Competition for Attention on Information Platforms: The Case of Local News Outlets

Abstract

Smaller firms are usually expected to benefit the most from having their products listed on platforms, as platforms can make their products easier to find and provide these firms with access to a broader set of customers than they could access on their own. While this logic might hold if firms compete for the best match between their products and customer preferences, it is unclear if smaller firms are indeed able to benefit from access to more potential customers if they compete for the attention of users. In many settings, such as social media or news aggregators, platforms act as attention brokers that attract attention and redistribute it to these firms. As the products of smaller firms will be competing for attention with those of larger competitors on the same platform, it is unclear if they will be able to capture a significant share of the demand they potentially have access to. We study this question in the context of news aggregators. Using data on 140 local German news outlets, we analyze which local news outlets benefit from being listed on news aggregators. We exploit a legal dispute leading to the removal of a subgroup of German local news outlets from news aggregators to identify the effect. Our results show that being listed on news aggregators is only beneficial for local news outlets that are sufficiently large in size to be recognized by potential readers on the aggregator and sufficiently broad in their scope and focus to cover multiple content categories that readers might be interested in. These findings hold relevant implications that run somewhat contrary to common expectations – larger firms tend to be the winners in the attention economy, suggesting the need for platform curation to empower smaller firms.