Working Paper: NBER ID: w30939
Authors: Manudeep Bhuller; Tarjei Havnes; Jeremy McCauley; Magne Mogstad
Abstract: Combining comprehensive data from the Norwegian media market on newspaper circulation, readership, revenues, factor inputs, and product characteristics with plausibly exogenous variation in the availability and adoption of broadband internet, this paper provides causal evidence on how the internet affected the traditional print media market. Household adoption of broadband internet triggered large reductions in print readership and circulation and equally large increases in online news readership. Despite strong substitution from print to online news consumption, newspaper firms’ revenues fell by almost 30%. Newspaper firms responded by dramatically cutting costs, either by shedding labor inputs or by reducing the physical size of newspaper sheets, and in doing so avoided meaningful losses in profits. The printed newspaper product available to customers also changed, as newspapers shifted content away from tabloid to more serious news. This paper offers a case study on how an adverse technology shock transmits through firms with multiple margins of adjustment, and provides an explanation for the economic resilience of newspapers.
Keywords: broadband internet; print media; newspaper circulation; online news; media economics
JEL Codes: L11; L82; L86; O33; R22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Broadband internet adoption (L96) | Decline in print readership (A19) |
| Broadband internet adoption (L96) | Decline in print circulation (A19) |
| Decline in print readership (A19) | Increase in online news readership (L86) |
| Decline in print readership (A19) | Total newspaper readership remains stable (D10) |
| Decline in print sales (A19) | Revenue losses for newspaper firms (G32) |
| Broadband internet adoption (L96) | Shift in advertising spending away from print (M37) |
| Decline in print sales (A19) | Adjustments in newspaper operations (M11) |
| Decline in print sales (A19) | Reduction in labor inputs (J89) |
| Decline in print sales (A19) | Alteration of physical newspaper sizes (Y90) |
| Decline in print sales (A19) | Shift in newspaper content from tabloid to serious news (L82) |