“The current days of the internet will soon be over” Rupert Murdoch

Speaking on an a conference call with shareholders and analysts today Rupert said (from CNN):

We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning.  We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues in return for our shareholders… The current days of the Internet will soon be over.

In other words he believes that users will soon start paying for the online versions of his newspapers, or rather more of them will.

Yet on the other hand Paidcontent, now owned by the Guardian ran an article today entitled Why raising the paywall may be an impossible dream.

At the moment it seems the two sides to this debate are irreconcilable.  On the side of free we have the fact that everyone has gotten very used to not paying for web news over the last 15 years and all the (now familiar) arguments about the ease of making copies and long run pricing trending to the marginal cost of distribution which in this case is zero.  Also, in the UK the existence of the BBC funded by the annual TV licence makes it even more difficult for newspapers to charge online. 

Then arguing against free we have the newspaper industry saying if they don’t charge they are toast – in effect saying that they have to innovate or die.

Some newspaper sites are already charging of course, not least the FT and Murdoch’s WSJ, and I suspect that with some clever thinking online audiences could be charged more effectively – for example by insisting on payment for parts of the site or for more timely news.  As pointed out in the paidcontent article that will be much easier for niche publications that more general interest papers like Murdoch’s The Sun, for which equivalent free alternatives are abundant.

If getting more people to pay is one challenge the other is doing so without alienating the majority who are happy ad supported customers.  Joshua Benton of Harvard puts it like this:

I suspect within any readership there is a small slice — maybe three percent — that is willing to pay. News organizations are going to have to find a way of getting money from that slice without driving away everybody else. I don’t think you can afford to put a lock and chain on the front page.

We are now entering the sharp end of this debate.  When Murdoch is making statements like the one I used in the title to this post you know that the rubber is about to hit the road.  Back in 2005 when he did the MySpace deal he showed himself to be ahead of the pack in his understanding of the web, maybe we are about to see that again.

Update:  More details on this from the FT here – apparently the WSJ is strongly considering per article charges, aka micropayments.

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  • News are meant to be fresh. So let's make them free after a week. Otherwise everyone should pay to get the latest ones. If online news sites can ally with blogs to move together towards the charging model, the market will become more mature. But charging for content is just one revenue stream. Why not have a bidding model for ad spots?

  • With the channels we run like http://www.reuters.zebtab.com/download.aspx or http://www.bbc.zebtab.com for the latest news brought to your desktop for free it is clear that old news does not have any real value unless research based or niche orientated. The headlines are all about breaking news and given the access proved even by a smaller player like ourselves how would you bar entry and put up a workable payment barrier. Multimedia has made its move and the hard copy days are numbered except for a certain segment of the population for their own reasons that do not want to engage or adapt. Its a bit like the old days of 80s tech product distribution – if all the distributors held the line then the customer was at the mercy of that price plan – but you know what, even then there was always someone who broke away and gave access at a different level, and the same will continue to happen here.

  • Let me add an example which I think highlights how difficult this issue really is. We run a community for SW London mums http://www.nappyvalleynet.com and last week our community (via Alleyns school) was hit by swine flu. We were notified of this by a local newspaper website which we follow dilligently and within five minutes we had posted our own take on this situation on our website and sent an alert email out to our members. This was all done on a Sunday evening by the site owners, at home, whilst their children played around them. The marginal cost, to the site owners, of this activity is probably measured in pence and yet if it hadn't been for a major news corporation sending reporters and posting pictures we would be non the wiser yet there was a huge transfer of value to our site ( we had our busiest ever traffic day).

  • With the channels we run like http://www.reuters.zebtab.com/download.aspx or http://www.bbc.zebtab.com for the latest news brought to your desktop for free it is clear that old news does not have any real value unless research based or niche orientated. The headlines are all about breaking news and given the access proved even by a smaller player like ourselves how would you bar entry and put up a workable payment barrier. Multimedia has made its move and the hard copy days are numbered except for a certain segment of the population for their own reasons that do not want to engage or adapt. Its a bit like the old days of 80s tech product distribution – if all the distributors held the line then the customer was at the mercy of that price plan – but you know what, even then there was always someone who broke away and gave access at a different level, and the same will continue to happen here.

  • Let me add an example which I think highlights how difficult this issue really is. We run a community for SW London mums http://www.nappyvalleynet.com and last week our community (via Alleyns school) was hit by swine flu. We were notified of this by a local newspaper website which we follow dilligently and within five minutes we had posted our own take on this situation on our website and sent an alert email out to our members. This was all done on a Sunday evening by the site owners, at home, whilst their children played around them. The marginal cost, to the site owners, of this activity is probably measured in pence and yet if it hadn't been for a major news corporation sending reporters and posting pictures we would be non the wiser yet there was a huge transfer of value to our site ( we had our busiest ever traffic day).