Survey demonstrates Israelis pay less for it’s use, but, what do online media outlets have to do to get Israelis to spend more money?
Everyone knows that Israelis are quick to embrace new technology and are avid consumers of locally produced content. What’s surprising is that Israeli media organizations struggle to leverage these advantages in order to survive in the digital age. New and old media companies alike are fighting for survival worldwide, but because the Israeli market is a small one the stakes are higher.
The most interesting conclusion of a recent survey of Israelis and the Internet, commissioned by Google from the Boston Consulting Group, is that Israeli online consumers value the Internet more than their counterparts in Europe and twice as much as their counterparts in the United States.
This added perceived value, or consumer surplus, is the difference between the cost to the consumer of a product or service and the value the same consumer attributes to it. For most Israelis, the entire value of the online content they access is consumer surplus because they don’t pay for it. The consumer surplus for online media is $2,150 a year on average for every Israeli with Internet access. The comparable consumer surplus for offline media is around $1,300.
More than half — 52% — of Israelis surveyed say they to consume most media online. That is reflected in the fact that online media account for 62% of total media consumer surplus in Israel. But online media account for less than 6% of total media costs. That means lots of opportunity for media purveyors, say the report’s authors.
The authors say the high level of consumer surplus in Israel is due in part to the greater amount and variety of contents that can be found online than offline, but also to the limited availability of paid content services such as Netflix, Spotify or Amazon Prime streaming media. As a result, according to the study, Israelis look for music, movies and other Web content on a range of websites, most of which is provided at little or no cost.
Perhaps the most critical question is whether Israelis would be willing to pay for such content. BCG thinks so, saying that as the market continues to develop, Israelis’ willingness to pay will increase. The consulting firm’s study notes, for example, that elsewhere around the world there is greater use of paywalls for newspaper and magazine content on the Internet for content that is in demand. The idea that Web content would be totally free is simply eroding elsewhere.
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