TY - JOUR
T1 - When Consumers Can Return Digital Products
T2 - Influence of Firm- and Consumer-induced Communication on the Returns and Profitability of News Articles
AU - Schulz, Petra
AU - Shehu, Edlira
AU - Clement, Michel
PY - 2019/9
Y1 - 2019/9
N2 - The news industry is being massively disrupted by the digital distribution of news. Consequently, publishers have revised their business models and integrated pay-per-article options. To reduce pre-purchase uncertainty, consumers can use information from firm-induced (e.g., newsletters), or consumer-induced communication (e.g., likes). These communication activities avoid purchases with poor fit but also increase customer expectations. Consequently, their effect on sales, returns, and profitability is unclear. For digital products, these effects are even less clear because product quality is difficult to evaluate pre-purchase, and products can be returned at almost no cost, even after consumption. In this study, we investigate the effects of firm- and consumer-induced communication on digital returns in the context of news articles on a major online platform (Blendle). We rely on a multi-equation model to quantify the effect of firm- and consumer-induced communication activities (i.e., newsletter promotions sent out by the platform and consumer likes from readers) on sales and returns and calculate their profitability impact. Our results show that newsletters decrease returns but do not significantly affect sales. In contrast, consumer likes have a twofold effect by increasing sales and decreasing returns. A simulation shows that both newsletters and likes increase profitability and that likes have a higher potential. Our results offer much needed guidance for online aggregators of digital products (e.g., audiobooks, e-books or news articles), as well as for online publishers based on pay-per-unit business models.
AB - The news industry is being massively disrupted by the digital distribution of news. Consequently, publishers have revised their business models and integrated pay-per-article options. To reduce pre-purchase uncertainty, consumers can use information from firm-induced (e.g., newsletters), or consumer-induced communication (e.g., likes). These communication activities avoid purchases with poor fit but also increase customer expectations. Consequently, their effect on sales, returns, and profitability is unclear. For digital products, these effects are even less clear because product quality is difficult to evaluate pre-purchase, and products can be returned at almost no cost, even after consumption. In this study, we investigate the effects of firm- and consumer-induced communication on digital returns in the context of news articles on a major online platform (Blendle). We rely on a multi-equation model to quantify the effect of firm- and consumer-induced communication activities (i.e., newsletter promotions sent out by the platform and consumer likes from readers) on sales and returns and calculate their profitability impact. Our results show that newsletters decrease returns but do not significantly affect sales. In contrast, consumer likes have a twofold effect by increasing sales and decreasing returns. A simulation shows that both newsletters and likes increase profitability and that likes have a higher potential. Our results offer much needed guidance for online aggregators of digital products (e.g., audiobooks, e-books or news articles), as well as for online publishers based on pay-per-unit business models.
KW - Digital product returns
KW - Digital business model
KW - Profitability
KW - Paid content
KW - News media
KW - Consumer likes
KW - Digital product returns
KW - Digital business model
KW - Profitability
KW - Paid content
KW - News media
KW - Consumer likes
U2 - 10.1016/j.ijresmar.2019.01.003
DO - 10.1016/j.ijresmar.2019.01.003
M3 - Journal article
SN - 0167-8116
VL - 36
SP - 454
EP - 470
JO - International Journal of Research in Marketing
JF - International Journal of Research in Marketing
IS - 3
ER -