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Evolving Attitudes to Paying for Online News

Finally for this session and for ECREA 2016, Richard Fletcher directs our attention to the question of paying for online news, drawing on a six-country study of online pay models. Such models have been a major concern in the industry for a long time, but have remained elusive; there are also few findings in the research that are consistent across different national media systems.

When newspapers went online in the mid-1990s, they decided that there was a need to make online news available for free in order to grow their audiences and eventually convert them into paying customers; this has not panned out as expected, however. Large audience segments are fundamentally disengaged from specific news brands; the online advertising market is now controlled by large companies such as Facebook and Google; and a strong reluctance by users to pay for online news persists.

Nonetheless, many news organisations have continued to explore pay models, highlighting the negative impact of the 'culture of free' on the news industry. But any kind of price tag that publishers want to put on online news will always be compared by news users with the established reference price tag of zero, which is used by news audiences to make their usage decisions.

People use observed prices to make their purchase decisions; in this, however, zero is a 'special' price as consumers associate greater benefits with products that are available for free than they do with any products that are available on a for-pay basis. The free availability of news especially from public service media organisations is suspected to enforce this reference price particularly strongly; at the same time, consumers used to paying for offline news and older consumers may be more willing to pay for online news as well.

The present study utilised data from the 2015 Reuters Institute Digital News Report in order to explore audiences' willingness to pay for the news; generally this ranged from 11% in the U.S. to 6% in the U.K. No more than 2% of these in any country indicated that they were very likely to pay for online news in future. Public service media users, surprisingly, were generally more willing to pay for the news than non-users; print news purchasers were more willing to pay for online news as well; for older users the situation was some what more variable.

This means that consumers who have a reference price above zero for offline news are also more likely to have a reference price above zero for online news. At the same time, consuming online news from public service media does not appear to by itself create a reference price of zero for other types of online news. Similarly, younger users may still have a reference price above zero in spite of their experience of free online news content, perhaps because they are used to paying for other forms of online content.

Thus, people might have different references prices for different types of news coverage: breaking news content may be expected to be free, for instance, while they may accept that niche and in-depth coverage will not be free. How can differences between paid-for and free content be marketed, then?