Abstract:
Digital technologies have transformed the news landscape, shifting consumption from print media toward online providers. This has allowed news outlets to collect richer data on individual readers, and to use those data both to tailor the news a reader sees - which stories appear and how they are framed - and to sell more precisely targeted advertising. Online news outlets also increasingly recruit readers from social media, amplifying incentives to capture reader attention through sensationalized stories and other techniques to increase engagement. Generative AI is likely to accelerate this trend by lowering the cost of personalizing news. Whether cheaper production and finer personalization raise or lower consumer welfare depends on how closely the objectives firms maximize are aligned with the underlying preferences of consumers. This review studies how the shift toward online news consumption affects both the supply and the demand for news and draws potential implications for consumer welfare.
