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Paid-For vs Free - Consumer Attitudes to Pricing in Media and Music - UK - April 2010

This report analyses market trends and consumer attitudes as regards the issues around paid versus free newspaper, magazine, TV and music content, investigating the core market factors, strengths and weaknesses, consumer dynamics, illustrative case studies and likely future developments.

  • Half of 16-24s and 43% of 25-34s have a ‘mostly free newspaper’ habit, but half of over-45s still pay for most of their papers, compared to around a fifth of under-35s.
  • Over three quarters of readers are currently unwilling to pay anything for online newspapers/magazines. Those who are prepared to pay are unwilling to exceed £5 per month for a subscription or 25p for an individual article.
  • A fifth of consumers prefer the idea of TV on-demand services where you only pay for what you watch. These are more popular than subscription services, which are seen as good value by just 14%.
  • Less than a quarter of consumers agree that the BBC is worth the licence fee, and four in ten would prefer an ad-funded BBC. ABC1s are twice as likely to support the licence fee as C2DEs.
  • The ‘tangibility’ of CDs is preferred to downloads by 30% of under-35s but by over half of over-45s.
  • Almost a fifth of all music listeners would rather put up with free, ad-interrupted streaming services than pay for ad-free online streaming. However almost a quarter of 16-24s agree that a monthly subscription with unlimited downloads/streaming is good value for money compared to 14% of music listeners overall.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Definition
          • Abbreviations
          • Future Opportunities

            • TV snacks
              • I read/watch/listen to therefore I am
                • Virtual editors and personalised papers
                • Market in Brief

                  • Pull of the free press
                    • Making online pay
                      • TV is the paid success story
                        • On-demand is in demand
                          • Digital (music) divide
                            • New music models
                            • Market Environment

                              • Key points
                                • Fragile recovery
                                  • Figure 1: GDP quarterly percentage change, 2004-09
                                  • Figure 2: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                • Cautious optimism
                                  • Figure 3: GfK NOP Consumer Confidence Index: March 2009-March 2010
                                • Recession has exacerbated the lure of the free
                                  • Figure 4: Graphical summary of impact of recession on consumers’ media usage, November 2009
                                • Broadband Britain
                                  • Figure 5: Broadband penetration, by demographics, 2004-09
                                • The age of free
                                  • Piracy problems
                                    • Three strikes
                                      • Dissenting voices
                                        • Advertising fall
                                          • Figure 6: Annual % change in UK adspend, by channel, January-September 2009
                                        • Long-term online ad growth
                                          • Figure 7: UK advertising, by proportion of total adspend, 2005-09
                                        • Press advertising
                                          • TV advertising
                                            • Figure 8: TV net advertising revenues, 2003-08
                                          • Generation game
                                            • Figure 9: Trends in the age structure of the UK population, by gender, 2005-15
                                          • Over-25 opportunities
                                            • AB growth
                                              • Figure 10: Forecast adult population trends, by socio-economic group, 2005-15
                                            • Ofcom regulation to impact pay-TV
                                              • BBC under fire
                                              • Market Trends and Background – Newspapers & Magazines

                                                • Key points
                                                  • Long-term print news decline
                                                    • Figure 11: Newspapers – average daily (Mon-Sat) net circulation, December 2004-December 2009
                                                  • Online traffic up
                                                    • Rise of the freesheet
                                                      • Figure 12: Average daily distribution of UK audited free dailies, January 2005-January 2010
                                                    • Ups and downs in the capital
                                                      • Figure 13: London free versus paid newspapers, December 2004-December 2009
                                                    • Paid consumer mags also trending down…
                                                      • Figure 14: UK magazines, total average net circulation, December 2004-December 2009
                                                      • Figure 15: UK magazines (paid titles only), total average net circulation, December 2004-December 2009
                                                      • Figure 16: UK magazines (free titles only), total average net circulation, December 2004-December 2009
                                                    • …but still success stories
                                                      • Figure 17: Top 100 actively purchased magazines, total average net circulation, December 2004-December 2009
                                                    • New paid models emerging
                                                      • Paywalls
                                                        • Freemium models
                                                          • Micropayments, e-commerce and apps
                                                          • Market Trends and Background – TV

