The more newspaper copies people bought in a country 20 years ago, the more people in that country are paying for online news today, INMA analysis finds. This insight might help size the opportunity for online subscriptions.
What is the evidence
I found a positive correlation when compared the proportion of adults who paid for online news across 25 mature markets in Europe and North America, per Reuters Institute’s Digital News Report, to the number of print newspaper copies sold in a given country 20 years ago, per WAN-IFRA’s World Press Trends.
For example, countries with educated and affluent populations, such as Norway or Sweden, had strong reading cultures in the past, buying up to 700 newspaper copies per capita.
Today they are leading the transition to paid news, with up to 45% of adults having paid for online news in the past year.
The Internet changed the way audiences access the news, but it did not perhaps alter the fundamental dynamics — news is most valuable to politically, socially, and economically active members of the community.
These groups have led the adoption of online news subscriptions, and their size limits the potential for this product category’s adoption.
Why does it matter
Many publishers survey the market and analyse available data to size the potential for online news subscriptions, which are often the fastest growing business line.
Strategists usually ask the following:
How big is the total addressable market? E.g., how many news consumers or adults online are there?
How many can I reach with distribution and sales channels? E.g., how many users do we reach on a monthly basis with our direct and non-direct channels, such as social networks?
How many news consumers or users of a particular Web site would pay for online news if the quality and price were right?
How many users already demonstrate brand preference and regular usage? E.g., how many users visit the Web site directly? How many visits on four or more days in a month?
Sizing this market is difficult though, as online subscriptions in many countries are in their nascent stage. Across 20 developed countries, Reuters Institute found 17% of adults paid for online news at least once in the past year. My 2020 study found that most of the top national news brands in 33 markets have not started to charge for online news yet.
Using the historical data on the print newspaper sales as a proxy for the size of the educated and affluent audience could help address the limitations of the online audience-only analyses.
What are the benchmarks
Earlier this year, at a New York Times Company’s earning call, President and CEO Meredith Kopit Levien said: “There are a billion people reading digital news, and an expected 100 million willing to pay for it in English, so it’s not hard to imagine The Times having a subscriber base that is substantially larger than where we are today.”
100 million is about 8% of 1.3 billion people for whom English is a native language.
The Times’ estimate is roughly in line with the one by The Wall Street Journal. At an Investor Day in 2020, Dow Jones’ Chief Marketing Officer Suzi Watford said she saw 56 million paying or willing to pay for online news in the U.S. alone.
This would be 17% of 328 million Americans.
Is the estimate for paid news adoption at a range of 8% to 17% an overly optimistic or rather conservative?
In 2001 in the United States, on average, 269 newspaper copies were sold per capita, suggesting a higher proportion of the population might be willing to pay for online news.
We can travel in time even further to discover more benchmarks. In many ways, the set-up of today’s market for paid online news resembles the beginning of the newspaper industry in the 18th and early 19th centuries.
At that time, U.S. newspapers served about 15% to 25% of the population. The business model was dependent upon circulation sales to educated and affluent individuals, observed Professor Robert Picard in his 2010 book The Economics and Financing of Media Companies.
Advertising as a key revenue model for news developed in the last half of the 19th century. Urbanisation, the Industrial Revolution, replacement of slavery with wage earning, and rising literacy changed the society, creating new mass audiences for news and consumers for the ads.
The adoption of printed newspapers peaked in mid-20th century before mass audiences embraced TV broadcasting. The advertising-driven business model peaked in the turn of the 21st century before the Internet media unbundled news from classified ads and put the print business in a disarray.
A decade ago, Professor Picard predicted that news readership in the future would look much more like its initial position rather than the position in its mid-20th-century height.
Given the facts of greater income, literacy, penetration of and broad adoption of the Internet as distribution channels for news, he expected a higher proportion able and willing to pay.
“Somewhere in the range of one-quarter to one-third of the population seems realistic,” he wrote.
Historical data on sales in a traditional channel might help to estimate the size of the market in a new channel. And in case of news subscriptions, such an analysis suggested the opportunity might be even larger than the market leaders predicted.