Link to Success: How Blogs Build an Audience by Promoting Rivals

Empirically, we find that Web logs (or ‘blogs’) often link to other blogs in the same category. We present an analytical model that explains why a rational blogger may choose to link to another blog. We allow bloggers to differ along two dimensions: (1) the ability to post news‐breaking content, and (2) the ability to find news in other blogs. By linking, a blog signals to the reader that it will be able to direct her to news in other blogs in the future. The downside of a link is that it is a positive signal on the rival's news‐breaking ability. We show that linking will be in equilibrium when the heterogeneity on the ability to break news is low relative to the heterogeneity on the ability to find news in other blogs. One implication of the linking mechanism is that blogs that are high on the news‐breaking ability are more likely to gain readers. Hence, despite the fact that bloggers link for purely selfish reasons, the macro effects of this activity is that readers' learning is enhanced.