                                                            • Key points
                                                              • Pay-TV in almost half of UK households
                                                                • Figure 18: TV platforms, 2004-09
                                                              • Subscriptions a growing source of industry revenue
                                                                • Free versus paid competition intensifies
                                                                • Market Trends and Background – Music

                                                                  • Key points
                                                                    • Album sales fall…
                                                                      • Figure 19: Music album sales, by volume, 2000-09
                                                                    • …but singles surge
                                                                      • Figure 20: Music singles sales, by volume, 2000-09
                                                                    • Global picture – digital growth
                                                                      • New online music models
                                                                        • Internet radio and streaming growth
                                                                          • Figure 21: UK internet radio and personalised online radio listeners, January 2008-December 2009
                                                                      • Competitive Context

                                                                        • Key points
                                                                          • TV leads way for paid content
                                                                            • Figure 22: Consumer expenditure on selected leisure goods and activities, 2004-09
                                                                          • Video game growth
                                                                            • Keep it live
                                                                            • Strengths and Weaknesses in the Market

                                                                              • Newspapers and magazines
                                                                                • Strengths
                                                                                  • Over-45s retain strong paid newspaper habit
                                                                                    • C2DE loyalty to paid tabloids
                                                                                      • Consumer magazine success stories
                                                                                        • Online growth and freemium potential
                                                                                          • Weaknesses
                                                                                            • Under-35s desert newspaper ‘tribes’
                                                                                              • Advertising revenues in freefall
                                                                                                • Consumers unwilling to pay for online content
                                                                                                  • Paywall problems
                                                                                                    • TV
                                                                                                      • Strengths
                                                                                                        • Pay-TV growth
                                                                                                          • Ofcom regulation
                                                                                                            • IPTV and on-demand potential
                                                                                                              • Weaknesses
                                                                                                                • Support for licence fee is weak
                                                                                                                  • Ad revenue in decline
                                                                                                                    • Growing piracy threats
                                                                                                                      • Music
                                                                                                                        • Strengths
                                                                                                                          • Digital sales are growing fast
                                                                                                                            • Proliferation of new business models
                                                                                                                              • Opportunities for premium value-add services
                                                                                                                                • Weaknesses
                                                                                                                                  • Piracy – an unstoppable tide?
                                                                                                                                    • Over-reliance on younger generations
                                                                                                                                      • Over-45s remain loyal to CDs but consume far less music
                                                                                                                                      • Who’s Innovating?

                                                                                                                                        • Key points
                                                                                                                                          • Technical solutions
                                                                                                                                            • Ad-funded community content
                                                                                                                                              • Music comparison
                                                                                                                                                • Engaging the fan base
                                                                                                                                                  • Diversity of formats
                                                                                                                                                    • Streaming goes audio-visual
                                                                                                                                                      • Technology giants enter pay-TV space
                                                                                                                                                        • iPad hope and hype
                                                                                                                                                        • Case Studies

                                                                                                                                                          • Newspapers and magazines
                                                                                                                                                            • Metro
                                                                                                                                                              • News International
                                                                                                                                                                • ShortList
                                                                                                                                                                  • Men’s Health
                                                                                                                                                                    • TV
                                                                                                                                                                      • Freeview/Freesat
                                                                                                                                                                        • BSkyB
                                                                                                                                                                          • Music
                                                                                                                                                                            • iTunes (Apple)
                                                                                                                                                                              • We7
                                                                                                                                                                                • Spotify
                                                                                                                                                                                  • Sky Songs
                                                                                                                                                                                  • Media Content – Who is Interested in What?

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • ‘Big five’ content types
                                                                                                                                                                                        • Figure 23: Types of content interested in, February 2010
                                                                                                                                                                                      • Male and female lifestyle interests
                                                                                                                                                                                      • Newspaper and Magazine Reading Habits and Attitudes

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Freesheet generation
                                                                                                                                                                                            • Figure 24: Newspaper readership habits, February 2010
                                                                                                                                                                                          • Older willingness to pay
                                                                                                                                                                                            • Women the biggest magazine buyers
                                                                                                                                                                                              • Figure 25: Magazine readership habits, February 2010
                                                                                                                                                                                            • Voting with their mouse clicks
                                                                                                                                                                                              • Figure 26: Attitudes towards newspaper and magazine content, February 2010
                                                                                                                                                                                            • News-lite generation
                                                                                                                                                                                            • Television Viewing Habits and Attitudes

