Nielsen: Consumers Will Spend Money Online On Certain Content, But News Has Become A 'Commodity'
While most consumers prefer their online content free, many are willing to open their wallets and purses for particular offerings, according to new research from Nielsen.
What sorts of content are consumers willing to pay for online? Mostly movies, music, and games, according to a survey of some 27,000 consumers across 52 countries.
Meanwhile, content created online -- like blogs, podcasts, and video -- are the least likely to attract consumer dollars, Nielsen finds.
In between are an array of news formats -- newspapers, magazines, Internet-only news sources and radio news and talk shows -- created by professionals, relatively expensive to produce, and, in the case of newspapers and magazines, commonly sold offline.
"Yet much of their content has basically become a commodity, readily available elsewhere for free," notes Nielsen. As a result, nearly eight out of every 10 respondents -- 79% -- said they would no longer use a Web site that charges them, presuming they can find the same information at no cost.
Meanwhile, more than three of every four survey participants -- 78% -- felt that if they already subscribe to a newspaper, magazine, radio or television service they should be able to use its online content for free.
That said, 62% of consumers said that once they purchase content, it should be theirs to copy or share with whomever they want.
Overall, 71% of global consumers said online content of any kind has to be considerably better than what is currently free before they will pay for it.
With regard to consumers, Nielsen notes: "As a group, they are ambivalent about whether the quality of online content would suffer if companies could not charge for it." Nearly evenly split, 34% thought so, 30% did not, while the remaining 36% expressed no firm opinion.
Regardless, publishers continue to experiment with a range of payment models, from full-service subscriptions to individual transactions, or micropayments. The New York Times, for one, is planning to debut a "metered" pay model next year, which will require subscriptions for high levels of content consumption.
Among those surveyed by Nielsen, about half -- 52% -- favor the latter, although the researchers admit that micropayments "have proved cumbersome to implement in the past."
Either way, only 43% of respondents said an easy payment method would make them more likely to buy content online.
On the other hand, 47% of respondents said they would be willing to accept more advertising to subsidize free content.
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This study should serve as a wake-up call to the news industry. Google doesn't make its money by charging people for access to content. It makes its money by selling advertising through an auction system. The market determines the value of the advertising medium.
Where news organizations have to move (and move quickly) is in the area of improving content delivery and the user experience. Most news sites have absolutely horrible interfaces. They just don't get how online marketing really works.
It's difficult to judge from the information provided in the free report how accurate this assessment is. In particular, asking consumers "to what extent are you willing to pay" for products or services is a demonstrably gross, and often inaccurate, indicator of price sensitivity -- which is the core construct at issue here.
Despite my arguments with method, however, I believe that the general premise here is correct: The majority of news online has been commoditized, not least because it is nauseatingly homogenized by design. Low barriers to switching certainly help cultivate audience churn, but the lack of differentiation among many sites is painful to see.