The Internet and Changes in Media Industry Structure: An International Comparative Approach

• In Event: Media Structure: Fragmentation and Polarization

Abstract

In this study, we examine the economic effects of the Internet on the overall transition of traditional media industries. Specifically, we empirically investigate whether (1) the development of Internet affected established traditional media in terms of aggregate revenues, and (2) the shift in the balance of advertising vs. direct payment support changed as Internet penetration grew. Based on industry and government sources, we constructed a country-level dynamic panel of 39 countries from 2007 to 2011. The data set includes the individual nation trends of media industries in terms of % GDP, country-specific economic status, unique characteristics of media industries, and broadband Internet penetration. The results show that 1) the Internet negatively affects aggregate revenue of established media industry in terms of % of GDP and 2) the development of the Internet may lead the shift of the balance from advertising, toward direct payment revenue. These findings correspond to the trends that Waterman and Ji (2012) previously found in the U.S. media industry.

Author

• Sung Wook Ji, Michigan State University