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Family pay-TV households
                                                                                                                                                                                                  • Figure 27: Types of TV watch or subscribe to, February 2010
                                                                                                                                                                                                • HD potential
                                                                                                                                                                                                  • Figure 28: Attitudes towards television, February 2010
                                                                                                                                                                                                • Beeb under pressure
                                                                                                                                                                                                  • Socio-economic divide on BBC
                                                                                                                                                                                                    • Micropayment TV potential
                                                                                                                                                                                                    • Music Listening Habits and Attitudes

                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                        • Under-35s free music fans
                                                                                                                                                                                                          • Figure 29: Ways in which listen to or buy music, February 2010
                                                                                                                                                                                                        • Over-35s stay physical
                                                                                                                                                                                                          • Figure 30: Attitudes towards listening to music or radio, February 2010
                                                                                                                                                                                                        • Freeloading young adults…
                                                                                                                                                                                                          • …but a quarter support subscriptions
                                                                                                                                                                                                          • New Media Usage and Attitudes

                                                                                                                                                                                                            • Key points
                                                                                                                                                                                                              • Free content usage three to five times higher than paid
                                                                                                                                                                                                                • Figure 31: Types of websites or applications and their usage, February 2010
                                                                                                                                                                                                              • New media content potential
                                                                                                                                                                                                              • Willingness to Pay for Media Content

                                                                                                                                                                                                                • Key points
                                                                                                                                                                                                                  • Three quarters unwilling to pay for online content
                                                                                                                                                                                                                    • Figure 32: Willingness to pay to read newspapers, magazines or online versions, February 2010
                                                                                                                                                                                                                  • Some basis for micropayments
                                                                                                                                                                                                                    • Films and sport most popular pay-as-you-go
                                                                                                                                                                                                                      • Figure 33: Willingness to pay to watch favourite types of programmes on television, February 2010
                                                                                                                                                                                                                    • Consumers receptive to a more established music pricing model
                                                                                                                                                                                                                      • Figure 34: Willingness to pay for different music products/services, February 2010
                                                                                                                                                                                                                  • Appendix – Media Content – Who is Interested in What?

                                                                                                                                                                                                                      • Figure 35: Most popular types of content interested in, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 36: Next most popular types of content interested in, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 37: Other types of content interested in, by demographics, February 2010
                                                                                                                                                                                                                  • Appendix – Newspaper and Magazine Reading Habits and Attitudes

                                                                                                                                                                                                                      • Figure 38: Newspaper readership habits, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 39: Magazine readership habits, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 40: Attitudes towards newspaper and magazine content, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 41: Types of content interested in, by newspaper readership habits, February 2010
                                                                                                                                                                                                                      • Figure 42: Types of content interested in, by magazine readership habits, February 2010
                                                                                                                                                                                                                      • Figure 43: Magazine readership habits, by newspaper readership habits, February 2010
                                                                                                                                                                                                                      • Figure 44: Types of content interested in, by attitudes towards newspaper and magazine content, February 2010
                                                                                                                                                                                                                      • Figure 45: Attitudes towards newspaper and magazine content, by newspaper readership habits, February 2010
                                                                                                                                                                                                                      • Figure 46: Attitudes towards newspaper and magazine content, by magazine readership habits, February 2010
                                                                                                                                                                                                                      • Figure 47: Attitudes towards newspaper and magazine content, by magazine readership habits, February 2010
                                                                                                                                                                                                                  • Appendix – Television Viewing Habits and Attitudes

                                                                                                                                                                                                                      • Figure 48: Types of TV watch or subscribe to, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 49: Most popular attitudes towards television, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 50: Next most popular attitudes towards television, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 51: Types of content interested in, by types of TV watch or subscribe to, February 2010
                                                                                                                                                                                                                      • Figure 52: Types of content interested in, by most popular attitudes towards television, February 2010
                                                                                                                                                                                                                      • Figure 53: Types of content interested in, by next most popular attitudes towards television, February 2010
                                                                                                                                                                                                                      • Figure 54: Attitudes towards television, by types of TV watch or subscribe to, February 2010
                                                                                                                                                                                                                      • Figure 55: Attitudes towards television, by most popular attitudes towards television, February 2010
                                                                                                                                                                                                                      • Figure 56: Attitudes towards television, by next most popular attitudes towards television, February 2010
                                                                                                                                                                                                                  • Appendix – Music Listening Habits and Attitudes

