Economic study on the impact of publicly funded PSM activities on commercial online news publishers
The European Broadcasting Union (EBU) commissioned O&O to conduct an independent economic study (read here) to test the "crowding out" hypothesis in relation to publicly funded Public Service Media (PSM) online news. The core aim of the study was to assess whether the online news activities of publishers – and, where data allowed, traditional publishers specifically – are negatively affected by the activities of PSM online news services.
The analysis focused on a set of key variables. For PSM, these included total spend on news, the average number of online news items published per month and weekly reach of PSM online news services. For commercial online news publishers, we included online news revenues and weekly reach of traditional publishers’ online news services. In addition to variables related to PSM and commercial publishers, we also examined the impact of other factors on publishers’ online news services, notably unwillingness to pay for news and disinterest in news.
The study identifies three overarching findings:
First, we find no evidence to support the argument that PSM investment “crowds out” online news publisher revenues. In fact, we have evidence that suggests a statistically significant positive relationship between higher PSM investment – both in terms of spend and news item output volume – and publisher online news revenues. This points instead to a likely “crowding in” effect
Second, we find no evidence to suggest that high PSM audience reach reduces the reach of traditional publisher online news. Instead, we also find evidence of a positive relationship between PSM online news reach and traditional publisher online news reach, likely a “crowding in” effect
Third, we tested the robustness of our models by adding additional variables related to audience behaviour, notably unwillingness to pay for news and disinterest in news. These factors were included in the models to examine whether they significantly confounded the link between PSM and online news publishers and to assess whether the models returned logical outputs. As expected, unwillingness to pay for news was strongly associated with lower online news publisher revenues – across countries and years where more people are unwilling to pay, publishers earn less. Similarly, disinterest in news was associated with reduced weekly reach for traditional publishers, suggesting that lower news engagement among audiences limits audience size. These findings are consistent with expectations and give us confidence that the models are functioning as intended. Importantly, even after controlling for these additional factors, the PSM variables remained stable, returning positive and statistically significant effects
The findings are based on correlation analysis and a suite of linear regression model specifications. Across all outputs, we find no evidence that PSM “crowds out” commercial online news providers.
Link to the EBU site where EBU members can access the additional PowerPoint.