A new study done by University of Chicago’s Booth School of Business professor Matthew Gentzkow finds that the Internet did not kill the newspaper industry. It was cellphones.
I jest. Even though it sounds like the (very) first draft of an Onion article, it’s apparently real. Here’s the deal: we usually say that the internet killed our old business model because of advertising revenue. Gentzkow shows that it’s a bit of a fallacy — people spend more time looking at advertisements online, too. From Booth’s release on his study:
“This perception that online ads are cheaper to buy is all about people quoting things in units that are not comparable to each other—doing apples-to-oranges comparisons,” Gentzkow says. Online ad rates are typically discussed in terms of “number of unique monthly visitors” the ad receives, while circulation numbers determine newspaper rates… By comparing the amount of time people actually see an ad, Gentzkow finds that the price of attention for similar consumers is actually higher online. In 2008, he calculates, newspapers earned $2.78 per hour of attention in print, and $3.79 per hour of attention online. By 2012, the price of attention in print had fallen to $1.57, while the price for attention online had increased to $4.24.
There’s also his findings that people were actually starting to lose interest in newspapers in the 1980’s, long before signing into AOL’s walled garden of news was a consumer habit. You can read his published paper “Trading Dollars for Dollars: The Price of Attention Online and Offline.” at the American Economic Review. Pay per view options are available for non-subscribers.
Consider my mind blown.