News Consumption and the New Electronic Media

[Keyword: online journalism]. Douglas Ahlers has published a useful paper in the Harvard International Journal of Press/Politics (Vol. 11, No. 1, 29-52) on 'News Consumption and the New Electronic Media' (PDF). It looks at people's consumption of news across online and offline media, as well as the threat to newspaper advertising from the web. Ahlers argues that:

"Theories of the adoption rate of new technologies have focused on two mechanisms that overcome the costs of switching. The first is if an immediate gain can be achieved by switching to the new technology. The second is if the new technology produces increasing returns to adoption. “Increasing returns to adoption are said to exist when the net benefit to the user of a technology increases as the degree of adoption of that technology increases.” [Robin Cowan, “High Technology and the Economics of Standardization” (paper presented at the International Conference on Social and Institutional Factors Shaping Technological Development: Technology at the Outset, Berlin, May 27-28, 1991), 4.]

“With data suggesting that consumers have greater preference for the offline media or see little difference, and in the absence of a major driver to overcome switching costs, we can predict a slow adoption curve or a failure to ever produce a mass market phenomenon.”

He concludes by saying:

“A close analysis of available industry data leads us to conclude that the hypothesized migration of consumers from the traditional news media to the online news media has not happened. At least it has not happened to a magnitude that could be characterized as the collapsing of the traditional news media. We can conclude that there is no indication that the industry is in free fall or that the doomsday talk is justified.

“The online advertising component of the industry is smaller than it first appears. Most of the impact from online advertising is in the area of classified advertising, but even here we estimate the impact to be between 10 to 15 percent. The Internet also provides new revenue streams in the area of online classifieds, as traditional news media companies compete online to recapture a portion of the total online advertising revenues.

“A customer segmentation model is a more appropriate way to view news consumption behaviors. There is not a one-size-fits-all pattern of news
consumption. Instead, there is a broad range of news consumption behaviors. Some
users will go online only for their news, others will never abandon the traditional news media, some will be light users of all media, and still others will embrace all media and be multichannel news consumers. For only a small group, the online news media will act as a substitute for the traditional news media. For the majority, it will act as a complement.” (p48)