Australia’s largest media company News Limited faces a great challenge in coaxing its broadsheet readers into paying for online content. Can the media giant prove that the well-established model of free online news can be smashed through unique content? Or will other publishers with free models simply pick up new readers?
News Ltd this week set up a paywall at its national broadsheet The Australian, with plans for paywalls for its high-selling tabloids The Daily Telegraph and the Herald Sun next year. It has softened the blow (or delayed the pain) for readers by giving them free access to “locked” content until December, so long as they register. Readers will thereafter be charged between $2.95 and $7.95 per week.
While The Australian is not the first paper to start to charge – the well-regarded Wall Street Journal, the Times and the New York Times have led the way – readers in Australia are used to accessing online news free of charge, and content in tabloids is considered a harder task to charge for than that in broadsheets.
There are also few examples of companies succeeding in asking consumers to pay for a product or service they’ve previously been offered on a platter: bottled water is one and pay TV could be seen as another, although pay TV offers shows not seen on free to air.
So how can they do it? SmartCompany consulted with behavioural economics specialist Bri Williams for advice for businesses looking to risk the short-term pain of a customer backlash for long-term revenue gains.
According to Williams, the opportunity for News is milking consumers’ love of exclusivity to entice people to pay.
Williams says News must first “interrupt people’s expectations by making overt changes to their service to differentiate the old from the new”. This might include a website redesign or new content features – things that show that this is a new product, and one worth paying for.
Williams says at the moment, people are comparing the charge to “free” – which is not a good thing for News.
“They therefore need to introduce comparisons to help frame the relativity of the price point,” she says.
An oft-used approach would be comparing the upcoming pricing to other daily items, such as a car parking or a magazine description. The key here is that the comparison must make the subscription cost seem small.
Williams points out that premium publication The Economist has succeeded in increasing the popularity of its combined online and print offering, by making it the same price as its print-only offering. This helps people see online as great value.
Similarly, don’t remind people they’re paying now. Williams says not talking about it makes the “healing process” easier.
Williams points out that by having a porous paywall that allowed some stories to be accessed free of charge, the New York Times has produced some interesting behavioural outcomes.
“While some people still use the site without paying, they are increasingly feeling guilty about doing it, and this will ultimately lead to conversion. Not dissimilar to public transport fare evaders – it takes some joy out of the experience,” she says.
While there are ways of hitting up consumers who are not used to paying, Williams says companies need to be alert to the sense of entitlement that will come with charging.
“In other words, it shifts from a social to commercial contract and therefore people will expect a different level of service through aspects like site design, features and quality of journalism.”
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
