Beruflich Dokumente
Kultur Dokumente
Unbundling of classifieds
Unbundling of classifieds
Unbundling of classifieds
Unbundling of classifieds
Unbundling of classifieds
Unbundling of classifieds
Unbundling of classifieds
ent to newspapers
Baseline Model Research Questions
Extensions Literature
Conclusion Outline
mScore, search
Media is under pressure
5%-40% of traffic
w sites
his monetizes as
ffic, this means
are drivingFall
about
in advertising revenue Loss of ‘good’ journalism
online ad
Unbundling of classifieds Local newspaper bankruptcies
venue is only 5%
Web ad revenue low Rise of aggregators/blogs
sent to
des the query
hat click, so we
kinds of clicks
s receive from
Will New Media Destroy the News Media? 2 /48
Introduction Issues
Baseline Model Research Questions
Extensions Literature
Conclusion Outline
Research Questions
Research Questions
Research Questions
Research Questions
Research Questions
Advertisers
Readers/Viewers Advertisers
$ $$
$ $$
$ $$
$ $$
or
$0 $$
or
$0 $$
or and
$0 $$
or and
$0 $$
or and
Anderson-Coate:
total ad revenue independent of no. of outlets
Will New Media Destroy the News Media? 6 /48
Introduction Policy Issue
Baseline Model Research Questions
Extensions Literature
Conclusion Outline
This Paper
$0 $$
or and
This Paper
$0 $$
and
This Paper
$0 $$
and and
This Paper
$0 $$
and and ?
This Paper
$0 $$
and ? and ?
Our Contribution
Our Contribution
Our Contribution
Our Contribution
Outline
Outline
Outline
Outline
Outline
Outline
Outline
Extensions (Future)
Outline
Extensions (Future)
Local news provision/geo-targeting
Outline
Extensions (Future)
Local news provision/geo-targeting
Ad-platform market structure
Model Elements
Model Elements
Fundamentals
Model Elements
Fundamentals
Limited consumer attention
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Nothing special about news
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Nothing special about news
Model applies to any content
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Nothing special about news
Model applies to any content
Simplifying assumptions
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Nothing special about news
Model applies to any content
Simplifying assumptions
Two outlets
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Nothing special about news
Model applies to any content
Simplifying assumptions
Two outlets
Exogenous readership allocation/outlet quality
Model Elements
Fundamentals
Limited consumer attention
Fixed over relevant time
Some opportunity to switch between outlets
Advertisers value impressions to consumers
Indifferent as to when impressions are over a relevant time
Content
Nothing special about news
Model applies to any content
Simplifying assumptions
Two outlets
Exogenous readership allocation/outlet quality
Symmetric outlets in terms of readership
Consumers
Consumers (readers/viewers)
Endowed with 2 periods of attention
If given the opportunity to choose, choose outlet i with probability xi
Opportunity to choose (switch) arrives in each period with probability ρ
Morning Afternoon
Morning Afternoon
x1
Morning Afternoon
x1
1− ρ
Stay
Morning Afternoon
ρ
Choose
x1
1− ρ
Stay
Morning Afternoon
x1
ρ
Choose Stay
x1
1− ρ
Stay
Morning Afternoon
x1
ρ
Choose Stay
x1
1− ρ
Stay
Morning Afternoon
x1
ρ
Choose Stay x1ρ x1
x1
1− ρ
Stay
Morning Afternoon
x1
ρ
Choose Stay x1ρ x1
x1
1− ρ x1 (1 − ρ )
Stay
Morning Afternoon
x1
ρ
Choose Stay x1ρ x1
x1
1− ρ x1 (1 − ρ )
Stay
x2
Morning Afternoon
x1
ρ
Choose Stay x1ρ x1
x1
1− ρ x1 (1 − ρ )
Stay
ρ
x2 Choose
Morning Afternoon
x1
ρ
Choose Stay x1ρ x1
x1
1− ρ x1 (1 − ρ )
Stay
ρ x1
x2 Choose Switch to 1
Morning Afternoon
x1
ρ
Choose Stay x1ρ x1
x1
1− ρ x1 (1 − ρ )
Stay
ρ x1
x2 Choose Switch to 1 x2 ρ x1
Advertisers
Outlets
Thus, if they capture a consumer’s attention for t periods, the total number
of advertisers they can supply to is tai.
