Online news needs a new pay model, U-M study shows

The revenue model that has sustained the newspaper industry for centuries no longer works in the digital age, but another age-old concept with some modern adaptations could be the answer to profitability, says a University of Michigan researcher. As newspaper and other similar content has gone digital over recent years, publishers have tried several funding models to strike the right balance between advertising, subscriptions and, in some cases, free content to lure readers. These publishers have faced steady declines in print newspaper subscriptions and advertising revenue, all while the e-commerce environment has grown up on social media, offering advertising in direct competition with their online news publications. Paramveer Dhillon, U-M assistant professor of information, along with Sinan Aral from MIT, conducted an in-depth study of the current paywall design at a top U.S. newspaper. They say the results show it is time to move away from the status quo. "Our study suggests that newspapers and other digital content providers should abandon a revenue model based solely on advertisements, as they face severe competition from Google and Facebook to attract ad dollars,” Dhillon said. "Instead, they should strive to convert online visitors to paid subscribers by offering differentiated content modulated via digital paywalls.