Market performance analysis of the online news industry



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The online news industry faces a challenge: Whether online news media can produce enough quality content that generates revenue and profit at a level comparable to traditional media. To meet the challenge, this dissertation applied two economic models, the industrial organization (IO) and the resource-based view of the firm (RBV), to locate the determinants of market performance for the online news industry. Together, the determinants derived from both models explained 19 to 35 percent of variance in market performance among the 208 news sites in the study. Separately, IO's industry variables were twice as powerful as RBV's firm variables in explaining news sites' revenue growth, profitability, and relative performance. A post hoc analysis using a news site's traffic as another dependent variable showed that the importance of the industry and firm effects differs substantially across market performance and traffic. A detailed examination suggested that industry effects were powerful in explaining the extent of news sites' market performance, whereas firm effects were influential in explaining news sites' traffic. However, the study argued that generating traffic should not be news sites' ultimate goal but their relay station; otherwise the solvency challenge remains.