When asked about the influence of the Internet on how we communicate and get information, the noted management consultant Peter Drucker observed that “the new information technology, Internet and e-mail, have practically eliminated the physical costs of communications.”
As for how we get our news and information, most of us have come to see the reasonable cost for content on the Web as approximately zero. We demand a smorgasbord of news of every sort from breaking political and business news to the latest celebrity gossip – and have it provided for free. But much of that information does not reside on trusted news sites, bringing to mind the famous Jon Stewart quote: “The Internet is just a world passing around notes in a classroom.”
In a recent study, eMarketer found that digital news is becoming the “go to” source of information for adults in the U.S., as we now spend daily on average five hours and 46 minutes with digital media. By way of contrast, the market research firm found that the time Americans spend reading “physical” newspapers has been cut in half over the past five years and has fallen by 22 percent in the past year alone (from 18 to 14 minutes a day). And for the first time, Americans are now spending more time with online media than they spend watching television, making the Web the main source for how we get our news.
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While there are major strategic implications for media companies and society as we turn into a culture of “free” news and information, there is one group of people that still expects to pay for their information: business executives. As companies look to cut costs by shifting from paid subscriptions to free sources of similar news and information, it is likely that they will find stiff resistance from executives. While moving to free news sources might make short-term financial sense, a recent study has found that executives around the world use and trust paid media in a way that produces value for themselves and their companies.
Quartz, itself a free digital news site, recently released its Global Executives Study. In the research, the company surveyed over 900 C-level business executives around the world. Their study found that top level business leaders were among the largest consumers of digital news, with 75 percent of these business leaders spending more than 30 minutes a day accessing their paid news sources and over a third – 36 percent – devoting at least an hour a day to reading news from their subscribed sites.
One might assume that such subscriptions are mostly amongst C-level executives in the financial industry subscribing to Bloomberg or The Wall Street Journal, but that is not the case. Indeed, while the Quartz study found that 47 percent of financial industry executives do have digital subscriptions, this is only slightly above the rate of 37 percent found amongst all top executives the firm surveyed. In fact, 40 percent of all C-level executives in technology, consulting, and media/advertising firms had digital news subscriptions. A preponderance of these C-level executives cited the quality, reliability, and exclusivity of the news from their paid subscription sites as the reason they spent so much of their day accessing news and information from these sources. Only 7 percent said that they continued their paid subscriptions out of “inertia.”
The Quartz study has profound implications both for consumers and producers of digital media. For companies, the utility that business executives continue to find in paid subscriptions for news and information will mean that it will be difficult for accounting and financial arguments to cut or curtail this area of expenditures. In short, C-level executives are heavy consumers of paid news and information that they find to be personally valuable for their jobs. The Quartz study found that a majority of these business leaders access their subscribed content first in their daily scan of the relevant environment and that 90 percent of these top managers share paid content both within and outside of their companies on a daily basis.
Thus, any push to shift business leaders from paid to free content sources would mean not just a change in their daily media patterns, but in how they do their jobs. Such a recommendation might not be the best career move for a procurement or accounting professional to make.
And for digital media companies, while there continues to be a push for converting free users of their sites to paid subscribers, online advertising continues to be their primary source of revenue. This is likely a wise strategy, for as we have seen in countless studies on media consumption in the Age of Internet and from the experience of the New York Times and other newspaper companies, shifting users who are accustomed to free access to a paid subscription is quite often a tough sell - to say the least.
However, digital content providers - regardless of their field - that can provide actionable news and exclusive insights for business leaders do have an opportunity to derive substantial revenue from top level executives who will push for their companies to be subscribers. And whether they are paid subscribers or free content users, top-level executives are a prized demographic for advertisers. So while a paid subscription may lessen digital ads on sites for subscriber-only content, corporate users can expect to see more ads targeting them into the future. It’s only Marketing 101.