Rupert Murdoch vs. Rupert Murdoch On Free vs. Paid News Websites

from the which-rupert-is-rupert dept

Thu, Aug 6th 2009 6:18am — Mike Masnick

Rupert Murdoch continues to shift his position on the value of "free content" but he seems to be going in the wrong direction, and not giving anyone much confidence that he knows what he's doing. You may recall that right before he completed buying the Wall Street Journal, he claimed that the WSJ would be better off going entirely free:

"We are studying it and we expect to make that free, and instead of having 1 million [subscribers], having at least 10 million to 15 million in every corner of the earth.... Will you lose $50 million to $100 million in revenue? I don't think so. If the site is good, you'll get much more."

That was just under two years ago, and his reasoning is actually quite sensible. However, after he took it over, there was apparently some back-and-forth and the Journal convinced Rupert to keep it behind a (somewhat porous) paywall. Of course, as many note, the WSJ is able to charge because of the reputation of its content (far above most other publications) and the fact that it's reporting financial info, where the direct value can be quite high to many readers.

Still, it was a bit of a surprise earlier this year when he started complaining about free content, saying:

"People reading news for free on the web, that's got to change."

And then he complained about Yahoo/Google "stealing" (he later changed it to "taking") content. Of course, that's not true. Both Yahoo and Google either link to content or have license deals. There is no "taking" of anything.

Either way, given those statements, perhaps it's no surprise at all that Murdoch is now planning to put paywalls across all his online news properties in the relatively near future. Apparently the plan will be based on the WSJ model, meaning that some stories were be available for free, but there will be severe limits. Given how many old school newspaper guys have talked about putting up a paywall, this isn't much of a surprise (though, it is still odd given his comments from two years ago).

That said, if newspapers are going to charge for online content, then let's see them go and charge. I think it will fail (miserably), but let's see him try to prove us wrong. Here's why I think it will fail:

Those other sites don't have the qualities that make some people willing to pay for the WSJ. The quality isn't as good and the direct monetary benefit is not nearly as clear.
Most of those other sites have much clearer (free) competition.
Nowhere at all does Murdoch talk about actually giving people a reason to buy. All he's saying is that if they put up a paywall, people will pay. Sure, a few might, but it's a small number, and doing so will stagnate any sort of growth, piss off advertisers, and allow competitors to take a giant leap forward -- all in one shot.

But... if he wants to charge and thinks that these points are incorrect, we're eager to see how Murdoch gets around these issues. In the meantime, if you work for a publication that competes with a Murdoch news site, start revving up a marketing/promotional campaign about how you don't charge, and see how much market share you can build. Unless, of course, Rafat Ali is correct in his thinking, suggesting that this is all a big bluff to get others to put up a paywall. I don't believe it though... because if I'm a competitor the fact that Murdoch is going paywall, gives me even more reasons not to do so.

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Filed Under: charging, fee, free, journalism, news, rupert murdoch
Companies: news corp.

39 Comments

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Anonymous Coward, 6 Aug 2009 @ 6:34am

One of the effects of the internet has been it's now possible for people to watch a story go "national". Previously you would actually have to live in the part of the country where the story was occurring to see it. The Lori Drew story is one example where the story was all over blogs and non-msm news sites before it finally hit the mainstream.

And that's why general news sites, while worthwhile, will never be a "must-go-to" site. Frankly, their idea of what story is worthwhile is based more on popularity than journalistic judgement. They only hop of the bandwagon once they see there's a critical mass they can tap into for ratings. And often they misunderstand the story and end up misrepresenting it to their readers. Once again the Lori Drew case is telling.
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Oily Taterz, 6 Aug 2009 @ 6:55am

What?
I will have to pay to watch O'reilly and Beck ?
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Improbus, 6 Aug 2009 @ 7:03am

Dear Stupid
Dear Stupid, er, Mr. Murdoch,

Allow me to introduce you to the music and movie industries. Have a nice time being irrelevant in the future. Ta Ta.
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Anonymous Coward, 6 Aug 2009 @ 7:05am

"I think it will fail (miserably), but let's see him try to prove us wrong."

