Industry and firm effects on performance: Evidence from the online news industry in U.S.

The online news industry in the United States 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 study 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 industry. Relatively, IO’s industry effects were twice as powerful as RBV’s firm effects in explaining news sites’ revenue growth, profitability, and relative performance. Together, the determinants derived from both models explained 21 to 39 percent of variance in market performance among the 208 news sites in the study.