What Consumers Want: Free Content
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As publishers and entertainment producers grudgingly warm to the idea that advertising alone might not be enough to support quality content on the Internet, they have begun to experiment with a wide variety of schemes to charge consumers for the online versions of their products.
But a new global study from Nielsen offers a bounty of data points confirming what many implicitly assumed -- that is, that consumers aren't going to be eager to begin paying for content that they've become accustomed to receiving for free.
Perhaps the most unsurprising of the survey's findings is that the overwhelming majority of the more than 27,000 respondents -- 85 percent -- said they would prefer content on the Web to remain free.
Then there is the ocean of cheap-to-produce content on the Web, ranging from blogs and podcasts to social networking sites and user-generated videos, which as a class has only a slim chance of succeeding with a pay model, according to the survey.
"In between are an array of news formats -- newspapers, magazines, Internet-only news sources and radio news and talk shows -- created by professionals, relatively expensive to produce and, in the case of newspapers and magazines, commonly sold offline," the Nielsen researchers wrote in their study. "Yet much of their content has basically become a commodity, readily available elsewhere for free."
And there's the rub. Seventy-one percent of consumers said that they would only pay for online content that is "considerably better" than what is available on the Web today for free. Meantime, 79 percent said they would drop a Web site that implemented a pay model, provided they could find the same information elsewhere for free.
For entertainment producers, that serves as a reminder that they will continue to battle digital piracy if, for instance, a site like Hulu moves to a pay model, as has been widely rumored.
For magazine and newspaper publishers, the glut of free online news aggregators poses a significant challenge to any attempt to implement a pay wall, whether it's an all-access subscription or a per-article micropayment model. Sites like the Huffington Post, Newser and countless other blogs have sprung up and thrived in large part by summarizing and linking to the content produced by other news outlets. Then search aggregators like the news pages offered by Google (NASDAQ: GOOG) and Yahoo (NASDAQ: YHOO) present visitors with multiple links to different stories about the same news event, an environment that the Nielsen findings suggest would be hostile to sites with pay walls.
But big-name publishers, most notably The New York Times, are rolling the dice with a pay model as online advertising receipts have proven incapable of sustaining large newsroom operations. The Wall Street Journal continues to lock much of its content behind a subscription wall, though it, like the Financial Times, is often considered an exception due to the specialized nature of its content and its unique ability to sell corporate subscriptions. Nevertheless, many other News Corp. properties are following suit, as CEO Rupert Murdoch has become one of the loudest advocates of reviving the paid content model on the Web.
The Nielsen study suggested that for all the ferment in media circles, many of the concerns haven't yet gained traction in the popular imagination. For instance, just 34 percent of respondents said they believed that the quality of online content would suffer without a pay model. Thirty percent said they did not think it would matter, while the remaining 36 percent didn't have a firm opinion.