The Boston Consulting Group has entered the paid content debate this month with a valuable contribution. It’s “Willingness to pay for news online” report presents key findings from an international survey.
Will consumers pay for online news? This is a burning issue for newspapers in the developed world that The Boston Consulting Group has attempted to answer in a survey of 5,000 consumers in nine countries, conducted last October.
A panel of participants in the U.S., U.K., France, and Germany, suggests that people are willing to pay a modest amount, around $5 a month, for online news.
This finding is applicable to most developed markets but applies to content that is:
• Unique (e.g., local news or specialised coverage)
• Timely (e.g., continuous news alert service)
• Conveniently accessible on a device of choice
“While encouraging, this willingness to pay will not fundamentally shift newspaper industry economics” underlines the study. For instance, it would shift the revenue mix in the U.S. from the current 80/20 percent mix of advertising to consumer pay by 2 to 3 percentage points towards consumer pay. However, its impact on margins would be more significant and could off-set one to three year's worth of forecasted advertising decline”.
But this consumer willingness to pay would disappear if disruptive, free models emerge, e.g. if Google, Yahoo and others were to offer comparable free services while making money in other ways.
“Finally, this impact will not affect all newspapers in the same way. It will differentially benefit newspapers with unique reporting and/or a unique voice as well as those with strong subscriber bases. In particular, the average major metro is not well positioned to take advantage of these trends. It will also play out differently in different countries, as the structure of news reporting varies dramatically” says the study.
These findings imply that there will be many hybrid models for accessing and paying for content, e.g.
• The best newspapers will leverage their content and subscribers and incrementally improve their economics
• Different customer segments will have different preferences for how to access, and how to pay
• New entrants will look for ways to provide news as part of their customised and personalised offers to all devices.
