Events | 2009.07.11
Unfree at last | James Silver
In the battle to charge for content on the web, print has found an unlikely champion in Murdoch
The notion of Rupert Murdoch as the saviour of newspapers may be unpalatable. But if the industry does survive the current turmoil, albeit largely in digital form, it will almost certainly have the 78-year-old News Corporation chairman and chief executive to thank.
That the newspaper business is caught in a vortex of haemorrhaging ad revenues and dwindling readerships, exacerbated by a deep recession, is hardly news. Across the US, household-name newspapers – including the Los Angeles Times, the San Francisco Chronicle and the Philadelphia Inquirer – teeter on the brink. In the UK, even the once unassailable (DMGT) reported a first-half pre-tax loss of £239m.
The decision by industry bosses to distribute their content free online while continuing to charge for it on paper and rely predominantly on digital advertising revenues to make up for cover price and print advertising shortfalls has been a spectacular failure. Traffic numbers, and the advertising they attract, are never going to bridge the gap. Scratch a little deeper, and it\'s apparent that many of those who first talked up the need to make content free on the web – the Silicon Valley start-ups, the search engine Goliaths, the software makers, and so on – were mostly doing so out of commercial self-interest.
The truism that people won\'t pay for general news content had been repeated so often that it became an accepted fact. But there\'s no meaningful evidence that significant numbers won\'t pay to access high quality up-to-the minute news, video, analysis and searchable archives. The severity of the situation facing newspapers means executives are faced with a stark choice: "pay walls" or bust.
From the New York Times to the DMGT, the clamour against "free" is growing. But it\'s Murdoch – an unlikely digital champion – who is making the real running. The turning point can be traced back to May. Operating income at the media giant had plunged by 47% year on year – from $1.4bn to $755m. His comments about the failing newspaper side of his business – where operating income slumped from $209m to just $7m – spawned more than 7,000 headlines around the world. "[We\'re] now in the midst of an epochal debate over the value of content and it\'s clear that, for many newspapers, the current model is malfunctioning," he said. " The current days of the internet will soon be over ."
When News Corp acquired Dow Jones for $5.6bn in 2007, Murdoch told shareholders in Australia he envisaged making wsj.com free. Eighteen months later, in Washington, he had a different message. "People reading news for free on the web, that\'s got to change," he said. Why the volte-face? Simple: he saw the Wall Street Journal\'s books. While ad revenue was collapsing across his newspaper division, traffic and paying subscriber numbers at Wall Street Journal online were soaring. "That it\'s possible to charge for content on the web is obvious from the Journal\'s experience," he said.
To that end, a variety of business models are urgently being investigated at the organisation, including placing "higher value" content such as the Sun\'s celebrity news and football coverage behind a pay wall. However, the idea said to be gaining traction at the highest levels is the possible launch of a Sky TV-style tiered subscription platform – available on mobile, e-reader or computer – featuring all News Corp content. Eventually, content from rival groups could appear on it too.
Forcing the "free" genie back in the bottle will not be easy. But with the survival of newspapers as viable businesses at stake, even diehard Murdoch-haters should hope he succeeds.
For more information, please visit
http://www.guardian.co.uk/commentisfree/[...]/06/newspapers-web-free-charge
