Lambrecht continues: “This sort of revenue model is ‘counter-cyclical’. It allows a firm to gain subscription revenue by attracting high value consumers off season – for example sports buffs who want sports content all year round – while not alienating low type consumers – occasional fans who simply tune in for high-profile games.”
While a large proportion of online news outlets have tried to monetise their business models by introducing paywalls or charging monthly subscription fees, such policies can limit revenue in the long-run.
“The inflexibility to respond to demand shocks in the organic news cycle can be a setback for a firm’s bottom line,” Lambrecht concludes.
“Managers should broadly identify their own cyclical demand shocks so that they can adjust their share of free and paid content. Firms offering long-term contracts with their customers, such as annual subscription fees, can use technology to flexibly assign any new piece of content to be free or paid as they observe real-time changes in demand. Some providers are already doing this, recognising it as a profit-maximising approach.”
