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Commentators have queued up to tell Rupert Murdoch that his plan to charge for online content is wrong. But I think it's obvious that he can charge.

Murdoch's got the will to charge, access to value-add content, and has a lot of experience selling subscription products in the UK. The question is not whether he can charge - it's whether his competitors can match his content and experience.

You CAN charge for online content

Let's start by knocking down a few myths about charging for websites...

He obviously can't charge for non-exclusive news

You can't charge for news that's published everywhere else. This isn't really an argument against his plans. He's not going to charge solely for non-exclusive online news because, obviously, nobody would pay.

People will pay

People DO, however, pay for online content all the time. And I don't just mean businessmen whose companies pick up the bill paying for FT.com:

  • In the UK, 200,000+ people pay £7.75 a month for access to which.co.uk (where I used to work) - you do the maths. What's more, you can buy one-off reports, too. Even more pay for access in the USA to consumerreports.org. This is replicated in France (Que Choisir), Australia (Choice), Holland (Consumentenbond), Germany (Stiftung Warentest) and many other countries round the world.
  • Every day, people on the internet pay via subscription or one-off payments for music, audiobooks, podcasts, online videos and even ebooks on how to make millions. Yes, they can get some of that for free. Or they can steal it. But some people still pay for it.
  • The Telegraph already charges £2.99 a month for access to its puzzles section.

People are prepared to pay for online content when they get value from it. This might be because they trust it (why else pay for Which? content when you can read reviews at TestFreaks or alaTest). Or it might be because it’s the only way they can access certain content.

It's become a truism that no one pays for online content. But it isn't true.

Murdoch's sites CAN enforce exclusivity

Newspapers routinely splash 'Exclusive' over stories that aren't. And once they've published something in a first edition, it doesn't take long for other papers to put the story in later editions or on their websites.

This is seen as an argument against charging for access to news online. But it’s valid only if the publishing model is built around print publication.

You could see the problem when the Telegraph broke MPs' expenses stories by publishing them in its first editions and online at about 10.30pm. The same stories were picked up by the other papers and news sites within minutes.

But what if Murdoch's paid-for sites were breaking exclusive stories at 8am - especially ones that were picture- or video-based? Sure, competitors will have versions of that story up soon, but they won't be as good - and nor will they have had the several hours' notice that they get when they pick up a first edition at 11pm the night before. They'd be even more likely to preserve that exclusivity if they started threatening news aggregators like Google News with lawusits.

The loss of advertising revenue won't be that big

Jeff Jarvis argues that "Charging for content ... online reduces audience and the advertising they justify". That this is a broken business model seems widely accepted. Shoving knockdown advertising in front of thousands on one-page-view visitors on non-sticky news sites doesn't pay the bills. Remember, if you're charging £3 per 1,000 impressions, 1 million page views only makes you £3,000.

But maybe you could charge more for advertising if the audience was more engaged and stickier. Or if you found better ways of advertising - as I explain below, the paid-for model doesn't have to look like the current websites. Maybe it could look more like the sort of interactive service you get when you hit the red button on Sky.

What can he charge for?

I don't imagine that Murdoch made this announcement to charge for content and now everyone's working out how to do it. Let's assume he's had some bright people thinking about how to do it for some time, and that this announcement is the culmination of that work.

So let's take a look at what he can charge for...

Current content

People value what the Sun and Sunday Times produce. That's why they buy them over their competitors.

If payment was made easy, maybe they would pay for the Sun's exclusive stories, big-name columnists, or unique access to their signed-up sports stars. And maybe they would pay to access The Times online for Jeremy Clarkson, its take on reviews, a series of columnists, games and crosswords (which the Telegraph already charges for), a discount dining club, and defined content sections like media and the TLS.

If they invested in these areas, adding video, more content, relevant offers and discounts etc, then the perceived value would become even higher.

Sharing

Where Murdoch has the edge over other UK newspapers is his ability to add to his papers' existing content.

While the Independent is adding me-too videos produced by the Press Association, and newspaper sites like the Guardian, Mail and Telegraph are adding us-too videos from the BBC, News International already owns Sky News, Sky Sports, Fox as well as umpteen other publications and broadcasters.

What if the best of this content was available on the paid-for newspaper sites? Would people pay if they could watch, read or download Sky News, Sky Sports, movie clips (whole movies?), exclusive interviews, whole books and digital editions of magazines?

Remember, the paid-for version of the site needn't look anything like the current one. A website is a means, not an end - it's a way to access content and interact with it (and with other people). What if the relaunched site looked more like a cross between a TV station, a newspaper, a book store and Facebook? If it gave you a choice of ‘channels’ to browse: some video, some words, some interaction? Changing the site to a much richer one would also open up new methods of serving, and charging for, advertising.

