A sign of the Times?: Paying for news online

If this were a news article, would you pay to read it?

If so, under what conditions would you consider it? Does it matter what brand is presenting the news or the source of information when weighing your willingess to pay for content online?  How much would you be willing to pay?

These are just a few of the questions I’ve been studying in recent months.  Regardless of whether you think you should pay for news content on the Web, a majority of newspaper executives plan to start charging online in the next year.

As a result, the debate over implementing micropayments, where a user pays  a small fee per article, has resurfaced in recent months.  As a journalism scholar, I’ve been examining micropayments from many angles.

First, I’ve been working with colleagues of mine in the Grady College to gauge consumer willingness to pay for online content through a series of surveys and experiments.

Earlier this month, my co-author Amy Sindik presented findings of one of our studies at the Association of Educators in Journalism and Mass Communication Mid-Winter conference in Norman, Oklahoma.

The findings of our study, “Newspaper Micropayments and Millennial Generation Acceptance: A Brand Loyalty Perspective” are quite promising for The New York Times, which plans to charge for content next year.

The Times website is a trusted brand, and that brand trust has a statistically significant relationship to willingness to pay for Times’ content online.  Overall, The New York Times itself is a powerful brand that fosters consumer loyalty and gratifications.  Overall, The New York Times clearly appears to be the most strategically poised brand name newspaper to implement a paid system.  Given that consumers are more willing to pay for online content from the Times than any other newspaper, the implication might be that if doesn’t work for The New York Times, it can’t work for anybody.

On the flip end, our study suggests that local newspapers may have a tougher time nudging consumers toward a willingness to pay for online news.  Only 3% of respondents indicated a willingness to pay for content from the local newspaper.

Regardless, local newspapers will want to watch with interest as The New York Times’ foray into online content plays out over the next year.  As an industry leader, and arguably the most viable and credible newspaper brand, the success or failure of The New York Times payment effort could be a harbinger for the rest of the industry.  Our study suggests that readers are more likely to pay for online content from the Times than any other local, regional or national newspaper.

The plan from the Old Gray Lady, however,  is a “metered” model, not a micropayment model.  There are many experts who believe micropayments will never work.  I’m not convinced.  Under the right circumstances, micropayments could succeed.  I’ll outline how next month in Austin.

Along with my co-author, Jameson L. Hayes, I’ll present The Case for a Modified News Micropayment Model on the Social Web at the International Symposium on Online Journalism.

In the meantime, feel free to start a conversation and join the discussion on the future of online news payments.

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8 Responses to “A sign of the Times?: Paying for news online”

  1. Martin Riley Says:

    Some thoughts for your presentation at the International Symposium on on-line journalism. In an article in Time Magazine in 2009 Walter Isaacson described what he felt was required of a micropayment system as follows
    “We need something like digital coins or a digital wallet. There should be a one-click system with a really simple interface that will permit impulse purchases”.
    Walter Isaacson could have been describing CarrotPay where Webcoins in a variety of currencies both real and virtual are stored in an Electronic Purse which resides on the users desktop and where micropayments as low as
    1 cent can by made with a single click authorisation. There is no logging in, delivery of digital product is immediate and processing charges for the merchant are at a fixed rate of 2.5%

    • graybs Says:

      Thank you for your comments. We do indeed reference the Isaacson article in our paper. Having an easy to use “digital wallet” type system is a vital component to our model. The paper will be available on the #isoj website next month. We look forward to sharing it. Thanks once again.

  2. Rolka Says:

    Hmmm, an interesting topic Geoffrey! The “micropayment” idea is an intriguing one. I imagine that it would have to be incredibly easy for the consumer though for it to work.

    Thoughts:

    #1. You’re right about intense brand loyalty/trust. A few would pay for the NY Times writing. Very very few will for local news sites. No doubt.

    #2. The consumer would have to have the option of simply filing a credit/debit card and then having it auto-bill for each article read. Just like downloading on iTunes. No clicks should be involved for the reader whatsoever in terms of the actual payment process.

    #3. What’s a fair price for a single article? Is length taken into account? Interesting. If your average newspaper costs $1 at the stands and contains in excess of 100 articles…..is a penny per reasonable?

    #4. These sites that try this, including The Times, better get some mighty fine firewall protection running as I’m sure some internet folk will hack the articles or all go in on one account and post the articles across blogs and other sites for free.

    After all, look how much free, illegal downloading goes on for music online. Why would people pay for news when they don’t have to AND it’s a much easier process than downloading song files.

    • graybs Says:

      Thanks for writing Aaron. Lala.com is an interesting example from the music industry, where people opt to pay 10 cents for music files that are in the “cloud” (or 99 cents for an MP3 download) largely because the pricing point is so low/favorable.

      If most companies in the news industries move toward putting their content behind paywalls there will be fewer (legal) substitutes. We also believe that adding the microearn option would help decrease piracy to an extent. If you can earn money, even in small increments, you have an incentive to not commit copyright violations.

  3. Continuing the ISOJ discussion about ‘MNMM’ « Graybs Says:

    […] whether consumers are willing to pay for news is a hotly debated topic, to say the least.  I’ve conducted survey research asking whether people are willing to (micro)pay for news, and under what conditions. I’m not […]

  4. Modified News Micropayment Model « Jameson Hayes' Blog Says:

    […] whether consumers are willing to pay for news is a hotly debated topic, to say the least.  I’ve conducted survey research asking whether people are willing to (micro)pay for news, and under what conditions. I’m not […]

  5. Philip Odegard Says:

    Ok seriously, I need to get some sleep as its almost 4am here, just wanted to comment with my appreciation for reading your posts. G’nite all!

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