Rupert Murdoch announced today that he intends to convert all of News Corp’s online news assets to subscription services. This news was released along with the quarterly earnings for News Corp that revealed a full year net loss of $3.4 billion, down from a profit of $5.4 billion.
If he thinks that he is going to recoup his losses by shutting the gates to his web properties, and sending that traffic to his competitors, he will be bitterly disappointed. News is not the sort of product that maintains exclusivity for very long. If there’s an earthquake in Peru or a celebrity dies, that information cannot be copyrighted and doled out by a privileged owner. And even when a reporter uncovers a major story after weeks of diligent and skillful research, as soon as it hits the streets it’s just more news and everyone else can pass it on to their audience.
The inherent value of a news enterprise is its credibility, its relationship with the customer, and its advertising reach. By erecting a wall between the publisher and the customer, both of the latter two items are severely squeezed. And if no one is consuming your product, credibility is hardly a concern. Nevertheless, Murdoch seems intent on his strategy for wringing revenue from his web visitors, but his arguments make little sense.
MURDOCH: The digital revolution has opened many new and inexpensive methods of distribution but it has not made content free. Accordingly we intend to charge for all our news websites.
Of course the truth is that it has made content free – at lease the majority of it, including most of what Murdoch publishes. Part of the reason it is free is due to the many new and inexpensive methods of distribution. If you remove costly production items like paper and presses and warehouses and trucks, you ought to be able to publish with significantly lower overhead. That means that advertising alone should be sufficient to be profitable. Television networks do it, and they have far greater overhead in production costs and celebrity salaries.
MURDOCH: Quality journalism is not cheap and an industry that gives away its content is simply cannibalizing its ability to produce good reporting.
Again, the media is a unique marketplace that has always given away its content in exchange for eyeballs that can be peddled to advertisers. And with regard to quality journalism not being cheap, that is something that Murdoch has never had to worry about since he doesn’t deal in quality journalism.
Murdoch has been a vocal critic of Google and other news aggregators who he says are stealing his product. He accuses them of benefiting from his company’s hard work without paying for it. But his Fox Nation is doing precisely the same thing by posting links to other news sites without offering them any payment either. So I wonder if he intends to start compensating those sites after he commences to charge for his own.
I still can’t see much of a market for online subscriptions to Fox News, Fox Nation, the New York Post, etc. Murdoch says that the fees charged by the Wall Street Journal are proof that the subscription model will work. But the differential between a subscription to the Journal and the Journal online is only forty cents a week. I suspect that that is not much of a barrier for Journal readers. Consequently, that may account for any success seen in that marketplace (although we don’t even know if there is any success because Murdoch will not release data on the Journal’s online only subscriber base).
In the end, Murdoch will just be doing a favor for all the other online news sites who learn to operate profitably without subscription fees. As the market matures there will be more and more of them. Advertisers will migrate to the web as it increasingly provides a superior return to fading newspapers. And since Murdoch is overweighted in dead-tree media, and his online acumen has been notoriously sub par (witness MySpace), this is just good news all around – the kind even I’d be willing to pay for (but don’t tell Rupert).
No way Jose.
>>Would You Pay To Read Fox News?<<
Helllllllll naw.
Would I pay to read Fox News? No. But I’m not the target market, some of the followers of Glenn Beck, Bill O’Reilly etc are pretty committed and they already spend money on all manner of crap endorsed by their idols – from books to bumper stickers.
HELL NO!!
The NYT used to charge a subscription fee, never for the whole paper but for its editorials but that hardly compares to the FOX situation since those articles were (largely, or entirely?) about opinions and one’s attachment to the particular writers. I believe it was somewhat successful yet the program was abandoned, and rumors of renewing it have thus far not materialized. Are FOX fans so enamored of FOX’s unique journalists and coverage of allegedly straight news that they would be willing to pay? Some might, though I doubt enough to make it profitable for King Murdoch.
The New York Times did experiment with a pay plan. It covered only their editorial content. That actually made sense theoretically because their exclusive columnists could not be read anywhere else, unlike routine news items.
However, even that failed badly. They had a substantial drop in hits. The columnists hated it because fewer people read their columns. And the practical effect was to make the paper less influential because their best original content was being read or passed along.
Why Murdoch thinks it will be any different for him is anybody’s guess. If he thinks that his audience will be more willing to pay up, he may be right to a degree. Fanatics are always an easy mark. But it won’t be enough to make up the difference in lost traffic.