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Summary:

Rupert Murdoch is picking up his toys from the playground and going home, and kicking sand at the “free” model touted by Wired’s Chris Anderson on the way out. The News Corp. chairman has announced that, due to poor advertising revenue on the company’s numerous news […]

374716426_b3808965cf_mRupert Murdoch is picking up his toys from the playground and going home, and kicking sand at the “free” model touted by Wired’s Chris Anderson on the way out. The News Corp. chairman has announced that, due to poor advertising revenue on the company’s numerous news properties, the company will begin charging for all online news content within a year. News Corp. lost $3.4 billion in the just-ended fiscal year, after a massive $8.9 billion in one-time charges.

The pay-wall strategy, which is still lacking many, many details, has more than a little bit of David Farragut’s “damn the torpedoes” mentality to it, but Murdoch noted that if his plan is successful, “we’ll be followed by all media.” Could this be the beginning of the end for free news on the Internet? Murdoch is hugely influential and could orchestrate a sea change for his contemporaries in the news business. And he’s in good company. His explanation that charging for news was natural because “quality journalism is not cheap” was virtually identical to the phrasing used by New York Times executive editor Bill Keller in an interview last December with NPR.

Murdoch said in May that his company would test new pay models on one of its sites, saying News Corp. would charge for some of his flagship content “within the next 12 months” and that the company was “looking” at charging for all content. I figured this would be a small-scale test on one of his top properties — but he had assembled a global team, personally overseen by Murdoch himself, to determine the best way to charge for content — and “save journalism” at the same time. Murdoch predicts “significant revenues” from the paid content model.

Most existing pay models at major news pubs, News Corp.’s Wall Street Journal and the Financial Times being the most prominent, allow casual users to read articles for free, but once value is established — that is, people start coming back for more — they ask for money. There’s no direct value-add, other than to make it possible to read their content without jumping through hoops. We’re taking a slightly different approach, offering up free content on a network of ad-supported blogs,  but charging for our subscription-only research and analysis service.

I suspect Murdoch will lean towards the first, partly free, model, but the Australian newsman can be unpredictable — and if he’s banking his entire company’s online model on “pay,” he could try anything — and it just might work. It’s also possible that Murdoch might bring his television content under the pay umbrella, perhaps altering News’ deal with Hulu or even — and I would love this — streaming Sky and Fox properties online for paying viewers. One thing’s for sure, Mr. Murdoch. Free or not, everyone’s eyes are on you.

(photo courtesy of the World Economic Forum)

This article also appeared on BusinessWeek.com.

  1. courtney benson Thursday, August 6, 2009

    “quality journalism is not cheap” I’m sorry but where’s the quality within Murdoch’s publications? Ask yourself how much you’re willing to pay to find out about Paris Hilton’s night out. Will people really pay for distraction journalism? I’d pay for critical thinking. This guy is out of touch and should just go off on his yacht off the coast of Somalia. What do you think?

    1. Agreed, there is absolutely no quality to any News Corp output, its some of the most biased, bigotted, sometime sexist, racist, xenophobic tripe out there

  2. I paid for the Wall Street Journal online for years. Two years ago I paid $119, and was considering not resubscribing the following year. When I saw the price had gone up to $149, I didn’t even have to think twice. I e-mailed the WSJ, told them why I wasn’t reupping, and that was that.

    Besides which, when Murdoch bought the WSJ, he made far more content available for free than ever before. And the iPhone app is free, along with content, though not interactivity.

  3. The words “quality journalism” and “Fox News” appearing together in the same paragraph?

    I’ve never seen that before!

    Also,

    Apparently Mr. Murdock didn’t get the “Never, ever, EVER start charging for what is free” memo. Everyone knows that’s the fastest way to an inverted hockey stick graph for user headcount.

    1. Yeah, but he doesn’t want user headcount. He wants profit.

      1. Then he needs to get out of the newspaper business. Buying WSJ for an inflated price is not going to help him turn a profit.

