The big chink
in the idea of paywalls
Online readers still believe content should be free
By Diego Vasquez
Feb 23, 2010
Newspapers convinced that walling off their content represents a promising new stream of revenue may be in for a disappointing reality check. In a worldwide study released last week, Nielsen found that 85 percent of respondents would prefer that free content remain free. That's probably not a huge surprise, but the numbers get even more discouraging: Fewer than 20 percent of respondents said they'd be willing to pay for any of the 13 subcategories broken out by Nielsen, including music, games and social networks. Less than 10 percent said they would pay for newspapers, and 10 percent said they'd pay for magazines. The problem may be simply that consumers have been trained to expect things for free on the web. While newspapers could eventually convince them to pay for these services, it may take years to find a pay model that is acceptable to both buyers and sellers. Jon Gibs, vice president of insights, online and cross media at Nielsen, talks to Media Life about why people are more likely to pay for professionally produced content online, why that does not apply to radio, and why people in developing countries have less problem paying for online content.
What did you find most surprising or most interesting about this report?
I think the thing that stuck out most is something we’ve seen again and again. On the surface, consumers don’t believe they should have to pay for content online. That of course flies in the face of the needs of the industry overall.
What this points out to us most is that online brands have quite a bit of work to do to convince consumers about the value of their content.
With that said, though, we know that when given a choice between having to pay or losing content that’s important to them, consumers would rather pay for the content.
What are the biggest factors consumers cite in being unwilling to pay for content?
Because it’s always been free, and therefore the content should always be free.
That’s the pervasive opinion in the marketplace, and now the onus is on the media companies to really explain their value to consumers and work with different models to see how payment could work in different ways.
One key element that backs that up is that if you look globally about a third of the population believe that the quality of content will decline if companies aren’t able to charge for it. Although consumers may say they have reservations about payment, they do understand there is a value here and that they might lose that.
What sort of content are people most willing to pay for and why?
I think it really varies. I think the better numbers are what consumers have already paid for.
About 3 percent of the population have paid for a wide variety of content. Specifically, we tend to see more gravitation to paying for those types of sources they have to pay for offline, such as newspapers and magazines. Whereas if consumers are in the marketplace offline and see the content for free, such as radio, they’re less inclined to pay for that online.
And then there’s the type of content you should always have to pay for theoretically, such as movies and games, where there is an explicit understanding that most consumers feel the probably ought to pay for it.
Why are people least likely to pay for so-called homegrown online content?
Again, we’ve seen historically is it’s more of a perception issue than anything else. As perceptions change and costs change, realities will have to change as well.
If people are less likely to pay for something, such as radio content or online newspaper content, that they have been getting for free, is there any way producers of this content can convince them otherwise?
Yea, I’m sure there is.
What we’re going to see is that some people will be willing to pay for some content. The desire and the amount will have to do with the value of the content. The challenge and the thing we’ll have to understand is that you won’t be able to charge for all online content.
If I had a blog out there, it’d be ridiculous for me to charge for it. So there has to be a realization that different content has different value.
Are people willing to pay for The Wall Street Journal? They have in the past. But how about The Huffington Post? We’ll have to see.
Why is there such a strong conviction that if you pay for something online, it should be yours to share and do what you want with?
I think that’s a fundamental extension of the offline model.
If I buy a book, it’s mine and I can give it to my mom if I want. If I buy a CD, I can sell it at a used CD store. They say look, I’ve had control of this, I’ve had books and CDs at my house, so why are you going to limit the value of that content to me when historically I’ve been able to do with it as I like?
The problem with that sentiment is that I only had one book before. I couldn’t give it to many people at once; it was physically impossible. This isn’t functionally the same thing because so many copies can be made.
Did you find any regional differences in who is willing to pay for content and who is not? What influences that?
What we do tend to see is in general that those in the Asia-Pacific region have started paying for content more than others.
And I think what we’re seeing that people are more willing to pay for mobile content because the idea of getting content on a mobile device is different from getting it on a PC.
Are developing markets more likely to embrace a pay-for model?
I think that if there’s no historical idea of content being free it’s easier to charge people for it. Either from a geographic sense or a new device sense, those are the markets where you will be most likely to see low resistance for for-pay models.
Consumers can be trained to pay.
Are people more comfortable with systems of micropayments compared to flat fees? Why or why not?
I think it totally depends on the type of content. For items where micropayments are appropriate, low-cost items in general like music tracks or articles, there is some built-in comfort. But for areas where there’s higher consumption, a real payment or subscription model might be better there.
Why are men slightly more willing to accept more advertising on a site to support the cost of content?
I think that it has more to do with the sites they’re used to visiting.
When you have certain environments that are a little more ad heavy or a little more payment heavy, sports sites for example, where you have a history of paywalls and different forms of advertising, they’ve trained the population slightly differently.
You also have a built-in young male population that’s already paying for a lot of digital content.
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