Competition from Online Platforms and the Impoverishment of Newspapers

Yves here. I am old enough to remember the days when most cities of any size had morning and evening newspapers. My earliest jobs were for the Dayton Daily News, first by having a paper route, and later by selling subscriptions door to door.

This article serves to confirm what we’ve repeatedly said, that what killed local newspapers was Craigslist. Classified ads were half the revenues of the typical local paper. Yes, Google and Facebook eating up online ads made a bad situation much worse, but newspapers were already on the ropes. And the hollowing out of reporting followed fast.

By Milena Djourelova, PhD candidate, Universitat Pompeu Fabra; Ruben Durante, ICREA Research Professor, Universitat Pompeu Fabra; and Gregory J. Martin, Assistant Professor of Political Economics, Stanford Graduate School of Business. Originally published at VoxEU

Newspapers advertising revenues have declined steadily over the past decades due to competition from online platforms. But what are the implications of this trend for the organisation and content of newspapers and for information local readers are exposed to? To shed light on these questions this column looks at the staggered introduction of Craigslist – the world’s largest platform for classified ads – in the US. It finds that the entry of Craigslist in a market led to considerable staff cuts by local newspapers, a decline in news coverage of politics, and a drop in readership. These changes also had electoral consequences, favouring partisan voting and ideologically extreme candidates.

The internet has profoundly changed the environment in which traditional media operate. In particular, over the past decades, competition from online platforms has contributed to the sharp decline in newspapers’ advertising revenues,1 forcing many outlets to drastically rethink their business model and organisation. How these changes affect news reporting, and, ultimately, the ability of local newspapers to inform citizens about political matters, is a question of paramount importance for the future of journalism and for democratic politics (Angelucci et al. 2021).

Yet, rigorous evidence on this issue is scant, mainly due to the difficulty of separating the effect of online competition from other technological and socio-economic changes brought about by the internet, which may affect the newspaper market in other ways.

To try to fill this gap, we study the impact on US newspapers of the introduction of Craigslist, the world’s largest online platform for classified advertising, which disrupted this formerly lucrative niche for many newspapers (Djourelova et al. 2021).2 Combining information on the staggered expansion of Craigslist across US counties between 1995 and 2009 with comprehensive data on over 1,500 US daily newspapers, we examine how the entry of a local Craigslist website, and the subsequent decline in local newspapers’ advertising revenues (Seamans and Zhu 2014), affected their organisation, editorial decisions, and news content, as well as the political implications of these changes.

The introduction of Craigslist provides a suitable testing ground for these questions for several reasons. First, its staggered expansion across the US over a 15-year period (Figure 1), combined with the limited geographic scope of each local Craigslist website, generates significant variation over time and across space in the degree of online competition for classified ads faced by local newspapers.

Figure 1 Craigslist roll-out over time


Second, since Craigslist websites do not feature news content or display advertising, its entry represents a specific shock to one source of revenue but leaves other market conditions unaffected.

Finally, ads on Craigslist are largely free of charge, and most local websites do not generate profits for the company. The lack of a clear profit maximisation strategy alleviates concerns that the timing of Craigslist’s entry might have been driven by strategic considerations related to the conditions of local newspaper markets.

Our empirical strategy is based on comparing the evolution of the outcomes of interest between areas served versus not served by a local Craigslist website, before and after its entry, controlling for population, the quality of local broadband internet, and a range of demographic and socioeconomic conditions.3

In addition, since the entry of Craigslist had a bigger impact on newspapers that depended more heavily on classified ads, we exploit variation across newspapers – including those in the same state or media market – in the extent to which they relied on classified ads at baseline. We proxy this reliance by the presence of a manager dedicated to classified ads.4

We find that the entry of Craigslist does not significantly affect the number of active local newspapers. Yet, following the opening of a local Craigslist website in a county, local newspapers cut staff by about 6% relative to the average number of jobs. Figure 2 depicts the dynamics of this effect by means of an event study around the time of entry.