This is what should be giving other UK newspaper owners sleepless nights. Just because News International can charge for content, doesn't mean anyone else can - because not everyone else has access to this sort of exclusive extra content.

The practicalities

I think it unlikely that people are going to hand over their credit card details to pay 50p to access the Times or Sun on a one-off basis. But what if any of these payment or distribution models were adopted:

  • What if they add 50p on to the cost of Sky broadband subscriptions and bundle it as a non-optional part of the package? Straightaway, they would have more than 2 million subscribers to the Times or the Sun online - an instant success.
  • What if each copy of the Times/Sun papers came printed with a unique code that gave 24 hours' access to the site. As people became used to the site, maybe they would be prepared to pay for ongoing access.
  • What if subscription included online access to Sky channels, so you could watch Premiership football live?
  • What if newsagents sold pre-paid access: £5 for a card with a unique code that gives you a week's access?

For the pre-paid model, there is already a network of agents in place, used to selling both the brand (the papers) and used to selling pre-payment tokens (whether it be the lottery, travel cards or utility top-ups).

For the subscription model, Murdoch already owns successful subscription businesses with great marketing and customer service experience (and, note, they have a lot of experience of bundling TV, internet and telephone products already). Competitor newspapers do not have this background.

Conclusion

Murdoch's got the will to charge, access to value-add content, access to an existing network for pre-payment access, and a lot of experience selling and marketing subscription and bundled products in the UK.

As I say, the question is not whether he can charge. It's whether his competitors can match his content and experience.

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Published 10 August, 2009 by Malcolm Coles

Malcolm Coles is Director at Digital Sparkle and a contributor to Econsultancy. He also blogs at malcolmcoles.co.uk. You can follow him on Twitter here.

16 more posts from this author

Comments (24)

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Alastair

Small correction: I think the Which amount is supposed to be £7.75 a month rather than £75.

about 7 years ago

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IanVisits

I agree that charging for unique content can, and almost certainly will work as a business model.

I am less convinced that people will subscripe to specific newspapers though.

While I probably visit every major newspaper website each day, I wont read more than one or two articles - and I was driven to them by news based search engines, not by deliberatly visiting their home pages to see what was there.

I wouldn't be willing to subscribe to The Times, The Guardian, The Telegraph each individually as 98% of their content doesn't interest me.

I would however be willing to pay an agregator who granted me access to lots of newspapers as I find most of the online articles via Google/Digg/NewsNow etc.

The agregator model works for the modern user who browses many websites for content, but the publications have to then accept that their brand power is weakened by such a model.

The question is which is more important to them, protecting the brand or earning income?

about 7 years ago

Chris Lake

Chris Lake, CEO at Empirical Proof

@Alastair - good spot, thanks. Sorted.

c.

about 7 years ago

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Ben Rooney

For Times crossword aficionados it has value and people would pay for that. However I am doubtful that anyone is going to pay for Times news, or even columnist, content. The Indy tried charging for its columnists and while I agree that you couldn't pay me to read Yasmin Alibhai-Brown, let alone expect me to pay to read her drivel, I think there are very few (make that no) columnists who provide such amazing insight, such apposite analysis that you can make a business hawking their views.

As for news, it is an interchangeable commodity - it is like toothpaste. I can always find another source. The BBC will always be "free" - why should I pay for the Times?

Murdoch is no fool but he is no god either. Of your suggested funding plans, the one that makes most sense is to bundle it all in with Sky - so using one part of NI to cross subsidise another. All of the others seem to require too much effort on the part of readers - and very few readers care that much.

The strangest plan yet to come out of NI is a website exclusively for a Sunday paper. What is that going to be? It sure as hell can't be just the S Times/NoW uploaded once a week - surely?

about 7 years ago

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adriatalk

I think that key sentence is: "People are prepared to pay for online content when they get value from it". That is the main reason why Murdoch (or anyone else) CAN charge for content online. You can charge only unique content or content which is valuable to someone.

about 7 years ago

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Nick Bond

So what we are talking about is not a website or a newspaper or a TV station, but the convergence of all these forms into one?

Makes sense to me. I would imagine that access to the content would also be spread across various methods (probably not newspaper, a little tough to be dynamic on that).

about 7 years ago

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Simon Heath

I totally agree that charging for some content is viable - if it is niche or perceived to be of value. However overcoming the fact that consumers of information simply EXPECT more general information to be free is going to be tricky.

