
HOME
          
LATEST STORY
“Modern” homepage design increases pageviews and reader comprehension, study finds
ABOUT                    SUBSCRIBE
June 12, 2014, 4:15 p.m.
Business Models
LINK: www.aeaweb.org  ➚   |   Posted by: Caroline O'Donovan   |   June 12, 2014

A paper by the University of Chicago’s Matthew Gentzkow, published last month in the American Economic Review, is making headlines. “Trading Dollars for Dollars: The Price of Attention Online and Offline” looks at advertising spending based on time spent engaging with news content. In it, Gentzkow contends that the conventionally held belief that the dawn of the Internet destroyed the business model for print newspapers is false.

Contrary to most popular accounts, the growth of the Internet has not obviously caused a large decline in newspaper readership. Readership has fallen steadily since the Internet was introduced in the mid-1990s, but it had been falling at almost the same rate since 1980, and the small acceleration of this trend accounts for a drop in readership of only about 10 percent. This is consistent with more systematic evidence in Gentzkow (2007) and Liebowitz and Zentner (2012), suggesting that online-offline substitution is relatively limited, as well as survey evidence showing that the Internet currently accounts for less than 10 percent of total time spent consuming news (Edmonds 2013).

In addition, he says print news lost more revenue when it lost its classifieds to sites like Craigslist than it ever did to online news.

For data, Gentzkow relied on comScore for online news traffic and the Video Consumer Mapping Study for print. Obviously, it’s much harder to measure minutes spent reading print than spent reading online, however, Gentzkow writes in an email:

…they actually had observers follow participants around and record what they do minute by minute. They find that the average person who reads a newspaper on a given day reads for 41 minutes.

Now these aren’t exactly comparable — one person could make multiple visits to a website on a given day, and subscribers probably read more than the average reader. But I think it’s clear as a ballpark estimate that the print number is an order of magnitude bigger than the online number.

Based on these numbers, Gentzkow calculates that, although more money is spent on print advertising, when you look at spending per hour of attention, the rates for online are much higher.

Screen shot 2014-06-12 at 2.42.40 PM

Gentzkow offers a a few rationales for why online advertising might be valued more highly in the market.

Each newspaper has physical space for exactly one advertisement. All readers of the newspaper must see the same ad. The marginal cost of printing ads is zero. Each website also has physical space for exactly one advertisement, but these ads are targeted, so the website can show different ads to different consumers. Consumer types are observable to websites.

In other words, whatever online news lacks in eyeballs, it makes up for in delivering the intended viewer.

Show tags Show comments / Leave a comment
 
Join the 15,000 who get the freshest future-of-journalism news in our daily email.
“Modern” homepage design increases pageviews and reader comprehension, study finds
A new report from the Engaging News Project shows that users prefer modular, image-heavy homepage designs.
Newsonomics: The halving of America’s daily newsrooms
If you’re lucky enough to have the right deep-pocketed owner buy your paper and steady it, you’ve won the lottery. If you’re in a town whose paper is owned by the better chains, or committed local ownership, your loss will probably be mitigated. Otherwise, you’re out of luck.
Gimlet wants to become the “HBO of podcasting” — here’s what its founder’s learned trying to get there
Alex Blumberg, CEO and co-founder of Gimlet Media: “People who like public radio like podcasts, but people outside of public radio also like podcasts. So let’s find those people.”
What to read next
1119
tweets
New Pew data: More Americans are getting news on Facebook and Twitter
A new study from the Pew Research Center and Knight Foundation finds that more Americans of all ages, races, genders, education levels, and incomes are using Twitter and Facebook to consume news.
538How Upworthy is using data to move beyond clickbait and curation
After hiring Amy O’Leary from The New York Times, the site has started using user data to inform its original content production.
534Putting the public into public media membership
Getting beyond tote bags and pledge drives is critical to the sustainability of public media. Is there an alternative vision of membership that relies on relationships more than money?
These stories are our most popular on Twitter over the past 30 days.
See all our most recent pieces ➚
Encyclo is our encyclopedia of the future of news, chronicling the key players in journalism’s evolution.
Here are a few of the entries you’ll find in Encyclo.   Get the full Encyclo ➚
San Francisco Chronicle
Examiner.com
Kaiser Health News
The Dish
The UpTake
Wikipedia
Daily Mail
Chicago Tribune
SeeClickFix
Connecticut Mirror
Minneapolis Star Tribune
PubliCola