News habit forming

On the consumer behavior, I found the habit forming argument is particularly relevant to the news consumption. Consumers’ appetites for news are built over time. If we imagine a demand curve for news, which is determined by the price of the news product and the quantity of news being consumed, as time goes by, the curve may move to the right for people who always follow the news. Because the marginal utility of the news increases with continuity of consumption (However, another assumption is that the overall news consumption shrinks even within the news habit group.). The opposite trend may be observed in the group that does not have a news consuming habit. Therefore, the media firms may be able to sell the news product with a higher price to groups with increasing news appetite than the group without a consumption habit. Also, if the gap between the two demand curves (group with/without news habits) becomes larger during a longer period of time, it may eventually change the shape of news media market.

As Seth pointed out in last week’s post, when the media content eventually become “free” online, the price of the product will no longer be a factor that affects the quantity of consumption. In that case, what will the demand curve look like? One possible way is to plot the demand curve for the market of advertising. Using the price of online ads and the quantity of the ads purchased, such demand curve will resemble the demand curve of media consumption. Another way to plot the demand curve for free online media product would be replacing the price with people’s time constraint for media consumption. Therefore, the less time people can NOT spending online, the more media products they consume online. This curve also mirrors the demand curve.

Dumb question: how can one measure the utility of a media product? Using Likert scale to assess satisfaction? Or as we know the amount of the products people purchase and the price for the product, the utility can be calculated.