Will consumers pay for online news and entertainment they now get for free?

Nielsen asked more than 27,000 consumers across 52 countries, and the answer is a definite “maybe.” As expected, the vast majority (85%) prefer that free content remain free. Yet there are opportunities to be found in the details. Indeed, when asked to focus on specific types of content, survey participants are more willing to at least consider paying for particular categories, especially if they have done so before.

Will Pay / Won’t Pay
Online content for which consumers are most likely to pay—or have already paid—are those they normally pay for offline, including theatrical movies, music, games and select videos such as current television shows. These tend to be professionally produced at comparatively high costs.

Consumers are least likely to pay for content that is essentially homegrown online, often by other consumers at fairly low cost. These include social communities, podcasts, consumer-generated videos and blogs.

In between are an array of news formats—newspapers, magazines, Internet-only news sources and radio news and talk shows—created by professionals, relatively expensive to produce and, in the case of newspapers and magazines, commonly sold offline. Yet much of their content has basically become a commodity, readily available elsewhere for free.

Compensation Conditions

Whatever their preferences, consumers worldwide generally agree that online content will have to meet certain criteria before they shell out money to access it:

• Better than three out of every four survey participants (78%) believe if they already subscribe to a newspaper, magazine, radio or television service they should be able to use its online content for free.
• At the same time, 71% of global consumers say online content of any kind will have to be considerably better than what is currently free before they will pay for it.
• Nearly eight out of every ten (79%) would no longer use a web site that charges them, presuming they can find the same information at no cost.

• As a group, they are ambivalent about whether the quality of online content would suffer if companies could not charge for it—34% think so while 30% do not; and the remaining 36% have no firm opinion.

• But they are far more united (62%) in their conviction that once they purchase content, it should be theirs to copy or share with whomever they want.

Despite the growing consensus that the media may only be able to generate appreciable online revenues by charging consumers for content, there is little agreement on just how to do that. Companies are experimenting with a range of payment models, from full service subscriptions to individual transactions, or micropayments. Among those surveyed by Nielsen, about half (52%) favor the latter, albeit micropayments have proved cumbersome to implement in the past. But a more manageable system may be no more enticing. Only 43% say an easy payment method would make them more likely to buy content online.

Regardless of what systems they choose, media companies will almost certainly not abandon advertising; and consumers will doubtless still see ads along with paid content. For the 47% of respondents who are willing to accept more advertising to subsidize free content, that may be tolerable. Yet it will probably not sit well with the 64% who believe that if they must pay for content online, there should be no ads.

Find Out More

• How do responses from consumers around the world compare?
• Are developing markets more likely to embrace a pay-for model?
• Does age factor into a willingness to pay?
• Which payment methods are the most acceptable?
• Where are the best advertising opportunities?

• Download Changing Models: A Global Perspective on Paying for Content Online

Nic Covey, Director of Cross-Platform Insights, The Nielsen Company

The big question in the new Internet decade is whether consumers will pay for content online.  It turns out that millions of global consumers are, in fact, willing to pay up… but not for everything.  For example, consumers are three times as likely to pay for online music than for a blog.

Consumers weigh in
Nielsen recently conducted a global survey of more than 27,000 consumers in 54 countries to examine attitudes about paying for online content and to determine which content types consumers were most willing to support financially.  The findings show that many consumers are willing to pay for online content or are open to increased advertising to pick up the costs, but attitudes vary greatly by geography, demographics and content type.

Paying for (perceived) quality
Consumers show a higher propensity to pay for music, movies, games and professionally produced video than for podcasts, blogs or consumer generated video.  This validates the notion that consumers globally still place more value on content produced by “professionals” than by other consumers.  Likewise, they are more inclined to spend money on what they already pay for, rather than on what they currently get for free.

While it may seem obvious that consumers are more willing to pay for professional content than amateur, the reality shouldn’t be taken for granted: to consumers, not all content is created equal.

Bring on the ads (in the Middle East, at least)
Overall willingness to pay for online content may surprise some, but more surprising yet is the extent to which consumers in some markets are still open to more advertising.  Nearly half (47%) of global respondents said they would put up with more ads to subsidize free content, but that willingness swings by market.

While 57% of respondents in the Middle East, Africa and Pakistan are open to the more advertising – as are 55% of those in Asia Pacific – just 40% of North America respondents and 39% of European respondents agree.

Later this month we’ll release the broader findings of this study.  The paper will reveal many of the regional, demographic and content nuances of willingness to pay for online content.  The key takeaway is this: across geographies, demographics and content types, consumers think very differently about how they’ll pay for content.  Accordingly, monetization models will have to be flexible – there will have to be more, not fewer, options to supporting the cost of content.

Predictions

• The future of monetization will include a much broader range of revenue models than exist today
• Good and useful content will always find patrons.

A timely conversation
On Friday, January 8, at the International Consumer Electronics Show (CES) in Las Vegas, I’ll join a panel of colleagues to discuss “Predictions and Opportunities for Media Monetization.” CES is an appropriate place to have this conversation: there we’ll see the latest tech gadgets that will offer consumers even more anytime, anywhere access to both free, and paid content.

“While our data does show that print newspaper readership is slowly declining, it also illustrates
that reports about the pending death of the newspaper industry are greatly exaggerated,” said
Gary Meo, Scarborough’s Senior Vice President of Print and Digital Media Services. “Given the
fragmentation of media choices, printed newspapers are holding onto their audiences relatively
well.”

