With sales of printed newspapers in decline and widespread expectation of free news online, publishers need a radical change of strategy in the way they deliver content, to win back the public’s wallets. News site paywalls are currently testing the most straightforward route, offering users unique and diverse content in exchange for a subscription fee, in a bid to effectively monetise a loyal digital audience. The question is, will tablets – bringing with them a richer, and more engaging user experience – be the bridge that turns the trickle of paying digital news readers into a flood?

It’s no huge secret that print newspaper markets in most English-speaking countries are in decline, and have been for quite some time. Gone are the halcyon days of eight million people turning out to buy a copy of News of the World on a Sunday – indeed, this, once-flagship, News International title has shed over a quarter of its buyers since the turn of the Millennium. This isn’t an isolated trend either; although some of the daily tabloid titles have engaged in a self-subsidised “pricing war”, in a bid to shore-up sales (or to squeeze the competition out), the general trend for the printed newspaper is downward, with no obvious sign of recovery. With this in mind, it is of little surprise that newspaper publishers have greeted the recent boom in the tablet computing market with open arms.

Free or paid – which is the winning model?

The digital news war has been waged on many fronts for some time now. Newspaper sites such as Guardian.co.uk and Dailymail.co.uk cite their ever-growing user numbers (with the Mail setting perpetual monthly records for UK news sites) as justification for the ‘free’ model, allowing casual and committed browsers alike unlimited access to their online content, and generating revenue from on-site advertising. While, in the background to this, Rupert Murdoch’s News International has begun to draw its wagons into something resembling a circle, asking users to pay subscription fees to view articles on the Times.co.uk and Newsoftheworld.co.uk sites with the objective of securing an engaged and long-term-loyal audience. While there is no clear answer to the conundrum of monetising digital users at present, the relative secrecy with which subscription numbers and free-to-paid conversion figures have been treated at NI’s Wapping HQ would suggest that the actual picture may be somewhat behind the model at present.

FT.com and the ‘freemium’ model

However, there are exceptions to these examples, in the shape of genuine success stories in the arena of paywalls. The Financial Times was one of the original exponents of paid content, and continues to grow its online base of 3.2m registered users and 206,000 subscribers. While it is clear that FT.com’s proprietary content around financial markets and analysis is a big draw for its target audience, the choice of a ‘freemium’ subscription model is also a key component in the site’s success. Allowing casual and search-sourced users to view a small number of articles, and prompting free registration to read further (albeit still  limited per day); while full subscription provides unrestricted access to the site’s content. It is heavily rumoured that the Daily Telegraph will be following a similar model when it launches its online paywall later this year. The main challenge for the publishers of Telegraph.co.uk will be to try and engage digital their audience with this registration mechanism without the same degree of proprietary journalism as the FT.

Consumers still resisting paid news

Going some way to support some of these approaches, research conducted by GfK NOP during March 2011[1] shows that while more than two-thirds of internet users (71%) access news websites, only 6% of these readers claim to have ever paid to do so. News International recently revealed that its paywall on The Times’ website had managed to convert a total 79,000 users to payment by the end of February 2011; and while only the brave would second-guess Mr Murdoch, it is highly likely that his targets would have been higher than this. It would seem that the paid-news revolution is one which still meets with significant resistance on the part of the consumer. Research has shown that, among those who currently read online news for free, only 3% claim that they would be “Very likely” to pay up for a subscription if their news site of choice blocked access with a paywall. Instead they would turn to the spectrum of free alternatives, right from the simply-syndicated to those with heavy journalistic influence.

Can tablets change the paid news market?

And so, to the tablet market, presently led by the omnipresent Apple in the form of the recently-launched iPad2. It’s easy to see the attraction to the publisher – while mobile phones were once lauded as the future of newspapers, no title really managed to make the transition from broadsheet to small-screen with any great success. The tablet however, a market bolstered by the deluge of new releases from big names like RIM (BlackBerry Playbook), Samsung (Galaxy) and HP (TouchPad), makes a far more obvious medium for newsprint. It offers the editor the opportunity to engage their ‘reader’ in a wonderful portable, media-rich environment, bolstered by WiFi and 3G connectivity to ensure that their news stays one step ahead of traditional printed copy.

