The new chair will work across Cardiff's School of Journalism, Media and Cultural Studies and Cardiff Business School, providing research for both disciplines.
Hargreaves, who is a professor of journalism at the university, was editor of the Independent in the mid-nineties and previously worked as director of BBC News and Current Affairs.
"Journalism's future depends upon the emergence of new financial models and Ian will bring great experience and energy to our efforts to understand what is going on and to help design solutions," says Professor Justin Lewis, head of the School of Journalism, Media and Cultural Studies.
The new role involves exploring digital economy issues across traditional academic boundaries, as well as across boundaries within government and the private sector, Hargreaves told Journalism.co.uk.
"The aim is do research and build understanding about how digital communications is affecting everything from the business models for journalism, but also the way the public services are provided," he said.
Issues that will be looked at include both regulatory challenges, access to digital communications and cultural points, such as the rise of citizen journalism and the future of local media and local newspapers' business models.
"As the new chair gets established, we will be trying to build up a set of research activities to throw light on these issues and working with academics in many disciplines, plus people in government and the private sector."
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