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Tablet Users Willing to Pay for Digital Content

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.”

Are you reading this on a tablet? Write us at editors@ebnonline.com, and let us know.

13 comments on “Tablet Users Willing to Pay for Digital Content

  1. _hm
    September 27, 2011

    Tablet is relatively new device and may be upper or prosperous people are first users. Being rich, they may be willing to pay for the content. This survey should have also included family income as parameter.

    However, if digital content is made attrative, yes, people will endorse it. I will too for news paper and magazines.

     

  2. Ms. Daisy
    September 27, 2011

    I think the free access to information from multiple sources on the web has laid the foundation for the expectation of free digital news content by many internet consumers. I am not surprised at the low percentage of people willing to pay for digital news. A lot of people look for the snip bits of news flashed on sites like MSN, AOL, and Goggle during the day because there is always a follow up detail by CNN, Fox, ABC and MSNBC to follow later in the evening. This is not different for Tablet users. The print media still have opportunities to target the Tablet users if the digital content is streamlined to specific audience, an example is this site. The general newspaper format will not sell. 

  3. Tim Votapka
    September 27, 2011

    Tough one to predict. Personally I don't see a big rise in digital subsciptions on a mainstream basis; not when there are unlimited, free resources available including social media. May be different in special interest areas and subject areas, and that's a survey question I'd like to see.

  4. JADEN
    September 27, 2011

    Technology move is changing the World of journalism as digital magazine is the new wave of the profession.  Lots of interactive contents are available on digital magazines.  Tablets make online content vastly more consumable, presenting it in a magazine format, hold it on the lap and easy to carry about.  Forget the hefty laptop with the power cord that weigh you down, an Adroid magazine app makes a tablet consume news as easy and convenient right in your lap.

  5. Daniel
    September 28, 2011

    Barbara, many of the peoples are using laptop or desktop, either in office or home. So for that purpose most of them not mind to pay for digital subscriptions. But for the tablet and smartphones, the situation is different. They are very hand and almost everybody would like to carry it on the go. so that could be one of the reasons, where increased number of digital subscriptions for tablets.

  6. saranyatil
    September 28, 2011

    With increase in screen size of smartphones and launch of tablets there is definitely a great mileage for digital content. It make life simpler where we can read journels books online just holding a device which light and easy to carry instead of carrying the whole book or newspaper. Devices can become ready reckoner for news.

    There will be many users who may opt for this service.

  7. Jay_Bond
    September 28, 2011

    This article brings up some excellent points about how companies are marketing their products and are they marketing them to the proper people. I still have at least 8 magazines sent to my house regularly. I am willing to pay for the few that I read on a regular basis. When offers come my way, no matter how much the price is slashed, if I don't think I will read it often enough I don't buy. I typically read my news online, either with my smartphone or on my laptop. We have the paper delivered mainly for the Sunday ads and coupons.

  8. Himanshugupta
    September 28, 2011

    I seriously cannot believe that tablet can change the mindset of the people so much. If i consider myself then if i do not have paid news/magazine subscription while i own a laptop then i will not buy the subscription even if i own a tablet. Has the survey consider the thought that those who own tablets are ready to pay for the services even if they do not own(hypothetically) them, maybe its not tablet which is the cause but mere effect.

  9. Taimoor Zubar
    September 28, 2011

    I think reading content on tablets will rise greatly, but I don't think people would, in general, switch towards paying for that content. When online news took over the print media, it made the content available for free and brought about a shift in the model. I don't think it's easy to make the people go back to the paying model.

  10. Ashu001
    September 30, 2011

    Himanshu,

    Your viewpoint is quite natural and not very hard to understand here.

    There is also a strong possibility that the set of customers who are buying a Tablet today already belong to the affluent category of customers who would'nt mind splurging a few extra dollars here and there.

    That does not mean that tablets have converted non-customers into customers(as of yet)-Its still early days to figure/make out those trends(based on what can only be dream-like consulting numbers).

    Our Very own,Consulting Editor also has a lot to say about this issue here

    http://www.ebnonline.com/author.asp?section_id=1038&doc_id=233855

    Regards

    Ashish.

  11. Ashu001
    September 30, 2011

    Barbara,

    I just read an interesting article on Businessweek regarding Amazon and its Tablet strategy(especially the new Kindle Fire).

    Its a most fascinating read and corroborates your line of thinking in this blog-post.

    Do read

    http://www.businessweek.com/magazine/the-omnivore-09282011.html

    But the best part of the article was were Jeff Bezos(founder of Amazon) said this-The market is big enough and growing fast enough for more than one player.

    Exciting times for component suppliers for sure…

    Regards

    Ashish.

  12. KPorter
    September 30, 2011

    While I've always a staunch supporter of protecting IP, and paying for content using a tablet has actually inspired me to pay for more content myself.

    I'd stopped subscribing to magazines, because honestly, I rarely have time to sit down and read one. In fact I'd unsubscribed because they just end up piling up and cluttering my space. A smart phone screen is too small, and a laptop hurts my eyes after a long day of work. I also don't want to have to pull out and set-up my laptop when I'm home relaxing.

    On a tablet, it's easy to have the whole magazine right there, and have it with me where ever I am.. It doesn't leave me stuck, sitting around in front of a computer for even more time during the day.

    The huge amount of information I go through to direct and manage social media, brings me to articles that I like, and introduces me to content I didn't see before — something I wouldn't have found just browsing through a magazine rack. Suddenly now I can also bookmark it, and come back to it again later.

    I agree, just from my own use experience, that if publishers and content developers have packaged and pay/per options, that tablets might actually bring a little refreshment back into the industry — though not revive things altogether.

     

    Kaye Porter

    Social Media Director — GDCA

     

  13. _hm
    October 2, 2011

    Apple with iPod has contributed significantly in reducing price for customer who pay for content and providing more revenue to the content provider. Perhaps, that is ideal model. Service like iTune should be available for different types of contents too.

     

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