Types of Ad Pricing
Price
vs
1-q
2a Quantity (Advertisers)
Will New Media Destroy the News Media? 18/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Morning Afternoon
Outlet 1
Outlet 2
Benchmark Case (ρ = 0)
In the monopoly benchmark, all advertisers multi-home. With consumers
single-homing, the first best is realised. With endogenous ad capacity, this
equivalence would not hold.
Price
vm
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 20/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Customer Types
Customer Types
Customer Types
Dil = xi − xi (1 − xi )ρ
D s = 2 ρ x1 x2
Perfect Ad-Tracking
Perfect Ad-Tracking
Perfect Ad-Tracking
Perfect Ad-Tracking
Perfect Ad-Tracking
Perfect Ad-Tracking
Perfect Ad-Tracking
l
D 1
Perfect Ad-Tracking
l l
D 1 D
2
Perfect Ad-Tracking
l l s
D 1 D
2 D
Perfect Ad-Tracking
l l s
D 1 D
2 D
2a1
Perfect Ad-Tracking
l l s
D 1 D
2 D
2a1 2a2
Perfect Ad-Tracking
l l s
D 1 D
2 D
2a1 2a2 a1 + a2
Perfect Ad-Tracking
Perfect Ad-Tracking
l s l
D 1
D D2
2a1 a1 + a2 2a2
Perfect Ad-Tracking
l s l
D 1
D D2
2a1 a1 + a2 2a2
Perfect Ad-Tracking
l s l
D 1
D D 2
2a1 a1 + a2 2a2
↑ρ
( )
if F −1 (1 − ai − a j ) − F −1 (1 − 2ai ) x j > 0 or ai > a j
Profit Comparisons
π i = D F (1 − 2ai )2ai
l −1
Profit Comparisons
π i = (D + 2D )F (1 − 2a)a
s l −1
π i = D F (1 − 2a)2a
l −1
Profit Comparisons
π i = xi F (1 − 2a)2a
−1
= π i = xi F (1 − 2a)2a −1
Pure Multi-Homing
Pure Multi-Homing
Pure Multi-Homing
Pure Multi-Homing
Pure Multi-Homing
Pure Multi-Homing
Intra-Outlet Tracking
Single-Home on i
Single-Home on i θi = D + D
l
i
1
2
s
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home θ12 = D + D + D
l
1
l
2
3
4
s
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home θ12 = D + D + D
l
1
l
2
3
4
s
Multi-Home (2 on i)
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home θ12 = D + D + D
l
1
l
2
3
4
s
Multi-Home (2 on i)
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home θ12 = D + D + D
l
1
l
2
3
4
s
Multi-Home (2 on i)
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home θ12 = D + D + D
l
1
l
2
3
4
s
Multi-Home (2 on i) θ12′ = 1
Single-Home on i θi = D + D
l
i
1
2
s
Multi-Home θ12 = D + D + D
l
1
l
2
3
4
s
Multi-Home (2 on i) θ12′ = 1
Impression Prices
Impression Prices
Assume that outlets cannot price discriminate between
switchers and loyal consumers.
Impression Prices
Assume that outlets cannot price discriminate between
switchers and loyal consumers.
Under symmetry (x1 = x2), can impression prices differ?
Impression Prices
Assume that outlets cannot price discriminate between
switchers and loyal consumers.
Under symmetry (x1 = x2), can impression prices differ?
If p1 > p2, 1 will only attract multi-homers while any
single-homers on 1 will bid up 2’s price.
Impression Prices
Assume that outlets cannot price discriminate between
switchers and loyal consumers.
Under symmetry (x1 = x2), can impression prices differ?
If p1 > p2, 1 will only attract multi-homers while any
single-homers on 1 will bid up 2’s price.
If there are no single-homers on 1 (i.e., a1 sufficiently low
relative to a2), then there may be a price differential.
Impression Prices
Assume that outlets cannot price discriminate between
switchers and loyal consumers.
