3 reasons why people pay for content

During time spent on the internet, we often encounter pay walls and subscriptions to access content. Most of the time, when we access content for free, we end up having an e-mail box full of advertising spam.

However, the sheer scope of the web means that we do manage to get much of the content for free. And that content can be easily reproduced, changed and reinvented. For news media, we have witnessed an exponential proliferation of information across all platforms that allows people to catch up with the news either for a fee or for free. In the case of entertainment, cable tv offered vast programme choices that have been enhanced even further with the appearance of platforms such as YouTube, Facebook and Instagram.

So why should consumers pay for content?

1. Quality and trust

This report shows that across six countries – China, Germany, India, South Korea, United Kingdom and United States – people pay for subscriptions because it enhances their trust in the quality of the content and reassures them that their personal data is safe. This trust comes largely from their positioning as a quality brand. In the case of news, the most heavily subscribed brands are those aligned with values such as reliability, truthfulness, objectivity and integrity. A study released by the Center for Media Engagement found that more complete information regarding a topic gives consumers a higher sense of trust. This explains why subscriptions continue to grow for well-established brand in the news media sector, such as New York Times, Wall Street Journal and Financial Times.

Likewise, in the entertainment sector, streaming services that work through subscriptions perform better than network TV and Cable TV across all the criteria. This year, Netflix received 24 nominations for Academy Awards, while in 2019 received 117 Emmy nominations and won 27. This “quality” strategy was already tested by HBO which has in its portfolio some of the most iconic programmes of recent years: Game of Thrones, The Sopranos, Chernobyl, My brilliant friend and Westworld, to mention few of them. With some differences, Amazon Prime, Hulu and Disney+ seems to be following the same path, offering value to paid subscribers through high quality, original content.

2. Accessibility

The findings of this white paper also highlight that one of the reasons why people are willing to pay for entertainment is the possibility to access and benefit from content at any time of the day, confirming once again that one of the points of strength of the streaming services is the promise to enjoy entertainment at any time, an asset that broadcasting lacks by nature.

When accessibility is extremely extensive, however, it can also discourage paid subscriptions. When survey respondents are asked why they don’t subscribe to services, in five out of six countries, they say they prefer not to pay as content is available for free.

When online, people find entertainment easily without paying subscriptions. According to a recent study, 90% of users spend their time watching online videos, but this does not mean that they are watching paid content. Much of the time is spent on platforms that fund their content through advertising, such as Facebook and YouTube. These platforms tend not to be in direct competition with streaming subscription services (although some do require subscriptions, such as YouTube Premium) as they don’t provide any original content and they don’t assure quality. Instead, payment tends to eliminate advertising for users.

The same pattern that applies to entertainment subscriptions surprisingly applies to news subscriptions. The “I can get it for free” leitmotif is the most cited among the reasons why people do not subscribe to news services while the availability of content is at the same time the main motive to have a subscription in the first place.

It is true that most newspapers all over the world provide limited access to free content online - sometimes around 3 or 4 articles per month - and that many broadcasters such as BBC or CNN offer news services completely free in some countries. These services work for those who are happy to stay up to date regarding the latest news however, they do not provide in-depth content or opinion, which are the real game changers for newspapers such as Financial Times or New York Times.

3. Fewer ads and less risk for your personal data

Advertising has been for years the first source of revenue to fund content. Today, this model is in doubt. According to this study, “it appears difficult to produce high-quality digital content that is exclusively funded by advertising. In the news industry, online advertising revenue per user is less than 10% of that in print.” Moreover, our evidence suggests that the “respondents are aware that advertising can subsidise content creation, as a result of the use or sale of personal data by media companies.” Paid content seems to translate to better control of personal data.

Silvia Pasquini, Intern, Media, Entertainment and Culture: Value in Media, World Economic Forum