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We won't pay for digital content, say UK consumers

Written by Chris Andrews

Target us with advertising, use our profile data, but keep your paywalls

Lumping humanity together as 'consumers' and attempting to create universal models to get them to part with their money would appear to be a business model destined to fail, as a new survey from KPMG has demonstrated.

Consumers & Convergence IV is the firm's annual survey of consumers' day-to-day use of mobile and PC technology. The question at hand concerns digital content, and the willingness of people to pay for it. The survey polled some 5,627 people from 22 countries, and found that globally 43% of them were willing to pay for access to frequently used online content. This figure jumps to 59% among Asia-Pacific countries.

Based on those figures, one could imagine a world dominated by paywalls, the once free and open Internet evolving into individual members clubs where content comes at a price. But these figures are not universal. In the UK, 81% of the population would go elsewhere for content if a previously free site began charging – so 19% willing to pay, or less than half the global average.

People are willing to pay for some types of content, with 50% willing to pay for games, 44% for music and 35% for video, but overall the results are not good for, for example, newspapers hoping to boost their revenues with paywalls.

People in the UK, however, are more willing to accept targeted advertising on PCs and mobiles and despite concerns over privacy, are willing to share personal profile data. Almost three quarters of those surveyed were willing to receive online ads in exchange for lower content costs, while 48% were willing to allow their personal profile data to be tracked.

The survey found that with this willingness to accept ads, comes a desire for these ads to be tailored to personal interests and activities. KPMG said this corresponded with an increase in people's willingness to allow their online usage and personal profile information to be tracked, if it resulted in lower costs, with 48% willing to do so, up from 35% in the 2008 survey.

"Although consumers are resistant to paying for content, they are becoming more accepting of viewing advertising and for their profile information to be tracked," said Tudor Aw, Head of Technology at KPMG Europe. "This continues a trend we have seen in previous years and again acts as a pointer as to whether a pay or ad-funded model will eventually succeed."

It seems odd that while nearly half the population is willing to allow that profile tracking, security and privacy remain major issues for people both globally and in the UK – nine out of 10 globally and some 86% in the UK worry about these things.

Mr Aw thinks this can be explained by the distinction between uncontrolled and regulated use of information. "At first sight, these concerns over privacy might seem to conflict with our findings that consumers are more willing to have their profile information tracked," he said, "but there seems to be a clear distinction in consumers' minds between uncontrolled use of personal information and properly regulated use. They do see the value in allowing service providers to have access to the information necessary for more tailored services, but they are only prepared to do this if the risks are controlled and, crucially, if there is some value in it for them."

So at present, for the UK anyway, clever targeted advertising appears to be the model that will keep people on site. As Mr Aw concluded, "UK consumers still haven't come around to the idea of paying for digital content and are clear that they will move to other sites if paywalls are put up."

So what does this mean for Rupert Murdoch, and specifically the Times newspaper, which established its paywall at the beginning of July?

There have been various figures reported, based on Hitwise numbers and others, and the results thus far haven't been great. While the Times itself hasn't released any official figures of how many people are actually paying for access, Hitwise showed that it had lost two thirds of its market share by visits since the paywall was erected, with the Guardian reporting that this was more likely to be around 90%.

This isn't far off predictions made before the paywall went up, with Sunday Times' editor, John Witherow, saying in May that "perhaps more than 90%" of pre-registration readers were likely to be lost once the registration-only service was implemented.

In the weeks before the paywall went up, the Times received an average of 4.29% of all visits to the News and Media – Print category, according to Hitwise, but by the week ending 10 July 2010, that market share had dropped to 1.43%, or just 33% of where it had been five weeks previously.

The data for the week ending 17 July showed that market share dropping off further to 1.37%, though the rate of decline was slowing. We're still waiting to see where those figures will stabilise and for some official numbers from the Times itself.

In saying that, it is very early days. It took the Wall Street Journal, a specialist newspaper with a generally affluent readership, years to attract its million paying customers. Whether a generalist paper like the Times, with the majority of its content available through other sources, will be able to achieve similar remains to be seen. If the KPMG figures are to be believed, however, it's not going to be a smooth ride.

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