Blog Post

Google’s Schmidt To Murdoch: ‘Mass Market Paywalls Won’t Work’

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Online news is too freely available for Rupert Murdoch’s global paywall plan to work, according to Google (NSDQ: GOOG) CEO Eric Schmidt. Speaking in a Q&A session at the Royal Televison Society Convention in Cambridge, England, on Thursday the search giant boss said via video link that while had succeeded in selling public subscriptions to finance professionals, “in general these models have not worked for general public consumption because there are enough free sources that the marginal value of paying is not justified based on the incremental value of quantity.” (via

He continues: “So my guess is for niche and specialist markets … it will be possible to do it but I think it is unlikely that you will be able to do it for all news.” So Schmidt backs WSJ and to carry on profiting from paywalls, but gives Murdoch no chance of succeeding with charging models on News Corp.’s mass market, general interest titles such as the New York Post, The Sun or The Australian.

It’s not exactly a helpful comment from Schmidt, given his company’s strained relationship with the news biz and its recent overtures to publishers: Google is for the first time (albeit on an experimental level) sharing revenue with news publishes via the Fast Flip project and has offered to help the paid content cause by sharing micropayment tools. But you can’t blame Schmidt for saying what many of us are thinking: it’s going to be an uphill struggle to convince a generation used to free online content to suddenly start paying for it.

Murdoch’s paid content battleplan has moved from online to mobile, with the announcement that WSJ’s BlackBerry mobile app will be paid-for from next month. But so far, no News Corp (NYSE: NWS). site has followed WSJ in charging for content and the rhetoric is yet to backed up with action. The company’s UK wing is preparing, a companion site to the Sunday Times broadsheet title, which will come complete with online-only content and staff. Given the timing of Murdoch’s announcement, that site could well be used as a test bed for general interest paid content.

12 Responses to “Google’s Schmidt To Murdoch: ‘Mass Market Paywalls Won’t Work’”

  1. Patrick King

    Widening the discussion slightly to media in general –

    Quality content (premium ad-free) will not get skipped over by TiVos and DVRs, whose growing household penetration is destroying the television industry’s revenue model. They don’t scream at you for 20 minutes every hour like ad-saturated commercial radio. They don’t cookie you, track your keystrokes and violate your privacy while selling your personal information like many of the more manipulative Internet sites out there do.

    The point being – offer consumers/clients two models for on-line content for; free but funded by ad revenue or premium content (no ads or distractions) that consumers/clients pay for by subscription or micropayment or whatever else works. This should be true for all media publishers regardless of their genre.

  2. Greg Golebiewski

    I know, Staci. But this begs even more questions, including why do they (NAA and other publishers) go to Google or Brill, instead of checking with those who do content monetization and can give them bigger returns without any "additional charges"?

  3. Staci D. Kramer

    @Greg The Google proposal may be cheaper for Checkout but there are other charges proposed for various elements. I don't think this is as simple as comparing transaction fees.

  4. Greg Golebiewski

    Brill's concept seems expensive comparing to other already existing solutions. Both Google Checkout (included in the NAA survey) as well as the popular PayPal (and PayPal micropayments, in particular) can charge a lot less.

    More importantly, platforms specializing in content monetization can absorb cc or paypal standard fees to process the transactions, and still they can offer the newspapers from 87% to as much as 94% as their return, depending on the site's qualified traffic — the bigger the traffic, the larger the newspaper's share, of course.

    Too bad that NAA seems not to know it.

  5. Patrick King

    And another thing – Murdoch has already been proved right – SKY TV – costs at least £10/month for basic package which is something you can get almost the same for free with "FreeView" so why are millions of SKY subscribers paying Murdoch? – because his peopl got the packaging, business model, user experience right. The same can happen for other media channels.

  6. Staci D. Kramer

    @steve That 20 percent for Journalism Online (brill-crovitz) includes the cc costs and the technology use, etc. — it's not commission plus expenses. The 80 percent should be left for the publishers.

  7. err, i just filled up at one this morning (2.39 cash/ 2.43 credit)

    but unlike you, i feel they actually charge more for those who choose to charge it (.04/gal) rather than pay cash.

    and btw- when brill gets done with his 20% and the cc companies skim off their 3-4%, what sort of change are we talking leftover for publishers?

    no wonder NOT ONE publisher has publicly announced they are w/ brill.

  8. And there is one more example of "paid" succeeding over the so-called "free" content despite of its critics: CNN. Who was then in the late 80's going to give a paid all news TV station a chance to survive in competition with such "free" giants as CBS or ABC, and yet CNN won! Why?

    Gurus of the "free" also forget that the credit card concept, where the shop owner has to pay extra 3 or 4 percent to…. sell his/her product to someone who seems to have no (cash) money, was completely ridiculous at first. It still is (if you think about it), and yet there are millions of businesses willing to pay. These includes the gas stations that once tried to offer cheaper gas for cash. Where are they now?

  9. Patrick King

    Schmidt, is wrong, Murdoch is right – because Schmidt's theory on people not paying for something that is free else where is not valid. Did free newspapers and magazines kill paid for titles on news-stands? Did free music kill the music publishing business? Did You Tube kill Hollywood and the TV content networks – NO! people say "we will not pay" but the reality is they will pay if it's a good experience, quality content and additional added value.

  10. Tony Cross

    Since the BBC news site is now the 21st most visited news site in the USA and rising, it won't be long before all of Mr Murdoch's customers work out how to get their news for free… maybe the British taxpayer can ask Obama for a kickback?

  11. WSJ was charging for content long before News Corp aquisition. News Corp should not be given too much credit for WSJ paywall success, which already was in place.

    News Corp focus on divisive tabloid that attract onlookers, not the type of content that get people waving money in their hand wanting to know more.

    Google, Inc. need to think about themselves as online advertising will be the next content medium to be marginalized altogether due to social marketing science…