IanVisits makes an interesting point around paying for aggregators rather than media-owned sites - but again the information itself on these sites needs to be perceived to be worth spending money on - whether through subscription or pay-per-view.

Murdoch's titles tend to fall more on the 'general' side of news - rather than niche. Online content is often paid for by a more wealthy demographic (e.g. FT). Not so for the NOTW or The Sun.

It was interesting that when he announced this move, Murdoch used celebrity scoops as an example of something people would pay for. With a mass of free celebrity content on the web this seems highly questionable and likely only to divert traffic to free providers of celebrity gossip (TMZ, Perez Hilton etc).

The difference between niche and general content is vital when it comes to charging.

I've written more about this here.

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

Alastair - oops. Yes. While we're updating those figures, Which? actually have 216,000 paying subs they announced today.

Ianvisits: "I wouldn't be willing to subscribe to The Times, The Guardian, The Telegraph each individually as 98% of their content doesn't interest me" I agree - that's why I was arguing Murdoch will need to bundle it with other products or subscriptions. But he could easily do that...

Ben: Yes, the Sunday Times plan does seem a bit odd. Who wants to lie around over a leisurely breakfast reading online news?

Simon - I see you described my argument as 'highly questionable' on Twitter. Obviously he's not going to charge for me-too content. I think I made that point at the start. Most reactions to the paying announcement seem to assume he's going to get the current sites and shove a paywall round them that you need to get your credit card out to get through. I think everyone agrees that's not going to work. So, that's not what he's going to do then ...

about 7 years ago

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Charles Knight

The problem with charging for access to the Sun is that the bulk of the readership for that paper seem to fall squarely into the "no-nets" or whatever they are called at the moment...

about 7 years ago

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craigm

Great post.  Absolutely fantastic post.

One thing that irks me about the bold generation of 24 year olds who own, develop for and comment on "social networking" (and whom I am generally hugely impressed with) is their blatent lack of understanding, it would seem, of exactly who this chap Murdoch is.

To a tweet, they have been harping on about how News International can't charge for content (in an almost "leave Britney alone" manner) without considering that:

A) News Corp is a truly giant media company which (as you point out) creates more exclusive content than virtually any other news source globally (even if most of it is p*sh).

B) It has pioneered and then dominated the development of the pay-TV model in the UK

C) Rupert likes a wee scrap now and again. Just ask those that never quite made it to Wapping.

Jumping up and down over the "death" of traditional newspapers is one thing (although I still reckon this is a least a decade or more premature), but to suggest that folk who read the Sun or already pay £50 a month to watch sky are never going to pay for his websites is to vastly under-estimate the man (or as Charlie Brooker jokes, Murdoch is "probably evil enough" to do it).

Yes some bloggers have got to stage in the last year or two where they can fly business class on their blog earnings, but Murdoch owns media that has been charging for content since before the Battle of f*cking Waterloo.

For sure he can't break news of plane crashes over the Hudson as fast as Twitter can, but thankfully there is plenty more to online news content than that...

(As a guardian reader, I am now off for a cold shower as punishment for defending News Corp.....blurgh)

about 7 years ago

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craigm

Oh, and @Charles Knight.

Just from the first article I found on the subject (dated August last year):

"Thesun.co.uk was the UK national newspaper website to draw the most page impressions in August as a record 328,196,404 pages were viewed, jumping past 300m for the first time."

So obviously even the Information Superhighway now has the occasional white van on it...

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

CraigM: "(As a guardian reader, I am now off for a cold shower as punishment for defending News Corp.....blurgh)"

Welcome to my world....

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

CraigM: Also, I might get you to write my posts for me. I think you've managed to say it a lot more succinctly!

about 7 years ago

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Daniel Filan

Personally, I'm really not sure that it will work at all. Murdoch may have some exclusive content, but will people really see it as valuable enough to pay for? Like I point out in my blog at http://bit.ly/11JVa1, there still exists a plethora of free news sites that most people will see as of the same value. Out of all of your models, I think that the best one would be to add the cost onto broadband fees - it stops people from consciously thinking about it and lets them almost forget that they're paying anything.

about 7 years ago

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Tony

When content becomes advertising because you view a subscribe here page instead of some valid content; then it's not accessible. Search engines don't crawl it, the site's search ranking gets lower (Less available hits and links) And the site gets added to everyone that is sensible's advert block list or host file so that your computer's web browser doesn't visit the website and waste your time.

Linking news content with an advert to subscribe to view is going to put the world of tweeters looking somewhere else for something to twitter about. (Maybe a lesson about how news on the Internet spreads for Mr Murdoch.)

