M any firms operate customer communities online. This is motivated by the belief that customers who join the community become more engaged with the firm and/or its products, and as a result, increase their economic activity with the firm. We describe this potential economic benefit as "social dollars." This paper contributes evidence for the existence and source of social dollars using data from a multichannel entertainment products retailer that launched a customer community online. We find a significant increase in customer expenditures attributable to customers joining the firm's community. While self-selection is a concern with field data, we rule out multiple alternative explanations. Social dollars persist over the time period observed and arose primarily in the online channel. To assess the source of the social dollar, we hypothesize and test whether it is moderated by participation behaviors conceptually linked to common attributes of customer communities. Our results reveal that posters (versus lurkers) of community content and those with more (versus fewer) social ties in the community generated more (fewer) social dollars. We found a null effect for our measure of the informational advantage expected to accrue to products that differentially benefit from content posted by like-minded community members. This overall pattern of results suggests a stronger social than informational source of economic benefits for firm operators of customer communities. Several implications for firms considering investments in and/or managing online customer communities are discussed.

Consumers are increasingly mindful of corporate social responsibility (CSR) when making purchase and consumption decisions, but evidence of the impact of CSR initiatives on actual purchase decisions is lacking. This article introduces a novel brand accountability–based framework of consumer response to CSR initiatives, which categorizes CSR efforts as “corrective,” “compensating,” or “cultivating goodwill.” Leveraging a database of CSR press releases by leading consumer packaged goods brands, the authors examine the effect of the different types of CSR announcements on brand sales. The findings suggest that CSR initiatives that genuinely aim to reduce a brand's negative externalities (“corrective” and “compensating”) lift sales, whereas CSR actions focused on philanthropy (“cultivating goodwill”) can hurt sales. The authors propose two moderators—CSR reputation and CSR focus on environmental or social causes—and a mechanism for these effects, which they examine under controlled experimental settings. The experimental results show that, conditional on CSR reputation, consumers perceive varying degrees of sincerity in the different CSR types and that sincerity mediates the effect of CSR type on purchase intentions. Overall, the results suggest that consumers are more inclined to reward firms that directly reduce the negative by-products of their own business practices than to be impressed by public goodwill gestures.

In recent years, many news providers have begun monetizing online content through paywalls. While the premise behind paywalls is that the subscription revenue can be a new source of income, the externalities that might arise from this pricing change are unclear. The authors study two potential externalities of newspaper paywalls: (1) the effect of a paywall on the engagement of its online reader base and (2) the spillover effect on the print version of the newspaper. The engagement effect considers how the paywall altered the various engagement metrics among light and heavy readers of online news. The spillover effect is likely to arise if readers view print and online versions of a newspaper as substitutes, implying that increasing the price of the latter is likely to increase the demand for the former. Moreover, many newspaper paywalls offer bundles wherein print subscribers are provided free access to the online newspaper. Therefore, the value that a reader derives from the print subscription could be higher after the erection of the paywall. As a result, paywalls are likely to have a positive spillover effect on print subscription and, consequently, circulation. The authors document the sizes of the two externalities for the New York Times paywall and compare them with the direct subscription revenue generated. They comment on implications for newspapers and online content providers that are seeking mechanisms to monetize digital content.

Between 2006 and 2011, daily print newspapers in the U.S. lost 20% of their paid subscribers, partly due to increasing availability of alternative sources of news, such as free content provided on newspaper websites and by news aggregators such as Yahoo. However, contrary to the expectation that firms respond to softening demand by lowering prices, newspapers increased subscription prices by 40-60% during this period. In this paper, we explain and quantify the factors responsible for these price increases. We calibrate models of readership and advertising demand using data from a top-50 U.S. regional print newspaper. Conditional on these demand models, we calibrate the newspaper's optimal pricing equations, and assess whether the increase in subscription prices are mainly rationalized by: a) the decline in overall readers' willingness to pay (WTP) in the presence of heterogeneity among subscribers which rendered it optimal for the newspaper to focus on the high WTP readers, or b) the newspaper's reduced incentive to subsidize readers at the expense of advertisers, due to softening demand for newspaper advertising. We find that the decline in the ability of the newspaper to subsidize readers by extracting surplus from advertisers explains most of the increase in subscription prices. Of the three available subscription options (Daily, Weekend, and Sunday only), subscription prices increased more steeply for the Daily option, a pattern consistent with the view that newspapers are driving away low valuation weekday readers while preserving Sunday readership and the corresponding ad revenues. Thus, our research augments theoretical propositions in two-sided markets by providing a formal empirical approach to unraveling the relative importance of the role played by agents on the subsidy and demand side in determining prices.

Newspapers are increasingly reliant on subscription revenue as advertising spend shifts to online platforms. Many newspapers have implemented paywalls in an attempt to boost subscription revenue. We study whether and how paywalls can help newspapers boost subscription revenue by retaining existing subscribers. Most major newspapers offer free access to paywalled content to subscribers to the print edition, which may help the newspaper retain subscribers by making their subscriptions more valuable. We leverage variation in whether and when existing subscribers activated access to the paywall of a top 30 North American newspaper. Our identification strategy accounts for self-selection in subscribers’ decisions to activate paywall access. We find that a subscriber’s activation of digital access decreases the risk of her canceling her subscription by about 31% and increases her subscription revenue by 7%–12%. In other words, digital activation improves subscriber retention and the associated subscription revenue. This suggests a crosschannel spillover in which the online product (the paywalled website) increases customers’ valuation for the offline product (the printed newspaper). Our results have implications not only for the newspaper industry but also for firms in other industries that offer subscribers to one product free or subsidized access to a complementary product. This paper was accepted by Kartik Hosanagar, information systems.