Professor Matthew Gentzkow Weighs in on New Economic Model for Newspapers

Newspapers are wrestling with the economic effects of the Internet. The huge decline in advertising revenues due to free sites such as craigslist is one such blow. An article on editorsweblog.org, published by the World Association of Newspapers and the World Editors Forum, estimates the loss could be as much as 75%.

The September 9 post included a summary of many of the challenges facing newspapers as they seek to adjust their business models. According to a recent study entitled Valuing New Goods in a Model with Complementarities: Online Newspapers, by Matthew Gentzkow, assistant professor of economics, an online edition reduces print readership by 30,000 per day and print profit by $5.7 million per year. According to the blog, he also found that online editions are seen as complements of print versions, not separate publications. His theoretical solution regarding nominal charges for online content is also discussed.

The complete September 9 post can be found at editorsweblog.com