What Do News Aggregators Do? Evidence from Google News in Spain and Germany
The impact of aggregators on news outlets is ambiguous. In particular, the existing theoretical literature highlights that although aggregators create a market expansion effect when they bring visitors to news outlets, they also generate a substitution effect if some visitors switch from the news outlets to the aggregators. Using the shutdown of the Spanish edition of Google News in December of 2014 and difference in differences methodology, this paper empirically examines the relevance of these two effects. We show the shutdown of Google News in Spain decreased the number of daily visits to Spanish news outlets by 11% and that this effect was larger in sports outlets than in national and regional outlets. We then analyze the effect of the opt in policy adopted by the German edition of Google News in October of 2014. Although such policy did not significantly affect the daily visits of all outlets that opted out, it reduced by 7% the number of visits of the outlets controlled by the publisher Axel Springer. Our results demonstrate the existence of a market expansion effect through which news aggregators increase consumers' awareness of news outlets' contents, thereby increasing their number of visits. We find no evidence of a substitution effect in our two empirical settings.