Start Date
12-16-2013
Description
With the new realities of the digital age, print newspapers are experimenting with different pricing models for their online content. Using NYT’s paywall rollout as a natural experiment, our study finds that a firm’s information pricing policy influences the pattern and effectiveness of online word of mouth (WOM) in social media. Using difference-in-difference-in-differences analysis, we find that implementing a paywall (i.e., charging for the content which was earlier available for free) has a disproportionate impact on the WOM for popular and niche articles, creating a longer tail in the content sharing distribution. Further, we find that the impact of WOM on NYT’s website traffic weakens significantly after the introduction of NYT’s paywall. These results show that information pricing strategy has implications for product and promotion strategies. The study offers novel and important implications for the theory and practice of strategic use of social media and information pricing strategy.
Recommended Citation
Oh, Hyelim; Animesh, Animesh; and Pinsonneault, Alain, "For a Fee: The Impact of Information Pricing Strategy on the Pattern and Effectiveness of Word-of-Mouth via Social Media" (2013). ICIS 2013 Proceedings. 18.
https://aisel.aisnet.org/icis2013/proceedings/EconomicsOfIS/18
For a Fee: The Impact of Information Pricing Strategy on the Pattern and Effectiveness of Word-of-Mouth via Social Media
With the new realities of the digital age, print newspapers are experimenting with different pricing models for their online content. Using NYT’s paywall rollout as a natural experiment, our study finds that a firm’s information pricing policy influences the pattern and effectiveness of online word of mouth (WOM) in social media. Using difference-in-difference-in-differences analysis, we find that implementing a paywall (i.e., charging for the content which was earlier available for free) has a disproportionate impact on the WOM for popular and niche articles, creating a longer tail in the content sharing distribution. Further, we find that the impact of WOM on NYT’s website traffic weakens significantly after the introduction of NYT’s paywall. These results show that information pricing strategy has implications for product and promotion strategies. The study offers novel and important implications for the theory and practice of strategic use of social media and information pricing strategy.