Readers will pay more for specialized online content
If online news content weren't so free, it seems many consumers, especially those with special interests, would pay for it, according to a new PricewaterhouseCoopers' study called “Outlook for Newspaper Publishing in the Digital Age.” But consumers aren't willing to pay as much as they would for a newspaper subscription.
The study looks at a consumer sample of 700 respondents in seven countries (Canada, France, Germany, the Netherlands, Switzerland, the U.K. and the U.S.). Respondents were asked to indicate the medium they prefer to gather news and background information, the reasons for their preference, the type of news content they prefer to read in newspapers, and their willingness to pay for news on different platforms. In addition to examining reader preferences, another section of the study reveals that digital ad revenue isn't looking so great at newspapers.
On a global scale, newspapers are the preferred medium, with an average 69% of respondents across the surveyed countries choosing the print product as their first choice for general news consumption, followed by 29% choosing online sources.
But in the U.S., reader preference for online news is higher than other countries, though still lagging newspapers (43% of respondents rate online as their first choice).
It comes as no surprise that the preference for online news increases among younger consumers; 35% of global respondents in the 18 to 30 age category cite the Web as their first choice. What might be a surprise is that the number isn't higher, especially because PwC admits the survey, conducted online, could be positively biased toward those with a preference for online news.
Multimedia is a big driver for those who prefer online content. For respondents who list online as their first choice, the number one reason wasn't for convenience or familiarity ― it's because of video, cited by more than a quarter of respondents. After video, top reasons include being able to receive a quick news overview and having customizable features.
On the other hand, those who prefer newspapers for news consumption say getting in-depth news coverage is the top reason (more than one-fourth), followed by receiving a quick overview and being easy to read. It's interesting that receiving news in-depth and having the ability to skim are both important attributes for newspaper readers.
Mobile and e-reader devices haven't quite caught on yet as a prominent way to receive news, as only 2% of respondents cite them as their first choice of news consumption (and 70% put them last). That's mostly due to difficulties with reading and unfamiliarity with the medium ― two reasons that could change in time.
What Will They Pay?
Like news preference, willingness to pay for news varies by age. “Willingness to pay” is defined in the study as the maximum amount consumers are willing to pay for a product. Within that limit, consumers will choose the cheapest available product with comparable quality. (Here's the catch: For online news, that often means free.)
When willingness to pay for newspapers is the base price, consumers are only willing to pay a percentage of that base to get the same content online, according to the study. While willingness to pay for high quality news content on traditional paper is 100%, respondents on average are only willing to pay 62% of that (or 38% less) for high quality news online.
One hint of promise for online publishers is that those 29 and under would pay only 28% less than newspapers for high quality general news online. That's a lot more than the oldest group (50 and under), who are only willing to pay 55% less than the cost of newspapers.
Another opportunity is in offering topic-specific content. Consumers with a specific interest, such as sports and financial enthusiasts, demonstrate a higher willingness to pay. For instance, on average, respondents preferring financial content would pay almost as much (97%) for quality financial content online as they would for general news in a newspaper. Financial trade publications (e.g. The Deal) that manage to have successful paywalls come to mind.
The indication that readers are willing to pay for Web news at all might seem like good news for publishers, but the results are hypothetical. According to the study: “This does not mean that they would actually buy online content at this amount however. Free content is abundant online and consumers would choose free content when the quality was comparable or sufficient for their purpose.”
It's typical supply versus demand: Online news would be worth something if it weren't already free.