Paywalls: Monetizing Online Content

57 Pages Posted: 9 Mar 2020

See all articles by Adithya Pattabhiramaiah

Adithya Pattabhiramaiah

Georgia Institute of Technology - Scheller College of Business

S. Sriram

The Stephen M. Ross School of Business at the University of Michigan

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business

Date Written: October 2018

Abstract

In recent years, many providers of news and entertainment have been exploring the possibility of monetizing online content. In the context of newspapers, the paywall instituted by the New York Times starting in March 2011 is a well-publicized case in point. While the premise behind paywalls is that the subscription revenue can potentially be a new source of income, the externalities that might arise as a consequence of this pricing change are unclear. We study two potential externalities of newspaper paywalls and compare them against the new direct subscription revenue generated. The first externality that we consider is the effect of a paywall on the engagement of its online reader base. The second externality is the spillover effect on the print version of the newspaper. If readers view print and online versions of a newspaper as substitutes, 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 subsequent to the erection of the paywall. As a result, paywalls are likely to have a positive spillover effect on print subscription, and consequently, circulation. We document the sizes of the two externalities for the New York Times paywall and compare them with the direct subscription revenue generated. We comment on implications for newspapers and online content providers who are seeking mechanisms to monetize digital content.

Keywords: Paywalls, Online Content Monetization, Cross-Channel Spillover Effects, Pricing, Advertising, Newspapers, Online Newspapers, Synthetic Control Method.

JEL Classification: M31, M37, L82, L11

Suggested Citation

Pattabhiramaiah, Adithya and Sriram, S. and Manchanda, Puneet, Paywalls: Monetizing Online Content (October 2018). Journal of Marketing, 2018, Georgia Tech Scheller College of Business Research Paper No. 17-8, Available at SSRN: https://ssrn.com/abstract=2916820 or http://dx.doi.org/10.2139/ssrn.2916820

Adithya Pattabhiramaiah (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

S. Sriram

The Stephen M. Ross School of Business at the University of Michigan ( email )

Ann Arbor, MI 48109
United States

Puneet Manchanda

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-936-2445 (Phone)
734-936-8716 (Fax)

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