Paywalls: Monetizing Online Content

Abstract

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.

Conducting Research in Marketing with Quasi-Experiments

“…Synthetic control has been used in multiple recent studies with quasi-experimental design (Abadie 2021). For example, Guo, Sriram, and Manchanda (2020) analyze the causal effect of industry payment disclosure on physician prescription behavior, Wang, Wu, and Zhu (2019) assess the impact of mobile hailing technology adoption on drivers’ hourly earnings, and Pattabhiramaiah, Sriram, and Manchanda (2019) study the causal effect of online paywalls on the sales revenues of newspapers.…”

Digital Analytics: Modeling for Insights and New Methods

“…By being able to connect to multiple servers at the same time to boost computing speed and power, the new AI offering can significantly scale up without any loss of accuracy in results, thereby enhancing customer experience. Pattabhiramaiah, Sriram, and Manchanda (2019) investigate how digital engagement of light and heavy readers changed after introducing a paywall for a New York Times' online content, showing that a paywall had an adverse effect on digital engagement, which was more negative for heavy users but does not impact subscribers as much as non-subscribers. On the other hand, the spillover effects of the digital paywall on print circulation share are positive, ranging from 0.32 to 0.52 share points.…”

Monetizing Online Content: Digital Paywall Design and Configuration

“…Most studies leverage quasi-experimental settings of paywall introductions and find a negative impact on website traffic (Aral and Dhillon 2017;Chiou and Tucker 2013;Cook and Attari 2012;Pauwels and Weiss 2008) and word of mouth activities (Oh et al 2016). In contrast, charging for access to online content not only provides direct revenue but also protects own paid channels from self-cannibalization (Pattabhiramaiah et al 2019)…”