Introduction: Since the birth of the online medium, Internet news publishers have been
experimenting with various revenue models for their online operations to achieve
profitability: the subscription model, the advertising model, the transactional model,
and the bundled model. However, recent market research shows that many newspapers generated less
than $5 in online revenue per unit of circulation. By 1999, a survey of 64 online newspapers serving California, Texas, New York,
and Florida empirically examined the application of these models in the online news
industry (Chyi & Sylvie, 2001). That study reported quite an unenthusiastic response
to the subscription model. Back then, online advertising served as a revenue source
for almost 80 percent of the sites. Fewer than 20 percent adopted e-commerce and
pay-per-use models. But only three percent of those online news providers were
utilizing the subscription model and most said it would be unlikely or very unlikely to
charge for online news access within the next two years -- i.e. between 1999-2001.
While the fee -based WSJ.com has long served as a classic example for adopting the
subscription model, most online publishers believed that general-interest news sites
would find it difficult to do the same.
The real market development was somewhat surprising. Following the economic
downturn, by 2001, the “free to fee” trend suddenly took off. (For a detailed account
of such practices in the industry, check the website The End of Free at
theendoffree.com). The subscription model re-entered the agenda , and many online
publishers seemed to believe it’s time to start charging for the valuable information
they offer (Outing, 2002).
However, market researchers found little evidence that suggests users are ready
to pay. According to the results of a March 2002 consumer survey, 70 percent of
online adults cannot understand why anyone would pay for content online (Jupiter
Media Metrix, 2002). Another market study revealed that 71 percent of news site
users would go somewhere else because there are so many free sites available. In
addition, the sign-up rate for newspapers that are charging for online access range
from 0.2 to 2.6 percent of the print circulation (Borrell & Associates, 2001).
Little academic research directly tapped into the economic viability of the
subscription model. Findings of an exploratory focus group study showed that while
most participants ranked the Internet their No. 1 information source and were able to
identify many of its strengths and weaknesses as a news medium, they showed no
intent to pay (Chyi, 2002). To further understand users’ response to paid content, this
study attempts to address the following questions:
RQ1: How many users are actually paying for online news access? Why?
RQ2: How many users will be willing to pay for online news access in the future?
Why?
RQ3: What is the relationship between income and the consumption of paid
content online?
RQ4: What other factors (demographics, usage) influence people’s paying intent?
RQ5: What is the general public’s preference for a particular format (online vs.
print)? Why?
RQ6: Is format preference related to paying intent?
Methodology
A random-sample telephone survey of 853 Hong Kong residents was conducted
during November 13-17, 2002 to investigate the general public’s response to online
news.
Hong Kong -- with the highest Internet penetration in Greater China -- is also
one of the most wired cities in Asia. As of 2002, 54% of people aged 10 or over had
used a personal computer and 48% had used Internet services during the previous 12
months (Hong Kong Census and Statistics Department, 2003). Hong Kong also has
the highest newspaper penetration in the region. About 20 daily newspapers remain
active in the market. At the end of 2002, 18 media websites provided online news
services -- 12 were operated by newspapers and six by TV or radio stations. Faced
with the economic viability issue, online publishers in Hong Kong seem relatively
radical when compared with their counterparts elsewhere in experimenting with the
subscription model. Six online news sites are charging (local or overseas) users for
access to at least some parts of the site.
Traditional & Online Media Use
Of all respondents, 97 percent watched TV on a daily basis. 1 On average, a TV
viewer spent more than 2.5 hours watching TV per day. (The median was 2 hours.)
About 89 percent of all respondents read the newspaper, and the average time for
newspaper reading was 57 minutes per day. (The median was 45 minutes.)
In terms of computer use, 63 percent of all respondents aged 15 or above used a
personal computer at home or work on a weekly basis. Computer users rated their
computer savvyness using an 11-point scale (with 0 being not familiar at all, and 10
being extremely familiar), and the mean was 5.6.
