Monday, December 14, 2009

Brief: Which Western countries care most about preserving the media?

A recent NYT article reviews a German study of how willing people in various countries are to pay for "online content" -- news reporting, videos, songs, etc. In the German-language PDF linked to above, a table shows how people in the countries studied describe their preferences for getting online content. The columns read: free with ads, free with no ads, pay with no ads, pay with ads, and none of above. You can probably figure out what the country names are.

There's a fair amount of variation in how much of the population is willing to pay at all, or conditional on paying or not paying, whether they'll accept advertising. To see what explains this, I've excluded people who answered "none of the above," leaving only those who expressed an opinion. In the table below, I've lumped the two "free" groups together and the two "pay" groups together. I've also calculated a "delusional" index, which answers the question, "Of those who want free content, what percent expect it to not even have advertising?" Obviously someone has to pay for news articles to get written, and some free-preferers recognize that advertising is the only viable alternative to not paying for typical media products yourself. So, those who answer "free, no ads" are expecting media producers to behave like charities.

The table also shows GDP (PPP) per capita, on the hunch that richer countries will be more willing to pay for news, videos, and so on. In economics jargon, this online content is a "normal good" that sees a rise in demand when a population gets wealthier (an "income effect" pushes the demand curve up). The table is ordered from most to least willing to pay.

Country GDP / cap % Pay Delusional
Sweden 37,334 25 20
Netherlands 40,558 20 36
Great Britain 36,358 19 43
USA 47,440 18 27
Belgium 36,416 15 33
Italy 30,631 15 46
Greece 30,681 13 27
Bulgaria 12,322 12 41
Czech 25,118 11 56
Germany 35,539 10 56
Turkey 13,139 9 54
Romania 12,600 9 48
France 34,205 8 56
Portugal 22,232 8 52
Hungary 19,553 8 52
Spain 30,589 6 61
Poland 17,537 5 57

It sure looks like wealth plays a key role, so let's look at how GDP relates to both willingness to pay and how delusional the free-preferers are:

Since the willingness to pay and the delusional index cannot vary outside of the range [0,1], I use the Spearman rank correlation instead of the Pearson correlation. The correlation between GDP and the percent willing to pay is +0.67 (two-tailed p less than 0.01). Between GDP and the delusional index, it is -0.49 (two-tailed p = 0.05). People in richer countries are more willing to pay, and they are less deluded about where stuff comes from -- that is, typically not from charities.

The surprises are worth looking at. At the top, we see mostly Anglo and Nordic countries, and at the bottom the more southern and eastern parts of Europe. However, France ranks pretty low, and Germany doesn't do much better, even though we Americans think of those countries as having more sophisticated media tastes, and as treasuring the institutions of the media -- Gutenberg in Germany, for example. We also think of ourselves as much more bratty when it comes to the media -- that because our sophistication level is so low, we're only a tiny bit willing to pay, and any more than that we'll junk the news in favor of some other cheap form of entertainment.

It looks like the ones that have more pro-market views are more supportive of paying for online content. The French and Germans may like the idea of keeping the media alive and thriving, but Americans are more willing to do what it takes to ensure that happens.

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