Are you speaking on behalf of yourself ? or do you presume to represent the views of many ? or perhaps you assume that the moment you state the correct view your followers will adopt that view as their own ?
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Carolyn Wood, 6 Aug 2009 @ 7:23am

Murdoch free vs. paid
"Nowhere at all does Murdoch talk about actually giving people a reason to buy." - In today's marketplace readers and people in general are validated by thinking that they, in an empowered state, found the reason to buy.

They pay with time, $$ or both.
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keith (profile), 6 Aug 2009 @ 7:23am

Old School Thinking
"Nowhere at all does Murdoch talk about actually giving people a reason to buy."

Exactly. The current content is being overvalued. Right now 90% of the news is simply a statement of current, mostly irrelevant facts with little to no objective analysis.

People can get 'news' or 'facts' from many other places. Very few people will 'pay' to get fed the same garbage that is being pushed out today.

The opportunity, as expressed here on Techdirt and why I'm an avid reader of the blog, is to provide honest, consistent, and reputable analysis of events/laws/news - and not just repeat random facts from around the country.
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Chronno S. Trigger (profile), 6 Aug 2009 @ 7:36am

Re:
I do truly believe that it will fail, and I'm not just following along with the crowd. AOL's payed garden failed and so did many others. Unless he adds something that no one else has or can get then I'd just rather not pay.

So there, that's at least two and the word "us" is valid.
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Anonymous Coward, 6 Aug 2009 @ 7:44am

"Rupert Murdoch continues to shift his position on the value of "free content" but he seems to be going in the wrong direction"

Isn't it more like "I think he is going in the wrong direction? Just because you don't like his direction doesn't make it the wrong direction, just a direction you don't like.
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Free Capitalist, 6 Aug 2009 @ 7:47am

Panic Waffles
I agree Rupert might just bury his media orgs if they rush to paywall. Frankly the 'urgency' to convert to paywall sounds like knee-jerk management following on myopic 'cash today' concerns.

If they want to believe people will just stop using aggregators to find news they find relevant or interesting, let them. Frankly I will never long for the days of monolithic media franchise being the only source for information. Even before news from many sources became broadly available over the Internet, I cancelled my newspaper subscriptions out of sheer boredom (ok I admit I did keep the WSJ for a few years).

Times are indeed hard for many, not just the media. But rushing to obtuse, short-sighted business plans is a great way to alienate customers and create long-term antipathy in public opinion.

Take some of the more cash-strapped, TARP infused banks. Pretty much all banks raised their credit card rates (not to mention adding outrageous fees without warning), but some took very long term, good standing accounts and raised their rates to DEFAULT levels (29%), or forced them to opt-out potentially harming their credit record. These greediest of banks might have trapped a lot of hard working people, and perhaps even bring some to financial ruin, but you can bet *everyone is doing everything they can to transfer balances and/or pay those cards off. Its the kind of move people will not forget for a very long time, and those who got shafted won't be coming back.

Rupert's organiztions won't face the same intensity of backlash down the road that I anticipate will happen to some banks. Then again, if no one can see their news, who will care when they close-up shop.
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Shawn (profile), 6 Aug 2009 @ 7:51am

In addition to a generally recognized higher quality of content, the WSJ has a demographic that is more likely to pay to play than 90% of the rest of the field.
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Anonymous Coward, 6 Aug 2009 @ 7:54am

Re: Murdoch free vs. paid
The reason to buy is because it is news and news obviously has a value.

It's actually hard to find news sources even on the internet - e.g. most blogs don't actually break news they only recycle it, and most often the recycling includes forcing whatever the news is into a predetermined religious/political view point which arguably reduces the value of the news.