Future Paying Intent
Online news users who were not currently subscribing to paid content were
asked to estimate the possibility of subscribing to such content in the future (n=375).
The results also were not very promising. Some 43 percent said it was “unlikely” that
they would pay for online news in the future, while 38 percent said “very unlikely.”
Only 1.3 percent answered “very likely” and 21 percent said “likely.”
An open-ended question probed the reasons for the lack of paying intent:
Nearly 40 percent of those without future paying intent indicated that free alternative
news services exist -- 29 percent mentioned traditional news media and 10 percent
mentioned other online news services. A long the same line, 17 percent said they
would not need such services. Another 17 percent said price was a factor damping
their willingness to pay.
Among those who said they might be willing to pay in the future, the reasons
cited include: “if I have such needs” (21%) and “if the price is reasonable” (15%).
Results:
Overall, the study showed that most online users were not paying for online
news and did not show strong intent to pay in the future, suggesting that the
subscription model is not working and may not work well in the future. The results
correspond with the trend identified in U.S.-based studies using site-centric
approaches (Borrell & Associates, 2001). As the lack of paying intent looks like a
global phenomenon, online publishers worldwide should exert caution when
implementing the subscription model.
The analysis identified no relationship between paying intent and income, gender,
education, or computer knowledge but showed a slight correlation with age . In
addition, time spent online and format preference was also related to paying intent.
These findings carry a few implications.
First, although younger respondents and heavy Internet users were more likely to
pay for online news access, even among the youngest age group or the heaviest online
users, still more than 60 percent reported no intent to pay in the future. Online
publishers should bear this in mind when evaluating the viability of the subscription
model.
Second, regarding format preferences, compared with the print edition, the
online newspaper was clearly less preferred. Answers to the follow -up, open-ended
question also revealed why users preferred different formats. As format preference is
also related to payin g intent, how to change that format preference might imply the
possibility for increasing paying intent. However, while respondents who preferred
the print format seemed able to cite some diverse reasons for their preference for the
print format, those who preferred the online format failed to mention anything other
than “convenience.” It seems that Internet-specific features such as “timeliness,”
“interactivity,” and “searchable databases” were not perceived as important even in
those online lovers’ minds. One cannot rule out the possibility that the online newspaper simply cannot serve
as a profit center like its print counterpart on an equal basis -- by generating
subscription-based revenues from the local market. For the time being, online
advertising still seems like a relatively effective and low -risk revenue driver. However,
if the effectiveness of online advertising still remains questionable, in the longer term,
online publishers might need to reposition their online product accordingly -- as a
complimentary service for readers or as a showcase of its brand name.
Theoretically, this study serves as another step to examine the unique economic
nature of online news. While buying a copy of the print newspaper is not a big deal
for most consumers, what makes them so reluctant to pay for online content? As
results showed that income is not a factor determining paying intent, subjective or
attitudinal variables seem of great importance. Further investigation into the
economics of online news should take these variables into account. On the other hand,
the lack of relationship between income and paying intent provides preliminary
support for the “online news as inferior goods” hypothesis, which should be further
explored with more empirical evidence.
Monday, November 29, 2010
Friday, November 5, 2010
The complementary relationship between the Internet and traditional mass media: the case of online news and information
Introduction: “Death of old media in the face of new communication technologies” is a issue which has received intensive attention in both academic and industrial research. Many researches are conducted on this issue in past decade. But the question whether old media are driven out of existence by new media, has received no definitive answer. I want to disscuss about one of researches on this field and title of the selected research is “The complementary relationship between the Internet and traditional mass media:the case of online news and information”. This research conducted by AnNguyen and Mark Western from The University of Queensland, Australia.
Medium-centred and user-centred perspectives: Since the first empirical attempts to explore the potential effect of new media on old media in the 1940s, there have been two main approaches to the issue: one is centered on the medium and its attributes and supports a displacement and replacement (absolute displacement) hypothesis; the other is focused on users' needs and often results in proposing a complementary effect of the new on the old.
