Academic journal article Journal of Electronic Commerce Research

From Free to Fee: Exploring the Antecedents of Consumer Intention to Switch to Paid Online Content

Academic journal article Journal of Electronic Commerce Research

From Free to Fee: Exploring the Antecedents of Consumer Intention to Switch to Paid Online Content

Article excerpt

1. Introduction

Online content refers to the category of digital content shared and distributed through online channels, such as online videos, electronic journals, music downloads and so on. Two major revenue models have been identified in online content service literature: the advertising revenue model and the pay-for-content model. In the advertising revenue model, content providers attract consumer "clicks" via free content and obtain advertising revenue from these "clicks". The advertising revenue model has the potential to attract new customers and increase market size [Papies et al. 2011]. However, since the revenues are supported by advertisers instead of consumers, content providers may only be accountable to advertisers rather than consumers. In this light, the quality of online content may deteriorate, which may result in an online market bowing only to the demands of advertisers.

To overcome the drawbacks of the advertising revenue model, the pay-for-content model has emerged as another major revenue model. In this model, content providers attract consumers by differentiated online content with a high quality of service, without advertisements, and charge consumers a subscription fee. As the revenues are supported by consumers, content producers are eager to increase product quality and diversity, e.g., offering superior or more creative content, in order to meet the heterogeneous demand of consumers. Meanwhile, content providers are motivated to improve service quality, which can reinforce their relationship with the consumers. However, according to a survey carried out by the Pew Internet & American Life Project in 2002, if online content providers put their content behind a pay wall having previously offered it free, only 12 percent of Internet users will pay, while 50 percent may look for a free alternative and 36 percent will terminate their relationship with the sites [Crosbie 2002] , In accordance with the survey results, many leading online content service websites, such as those of Slate and The New York Times, have struggled to charge for content [Lam & Harrison-Walker 2003; Lopes & Galletta 2006]. Such failed cases indicate that the success of a pure pay-for-content model is very hard to ensure.

From what we have discussed above, neither the advertising revenue model nor the pay-for-content model alone is enough to support the viability of many online business companies. Due to consumer heterogeneity in quality demands and price sensitivity, a hybrid revenue model offering both pricing and advertising options to consumers seems to be a better choice than either one alone [Kumar & Sethi 2009; Fan et al. 2007; Prasad et al. 2003] , Such a hybrid model can help online content providers make full use of the advantages and offset the defects of each pure revenue model.

While a hybrid revenue model is promising, its success largely depends on consumers' intention to switch from free to paid online content. In a hybrid revenue model, content providers firstly attract consumers with free content via a trial, and then attempt to attract them to pay for premium content by delivering high-quality service. By offering an incomplete version of online content (e.g. many video websites only provide a two-minute free preview of a two-hour long video), the trial can acquaint consumers with the high quality of content and service. The essential objective of the trial is to lure consumers to subscribe to paid-for content. In order to ensure the content is worth paying for, many consumers access the free content of a provider for a long time. However, previous research has indicated that long-term use of free online content will make consumers accustomed to the free model. The stronger the habit, the lower the willingness-to-pay will be [Gallaugher et al. 2001]. According to status quo bias theory, this behavior phenomenon can be explained as individuals' preference for maintaining their current course of action [Samuelson & Zeckhauser 1988]. …

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