What ever you think about the way Mr Murdoch describes his motivation (and you could question the news content of a lot of his titles), he does have a point : if he is successful then there is no doubt that the rest of the industry will follow.
And he isn't going to fail just because Masnick says so !.
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Anonymous of Course, 6 Aug 2009 @ 8:01am

Reasons to buy
I think the reasons not to buy have been expressed
well enough. There are reasons to buy a newspaper
but I don't see them in a national online paper
(WJS excepted.) Things like coverage of local
events, local politics, local jobs and the classifieds.

I suppose it's possible to create a national paper
with these items inserted for individual users.
That might be worth paying for.

Unique and in-depth investigative journalism might
be worth paying for as well. But I may as well ask
for the moon.

But it still won't be suitable for wrapping fish and
chips or lining the bottom of a bird cage.
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Anonymous Coward, 6 Aug 2009 @ 8:18am

Re: Re: Murdoch free vs. paid
But where's the reason to buy over free?

There are only a limited number of news sources right now...but they're all free. I can go to any of them at any time, and basically get the same information. Not only that, but everyone knows that there are more sources, it's not like that many people will be fooled into thinking they need to pay for information.

So if one news site sets up a pay-for-access system...what reason is there to pay, and not just go to another site?
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Anonymous Coward, 6 Aug 2009 @ 8:36am

Re: Re: Re: Murdoch free vs. paid
When more and more of the news sites move to subscriber models, you will understand. When enough of the market isn't free, the free sites will get the traffic but NOT the income, which actually can put them at a disadvantage financially. More users to support, but no real increase in income.

The other sites move to various payment models, and have less users (lower expenses) but higher income. Business wise, it's a no brainer, no matter how much Mike tries to suggest that it's against basic economics.

Basically, there are a few different versions. Many sites run "teasers" or "excerpts" and then charge to go past those points. The sites are both technically free and indexable by Google, which means they are getting the best of both worlds. They can still be linked, they can still be raped by news extract services, but they hold the vast majority of their content for subscribers.

At a few dollars a month, it is very likely that the good news sources will make money.
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Anonymous Coward, 6 Aug 2009 @ 8:40am

Please Mr. Murdoch put a paywall up on all Fox News first. That is obviously a site that needs to have a paywall as soon as possible. This is my dream.
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Chronno S. Trigger (profile), 6 Aug 2009 @ 8:53am

Re: Re: Re: Re: Murdoch free vs. paid
"When enough of the market isn't free, the free sites will get the traffic but NOT the income"

There you are wrong. How do newspapers today make money? Subscriptions? No, advertisements. Advertisements pay for the news and have for several decades. Subscription fees are just for the paper and distribution (non existent on the web).

When the free sites get the traffic they get the large advertisement deals. Now you may think that the pay wall will counter that but how many people do you know are going to be paying $10, $20, or $30 a month when they payed $50 a year for the physical paper. I personally won't pay $5, especially if I can go get the same exact thing for free. And here we reach the issue that Mike and others have been pointing out for a while now: Why should I pay? What makes you different? What do you have that the free guys don't?
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Hephaestus (profile), 6 Aug 2009 @ 8:58am

So let me get this straight and .....

So let me get this straight and then predict the future .....

What we know ... Rupert Murdoch want to put up a pay wall around all his news assets....

What are the possible outcomes of this action? ....
1) a reduction in readership leading to a reduction of profitability when paywalls go up.
2) We are entitled to exist, lets lobby to have laws enacted that protect us.
3) RIAA Like outfit formed to search online and fine/charge people who have links or any similar stories.
4) Criminalization of Linking, blurbing (short excerpts), etc
5) Further Losses of readers leading to greater reduction in profitability.
6) failure of Rupert Murdochs assets.
7) Felony Interference of a Business Model law enacted preventing competition in all industries.

Big Ole GRIN .... I dont think it will get that Grim but...

In washington the attitude is we need to do something now. There is no real discussion, no debate, most politicains only know the part of the law that they have an interest in. When these papers begin failing look for all sorts protectionist laws to be passed, laws that will be abused by private parties and the government. Lets hope Reuters acceptance of linking in prevails, preventing the sort of protectionism we see in the record industry today.

