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Paid online content has optimistic future, study suggests

More people are paying for online news, and those who don’t digitally subscribe are warming to the idea of doing so, according to a new study by the Reuters Institute for the Study of Journalism at the University of Oxford.

by Nick Tjaardstra nick.tjaardstra@wan-ifra.org | June 20, 2013

The survey, including more than 11,000 people in the U.K., U.S., Germany, France, Italy, Spain, Brazil, Japan and Denmark, suggests paid news is losing its novelty and becoming more widely accepted. Web news is now the main source of information for people in Spain, Italy, Japan and urban Brazil, while audiences in Germany, France, Denmark, the U.K. and U.S. still rely mostly on TV news.

This is reassuring data for news organisations, as several British newspapers including the Daily Telegraph and the Sun have recently announced paywalls, and about half of U.S. newspapers now charge for some digital content, according to the Guardian.

About 10 percent of those surveyed have paid for news in some digital form, a figure that rose about one-third from last year.

Charts by Reuters InstituteCharts by Reuters InstituteAll countries except Denmark saw in increase in the number of people who paid for digital news content in the past year. However, whereas 50 percent said they bought a print newspaper in a one-week period before the survey, only 5 percent said they paid for digital content in the same period.

Among those who currently do not pay for digital news, 14 percent said they’d consider it in the future. For news lovers, that figure is slightly higher, 19 percent. In Brazil, that figure rose to 58 percent.

The demographic most likely to pay for online news is males in the 25-34 age group, the study found. Tablet users are also twice as likely to pay for digital content than computer readers, though that fact is influenced by income.

Publishers’ paid content strategies vary, with one-off purchases of apps, articles or single-day access common in Italy, Spain and France and subscriptions prevalent in the U.S. and Denmark.

With such a variety of paid online content strategies, publishers should not think of paywalls as the primary solution. Publications need to weigh their decisions to adopt paywalls based on whether digital subscription revenue will offset lost ad dollars from reduced traffic, Robert Picard, Reuters Institute director of research, writes in the report.

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In fact, rigid paywalls are linked to traffic drops of more than 85 percent. The Times lost 91 percent of traffic when it installed its paywall, the report says. However, metered paywalls such as The Financial Times’ tend to prompt only 5 to 15 percent decreases in traffic.

While more people are willing to pay for digital content, few are willing to match print’s prices, a report by Simon-Kucher & Partners shows. About 80 percent said they would not pay $15 per month, the monthly price of a New York Times digital subscription, to use a newspaper app — and that price is much lower than the cost of a print subscription, which can be up to $50 per month, NetNewsCheck reported. However, 80 percent expressed interest in cheaper subscription options of individual sections, such as news or sports.

Newspapers are thus burdened with the task of convincing their audiences that their digital content is worth the price. Added interactive functions often make digital packages worth more than print, said Kyle Poyar, senior consultant with Simon-Kucher.

“Apps allow consumers to read whenever and wherever they want — and without getting ink on their hands,” Poyar said in an interview with NetNewsCheck. “Publications need to invest in explaining and defending that value to consumers.”

Paywalls alone will not be sufficient to save a newsroom’s finances, Picard notes. In an essay in the report, he urges publications to consider e-commerce, events, syndication and other digital services as part of their revenue-generating arsenal. Some large newsrooms now generate 15 to 25 percent of their revenue from digital content, but those profits may never supplant print subscriptions and ads.

But instituting some form of paid content is a question of “when” not “if” for most newspapers, Picard writes. Few sites have enough traffic to support an advertising-only business model, the Guardian notes. The Mail Online, one of the few sites to do so successfully, had 7.6 unique monthly visitors in March, according to comScore data.

Despite the growing prevalence of online news, Nic Newman of the Reuters Institute said that traditional mediums are not to be written off. He said that “digital news is extending the range of options available” rather than replacing print newspapers and broadcast news. “It’s a multi-platform world and becoming more so,” he writes in the survey.

Read the entire report here (pdf).