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.

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  1. But there’s one really annoying thing about customers: No matter how much you insist, they can still say No.

    Don’t worry. In tandem with the administration’s coming journalism bailout, “no” will no longer be an option.

  2. Dear Rupert:

    The POST website is so obnoxiously sucky, I have refused to follow links to it for years.

    Good luck, Matey.

  3. Let us know how that works out, Rupert. I damn sure won’t be reading about it in any of your papers.

  4. The Journal is a good paper, but I get it free at the office. I have only ever paid when I was in Europe and the people I was staying with had no computer, or similar rare circumstances.

    Hopefully ad revenue will pick up and this plan will be scrapped.

  5. Methinks Cavanaugh especially likes being part of the “great collaborative orgy.” Prolly makes him feel like he’s in a digital Plato’s Retreat. Very kinky, baby!

  6. And of course, along with paying a subscription fee, we’ll be expected to put up with the same level of in your face advertising, including popunders, animations that crawl over the text you’re trying to read, and loud audio that only stops if you can find and press the tiny, hidden off button.

    Sign me up, Mr. Carver.

    “Have you released the next version of our operating system yet?”

    “Yes, complete with bugs, that will require the user to endlessly purchase fixes.”

    “Eeexcellent, eeexxxcellent!!”

  7. From Derek Thompson’s post on the “Atlantic” site

    Me, I have the feeling that asking readers to pay for is like charging $10 for a Big Mac. That’s not just my liberal commie instincts talking up: I’d say the same about or any site living on a heap of AP wire stories. If the bulk of your site is expendable, borrowed, or fungible with Google News, there’s no reason [to pay] a dime for it.


    Technically, much of is already paid content. But there’s an easy way around the pay wall. Some articles show the first few paragraphs interrupted by a banner asking you to subscribe to read the rest. But! If you copy the headline and paste it into your Google search, the first item under “News Results” will be the full article…free! That means WSJ’s subscriber-only content is, well, not subscriber-only at all. Presumably, Murdoch allows this to optimize traffic from web searches, but it’s a pretty obvious loophole and one that he’ll have to close if he expects enterprising news readers to actually pony up cash for content.

    And, from Staci Kramer’s post on “paidContent”

    The problem? Beyond the “OMG, he’s going to kill the sites by shutting off the free oxygen” factor already making the rounds like the wave, not all News Corp. news outlets are created equal. and its offshoots produce financial news and info for which a small group of people are willing to pay decent sums. Not the amounts Murdoch thought they would pay, but still real money. But Murdoch’s plans include charging for the websites of UK tabloids The Sun and the News of the World; U.S. tabloid the New York Post, which already failed with its own celeb site sunk by high expenses; for general newspapers like the Times of London and The Australian. They also include non-print sites like What will News Corp. charge for? [Micropayments] to see the Sun’s topless Page 3 girls (or maybe 10p not to see them)? “World exclusive” interviews with 15-second celebs? Bill O’Reilly outtakes?

    When a reporter for the Daily Telegraph asked about charging for sites that aren’t “quality,” Murdoch quickly replied: “I think they are very, very high quality and they’re entertaining.” When the question extended to the same content being available across the web at no fee, Murdoch was equally quick: “Not if they’re ours. We will be asserting our copyright at every point. … You can sneer at it from the Telegraph but I’m sure your great scoop, the about parliamentary expenses, people would be very happy to have been paying for that on a website.” Still, no details about what he would charge for, how or how much.

    Asked by a reporter for UK rival Guardian (our corporate big sibling) what he could do to stop readers from migrating to free sites, Murdoch simply said: “Just make our content better and differentiate it from other people. And I believe if we’re successful, we will be followed by all the media.” He added, “Frankly, the big free competition will be coming from the BBC.”

  8. The title is pure gold, Tim. Bravo.

  9. The WSJ subscription model is successful because the information it contains helps traders make money. You don’t want the other guy knowing something that you don’t so the pressure is there to keep up with the info.

    I think Rupert might be successful charging subscriptions to his other news operations, because the people who hang on every word of reporting from his organization because it fits into their world-view are addicted to it. To them, paying for that is a privelege and they will fork it out.

    One of the consequences of this is that, because they are paying for that feed, they will pay attention to it even more, and stop even considering alternative sources of news. They will become comfortable in the walled garden, and the echoes in the chamber will become louder and louder until nothing else can penetrate.

  10. I still think micropayments could work, but they’d have to be truly micro and convenient for the reader. Maybe something at the ISP level, that charged you a fraction of a cent for reading a micropayment story. That way you wouldn’t have to sign up, download software, pay into an account, etc.

    If I were Murdoch or the newspapers I’d try to create some ISP-based system, splitting the revenue with them. You could fund a lot of news for just $1/month per reader. Plus, such a system would make it easier for individual writers/artists/etc. to make money online.

  11. I don’t see why the can’t run this on the cable model — bill the ISPs for allowing access to all their customers.

  12. I subscribe to the WSJ paper version, but often read it with my WSJ iPhone app.
    Speaking of which, it seems that the whole iPod song/app download model works very well. I’m usually willing to shell out 99 cents to try out a new app that looks interesting.
    Apples and oranges, I know, but still, might that model be somehow applicable to news content?

