The Unbundling of Journalism

Due to the switching behavior of online consumers, news outlets increasingly compete with each other to attract audience for each single news item they produce, rather than for complete editions of their newspapers: the so called unbundling of journalism. Using a standard Hotelling duopoly model with ideologically differentiated newspapers, I show that online competition unambiguously reduces news articles' quality, as compared to the scenario in which outlets compete to sell their newspapers (content bundles) to single-homing consumers. By contrast, the unbundling of journalism may foster outlets' newsgathering activities when their ideological positions are relatively important from consumers' viewpoint. These results are driven by significant differences in the role played by newsgathering and quality-improving activities as instruments to increase the readership (hence, ad-revenues) in the offline and the online market for news.