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A hugely significant KPMG survey has somewhat conclusively confirmed what we have long known – people are not prepared to pay for web content. More specifically, Brits, more than other nations, are particularly in opposition to the idea. This may give some indication as to how successful pay walls for news sites will actually be.

Four out of five say no way

The KPMG survey, which had 5,627 respondents from 22 different countries, found UK citizens the most unwillingly to pass over their hard-earned pounds for news content. Of the Brits quizzed, 81 per cent said they would not shell over money for web content.

What were the findings?

Speaking to The Telegraph, Tudor Aw, who heads up technology at KPMG Europe, explained that: ‘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 pay walls are put up.’

He went on to explain that customers have, however, become receptive to the necessity of advertising models and in allowing sites to track their user profiles (presumably for hyper-specific ad targeting). But what Mr. Aw did not explain is that the average cost advertisers pay per impression has dropped notably in recent years, and that most newspapers cannot sell out their advertising capacity, making a certain percentage of these ‘free viewers’ worth nothing to the news publications.

Times paywall under the spotlight

This KPMG finding and Mr. Aw’s assertion is of great significance to the global newspaper industry, and more specifically Great Britain, with Rupert Murdoch’s Times Online recently going behind a pay wall. As an immediate effect, the publication has seen what all know to be a massive drop off in subscriber numbers, but what the media industry waits with baited breath to see is whether revenue is greater as a result of the paid subscribers.

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It’s the newspaper business making the switch from its reliance on impressions and advertising to subscription and charging users. This has worked for highly targeted financial publications like the WSJ, but whether it will work for a generalist site like Times Online remains to be seen.

Focus on delivery platforms, not content monetisation

Some publications have attempted to mitigate the challenges of online monetisation by introducing different delivery methods to new platforms. Dedicated magazine apps have propped up all over the iPad, for example, with some companies heralding their existence as a major success since they charge users for the app and the service. How is the iPad, or any tablet or eBook delivery platform different from the web? Well, firstly, it isn’t really – the content you get is often times identical, but it’s that tablets can ‘simulate’ the magazine and newspaper ‘feel’ that make people feel comfortable dealing with the ‘mobile’ pay walls.

Whether this trend continues remains to be seen, but the great pay wall experiment lead by Times Online is in full swing, and there’s not a soul in the media world not anxious to see how it will pan out.

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Several months ago we wrote about Times Online and the Sunday Times going behind a rather pricey pay wall that meant access would be limited only to those who paid for it. This Sunday Times pay wall has since taken effect. The Guardian newspaper is pulling in the opposite direction, though, with its latest innovation seeing the company opening itself to sharing content more.

The Guardian blog plug-in

The Guardian blog plug-in will allow websites to embed the full text of a Guardian new article directly into their post. This is great, considering innovation like this has been seen around press releases and commentary around that. Specialist sites, like this one, will essentially be enabled to do the same with the original Guardian story and be able to comment around that.

But before you mistake this for Guardian-like benevolence, this plug-in comes with a huge catch. Sites that use this plug-in have to embed the website’s advertising, too.

It’s a game of capacity

When it’s boiled down to its essence, this whole pay wall vs. no pay wall argument is an advertising capacity and revenue game. In fact, it boils down to revenue. Insofar as Newscorp sites, in this case the Times and the Sunday Times, cannot sell the advertising capacity they have based on the number of impressions they receive, blocking free access may not have as negative effect as many suspect it will. If the revenue it receives from paying customers, coupled with the depleted advertising capacity being sold out in full, this move could be a masterstroke on the part of Rupert Murdoch.

Photo: Apple

The same applies to the Guardian. If what that site is searching for is more impressions to advertise against – that is, if they have more willing advertisers than they have advertising ‘space’ – this ‘sharing’ plug-in is ingenious.

Mobile devices add to the tip-toe

As if the challenges for the news industry aren’t varied enough, publications are having to face the dual threat-promise new devices bring to their businesses. What the iPad and other tablets mean for this space has been debated at length, and for our money, the Guardian seems more inline with the times.

Photo: Apple

Speaking at All Things Digital, Steve Jobs touched on competitors ranging from Google to Adobe and product performance within his company, too. One area that has not gotten the kind of coverage it deserves, considering the forum, is his opinion on the future of the newspaper business.

Democracy depends on a healthy press

The conference, which ironically, was opened by Newscorp big wig Rupert Murdoch, saw Jobs premising his opinion on his belief that ‘democracy depends on a free, healthy press.’ As a result, Apple is prepared to assist traditional journalism in any way that it can to stabilise the financials of the newspaper business.

The iPad, which is partly envisioned as a platform for distributing digital content and news is one such example of Apple’s ‘assistance’ (at a profit, of course) of this industry. And Steve Jobs believes the rich platform can provide an opportunity to monetise better than a mere web page can saying, ‘I think people are willing to pay for content’ – a sentiment Rupert Murdoch shares with Steve, considering the pay wall going up for the Times Online.

The bloggers’ perspective

Photo: Matthew Yohe / Wikimedia Commons

Blogging – whether done professionally or casually – is partly responsible for the decline of the newspaper business. The ability to get information online for free – in the sense that users do not pay for it directly – has put pressure on the newspaper industries, raising fears about the future of the press business. This pressure has led to a radical rethink in how the press industry monetises content.

The nexus sits snuggly between demand and supply, as well as rethinking the business model – something Apple is keenly aware of. Insofar as the quality of reporting is of a level so high and exclusive, people will pay for it. This is the very reason publications like the Financial Times and the Wall Street Journal can charge premium subscription prices. However, where we start getting to industries, like technology reporting, where blogs do a comparable (if not superior) job to traditional outlets, the ‘professional’ press will struggle to compete by charging for content.

Beyond ideas

It’s not so much that Steve Jobs is wrong in sentiment, it’s that the business, one steeped in heavy tradition, needs to rethink how it makes money. And perhaps old stalwarts of the newspaper business like Rupert Murdoch aren’t capable of pulling new tricks. Perhaps.

Photo: Apple

Rupert Murdoch’s divisive initiative of erecting a pay wall for his newspaper properties has come to bear, with the Times Online set to charge from June 2010 onwards.

A pound per day, two per week

Users will be charged in one of two ways – by either paying £1 for a day’s access or £2 for a week’s access to both sites. Seven day print subscribers will be granted access without additional charge.

Smaller, more lucrative audience

The Newscorp property is losing over £7 million pounds per month, with Rupert Murdoch betting the massive loss in audience from the pay wall will result in a more monetizable audience in those who choose to stay. With the times currently having 20 million unique users a month, its expected a massive percentage of that readership will be lost. But with reports of excess inventory – advertising space that could not be sold for a certain amount of users – a part of the hit will not be felt at all. The rest of the advertising revenue lost may be made up from revenue collected from paying customers.

Free information

Photo: Amazon

Professional blogs, coupled with advertising supported news sites and the glut of amateur publishing out there has led many to believe information on the Internet should be free. Rupert Murdoch, and various voices in the newspaper industry, most notably the AP, obviously disagree with that sentiment yet are having a hard time bucking the trend.

The mobile devices play

With the Kindle store – and other e-reader platforms – allowing publishing houses to sell applications to access their content and the supposed saviour in the iPad soon to be released, publishing houses are reaching at every avenue possible for additional advertising dollars.

Given that the advertising revenue for UK newspapers fell more than £700 million last year, Rupert Murdoch may feel that a pay wall for Times Online and his other properties is the way to go. Given the success of the Wall Street Journal, at least, his theory that people are prepared to pay for high quality content even online may still be proven true.

If not, Times Online is gifting readers to competing publications.