News for Sale: Charges for Online News Are Set to Become the Norm as Most Consumers Say They Are Willing to Pay, According to The Boston Consulting Group
But Paid Online Content Will Not Fundamentally Alter the Economics of News Organizations, Survey of 5,000 Consumers in Nine Countries Finds
| Source: The Boston Consulting Group
NEW YORK, NY--(Marketwire - November 16, 2009) - Media companies could counter the effects of
the advertising slump and benefit from a major boost in profits if they
start charging for online news, according to The Boston Consulting Group
(BCG).
New research released today shows that consumers are willing to spend small
monthly sums to receive news on their personal computers and mobile
devices. In a survey of 5,000 individuals conducted in nine countries, BCG
found that the average monthly amount that consumers would be prepared to
pay ranges from $3 in the United States and Australia to $7 in Italy.
John Rose, a BCG senior partner based in New York who leads the firm's
global media sector, said, "The good news is that, contrary to conventional
wisdom, consumers are willing to pay for meaningful content. The bad news
is that they are not willing to pay much. But cumulatively, these payments
could help offset one to three years of anticipated declines in advertising
revenue."
BCG's survey found that consumers were more likely to pay for certain types
of content, specifically news that is:
-- Unique, such as local news (67 percent overall are interested; 72
percent of U.S. respondents) or specialized coverage (63 percent overall
are interested; 73 percent of U.S. respondents)
-- Timely, such as a continual news alert service (54 percent overall are
interested; 61 percent of U.S. respondents)
-- Conveniently accessible on a device of choice
In addition, consumers are more likely to pay for online news provided by
newspapers than by other media, such as television stations, Web sites, or
online portals.
They are specifically not interested in paying for news that is routinely
available on a wide range of Web sites for free.
While encouraging, this willingness to spend is only part of the solution
for newspapers. For example, in the United States, advertising -- which
accounts for around 80 percent of newspaper revenues -- is in a steep
decline. If consumers start to pay for their news online, it will slow, but
not stop, newspapers' decline. As a result, newspapers must look to
innovate on multiple fronts.
Consumers More Likely to Pay for Online Content from National and Local
Newspapers Than from Major Metros
These particular findings will benefit newspapers with unique voice and
reporting and with strong subscriber bases. In particular, national and
local newspapers, which have content not available elsewhere, can take
advantage of these trends, while major metropolitan daily newspapers will
likely struggle.
The survey suggests that several hybrid models for accessing news and
content will emerge. For example, 52 percent of U.S. consumers of business
news would be interested in a bundled print-and-online subscription,
compared with just 35 percent of young consumers.
"Newspapers should be experimenting with paid online content," said Marc
Vos, a Milan-based partner and leader of BCG's media sector in Europe, "It
will take trial and error to find what works."
To receive a summary of the survey findings or arrange an interview with
one of the survey authors, please contact Eric Gregoire at +1 617 850 3783
or gregoire.eric@bcg.com.
About the Survey Methodology
The survey was conducted via the Web in October. A total of 5,083
respondents participated in nine countries: the United States (1,006
respondents), Germany (1,006), Australia (529), France (510), the United
Kingdom (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.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm
and the world's leading advisor on business strategy. We partner with
clients in all sectors and regions to identify their highest-value
opportunities, address their most critical challenges, and transform their
businesses. Our customized approach combines deep insight into the dynamics
of companies and markets with close collaboration at all levels of the
client organization. This ensures that our clients achieve sustainable
competitive advantage, build more capable organizations, and secure lasting
results. Founded in 1963, BCG is a private company with 66 offices in 38
countries.
For more information, please visit www.bcg.com.