The impact of web traffic on revenues of traditional newspaper publishers Using a case study analysis, where Google News added local content to users’ home pages who chose to enter their location, they find that the inclusion of local content by Google News had mixed effects on local new sites. It increased traffic, especially in the short run, but it also increased the reliance of users on Google News for their choice of news, and increased the dispersion of user attention across outlets. Furthermore, they find that the adoption of Google News leads to greater consumption of local news, both unconditionally (by more than 26%) and conditional on Google News page views. They find a 5% increase in direct navigation to local outlets (bypassing Google News altogether, presumably because the user had learned that they like the outlet and actively chooses it in the future), and a 13% increase in clicks on local outlets from the Google News home page. However, over time, incremental local news consumption is derived primarily from increased use of Google News. The impact of online news advertising on print advertising Sridhar and Sriram (2014) analyse how firms choose to transfer their budgets over time between online and print newspaper publishing. Using monthly advertising data for a large US newspaper over the period 2007-2011, they carry out an empirical study to determine whether online advertising is substituting print advertising revenues. 64 They find that, whilst online traffic is increasing, online advertising prices remain low. They report that 4-9% of the decline in print advertising revenues was due to substitution from the transition to online media, with most of the decline being attributed to the substitution of advertisers to alternative media options other than newspapers. Media, aggregators and the link economy Dellarocas, Katona, and Rand (2012) develop a theoretical model to determine how hyperlinking affects the incentives of news providers to produce quality content, rather than link to third party content, and the resulting impacts on the profits and content quality of both news providers and 65 aggregators. They find that the Internet has been disruptive in breaking up geographical monopolies, with all content competing for online readers. Linking allows similar sites to coordinate content production in ways that increase their joint profits and quality, thus benefiting consumers. The main benefit of aggregators to content creators comes from traffic expansion. Assuming content aggregators form links to the best available content, their presence makes it easier for consumers to access good content, and increases the attractiveness of the entire content ecosystem. However, the presence of aggregators incurs costs that need to be considered, such as the appropriation of attention and revenues to news content providers. Their net effect is positive for content creators only if the traffic expansion they induce is sufficient to offset the loss of attention and advertising revenue. 64 Sridhar, S. and Sriram, S. (2013), ‘Is online newspaper advertising cannibalizing print advertising?’, University of Michigan. 65 Dellarocas, C., Katona, Z., and Rand, W. (2013), ‘Media, aggregators and the link economy: Strategic hyperlink formation in content networks’ in Management Science 59:10, 2360-2379. Deloitte LLP. 22