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

UPDATE – 12/18/09: This article on the A2/M2™ Three Screen Report and related documents have been updated to include data from the full time period of the quarterly report, resulting in increased numbers for in-home, and time-shifted TV viewing. The previous report did not include viewing from the first week of the new Television Season.

Nielsen’s latest A2/M2™ Three Screen Report – a quarterly analysis from our Anytime Anywhere Media Measurement™  initiative – shows considerable year over year growth in terms of time spent for DVR (up 22.5%) and online video (up 34.9%) in Q3 2009. Given the consistent spike in usage among the three screens of television, Internet and mobile, consumers are clearly adding video platforms to their schedule, rather than replacing them.

“Americans today have an insatiable appetite for not only content, but also choice,” says Nic Covey, director of cross-platform insights at Nielsen. “Across all age groups, we see consumers adding the Internet and mobile devices to their media diet — consuming media anytime and anywhere possible.”

What We Watch Weekly
For the first time this quarter, Nielsen reports how much time the average American spends in a typical week with TV, Internet and mobile devices. Without a doubt, consumers of all ages spend the majority of their video time (nearly 99%) in front of the television, while DVR and online video are becoming more widely used.

• In 3Q09, the average American watched more than 31 hours of TV per week, with 32 minutes spent in playback mode with their DVR.
• In addition, each week the average consumer spent a little more than 4 hours on the Internet and 22 minutes watching online video.
• The average consumer spent 3 minutes watching mobile video each week.

The TV and Internet figures in this report are calculated using Nielsen’s National TV and Internet panels, which are measured electronically and reported on a regular basis. The Mobile phone figures are collected by Nielsen via a quarterly survey and give a firsthand look at how early adopters self-report their usage of mobile video.

Other Highlights of the Report

• Almost 99% of video content watched in America is still done on traditional television
• DVR and Online Video continue to show solid growth – up 22.5% and 34.9% respectively in time spent from Third Quarter 2008
• Teens continue to watch mobile video the most, at just over 7 hours per month, though mobile video is not just a young medium, as mobile users Adults 45-54 report viewing nearly 3 hours of video on their mobile phones

• Download Nielsen’s A2/M2™ Three Screen Report

For two days, global stakeholders from government, academia and media met to discuss trends in youth media and their implications on the media diet and educational processes of today’s youth. As part of the dialogue, Covey presented Nielsen’s latest understanding of media usage among teens.

The video below features a Q&A session that followed Covey’s presentation.

They might be on the Internet, or gaming or texting… but they could also be be watching live TV, listening to the radio or reading a newspaper. At the annual What Teens Want conference in New York, The Nielsen Company presented How Teens Use Media, which argues once you look past the hype – American teens are not as alien in their media usage as you might expect. Sure, it might sound hip and trendy to suggest they’re too busy texting, Twittering or LOL-ing to be engaged with traditional media, but ultimately, the research proves otherwise.

“The media experience is broadening for all consumers, not just teens,” said Nic Covey, director of insights for The Nielsen Company. “Looking at our research across markets and media, we see that, contrary to popular assumption, teens are actually pretty normal in their usage, and more attentive than most give them credit for.”

The comprehensive report combines insights from Nielsen’s global resources in Television, internet, mobile, gaming, moviegoing, radio, newspaper and advertising research to debunk myths and provide the hard facts around how teens use media.

Key Takeaways

• Teens are NOT abandoning TV for new media: In fact, they watch more TV than ever, up 6% over the past five years in the U.S.
• Teens love the Internet … but spend far less time browsing than adults: Teens spend 11 hours and 32 minutes per month online. Far below the average of 29 hours and 15 minutes.
• Teens watch less online video than most adults, but the ads are highly engaging to them: Teens spend 35% less time watching online video than adults 25-34, but recall ads better when watching TV shows online than they do on television.
• Teens read newspapers, listen to the radio and even like advertising more than most: Teens who recall TV ads are 44% more likely to say they liked the ad.
• Teens play video games, but their tastes aren’t all for the blood-and-guts style games: Just two of their top five most-anticipated games since 2005 have been rated “Mature.”
• Teens’ favorite TV shows, top websites and genre preferences across media are mostly the same as their parents: For U.S. teens, American Idol was the top show in 2008, Google the top website and general dramas are a preferred TV genre for teens around the world.

For additional insights, download a free copy of How Teens Use Media