Title: Are Breaking News Worth Paying For? Exogenous Demand Shocks and the Effect of Paywalls on Online Newspaper Readership

Authors: Kathrin Gruber, Klaus Miller

Affiliation: Vienna University of Economics and Business & Goethe University Frankfurt

Abstract:
Actually, the problem in the publishing industry is two-fold: on the one side,
advertising revenues are declining in the industry and on the other side
revenues for paid content are small. So the question comes up, how content can
be provided at all, if the business model is not sustainable any more. But what
are the customers actually paying for? Are they paying for content or rather not
to see ads or both?  We study the move from free to fee (by the introduction of
a metered-paywall) using weekly data for the period 2015 to 2017 from a daily
newspaper. We analyze individual usage patterns of 2,289,000 unique clients of
the publishers browser-offering where time related user heterogeneity is
incorporated in a Bayesian hierarchical model. Thus, we try to explain market
dynamics and provide answers to relevant marketing strategies about the content
provided behind the paywall and if unexpected, special events serve as
'advertising' for the paywall.