Demand for (Un)Biased News: Government Control in Online News Markets∗

Anecdotal evidence suggests consumers navigate to news outlets that are government controlled (GC) and pro-government biased even in the presence of independent news outlets. Does this imply a demand for pro-government bias in the news? Or do consumers enjoy other aspects of GC news outlets such as quality or brand? To answer these questions, we examine consumers’ demand in the Russian online news market. We use publication records of the top 48 online news outlets to characterize the methods of government control in the news and identify the news that is sensitive for the government. We then use temporal variation in the amount of sensitive news and click-level browsing panel data to estimate the demand for news. The average consumer prefers the quality and brand of the GC news outlets but the news coverage with less pro-government bias, and there is a substantial heterogeneity in preferences. In a counterfactual simulation, we show that the GC news outlets would have 16.9% higher market shares in the absence of control and 42.9% lower market shares if their quality was at the level of the independent news outlets. Higher quality of the GC news outlets expands their share of online attention from 21.98% to 33.1%, substantially increasing their media power.