Spillovers from Online Engagement: How A Newspaper Subscriber's Activation of Digital Paywall Access Affects Her Retention and Subscription Revenue

46 Pages Posted: 1 Oct 2020 Last revised: 12 Mar 2021

See all articles by Adithya Pattabhiramaiah

Adithya Pattabhiramaiah

Georgia Institute of Technology - Scheller College of Business

Eric M. Overby

Georgia Institute of Technology

Lizhen Xu

Georgia Institute of Technology - Scheller College of Business

Date Written: September 1, 2020

Abstract

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 cross-channel spillover in which the online product (the paywalled web site) 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 which offer subscribers to one product free or subsidized access to a complementary product.

Keywords: Digital Monetization, Newspaper Paywalls, Customer Retention, Matching, Synthetic Control, Causal Forest

JEL Classification: M15, M31, M37, L82, L86

Suggested Citation

Pattabhiramaiah, Adithya and Overby, Eric M. and Xu, Lizhen, Spillovers from Online Engagement: How A Newspaper Subscriber's Activation of Digital Paywall Access Affects Her Retention and Subscription Revenue (September 1, 2020). forthcoming, Management Science. Georgia Tech Scheller College of Business Research Paper No. 3694089 , Available at SSRN: https://ssrn.com/abstract=3694089 or http://dx.doi.org/10.2139/ssrn.3694089

Adithya Pattabhiramaiah (Contact Author)

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

800 West Peachtree St.
Atlanta, GA 30308
United States

Eric M. Overby

Georgia Institute of Technology ( email )

800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States

Lizhen Xu

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

United States
404-894-4380 (Phone)
404-894-6030 (Fax)

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