US Readers Will Pay $3/Month for Online News

November 18, 2009

In what appears to be a mixed blessing for subscription-based online news models, a recent study by the Boston Consulting Group found that global consumers are indeed willing to pay to receive news – especially from online national and local newspapers – on their personal computers and mobile devices.

However, when the rubber finally hits the road, they may not be willing to pay much. The survey of 5,000 consumers in nine countries, revealed that the amount they are willing to fork over depends upon the country they live in and on the type of content that they deem most valuable. The average monthly amount consumers are prepared to pay ranges from $3 in the US and Australia to $7 in Italy.

Most Valuable Content

The research found that consumers are more likely to pay for news content that is unique, specialized, timely and convenient:

  • 67% of overall respondents and 72% of US respondents are willing to pay for unique content, such as local news
  • 63% overall respondents and 73% of US respondents are willing to pay for specialized coverage.
  • 54% of overall respondents and 61% of US respondents are interested in timely news content, such as a continual news alert service
  • A high percentage of both overall and US respondents are willing to pay for conveniently accessible content on a device of choice.

Newspaper Sites Rule

Consumers also are more likely to pay for online news provided by newspapers than by other media, such as TV stations, websites, or online portals, the study found. They are specifically not interested in paying for news that is routinely available on a wide range of websites for free.

Only Part of the Solution

BCG said that while this news is encouraging for newspapers, this willingness to spend is only part of the solution because of the advertising nosedive newspapers are experiencing. Advertising in the US , for example – which accounts for around 80%? of newspaper revenues – is in a steep decline. If consumers start to pay for their news online, it will slow, but not stop, newspapers’ slide. As a result, newspapers must look to innovate on multiple fronts, BCG said.

“The good news is that, contrary to conventional wisdom, consumers are willing to pay for meaningful content,” said John Rose, a BCG senior partner and head of thei firm’s global media sector. “The bad news is that they are not willing to pay much.”

Cumulatively, however, these payments could at least help offset one to three years of anticipated declines in advertising revenue, Rose added.?

National and Local Online Papers More Appealing than Major Metros

BCG suggests that some media companies could counter the effects of this advertising slump and benefit from a major boost in profits if they start charging for online news. Moreover, the online subscription model stands to benefit those newspapers with a unique voice and reporting and with strong subscriber bases. In particular, national and local newspapers -? which have content that is not available elsewhere. On the other hand,? major metropolitan daily newspapers will likely struggle, BCG said.

The survey also suggested that several hybrid models for accessing news and content may emerge. For example, 52% of US consumers of business news would be interested in a bundled print-and-online subscription, compared with just 35% of young consumers.

“Newspapers should be experimenting with paid online content,’ said Marc Vos, a BCG partner and head of its media sector in Europe, “It will take trial and error to find what works.”

Earlier this year, Outsell released an ominous report that said newspapers were “too slow to make the transition” to a digital revenue models and would need to accelerate their efforts to stem the continuing steep declines in ad revenues.

The New York Times Co.’s Boston Globe and News International’s The Times are among the most recent publications to announce they are switching to paid-subscription models, according to MediaBuyerPlanner.

About the survey: The survey was conducted via the Web in October. A total of 5,083 respondents participated in nine countries: the US (1,006 respondents), Germany (1,006), Australia (529), France (510), the UK (506), Spain (505), Italy (504), Norway (259), and Finland (258). The respondents were equally divided between men and women and among four age ranges. Respondents came from throughout each country, except in Australia, where the results were deliberately skewed toward Melbourne and Sydney.


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