Monetizing Online Content: Digital Paywall Design and Configuration
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Monetizing Online Content: Digital Paywall Design and Configuration Robert Rußell • Benedikt Berger • Lucas Stich • Thomas Hess • Martin Spann
Received: 6 April 2019 / Accepted: 6 January 2020 The Author(s) 2020
Keywords Digital paywalls Online content Monetization Revenue models Pricing
1 Introduction The media industry was among the first affected by digitization, because digital technologies have changed content production, distribution, and consumption profoundly. Most media companies have suffered revenue losses, being unable to adapt their monetization strategies to the rapidly changing media consumption patterns of their recipients. Additionally, advertising revenues have proven to be a less reliable revenue source in online than in offline media markets. Consequently, a major obstacle to the content providers’ successful digital transformation is the establishment of sustainable revenue streams (Chyi 2012). The Accepted after two revisions by Ulrich Frank. R. Rußell (&) B. Berger T. Hess Institute for Information Systems and New Media, LudwigMaximilians-Universita¨t Mu¨nchen, Ludwigstr. 28, 80539 Munich, Germany e-mail: [email protected] B. Berger e-mail: [email protected] T. Hess e-mail: [email protected] L. Stich M. Spann Institute of Electronic Commerce and Digital Markets, LudwigMaximilians-Universita¨t Mu¨nchen, Ludwigstr. 28, 80539 Munich, Germany e-mail: [email protected] M. Spann e-mail: [email protected]
market for music and video content reveals a trend toward direct monetization, with subscription-based streaming services such as Spotify or Netflix showing increasing revenues. However, other media markets, including the market for news content, still struggle to monetize their content online (PricewaterhouseCoopers 2019). After extensive experimentation with various monetization approaches and several failed attempts, more and more news content providers adopt digital paywalls to counter the impending market trends. While the term digital paywall is commonly used in the context of news content, the functionality of this instrument to govern consumers’ access to online content is also important for other media products such as music, videos, or games. However, a standard digital paywall does not exist. Owing to the wide range of and new developments in configuration options, the limited experience with digital paywalls in practice, and a lack of research on this topic, it is still unclear which factors determine the optimal design of a digital paywall. The process of establishing a viable business model for online content is complex and remains a challenge for media companies. Content providers seek to maximize direct revenue by selling content and indirect revenue through advertising (i.e., a two-sided market), while simultaneously considering cannibalization and spillover effects on their traditional formats. Whereas news content providers usually rely on both revenue sources for their printed editions, most of them initially offered their online editions free
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