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  15. He has to come up with something more than what he is offering new. The News Corp. focus the business media market is the place for a pay site and pay app combination. There is room for improvement on market tools and market media along with business media. I’m addicted to the bloomberg app. If News corp. offered something similar with a web site and more personalization like yahoo finance… ahh hell if they just mashed bloom, yahoo morningstar and so on all together along with business news and regular news and offered a nicely integrated interface and cell to computer transfer of information I would pay. I hate to say it, but all the little bells and whistles when it comes to applications count.

    I have no problem paying for content I can use or want if I can get it quicker, easier, better organized… An all in one business stop would be the place to start. Including 401K and so on, the current economic climate would help sell such a thing.

    Feeding market junkies is a good business model that can be “softened” to appeal to the public.

  16. Would you actually pay to hear what Neil Cavuto thinks about anything?

  17. Would you actually pay to hear what Neil Cavuto thinks about anything?

    Neil Cavuto still wins points for a poking a train sized hole in Bill O’Reilly back during the Enron fiasco.

  18. I never knowingly visit any of Murdoch’s sites now except maybe through a link on another site to something stupid on FOXNews. I can’t see myself actually paying to subscribe to it.

  19. Would you actually pay to hear what Neil Cavuto thinks about anything?

    I like Cavuto. He has his retarded moments, but who doesn’t. As far as calling bullshit when it needs to be called he does it almost as much as the annoying long haired kid on fox business. MSNBC almost seems like circus these days and CNBC is rapidly following the circus model. I get most of my business information online and the WSJ anyway. With CNBC or Fox business on in the background depending on the time. Fox business has better looking anchors and reporters, even if some are dumber than posts.

  20. The wingnuts were just getting used to the internet, now he’s gonna make them pay?

  21. For the record my wife worked for News Corp. For a while and now works for an affiliate. But she’s pretty much apolitical. Oddly most of the staff behind the scenes at the affiliate are liberal. The management at the top seems to be more socially conservative. They wouldn’t show the Ozzy Osbourne special thingy a while back.

  22. News Corp and Coinstar are about to go at it over Redbox and releases.

    In other news flash trades, and high freq trading, are voluntarily gone from the Nasdq. Just wait for the out cries from GS and the like for losing their advantage. I wonder what impact on volume this will have.

  23. Murdoch has never made a stupid move in the media business. (anyone?)

    So this is pretty weird–I think he thinks he simply has little to actually lose here (I’m sure that not all the content will be walled off) and maybe as a long shot, a lot to gain.
    Remember also that the WSJ came closest to success with their free-for-most-stuff and the juicy-trader-bits-for-pay plan.

    Still I can’t see it working with most of the murdoch properties, for reasons already mentioned, ie it’s low quality, it’s just AP stories that you can find anywhere, it’s not worth money etc.

  24. I guess it really is true. Old people are cluless when it comes to the Internet.

  25. Most of the value of online content is the ability to pass it along to others without any hassles.

    The newspaper industry always considered that a value of hardcopy too – you buy the paper and half a dozen people you work with read the same copy.

  26. Murdoch has never let his stupid move in the media business go public. (anyone?)

    He’s made some mistakes and missteps, but he always pulls back before they materialize into significant losses. He is one shrewd businessman.

  27. I’m going to have to spend some time on the more liberal side of the net to watch the Fox bashers. I love those guys.

  28. Murdoch’s never made a dumb media move? What would you call their MySpace purchase, if not short-sighted and “dumb”?

  29. I can see this working for the WSJ, but not for anything else.

  30. Damien,

    Forgot about that one.

  31. It’s not stupid to charge for premium content, but charging for 80% of your content is foolish and will hurt revenues in the long-run.

  32. The reverse brilliance of the free-content argument is that it completely avoids the real issue, which is loss of ad revenue.

    Subscriptions and newsstand sales traditionally didn’t even cover production and distribution costs. When you factor in how much money papers will save when they don’t have to own printing presses and trucks, they’ll actually be getting a better deal.

    Except for one thing: There’s no way to replace the exorbitant ad rates they collected — not just for classifieds but for display ads.

    You might think the way to adapt to that would be to cut costs, leverage the ability to draw the widest possible audience, and make as much as you can in the online ad market. But apparently not.

  33. Aren’t the structures for ad revenue different online than they are in print or even televised media?

    An interesting ad revenue sideline, local stations here thought they were out of the woods with this summers recession based on their ad revenues not dropping as much as they thought they would. The problem is someone forgot to factor in defaults on receivables from ad revenue. It appears the largest concern now is if you are going to get paid for running the ad or not, not getting the ad business.

  34. “””Murdoch has never made a stupid move in the media business. (anyone?)”””

    Canceling Family Guy? But he redeemed himself by putting it back on air.

  35. wow, this is bad news for all the people reading the news now…soon blogs will officially take over..

  36. Generally if I see a reference to an article that’s behind a paid subscription wall, I just Google the teaser quote. I can almost always find where somebody’s cut and pasted it into an elist post or blog.

  37. It’s a dilemma. I’ve discovered that it’s almost impossible to get real investigatory work from amateurs (bloggers). News may have to become a non-profit enterprise.

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