Even if Consumers Will Pay $3 a Month for Online Content, It is Small Consolation

Sometimes good news is bad news. U.S. consumers, for example, say they are willing to spend about $3 a month to receive news on their personal computers and mobile devices, a new survey by Boston Consulting Group suggests.

“The good news is that, contrary to conventional wisdom, consumers are willing to pay for meaningful content," says John Rose, BCG senior partner  "The bad news is that they are not willing to pay much."

The bigger problem is that, even were such new payment models to take hold, it would not help much. In the United States, advertising accounts for around 80 percent of newspaper revenues, and that revenue source is in steep decline. Even if consumers start to pay small amounts for their news online, it would only slow, but not stop, newspapers’ decline, BCG notes.

One does not have to agree with all the assumptions analysts make about where newspaper revenue is headed, but some of the forecasts seem to assume that newspapers can arrest the slide in advertising in 2010, with slight growth over the next five years or so.

Lots of people believe the ad recession caused by the "Great Recession" now is over. But some observers, perhaps many, believe advertising as a share of overall promotion and marketing budgets is headed lower as the result of a shift in thinking about the effectiveness of advertising overall, and of advertising in physical media in particular. Time will tell.

The other issue is whether the $3 a month benchmark is what respondents think they would pay for news from every source, or whether they had in mind the sort of news they might otherwise get from a local newspaper. The answer matters quite a lot. A single local newspaper might be happy to have a new $3 a month subscriber revenue stream. But if that amount was spread over all the interests any single subscriber might have, it is an awfully small amount.

BCG’s survey found that consumers were more likely to pay for certain types of content, specifically news that is unique. About 72 percent of U.S. respondents said they would be interested in local news, while 73 percent indicated they would pay for specialized coverage.

Some 61 percent of U.S. respondents suggested they would pay for timely news, such as a continual news alert service.

In addition, consumers are more likely to pay for online news provided by newspapers than by other media, such as television stations, Web sites, or online portals, the study suggests.

They are specifically not interested in paying for news that is routinely available on a wide range of Web sites for free, BCG says.