If 88% of people refuse to pay for online news, can News.com.au make money?

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.

(*Reports have surfaced in the last week that Murdoch intends to charge mobile users $2/w for access to the NYT so these estimates are close to expected figures.)

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.

3 thoughts on “If 88% of people refuse to pay for online news, can News.com.au make money?”

  1. This is a worthwhile exercise only if you contrast your $47M estimate to news.com.au’s current revenue, and the odds are against anyone disclosing them. They’re known to a relatively small group of snr execs in NDM and News and they’re a very secretive lot.

    If you get that number, you still need to try and model the biggest variable in all this: the effect of one or more of NDM’s competitors staying with free content. Four visits per month on average hardly suggests a tight-knit, closely-engaged readership. It sounds more like a readership who’d bail for the nearest free publisher the moment the fee wall is raised.

    How many users would switch (and for which competitors) is really, really hard to model, especially when any industry-wide move to paid news also has to beware of anti-cartel laws.

    All this uncertainty explains why it’s taking so long!

  2. You can not ask readers to pay for something that can be obtained for free. As long as players like BBC in the UK and ABC in Australia are funded or subsidized by the government then there is little point in setting up a paywall.

    Pay for mobile runs into the same issues as the above. Why pay for something you can for free. If I can surf to a site that reproduces the best content on the NYTimes (hi Drudge/HuffingtonPost), then I’m not going to pay for it.

    Another issue is the premium brand mastheads like news.com.au, The Australian, SMH and The Age drive tremendous amounts of traffic around their network. So even if currently these sites have a wafer-thin display advertising margin, they are driving users to non-news sites that may have great profit margins. Put up a paywall and those non-paying users spend their money elsewhere.

    And Rupert keeps talking about the WSJ, which has only worked because it is a niche offering with a premium brand, the latter is something that is very difficult to obtain…

    It is not all doom and gloom though, because very smart people at institutions and companies around the world are working on the future of journalism and from the little that I’ve seen ‘from the inside’, I’m confident that solutions to viable business models will arise that are win-win for all involved. Stay tuned…

  3. I believe that enough people will be willing to pay for on-line news to keep a few newspapers afloat and that this will become larger number over time, as I believe a percentage of the ‘only if there is no advertising’ could easily shift across. I also believe that it will force Murdoch to improve the quality of the newspaper reporting, or at least make them more specialised so they can target specific audiences, maybe the right of centre crowd. I think Murdoch owns the FOX news network doesn’t he?! This is especially as the ‘free’ BBC and ABC news websites are perceived as expressing the left or liberal view in the media.

    Pay TV currently competes with free to air TV and it’s really about getting the right mix to attract an audience with the money and savvy to pay for internet news. I do believe there will be a few lost during the process though.

    Finally, for now, I feel all the planets (aka news media) are aligning so that there will be a number of them starting to charge for their on-line media around the same time. (When they are not competing and trying to cut each others throats)

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