FML Blog

Consumers remain reluctant to pay for online news

Thursday, July 31, 2014      Marjolaine Detry      0

The latest data from the Reuters Institute Digital News report suggest that online consumers remain addicted to free news. Report author Nic Newman, explores the strategies being pursued by media companies to get them to change their ways.

Many newspaper executives are convinced that consumers can be re-educated to pay for the news they consume online. It worked for bottled water they say - why not for news?

But despite the widespread publisher adoption of paywalls, consumers are not exactly lapping up new paid products. After a surge in digital payment between 2012 and 2013, growth seems to have stabilised in most markets. Across our sample of ten countries*, just over one in ten (11%) say they have paid for online news in the last year – either via a one-off purchase or ongoing subscription.

 

RISJ Image 1_ Percentage paying for any online news in the last year

This is in line with publisher experience where new paywalls and paid apps often find easy growth for a while and then stall – after the supply of loyal users runs out.

In the absence of significant growth in overall numbers, news organisations are focusing on maximizing revenue from those who are prepared to pay. Among this group we find that the majority (59%) are now making ongoing payments in the form of digital subscriptions– normally on a monthly, quarterly, or annual basis. There are two exceptions to this: Spain where more people are making one-off payments and Finland where there are more people paying for print and digital bundles.

In the UK, just over one-third of all digital subscribers have signed up with The Times, followed by the Telegraph and the Sun which both introduced paywalls in 2013. In the US, large numbers of digital subscribers have signed up for either the New York Times or the Wall Street Journal. In France, it is Le Monde and Mediapart leading the way

The low figures for the likelihood to pay in the future (for those not already paying) make particularly worrying reading in the UK and may be explained by the abundant supply of quality free news from the BBC, Sky, Mail Online, and the Guardian. But in other markets such as (urban) Brazil, Spain, and Italy there is more potential for growth.

Those who are paying tend to be male, well educated and very interested in the news. Almost half of them own a tablet. The problem is that there simply aren’t enough of those types of people – with an increasing number of publishers chasing their cash.  

RISJ_ Image 2 Who is paying for online news?

Subscription works for specialist financial publishers like the Financial Times and the Wall Street Journal but is far more of a struggle for general interest newspapers who are increasingly competing online with broadcasters and pure players like the Yahoo, the Huffington Post.

Some news organisations - recognising the challenge - have spent significant amounts of money in acquiring exclusive content. Others have focused more on developing strategies that focus on multiple revenue streams of which subscription is only one part. Indeed most publishers are now using a mix of commercial models from advertising to micropayment, e-commerce, and a range of premium approaches including soft and hard paywalls.   

Differential pay models

Our research also shows the impact of new platforms, with consumers showing a greater willingness to pay for tablet and smartphone news content – even after taking into account variables such as education and income.  

 

  RISJ_Image 3 Impact of device after controlling for variables This has led to a new trend for differential pricing. Bildplus, for example, now offers three price packages providing access via web, smartphone, and tablet apps for €4.99 monthly, web, smartphone, tablet apps, and epaper editions for €9.99 monthly, and BILDplus Komplett for €14.99 monthly that includes web, smartphone, tablet apps, epaper editions, and the printed paper.
Elsewhere, digital channels are also being used to offer special content apps and editions. In Spain, El Mundo has introduced an evening app edition and a daily gossip app. O Globo and O Estadode S. Paulo in Brazil have also created special new evening products for tabloids and mobiles.

A major emerging strategy is the acquisition of video rights to help drive acceptance of paid tablet and smartphone services. The Sun in the UK reportedly paid £20 million for Premier League football highlights, and recently completed deals for Scottish Premier League highlights and Champions League and Europa League highlights beginning in 2015 for its Sun+ bundle. BILDplus in Germany offers a ‘BUNDESLIGA bei BILD’ subscription in addition to its basic digital bundles that attracted 150,000 subscribers in 2013.

It is not unusual for publishers to offer some free digital content, basic paid news access to additional material by single access or subscription payment, and premium paid access to specialised news, tools, and personalised news and analysis services. In Italy, Repubblica.itand Corriere.it remain free on the desktop/laptop version, but charge a fee for access through mobile devices. La Stampa is experimenting with premium models and the Il Sole 24 Ore business newspaper has introduced a metered paywall.  

 

Membership and community

A related alternative to subscription is the membership model, which is being pursued by news providers whose users have strong psychological links to the organisation. Readers of the Guardian in the UK, for example, are less interested in subscriptions for general web access, but more interested in memberships because of their connotations of community and association. Consequently it is exploring revenue streams based on membership and live experiences, and close engagement with readers on all platforms. Il Fatto Quotidiano in Italy is also experimenting with a membership model.  

 

Digital first and the role of big data

Perhaps the most significant strategic change has been a recognition that online is not just a platform for distributing print content but an important revenue source in its own right. For many publishers, the key focus has now become online business and content strategies – as the driver of future growth. These strategies increasingly focus around building on-going relationships with consumers and providing more relevant and personalised services that often go far beyond news. A key part of this is a more sophisticated use of data and a deeper understanding of consumer needs.

Alongside the quality of content, the most important factors in getting people to subscribe in the first place seems to be a desire to access favourite content anytime on any platform, combined with a fear of not being able to access that content for free. It is not surprising, then, that marketing efforts have focused on pushing paid smartphone and tablet options heavily as part of the drive for wider bundled print and digital subscriptions.  

 

RISJ_Image 4 Motivations for Paying for News In contrast, our survey suggests that keeping subscribers tends to be more about the actual experience of the content, along with its quality. The quality of individual writers is a particularly important factor in France and the United States, both countries where journalists have traditionally had a high profile.  

 

Digital payment in the future

The growing range of business models in digital news provision suggests the industry will be much more segmented than in the past. It is likely there will be a mass-market tier of providers based on free and premium content, as well as a more niche group creating high value content for smaller groups of well-paying subscribers. Others will position themselves between the two, offering multiple bundles of content at various price points to serve different user groups.

So far the process has provided consumers with a greater choice the type of range of content than every before but the future for the news business remains distinctly uncertain. New business models are emerging but they are not yet fully formed and the jury is out on whether they will be enough to maintain the well-funded news organisations we’ve become used to in the past.  

 

Reuters Institute Digital News Report 2014

Based on a survey conducted in US, UK, Germany, France, Italy, Spain, Denmark, Finland, Brazil and Japan. Total sample size was 18859 adults with around 2000 per country. Fieldwork was undertaken at the end of January/start of February 2014. The survey was carried out online. The data was weighted to targets set on age and gender, region, newspaper readership and social grade to reflect the total population.
The research and report can also be found on a dedicated website (www.digitalnewsreport.org) from 12th June containing slidepacks, charts, and raw data tables, with a license that encourages reuse.
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