Most newsbrands to use paywalls by 2016, new report finds

A new report has shown that only 27% of media companies expect significant profit margin increase in the next three years, spelling a likely end of the ‘for free all’ business model used by most newsbrands.

As media companies struggle to generate online revenues it is likely that within three years 90% of online newsbrand content will be behind paywalls the report says.

The global pricing study by Simon-Kucher & Partners notes that the media sector has the most pessimistic outlook compared to other industries, and that the ‘free for all’ culture could come to an end by 2016.

“Media companies clearly see optimised content offers (print and online) as key success factors for the future, but these offers need to be priced correctly,” said Mark Billige, UK managing partner of Simon-Kucher & Partners.

“Media sector senior management has understood the importance of switching to paid content for websites and apps as digitisation grows. But thus far, few companies have made the leap of faith in establishing pricing functions, which have powerful impact on value perception and prices charged,” he added.

In a separate study on digital broadsheet newspaper pricing, 50% of participants thought that £15.00 per month was too expensive to pay for content, however David Smith, senior consultant at Simon-Kucher & Partners believes that readers “could be educated to pay more”.

Billage concluded: “Every point of margin you can get from a price increase is critical in today’s tough climate, and more so for online content providers whose customers have been used to everything for free.”

The Daily Telegraph will be the first UK newsbrand to introduce a metered paywall for its online site, charging users £9.99 per month for content access.