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    The Comprehensive Effects of a Digital Paywall Sales Strategy
    17 Jun 2019Working Paper Summaries

    The Comprehensive Effects of a Digital Paywall Sales Strategy

    by Doug J. Chung, Ho Kim, and Reo Song
    Many print media firms are switching to a business model requiring readers to pay for online content. This study of media paywall strategies in the US finds that adopting a digital paywall can lead to positive demand substitution from digital to print channels, particularly for large-sized firms and those with unique content.
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    Author Abstract

    This paper explores the multiple and comprehensive effects of a digital paywall sales strategy, an increasingly common means of go-to-market for media firms. Specifically, we examine the effects of a digital paywall on a media firm’s two sources of income—subscription and advertising—across its two channels—traditional and digital. We compile a unique data set from multiple sources that contain detailed data on 79 major U.S. print media firms; and, for causal inference, we utilize a synthetic control method to distinguish the true effect from naturally occurring time trends. In addition, we take into account demand spillover—substitution vs. complementarity—across channels as well as factors that moderate such spillover effects. We find that, although heterogeneous across media firms, a paywall sales strategy can lead to positive demand substitution from digital to traditional channels, especially for firms with large circulation and uniqueness of content. Furthermore, uniqueness of content reduces the decline in digital demand, moderating the loss in digital advertising revenue while increasing digital subscription revenue. Overall, the effectiveness of a digital paywall varies by both the source and the channel of income across media firms with different characteristics.

    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: May 2019
    • HBS Working Paper Number: HBS Working Paper #19-118
    • Faculty Unit(s): Marketing
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    Doug J. Chung
    Doug J. Chung
    MBA Class of 1962 Associate Professor of Business Administration
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