A new report from Nielsen (FT article – subscription required) suggests a third of people around the world (in 52 countries) would be happy to pay for online content.
While this will please many in the newspaper business (notably Rupert Murdoch, who is introducing paywalls for some of News Corporation’s papers this year), the research findings are not quite the equivalent of a reprieve for struggling newspapers.
The bottom line for newspapers is how much they can earn against their operating costs. The margins once enjoyed by papers have been eaten up by plummeting circulations, reducing the revenues they generate from both sales and advertising. This has been exacerbated by people moving online to read their news (and the associated loss of loyalty it is presumed this entails).
Online advertising just doesn’t generate revenues in the way it traditionally did offline, and even online advertising sales have been dropping (these Newspaper Association of America figures make depressing reading if you are in the newspaper industry, and highlight how newspapers online are competing with specialist sites like Craigslist or Gumtree for classified advertising).
So making people pay for newspaper content online is seen by many as the solution (notably not by Alan Rusbridger at The Guardian). As readers of this blog know, I believe this is the solution. Either way, the question that has yet to be answered is this: even if a third of people say they are happy to pay for online content, will the revenue this could potentially generate cover the costs of running a newspaper?
It comes down to a balance between the price newspapers can charge, and the number of subscribers (or people paying micropayments for articles) they keep.
And we will find out whether a profitable balance can be struck later this year, first when News Corp erects its paywalls, and second, when the rest of the newspaper industry decides whether to follow suit.