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com 548 presentation 2

  1. 1.   Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model A powerpoint for Com 548 MCDM University of Washinton   Yun Li Oct 20, 2009
  2. 2. What is the issue? <ul><li>The Internet has become a well-established news medium, while, no business models seem to generate reliable revenue streams for online news services. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Advertising model ( the effectiveness of online advertising remains questionable )? </li></ul><ul><li>  </li></ul><ul><li>e-commerce never fulfilled its promise. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  3. 3. What is the viability of the subscription model?  
  4. 4.   <ul><li>A study has been conducted to investigate how consumers in a geographic market respond to fee-based online news services. </li></ul><ul><li>  </li></ul><ul><li>Paying intent (willingness to pay) for online news is measured. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>What factors have an influence on paying intent are also examined. </li></ul>
  5. 5. A random-sample telephone survey of 853 Hong Kong residents was conducted during November 13-17, 2002 <ul><li>  </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>very few users actually responded to paid content </li></ul><ul><li>  </li></ul><ul><li>most had no intent to pay in the future. </li></ul><ul><li>  </li></ul><ul><li>free alternatives existed online and offline </li></ul><ul><li>  </li></ul><ul><li>users did not perceive online news as something with unique value. </li></ul><ul><li>  </li></ul><ul><li>the possibility that online news is an inferior good. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  6. 6. Factors Related to Paying Intent <ul><li>Age : (negative) </li></ul><ul><li>younger users were more likely to pay for online news access. </li></ul><ul><li>  </li></ul><ul><li>Newspaper use :  ( positive) </li></ul><ul><li>more time spent reading newspapers meant a higher likelihood of paying for online news. </li></ul><ul><li>  </li></ul><ul><li>Income : (negative) </li></ul><ul><li>people with higher income were actually less, not more,willing to pay for online news. </li></ul>
  7. 7.   <ul><li>“ online news is  characterized by a horizontal demand curve at the price of zero.” </li></ul><ul><li>  </li></ul><ul><li>“ consumers would purchase as much as they can at the current price, but if the price goes even a penny up, the quantity demanded drops to zero.” </li></ul>
  8. 8.   <ul><li>  </li></ul><ul><li>Conclusion of Chyi's research: </li></ul><ul><li>  </li></ul><ul><li>Online  news publishers may find it difficult to use the subscription model to achieve economic viability </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>“ free becomes not just an option but an inevitability. Bits want to be free.” ( Chris Anderson’s ) </li></ul>
  9. 9. discussion questions: <ul><li>  </li></ul><ul><li>What is the future of the online news industry? </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>What revenue model do you think that Internet news publisher can apply to achieve profitability? </li></ul><ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Is there value to maintaining digital media when profitability is not achievable? </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  10. 10.   Citations:   <ul><li>  </li></ul><ul><li>  </li></ul><ul><li>Anderson, C. (2009). Free: The future of a radical price. New York: Hyperion. </li></ul><ul><li>  </li></ul><ul><li>Chyi, H. I. (2005). Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model. The Journal of Media Economics. 18 (2), 131-142. </li></ul><ul><li>  </li></ul><ul><li>  </li></ul>
  11. 11.   <ul><li>  </li></ul><ul><li>Thank you ! </li></ul>