According to the demographic data in the study, newspapers continue attract educated, affluent readers.
In an average week:

• 79% of white collar employed adults read a printed newspaper
• 82% of adults with household incomes of $100,000 or more read a printed newspaper
• 84% of adults who are college graduates or more read a printed newspaper

Washingtonpost.com was the leading newspaper website, with 24 percent of adults in the local market visiting the newspaper’s web site in the past week. 

Weekly Print Audience 

 * Gannett Wisconsin Newspapers include Appleton Post-Crescent, Fond du Lac Reporter, Green Bay Press-Gazette, Manitowoc Herald Times Repoter, Oshkosh Northwestern

Weekly Website Audience 

Integrated Newspaper Audience

Read the full press release.

“The effects of the global financial crisis have certainly caught up with the ad sector in this latest quarter, especially in North America and Europe where virtually all of the territories we reported on recorded negative growth,” said Ben van der Werf, managing director, Global AdView at Nielsen.  “Even China, which usually sees a boost in ad spend during the Chinese New Year, posted subdued growth for the quarter.”

All four major media types – newspapers, magazines, TV and radio – posted drops in ad spending, with print media leading the decline.  Magazines fared the worst (-17.4%) followed by newspapers (-9.1%).   In North America, magazine ad spend was down 22.2 percent, while newspapers were off 15.6 percent.

Not surprisingly, the automotive category recorded the largest loss in ad spend – down 19.9 percent – followed by financial services (-16.7%) and clothing (-15.7%).

Read the full Global Ad Spend press release.

Main media, defined by Nielsen as free to air TV, newspapers and magazines, increased 13 percent in 2008, while all other media (radio, outdoor, pay TV, cinema and other) posted an 8 percent increase for the year.

In 2008, three markets recorded declines in ad spend versus 2007, while another posted no growth:

• Taiwan (-11%)
• South Korea (-8%)
• Thailand (-4%)
• New Zealand (0%)

Meanwhile, five countries showed solid double-digit growth:

• India (29%)
• Indonesia (19%)
• China (17%)
• Malaysia (12%)
• Philippines (11%)

Other key findings from Nielsen’s research:

• A total of US$115.2 billion was spent on advertising in the twelve markets monitored.
• A total of US$108.4 billion was spent on “Main Media” advertising, with television comprising 70 percent of expenditures.
• Television ad spend grew 15 percent. Only three countries recorded declines in TV ad spend, while five countries posted solid double-digit growth in this category.
• Although Americans are being deluged with stories of newspapers closing, cutting back and filing for bankruptcy, the medium recorded 9 percent growth, with declines in four countries.
• Magazine ad spends, while still comparatively small, increased 10 percent, with India leading the way.
• Radio dominated “all other media” with a 47 percent share of spend and a 12 percent increase for the year.

Over the next few days, Nielsen Wire will dig deeper into the numbers for Australia and New Zealand, East Asia, Southeast Asia and India.

Visit Editor & Publisher for the full list of the top 30 news sites and online newspaper sites.

“This data begs the question: is the constant negative news feed on the industry warranted when newspapers are actually being read by three-fourths of the adult population? When you look at audience data, it seems irrational that advertisers are leaving newspapers because the numbers speak for themselves,” said Gary Meo, senior vice president, print and digital media, Scarborough Research.

“The economic situation we’re in has had many casualties, banks, the housing market, free soda, the works. But one of the most notable has been newspapers. I’ve posted in the past on the fate of the Christian Science Monitor, and the Rocky Mountain News has now said its goodbye as well. I think it is safe to say that these are not the end of a trend; they are the first casualties of a much longer downward decline…

…I would like to invite all of the members of this community to post their ideas on the future of news, particularly as it is related to emerging media (i.e. not TV). I’d like to start by giving an example from the New York Times online. They have provided an interactive map taking a look at immigration patterns into the US over the past 120 years. What I think is impressive is that they have made this the centerpiece for ongoing online discussions among readers; they have journalists write pieces about the trends and they have op-ed writing columns. They are integrating all of the strengths a news source can provide: great data collection, objective reporting, opinion, and adding social media.”

Read the whole post to submit your thoughts on the future of news.

The NY Times’ website drew just over 20 million unique visitors in November — a 10% increase over unique traffic to the site last November.

Meanwhile, MSNBC saw 41.9% year over year growth, reaching 41.8 million unique visitors last month, according to Nielsen. 

MSNBC edged past CNN Digital Network (CNN), which drew 41.5 million unique visitors during the month — a 27% increase over its November 2007 unique audience.

Despite the conclusion of the U.S. presidential election, The Huffington Post (ranked #21) continued to see the fastest growth among the top 30 sites. The site’s unique audience increased 270% over November 2007 — to 7 million unique visitors.  However, Huffington’s unique audience declined from October 2008, when the site’s unique visitors grew by 448% year over year to 8.1 million.

Fox News Digital Network was the second fastest growing site among the top 30 — up 131% over November 2007.

Among the top 30 newspaper sites, the Minneapolis Star Tribune (ranked #12) saw the fastest growth.  The site’s unique audience increased 265% over November 2007 — to 3.5 million unique visitors. 

The Detroit News (ranked #25) was the second fastest growing site among the to 30 — up 232% over November 2007.

Overall, all but one of the top 30 online news outlets and all but four of the top 30 newspaper websites attracted larger online audiences in November 2008 than they did the prior November.

View the top 30 newspaper websites for November in Editor & Publisher.

View the top 30 online news outlets for November in Editor & Publisher.

Read coverage of Nielsen’s findings on MSNBC.com.