Internet not responsible for dying newspapers, new study finds

We all know that the Internet has killed the traditional newspaper trade, right? After all, until the general population started interacting with the web in the mid-90s, the newspaper business was thriving — offering readers top notch journalism and pages of ads.

But a recently-published study finds that we may be all wrong about the role of the Internet in the decline of newspapers.

According to research by University of Chicago Booth School of Business Professor Matthew Gentzkow, assumptions about journalism are based on three false premises.

In his new paper, “Trading Dollars for Dollars: The Price of Attention Online and Offline,” which was published in the May issue of the American Economic Review, Gentzkow notes that the first fallacy is that online advertising revenues are naturally lower than print revenues, so traditional media must adopt a less profitable business model that cannot support paying real reporters. The second is that the web has made the advertising market more competitive, which has driven down rates and, in turn, revenues. The third misconception is that the Internet is responsible for the demise of the newspaper industry.

“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.

Several different studies already have shown that people spend an order of magnitude more time reading than the average monthly visitor online, which makes looking at these rates as analogous incorrect.

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.

Gentzkow also points out that the popularity of newspapers had already significantly diminished between 1980 and 1995, well before the Internet age, and has dropped at roughly the same rate ever since. “People have not stopped reading newspapers because of the Internet,” Gentzkow notes

Washington Capitals Score 4 Goals in the First Period

Alex Ovechkin scored the 10th goal of the season, and he helped the Washington Capitals score the fourth goal in the first period in order to beat the Colorado Avalanche on Saturday. Evgeny Kuznetsov has two assists prior to adding the seventh goal of the season to provide Washington some insurance in the third period.

Ovechkin added a late assist in the third period with three goals. Also, Jason Chimera has around three assists, and Nate Schmidt and Dmitry Orlov hit their first goals in the season for the Capitals.

Reto Berra, the Colorado goaltender, gave up four goals consecutively for the third game, and he was replaced by Calvin Pickard after the first period. Avalanche’s top goaltender, Semyon Varlamov failed to take part in the fifth game due to a groin wound.

Nathan MacKinnon scored the ninth goal of this season for the Avalanche, who let seven goals for the very first time this season. He also lost the third consecutive game in order to fall to 3-3.

The four goal period of Washington was the first one since the late January and started when Justin Williams scored three minutes in. After Willams took over the feed of Chimera from behind the goal line and struck a shot in the near post, Alex Ovechkin increased the lead off twice the Nicklas Backstrom’s pass from the same spot by squeezing the effort beneath Berra.

It was the 485th goal of Ovechkin’s career after his 484th goal created a record for the players born in Russia. The deflected shot of John Carlson from the point made it 3-0 as it slipped into a net that was left open after Berra slipped while defending the previous shot.

Cody McLeod as well as MacKinnon scored their second goal from the right on the third period power play. Karl Alzner and Orlov added late goals for the Washington Capitals. Also, Andreas Martinsen scored for the Avalanche.