Newspapers and the Internet: friends or foes? : evidence of concentration of choice in Korea

Abstract

Does the expansion of the Internet provide opportunities for newspapers to attract more readers, or does it threaten their sustainability by cannibalizing subscription revenue from print circulation? To examine these competing hypotheses, I analyzed a unique data set of the monthly number of clicks on the homepages of the Web sites of four economic newspapers in Korea between 2001 and 2009. Using a unique quasi-experimental observation of the Korean media industry, I illustrated the differential impact of the Internet on leading newspapers and their followers. By attracting people to a common "playground" and providing inference information-namely information on others' decisions-the Internet has a significant impact on consumer choice of information products, reinforcing informational cascades through the inference effect. My findings reveal that since the advent of the Internet, customer preference has consistently been dominated by market leaders, strengthening the brand image of the leaders. This phenomenon will, over time, widen the gap between leading newspaper groups and laggards, providing new opportunities for market leaders only. Thus, my findings point to significant marketing strategies based on consumer choice.