Consumers to pay for online news
New York: 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).
The research 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 U.S. 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).
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.
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