Figure 2 Newspaper jobs-count – event-study around Craigslist’s entry into the local market


The effect is driven by newspapers that relied more heavily on classified ads at baseline, for which such cuts amount to 14% of the mean. Staff cuts affect both managerial and editorial positions. Cuts in editorial staff appear to disproportionately affect editors responsible for the coverage of politics, leaving other areas such as sports and entertainment largely unaffected.

We then test how these organisational changes affected newspapers’ editorial priorities, with particular regard to the news coverage of politics. First, applying keyword searches to the entire corpus of articles accessible for over 800 newspapers in our sample, we compute the number of articles that mention the names of local Congressional representatives.

We find that, following the entry of Craigslist in a given area, news coverage of local representatives declined significantly in papers with dedicated classified ad managers compared to those without, by a magnitude of about 30%. Interestingly, we do not find evidence of a similar decline for national politicians.

To complement this approach, we estimate a semi-supervised topic model on a random sample of two million articles and find evidence of a decline in the probability that articles published by affected newspapers relate to politics. We find no significant effect on other topics such as sport, entertainment, or crime (Figure 3).

Figure 3 Impact of Craigslist’s entry on content, comparing newspapers with vs without classified manager at baseline


Next, we examine how readers respond to these changes in content. Using data on circulation, we document that, in the years after the entry of Craigslist, local newspapers experienced a sharp decline in readership (Figure 4).

Figure 4 Newspaper circulation: Event-study around Craigslist’s entry into the local market


We further explore this aspect using data from two large-scale surveys on media consumption. The results confirm that, following the entry of Craigslist in an area, local respondents are less likely to report reading a (non-national) newspaper. Interestingly, this trend is primarily driven by individuals that are relatively less likely to be interested in classified ads and therefore cannot be merely due to lower demand for print ads.

Crucially, evidence from both survey and browsing data suggests that the decline in newspaper readership is not compensated by increased news consumption online or through other sources (i.e. national papers, radio, or TV). It is hence likely to result in individuals being generally less informed about politics.

Finally, we study how reduced news coverage and awareness of politics affect the electoral choices of local voters. We find that the entry of Craigslist favoured ideologically extreme candidates and reduced the probability that voters support different parties in concurrent elections (split-ticket voting).

These findings are consistent with the view that as less information about local politicians becomes available, voters tend to rely more heavily on partisan cues, which are shaped primarily by the national political debate (Darr et al. 2018, Moskowitz 2021, Trussler 2020).

Taken together, our results indicate that the impoverishment of local newspapers due to competition from online platforms can jeopardise their ability to inform citizens about politics, with potentially detrimental effects for ideological polarisation.5 This evidence supports the concerns expressed by some regulators that newspapers’ financial distress, due to lower advertising revenues, may threaten quality reporting and pluralism (FCC 2016).

See original post for references

Print Friendly, PDF & Email


  1. Basil Pesto

    I mentioned last week that I was reading Seymour Hersh’s memoir. I finished it today and it’s great, invigorating stuff – and the care he put into his work is genuinely inspiring at times (he also, it’s worth mentioning, goes to great lengths to extol the virtues of diligent and capable editors, even when he disagrees with him politically).

    He mentions in the intro the halcyon days and mentions, in passing, the revenue generated by what he calls ‘want ads’ as well as the more traditional commercial advertising. He refers to it as the ‘golden age’ of journalism, and perhaps he’s right (though he also points out that, even back in the day, there were many journalists who were, shall we say, terminally incurious). It’s hard to think of any newspapers today where a reporter has a charge card and carte blanche to travel wherever, whenever to chase a story. When the last of his generation passes on, and many of the highly placed, assiduously cultivated, trustworthy sources disappear (given the lack of resources in news organisations to continue to support this kind of reporting legwork), it’s going to be an even grimmer picture than it is today. Substack is fine as far as it goes, but there’s no doubt that having a strong organisation behind you can open doors that a group of dedicated subscribers alone cannot. Some of those organisations still exist, but they seem less willing to rock the boat, and there’s probably less need to for them to do so given the concentration of the news media biz as it stands today.

