Would you pay for news
Fred Wilson asked this great question on AVC.com yesterday and sparked a really interesting discussion about whether and what people would pay for. I’m reposting my comment here with some edits…
1. Would you pay for news…. right now?
The NYT paywall went up on 17 March 2011. Over the next 5 years >50% of publishers started charging for online access. As a result willingness-to-pay for news has grown. And will continue to. But it takes time to change views on a content-set that has been free for 20 years. Music was freely available just 10 years ago. Yet today more than 25m people pay for Spotify. These shifts don’t happen overnight but that doesn’t mean they won’t happen.
2. Fragmentation <> decreased concentration
Ubiquity and fragmentation are often cited as reasons for not paying for news online. Yes, you can get your news from social media, apps, or ‘pundits’ who rewrite events, but original research and reporting is produced by a shrinking number of journalists. As they go out of business that ubiquity goes with them. i.e., There’ll be nothing to rewrite / republish / redistribute. This is not unlike the CDO bubble where the derivative market imploded when the primary market disappeared. In the case of CDOs, primary demand evaporated. In the case of news it’s supply that is at risk.
3. News fundamentals are strong
This might sound odd but bear with me. As readers we have less free time, more information to absorb, more partisan voices to filter out, and layered issues to unravel. This is the fundamental need for news. And as complexity grows this need is getting stronger. Angry US voters support Trump because no one is listening to them. Beguiled UK voters supported Brexit on the back of false promises. Climate change is debated as if it’s a matter of opinion. Everywhere you look, the need for transparency is growing. On fundamental principles our need for news is growing every day.
4. Product need <> business model
So if demand is growing then why are publishers struggling? Put simply, the prognosis for ad-funded news is terminal — FB and GOOG capture 85%+ share, ads are being blocked, programmatic-buying is driving down prices, viewability is becoming an issue, ad tech is slowing site performance, users want opt-in privacy regulation, audiences / sales are getting fragmented through 3rd party distribution, ad CTRs continue to fall…. the list goes on.
But what happens when demand for a product is strong but the business model is not? A new business model emerges. This is why messaging (via Whatsapp) is growing, despite the death of SMS as a telco business. It’s why online photography is growing, despite the decline in camera sales. And it’s why the number of Uber rides is growing, despite the drop in use of taxis.
This is the change that news needs to go through as well, because publisher reliance on reader revenue WILL continue to increase. For example, most publishers still offer RSS feeds to drive distribution. But there is no longer a business model here that makes sense, and the headlines / thumbnails they give away are increasingly (and sadly) all that busy readers want. So over time these free RSS feeds will decrease in number. The same is true for third-party distribution via FB Instant Articles, Apple News, etc. all of which have failed to deliver a better outcome / future for publishers.
Studies in online music and TV have validated the intuitive idea that reducing free access contributes to the uptake of paid alternatives. In fact a similar question 10 years ago might have been “would you pay for music”? The responses would have been similar to those for news today. And the responses going forward from news publishers will be similar to those of other content owners who more successfully sell their products online today.
5. Price and UX
iTunes shifted the perceived price of a song from FREE to 99 cents. Two things about this shift were interesting. First, the per-song price was so much lower than the reference price ($15 / CD) that it had massive appeal for readers. Second, the universality of a common price for all songs trained users to just click on the button and conduct transactions on impulse — the bedrock of micropayment solutions.
In addition, iTunes also provided two critical UX solutions — the ability to quickly get to ANY song, and the ability to create digital ‘mixed tapes’ i.e., playlists. Their solution to both these problems was far better than free alternatives.
Like iTunes, news needs a low uniform price for its shift away from FREE. In our view, this price is 10 cents per article. This is more than what publishers can earn through ads, and yet is low compared to digital subscriptions or newspaper prices.
And like iTunes, paid news also needs to provide a better experience than free alternatives. Our approach to this question has been to source content from trusted sources, to filter the content and serve up the highest-quality stories, and to present these stories through a streamlined UX which makes reading faster, easier, and more pleasurable.
This last piece of the puzzle is where you come in. We need help and feedback — lots of it — to identify and solve the unmet needs of free news. If you’re reading this, you obviously care about the problem of viability in news. Please help us by signing up for inkl’s freemium service, and telling us what you see as the differences (existing or desired) that will convince you and others like you to pay for news.
And please share or ‘heart’ this article so that more people get to read it.