Survey shows 5% say they would pay for news online

image A Harris research poll commissioned by paidContent:UK found that 5% of respondents think they would pay for news online, with the vast majority saying that instead they would simply go to an alternative free site.

If the 5% panned out in practice (and surveys are notoriously bad predictors of buying behaviour, so there is considerable downside risk to this figure) then a back of the envelope calculation shows that even with a fairly modest charge of £3-5 per month the subscription revenues gained are likely to significantly exceed the ad revenues lost from the 95% who decide to go elsewhere, so there is some good news in this figure.

The bad news, however, is that these revenues won’t add up to much of a total when compared with traditional hardcopy paper sales.

So we are looking at another story of the transition to digital shrinking an industry.

The only option I can see on the table for newspapers to mitigate this development is to build vibrant communities around their properties (as I have said before).  The catch, though, is that it is prohibitively hard to build a community whilst charging for content.

It is interesting to note that the newspaper that has had the most success building an online community (the Guardian, owner of paidContent) is also the one that is most opposed to charging.

  • Nice observation Nic. I like the idea of shrinking an industry and the reference to Wikipedia – Graigslist is another great example of how this can be done.

    However, if you want to successfully shrink an industry you also need to disrupt it. This is why just charging for online news won't not work. By now, everyone is used to the free access of news online and this won't change soon, at least not without a disruptive element.

    This is where i see the power of the real time web, it will help to monetize news and information online. Simply put, i can imagine a business models where people who need access to information fast or even in real time will pay for it. A system that already exists for quite a while in trading btw.

    How fast someone had access to “the news” or information in general has always been an important factor in our history. A few decades ago, nothing was older than yesterdays news, but than again you didn't need to pay for yesterday's newspaper just to catch up.

    News will be free but the people who need to know about it in real time, might pay for just that.

  • Hi Nick,
    Very interesting – correlates with our previous conversation re the FT http://www.theequitykicker.com/2009/07/27/makin

    However, when you actually take away the free version and the paper version is very expensive, I would not be surprised if this was a higher. I also liked this comment on the Guardian article:

    “As Film 4 found out, it's true that very few people are interested in paying to subscribe to individual channels/publications. But Sky has proved that people are perfectly happy to pay for a combination pack of services that appeal to their particular interests.

    Ask consumers if they would pay for a package of internet services (say a 'current affairs pack', a 'music pack' or a 'sports pack' that included the leading publications in the field as well as video content and access to comment from the leading experts) and, I think, you'll get a rather different answer.”

  • chrispadfield

    I wonder what surveys said about people paying for applications on their mobiles 5 years ago or sending text messages 15 years ago. As you point out, I am not sure a survey on people's willingess to pay for a product that does not exist in the way it will be sold in the future are of much (or really any) value.

    It's also all very well saying people will get “free news” but that presumes the type of news they want to get remains avalible free. Wouldn't necessarily count on that.

    >> This is where i see the power of the real time web, it will help to monetize news and information online. Simply put, i can imagine a business model where people who need access to information fast or even in real time will pay for it. A system that already exists for quite a while in trading btw.

    I don't really understand this argument; most people who claim news will be free do so because of the simple economic argument that P trends towards MC. Ignoring the abundance of counter examples to this (the whole software industry for example which manges quite well with both paid and free content, much like I believe the news industry will when it sorts out a payment system). But if you follow the trending towards free argument for news, I don't see why “instant news” becomes any more valuable. MC is still effectivly free – so why can you charge more for real time news than news > 1 day old?

    Certain types of news is valuable when avaliabile instantly – but most people who buy news pay for reporting & commentary. Anyone can report (thus little value) that there has been explosion somewhere or that a stock price has tanked – the value is generated in explaning that and providing context. I am not convinced that explanation needs to be in real time.

  • chrispadfield

    Compeltly agree re bundling. Also, I expect news to be bundled with tv/music/entertainment to create “media packages”.

    How this links to the delivery system is yet to be seen, but I expect content to become more and more delivery mechanism agnostic (Sky Player is a good example of the trend from a big media company). While there will be links between content owners and delivery systems – it's the former that will win the battle for value and the rest will continue their migration to becoming dumb pipes.

