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

ABSTRACTAs a hybrid revenue model seems better for generating revenue for online content providers than purely either an advertising revenue model or a pay-for-content model, many online content providers are increasingly adopting the hybrid revenue model. The success of this model largely depends on consumer intention to switch from free online content ("free") to paid online content ("fee"). However, consumers who are accustomed to free content seem unready to embrace this practice, making the hybrid revenue model undesirable. Motivated by such concerns, some studies have investigated the reasons for consumer intention to pay for online content, yet scant research has synthetically explored the antecedents of consumer intention to switch from "free" to "fee" in the context of a hybrid revenue model. Using the literature of perceived value and the status quo bias theory as theoretical lenses, we develop a model to explore consumer intention to switch from "free" to "fee" in the context of a hybrid revenue model. Empirical results reveal that loss aversion, social norms, cognitive inertia, and cognitive lock-in can indirectly or directly influence consumers' switching intentions. Furthermore, consumer's adaptation level to advertising is also found to moderate the relationship between perceived sacrifices and switching intention. Besides contributing to theory building on consumer switching intention, the research results also offer important suggestions to online content providers.Keywords: Online content; Hybrid revenue model; Switching intention; Status quo bias theory1. IntroductionOnline 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. …