Survey: Readers don't want to pay for news online

The Jakarta Post, The Associated Press , New York | Mon, 03/15/2010 12:19 PM

Getting people to pay for news online at this point would be "like trying to force butterflies back into their cocoons," a new consumer survey suggests.

That was one of several bleak headlines in the Project for Excellence in Journalism's annual assessment of the state of the news industry, released Sunday.

The project's report contained an extensive look at habits of the estimated six in 10 Americans who say they get at least some news online during a typical day. On average, each person spends three minutes and four seconds per visit to a news site.

About 35 percent of online news consumers said they have a favorite site that they check each day. The others are essentially free agents, the project said. Even among those who have their favorites, only 19 percent said they would be willing to pay for news online - including those who already do.

There's little brand loyalty: 82 percent of people with preferred news sites said they'd look elsewhere if their favorites start demanding payment.

"If we move to some pay system, that shift is going to have to surmount significant consumer resistance," said Tom Rosenstiel, director of the project, part of the Pew Research Center.

Last year, online advertising saw its first decline since 2002, according to the research firm eMarketer. Four of five Americans surveyed told the project that they never or hardly ever click on ads.

Despite a lot of choices, traffic on news sites tends to be concentrated on the biggest - Yahoo, MSNBC, CNN, AOL and The New York Times.

"There was this view that we're retreating into our own world of niche sites and that's not true," Rosenstiel said.

That offers a glimmer of hope for establishing a pay system if operators of the biggest sites could somehow agree on how to do it, he said. The survey found that if forced to make a choice, consumers prefer some kind of subscription service to a pay-as-you-go plan.

The Wall Street Journal requires readers to pay for content and The New York Times recently announced plans to charge for full access to its Web site. Starting next year under a metered system, Times readers will be allowed to click on a certain number of stories for free each month, with fees kicking in for readers who exceed that level.

In addition to attempts to reach back and charge readers for content they have become accustomed to getting for free, news executives hope that advances in technology and changes in consumer habits will provide future revenue opportunities.

The Associated Press last month announced a new business unit, AP Gateway, designed to develop and promote products that will help the cooperative, newspapers and broadcasters create revenue-producing products. The AP, for instance, will charge for an application it is developing for use on the iPad, Apple's tablet computer.

While consumers may seem reluctant to pay for news, they're more likely to pay for the functionality of news products on various devices, including smart phones, said Jane Seagrave, senior vice president and chief revenue officer at The Associated Press.

"I'm more hopeful now than I ever have been," Seagrave said. "There seems to be a broad understanding that there is a value to professional journalism that is at risk right now."

Pew's survey also noted how news habits are changing rapidly. Blogging is declining in frequency, one quarter of Americans now say they get some news on their mobile phones and people are looking for news more frequently on social Web sites, the survey found.

For the online survey, the project interviewed 2,259 people from Dec. 28, 2009, to Jan. 19, 2010. The margin of error is plus or minus five percentage points.

Beyond the online activity, the study found that cable news, led by Fox News Channel, seemed to be the only sector of the news industry thriving.

Newspaper advertising revenue fell 26 percent in 2009 compared to the year before, the study said. Local TV and radio ad revenue were both off 22 percent. Network television ad revenue was down 8 percent.

Network news division resources are down more than half since the late 1980s, and that doesn't count ABC News' recent announcement that it could lose as much as a quarter of its staff due to cutbacks.

Newspaper spending on reporting and editing has fallen roughly 30 percent over the past decade, probably more at many big-city dailies, Rosenstiel said.