Published: November 13, 2015
The University’s department of economics and finance held its 30th annual Henry George Lecture on Wednesday. In the past, many influential speakers, including nine Nobel Laureates, have come to The University to present their research and views on economicly prevalent issues. This year’s speaker was Susan Athey, whose presentation entitled “The Internet and the News Media” highlighted how the internet has changed media consumption in the past few decades.
Athey came from the Stanford Graduate School of Business, where she is an economics of technology professor. She has performed ample research in her interests, which include the economics of the Internet, marketplace design and analysis of auction data. This past week, Athey shared her research on the impact of the Internet on how people consume news and information with the crowd of University students and professors.
She began by explaining how crucial it is to understand how people get information because, especially with today’s technology, it is constantly changing. Athey described the different ways in which the media is under pressure. It can be seen in the fall of advertising revenue, local newspaper bankruptcies, the loss of “good” journalism and, importantly, the rise of aggregators. In Athey’s opinion, “It’s not just an idle concern that the news media is under pressure…I expect there will be more media consolidation and firms going out of business in the years to come.”
Why does she predict this? Because, according to Athey, intermediaries are becoming more important as news is becoming less popular. These intermediaries include research aggregators and social media. Research aggregators are websites like Google News, Yahoo News, the Huffington Post and Bing News. On the social media side, Facebook is currently taking over from Google News as the top referencing source. The intermediaries between who finds the news and who reads the news have a major power in influencing what people see and read online.
Athey has experienced many different opinions on the roles of intermediaries like these today. Many people view them as “parasites” because while someone does all the research, Google News uses algorithms to show what other people have done. On the other hand, these aggregators can also play a role similar to a taxi cab, meaning that they help people find the news. In this way, it may be easier for people to get to the news and they will read more, which is good for the news industry.
As Athey put it, “Google News may be a substitute to The New York Times but also a complement to a small publisher you wouldn’t otherwise go to.”
To help the audience visualize this in a specific instance, Athey offered the example of the Google News shutdown in Spain in December of last year. In 2014, the Spanish Parliament passed a law that news aggregators needed to pay a fee in order to show news snippets or previews from their publications online. Google News decided to shutdown instead of pay. After the shutdown, people began doing more direct searches on news home pages. As a result, people’s views on landing pages of different newspapers’ websites increased significantly. Athey talked about the significance of this because people in Spain began searching through the newspapers’ websites looking for articles, therefore exposing themselves to more articles in one specific paper.
However, the Google News shutdown did ultimately cause a decrease in news consumption in Spain. What does this mean for the news industry? It proves that patterns are changing in the way news is consumed.
Athey provided some statistics to support this statement. In 2008, about 38 percent of adults had some kind of a social media account. By 2013, that number rose to 72 percent. During this year, Facebook replaced Google as the top news referencing source.
Many questions arise as a result of this. Will people consume relatively less or more political and science news? Will there be a relative increase of trendy topics versus long-term issues? It is important to understand these questions with the rise of news on social media and Facebook. Consequently, reporters spend most of their time trying to make their stories interesting so they can get more “clicks” or “shares.”
Athey warned that the news has become more biased. She said that, “Content is highly data driven and based on responses by users in real-time…Any slight change in what they think people want will change content.”
Athey has performed many studies on this issue. She shared with The University community a couple of her methods to test topic variation in the media. One such method was the “Wikipedia Method,” in which she gives certain news documents scores based on how well they match a Wikipedia article on the topic, to see if that is a “valid macro topic.”
Over the years, Athey has published countless papers on how media consumption is changing today. It is evident that social media is not changing the types of news people read, but it is changing the way people read. It is an important observation to keep in mind, especially in this world of ever-changing technology.
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