News Corp. and the Great Not-Free Experiment

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.

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