Digital Paywall Design: Implications for Content Demand & Subscriptions
Forthcoming, Management Science
39 Pages Posted: 27 Jan 2017 Last revised: 26 Mar 2020
Date Written: March 10, 2020
Most online content publishers have moved to subscription-based business models regulated by digital paywalls. But, the managerial implications of such freemium content offerings are not well understood. We therefore utilized micro-level user activity data from the New York Times (NYT) to conduct a large scale study of the implications of digital paywall design for publishers. Specifically, we use a quasi-experiment that varied the (1) quantity (the number of free articles) and (2) exclusivity (the number of available sections) of free content available through the paywall to investigate the effects of paywall design on content demand, subscriptions, and total revenue. The paywall policy changes we studied suppressed total content demand by about 9.9%, reducing total advertising revenue. However, this decrease was more than offset by increased subscription revenue as the policy change led to a 31% increase in total subscriptions during our seven-month study, yielding net positive revenues of over $230,000. The results confirm an economically significant impact of the newspaper's paywall design on content demand, subscriptions, and net revenue. Our findings can help structure the scientific discussion about digital paywall design and help managers optimize digital paywalls to maximize readership, revenue, and profit.
Keywords: digital paywalls, news-media, content demand, subscription-based models, quasi-experiments
JEL Classification: M31, L82, L11
Suggested Citation: Suggested Citation