The Impact of Online Competition on Local Newspapers

How does competition from online platforms affect the organization, performance, and editorial choices of newspapers? And what are the implications of these changes for the information voters are exposed to and for political accountability? The paper presented in this Mannheim Applied Seminar studies these questions using the staggered introduction of Craigslist - the world’s largest online platform for classified advertising - across US counties between 1995 and 2009. This setting allows the authors to separate the effect of competition for classified advertising from other changes brought about by the Internet, and to compare newspapers that relied more or less heavily on classified ads ex ante. They find that, following the entry of Craigslist, local papers experienced a significant decline in the number of newsroom and management staff. Cuts in editorial staff disproportionately affected reporters covering politics. These organizational changes led to a reduction in news coverage of politics and political corruption, and resulted in a decline in newspaper readership which was not compensated by increased news consumption on other media. Finally, the authors find some evidence that reduced news coverage of politics was associated with lower voter turnout, and more party-line voting for both citizens and politicians.