In a survey conducted through it’s online market research service Pureprofile has released results of a survey how prepared people are to pay for news content online. The results are unsurprising, with 88% of those polled in both Australia and the UK unwilling to pay for online news. Only 5% were willing to pay for content if it was deemed of a high enough quality, with the remaining 7% only willing to pay for content if advertising was removed from the site.
(Survey data in the below image).
The weakly defined options of the poll above aside, if 12% of respondents are willing to pay for their news online, is this a sufficient number for Murdoch’s plan to succeed? I’ve discussed Murdoch’s decision to charge for online content before and concluded that potentially it is a viable business model if enough people are willing to pay the online access prices. Now that we have an estimate to the number of people who are willing to pay for online news content from the survey above, we can look at the kind of income this might generate for Murdoch’s Australian news portal News.com.au. Using News Limited’s self published data from August 09,News.com.au achieved 4.1 million unique browsers and 17 million browsing sessions. Let’s do some basic maths to conclude that those two numbers average out to a reader who returns to the site 4 times in a month. With this profile we can start crunching some numbers as to how much money News Limited might make if they turn the site over to a fully pay-walled site.
A Likely Pricing Model
For News.com.au’s ‘average’ reader (Lets call him Mr Pink) there are two likely payment options to eventuate, either a weekly subscription model or a price levied per session/online ‘edition’. Fortunately given an average of just over 4 sessions per unique visitor, this makes the mathematics fundamentally the same for either of the models. For the sake of simplicity at this stage we will be discounting the potential loss in advertising revenue involved by catering to the 7% of respondents to the survey above who would only consider paying for their online news if it was advertising free.
We can now generate potential revenue figures with the below formula:
Current Readership x Percent willing to pay x Fee levied = Monthly income
Or using the above data and an estimate on the likely fee structure we get:
4.1 Million x 12% x Let’s use $2 per session/week* for access = $3,936,000 per month.
Switching to a paid access model could secure News.com.au just over $47 Million a year in online subscription fees, not to mention possibly forcing reader back to it’s struggling printed newspapers business, which could add additional income. Is this enough to justify the potential loss in advertising revenue from decreased readership figures? Not to mention the readers who were only willing to pay for their news without advertising? Given the difficulty of pulling accurate financial data for News.com.au from within the overall spectrum of earnings of the News Corporation business entity, it’s hard to make a concrete conclusion whether an annual income of $47 Million is a viable move for Murdoch.
$47 Million, Spare Change?
Given annual revenues of $30 Billion from across all of it’s business units, $47 Million is a drop in the ocean and seems to undervalue the News.com.au property. Unless a number of the respondents to the Pureprofile.com survey above can be convinced to change their mind on this issue, a decision to charge for content online in this case is likely to result in a negative outcome for Rupert’s bottom line.
**If any readers have additional information regarding the above numbers or know where I can find revenue figures for news.com.au please add a comment below.