Private news media across the world are trying to develop pay models for news. Our understanding of what drives behaviour and attitudes to paying for online news, however, remains limited. We use survey data from six countries (France, Germany, Japan, Spain, United Kingdom, and United States) to investigate three hypotheses: (1) those who use public service media for online news are less likely to pay for/express a willingness to pay because they have a reference price of zero for online news, (2) those who pay for print newspapers are more likely to pay for/express a willingness to pay for online news because they have a reference price above zero for offline news, and (3) that younger people are more likely to pay for/express a willingness to pay for online news because they are more likely to have a reference price above zero for other digital content. Our analysis supports Hypotheses 2 and 3, but not Hypothesis 1. Therefore, paying for offline news increases the likelihood of paying for online news because it helps create a reference price above zero. However, consuming free online news from public service media does not by itself create a reference price of news.
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Articles
Paying for Online News
A comparative analysis of six countries
Richard Fletcher &Rasmus Kleis Nielsen
Pages 1173-1191 | Published online: 28 Oct 2016
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https://doi.org/10.1080/21670811.2016.1246373
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Introduction
Paying for Online News
Research Design
Analysis
Results
Conclusion
Disclosure statement
Funding
Acknowledgements
Footnotes
References
Abstract
Private news media across the world are trying to develop pay models for news. Our understanding of what drives behaviour and attitudes to paying for online news, however, remains limited. We use survey data from six countries (France, Germany, Japan, Spain, United Kingdom, and United States) to investigate three hypotheses: (1) those who use public service media for online news are less likely to pay for/express a willingness to pay because they have a reference price of zero for online news, (2) those who pay for print newspapers are more likely to pay for/express a willingness to pay for online news because they have a reference price above zero for offline news, and (3) that younger people are more likely to pay for/express a willingness to pay for online news because they are more likely to have a reference price above zero for other digital content. Our analysis supports Hypotheses 2 and 3, but not Hypothesis 1. Therefore, paying for offline news increases the likelihood of paying for online news because it helps create a reference price above zero. However, consuming free online news from public service media does not by itself create a reference price of zero for online news.
Keywords: business of newscomparative researchonline newspaying for newspaywallsreference price
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Introduction
Private news media across the world are trying to develop pay models for news, as advertising revenues alone look insufficient to sustain existing forms of professional journalistic news production (Cagé 2016; Herbert and Thurman 2007; Myllylahti 2014; Swatman, Krueger, and van der Beek 2006). Both popular and elite newspapers (like Bild and The New York Times) and online-only news sites (like DeCorrespondent and MediaPart) are experimenting with pay models, including hard or metered paywalls, freemium models, memberships, and micropayments. Some have struggled. (The British tabloid the Sun abolished its paywall in August 2015 less than two years after introducing it.) Others seem to thrive. (The Financial Times has more than three-quarters of a million subscribers, more than at any point in its history.) Yet, with some variation country to country, only a minority of people are paying for online news (Fletcher et al. 2015; Newman, Levy, and Nielsen 2015), prompting analysts to question whether pay models will ever work in a media environment where many have become accustomed to free news (e.g. Pickard and Williams 2014). This, combined with declining print circulations and decreasing advertising revenues, is already posing an existential problem for some private news providers. But as important as the fate of individual organizations may be—not least for the journalists who work for them, and the readers that rely on them—the significance of this development is likely to run deeper because, as Hamilton (2004) has shown, broad changes to the economics of news that result from market forces can directly affect the quality and character of news coverage. Some scholars have responded by examining what news content is typically placed behind a paywall compared to what is still offered for free (e.g. Sjøvaag 2016). However, our understanding of what drives pay behaviour and attitudes among audiences across different markets remains limited. Most previous studies, while valuable, have used surveys with a small number of respondents and do not explore whether findings are consistent across countries (e.g. Chyi 2005, 2012; Goyanes 2014; Kammer et al. 2015).
In this study, we use survey data from the 2015 Reuters Institute Digital News Report to analyse factors related to paying for online news and expressing a willingness to pay for it in the future. We conduct the analysis across a strategic sample of six different high-income democracies with different media systems to identify factors that are consistent across different contexts. The six countries are France, Germany, Japan, Spain, the United Kingdom, and the United States.
We focus in particular on the possible role of people’s reference price for news (the price people consider reasonable to pay) (Kalyanaram and Winer 1995; Mazumdar, Raj, and Sinha 2005). Many academics and commentators have suggested that one of the central challenges facing pay models for online news is a “culture of free” where people expect to be able to access content as free at the point of consumption (see e.g. Goyanes 2014; Hill and Lashmar 2013). The idea has also been evoked explicitly by news organizations themselves in their coverage of the digital content business (e.g. Greenslade 2010; Haberman 2014). For a newspaper industry historically supported by a combination of sales revenues and advertising revenues, and facing an always-difficult and increasingly challenging digital advertising market, this is clearly a potentially serious obstacle to long-term commercial sustainability (Brock 2013). It is part of the reason commentators like Arianna Huffington (2009) have declared that “the paywall is history”.
In light of the importance ascribed to the “culture of free” online and to advance our understanding of the business of online news, we focus on the possible role of people’s reference price for news and investigate three hypotheses: (1) that people who rely on public service media for online news are less likely to pay for/express a willingness to pay for online news because they have a reference price of zero for some of the online news they access, (2) that people who already pay for print newspapers are more likely to pay for/express a willingness to pay for online news because they have a reference price above zero for some of the offline news they use, and (3) that younger people are more likely to pay for/express a willingness to pay for online news in part because they may be more accustomed to a reference price of above zero for other forms of digital content, such as music and video download/streaming services.
Controlling for a number of socio-demographic, news attitude, and online news use variables, we find that (H1) there is no significant negative association between using public service news and paying for online news or expressing a willingness to pay for online news, (H2) paying for (offline/print) newspapers is strongly and positively associated with paying for online news and expressing a willingness to pay for online news, and (H3) that people within younger age groups are more likely to pay for online news or express a willingness to pay for online news. H2 and H3 are thus supported, but H1 is not. In other words, paying for printed news increases the likelihood of paying because it helps create a reference price of above zero for online news. At the same time, the consumption of free online news from public service media does not by itself help create a reference price of zero for all other online news. We conclude by noting some limitations of the analysis and discuss the wider implications for digital journalism and its commercial underpinnings, noting in particular that while low reference prices may be part of the challenge facing the business of online news, a more important concern for publishers is how to distinguish paid-for news content from that which people
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