Periodic Reporting for period 5 - MIRAGE (Independence and quality of mass Media in the InteRnet AGE)
Periodo di rendicontazione: 2023-09-01 al 2024-06-30
The project studies how competition from online platforms and pressures from corporate interests influence the way traditional media operate, and, ultimately, content quality and editorial independence. It tackles three distinct but intertwined questions. First, it examines how shrinking advertising revenues due to increased competition from online platforms affect the organization of newspapers, the diversity and quality of news content, and, ultimately, the information citizens have access to. Second, it examines whether and how pressures from corporate advertisers affect the way newspapers report on issues that are relevant to readers, and what market forces can alleviate or exacerbate this risk. Third, it studies how the connections between the banking sector and the media, namely through lending and ownership, influence news coverage of important financial issues, and can ultimately affect the policy debate concerning bank regulation and monetary policy. Understanding these questions is of paramount importance for society at a time when profound technological and economic transformations are reshaping the media landscape. Assessing the impact of these dynamics on traditional media, particularly newspapers, is especially important since, despite shrinking revenues and staff cuts, they continue to play a central role in the production of original content and in informing citizens about important policy issues, both national and local. Hence, the overarching goal of the project is to generate rigorous empirical evidence on the questions mentioned above, and to highlight differences on how these fundamental forces play out in different contexts (namely in the U.S. and Europe). Last but not least, the project also aims to generate well-grounded policy recommendations on how regulators ought to govern the complex changes the media industry is undergoing, with the goal of protecting pluralism and media independence while allowing digital progress to express its full potential. My research has significantly advanced our understanding of how the internet and online platforms impact traditional media. The findings reveal that competition from online platforms and the resulting decline of legacy media have profound effects on the information available to citizens. On one hand, financial constraints have forced newspapers to downsize, leading to reduced news coverage, particularly on political matters. On the other hand, financial distress makes media outlets more susceptible to external pressures from advertisers and lenders, posing serious risks to media independence.
The project consists of three modules. Module 1 studies how the introduction of Craigslist - the world’s largest online platform for classified ads - affected the performance, organization, and content of local newspapers in the U.S. The data collection process has been completed. This task was very demanding, as it involved assembling data from many sources and digitizing a massive number of documents only available in paper format. We have also completed the data analysis, which has delivered a set of very interesting findings, as well as the write-up of the paper. The resulting article, titled “The Impact of Online Competition on Newspapers: Evidence from the Introduction of Craigslist”, has been submitted and was recently accepted for publication in the Review of Economic Studies, one of the most influential outlets in economics. Module 2 studies the relationship between advertising spending by car manufacturers and newspaper coverage of car safety recalls. It has required the collection of comprehensive data on all car safety recalls issued in the U.S. and on the ad spending by car manufacturers in national and local newspapers between 2000 and 2014. It has also required identifying all articles about car safety recalls published in hundreds of newspapers over the same period. The collection and analysis of the data, as well as the write-up of the results, were completed swiftly. The resulting paper was submitted for publication to Management Science - the world’s top management journal - and was finally accepted after a rapid editorial process. Module 3 studies how connections between banks and media companies affect news coverage of financial issues. The data collection has involved mapping all lending and shareholding relations between banks and the top newspapers in several European countries, and identifying all articles about bank’s earnings announcements, bank’s mergers and acquisitions, and the Eurobond crisis. We have completed the data collection process and the analysis of the data, which has delivered a set of very interesting results. We have also completed the write-up of the paper, which we circulated and presented extensively in conferences and seminars. We have recently submitted the resulting paper for publication to The Journal of Finance, the flagship journal in finance, and expect a response soon.
The project generates novel empirical evidence on several important questions that are at the hearth of the academic and public debate on the role of the media in democratic societies. The first module has produced the first systematic large-scale evidence of how competition from online platforms has reshaped the way traditional media operate, i.e. their revenue structure, internal organization, editorial priorities, quality of news content. In addition, it sheds light on the ramifications of these changes for the access of citizens to information they need to take part in the democratic process and keep elected officials accountable. The second module tests empirically the hypothesis that, to preserve a positive relationship with their advertisers, media may bias news in their favor. The question of whether firms can use advertising spending – in addition to direct ownership – to influence the media and limit hostile coverage, is central to the debate on media independence from corporate interests. In this regard, our contribution is novel in that it provides the first robust evidence that media bias content in favor of advertisers even in situations in which the interests of the latter are clearly opposed to those of the readers. Furthermore, it sheds light on how competition and the entry of online competitors favor or deter this situation and on what policies may be most appropriate to insulate the media from outside pressures. The third module represents the first large-scale investigation of how the relationship between media and the banking sector affect the way financial issues get covered in the press, the information available to readers, and ultimately, the policy debate. Documenting whether banks can exploit connections to media firms to promote a narrative more aligned with their interests is important, especially at a time when most traditional media are in financial distress and are increasingly dependent on creditors.