Kindle Review – Kindle 3 Review, iPad Review

NY Times talks about a Boston Consulting Group survey that found 48% of Americans were willing to pay for news online (including mobile devices). Americans wanted to pay an average of $3 a month for news -

Among regular Internet users in the United States, 48 percent said in the survey, conducted in October, that they would pay to read news online, including on mobile devices.

That result tied with Britain for the lowest figure among nine countries where Boston Consulting commissioned surveys.

The study drew from a survey of 5,000 people in 9 countries.

At the same time a new Forrester Report finds that 80% of consumers won’t pay for content -

 In a new Forrester report, we find that most consumers (80%) say they wouldn’t bother to access newspaper and magazine content online if it were no longer free (no surprise), and the rest are split about how they’d like to pay for content:

8% want subscription access, 8% want subscription bundles for Web, print, mobile devices, and 3% want micro-payments.

The Forrester study is based on 4,711 US consumers.

The Conclusions and Thoughts

The Forrest blog post has a rather interesting conclusion -

Consumer willingness to pay is so modest — and, in general, we find it tends to over-report in surveys — that publishers need to be extremely flexible to accommodate the needs of these precious customers.

The BCG study concludes -

Charging for online access to news would not greatly increase a newspaper’s revenue, but since the cost of reaching Internet readers was very low, it could significantly increase profit.

Is there some sort of bias in the questions that is leading to such a different response from users.

For example -

Are Forrester asking – If 25% of news sources went paid would you pay?

Are BCG asking – If 100% of news source went paid would you pay?

The Reports aren’t free so don’t know if/what effect the questions are having.

Which is it - 20% or 48%?

It’s a bit of a chicken and egg problem.

We can’t really know how many customers would actually pay until all/most of the good news sources are free.

Let’s consider two scenarios -

1. 80% of the Top News Brands start charging. In that case it’s easy to see 50% of customers paying for news.
2. Only 20% of the Top News Brands charge and the remaining are still free. In that case it’s easy to see 20% or less of customers pay for news.

The answers in the survey depend a lot on exactly what questions were asked and what context was provided.

Different websites are writing about either the 20% survey or the 48% survey – It’s a classic case of people taking whatever data points suits their perspective.

The one thing that is somewhat clear is -

The biggest factor in people paying for news is newspapers not giving it away

As long as there are a lot of news sources giving away free content, the charging for news isn’t going to work.

What we might see is -

1. Top tier of newspapers (say 20 of the top 25 newspapers) banding together and going with paid news.
2. Next tier of newspapers mostly going free.

The BCG thinks banding together won’t work because other free news sources are available -

Consumer willingness and intent to pay is related to the availability of a rich amount of free content. There is more, better, richer free in the United States than anywhere else.”

According to Rose, a banding together of major news providers in the United States wouldn’t help because of the availability of other free sources on the Internet users can access.

However, they are forgetting the dimension of trust and brand recognition. They are also ignoring the fact that quality news coverage is not cheap and low budget news sites just won’t be able to cover Iraq and other non-local news well. Even local news coverage costs money.

Local News, News Alerts, Specialized Coverage have potential

Marketing Pilgrim point out that Americans were willing to pay more often for certain situations -

72% of US respondents were willing to pay for unique news such as local news.

73% were willing to pay for specialized coverage.

61% were willing to pay for a continual news alert service.

People were interested in news accessible easily on a device of their choice.

There’s also good news in that people are more likely to pay for online news provided by newspapers (rather than news provided by TV stations, web sites, etc.).

Where does that leave us?

Confused. Though we shouldn’t be.

No one knows the actual answer until we try it out. Newspapers don’t have much to lose – the current online model is going to destroy them – already is.

Might as well try out a paid model and see where that goes. Try a $3 subscription model at the minimum. $10 ideally.

Also leverage the iPhone and the Kindle and other channels and please remove the free and $1 iPhone News Apps. Trust newspapers to go into a channel where people are charging money (McSweeney’s $5 app) and offer up their product for free.