  4. With all respect, Mr. Murdock there are other alternative for FREE new on the internet.
    Free is the new and evolving business model. Sir, ask yourself What would Google do.
    If you want to know read the book entitle exactly that What Would Google do.

    What business are you in advertising or news. Everyone has to make money
    but charging for what is free all over the internet may need some rethinking.
    Increasing your traffic maybe the key.

  5. Berryhill rallies to win first game at American Legion Baseball – Midland Daily News « Video Game News Blog Thursday, August 6, 2009

    [...] News Corp. and the Great Not-Free Experiment – Gigaom.comRupert Murdoch is picking up his toys from the playground and going home, and kicking sand at the “free” model touted by Wired’s Chris Anderson on the way out. The News Corp. chairman has announced that, due to poor advertising revenue on the [...]

  6. Michael Yokitis Thursday, August 6, 2009

    Although, like everyone, I appreciate freebies, I’m troubled by what I percieve as the common expectation that nearly everything on the internet should be free. If you want an internet connection you should pay for the pipe, and if others are paying reporters, editors, photographers, etc to keep a news organization going, then I think it would be presumptious to expect to recieve that service at no-charge.

    If they can make a no-charge business model work via ad revenue or some other means, great. But lets not be shocked if we’re actually asked to pay for services that we recieve.

    1. If Murdoch can make it work, then good.

      The reality is even if I do not get access to “high quality” journalism. I will have access to lower quality rereports which are you know free. I will just ignore the WSJ. It will not cost me much.

      I dont see myself paying for news when I get the same from cnn.com and twitter.com for free. And there is also no convenience factor (whcih is why i pay for iTunes music)

  7. digitalgenerator Friday, August 7, 2009

    He can charge if he wants – but will people pay?

    It will be fascinating to watch how this affects his advertising revenues, in the short term who will advertise with him (especially if the readers disappear).

  8. Jordan,
    I look at this a bit differently.

    First, as evident by the NY times (sub to free model now) and the WSJ (free to sub to free back to sub model), i think we will come back to free for the following reasons:
    a) quality journalism is becoming highly fragmented and is no longer owned by large institutions
    b) bloggers, such as yourself, develop an expertise and like it or not, your commenters and followers such as myself, expect you to be a quality journalist (eventhough you are a blogger and may not identify yourself as a journalist, i submit, your readers expect it)
    c) you and Om and Brian Lam’s team at Giz (p.s. i am not lam eventhough we share the first name), are supplanting the journalists of these large institutions and are specialized, recognized as the experts for interest areas.

    Thus, people like myself and others not technically adept, simply close the tab or window when presented with a log-in/subscription at these major media outlets – or google it. Only the highly attached followers with pay for the sub model, which is an decreasingly smaller pie.

    Sorry Murdoch, but I think you might want to try a different model.

  9. Jesse Kopelman Friday, August 7, 2009

    This whole discussion is based on a false premise. Web news sites are not free, they are supported by advertising — just like TV and Radio news! I don’t hear anyone arguing that CNN, MSNBC, and Fox News should follow the Bloomberg model and become subscription networks. Given that the distribution costs of Web News is more like TV and Radio than Print, why wouldn’t it use the former business models rather than the latter? It seems like the subtext here is the idea that companies need to increase Web News revenues to offset declines in Print News revenues. Why? What does one have to do with the other, from a purely business perspective?

  10. Murdoch has been through this before – bet the company on a ‘users will subscribe’ strategy and won big time.

    He transformed the UK’s TV landscape, setting up a subscription only platform when there were existing free (both state sponsored and advertizing backed) alternatives. Sky now has 9 million subscribers – (that’s at least a third of the possible UK market).

    He played a long game, paying huge amounts for exclusive rights to ‘must have’ content
    (live soccer initially)
    forcing fans to subscribe. He then branched out from that loyal base to get the rest of us.

    The situation with news on the web isn’t identical, but don’t underestimate Murdoch.

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