Working Paper: CEPR ID: DP13651
Authors: Frode Steen; Frode Skjeret; Timothy Ga Wyndham
Abstract: The digitisation of society has posed a challenge to news outlets. Seeking advertising revenues and facing competition for the attention of their readers, many news outlets entered the digital era with unrestricted access to their online content. More recently, news outlets have sought to restrict the amount of content available for free. We quantify the impact of introducing a paywall on the demand for news in Norway. The short-run average impact of a paywall is negative and between 3 and 4%, in the long run the effect increases to between 9 and 11%. We find heterogeneity in the response to paywalls. The largest news outlet within its market experiences larger effects than the other news outlets. After introducing a paywall, the largest news outlets face a long-run reduction in demand between 13 and 15%, as compared to the others who experience a decrease of between 8 and 11%. The timing of introducing a paywall does not seem to affect the demand response very much.
Keywords: online news; paywalls; business models; two-sided markets
JEL Codes: L20; L82; D40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Introducing paywalls (Y20) | Reduction in news consumption (E21) |
| Larger news outlets (L82) | Larger long-run reduction in demand (H31) |
| Smaller news outlets (L82) | Reduction in demand (D12) |
| Timing of paywall introduction (C41) | Demand response (L97) |
| More competitors introducing paywalls (D49) | Increased negative demand effects for larger outlets (D12) |