The main revenue generated by a huge number of websites is through advertising and if the adverts are not world viewable (And most ad agencies specify that they must be,) Then no one can see the adverts and so no one will click and as a result the website looses advertisers. Mr Murdoch will generate a lot more revenue from using advertising more strategically instead on his News Corporation websites. Instead of pay per view or subscrition based content. The evidence of that fact is everywhere you look on plenty of other Internet web sites. Especially the vast number of media based websites.

Why won't Brits pay? Because Brits already pay internet connection fees, telephone line rental bills, mobile phone bills, electricity bills and soon some kind of Internet stealth tax if the digital Britain report is to be belived (And it has to be read to be believed.) People that do pay, to pay, to pay, to view adverts along with some assorted "Exclusive" Content are obviously wasting money and Brits are not stupid.

If a story is that important; all of the major news agencies will be reporting it. No one will pay Murdoch just for his take on it (Unless duped,) When there are many more greater sources on offer and found easily using one search engine.

This pay subscription based news website concept is nothing new, here's an example :

http://lwn.net/op/Subscriptions.lwn

So nobody give Mr Murdoch the credit for being the first person to come up with the idea. (BTW did you notice how lwn.net obviously can't afford to pay a web designer?)

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

Daniel: "Murdoch may have some exclusive content, but will people really see it as valuable enough to pay for? " Check out the list of News Corp companies at wikipedia: http://en.wikipedia.org/wiki/News_Corporation - I think it's a bit more than 'some exclusive content'.

Tony: there are ways to deal with SEO - first click free, or have logged-in/out versions of pages with teaser copy etc. And what's that annoying site where the answers are 10 scrolls down unless you're logged in?

Also, I entirely agree that no-one's going to pay for me-too news. That's what I was saying! But I don't agree that more strategic advertising will pay the bills - that model has never really worked.

about 7 years ago

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Simon Heath

Hi Malcolm, totally get your point that you were made clear that you can't charge for general content, but I do find it very questionable how Murdoch's grand plan is going to work and for his approach to charging for content that really is general at best (it would be good for us to know how he will be charging of course, he missed that bit out!). Your piece was a good argument just can't see it working for News Corp, besides WSJ, certainly in the UK... time will tell.

Agree with Tony: "If a story is that important; all of the major news agencies will be reporting it."

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

Simon: Did you see the Guardian's membership club idea today? And Simon Jenkins (god, what am I writing now) had an interesting piece in the Guardian as well: http://www.guardian.co.uk/commentisfree/2009/aug/10/newpaper-internet-paywall-murdoch-live

I'll look like an idiot when he just shoves a subscription barrier round timesonline.co.uk. But assuming he doesn't, there are all sorts of models where the perceived value of the add-ons might justify a subscription - with news thrown in as just part of the mix.

about 7 years ago

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Matt Wardman

>Remember, if you're charging £3 per 1,000 impressions, 1 million page views only makes you £3,000.

One of the reasons advertising may not have worked is that sites such as the Guardian aim for more like £5->£15 for what are basically run of site banners, and then much more for other types.

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

Matt - do they achieve that? Seems much higher than the usual rates I see quoted (for average CPMs including the unsold slots they knock out dirt cheap).

about 7 years ago

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Malcolm Coles, Director at Digital Sparkle

CW: Ah yes, that's it. I'm not convinced by a pay model that relies on people not noticing the answer's a bit lower down the page...

Matt Cutts recorded a video recently answering a question about whether google would kick them out the results, so I'm not the only person annoyed. He said no :(. http://www.youtube.com/watch?v=w9T6LNMvpvw

about 7 years ago

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Rodney Isemann

I think the bundled offerings are the best way for his scheme (Dr. Evil anyone) to get off the ground.

I also think the depth of news is a factor too but I'm not clever enough to know how exactly. For example I know (from Twitter) about an earthquake and also when there was some tsunami warning - I don't need to know more than what the 140 characters will give me. Since mobile phones are ubiquitous then news is almost ubiquitous.

As it is news and information are separate things and most news actually isn't news. Or at least relevant news, hence information overload. Is the fact that there was that earthquake on the other side of the world really relevant to me? No.

And when news is really important, I'll probably head to the BBC, which I pay for, but which feels free.

R!

about 7 years ago

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Betty

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say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Betty

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almost 7 years ago

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shane hanafin, Lead design at Cubetech

In my opinion the whole pay model is flawed as long as google promotes the business as news. You get teaser upon teaser and have no idea of the value of the content unless you buy a subscription. As one commentator above me put, we are moving more and more towards twitter the entire time with a headline and no substance under it. All it has made me do is to use online news sites that don't charge a fee for it.

over 2 years ago

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