With more and more content available for free, the value consumers put on this content is not matched by the price they pay to access it, resulting in consumer surplus of online content. In the UK, this surplus is £17 billion, almost triple from the 2007 level, analysis by PwC shows.
Professional services firm PwC recently released an analysis into the ‘consumer surplus’ of online content in the UK. The firm explains that the increasing availability of online content available for a small charge or even for free results in an underestimation of the value of this content, as the amount paid is often less than the value consumers put on the content.
To be able to value this UK surplus, PwC used a 2013 study from The Boston Consulting Group (BCG), which estimates an annual surplus of £700 for online media access per connected UK consumer, and combined this with ONS data on the proportion of the UK adult population engaged in internet activities between 2007 and 2014. The PwC research focuses on online reading – reading or downloading online news, newspapers, magazines and books – and online entertainment – playing or downloading games, images, films or music.
Between 2007 and 2014, the proportion of UK adults engaged in online reading grew from 20% to 55% and online entertainment from 24% to 44%. Combining these increases with the growth in the adult UK population, PwC estimates a total consumer surplus from these online activities of £17 billion in 2014, up from £6.7 billion in 2007.
According to John Hawksworth, Chief Economist of PwC, this increase reflects the difficulties companies experience in charging for content and the need to find other ways to raise revenue. “The challenge for businesses will be to find imaginative ways to capture more of the value from their services without unduly curbing consumer access to online content.”