1. Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model A powerpoint for Com 548MCDM University of Washinton Yun LiOct 20, 2009

2. The response of1999 survey of 64 online newspapers serving California, Taxas, New York, and Florida:

3.

80% of the sites surveyed generated revenues from online advertising.

Fewer than 20% from e-commerce and pay-per-use models.

Only 3% were subscription-based.

4. What is the issue?

The Internet has become a well-established news medium, while, no business models seem to generate reliable revenue streams for online news services.

Advertising model ( the effectiveness of online advertising remains questionable )?

e-commerce never fulfilled its promise.

5. How about readopted the subscription model? 6. What is the viability of the subscription model? 7.

A study has been conducted to investigate how consumers in a geographic market respond to fee-based online news services.

Paying intent (willingness to pay) for online news is measured.

What factors have an influence on paying intent are also examined.

8. A random-sample telephone survey of 853 Hong Kong residents was conducted during November 13-17, 2002

very few users actually responded to paid content

most had no intent to pay in the future.

free alternatives existed online and offline

users did not perceive online news as something with unique value.

the possibility that online news is an inferior good.

9. Factors Related to Paying Intent

Age :(negative)

younger users were more likely to pay for online news access.

Newspaper use : ( positive)

more time spent reading newspapers meant a higher likelihood of paying for online news.

Income : (negative)

people with higher income were actually less, not more,willing to pay for online news.

10.

online news is characterized by a horizontal demand curve at the price of zero.

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.

11. Conclusion:

Online news publishers may find it difficult touse the subscription model to achieve economic viability

12. free becomes not just an option but an inevitability. Bits want to be free. ( Chris Andersons ) 13. discussion questions:

What is the future of the online news industry?

What revenue model do you think that Internet news publisher can apply toachieve profitability?

Is there value to maintaining digital media when profitability is not achievable?

14. Citations:

Anderson, C. (2009). Free: The future of a radical price. New York: Hyperion.

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.

15.

Thank you !