All hail news aggregators!

Newspapers have been fighting a losing battle with news aggregators on the grounds that the latter allow readers to bypass the newspaper front pages by deep linking to news articles, thereby reducing advertising income. This argument has always puzzled me, as news aggregators allow readers to discover these articles in the first place. It appears, though, that news aggregators have a different and so far neglected impact on the newspaper industry: the content of newspapers is changing.

Doh‐Shin Jeon and Nikrooz Nasr Esfahani imagine a world where newspapers try to steal readers from each other by exploiting the presence of news aggregators. Readers are interested in a number of issues, and newspapers write articles about them. They may try to cover many issues and choose how much quality to put into the reporting. Suppose the news aggregator identifies the highest quality article for each issue. When readers switch from following the local newspaper to following the news aggregator, the newspapers are forced to specialize into a few issue and perform much higher quality reporting. As a result the readers get much better news, newspapers make get less profits, though, but only if there were few competitors to start with. If you have many small newspapers, they become niche providers on very few topic and take great advantage from the news aggregator. And we are all happy for it.