In Search for an Audience-Supported Business Model for Local Newspapers: Findings from Clickstream and Subscriber Data

Abstract

With the decline of advertising revenue, local newspapers must shift their revenue sources from primarily advertising to deriving a larger share from subscription fees. Although existing studies on willingness to pay for online news have examined the determinants of people’s paying intent, this study focuses on what factors drive digital news subscribers’ decision to cancel their subscriptions. We propose a framework that illustrates the sources of negative experiences on news websites—namely the inferior good hypothesis, ad-interference hypothesis, and newsletter intervention hypothesis—and investigate how these elements of negative experiences and news reading behaviors are associated with subscription cancellations. We analyze clickstream data merged with subscriber payment data to investigate these associations from three local news sites. Our findings indicate that regularity of news reading, local news content, using ad blockers, and subscribing to certain newsletters are negatively associated with cancellation. These results provide news organizations with a road map for managing the user experience so that consumers will be more willing to pay for the news.