Agenda chasing and contests among news providers

• Author: Miklos Sarvary,Zsolt Katona,Jonathan A. Knee
• DOI: http://doi.org/10.1111/1756-2171.12191
• Published date: 01 August 2017
• Date: 01 August 2017

RAND Journal of Economics

Vol.48, No. 3, Fall 2017

pp. 783–809

Agenda chasing and contests among news

providers

Zsolt Katona∗

Jonathan A. Knee∗∗

and

Miklos Sarvary∗∗

This article studies competition in contests with a focus on the news industry that is increasingly

influenced by social media. The model assumes publishers to pick a single topic from a large

pool based on the topics’ prior “success” probabilities, thereby“chasing” potentially successful

topics. Firms that publish topics that become successful divide a “reward” which can change

with the number of competing firms and the number of successful topics. The results show that

share structures can be categorized into three types that, in turn, lead to qualitatively different

outcomes for the contest.

1. Introduction

Contests—competitive situations where winners share a reward—describe many economic

interactions, including, for example, the rivalry among Research and Development (R&D) teams,

competition among forecasters, or the race among job candidates. In this article, we develop

a generalized contest model to describe competition between online news publishers. Largely

due to the emergence of the Internet, news media have undergone qualitative change. There are

many facets to this transformation but—we argue—an important aspect of it is that news outlets

increasingly compete in a contest where (i) they try to publish stories that are likely to become

“viral” due to consumers’ online sharing activities and (ii), if successful, they divide online ad

revenues closely linked to pageviews. The resulting contest has important implications for the

type and diversity of news that end up being published.

Traditionally, mainstream media (the press or broadcast media) had a strong role in so-

called agenda setting. By 2010, the appearence of online media sites combined with the broad

∗University of California Berkeley; zskatona@berkeley.edu.

∗∗Columbia University; jk2110@columbia.edu, miklos.sar vary@columbia.edu.

The authors wouldlike to thank Tuba Pinar Yildirim, Francesco Marconi, SivanFrenkel, Luis Cabral, Miguel Villas-Boas,

Ron Sachar, participants at the 2013 SICS conference in Berkeley,at the 11th Media Economics conference in Tel Aviv,

and participants at the Yale SOM and Temple, Fox SOB,and MIT seminar series, for their comments and suggestions.

All errors are ours.

C2017, The RAND Corporation. 783

784 / THE RAND JOURNAL OF ECONOMICS

adoption of social networks lead to a more “diluted” public agenda where news outlets seem to

grab considerable attention from the public by publishing seemingly marginal topics. A 2014

article in the Financial Times, tellingly titled, “You won’t believe what viral content does to

news” describes the trend as follows: “In 2014, the fastest-growing form of online ‘content’ is

an epidemic of hear twarming videos [ ...],funny lists[...]and click-baitheadlines from sites

such as BuzzFeed, Upwor thy, and ViralNova. Rather than being found on news sites or through

search engines, they flourish on social networks such as Facebook and Twitter” (Gapper, 2014).

Indeed, there is ample anecdotal evidence that social media may propel so-called trivia topics in

the mainstream news (see, e.g., Deighton and Kornfeld, 2010).

Competition between online news sites is fierce. Barriers to entry in the news industry

have declined substantially in recent years, leading to the emergence of new players, such as the

Huffington Post, BuzzFeed, or The Business Insider, to name only the most prominent ones. Many

of these new entrants came to prominence by developing proprietary forecasting technologies

to rapidly identify popular themes that are likely to become mainstream online. The Huffington

Post pioneered technology to monitor the public’s search behavior to identify emerging topics.

BuzzFeed succeeded byidentifying “trending” content based on technologythat monitors sharing

behavior on popular social media sites, such as Facebook or Twitter. In a world where social

media has become the dominant source of traffic for news,1such technologies have shown rapid

results in terms of pageviews attracting large investments by established media conglomerates.

Traditional publishers have had no choice but to follow the new entrants’ tactics. In fact, the

line between traditional and new media is increasingly blurred as even iconic examples of the

respective categories copy each other’s strategies. Traditional media have realized the need to

link to external sources of content to remain relevant.2Even television newsproviders have taken

notice of the emerging trend and have launched their own “web corners,” not to miss out on the

potential traffic generated by social media. In the meantime, new entrants have hired dozens of

reporters, many of them previously employedby traditional news outlets, to improve their content

quality.

It is important to realize that news sites cannot consider reporting on everything, even though

they do not face physical space limits. Consumers’ attention is limited and they can quicklyswitch

between pages. Similarly, if consumers use search engines, t hey only consider the first few items

on the search engine’s results list. Thus, to have a chance at becoming the most shared item on

a particular topic requires considerable editorial “investment,” hence, the hiring of traditional

journalists at many of the news start-ups that discover the importance of “curation” beyond just

focusing on forecasting algorithms for trending content.

In sum, in this new environment dominated by social media, where consumers’ sharing

behavior can quickly propel a news item to the top, competition among news providers is best

described as a permanent contest where firms have to “bet” on a (few) topics and the “winners”

divide the advertising revenues generated from pageviews (the “prize” of the contest).3As such,

rather than “setting the agenda,” as they did in the past, today’s news providers are “chasing the

agenda” mostly set by consumers’ sharing behavioron the Inter net. Indeed,the central question of

the article is how this contest nature of competition between news providers is likely to influence

the public agenda. That is, what type of news will emerge from the massive amount of diverse

content available? In particular, will competition focus firms on a relatively f ew important topics

1See, for example, the data presented byThompson (2014) in The Atlantic with the telling subtitle: “Social networks

are the new front page and homepage for news. [. . . ]” Facebook’sg rowinginfluence on news is also reflected in that it

increasingly requires publishers to host their content on its servers (Alpert, 2015).

2An internal report on innovation by The New York Times that leaked to the public in March 2014 clearly reveals

that the newspaper seeks to adopt the techniques that its newly minted competitors apply to generate audiences from

social media.

3The idea of a “contest” is not entirely foreign to the news industry.It describes some aspect of competition among

traditional news media who had to pick topics from a relatively large set generated byupstream infor mation providers

such as the Associated Press, Reuters, or Agence France-Press.

C

The RAND Corporation 2017.