IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v68y2022i5p3528-3548.html
   My bibliography  Save this article

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

Author

Listed:
  • Adithya Pattabhiramaiah

    (Marketing, Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308)

  • Eric Overby

    (Information Technology Management, Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308)

  • Lizhen Xu

    (Information Technology Management, Scheller College of Business, Georgia Institute of Technology, Atlanta, Georgia 30308)

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 crosschannel spillover in which the online product (the paywalled website) 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 that offer subscribers to one product free or subsidized access to a complementary product.

Suggested Citation

  • Adithya Pattabhiramaiah & Eric Overby & Lizhen Xu, 2022. "Spillovers from Online Engagement: How a Newspaper Subscriber’s Activation of Digital Paywall Access Affects Her Retention and Subscription Revenue," Management Science, INFORMS, vol. 68(5), pages 3528-3548, May.
    • Handle: RePEc:inm:ormnsc:v:68:y:2022:i:5:p:3528-3548
    DOI: 10.1287/mnsc.2021.4092
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2021.4092
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.2021.4092?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    2. Emily Oster, 2019. "Unobservable Selection and Coefficient Stability: Theory and Evidence," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 37(2), pages 187-204, April.
    3. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    4. Shrihari Sridhar & Srinivasaraghavan Sriram, 2015. "Is online newspaper advertising cannibalizing print advertising?," Quantitative Marketing and Economics (QME), Springer, vol. 13(4), pages 283-318, December.
    5. DiPrete, Thomas A. & Gangl, Markus, 2004. "Assessing bias in the estimation of causal effects: Rosenbaum bounds on matching estimators and instrumental variables estimation with imperfect instruments," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2004-101, WZB Berlin Social Science Center.
    6. Xu, Yiqing, 2017. "Generalized Synthetic Control Method: Causal Inference with Interactive Fixed Effects Models," Political Analysis, Cambridge University Press, vol. 25(1), pages 57-76, January.
    7. Matthew Gentzkow, 2007. "Valuing New Goods in a Model with Complementarity: Online Newspapers," American Economic Review, American Economic Association, vol. 97(3), pages 713-744, June.
    8. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
    9. Chiou, Lesley & Tucker, Catherine, 2013. "Paywalls and the demand for news," Information Economics and Policy, Elsevier, vol. 25(2), pages 61-69.
    10. Neslin, Scott A. & Shankar, Venkatesh, 2009. "Key Issues in Multichannel Customer Management: Current Knowledge and Future Directions," Journal of Interactive Marketing, Elsevier, vol. 23(1), pages 70-81.
    11. Chrysanthos Dellarocas & Zsolt Katona & William Rand, 2013. "Media, Aggregators, and the Link Economy: Strategic Hyperlink Formation in Content Networks," Management Science, INFORMS, vol. 59(10), pages 2360-2379, October.
    12. Elisa Montaguti & Scott A. Neslin & Sara Valentini, 2016. "Can Marketing Campaigns Induce Multichannel Buying and More Profitable Customers? A Field Experiment," Marketing Science, INFORMS, vol. 35(2), pages 201-217, March.
    13. Appel, Gil & Libai, Barak & Muller, Eitan & Shachar, Ron, 2020. "On the monetization of mobile apps," International Journal of Research in Marketing, Elsevier, vol. 37(1), pages 93-107.
    14. George Lisa M, 2008. "The Internet and the Market for Daily Newspapers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-33, July.
    15. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    16. Matthew Gentzkow, 2014. "Trading Dollars for Dollars: The Price of Attention Online and Offline," American Economic Review, American Economic Association, vol. 104(5), pages 481-488, May.
    17. Robert Seamans & Feng Zhu, 2014. "Responses to Entry in Multi-Sided Markets: The Impact of Craigslist on Local Newspapers," Management Science, INFORMS, vol. 60(2), pages 476-493, February.
    18. Shrihari Sridhar & Srinivasaraghavan Sriram, 2015. "Is online newspaper advertising cannibalizing print advertising?," Quantitative Marketing and Economics (QME), Springer, vol. 13(4), pages 283-318, December.
    19. Anja Lambrecht & Kanishka Misra, 2017. "Fee or Free: When Should Firms Charge for Online Content?," Management Science, INFORMS, vol. 63(4), pages 1150-1165, April.
    20. Susan Athey & Markus Mobius & Jeno Pal, 2021. "The Impact of Aggregators on Internet News Consumption," NBER Working Papers 28746, National Bureau of Economic Research, Inc.
