A vast majority (96%) of consumers read, watch or listen to media content (including news) for almost 24 hours a week, according to a new report from the World Economic Forum. What’s more, “almost 60% have gone through some form of registration process to consume news or entertainment – either free or paid.”
The report, “Understanding Value in Media,” examines the concept of value in media from the perspective of consumers, media businesses and advertisers. It provides an overview of news and entertainment consumption in leading markets and analyzes the implications for business models.
It presents findings from surveys of more than 9,100 consumers across China, Germany, India, South Korea, the UK and the US. It also includes inputs from six workshops with around 100 executives from across the media industry.
Here are highlights for publishers:
Willingness to pay is rising
Although media engagement is high, less than 20% pay for news; 44% pay for entertainment. However, willingness to pay is rising – the proportion of people saying they would be willing to pay for media in the future is greater than the proportion of people who currently pay. For news, 53% would be willing to pay in the future, up from 16% who pay today. For entertainment, 70% are willing to pay, up from 44% today.
Country-wise, the proportion is as low as 11% in the UK, and 9% in Germany, though this may be due to the availability of public-service media in these countries, the authors suggest. It rises to 25% for both India and China.
Young people are more likely to pay for content, but low-income groups are not. The survey found that across countries, young people (aged 16–34) are the ones most likely to pay for content. An average of 61% currently pay for entertainment and 17% for news. These figures are above the global averages among the general population, in both cases.
35% acknowledge responsibility to pay for news
Consumers are also aware of their own role in content consumption. 35% agree that they should be responsible for paying for – or funding access to – news.
The data also shows that consumers expect governments to take a bigger role in funding news than entertainment (35% versus 18% respectively). This implies that they have a reasonable understanding of the important role that news providers play in promoting healthy political discourse.
Is there room to grow the amounts people pay? That “depends on the category of consumer,” according to the study. “For unengaged consumers without active registrations for media services, there is limited revenue opportunity. This group is willing to pay only a fraction of the fees currently paid by subscribers.”
On the other hand, those who already subscribe to the media are willing to pay more in the future for news than they do now (except in the US).
“Genuine alternative to digital advertising”
During the research, 69% of news publications in Europe and the US had some sort of metered access with the numbers having increased over time. Consumer revenue strategies are paying off for quite a few publishers including the New York Times, The Guardian and The Financial Times. Additionally some specialized “digital natives”, such as Axios, Business Insider, The Athletic and The Information, turned profits in 2019, or expect to in 2020.
The success of some paid news and entertainment services demonstrates that consumer revenues are a complement, and perhaps even a genuine alternative, to digital advertising.Understanding Value in Media
In many cases, the so called “pivot to paid” is an outcome of changes in advertising. Only 9% of the news executives surveyed expect the share of advertising revenue to increase in the next five years.
Growth in digital content consumption has moved advertising spend online, shrinking once-guaranteed revenues for legacy media. A greater share of marketers’ budget now goes to the providers of platforms as opposed to content.
The consequence is that media companies are convinced they need to rebalance income streams in favor of reader revenues, and the value of consumer data is important in helping them do so.
In the news industry, online advertising revenue per user is less than 10% of that in print. (As this paper went to press, the risks of relying on advertising as a main funding source were made plain by the economic volatility created by the spread of COVID-19.Understanding Value in Media
The main question for media companies is whether they can convince consumers that they will deliver enough value to make them start paying. This raises the question of what it will take to convince users to start making payments.
“What are the problems that media solve?”
One factor may be trust, suggest the authors. The findings suggest greater willingness to pay in India and China. They go hand in hand with data showing that these consumers trust content from paid sources to be of higher quality compared to free media.
The 60+ leaders surveyed for the study overwhelmingly agree that media companies need to do more to help consumers understand the value of their data.
Rasmus Kleis Nielsen, Director, Reuters Institute for the Study of Journalism, comments, “It is more important than ever to ask, “What are the problems that media solve?
“If we don’t clearly understand what value media provides for people – and how – it is hard to see how the industry can find sustainable business models that can fund content creation and guarantee their independence from various more-or-less eager would-be patrons.”
Nielsen refers to data from the 2019 edition of the annual Reuters Institute Digital News Report. He says, “The report documents the uncomfortable fact that a large part of the public – in some countries a clear majority – do not feel that the news media delivers in solving the problems that journalism often purports to address.”
He adds, “The media industry has to address this fundamental problem and demonstrate to the public that independent news and professional journalism is valuable for them, for their communities and for society. If we do not deliver value to them, why would they value us?”
The full report can be downloaded from World Economic Forum:
Understanding Value in Media