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Premium or Bust: Will customers pay for digital content?

When it comes to monetizing digital content, there are a few different models providers tend to go with:

  1. Provide the content on a paid subscription basis
  2. Offer free content, then generate revenue through ads
  3. Make the content available for free, then capitalize on the collected customer data

Generally, customers tend to be okay with at least one of these models—it’s when they feel that they’re paying for content twice, with information or ad revenue and cash, that content providers run-up against friction.

However, there is a discrepancy between what customers believe and the reality that content providers face. In many cases, one revenue stream is not enough to support an entire organization and also deliver the level of content customers expect.

Looking at newspapers and magazines for example, many customers believe that these media outlets make more than enough money off of ad revenue and digital data, so there is no need to pay for the content. In truth, digital products contributed just 25% of overall ad revenue just 25% of overall ad revenue for newspapers in 2015, and that was due less to an increase in digital ad spend but more to a rapid drop in print ad revenue.

In most cases, print content effectively subsidizes digital content for media outlets, but consumers’ willingness to pay for digital content is not keeping pace with the drop in demand for print. In early 2016, only 6% of UK residents reported that they would be willing to pay for news content online, meaning that for these outlets to thrive going forward, they will need to define customers’ expectations regarding new media.

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