    I imagine it won't be that long before it's possible to pick up a bundle for a bunch of tv channels, the economist, guardian, time and a music subscription to X record labels for a certainly month price. Book publishing house bundles might get thrown in as well.

  • Agree – also makes compelling alternative to Beeb

  • Good point Henry. Intelligent bundling might make the difference, particularly if it contains something that is hard to get elsewhere.

  • Hi Bastian – a lot of people hope timeliness will be monetisable, but I'm not so sure. I blogged recently that Yahoo have stopped charging for real time stock feeds (15mins delayed has always been free).

  • Hi Phil – the price of software is also heading down, largely driven by the open source community, and the biggest brake on this trend remains the cost of distribution/implementation. I'm not sure there are an abundance of counter arguments.

    Maybe we will suddenly find that we can't get news online without paying for it. But I suspect not. Instead I think people will use a free (ad supported) news offering to drive revenues in other parts of their organisations – e.g. conferences.

  • Indeed. I'm starting to think that the BBC is a net negative for the uk.

  • chrispadfield

    The cost of disribution of software is essentially zero and while ticket price for (particularly enterprise) software is going down, the aggregate amount of money spent on software continues to increase year on year. More competition (including open source) has certainly lowered priced – but hardly are we are P=MC and I don't see that ever happening.

    Other examples of things we all pay for where MC =~ 0 is any other type of media (video, audio, digital books), almost all communications (phone calls, text messages, internet access), some utilities for example whilst scarce water still has a MC of almost zero for residential users, there is a negligiable (bar externalities) MC for driving on roads yet we pay road tax – the list goes on.

    Typical response when MC = 0 is not to make the product free (because this does not cover average costs so nothing get's made) but to charge a fixed cost for an “all you can eat” amount. This is what I expect will happen with media -> bundling, micropayments for people that don't want a media bundles, and free stuff for everyone else. We are already seeing this start with the uptake of Spotify – I am not interested in buying an individual track anymore – but a fixed monthly free for unlimited access to a whole catalouge sounds great. This is not a new idea of course, Sky, BBC already work this way – I just expect more of it.

    Sure hybrid models will appear e.g. techcrunch as you say getting a lot of money from conferences, music artists making money from concerts – but these type of buiness models are not particularly new – just made easier to do with the web.

    Whether we will get good free news online is a good question; and the BBC is certainly a big factor here. I think the important converse question is can other news companies create compelling, diversified content at a price people will pay for.

  • Hi Chris – this debate will run and run. You make a good point re fixed price all you can eat deals, although in many areas they are also declining, including many of the areas you mention.

    Thanks for the comments and the debate, much appreciated.

  • chrispadfield

    The cost of disribution of software is essentially zero and while ticket price for (particularly enterprise) software is going down, the aggregate amount of money spent on software continues to increase year on year. More competition (including open source) has certainly lowered priced – but hardly are we are P=MC and I don't see that ever happening.

    Other examples of things we all pay for where MC =~ 0 is any other type of media (video, audio, digital books), almost all communications (phone calls, text messages, internet access), some utilities for example whilst scarce water still has a MC of almost zero for residential users, there is a negligiable (bar externalities) MC for driving on roads yet we pay road tax – the list goes on.

    Typical response when MC = 0 is not to make the product free (because this does not cover average costs so nothing get's made) but to charge a fixed cost for an “all you can eat” amount. This is what I expect will happen with media -> bundling, micropayments for people that don't want a media bundles, and free stuff for everyone else. We are already seeing this start with the uptake of Spotify – I am not interested in buying an individual track anymore – but a fixed monthly free for unlimited access to a whole catalouge sounds great. This is not a new idea of course, Sky, BBC already work this way – I just expect more of it.

    Sure hybrid models will appear e.g. techcrunch as you say getting a lot of money from conferences, music artists making money from concerts – but these type of buiness models are not particularly new – just made easier to do with the web.

    Whether we will get good free news online is a good question; and the BBC is certainly a big factor here. I think the important converse question is can other news companies create compelling, diversified content at a price people will pay for.

  • Hi Chris – this debate will run and run. You make a good point re fixed price all you can eat deals, although in many areas they are also declining, including many of the areas you mention.

    Thanks for the comments and the debate, much appreciated.