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fogbugzd, 6 Aug 2009 @ 9:00am

Hurray!!!!
I love the idea of putting Fox News behind a pay wall. The fewer people who watch, the better. Fox News isn't like the WSJ. With the WSJ there is plenty of reason to buy, especially if you are in financial services. Fox News is an entirely different demographic.
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Bob Vila, 6 Aug 2009 @ 9:11am

I really hope he decides to charge a lot. Maybe he can change the Fox TV channels to pay stations as well. The world will be a better place.
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Anonymous Coward, 6 Aug 2009 @ 9:31am

Re: Re: Re: Re: Re: Murdoch free vs. paid
"Subscription fees are just for the paper and distribution (non existent on the web)."

Apparently you have never had to host anything in your life.

It's never free. It costs money, manpower, equipment, maintenance, etc. No, it isn't expensive like printing, but it still costs.

Advertisements are part of the model, but smart business people don't depend on a single income stream to make their buisness run. Heck, even the sainted Wired magazine, packed full of ads (well, use to be) is very dependant on the money that it gets from the sales of copies. It is another revenue stream, and an important one. Even if they take in 20 cents a copy, wired pushes out 700,000 copies a month - close to 2 million dollars a year. It's not beeeeelions, but it's income none the less.

You also forget the very basic problem of ad supported business: there is such a thing as too many ad spaces, which depresses their value. Adding a ton of eyeballs looking at an empty ad space isn;t helping the bottom line.
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alternatives(), 6 Aug 2009 @ 10:00am

Rupert won't live long enough
to see that the plan didn't work out.

If a Rupert product says something important, it will get quoted. And mis-quoted. If Rupert's IP goons smack people down, then people will rush even faster away from Rupert-land.

Eventually, the lack of Rupert-linked products will be filled in my not-his-products and eventually few will miss him/his products.
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BullJustin (profile), 6 Aug 2009 @ 10:02am

A chance of making it
Fox News, for all it's zaniness and partisanship, has built an empire on people who feel like they are excluded from mainstream society. These people tend to believe anything and everything Fox News tells them to believe. They are, essentially, fanatics for the things Fox News drives down their throats. They also tend to have a "no free lunch" mindset and as such may be more willing than the average consumer to pay for what used to be free.

It will be interesting to see if Fox can parlay its fanatical viewership into subscriptions. After all, no one thought a fourth network could challenge ABC, CBS, and NBC, yet Murdoch managed to do it. They are a far cry form the edge thinking that popularized the Fox Network and led to all the other Fox News properties, but I wouldn't count Murdoch out just yet on this. His fanatics may see as much value in "the news other stations are afraid to report" as the typical WSJ reader sees.

The longer a person has been misled the more strident they become to refuse admitting they were deceived. No one likes to be wrong and when one is way off base they fight harder to prove they were right than anyone else.
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Anonymous Coward, 6 Aug 2009 @ 10:23am

Re: Re: Re: Re: Re: Re: Murdoch free vs. paid
"Apparently you have never had to host anything in your life.

It's never free. It costs money, manpower, equipment, maintenance, etc. No, it isn't expensive like printing, but it still costs."

Paper distribution has a variable cost that increases for each paper you print. Distributing 100 costs much less than 100000000.

Yes, getting 10000000 views on your website will end up costing more than 100, but the difference in costs is not nearly the same as physical distribution. Not low enough to say its "free", but low enough so that many businesses are willing to give it away for free.

And that's really the point: in a competitive market, the least expensive product wins, unless you give a "reason to buy". Being more expensive than your competitors only works if people are willing to pay more, and when your content is virtually identical...

"Advertisements are part of the model, but smart business people don't depend on a single income stream to make their buisness run. Heck, even the sainted Wired magazine, packed full of ads (well, use to be) is very dependant on the money that it gets from the sales of copies. It is another revenue stream, and an important one. Even if they take in 20 cents a copy, wired pushes out 700,000 copies a month - close to 2 million dollars a year. It's not beeeeelions, but it's income none the less."

