BCG finds that consumers are willing to pay to receive news online

According to a survey by the Boston Consulting Group, consumers are willing to spend small monthly fees to receive news on their personal computers and devices. In the survey of 5,000 individuals conducted in nine countries, BCG found that the average monthly amount that consumers would be prepared to pay ranges from $3 in the United States and Australia to $7 in Italy.

Their key findings include:

Consumers were more likely to pay for certain types of content, specifically news that is:

• Unique, such as local news (67 percent overall are interested; 72 percent of U.S. respondents) or specialized coverage (63 percent overall are interested; 73 percent of U.S. respondents)

• Timely, such as a continual news alert service (54 percent overall are interested; 61 percent of U.S. respondents)

• Conveniently accessible on a device of choice

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.

In my opinion, it will be a difficult ramp to get consumers to pay for something they have been accustomed to getting for free, although there is precedence for this with online personal sites and specialized jobs sites such as Doorstang.

Unfortunately, in order for this to work for newspapers, all of them (by content type that is) will have to do this, else the model will fail. For instance, if the NY Post charges but the NY Daily News does not, then the model fails for the NY Post since the content is similar, although both may disagree about their respective sports sections. They will have to collude in a sense. I can see the model working for highly specialized newspapers like the Wall Street Journal (WSJ) but for run of the mill newspapers, it will not work.

I read the physical copy of the WSJ in the am and catch up with articles I could not get to, online. Plus there are several times when I need to save articles for research purposes. In addition, the WSJ has breaking financial news throughout the day that I rely upon. This is valuable to me so I would be willing to pay extra for those features. However, if the financial times does not charge then I may not pay for the Wall Street Journal since the content is similar. However, I am not sure if the Financial Times' breaking news alert email service is comparable to the Wall Street Journal's.

The newspapers rely, in small part, upon online advertising, which relies upon unique visitors and page views. If you restrict access to only paying subscribers, then you would lose a large portion of those page views and the associated revenues. I assume that the newspapers who are thinking of charging have done the analysis and are comfortable with the financial trade-off. One way to minimize the falloff is to make a few articles or the lead article available to all visitors and charge for the bulk of the remaining content or to print or save articles.

Either way you slice it, I would be surprised if the subscription fees are enough to offset the slide in advertising revenues, which are down close to 30% in the first 9 months of 2009. The stock prices have done well due to the heavy cost cutting but at some point revenues will matter.