When you start from a low base all progress looks impressive, all growth appears steep. If that sounds like a churlish way to interpret the Reuters Institute Digital News Report 2013 findings that show the number of people in the UK accessing paid-for for news online has more than doubled, it’s not meant to – it’s merely to point out that the challenges facing publishers looking to charge are equally steep.
YouGov, on behalf of the Reuters Institute, asked people in nine countries whether they had accessed paid-for digital news in the past 12 months. A year ago 4 per cent of UK respondents said they had. This year it’s up to 9 per cent.
Compared to the eight other countries surveyed, the UK comes bottom of the payment pile and already we may be able to guess some of the reasons why. Nevertheless, there are a couple of positive signs.
First, younger age groups are more likely than older age groups to pay. Consider, for example, that 20 per cent of 25 to 34 year-olds have accessed paid-for digital news in the last year, compared to less than 10 per cent of those over 45. Interestingly, one in ten 18 to 24 year-olds – a group we suspected were only interested in free – say they have accessed paid-for news.
Secondly, there is a greater propensity among smartphone and tablet owners to buy their digital news, or at least some of it. Globally, tablet owners are twice as likely to do so compared to computer users. Given the extraordinary acceleration in projected ownership of these devices that can only be good news.
The devil, however, is in the detail. Once you take into account people’s gender, age, education and income (the other factors that may play a role in influencing a person’s likelihood to pay for news), UK smart device owners are only marginally more likely to pay than other online users. In other words, as tablet and smartphone ownership becomes ever more mainstream – and these demographic anomalies smooth away – there’s no guarantee that the purchasing patterns among early adopters will be replicated.
The report goes on to suggest that the lack of a tablet effect may also “relate to the lower levels of payment in the UK generally and to the fact that some of the most popular news apps (BBC, Sky and Metro) are provided free".
Ah, the BBC. As Robert Picard notes in one of the essays that appends the report (see page 89):
The presence of quality, free competitors affects willingness to pay. If quality digital news is provided free by newspapers or broadcasters in a market, there is reduced demand for paid news services.
This is not a new argument but it’s always worth repeating and it is underscored by answers to another question in the survey. Asked which online brands they had accessed in the last seven days 52 per cent cited the BBC, dwarfing all other responses (Mail Online came next with 14 per cent). Indeed of the top 10 brands, eight will continue to be free for the foreseeable future. (Of course, we all pay for BBC online through our licence fees but rival publishers don’t see it quite like that).
The point is that even in a fanciful future where the BBC, Mail Online and the Guardian all charge there will still be digital news freely available – from Sky News, Channel 4 News, Yahoo, Huffington Post and MSN to name but five. And as more newspapers disappear behind a paywall, the free-to-air, advertising-supported model will become ever more attractive to other publishers looking for a gap in the market.
Asked to name the key motivation for paying for news in the future, a quarter of those who have so far refused to dip their hands into their pockets cited a potential lack of “suitable digital news services” available for free (see graph, above).
Unfortunately for newspaper publishers, it doesn’t look like these refuseniks are going to need to make any hard decisions soon. And they seem to know it. Just 8 per cent of that group said they were likely to pay for digital news in the future.
The silver lining? That figure has nearly doubled in the last year.
The Reuters Institute Digital News Report 2013 can be downloaded in full here.
Jon Bernstein is a freelance digital media consultant. You can read his personal blog here.