Rupert Murdoch has put an end to the culture of free by closing News International’s online content behind a paywall, believed to go live within days.
The media mogul’s attempt to change consumers’ "online equals free" mindset has come under considerable scrutiny, with reports suggesting consumers simply won’t pay for online content in a world where the BBC offers it for free.
Kantar Media’s Futureproof study, which was conducted in August last year among a panel of 2,400 adults in Great Britain, considered willingness to pay across a variety of media. Television emerged as the medium most respondents are willing to pay for (23% of the panel agreed they would pay), although things looked less profitable for online newspapers.
Just 3% of the survey panel agreed they are "willing to pay for newspaper content online", while 2% said they are "willing to pay for newspaper content via mobile".
Qualitative research on news consumption highlighted a mindset issue that must be considered when quantitatively addressing respondents’ willingness to pay for digital content.
Within the group discussions, respondents struggled to comprehend a world with no free option. When pushed, there was greater willingness to pay via the paywall model than by micropayments (see box on paid content models below).
Kantar also found that the paywall infrastructure was relatively familiar to respondents. Many already pay subscriptions for their Sky/Virgin TV, mobile phone and broadband services, so an additional subscription would not necessarily be out of the question.
The paywall offers an element of reassurance for consumers. Kantar’s respondents demonstrated a clear preference for a fixed payment where they know exactly how much will be charged each month (or each week or each year).
By contrast, micropayments appeared "overly complicated" to the panel. Respondents expressed fears they would end up paying more in the long run, and there was confusion about the concept of a maximum payment cap.
Mobile apps, although not familiar to everyone, were favourably received by key audience segments. The more future-facing (younger, tech-savvy) respondents were more familiar with the concept and how to use and buy apps. However, apps still appeared somewhat "confusing and unnecessary" to traditional newspaper readers. Again, the preference for a "one-off" payment for mobile news apps over regular "pay as you access" fees was clear.
The right price point is critical for the success of any paid content strategy. Respondents were unlikely to pay the equivalent of a newspaper cover price for access to digital content, despite The Times’ strategy to charge users an access fee of £1 per day or £2 per week. Initial reactions to Kantar’s survey suggested £5 per month would be "about right".
A paid-for digital strategy is clearly not without risks, and within this there is a need for publishers to robustly weigh up the risk/return equation.
The four core proposals of paid content
Paywalls
Users pay upfront to gain access for core content online. This option is already successfully employed online by both the Wall Street Journal and the Financial Times. Given their niche business markets, doubts remain whether this subscription model is transferable to more mainstream news providers. Paywalls are also being trialled by Axel Springer for a selection of their regional titles in Germany, and News International has made its intentions clear.
Micropayments
These take a pay-as-you-go approach where web users pay for the articles they access on a click-by-click basis. No-one in the general market is yet known to be actively implementing this strategy.
The hybrid model
This strategy is more aligned with where the New York Times is heading. In what the NYT is calling a "metered solution", the hybrid model acts more as a velvet rope than an outright entry fee. Newspaper subscribers gain free VIP access to digital content, whereas regular users are restricted to browsing a limited number of articles before having to pay.
Paid-for news mobile apps
The Guardian achieved more than 100,000 downloads of its mobile app within the first two months of launch (priced at £2.39), and reports suggest plans are in place to further enhance the app to enable the publisher to introduce a monthly charge. This revenue stream may be slightly better equipped for monetisation given the existing (and trusted) payment infrastructure already in place. Despite this, some providers are offering free mobile apps, such as Sky News which has had more than one million downloads.
Kantar Media has developed a quantitative price optimisation model to help publishers pinpoint the crucial price-point to charge. By applying choice-based conjoint analysis, Kantar Media can identify the optimal price-point for subscriptions and forecast what impact this is likely to have on website use and new brand audiences.