Ideal pay-wall fee may be less than you think
In work conducted in the course of his newly completed study for the American Press Institute, Greg Harmon of Belden Interactive gathered some of the first actual sentiment from real consumers as to what they might be willing to pay for online content.
Harmon cautions that his early soundings are not sufficiently complete to draw any hard conclusions, so consider yourself warned. But real-world market intelligence has been so rare in the emotional paid-content debate that it’s worth discussing, with the explicit understanding that more research properly lies ahead.
Here is what Harmon found in quizzing a sample of 450 people in what he called one “typical” newspaper market:
Asked what they would spend for a monthly subscription to the newspaper’s site, the respondents willing to pay for news said that they would cough up an average of $4.64. But, Harmon noted, 211 respondents, or fully 47% of the group, said they would not pay at all.
Repeating for emphasis: Forty-seven percent said they would not pay at all.
The price point Harmon identified contrasts significantly with the assertion by Steven Brill, the founder of Journalism Online, that newspapers could charge an average of $8.33 per month for access to secured websites.
In announcing last month that some 500 publications had signed non-binding letters of intent to explore the possible use of his planned payment service, Brill said the publishers (whom he declined to identify) collectively stood to generate $900 million in content payments. This week, Brill upped the number of unnamed papers to 1,000.
If Harmon’s findings prove to be accurate, then Brill’s $900 million estimate would be aproximately 1.8 times the size of the market opportunity suggested by Harmon’s research.
A shortfall in anticipated online content payments of this magnitude would be a major setback for publishers, given that Brill’s projection is equal to almost a third of the $3 billion in online revenues the industry books in a year.
If a substantial number of consumers shunned newspaper sites requiring payment, the revenues gained from selling access to content might not make up for the decline in advertising sales that would result from the resulting drop in traffic. The failure of pay-wall revenues to equal or surpass online ad sales would spell disaster for any publisher.
In fairness, if must be noted that Brill may be right and Harmon’s work-in-progress research may be wrong.
Because no one knows for sure, it is perhaps understandable that Harmon discovered nearly half the publishers in the United States can’t decide what to do about charging for the costly-to-produce content they now give away for free.