Under symmetry (x1 = x2), can impression prices differ?
If p1 > p2, 1 will only attract multi-homers while any
single-homers on 1 will bid up 2’s price.
If there are no single-homers on 1 (i.e., a1 sufficiently low
relative to a2), then there may be a price differential.
So long as ad capacities are not too different, there is a
single impression price. Call this p.
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Multi-homer surplus = (D + D + D )v − p l
1
l
2
3
4
s
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Multi-homer surplus = (D + D + D )v − p l
1
l
2
3
4
s
Multi-homer surplus (2 on i)
= v − (2D + D + D )p
l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
Multi-homer surplus = (D + D + D )v − p l
1
l
2
3
4
s
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
Multi-homer surplus = (D + D + D )v − p l
1
l
2
3
4
s
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
Multi-homer surplus = (D + D + D )v − p l
1
l
2
3
4
s
vi
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
Multi-homer surplus = (D + D + D )v − p l
1
l
2
3
4
s
p vi
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
v12
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
D lj + 12 D s
p v12
D lj + 14 D s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
Multi-homer surplus (2 on i)
= v − (2D + D + D )p l
i
l
j
3 s
0 2
(D + D )(vi − p) = 0
l
i
1
2
s
D lj + 12 D s
p v12
D lj + 14 D s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
1
4
D v > (D + D ) p
s
i
l 1
2
s
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
(D + D )(vi − p) = 0
l
i
1
2
s
D lj + 12 D s
p v12
D lj + 14 D s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
1
4
D v > (D + D ) p
s
i
l 1
2
s
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
′
v12
(D + D )(vi − p) = 0
l
i
1
2
s
D lj + 12 D s
p v12
D lj + 14 D s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
1
4
D v > (D + D ) p
s
i
l 1
2
s
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
1
Dil + 12 D s
p v12′
1
4
D s
(D + D )(vi − p) = 0
l
i
1
2
s
D lj + 12 D s
p v12
D lj + 14 D s
D (v − p) + D (v − 2 p) > 0
l
j
1
4
s
p vi
1
4
D v > (D + D ) p
s
i
l 1
2
s
0
Will New Media Destroy the News Media? 30/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
(D + D )3(1 − v12
l 1
2′) s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
(D + D )3(1 − v12
l 1
2′) s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
Market Demand for
Impressions
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
(D + D )3(1 − v12
l 1
2′) s
1
D s
p v12′
4
(D + D )2(v12
l
′ − v12 )
1
2
s
D lj + 21 D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
Market Demand for Market Supply of
Impressions Impressions
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
(D + D )3(1 − v12
l 1
2′) s
p v12′
1
4
D s
2a1 D + 2a2 D
l
1
l
2
(D + D )2(v12
l
′ − v12 )
1 s
D lj + 21 D s
2
+(a1 + a2 )D s
D lj + 41 D s p v12
(D + D )(v12 − vi )
l 1
2
s
p vi
Market Demand for Market Supply of
Impressions Impressions
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
Dil + 12 D s
1
D s
p v12′
4
p vi
Market Demand for Market Supply of
Impressions Impressions
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Market Clearing
′
v12
Ds (2 − D )
s s
p= D s
Dil + 12 (3 − 2(a1 + a2 ))
v12 D
p
1 4 s+ D (2 − D )
s
vi
Market Demand for Market Supply of
Impressions Impressions
0
Will New Media Destroy the News Media? 31/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Equilibrium Prices
⎧ D s (2 − D s )
⎪ (3 − 2(a1 + a2 ))
⎪ 4 + D (2 − D )
s s 1
D >p
s
p=⎨ if 2
⎪ 2(2 − D )s 1
D ≤p
s
⎪ (1 − (a1 + a2 )) 2
⎩ 4− D s
Equilibrium Prices
⎧ D s (2 − D s )
⎪ (3 − 2(a1 + a2 ))
⎪ 4 + D (2 − D )
s s 1
D >p
s
p=⎨ if 2
⎪ 2(2 − D )s 1
D ≤p
s
⎪ (1 − (a1 + a2 )) 2
⎩ 4− D s
s
D low Profits higher under perfect tracking
Equilibrium Prices
⎧ D s (2 − D s )
⎪ (3 − 2(a1 + a2 ))
⎪ 4 + D (2 − D )
s s 1
D >p
s
p=⎨ if 2
⎪ 2(2 − D )s 1
D ≤p
s
⎪ (1 − (a1 + a2 )) 2
⎩ 4− D s
s
D low Profits higher under perfect tracking
D s
high Profits may be lower under perfect tracking
Switching (Low)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
Price
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 33/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
a1 = a2 = a
Price
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 33/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
a1 = a2 = a
Price
p= 2 − Ds
4 − Ds
2(1 − 2a)
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 33/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
a1 = a2 = a
Price
