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How much is the news worth? It's a question that's weighing on the minds of many news media execs these days as they grapple with the challenge of figuring out new business models.
Paid content looks to be a big part of those new business models, but there's one question that still dogs execs: just how big is the market for paid news?
In the UK and US at least, the numbers don't look so good. According to a study by the Boston Consulting Group, just under half of regular internet users surveyed in both countries indicated that they'd be willing to open up their wallet for the news. This includes those who would pay for mobile access.
The UK and US tied for last place in the nine countries the Boston Consulting Group surveyed. And for US news media execs, the news doesn't get much better: the average amount those surveyed said they'd be willing to pay was a modest $3/month, thanks in large part to a highly-fragmented market in which free content is likely to always be available.
Now, if you're a media exec, the idea that 48% of regular internet users might pay for your content may not sound so bad. But wait. Another study by Forrester Research found that "most consumers (80%) say they wouldn't bother to access newspaper and magazine content online if it were no longer free". Ouch,
Which study is likely to be more accurate? That's hard to say. But I think a question needs to be asked: does it really matter?
The status quo isn't working. Industry execs are well-aware that advertising alone isn't a reliable source of revenue and that lots of things need to change. So why not just get on with it? While nobody is suggesting that newspapers, for instance, rush to implement pay walls that aren't well thought out, one has to wonder if all of the talk about change in the industry is ever going to actually result in change. At this pace, it seems that huge chunks of the news media will be bankrupt before action is taken.
The truth is that dozens of studies looking at the willingness of consumers to pay for news content can be conducted without answering the questions that decision-makers need to address. That's because there aren't one-size-fits-all solutions. A newspaper like the New York Times, for instance, faces different challenges than, say, a local daily.
Instead of focusing on how many people might pay for news content, and what they might pay, execs should focus on:
- The packaging/composition of their paid and free offerings.
- Value proposition.
- Market positioning.
In other words, they need to focus on developing real products. They shouldn't worry about how many consumers answer yes or no to the question "Will you pay for news content?" That doesn't matter because few products sell themselves and great businesses aren't created with top-down assumptions about market size. Great businesses are created when demand and needs are identified and met.
There is a market for paid news content out there. The companies that are interested in building it will succeed; those that are merely interested in how big it currently might be won't.
Photo credit: Stephen Cummings via Flickr.