Media Plurality and the Intensity of Readers' Political Preferences

Abstract

In this article, the author studied the effect of the intensity of readers' political preferences on the news firms' incentives to choose between a single- and a multi-ideology strategy (i.e., media uniformity vs. media plurality). The author shows that alternative formalizations of the intensity of readers' preferences alter the equilibrium level of media plurality, given that they affect demand for news. In particular, when the readers' disutility of consuming news that differs from their ideal variety is relatively high for politically close news, the media firms choose a multi-ideology strategy, because the increase in demand is large. On the contrary, when the readers' disutility of consuming news that differs from their ideal variety is relatively low for politically close news, media firms choose a single-ideology strategy because a multi-ideology strategy does not significantly increase demand.

Notes

¹The idea behind supply side forces is that outside actors (e.g., owners, journalists, interest groups, and advertisers) can exercise control over the political ideology choice of news outlets. Supply side forces can, for example, be the outcome of ideological bias of newspapers' owners or journalists (Baron, 2005, 2006), media capture by interest groups (Besley & Prat, 2006; Jung, 2009) or advertisers' pressure (Gabszewicz et al., 2001; Hackner & Nyberg, 2008; Kind et al., 2007; Manduchi & Picard, 2008; Resende, 2008; Roson, 2008).

²An example of customization is Dell, where consumers when buying a computer can choose between different components but at a different price according to the components chosen. An example of a fat product is a TV set that can be adjusted for brightness, focus, and color and so forth. In other words, fat products can be defined as access products. When consumers pay to access a given product, they can choose amongst what is offered “inside.” In this way, in the context of the news market we talk about “fat news” when the same media outlet caters to many different consumers, and each consumer can go online and find what they need.

³The introduction of price discrimination of the type used in Dewan et al. (2003) does not substantially change our results. This is interesting because price discrimination increases the firms' incentives to provide media plurality, given that they can extract extra revenue from consumers. Calculations with price discrimination can be obtained from the author upon request.

⁴In Dewan et al. (2003), the costs of adapting products, besides the quadratic element, also have a linear part. The inclusion in our model of a linear element does not change the results. Therefore, for simplification we eliminate it from the analysis.

⁵For example, to provide political opinions away from the newspaper's political core, the media firm might need to hire a completely new journalist staff and to adopt also a new administrative structure. Conversely, to provide political opinions contiguous to the newspaper's political core, the media firm might be able to continue to use the same resources that it already owns.