A 5% takeup of paid news - Freemium Ahoy?

Tuesday, September 22. 2009

A 5% takeup of paid news - Freemium Ahoy?

Research reported in the Grauniad from Harris that only 5% of people would pay for news (the research was sponsored by Paid Content, which I find ironically deeply amusing....):

If their favourite news site begins charging for access to content, three quarters of people would simply switch to an alternative free news source, people who read a free news site at least once a month told us.

- Just 5% of those readers would choose to pay to continue reading the site.

- 8% would continue reading the site's free headlines only.

- 12% of respondents are not sure what they would do.

This is a poke in the eye for News International's Rupert Murdoch's plan to force people to pay to read online newspapers. The gamble must be that there will be no other sites left standing as free alternatives, or maybe buy them all - but in the UK the BBC will exist:

n Britain, there will always be the BBC - unless the Murdoch-inspired anti-BBC propaganda forces it to close or to reduce its online service. I don't see how any paper will circumnavigate that problem.

In the US, there is no equivalent to our public service broadcaster. So let's imagine that Murdoch's attempt by his own News Corporation to stitch together a digital news cartel comes off.

Except, in the US there is Google - makes its money by advertising and not public financing, but uses it to hand over content for free as well.

Still, 5% is 5% - thats a similar number to what seems to emerging as a rule of thumb for Freemium use, so that probably points to the answer - offer extra value and you will get a 5% freemium user base. Much cheaper than trying to Bunker-Hunt the news market and buy them all. (Buying Google will be a tad expensive of course......)

Posted by Alan Patrick in Dis - Aggregation at 10:16 | Comments (2) | Trackbacks (0)

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I haven't done the analysis, but it's entirely possible that the BBC paradoxically makes it easier for Murdoch (or other) to hold together a pay-for-news cartel in the UK.

Without the BBC, a cartel would perhaps crumble because there's always an individual incentive for cartel members to break away and try to take the lion's share of the advertising funded market. Classic prisoners' dilemma territory.

With the BBC there, said market is just not as attractive, any pageviews get shared somewhat with the BBC. So the incentives to break away from the cartel could be lower.

Of course, this depends on the size of that market compared to the pay-per-view market, number of players, and so on. Someone with a better handle on the particular numbers here could better analyse it.

But it's not immediately obvious to me that the BBC would be a bad thing for the cartel instigators here.

#1 Ben Griffiths (Homepage) on 2009-09-22 21:59 (Reply)

Interesting thought Ben, and you may be right re game theory. Also, if you took the BBC away its not clear the amount of Ad money in the system goes up, so they may find more inventory is competing for the cash as new commercial players fill the BBC space, reducing Ad rates.

#2 alan p on 2009-09-24 07:32 (Reply)

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