But Newspapers aren't talking about creating multiple income sources. They're sacrificing one source of income for another.

Advertising money is made off of viewer volume. Paywalls make money by limiting content. The two are mutually exclusive - limited content creates lower traffic.

And you think that having the highest traffic doesn't mean the highest income? Why do you think companies pay such ludicrous prices for Suberbowl and Olympic ads? Because they get a huge amount of bang for their buck. The higher your share of viewers, the more your ad space is worth, and the more you can charge advertisers.
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Anonymous Coward, 6 Aug 2009 @ 10:45am

If you don't think the TV network doesn't reflect on other properties, wrong.
I love the fact that Glenn Beck called the President Obama a "RACIST" and hasn't been fired or reprimanded for it.

Stay Classy Rupert, Stay Classy.
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Anonymous Coward, 6 Aug 2009 @ 11:59am

Our local paper did this - they charge $5 a month for access to the online version of the newspaper. $3.99 if you where also a regular subscriber. 99% of the paper is just a direct re-print from the new services you can easily access online anywhere! The last 1% is the same as if you asked you neighbor (hell they could have written it).
This fee system was in place for a year then they revamped it to be free for current subscribers (still $5 with out a subscription). Another year pass and now it is all free!

The internet is a wonderful tool. With internet ads you can really determine the effectiveness of your ad. The content provider can get only revenue on ads that are actually used. This tells me the newspapers has been way over charging on their ads as their effectiveness in print is more likely less then the impulsive clicking on the internet.
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Anonymous Coward, 6 Aug 2009 @ 12:12pm

What Aussies REALLY think of Rupert
I'm not an Aussie, but found this hilarious!

http://www.youtube.com/watch?v=vAVOJYYwMaA
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Anonymous Coward, 6 Aug 2009 @ 1:01pm

Re:
1) Stop trolling, you apparently aren't good at it because:
a) you have no style and
b) your comment is immediately identified as a troll and thus fails at its mission

2) Obviously Mike here is representing his own view that many others happen to share and a few don't. Notice the root of the first word of this point: obvious. This is why your troll fails.
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Free Capitalist, 6 Aug 2009 @ 1:05pm

Re: Re: Re: Re: Murdoch free vs. paid
When enough of the market isn't free, the free sites will get the traffic but NOT the income, which actually can put them at a disadvantage financially. More users to support, but no real increase in income.

It would seem that the loss of advertising dollars to Internet-borne media has caused archaic-newsmedia people to forget how advertising works.
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AnodeCathode, 6 Aug 2009 @ 1:15pm

Well someone seems to get it.
Reuters has taken you up on your advice:

http://blogs.reuters.com/mediafile/2009/08/04/why-i-believe-in-the-link-economy/
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Beth Tomkiw, 6 Aug 2009 @ 1:56pm

Re: What?
I would pay to watch them—GO AWAY!
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BobinBaltimore (profile), 6 Aug 2009 @ 2:08pm

Rupert the Fool?
So a few comments on various items above:

1. I agree with Mike (shocker) that having a paywall requires a hook...something that creates value and imperative to get people to pay. WSJ and some other national newspapers probably have that, if done well. Most don't. That's a problem for this approach, definitely.

2. If done thoughtfully, paywalls do not have to be anti-search engine. Exposing enough teaser text and media with proper SEO can do the trick.

3. Despite all the Fox and FoxNews references above, I have seen no mention, even in his competitor sites (like The Guardian) of any intention to paywall any sites other than his newspapers.

4. Note that for all your News Corp-In-Freefall thinkers, News Corp's major divisions are still quite profitable (see: http://www.guardian.co.uk/media/2009/aug/06/rupert-murdoch-website-charges), just not as profitable as they were a year ago. But there are very few businesses that haven't fallen substantially year-over-year, and many that see less than zero net. News Corp is not in a bad position relative to its competitors.