    We might take solace in that the future
    of industries and institutions can be hard to foresee and that journalism might recover some of its quondam vigour somehow, but as it stands, to assert that it will seems like magical thinking.

    1. PlutoniumKun

      His book is excellent, but also very sad, as its clear that the days when a journalist like Hersh could be let loose on the establishment and get published in the biggest outlets is long gone. It doesn’t matter how good a journalist is, a lone individual on substack can never produce the sort of investigative journalism Hersh did, unless they are individually very wealthy. Maybe a small number of the best, like Taibbi, could raise enough to hire staff and become like a mini-newsroom, but as you say, even that would lack the sort of hard headed editor that was a vital part of a newsroom.

      1. Basil Pesto

        I have to say as well, I think Taibbi’s lost a certain something without that editorial oversight, though it’s hard for me to put my finger on what. It’s not technical; he’s still very fun to read. I dunno, I just hope he doesn’t get too comfortable in the substack niche he’s carving out for himself. Something else that I think I appreciate from Hersh’s book is how it can be reinvigorating for a journalist’s work and career to switch from coverage of one subject to another. Sometimes it was of his own volition as with the Kennedy book and his other book work, but others it was on assignment (Vietnam to Watergate, miscellaneous to the War on Terror although that probably would have happened anyway).

        1. Alex Cox

          Taibi’s recent piece about discharging student debt was outstanding. I don’t think an editor could have improved it.

  2. Phil in KC

    Former journalist here. The hollowing out of newspapers started long before the advent of Craigslist. Newspaper reading is a habit. We knew by the late 1980’s that the habit was slipping because circulation was slipping, despite a growing population. Attempts to inculcate the newspaper habit through programs such as Newspapers in Education failed, as did all the other gimmicks that were tried to boost, or merely retain subscribers. This, and erratic customer service by carriers, was a problem that was not adequately assessed and addressed by the owners/managers.

    We in the newsroom were well aware that the people on the first floor who sold classified ads, display ads, and subscriptions were keeping us in business. That knowledge did not prevent us from treating them as inferiors.

    What’s happened to newspapers reminds me a bit of what happened to the movie industry in the late 1940’s and 1950’s: the audience changed, TV emerged as a formidable competitor, and the industry responded by cutting costs and abandoning the studio system. But the movie industry survived and thrives today as an important cultural medium. So too does the medium of books: The Kindle did not kill the paper book. Journalism can survive if it can find a home in the internet. My paper was very late in coming to grips with the internet and is now paying a heavy toll. But this has opened opportunities for others. A pair of journalists started an online newspaper for a suburban county a few years ago. They are doing great work and have thousands of paying subscribers–including me.

    1. Carolinian

      Thanks. While Yves and the article are undoubtedly right about Craigslist, it was arguably television that provoked the journalistic decline. This is particularly true in a town like mine where the local news coverage was always skimpy at best and the paper mostly filled with human interest stories, sports and AP. Indeed I don’t see the decline of our local outlet–now owned by Gannett–as any great loss and you can still read what local news they do have on the web.

      One should also point out that it’s not just newspaper reporting, national and local, that has declined but that the once big three US television networks have greatly reduced their international staffs–the reliance on stringers and Youtube often giving a distorted picture of places like Syria.

    2. Pelham

      I’m another former journalist and agree with most of your points. But from my perspective — which may well be hostile and skewed — I don’t think the internet will ever provide any adequate answer. The medium, I think, is indeed the message, and online as a medium is sketchy. Hence, anything found online is questionable. Even the NYT, for example, has been discovered surreptitiously changing the originally published wording of its 1619 project. The reputational damage from this sort of thing cannot be undone, and the temptation to commit such minor but consequential malfeasance apparently cannot be resisted. In ink on paper, these are not problems.

      So I’m at least a mild Luddite resisting change. And as we all know (including me), change is good. But not all changes are good. In fact, a very large number are maladaptive. The internet, for all its many, many blessings, is in its broadest application and effect tearing our society apart. Therefore I believe any kind of restorative, healing and enlightening journalism cannot be delivered online.