The most pronounced medium-centred approach so far is Maxwell McCombs' Principle of Relative Constancy. This principle was inspired by media owner Charles Scripps, who contended that mass communication products have become staples of consumption in our society (much like food, clothing and shelter) and thus, 'in spite of the increasing complexity of mass communications with the advent of new media, the pattern of economic support has been relatively constant and more closely related to the general economy than to the various changes and trends taking place within the mass media field itself. In other words, as staples, mass communication receives a constant share of the economic pie, or a relatively fixed proportion of all expenditures. Using aggregate data of consumers' and advertisers' spending on mass communication in the USA from 1929 through 1968, McCombs found strong support for this hypothesis: despite some short-term anomalies, the ratio of media spending to total consumer spending remained relatively fixed (around 3%) during the four decades. This media-spending share constancy hypothesis, which was so compelling that McCombs raised it to the status of a principle, was confirmed in a follow-up study for the 1968-1977 decade. During the 1948-1959 period, when television rapidly entered American households, McCombs tested these three possible sources to determine which accounted for television revenue. He discovered that the Principle of Relative Constancy also held for this shorter period of television penetration, which means television did not bring about any significant increase in total media spending (that is, it did not divert from non-media spending).
the constancy concept developed by McCombs is potentially unreliable because of its many theoretical and methodological drawbacks. Extending McCombs's data to 1981, Wood revisited his methodological approach to discover that the Principle of Relative Constancy's inherent hypothesis of income-share constancy in mass media spending, although correct for the whole six-decade period, was not supported in short-run tests. In particular, mass media spending significantly fluctuated from one decade to another and decade-long increases in disposable income were associated with either drop or surge in media spending. Such short-run departures from constancy were found in later studies showing that mass media spending dramatically increased after the VCR penetrated daily life. Son and McCombs found that total mass media spending was up to 3.7% in 1987 from 2.2% in 1975 although they argued that this was a short-term exception rather than something to discredit the long-term Principle of Relative Constancy.
Recent research has also called the constancy assumption into question in the light of demand theory. Noh and Grant found the constancy assumption a biased adoption of consumer demand theory since it only takes income into account and leaves aside other possible explanations. For example, even if income remains constant, consumer spending on mass media will change as the result of a change in the price of a media good. Similarly, Dupagne asserted that the proportional relationship in the Principle of Relative Constancy is inconsistent with the dominant, traditional, micro-economic model of consumer choice and that using different methodological factors might result in conflicting evidence about the Principle of Relative Constancy. Using empirical evidence from Belgium, the study explored five independent variables (income, price, population, unemployment and interest rate) to find that price and population were better predictors of consumer spending on mass media than income.
In a broader context, one could argue that different media as different content (information and/or entertainment) resources will coexist for a number of reasons.
Hypothesises
H1: Internet users use traditional news and information sources more frequently than non-users of the Internet.
H2: Internet news and information users use traditional sources more frequently than non-users of Internet news and information.
H3: Frequent Internet news and information users use traditional sources more frequently than non-frequent users of Internet news and information.
H4: Internet news and information usage is more associated with news and information seeking from more information-intensive sources.
Methodology
This study is based on a secondary data analysis of the 2003 Australian Survey of Social Attitudes, a national social-attitudes survey conducted from August to December 2003, using a stratified, systematic, random sample from the 2002 Australian Electoral Roll. The overall response rate was 44% with a final sample size of 4270.
Result
H1 was not supported but another three was confirmed.
APPLICATIONS FOR IRAN:
We can apply above method in Iranian media. We can explore the effect of internet on Iranian tv which is governmental. At the same time we can try give a answer to a follow-up question: What media is first choich of Iranian people. Before first choice of Iranian was Tv. But Now I think it is changed.