The outlook is promising

Although tablet penetration is relatively low in the UK market at present (around 6% according to GfK NOP’s March 2011 research) and skewed to early-adopters and gift recipients, the outlook is promising. Of internet users who do not currently own a tablet, just under a quarter (23%[2]) cited an intention to purchase one in the coming 12 months, suggesting a market which is very much on-the-up. This data is supported by US research[3], which estimates that by the end of 2011 the global tablet market will have grown fourfold against last year, with Apple’s iPad continuing to lead – albeit with a reduced market share, due to incursions from newly-released competitor devices.

This trend has not escaped the attention of the news industry, with almost every publisher of note launching or developing a tablet-friendly service or application. The trailblazer in this arena has been the American publication The Daily, launched in February 2011 (to much fanfare) as the world’s first ever tablet-only newspaper, and currently appearing on the iPad with a daily digest to rival most broadsheets. Its publisher News Corp (owned by Rupert Murdoch) was reported to have invested $30m on its development and launch, with an additional $0.5m a week to keep the fledgling title afloat, with the aim of convincing the younger news audience to part with $0.99 a day or $39.99 a year for a subscription to the service. While The Daily’s publishers have kept quiet any figures around user conversion from the free trial (following Feb 2011 launch) to paid subscription, analysis conducted by the Nieman Foundation at Harvard University[4] shows that the volume of social networking activity (trending metrics and tweets) generated by the application has fallen back considerably since the free trial ended, suggesting a diminishing number of users.
There is a strong likelihood that The Daily will be hitting the UK in summer 2011, although no formal pricing structure has been revealed as yet.

It appears that News Corp isn’t alone in its conviction that this is the future of news. Advertising guru Sir Martin Sorrell, head of global advertising giant WPP Group, has weighed-in with his support for Rupert Murdoch’s strategy, professing an admiration for the current Wall Street Journal and Times iPad applications. While a self-confessed “realist”, Sir Martin holds the belief that “getting people to pay for content is very important”, and that The Daily is “the right way to go”. However, despite once profiting from the previous ‘volume’ approach to digital audiences, it may be hypothesised that Sorrell’s WPP Group has a vested interest in the efficiencies that come from the highly-engaged, well-profiled advertising audience that would frequent such a platform.

Tablet users: “accessing news websites/apps” is the second most important function

Looking more closely at the tablet audience (both current and future owners) and their needs, it is clear that these devices will be used for a broad range of applications and services, both work and play. GfK NOP research suggests that “accessing news websites/apps” is the second most important function to this audience (58% considered this “Important” or “Very important”), behind “email” (at 76%). The other requirements key to the tablet user’s experience look likely to be “accessing work documents/calendar” (53%), “reading ebooks” (52%) and “listening to music” (51%).
As one may have hypothesised, given the tablet’s target audience, it is the younger users who have the greatest diversity of needs from this platform – although the appeal of “news websites/apps” and “email” is much more universal, transcending the age groups.

Tablet users: only one-in-seven would be “Likely” or “Very likely” to pay for news

However, this may not necessarily be heralding the good news that publishers are seeking. It appears that many of the consumer attitudes which have been barriers to the success of online news paywalls may also resurface in the quest to convert tablet users to paid subscribers. Only one-in-seven of the tablet audience (14%) say that they would be “Likely” or “Very likely” to pay for access to news applications/websites on their tablet (only 3% consider themselves “Very likely”).

Conclusion

While it is clear that tablets are a growing market, representing a significant opportunity for news publishers, the transition to gaining an audience who are willing to pay for this service relies heavily on a step-change in consumers’ attitudes to the value of journalism, which is unlikely to happen overnight.

 

Footnotes

1. Online fieldwork conducted by GfK NOP during March 2011, among a representative sample of 930 UK internet users.
2. This figure in reality would be lower than stated as consumers tend to overclaim their intention to purchase products like tablets.
3. http://bit.ly/hDtGJQ
4. http://bit.ly/fP9AZn

Related posts:

1. Apple’s iPad2 vs. Android: who are the contenders for 2011 tablet domination?

Tags: Apple, Blackberry, Dailymail.co.uk, Guardian.co.uk, iPad, iPad2, Murdoch, News Corp, Playbook, RIM, Sorrell, Tablet PC, The Daily