Publications
Publications
- 2019
- HBS Working Paper Series
The Comprehensive Effects of a Digital Paywall Sales Strategy
By: Doug J. Chung, Ho Kim and Reo Song
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.
Keywords
Digital Paywall; Demand Substitution; Spillover Effect; Synthetic Control; Sales; Strategy; Media; Newspapers; Publishing Industry
Citation
Chung, Doug J., Ho Kim, and Reo Song. "The Comprehensive Effects of a Digital Paywall Sales Strategy." Harvard Business School Working Paper, No. 19-118, May 2019.