Medium-centred and user-centred perspectives: Since the first empirical attempts to explore the potential effect of new media on old media in the 1940s, there have been two main approaches to the issue: one is centered on the medium and its attributes and supports a displacement and replacement (absolute displacement) hypothesis; the other is focused on users' needs and often results in proposing a complementary effect of the new on the old.
The most pronounced medium-centred approach so far is Maxwell McCombs' Principle of Relative Constancy. This principle was inspired by media owner Charles Scripps, who contended that mass communication products have become staples of consumption in our society (much like food, clothing and shelter) and thus, 'in spite of the increasing complexity of mass communications with the advent of new media, the pattern of economic support has been relatively constant and more closely related to the general economy than to the various changes and trends taking place within the mass media field itself. In other words, as staples, mass communication receives a constant share of the economic pie, or a relatively fixed proportion of all expenditures. Using aggregate data of consumers' and advertisers' spending on mass communication in the USA from 1929 through 1968, McCombs found strong support for this hypothesis: despite some short-term anomalies, the ratio of media spending to total consumer spending remained relatively fixed (around 3%) during the four decades. This media-spending share constancy hypothesis, which was so compelling that McCombs raised it to the status of a principle, was confirmed in a follow-up study for the 1968-1977 decade. During the 1948-1959 period, when television rapidly entered American households, McCombs tested these three possible sources to determine which accounted for television revenue. He discovered that the Principle of Relative Constancy also held for this shorter period of television penetration, which means television did not bring about any significant increase in total media spending (that is, it did not divert from non-media spending).
the constancy concept developed by McCombs is potentially unreliable because of its many theoretical and methodological drawbacks. Extending McCombs's data to 1981, Wood revisited his methodological approach to discover that the Principle of Relative Constancy's inherent hypothesis of income-share constancy in mass media spending, although correct for the whole six-decade period, was not supported in short-run tests. In particular, mass media spending significantly fluctuated from one decade to another and decade-long increases in disposable income were associated with either drop or surge in media spending. Such short-run departures from constancy were found in later studies showing that mass media spending dramatically increased after the VCR penetrated daily life. Son and McCombs found that total mass media spending was up to 3.7% in 1987 from 2.2% in 1975 although they argued that this was a short-term exception rather than something to discredit the long-term Principle of Relative Constancy.
Recent research has also called the constancy assumption into question in the light of demand theory. Noh and Grant found the constancy assumption a biased adoption of consumer demand theory since it only takes income into account and leaves aside other possible explanations. For example, even if income remains constant, consumer spending on mass media will change as the result of a change in the price of a media good. Similarly, Dupagne asserted that the proportional relationship in the Principle of Relative Constancy is inconsistent with the dominant, traditional, micro-economic model of consumer choice and that using different methodological factors might result in conflicting evidence about the Principle of Relative Constancy. Using empirical evidence from Belgium, the study explored five independent variables (income, price, population, unemployment and interest rate) to find that price and population were better predictors of consumer spending on mass media than income.
In a broader context, one could argue that different media as different content (information and/or entertainment) resources will coexist for a number of reasons.
Hypothesises
H1: Internet users use traditional news and information sources more frequently than non-users of the Internet.
H2: Internet news and information users use traditional sources more frequently than non-users of Internet news and information.
H3: Frequent Internet news and information users use traditional sources more frequently than non-frequent users of Internet news and information.
H4: Internet news and information usage is more associated with news and information seeking from more information-intensive sources.
Methodology
This study is based on a secondary data analysis of the 2003 Australian Survey of Social Attitudes, a national social-attitudes survey conducted from August to December 2003, using a stratified, systematic, random sample from the 2002 Australian Electoral Roll. The overall response rate was 44% with a final sample size of 4270.
Result
H1 was not supported but another three was confirmed.
APPLICATIONS FOR IRAN:
We can apply above method in Iranian media. We can explore the effect of internet on Iranian tv which is governmental. At the same time we can try give a answer to a follow-up question: What media is first choich of Iranian people. Before first choice of Iranian was Tv. But Now I think it is changed.
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