The Digital Coase Theorem and the News

The rise of news aggregator apps has spurred legislative initiative across the globe due to the lawmakers’ ability to represent the interest of local trade associations – namely, traditional news publishers. To a perceived problem, the traditional approach has consistently been to identify the negative externalities created by news aggregator apps at the expense of traditional news publishers. The traditional approach nevertheless lies upon numerous pitfalls and a partial analysis of the situation, hence favoring inefficient outcomes. This Article offers an alternative approach. This approach spawns from the tradition first incepted by Nobel Prize Laureate Ronald Coase. Applying the Coase Theorem to the digital journalism problem identified, this Article proposes a “Digital Coase Theorem” where an efficient outcome is reached and where innovation is optimally incentivized.

By Aurelien Portuese¹

I. INTRODUCTION: THE NATURE OF THE PROBLEM

The rise of digital platforms has enabled individuals worldwide to access news articles with unprecedented ease.² Digital companies have innovated and designed applications whereby individuals can access tailor-made news content (hereafter, the “news aggregator apps”). The multiplication of news aggregator apps has not eclipsed the ascendency of two highly appealing companies to users: the social media platform Facebook and the search engine Google.³ These two companies have designed complex algorithms to best suit t