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Price and paying for news

If subscriptions are going to play a bigger role in the future of journalism, then another area of growing importance is pricing. How sensitive are people to the price of the news? If the price were lower, or structured differently, might more people pay? Or are those who pay for news a relatively smaller group by nature and willing to pay virtually any price for it? Is there some kind of middle ground? Or is the future to be found in passionate niches?

The survey probed deeply into the question of pricing and found that there appear to be different price points that matter to consumers. In general, those who pay now feel they are getting a relative bargain. Those who don’t pay say pricing matters a lot—and they aren’t willing to pay much.

One caveat, of course, about asking people about what they might do in the future is that it is hypothetical. What people say they might do is not a guarantee. Television was once largely free, and people resisted the idea of having to pay. Then they began to pay. Now there are signs that they may want to pay less.

With those caveats in mind, what did we find?

Perceived cost and value of the news people pay for

To begin with, those who pay for news already think the amount they pay for their favorite news source is relatively low. More than half (58 percent) say the price they pay for their chosen news source is a very small cost to them, and 32 percent say it is a moderate cost. Only 7 percent say the price they pay is a significant cost to them.

Those age 65 and older are less likely than those age 64 and younger to say the cost they pay is very small for them. Those earning less than $35,000 a year are also less likely than those earning more to say the cost is very small to them (46 percent vs. 63 percent).

The flip side of cost, of course, is value. Are people getting something good for what they are paying?

Most payers are relatively happy with the value they receive. In all, for instance, 40 percent say the source is a very good value for the price; another 43 percent say it is a fair value. Just 11 percent say the content is somewhat overvalued, and 4 percent say it is very overpriced compared to the value they receive.

Contrary to what people might expect, however, these valuations have little to do with demographics. No differences emerge here by age or income or other demographic groups. The value people put on the news they pay for is a reflection of attitude, not other attributes.

Hypothetically some are willing to pay a small fee for free sources they use

What about people who don’t pay? Is there a chance they might? And if so, what might lead them to do so?

As we said before, assessing this can be difficult in surveys. It involves asking people about a hypothetical. But the findings suggest there is at least some sizable minority of people who do not pay for news today who might be persuadable.

Among those using a free source, most (73 percent) say they aren’t likely to pay for that source in the future. But more than a quarter said they might (16 percent say they would be moderately likely and 10 percent say they would be very or extremely likely).

Some of these people using free sources include those who pay for another publication already. If those people are removed and we look only at people who pay for no news whatsoever, there is still a notable potential for increasing subscriptions. Of this group who pay for no news at all currently, 17 percent say they are likely to pay for a particular news source they now use (and roughly a fourth of those, 4 percent, say very likely). In other words, nearly 1 in 5 nonpayers say they might be willing to start paying.

Who are these potential payers? They tend to be people who we earlier identified as seekers—or who actively seek out information about topics they care about—rather than describing themselves as people who are more likely to bump into the news.

For example, during the formative interviews, Freddy, a 34-year old from Phoenix, said he would be willing to pay for soccer news in print or online because he does not see any great free source. “General news you can get anywhere…whereas soccer is different here and it’s kind of hard to find,” he said.

Among seekers, 29 percent say they would be moderately willing to pay. Among bumpers, the number drops to 18 percent.

Those who already pay for another source are also more likely than others to say they would be willing to pay for a source they currently get for free (32 percent) than are those who do not pay for any news (17 percent).

Would bundling—giving people access to a lot of news sources for just a bit more than the price of getting one favorite news source—help? Here the answer must be taken with a grain of salt. The bundling idea is hypothetical. Until people saw a concrete list of what they would get, it is hard to know what they would do. Bundling has proven effective for publishers like The Washington Post in the last couple years.1

But in this survey, the generic idea of bundling did not appear to make a big difference.

In general, again, 83 percent of nonpayers say they are not likely to pay for news no matter what while 16 percent say they might. If offered the prospect of multiple news sources in a bundle, the numbers move only slightly, with 81 percent saying they are not at all or not very likely and 19 percent saying they might (14 percent say they would be moderately likely, and 5 percent say they would be very or extremely likely to pay).

Among all news consumers, payers and nonpayers who regularly use a free source, 26 percent say they are at least moderately likely to pay for their free source of choice, with only slightly more (30 percent) saying so if additional news sources were bundled with it.

Are there differences in this by ethnicity?

Hispanics are more likely to be swayed by the inclusion of access to other news sources, with 43 percent saying they would be at least moderately likely to be willing to pay under those circumstances compared to just 29 percent of African Americans and 26 percent of whites.

Those who say keeping up with the news is very or extremely important to them are more likely than others to say they would be at least moderately likely to start paying for their free source (32 percent vs. 18 percent). But an offer of access to other content with a subscription does not change how likely either group is to pay.

Price makes some difference

Price does, however, play a role in people’s willingness to pay for a free source they currently use.

To test this, we randomly assigned each respondent to consider a specific price point. Respondents were asked whether they would pay for their current source at one of five randomly assigned prices: $50 cents, $1, $3, or $7 a week.

About 1 in 4 free users say they’d be willing to pay for the source they currently use for free if it were 50 cents or $1 a week. That number fell to about 15 percent of free users at $3 or $5—but it didn’t matter which price among those two.

But there was a point at which the price was too high. Fewer than 1 in 10 free users would be willing to pay $7 per week.

No differences emerge in willingness to pay by demographic group once controlling for price. But, those who say keeping up with the news is important to them are more willing to pay.

Percent
$0.50 22%
$1 27%
$3 15%
$5 16%
$7 9%

Data Source: Question: Suppose [FREE SOURCE] decided to charge a [INSERT FEE] weekly fee to access its news and information. Would you pay that fee to continue getting news and information from [FREE SOURCE] or would you stop getting your news and information from [FREE SOURCE]?

Media Insight Project

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