5. I do find is humorous and a bit disappointing how readily even thoughtful people here and elsewhere seem to dismiss Murdoch as a floundering fool, someone who doesn't understand his business, his markets or the complexities of consumer relations. Murdoch - and his team - is a leading multimedia visionary, one of the tops in the last 50 years. He has both lead markets and created new opportunities out of whole cloth where non existed previously. I don't think he has all this figured out yet, but to intimate he has suddenly become blind to the changing ways of markets and to the desires of his consumers is folly. After all, hasn't he been accused relentlessly for 30 years of doing not much more than pandering to what the market wants...the lowest common denominator and such? I say that if any major media outfit is going to figure out the right mix to stay in business at a large scale and give the market want it wants, News Corp is probably it.
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Anonymous Coward, 6 Aug 2009 @ 2:51pm

Re: What?
Hey, we found your birth certificate!

http://i202.photobucket.com/albums/aa62/Cindyville_photo/bcert.jpg
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..., 6 Aug 2009 @ 5:55pm

Re: Re: What?
Heh - good one
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..., 6 Aug 2009 @ 6:22pm

Re: If you don't think the TV network doesn't reflect on other properties, wrong.
Maybe there are be consequences

http://mediamatters.org/blog/200908060011
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Talmyr (profile), 7 Aug 2009 @ 5:00am

News Corp's Master Plan, bwah ha ha
Rupert Murdoch owns some of the more popular papers (of varying quality) in Britain, such as the Times and the Sun. So his plans will have a big effect here. The way the news was reporting it, the 'accepted wisdom' is that if news Corp puts up a paywall, that will be seen as an EXCUSE for all the rest to put up a paywall as well, so that everyone will supposedly be 'forced' to have to pay for their news.

The problem for the paywallers is the BBC, which as it is funded by taxpayers through the TV licence can just put its news up online - so surprise surprise, a newspaper on the paywall side of things has already started bleating about 'unfair competition and advantages'. Just a different model of course ;) Obviously, what these people are forgetting is that the British (and Australians) don't have to get all their news from British/Australian papers - and it's likely that other sources will find reporting British/Australian news in more detail for 'free' will suddenly win them market share.

Obviously, if the paywall sites DO manage to come up with good or useful or interesting content to make the paying worthwhile, they MAY get more interest. It remains to be seen how they will actually deal with the modern world, rather than just propping up their old print monopolies.
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Robin Hoover (profile), 7 Aug 2009 @ 6:34am

AP-chondria
i think bobinbaltimore's point about how the past success and innovations of the news corp should not be discounted, mr. murdoch is ntl displaying some very a.p. like fears and misunderstandings of how the technology of the internet works.

http://paidcontent.co.uk/article/419-if-wsj.com-is-the-model-news-corp.-isnt-building-a-ne ws-fortress/

specifically, he is puffing his chest and threatening others:

"...We will be asserting our copyright at every point...."
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Tom Clarke, 7 Aug 2009 @ 4:49pm

See, here's the key point. If he charges, then people will only go for those sites if they really want to get to particular articles. But they won't follow links to those articles because there's no way to link to allow non-subscribers access.
And there is an alternative that will never, ever charge, because it's not allowed to. It's called the BBC. It's publicly funded, it's got one of the best reputations for news in the world, and it's in English.
So it's not going to work.
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inov8v (profile), 10 Aug 2009 @ 8:40am

Rewarding payng customers...
I've been a long time fan of the WSJ but have decided to let my subscription run out. I find it offensive that existing customers are rewarded by paying three times the rate of new customers. I get introductory fees but 300% price increases cannot be a good retention model.
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inov8v (profile), 10 Aug 2009 @ 3:50pm

Re: Rewarding payng customers...
From Dow Jones Customer Service, "...We do understand that an increase from $149.00 to $441.48 is quite substantial.
Unfortunately, the rising production costs we have experienced did affect your renewal rate."
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