p= 2 − Ds
4 − Ds
2(1 − 2a)
vc 1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 33/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
The impression price changes both the number of
advertisers and their mix
Price
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 34/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
The impression price changes both the number of
advertisers and their mix
Price
Demand from Multi-homers
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 34/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
The impression price changes both the number of
advertisers and their mix
Price
Demand from Multi-homers
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 34/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
The impression price changes both the number of
advertisers and their mix
Price
Demand from Multi-homers
4−ρ
(q − 2a)
ρ
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 34/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (Low)
The impression price changes both the number of
advertisers and their mix
Price
Demand from Multi-homers
4−ρ
(q − 2a)
ρ
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 34/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
Price
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 35/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
a1 = a2 = a
Price
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 35/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
a1 = a2 = a
Price
p=
D s (2 − D s )
4 + D (2 − D )
s s( 3 − 4a )
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 35/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
Reduction in demand for impressions -- advertisers prefer to accept missing
impressions rather than pay for wasted impressions
a1 = a2 = a
Price
p=
D s (2 − D s )
4 + D (2 − D )
s s( 3 − 4a )
vc 1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 35/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
The impression price changes both the number of
advertisers and their mix
Price
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 36/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
The impression price changes both the number of
advertisers and their mix
Demand from Multi-homers
Price
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 36/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
The impression price changes both the number of
advertisers and their mix
Demand from Multi-homers
Price
1-q
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 36/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
The impression price changes both the number of
advertisers and their mix
Demand from Multi-homers
Price
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 36/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
The impression price changes both the number of
advertisers and their mix
Demand from Multi-homers
Price
4−ρ
(q − 2a)
ρ
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 36/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Switching (High)
The impression price changes both the number of
advertisers and their mix
Demand from Multi-homers
Price
4−ρ
(q − 2a)
ρ
vc
Demand from Single-homers
2a
Quantity (Advertisers)
Will New Media Destroy the News Media? 36/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
When consumer switching is low, outlets can profit from adopting perfect
tracking.
When consumer switching is low, outlets can profit from adopting perfect
tracking.
But as internal tracking improves, the incentives to do so diminish
When consumer switching is low, outlets can profit from adopting perfect
tracking.
But as internal tracking improves, the incentives to do so diminish
When consumer switching is high, outlet profits may fall with perfect
tracking.
When consumer switching is low, outlets can profit from adopting perfect
tracking.
But as internal tracking improves, the incentives to do so diminish
When consumer switching is high, outlet profits may fall with perfect
tracking.
Competitive pressures may not drive adoption as this requires inter-outlet
coordination
When consumer switching is low, outlets can profit from adopting perfect
tracking.
But as internal tracking improves, the incentives to do so diminish
When consumer switching is high, outlet profits may fall with perfect
tracking.
Competitive pressures may not drive adoption as this requires inter-outlet
coordination
When capacity choice is endogenous, outlet asymmetry drives adoption
issues.
