Effects of Content Sourcing Strategy on Online News Subscription

Abstract

Declining circulation and advertising revenue have led many newspapers to cut costs by shrinking their in-house staff and sourcing more content from external wire agencies. In this study, we analyze how the mix of in-house and wired content impacts online readers’ subscription decisions using clickstream data from a large regional U.S. newspaper. To control for sample selection that may occur if readers visit the site on days with their preferred content, we use readers’ local precipitation as an excluded variable that indirectly randomizes their exposure to content from these two sources. We find that publishing 10 additional in-house articles a day would, on average, increase a reader’s rate of subscription by 15% relative to the baseline subscription rate. Publishing 10 additional wired articles a day, on the other hand, would decrease the subscription rate by 11%. The negative impact of wired content on new subscriptions by local readers is 26% less severe than it is for remote readers. Both content effects are approximately doubled for readers who use a tablet as the primary access device. Effects of content in some categories within each source go against the overall trend. Producing more General News, Sports, and Entertainment articles, and wiring more Business articles increase subscription. But, publishing more Lifestyle, Health, and Food articles do not, regardless of their sources. These results suggest that there exist opportunities for newspapers to increase subscriptions by carefully publishing the right content from the right source.

Keywords: Online Newspapers, Content Sourcing Strategy, Paywall, Willingness to Pay, Endogenous Switching

JEL Classification: M1, M3