Murdoch decides Sun, Times, NYT, to charge for online news

After the release of their annual figures, NewsCorp have finally announced that they will be charging for news online by next summer.

The figures themselves don't make good reading: a $680 million quartley loss, overall revenues down 7.8%, and a $3.4 billion loss at the end of June, compared to a $5.4 billion profit the year before.

PaidContentUK have some more figures:

News Corp. reported both its full fiscal year and quarter results today—swinging to a loss for both. For FY09, the company showed a net loss of $3.4 billion, compared with net income of $5.4 billion in FY08. Revenues were down 8 percent, to $30 billion from $33 billion. News Corp. took a pre-tax impairment charge in FY09 of $8.9 billion for goodwill and intangibles.

It appears that Rupert Murdoch has chosen to announce his online charging plan on the same day NewsCorp's figures are released. This gives him the opportunity to show a wider content as to why users will soon be paying for material they used to receive for free. From Media Guardian:

"Quality journalism is not cheap," said Murdoch. "The digital revolution has opened many new and inexpensive distribution channels but it has not made content free. We intend to charge for all our news websites."

The Australian-born press and television baron was speaking as his News Corporation holding company slumped to a $3.4bn (£2bn) net loss for the financial year to June, hit by huge writedowns in the value of its assets, restructuring charges and a dive in commercial revenue.

It seems that David Simon, who created somewhat of a blogosphere storm with his recent article in the Colombia Journalism Review, 'Build the Wall', has got his wish:

If the only way to read the Times is to buy the Times, online or off, then readers who clearly retain a desire for that product will reach for their wallets. And those comfortable acquiring their news at a keyboard will be happy to pay much less than they do for home delivery.

Bobbie Johnson sees a clear divide in the media between those charging for content, and those advocating a free model where journalism becomes something else entirely. This might be an overly simplistic way of analysing the debate - few media platforms will be all free, or all charged for - but it's worth a look at the full article:

Proponents of free news say it is impossible to succeed by charging readers when there are so many competing sources of information prepared to give their services to readers for nothing, echoing the words of the famous futurist Stewart Brand, who said "information wants to be free".

So far at least, history is one their side: while specialist news publications such as the Wall Street Journal, the Financial Times and the Economist charge for access to some of the information they publish, few mainstream publications have managed to succeed in implementing pay walls.

Of course, the kickback will be that users won't pay for the content, but Murdoch believes he has found a simple solution:

The News Corp boss pointed to the Telegraph's recent run of scoops about MPs' expenses as an example of journalism readers would pay to read: "I'm sure people would be very happy to pay for that."

Rarely afraid of a confrontation, Murdoch made it clear that he was gearing up for a bruising fight: "Our policy is to win.

In the age of 24 hour news channels, and 24 hour newspaper online publishing, how often does a scoop like the Telegraph's come along? For those slow news days, when papers are reporting the same stories, with similar quotes, figures, and pictures, will users will be willing to go to The Sun, The Times and the News of the World?

Unsurprisingly, Jeff Jarvis is having a field day, and points out one of the biggest problems with charging online - even the smallest cost allows you to be undercut by a website offering content for free: a business model where there is no direct charge to the user:

Charging for content brings marketing and customer-service costs. Online, it reduces audience and the advertising they justify. Putting content behind a wall cuts it off from search and links; they cut off your Googlejuice.

When publishers build those walls, they open the door for free competitors, who can now enter the content business with virtually no barrier to entry. Publishers who fool themselves into thinking pay will save the day only further forestall the innovation and experimentation that is the only possible path to success online.

If their content is behind a pay wall, NewsCorp will of course be looking into protecting their material, to a drastic extent. This from the Inquisitr:

Harold Mitchell, the founder of one of Australia’s largest advertising groups and a man connected to News Corp locally, said in a radio interview Thursday (local time) that News Corp. is preparing to sue Google and Yahoo to stop both from linking to, and quoting News Corp content.

Stopping Google linking to your articles, which will already be behind a pay wall, could have a substantial effect on online advertising revenue for NewsCorp websites. But will the subscriptions or micropayments they receive be enough to compensate?

Charlie Beckett reckons Murdoch could be going down one of three paths:

1.‘Asset-stripping’: get as much cash out of these businesses as you can without completely killing the customer base to pump up the balance sheet while other media organisations burn their capital and plunge further into debt.

2. ‘The gamble’: If a few titles go down that just proves their weakness. Whatever is left standing will dominate a depleted market as the rivals follow in the wake of News International. In the same way that putting the price up of the Sunday Times actually strengthened its market dominance. If you are a sector leader - such as The Sun - then you have the brand community to set the pace and help dictate consumer behaviour.

3. Genius: Murdoch understands that enough of the public want to preserve their source of news and will be prepared to pay. They realise that they have had a free ride.

Although this business path is not inevitable, it needs to be experimented with - and if anyone can try it, it will be Murdoch. But if nothing else, as Matt Wells says in the Guardian - it is one hell of a gambe.

Jeff Jarvis' fake speech to the NAA

Jeff Jarvis on the speech he would give to the NAA (Newspaper Association of America), at their conference in San Diego.

Jarvis, on his usual 'changing industry' high (which is brilliant), chastises the old barons of the newspaper industry in the USA for not changing. Some more names than Murdoch would be welcome, and again, there is some vagueness over new web business models - but there always is, that's the point.

An extract:

"Yesterday, you delivered a foot-stomping little hissy fit over Google and aggregators. How dare they link to you and not pay you? Oh, I so want Eric Schmidt to tell you today that you’re getting your wish and that Google will no longer link to you. Beware what you wish for. You’d lose a third of your traffic overnight. If other aggregators (I work with one) and bloggers (I am one) and Facebook all decided to follow suit, you’d lose half your traffic. On most of your sites, only 20 percent of the audience in a day ever sees your homepage and its careful packaging; 4 of 5 readers instead come in through search and links."

As I mentioned in reaction to Henry Porter's article, Google doesn't have to link to news sites - and nor do the rest of us. Jarvis is pretty accurate on user experience of websites too, from my perspective. I have about four news websites I look at everyday (BBC, Guardian, Telegraph, CNN), and most of my other links and news come from Google Reader and it's subsequent links, (or not, seeing as how I often can see the whole post through Reader: there are plenty of the websites themselves I rarely look at).

Another extract:

"You all remember the quote from a college student in The New York Times a year ago, the one that has kept you up at night. Let’s say it together: “If the news is that important, it will find me.” What are you doing to take your news to her? You still expect her to come to you - to your website or to the newsstand - just because of the magnetic pull of your old brand. But she won’t, and you know it. You lost an entire generation. You lost the future of news.

You blew it."

As long as someone is linked up with the tools, perhaps the news will come to them, though they need to allow it to reach them first.

Related posts:
Henry Porter on Google
Walter Issacon on the Daily Show
Tim Luckhurst on buying a newspaper 'for democracy'