The Impact of News Aggregators on Internet News Consumption : The Case of Localization ∗

This paper analyzes the impact of news aggregators on the quantity and composition of internet news consumption. In principle, news aggregators can be a substitute or a complement to the news outlets who invest in the creation of news stories. A policy debate centers around the decrease in the incentives for news creation that results if readers choose to consume their news through aggregators without clicking through to the news websites or generating any revenue for the outlets. This paper provides a case analysis of an example where Google News added local content to their news home page for users who chose to enter their location. Using a dataset of user browsing behavior, we compare users who adopt the localization feature to a sample of control users who are similar to the treatment users in terms of recent internet news consumption. We find that users who adopt the localization feature subsequently increase their usage of Google News, which in turn leads to additional consumption of local news. Users also navigate directly to the new sites they have discovered, further increasing their local news consumption. The increase in local news consumption diminishes over time, however, and in the longer run most of the additional local news consumption derives from increased Google News usage. Patterns of news consumption change: users read a wider variety of outlets, more outlets that are new to them, and a larger fraction of their news “home page” views come from Google News rather than the home page of other news outlets. Thus, the inclusion of local content by Google News had mixed effects on local outlets: it increased their traffic, especially in the short run, but it also increased the reliance of users on Google News for their choices of news, and increased the dispersion of user attention across outlets. ∗The authors acknowledge support from Microsoft Research. We would like to thank seminar participants at Microsoft Research and the Toulouse Network for Information Technology for helpful comments, as well as Josh Feng for exceptional research assistance.