Friday, May 15

What's wrong with Murdoch's dream to charge for news online

Rupert Murdoch, the part-owner and chairman of News Corp (Star TV, 20th Century Fox, The Times, The Sun, Wall St Journal...) announced that the day's of the free internet are over, and New's will pursue a paid content strategy within 12 months.

Having worked long and hard on both The Times and The Sun's digital products for many years it's a surprising statement and strategy to me. 5 years ago both The Times and The Sun were really not punching their weight, with less than 1m unique users per month each. Over that time investment in content, marketing and technology has brought both titles to around 20m unique users. The point, is that they are each influential in their own right, they reach millions of people each day and the revenues are healthy (albeit a million miles from newspaper takings).

Having built a platform of audience, of influence and of advertisers/commerce, News Corp is in a powerful position to grow new revenues in the digital age. Unfortunately, in these times, we all need the revenue to come along quicker, to grow faster, to replace declines in print. So comes the 'dream' of charging for content, again!

The Wall Street Journal does very nicely from it's subscription revenue. In fact, in studies that I made a few years ago WSJ was earning substantially more than it would have from a free/open advertising business-model. But that's the exception, not the rule. The WSJ is a globally known 'busines' news source, it delivers something of high-value (business thought and news) that many cannot do without. Like The Economist, it's a thought leader and an influencer to which people subscribe.

The quality of journalism in The Times is certainly on par with WSJ but to think that this makes it chargeable is a very 'internal' product-led view of the world. The truth is that the readers 'value' from the content is much less if it is not influencing their daily work or business decisions. The content may well be fantastically written but the prose in "Spur's destruction of Chelsea" (that's my dream!) is not content that a large number of people will pay for...

The reasons:

1) It doesn't add enough value to me (not in the same way a stockmarket recommendation would)

2) I can ALWAYS get that same information for FREE online elsewhere (it may not be so well crafted, but the facts remain the same)

3) The news product is not the "some of it's parts" when it's online. I will only read the bits that I find personally interesting. So you can't charge me $1 a day since one day I might find 1 article interesting, the next day it might be 10 articles.

4) We are still at the beginning of the digital age, many people have still not developed their habits, their brand preferences

5) The internet is GLOBAL. The Times and The Sun are extending their brands from NY and London to Saigon and Siberia. To people in Saigon, The Times is new, not something to charge a premium for.

I expect The Times is the most likely target to trial a new subscription/"pay as you go" service on. I will feel quite sad if that is the case. The pay barrier will hemorrhage readership very quickly, the global reach and influence of the content will diminish overnight and the platform that has been built for the transition of paper to web will be taken away.

Internet business-models are continuing to develop fast, revenues are building proportionately quickly (compared with other media)...just be patient. Please Mr Murdoch, don't hold onto the Candle when the Lightbulb has already been lit.


Anonymous Chris Tran said...

Great post dude. Murdoch certainly does have deep pockets to await an appropriate business model.

To be honest, I haven't yet come up with a good model for newspapers to gravitate to. Advertising just won't be enough for them. Ever.

They may have to reduce costs and have 100% freelance writers with some great editors and A-list op-ed writers. I am more likely to pay for regular columns, from a Thomas Friedman than articles one or two grades better than what I can get from other sources on the web.

Ok, I'm not so much a Friedman fan as a Krugman fan.... But Friedman is better known, Nobel prize be damned!

16 May, 2009 02:15  

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