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Rupert Murdoch is going all in on paid content. The News Corp. head anounced yesterday during an earnings call that all of his publications will be charging for access within this fiscal year.

The announcement has been met with both derision and excitement. Charging for news content has the potential to shrink audience numbers and choke ad revenue. But as publications struggle to find the right revenue model, Murdoch's decision could pave the way for other organizations that have been talking a lot about charging online but doing little about it.

So will News Corp. sink or swim with its plans to charge for content? The answer, as with anything: it depends on execution.

Customers may be accustomed to getting their news for free online, but they're also willing to pay for valuable content and ease of use, as evidenced by The Wall Street Journal's success with online subscriptions. All of that site's articles are available for free online via Google. And yet, many frequent readers are willing to pay for access to the site's financial news directly.

Murdoch is looking to replicate the Journal's monetization success. He announced on the call yesterday:

"Quality journalism is not cheap and an industry that gives away its content is simply cannibalizing its ability to produce good reporting. The increase we have seen in our Wall Street Journal subscriptions since we acquired the paper proves to me that the market is willing to pay for that quality without any special market."

This is definitive flip from Murdoch's initial approach to online revenues. At the end of 2007, he was still planning to run the Wall Street Journal on ad revenue. But as the economy shifted, so have his plans. Rumors of charging for specific properties (like video portal Hulu) have been swirling since Spring. And Murdoch predicted in May that his company would start testing pay models on some of the stronger news properties with the year.

But now he's gunning for all News Corp. properties: "We intend to charge for all our news websites," he said, noting that "the big competition will be coming from the BBC," which offers online news for free. Nonetheless, he stated: "Our policy is to win."

To win with both revenues and audience numbers, it will take a delicate touch. Many properties that have failed to make money offline will be handicapped by efforts to charge on the web. News Corp.'s celebrity tabloids like The Times and The New York Post are already struggling to compete for viewers with free gossip sites online. If Murdoch has had trouble charging a quarter to 50 cents for paper copies of The New York Post in Manhattan, how will he get web surfers to fork over for Page Six online?

One approach being tossed around is bundling. In New York this spring, Jonathan Miller, News Corp.'s chief digital officer, hinted that the answer for revenues might be packaging content:

"I think what works for consumers most likely -- and this has to be tested, frankly -- is bundles. I think you have to figure out what are the right bundles that people buy and what's contained in that bundle."

Bundling assumes that consumers will accept less valuable content to get access to the premium inventory they value. For that to work, News Corp. has to figure out what its most valuable assets are. Would sites like Hulu and WSJ.com have to float less niche products like the tabloids? That might prove an untenable burden for News Corp.'s popular content. Especially considering that no News Corp. content is rolling in revenues right now.

The company took a $3.4 billion net loss in 2008, down from net income of $5.4 billion a year earlier, reflecting $8.9 billion in impairment charges.

But news organizations no longer have the luxury of speculating about profit strategies. It is time to test out what plans will work online. And Murdoch isn't afraid to be first in the water with charging for content. He tells the Financial Times: "If we're successful, we'll be followed by all media."

It's unlikely that one model will work for all publications. The FT, for instance, has had some success with its monetization model for financial content (the site is free for a limited number of articles a month, when the limit is reached, readers are asked to pay).

The Journal has seen success with its paid model, but the financial paper has a dedicated and wealthy audience willing to pay for specialized content. Will the same be true for FOX News content? Unlikely.

But right now it's all in the experimental stages and Murdoch's putting his money where his mouth is.

As venture capitalist Fred Wilson wrote today: "Talk is cheap. Actions are not....So let's get on with it. Let the experiments with paid news begin."

Image: Reuters

Meghan Keane

Published 6 August, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (1)

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Simon Heath

I agree that's it all experimental at the moment - and far too early for such a bold statement from such an influential source. Murdoch is mostly coming across as  defensive - and desperate - in the wake of a £2bn net loss. It's not as simple as saying 'content is valuable, we're going to charge for it' - he needs to reassess and seriously understand the media environment that exists in 2009.

The blogosphere and aggregated news channels play an important role in news these days.

The distinction between ‘niche’ and ‘general’ news content is important - people will pay for the former but they won’t for the latter when they can get it for free elsewhere. Where does the majority of News Corp titles fit in here - that's the question.

Murdoch is in danger of rampaging, destroying the balance between traditional and new media owners - they both need each other to survive.

Conor Clark in The Atlantic writes, “…the blogosphere is completely reliant - completely parasitic - on the very institutions they are driving to bankruptcy”. As he points out, check out The Huffington Post and “see how many of its main stories are from The New York Times and The Washington Post.”

Introducing widespread charging across all titles and all content as espoused by Murdoch will destroy this delicate news eco balance.  A sensitive and sophisticated approach is necessary - not the rampage of a desperate dinosaur.

I've written about this in detail here.

about 7 years ago

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