Murdoch To Solve Web Traffic Problem

News Corp chairman Rupert Murdoch says he's bringing the days of the free interwebs to a close. In the course of reporting some extremely grim financial results, Murdoch said News Corp intends "to charge for all our news websites," adding, "If we're successful, we'll be followed by all media." More:

As I always have said before the traditional income and business model has to ensure that our journalistic enterprises can return to their old margins profitability. The extended downturn has only increased the drumbeats of change but the secular challenge is clear. Classified advertising revenues will never again reach the levels that print once offered.

Quality journalism is not cheap and an industry that gives away its content is simply cannibalizing its ability to produce good reporting. The increase we have seen in our Wall Street Journal subscriptions since we acquired the paper proves to me that the market is willing to pay for that quality without any special market.

And we have tens of millions of readers. In Britain, the Times of London has a digital audience that now reaches more than 16.0 million people across the globe every day. In the U.S. the Journal is the only newspaper that has actually expanded both as print and online subscriptions during this recession. Additionally, you can now also read the Journal on your Blackberry or iPod.

We can be platform-neutral but never free. Intense research and development is being done by many companies to produce convenient and inexpensive mobile reading devices. Right now we are working with software, hardware, and other publishers within the industry to develop a model that works for consumers.

As Murdoch's own Homer Simpson once marveled, "They have the internet on computers now?"

Murdoch's paid content plan, which will include the Fox News site, is supposed to be in place by next summer.

It's never wise to challenge Rupert Murdoch's media savvy, but I don't see any scenario in which the market for paid electronic content is better today than it was in 2005, or 1996, or 1995. The lesson of history has been that charging, password-protecting or in any other way blocking access hurts the publication by removing it from the great collaborative orgy.

But the more compelling argument against paid content sites is that they're a bad deal for customers. Not just in the sense that having to pay is a worse deal than getting something for free. Online payment is a bad deal because it's hard to keep track of how much you're paying and what you're getting in return. Is there anything more irritating than the knowledge that you are literally accumulating nickel-and-dime charges every time you click?

That's why micropayments never worked out, but flat-rate models stink too. About 15 years ago, I subscribed to the Wall Street Journal online, then never once visited the site. At the end of the year, the Journal used the negative option to roll over my subscription, and it wasn't a cheap subscription; it wasn't until I saw the credit card bill that I realized how much money I'd wasted over two years. If the paper WSJ had been coming to my door all that time I might not have read it, but I wouldn't have felt the waste quite so acutely. I have not subscribed to any version of the Journal since. Murdoch claims online subscriptions are up, but if the model is so successful, why is it so sporadically applied? I'd say four out of every five times I click on a Journal story I get it in its entirety, no subscription needed.

If that ratio changes, I'll change my own behavior and get the same news somewhere else, either through another publication or a copyright-violating Freeper-type with a Journal subscription. Of course, copyright violation is considered a crime, so that's another disincentive to do business with a paid-content site at all. Most of the value of online content is the ability to pass it along to others without any hassles. Charging for content doesn't just mean you have to pay for something you'd rather get for free; it means you have to pay for something that is less valuable than it would be if it were free.

Murdoch's wonderful history of keeping customers satisfied contrasts sharply with most professional journalists, who in my experience hate their readers like poison. But there's one really annoying thing about customers: No matter how much you insist, they can still say No.