      1. Carolinian

        tearing our society apart

        Internet in the 60s? Maybe it’s TPTB, then and now, that tear us apart. They have different goals than the public at large.

        After all we’re sitting here reading the internet. Seems calm and even restorative to me.

        And back then there were rabble rousers, John Birchers, the Fluoridation obsessed. They had newsletters and shortwave radio and other means of communicating if not quite so conveniently. There was even a book back then about our “paranoid style” in America–all long before the internet

  3. Pelham

    After many years of news crapification (and it’s not just newspapers), I think we need to face up to the probability that there is no market solution. That means a public solution funded by the currency issuer. I can see several ways this might take shape.

    But does anyone else have a better idea? That’s a genuine question, not a challenge.

    1. Basil Pesto

      It’s not a bad idea per se but to get the best results I think you would need a proper Chinese Wall to separate the press from the various branches of government, and from party politics, and I think that’s easier said than done. It’s intrinsically difficult for state media to do investigative reporting on the state that funds it. It will also be treated with suspicion from the get go as people are bound to assume, Chinese Wall or not, that the reporters are just doing the legwork for the government whether reporting on domestic or foreign affairs. And it might well be true.

      Honestly, the dilemma of how to Make Journalism Great Again is actually a pretty interesting one.

    2. Mildred Montana


      Public solution? You assume the government would want a solution to a problem that in its eyes doesn’t exist. The newspaper business is just fine, thank you. A military spokesman talks to some reporters, they dutifully jot down his comments, and newspaper-readers get a (usually) uncorroborated account of some military action somewhere. Why would the government want to fix this? It obviously doesn’t, as evidenced by the way it hounds truth-tellers like Assange and Snowden into exile, with worse to come if only it could get its hands on them.

      There is a “market” solution. It’s called a bail-out and is a staple of today’s corporate capitalism. If the government’s favorite newspapers get in serious financial trouble I anticipate substantial government aid for them. As quasi-propaganda organs, they certainly have earned it. /sarc

    3. James Simpson

      The BBC here in the UK is hardly a bastion of independence. Its TV and radio news coverage is notoriously sycophantic to whichever party is in power.

  4. aleric

    One start would be to break up the chains that bought up hundreds of newspapers. From the data here and what I have observed of the local papers, these chains made the short-term decision to maintain profit levels and run the papers into the ground by cutting reporters and skeptical coverage of local power players.

  5. eugene

    One piece of collateral damage from the disappearance of local reporting that has been little reported on is that the big national papers and magazines had come to depend on local reporting as an early alert system for significant news. Most of the big outfits have cut back drastically on bureaus, and for a while local papers filled the gap. Now with fewer and fewer local papers able to afford enterprise journalism, bad actors have more a sense of impunity.

    1. JustAnotherVolunteer

      This – and by local news I mean the old alternative weekly (now mostly funded by pot/CBC ads) and the local tv stations trolling the nextdoor boards and regional sub-Reddits for breaking news. I check Reddit first these days and I don’t read the local paper which isn’t local anymore in any case. Sub-par USA Today with aggressive subscription model.

  6. James Simpson

    Here in the UK there was no golden age of newspapers, national or local.

    the decline in newspaper readership is not compensated by increased news consumption online or through other sources (i.e. national papers, radio, or TV). It is hence likely to result in individuals being generally less informed about politics.

    The second sentence does not follow from the first. If I take my local paper, the Northern Echo, here in NE England as an example. It was founded in the late 19th century as a determinedly apolitical, conservative, fairly middle-class sheet, funded by ads and never delving into investigative journalism. It has never even tried to rock the boat of local politics and barely mentions anything the local council says or does – apart from republishing its press releases.

    The factory in which my father worked for 43 years produced insulation with the byproduct of asbestos which killed many workers, some of whom I knew personally. Yet for many years the Northern Echo failed to do more than the briefest of reports in what was a scandal which never emerged. However, when it comes to naming and shaming suspects in sensationalist offences, the Echo is all over it with front-page photos and highly-slanted news which is really right-wing opinion.