Endogenous Ad-Capacity
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai
πi =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
π i = D (1 − 2ai )2ai
l
Endogenous Ad-Capacity
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai
πi =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
π i = D (1 − 2ai )2ai
l
Endogenous Ad-Capacity
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
3
πi =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
π i = D (1 − 2ai )2ai
l
Endogenous Ad-Capacity
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
3
πi = ac =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
1
2
π i = D (1 − 2ai )2ai
l
Endogenous Ad-Capacity
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
3
πi = ac =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
1
2
π i = D (1 − 2ai )2ai
l
am = 1
4
Endogenous Ad-Capacity
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
3
πi = ac =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
1
2
π i = D (1 − 2ai )2ai
l
am = 1
4
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai
πi =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
π i = D (1 − 2ai )2ai
l
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai
πi =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
π i = D (1 − 2ai )2ai
l
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
4
πi =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
π i = D (1 − 2ai )2ai
l
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
4
πi = ac =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
3
8
π i = D (1 − 2ai )2ai
l
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
4
πi = ac =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
3
8
π i = D (1 − 2ai )2ai
l
am = 1
4
πi = 2 − Ds
4 − Ds
(1 − a1 − a2 )2ai ac = 1
4
πi = ac =
s s
D (2 − D )
s
4 + D (2 − D
s
)
(3 − 2(a1
+ a 2
))ai
3
8
π i = D (1 − 2ai )2ai
l
am = 1
4
Impact of Switchers
Profits
s
D
Will New Media Destroy the News Media? 40/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Impact of Switchers
With ‘no tracking’ and
perfect tracking there is no
impact of switchers
Profits
s
D
Will New Media Destroy the News Media? 40/48
Introduction
Elements
Baseline Model
Perfect Tracking
Extensions
Imperfect Tracking
Conclusion
Outlet Asymmetries
Outlet Asymmetries
Outlet Asymmetries
Outlet Asymmetries
Outlet Asymmetries
Outlet Asymmetries
Outlet Asymmetries
Generalisations
Generalisations
Easy generalisations:
Generalisations
Easy generalisations:
Many outlets: more switching caused by competition
Generalisations
Easy generalisations:
Many outlets: more switching caused by competition
Heterogenous outlets: vertical quality causes additional sorting
Generalisations
Easy generalisations:
Many outlets: more switching caused by competition
Heterogenous outlets: vertical quality causes additional sorting
Capacity constrained advertisers: competition without switching
Generalisations
Easy generalisations:
Many outlets: more switching caused by competition
Heterogenous outlets: vertical quality causes additional sorting
Capacity constrained advertisers: competition without switching
Difficult generalisations:
Generalisations
Easy generalisations:
Many outlets: more switching caused by competition
Heterogenous outlets: vertical quality causes additional sorting
Capacity constrained advertisers: competition without switching
Difficult generalisations:
Many attention periods: then get n-homers
Generalisations
Easy generalisations:
Many outlets: more switching caused by competition
Heterogenous outlets: vertical quality causes additional sorting
Capacity constrained advertisers: competition without switching
Difficult generalisations:
Many attention periods: then get n-homers
Repeat ads on an outlet: helps high value advertisers increase impressions
but there is diminishing marginal returns.
Price
1-2a
a Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
Price
1-2a
a (1 − xb (1 − ρ(1 − ρ )(1 − xb ))
Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
Price
1-2a
a (1 − xb (1 − ρ(1 − ρ )(1 − xb ))
Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
Price
vb
1-2a
a (1 − xb (1 − ρ(1 − ρ )(1 − xb ))
Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
vb
1-2a
a (1 − xb (1 − ρ(1 − ρ )(1 − xb ))
Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
vb
1-2a
a (1 − xb (1 − ρ(1 − ρ )(1 − xb ))
Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
1-2a
a (1 − xb (1 − ρ(1 − ρ )(1 − xb ))
Quantity (Impressions)
Will New Media Destroy the News Media? 43/48
Introduction Generalisations
Baseline Model Impact of Blogging
Extensions Aggregators
Conclusion Paywalls
Aggregators
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Aggregators
“There are those who think they have a right to take our news content and use it for
their own purpose without contributing a penny to its production. Content creators bear
all the costs, while aggregators enjoy many of the benefits. In the long term, this is
untenable.” (Rupert Murdoch)
Informational Requirements
Informational Requirements
Informational Requirements
Informational Requirements
Can outlets use fact that consumer has visited other sites to price
discriminate?
Informational Requirements
Can outlets use fact that consumer has visited other sites to price
discriminate?
If not, perfect tracking generates Cournot outcomes but without inefficiency
in the baseline model
Future Directions