"Is Online News an Inferior Good? Examining the Economic Nature of Online News among Users"
By Iris Chyi & Jacie Yang

Journal: Journalism & Mass Communication Quarterly, 86(3), 594-612.
Date of Publication: Autumn 2009

Abstract
The U.S. newspaper industry is transitioning from print to online, but users' response to online news has fallen short of expectations and thus raised questions about the economic viability of the new medium. To examine the nature of online news, this study explores the economic concept of "inferior goods" and its applicability to online news consumption. Analysis of survey data collected by the Pew Research Center shows that as income increases, consumption of online news decreases, other things being equal. Therefore, online news is an inferior good among users. Important theoretical and practical implications are discussed.

For more information visit: http://www.newmediaresearch.org/research/inferior/

Questions with the author Iris Chyi:

What do you consider to be the major contributions of this article in terms of conceptual innovations?

This study tested an original hypothesis regarding the economic nature of online news and identified a negative relationship between income and online news consumption, suggesting that online news is an inferior good. For the first time in communication research, news consumption was examined within the "theory of goods" framework from a media economics perspective, and this theory-driven, interdisciplinary approach has proved effective, compared with traditional approaches such as uses and gratifications or the diffusion of innovations.

In what ways does your piece contribute to the literature in this field?

This study suggests that online and print newspapers co-exist not as two normal goods but as a combination of an inferior good and a normal good. The findings solved the following mysteries: (1) why cannibalization has been negligible, (2) why paying intent for online news has been so low, and (3) why users perceive online news as less favorable. The results also corrected the overoptimistic bias underlying online news research-despite multimedia content and interactive features, online news' performance has fallen short of expectations, because "goods are what are thought of as goods."

What specific methodological, pedagogical, or policy-related advances or contributions does this publication make?

This study provides reality-based research which encourages online news publishers to rethink the economic nature of their product offerings when developing content, pricing, and marketing strategies (e.g., the fee vs. free debate, online-only publishing, etc.). This study has been featured on AEJMC's "research you can use" site, Nieman Lab's blog , KCBS radio news, and received attention from the publisher of The Dallas Morning News, and the newsroom of The Austin American Statesman.