    I’d not miss this newspaper if it closed tomorrow. Would local people really be less informed about much they can’t find better reported elsewhere?

  7. TimmyB

    I was a daily purchaser of the Boston Globe to 1992 and subscribed to the Los Angeles Times from 1992 to 2016 after moving to Los Angeles. Over that time, the paper got worse and worse and more and more expensive. Honestly, I stopped subscribing soon after our African Gray Parrot died and I no longer needed cage liners.

    1. Nikkikat

      I agree with you TimmyB, I also lived in calif. The LA Times was a great paper. It had incredible series and carried real news of the US and Abroad. To me these other things above were part of the loss. But the main issue was that fired all of their investigative news reporters.I quit reading the paper because there wasn’t anything of value. They started peddling the same crap as the TV news. Billionaires started buying them up etc. I quit the paper in the early 2000’s. Expensive, thin and worthless.

    2. HotFlash

      TimmyB, condolences on the loss of your African Gray. They are right smart birds and quite the people.

  8. Appleseed

    In our Midwestern metropolis, the classified ad hegemony of the two daily papers (owned by the same family, housed in the same building, using the same printing presses) was challenged in the 1970s by an all classified ad tabloid newsprint weekly. No display ads and no editorial content. Cheap cover price and very successful until Craigslist killed it dead. Through the years a series of local alt-weeklies mimicked the Village Voice by relying on phone sex, outcall “massage”, and hook-up, er, dating classified ads that the “family-friendly” dailies wouldn’t run. A business tabloid, now in its 41st year, successfully garnered some of the Public Notice classifieds that continue to underwrite the sole remaining daily. The long-running African-American weekly also gets some of those notices, too as well as display ads from large companies that seek street cred. These print media outlets co-exist in the local media ecosystem, so perhaps diversity is the key to health. In the major daily, paid obituaries have replaced classifieds as another profit center. A terrible shame. When I began the journalism craft, obits were a free community service – and very popular. I later became the consumer affairs columnist and had more than half of the back page (premium ad space) devoted to a Q&A that helped people resolve issues with local and national firms. No business wanted to see their reputation sullied on the back page so they made sure to promptly fix the problem. That job also included a community outreach component. I visited elementary school classrooms and taught bike and pedestrian safety skills as well as general neighborliness (pick up trash, keep your dog on a leash, stranger/danger, etc.) Great way to generate the next generation of newspaper readers. But that was back when local newspaper owners cared about cultivating a relationship with the community. I think publishers have forgotten what at least one political party also seems to have forgotten, namely that you have to give people a reason to pay attention to your product and support it. The local paper is now being “edited” in another state and runs mostly USA Today and AP stories. Local news focuses on crime and celeb features. As for Eugene’s point about local news acting as an early alert system, back in the day I was taught to look at national news and ferret out a local angle. For example, it might be interesting to read about the increase in domestic violence in Chicago or Greater London during the pandemic, but we need reporters to dig into the local police stats and talk with DV shelters to find out what their experience has been. Then the story has relevance to its community. The changing revenue stream has led many publishers to pursue the non-profit model with varying degrees of success.

  9. Starry Gordon

    I don’t remember any golden age of journalism. Back when I was a teenager (1950s), I read a book (weird kid, right?) which was said to tell its readers how to read the news. As a basis for his rather skeptical methods, the author pointed out that newspapers were businesses and they were far more likely to be concerned with business, including getting along with the class of people who owned businesses and the government, than with the interests of ordinary people, and would shape their products accordingly. That shaping would include not only filtering and framing, but obfuscation and outright lying when necessary. Every time I checked out a circulating news story which was not state stenography, its truth value seemed to range from 0% to 50%, Such august eminences as the New York Times lied about Vietnam just as they later lied about Iraq. Decades later, Dr, Chomsky called this the ‘propaganda model’ as if he had just discovered it, and there was great controversy as if the facts of the matter were not obvious.

    One has a chance of getting some truth from the social media. What do you expect to get from the Times or Wapo? Hence, what would there be in the paper to attract readers other than the classified or babes on page 6?

Comments are closed.