In this paper, we analyze the effects on content provision in the news market of single-homing readers (i.e. that consume news from just one outlet) and multi-homing consumers (i.e. that can choose to consume news from competing outlets). Media firms compete on content provision and on advertising revenues. Readers have an ideal variety of content and experience a disutility from consuming news that differs from their ideal variety. In addition, readers have a preference for single-homing and for multi-homing. In this set-up, we show that media firms only diversify content with single-home readers. The reason for this is that competition for readers and advertising is lower under multi-homing than under single-homing, since multi-homing readers consume from all media outlets. We derive the effects of this for profits, consumer surplus and social welfare and discuss the implications for the current debate in the media market related with social media and echo chambers.
Keywords: Social Media; Echo Chambers; Content Provision; Two-Sided Markets; Multi-Homing.
JEL Classification: D43, L13, L82, L86.