A key dilemma for news organisations is how to derive more revenue from online media. In the early days of the internet, publishers hoped that online advertising would move seamlessly to the web as audiences grew. They believed that trusted brands would gain a sizeable chunk of that market. But in practice, the enormous amounts of general news inventory has pushed down prices for brand advertising and much of the value has gone to sites that have used technology most effectively to target specific consumers – classified listings sites, news aggregators, search engines, and now social networks.

Despite the increased importance of internet news, for most newspapers digital revenues remain a fraction of those derived from print. If consumers cannot be persuaded to pay for digital news, publishers will need to significantly reduce staff costs or may be forced to the wall.

In the last 18 months, publishers have launched a series of initiatives to encourage consumers to pay. In July 2010 Rupert Murdoch’s News Corporation took the brave decision to put The Times and Sunday Times behind a paywall. The titles lost 90% of their audience in the process, but News Corp says revenues are on track and these digital customers contribute 50% more cash than the 20 million ‘window shoppers’ they had before.¹

Meanwhile the New York Times introduced a flexible paywall in March 2011 where individuals could access a number of articles a month for free. This approach enabled the company to maintain its market share AND gain more than 450,000 digital subscribers.² Encouraged by these figures, more publishers in the United States and Europe have recently launched paywalls or are considering charging for content on desktop, combined with charging for news apps on tablets and mobile phones. Publishers will be looking for encouragement in the data contained in this survey around attitudes to paying for digital news.

Despite the best efforts of news organisations, the numbers paying for online news remains low. In the UK we see the lowest proportion of people paying for digital news content – just 1% in the last week. This compares with a recent National Federation of Retail Newsagents survey (Feb. 2012), which shows 70% of their UK sample buying a printed newspaper at least once a week.[3.

In total, Denmark has the highest percentage of digital news payment (12%), but less than half of this was in the previous month. Indeed, Denmark is slightly unusual in that one of the largest newspaper groups, Berlingske, has introduced payments for individual articles such as gadget reviews, travel, and slimming guides. Most Danish newspapers also charge for mobile and tablet news apps, either as a single payment or as part of an ongoing subscription.

UK tablet users are most likely to pay for news

There are some interesting differences in attitudes towards payment when you drill down into the UK figures by age and device – and also sharp differences depending on the strategy being pursued by each news organisation.

Those who use a tablet as their main way of accessing news online have paid for significantly more digital news content than those who use a computer or mobile phone as their main way to access online news.

We can also see that those who use online news heavily are more likely to pay for news. Tablet and mobile users also indicated that the device made a difference to their willingness to pay.

Many newspapers now provide free and paid-for offerings online but follow different approaches

• The Guardian charges for its iPad and iPhone news ‘app’ as well as its Kindle version but allows free access to the core website
• The Financial Times requires registration and then limits the number of articles without payment. It operates a cross-platform ‘app’ which follows similar rules
• The Times and Sunday Times lie fully behind a paywall on all platforms – and only exceptionally allow articles to appear without payment (such as the story of the death of war correspondent Marie Colvin)
• The Daily Mail provides a free service across all platforms

Going forward 6% of respondents agreed with a statement that they would be willing to pay for news from particular sources they liked. Agreement is higher amongst younger people with 13% of 16-24 year olds and 11% of 25-34 year olds being open to paying for news.

Once again, it is tablet owners who are most open to the idea of paying to access online news in the future.

Newspaper brands staging a comeback on tablet?

Looking at the relative position of different traditional and non- traditional news brands across devices, the position of ‘newspapers’ seems to have been strengthened by the emergence of the tablet. Five of the top news brands on a tablet in the UK come from newspaper groups, compared with just two on the open web. New media players such as Yahoo! and Google News seem to perform less well in this arena.

The success of the app stores particularly with Apple and Android users has encouraged the rebundling of news into semi-closed environments – accessed by a simple touch on a branded icon. Although standard web browsers are used extensively on tablets, our survey shows that news apps are also popular and are used more heavily by those for whom these devices are the primary access point.

Not only are these news apps popular, they are increasingly appearing in a world where bundled content can be easily paid for. The eco-systems developed by Apple and Amazon in particular facilitate one-click purchases that reduce much of the friction associated with news payment. Both companies have also introduced the concept of digital newsstands in recent software releases, which can push new editions of any publication to the device.

These developments are not going to reverse the trends towards real-time always-on news, but they may offer some hope to traditional newspaper groups struggling with new competition and falling profit margins. On the other hand, we should remain cautious in interpreting these figures at this stage. It is still very early days for tablets, which are largely in the hands of richer, and better educated groups who are likely to be more prepared to pay. This is a developing story, which will benefit from the tracking of this data over time.