Tablet computers are clearly changing the way users view digital content, but a recent study indicates tablets may also influence users' willingness to pay for that content.
Tablet users are more likely to pay for online subscriptions to newspapers and magazines than users of laptops, PCs, or smartphones, according to research from FTI Consulting Inc. “These results suggest that well-formulated digital media strategies may offer new revenue prospects to traditional media,” the researcher says in a press release.
The study has significant implications for print media, which have been hit hardest by the transition to digital content. Mobile computer users have largely been willing to pay a nominal fee for music, video, and movie downloads. They have been less willing to pay for newspapers or magazines.
According to the study, which polled more than 1,500 tablet, PC, and smartphone users, 74 percent of respondents read news online, but only 21 percent pay for that online news access. And just 7 percent of the readers who do not currently pay say they would be willing to do so.
Also, 53 percent of tablet users (and 35 percent of nontablet users) said they could be induced to pay for some features. For example, about half of users ages 18–45 said they might pay for a bundled combination of digital and print content.
Authors of the study said media companies may be targeting the wrong audience of prospective users. From the press release:
“If you are asking whether people who currently refuse to pay for online newspapers will begin to pay, then you are focused on the wrong opportunity. Media companies may win a small number of converts focusing on 'new' customers; but the real opportunity exists among individuals who currently have print subscriptions or are regular newsstand purchasers. It's these individuals who can be enticed to pay for a bundled print/digital subscription that offers special features unavailable to non-subscribers,” said Bruce Benson, a Senior Managing Director and Global Leader of Communications, Media and Entertainment Solutions at FTI Consulting.
Another interesting finding is that tablets are not the preferred device for social media interaction:
Instead, tablets are used primarily for consumption and appear to serve as “discovery devices” for video content online, possibly driving some users to increase TV subscription expenditures after becoming a tablet owner. The report also reveals that both tablet and non-tablet users show strong willingness to substitute digital for conventional media when they have online alternatives available.
I'm actually surprised by the findings. I don't pay yet for online subscriptions to many of the newspapers and magazines that I buy. I figured that I'm still the prime target for all those telemarketers (which still call me on a regular basis).
As a business journalist, I'm thinking about our readers. My company provides all types of digital content, and I'm directly involved in most of them. The FTI press release also says:
“Tablets offer an important new front to woo consumers who already have shown a willingness to consume and pay for content. While tablet devices are not the panacea for the ills of the consumer entertainment and news media industries, these devices clearly can provide a valuable and viable boost for revenue-challenged content production and media companies,” added Benson. “Tablets must be understood for the potential they offer. A key element in stemming the decline of traditional revenue streams and monetizing digital revenue is to focus on what tablet users consume and want to consume and to provide that content to them with a reasonable value proposition.”
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