    21. Iacus, Stefano M. & King, Gary & Porro, Giuseppe, 2012. "Causal Inference without Balance Checking: Coarsened Exact Matching," Political Analysis, Cambridge University Press, vol. 20(1), pages 1-24, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schwierzy, Julian & Wenzel, Tobias, 2024. "Mass customization with additive manufacturing: Blessing or curse for society?," ZEW Discussion Papers 24-046, ZEW - Leibniz Centre for European Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander S. Skorobogatov, 2021. "The effect of alcohol sales restrictions on alcohol poisoning mortality: Evidence from Russia," Health Economics, John Wiley & Sons, Ltd., vol. 30(6), pages 1417-1442, June.
    2. Inyoung Chae & Jihyeon Ha & David A. Schweidel, 2023. "Paywall Suspensions and Digital News Subscriptions," Marketing Science, INFORMS, vol. 42(4), pages 729-745, July.
    3. Adithya Pattabhiramaiah & S. Sriram & Shrihari Sridhar, 2018. "Rising Prices Under Declining Preferences: The Case of the U.S. Print Newspaper Industry," Marketing Science, INFORMS, vol. 37(1), pages 97-122, January.
    4. Asatryan, Zareh & Castellón, César & Stratmann, Thomas, 2018. "Balanced budget rules and fiscal outcomes: Evidence from historical constitutions," Journal of Public Economics, Elsevier, vol. 167(C), pages 105-119.
    5. Ryo Makioka, 2021. "The impact of anti‐sweatshop activism on employment," Review of Development Economics, Wiley Blackwell, vol. 25(2), pages 630-653, May.
    6. Song, Jinbo & Nie, Rong & Yuan, Hehui & Gao, Jingxin, 2023. "Does the renovation of waste-to-energy incineration plants attenuate the housing price gradient? Evidence from a quasi-natural experiment in Shenzhen, China," Energy Economics, Elsevier, vol. 120(C).
    7. Shijie Lu & Koushyar Rajavi & Isaac Dinner, 2021. "The Effect of Over-the-Top Media Services on Piracy Search: Evidence from a Natural Experiment," Marketing Science, INFORMS, vol. 40(3), pages 548-568, May.
    8. Maximiliano Marzetti & Rok Spruk, 2023. "Long-Term Economic Effects of Populist Legal Reforms: Evidence from Argentina," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 65(1), pages 60-95, March.
    9. Stefano Cascino & Ane Tamayo & Felix Vetter, 2021. "Labor Market Effects of Spatial Licensing Requirements: Evidence from CPA Mobility," Journal of Accounting Research, Wiley Blackwell, vol. 59(1), pages 111-161, March.
    10. Pekka Malo & Juha Eskelinen & Xun Zhou & Timo Kuosmanen, 2024. "Computing Synthetic Controls Using Bilevel Optimization," Computational Economics, Springer;Society for Computational Economics, vol. 64(2), pages 1113-1136, August.
    11. Lüth, Hendrik, 2021. "Reassessing Car Scrappage Schemes in Selected OECD Countries: A Synthetic Control Method Application," Working Paper 190/2021, Helmut Schmidt University, Hamburg.
    12. Erasmo Giambona & Rafael Matta & José-Luis Peydró & Ye Wang, 2020. "Quantitative easing, investment, and safe assets: the corporate-bond lending channel," Economics Working Papers 1722, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2020.
    13. Andrii Melnychuk, 2024. "Synthetic Controls with spillover effects: A comparative study," Papers 2405.01645, arXiv.org.
    14. Sebastian Doerr & Stefan Gissler & José-Luis Peydró & Hans-Joachim Voth, 2018. "From finance to fascism," Economics Working Papers 1651, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2020.
    15. Alloush, Mo & Bloem, Jeffrey R., 2022. "Neighborhood violence, poverty, and psychological well-being," Journal of Development Economics, Elsevier, vol. 154(C).
    16. Michał Marcin Kobierecki & Michał Pierzgalski, 2022. "Sports Mega-Events and Economic Growth: A Synthetic Control Approach," Journal of Sports Economics, , vol. 23(5), pages 567-597, June.
    17. Stefano, Roberta di & Mellace, Giovanni, 2020. "The inclusive synthetic control method," Discussion Papers on Economics 14/2020, University of Southern Denmark, Department of Economics.
    18. Turati, Riccardo, 2024. "Network Abroad and Culture: Global Individual-Level Evidence," GLO Discussion Paper Series 1488, Global Labor Organization (GLO).
    19. Calvo, Thomas & Lavallée, Emmanuelle & Razafindrakoto, Mireille & Roubaud, François, 2020. "Fear Not For Man? Armed conflict and social capital in Mali," Journal of Comparative Economics, Elsevier, vol. 48(2), pages 251-276.
    20. Tomasz Serwach, 2022. "The European Union and within-country income inequalities. The case of the New Member States," Working Papers hal-03548416, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:68:y:2022:i:5:p:3528-3548. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.