                                                                                                                                                                                                                      • Figure 57: Ways in which listen to or buy music, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 58: Most popular attitudes towards listening to music or radio, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 59: Next most popular attitudes towards listening to music or radio, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 60: Types of content interested in, by ways in which listen to or buy music, February 2010
                                                                                                                                                                                                                      • Figure 61: Types of content interested in, by most popular attitudes towards listening to music or radio, February 2010
                                                                                                                                                                                                                      • Figure 62: Types of content interested in, by next most popular attitudes towards listening to music or radio, February 2010
                                                                                                                                                                                                                      • Figure 63: Attitudes towards listening to music or radio, by ways in which listen to or buy music, February 2010
                                                                                                                                                                                                                      • Figure 64: Attitudes towards listening to music or radio, by most popular attitudes towards listening to music or radio, February 2010
                                                                                                                                                                                                                      • Figure 65: Attitudes towards listening to music or radio, by next most popular attitudes towards listening to music or radio, February 2010
                                                                                                                                                                                                                  • Appendix – New Media Usage and Attitudes

                                                                                                                                                                                                                      • Figure 66: Most popular types of websites or applications used frequently, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 67: Next most popular types of websites or applications used frequently, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 68: Other types of websites or applications used frequently, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 69: Most popular types of websites or applications used occasionally, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 70: Next most popular types of websites or applications used occasionally, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 71: Other types of websites or applications used occasionally, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 72: Most popular types of websites or applications not used in last three months, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 73: Next most popular types of websites or applications not used in last three months, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 74: Other types of websites or applications not used in last three months, by demographics, February 2010
                                                                                                                                                                                                                      • Figure 75: Types of content interested in, by most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 76: Types of content interested in, by next most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 77: Types of content interested in, by other types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 78: Types of websites or applications used frequently, by newspaper readership habits, February 2010
                                                                                                                                                                                                                      • Figure 79: Types of websites or applications used frequently, by magazine readership habits, February 2010
                                                                                                                                                                                                                      • Figure 80: Types of websites or applications used frequently, by types of TV watch or subscribe to, February 2010
                                                                                                                                                                                                                      • Figure 81: Types of websites or applications used frequently, by ways in which listen to or buy music, February 2010
                                                                                                                                                                                                                      • Figure 82: Attitudes towards newspaper and magazine content, by most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 83: Attitudes towards newspaper and magazine content, by next most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 84: Attitudes towards newspaper and magazine content, by other types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 85: Attitudes towards television, by most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 86: Attitudes towards television, by next most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 87: Attitudes towards television, by other types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 88: Attitudes towards listening to music or radio, by most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 89: Attitudes towards listening to music or radio, by next most popular types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 90: Attitudes towards listening to music or radio, by other types of websites or applications used frequently, February 2010
                                                                                                                                                                                                                      • Figure 91: Types of content interested in, by most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 92: Types of content interested in, by next most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 93: Types of content interested in, by other types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 94: Types of websites or applications used occasionally, by newspaper readership habits, February 2010
                                                                                                                                                                                                                      • Figure 95: Types of websites or applications used occasionally, by magazine readership habits, February 2010
                                                                                                                                                                                                                      • Figure 96: Types of websites or applications used occasionally, by types of TV watch or subscribe to, February 2010
                                                                                                                                                                                                                      • Figure 97: Types of websites or applications used occasionally, by ways in which listen to or buy music, February 2010
                                                                                                                                                                                                                      • Figure 98: Attitudes towards newspaper and magazine content, by most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 99: Attitudes towards newspaper and magazine content, by next most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 100: Attitudes towards newspaper and magazine content, by other types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 101: Attitudes towards television, by most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 102: Attitudes towards television, by next most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 103: Attitudes towards television, by other types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 104: Attitudes towards listening to music or radio, by most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 105: Attitudes towards listening to music or radio, by next most popular types of websites or applications used occasionally, February 2010
                                                                                                                                                                                                                      • Figure 106: Attitudes towards listening to music or radio, by other types of websites or applications used occasionally, February 2010

                                                                                                                                                                                                                  Paid-For vs Free - Consumer Attitudes to Pricing in Media and Music - UK - April 2010

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