Can Rupert Murdoch change the world?
Rupert Murdoch didn't become a media mogul worth an estimated $4 billion by giving stuff away for free.
So the announcement today that the websites of The Times and The Sunday Times -- both owned by News Corporation -- are to start charging for access from June isn't surprising. Reading these websites will cost £1 a day -- or £2 for a week -- once the gates go up on free browsing.
Now, £2 for a week compares pretty well with paying £1 for the printed version. If it was 1995, it might seem a bargain.
But it's not. This is 2010 -- and we've read our online news free for a decade. That makes Murdoch's manoeuvre look something between bold and suicidal.
Why papers want to charge
As a full-time freelance writer and consultant, I've watched closely what the rise of the Internet has done to the economics of publishing companies as diverse as Future Publishing (LSE: FUTR), Reed Elsevier (LSE: REL), and Trinity Mirror (LSE: TNI).
Only yesterday a publishing veteran said to me, "I seriously wonder whether the job of journalist as such will exist in ten years". (Get your kids off those degree courses, pronto!)
Any traditional publisher faces a battery of disruptive forces:
- Internet users reading your free content don't buy the printed version.
- Your paper content is instantly dated and it's not interactive.
- Web readers are promiscuous media consumers -- they may read two stories off your site and then go elsewhere, instead of reading all your content, and seeing all your ads.
- Advertising revenues have slumped with the recession.
- Professional journalists pursuing news stories costs a lot of money.
- Amateurs with inside industry knowledge increasingly break stories via blogs and social media.
- Lots of websites get their content for free, or at a very low cost.
- Much of what's popular on the Internet isn't journalism at all.
These forces are rendering traditional news publishing on paper obsolete.
It's not just that newspaper sales are declining while online revenues from advertising aren't rising quickly enough to make up for it. There's also the fact the Internet unwraps how the different elements of a newspaper or magazine subsidise the other elements.
Whatever 'old media' now says, it used to employ the sort of fluffy stuff popular on the Internet to attract readers, too, and this subsidised its worthier content.
Equally, every now and then the news department would break a vital story that boosted both a newspaper's sales and its prestige. And that in turn increased its advertising rates.
It's notable that Murdoch is looking to create this model online. He's not looking to charge per page view (a micropayment model) but instead wants you to pay to enter his 'garden' and consume his content.
He wants you to pay to have less time to consume the content of his rivals.
In short, he's trying to put the jack back into the box -- but an online box instead.
No big charge
The Times and The Sunday Times aren't the only online websites going down this route. The Financial Times, owned by London-listed Pearson (LSE: PSON), and The Wall Street Journal already charge for access to some degree.
Other well-known names that offer special content to subscribers include Reed Elsevier's New Scientist magazine, which requires a subscription of £137 a year to view all its content, and The Economist -- 50% owned by The Financial Times -- which charges $95 a year
More mainstream papers and magazines have held off out of fear of losing their audiences, and their low-but-better-than-nothing ad revenues. But many whisper they are running out of time.
Will Rupert Murdoch succeed where nearly everyone else has failed? Like most -- media insider or not -- I think the approach he's trialling is unlikely to work, especially at £1 a day.
There's so much content on the Internet that's free, publishers need to band together to raise their drawbridges en masse if there's to be any widespread move towards paying for content. And there's no sign of that happening, despite Mr Murdoch's tub-thumping about the perils of free content and the power of Google.
Even if all the newspapers did start to charge, you'd still have exceptions like the BBC providing quality news for free. There's also the plethora of specialist websites, blogs, and social networks that have already replaced a huge chunk of our traditional media consumption.
I like reading The Sunday Times' business section, but at £2 I expect I'll catch up via the BBC and Robert Peston and one of the better business blogs on the days when I don't fancy reading the paper version in bed.
The 500-lb Googlerilla
And what about Google? It's not clear how the search giant will treat mass media's content if it's inaccessible to the vast majority of searchers. That could mean The Times and other sites that erect fences around their articles will fall down Google's rankings.
Without Google sending you readers, you may as well pack up and go home.
You can see how global the reach of The Times is from the plethora of US readers chiming in with comments. Perhaps Mr Murdoch has judged he can do without them, since his display advertising and his articles don't target them. It seems a big gamble, but perhaps he believes his newspapers will be worth just a fraction of their current value if he can't make them pay online today. If so, investors in the likes of Trinity Mirror had better watch closely.
It's interesting that just yesterday Russian billionaire Alexander Lebedev bought the stricken Independent newspaper. This time last year he purchased London's Evening Standard, and he seems to have turned it around by giving it away for free.
Can Rupert Murdoch really hold back the tide? Let us know your views in the comment box below...
More from Owain Bennallack:
