Can Murdoch charge for the web?

Here is the news, which is probably old to you by now.  Hit&Run asks:

It's never wise to challenge Rupert Murdoch's media savvy, but I don't
see any scenario in which the market for paid electronic content is
better today than it was in 2005, or 1996, or 1995.

I see one big difference.  In those other years, competing media outlets were willing to give away their product for free.  This time around plausibly all the major newspapers will follow suit and charge for their content as well.  It's like one of those Lester Telser/George Bittlingmayer models except now we are at the point where the major players realize they are all below their average cost curves permanently and they are not willing to incur losses indefinitely.  Since we've not yet been in an all-charging equilibrium, we don't know what the price will be.  What does the NYT business model look like at $50 a year for access, with price breaks for India?

In that equilibrium does any newspaper gain from defecting and moving back to p = 0?  Is there a stable core to the game?  Isn't Murdoch simply signaling that all the newspapers ought to collude?

Won't NPR, and NPR.org, be the big winner?

I'm not saying the Murdoch move is going to "work."  I am saying that if the game has no core the idea of charging for content will not go away.

Comments

BBC News Online, has your hour come?

I think I'll just get all of my news from chain emails from now on

I'll see his paywall and raise him a news aggregator. Maybe I'll charge for the news aggregator, just to add to the indignity.

The marginal cost of reproducing all that content is nearly zero. What stops someone from just writing a bot to republish all that news elsewhere (with, of course, some appropriate AdSense boxes)? Moviemakers can conceivably get around such holes by inserting invisible watermarks, but that doesn't work with text. Bot-owner pays for one access account and resells access at zero cost and collects the tasty, tasty AdSense dollars. Legal pursuit will be about as effective as existing legal restrictions on copyright violations.

This is the Murdoch that bought MySpace for hundreds of millions, only to watch it steadily crumble before Facebook and Twitter. And it kickstarted YouTube and promptly lost it to Google. He may be a corporate genius, but his performance thus far on online assets has been less than stellar.

In that equilibrium does any newspaper gain from defecting and moving back to p = 0?
Yes, because P > 0 means death. In an equilibrium where all papers charge a positive price, all papers die as readers switch to independent free sources. Content producers need to take P = 0 as a permanent, assumed feature of web publishing, and try to work within that framework to find a viable business model.

Like they say "information wants to be free." The problem, of course, is TANSTAAFL!

I would like to throw out an idea about how newspapers might profitably transition from a print to electronic venue and see what others think.

I don't mind paying for information but I don't want to pay more than I feel is fair. I would be willing to pay my home delivery subscription rate and access online. However, I want an incentive to change to the new mode by providing new business to other struggling information providers. Here is a proposed solution.

Each newspaper can become effectively a shopping mall anchor tenant. Each boutique information provider would make their product available on the anchor tenant's site. The site would be made available at the home delivery subscription rate. Say your local newspaper is $10 a month and their average cost (AC) in print is $8 so their gross profit margin is $2. If their AC is only $3 online then they would maintain their GPM at $5. They could sign up third party information providers (like boutique retailers at the mall) who would split the revenues from the remaining $5 based on the number of click-throughs.

This might create a business model to enable information suppliers (old line newspapers and boutique information providers) to have a happy compromise with buyers.

I fear the business of information providing is becoming endangered and we the consumer need to pay our fair share without feeling we are not getting fair value.

What do others think about this idea?

I dont see who would want to pay for foxnews.com. Foxnews at its very best is only very mediocre in terms of analysis. One would think that many of the same people who would gravitate towards foxnews could just as easily substitute for drudge report. Another thing to consider is that Foxnews on TV is a great product. It's slanted to the right, the arguments are easily digestible, and a lot of the commentary is angry cathartic release for the viewers. Oh and lets not forget that the anchors are smoking hot and very charming. Remember, foxnews pioneered the super sexy babe anchor. However, internet news consumers tend to want analysis that is a bit weightier and this is not foxnews' strong suit.

It's one thing for the economist to charge for content. They are one of a kind. However, foxnews is essentially the same sound as newsmax.com or any other conservative online news content provider. I think this will fail. In the long run I dont see any huge need for the big network news guys. We have reuters and the AP doing the hard news reporting, we have "FREE" online blogs doing the editorializing in a million different flavors. I think most of the major "news" players are simply grasping for tactics while at the base of an insurmountable challenge.

NewYorkTimes.com has improved radically. The hiring of authorities/experts to blog and write opinions (Paul Krugman, Ezra Klein at WaPo) seems to be the trend. It's a smart one I believe. What will save these news organizations are e-book readers/tablets (Apple?????) if they come soon enough. An NYTimes app on the Apple tablet with a great UI and great content would be worth the subscription. Same with any magazine, journal, etc...

I was trying to think of away in which I could help in taking down Fox news and the Wallstreet journal editorial board, then I heard about this and now I don't have to.

Seriously I get .01% of my news from these traditional sources, and I can fairly confidently say that the same goes for most people in my age bracket. So mark this day as the fall of the right-wing media for all it was worth.

Question: in a fragmented media environment, do most people want a lot of signal, or just articles that confirm their preexisting biases? Journalists as a profession at least theoretically have a code of neutrality in their reporting.

There are many types of online content. WSJ has content that is not found elsewhere, and Dow Jones has priced it accordingly. National news can't be sold outside of a bundle because it is available everywhere. Local news is another matter. Online audiences can be segmented and priced according to what they are willing to pay for the content bundle they wish to purchase. There is clearly going to be a segment where "free" is the optimal price, but the content available to them is not going to be what is available to those willing to pay a price greater than zero. The market for online content needs price information to help content providers understand what is economical to produce. Page views are a poor proxy for demand. Online advertising prices are too low to subsidize content for all but a few web sites.

The fundamentals of media won't work for Murdoch, and here's why: As Marissa Mayer noted to Congress,

the atomic unit of media consumption has changed. On the Internet, you read individual articles, not an entire newspaper.

Therefore, charging for Internet news implies that every user

  • must carry a subscription to every single website they might visit, or,
  • must purchase an article via an easy-to-use, yet secure, micropayment system

Does anybody see that as a realistic scenario? I don't.

The quality of their product was/is so low that I wonder who would pay for it. This is especially true if you can get information from people who were on the scene or were insiders posting on the net sometimes anonymously. Networking folks.

I hope all the MSM tries to charge money on the same day. It will be the biggest boon to independent media yet. Most of my friends really viscerally want the dinosaurs to die. We aren't paying for their propaganda. I'm talking about every media source that shilled for the military industrial complex in the leadup to Iraq and every media outlet that shilled for a facist heist during the bailout mania.

What! I don't even pay for UFC fights.

The toll bridge is broken and the moat has been drained and the alligators haven't been fed in weeks.

I foresee a problem when you can't trust free content and newspapers can sell verification, if they can sell it. Of course, what they will really be selling is an imprimatur on unknown reporters and perks for people like Tyler.

Won't Google & Yahoo be the winners?

If there's a particular topic I want to read about, won't these and other news search engines find some media source willing to give it away? It may not be the New York Times, but so what?

"Data to prove my point: http://www.alexa.com/siteinfo/nytimes.com
New York Times is only 115th most popular website, and visitors spend an average of 4.7 minutes a day on it. You don't buy a paper newspaper to throw it away in less than 5 minutes."

I'm not sure if that site's information is better than what's on other sites, but I've looked at a few and they all seem to have different numbers. Perhaps it takes a sharper eye than mine to see the difference, but I don't think any of it is perfect.

But let's say it is. Is the average amount of time really an indication of anything? It could be, but it's very possible the number is skewed. A site like that of The New York Times is one of the most popular on the Internet for news--as opposed to sites overall, which is a distinction that some, like you, fail to make--but not all are going to spend a lot of time there. I doubt that makes a difference, because whether you accept a low end or a high end estimate, it's quite possible that there are enough people that might pay a small fee--the people who spend far more than five minutes there--to make charging worthwhile.

WSJ used to be pay for access. It made good money. Murdoch came in, changed that--made it free. Now he sees the value destruction first-hand.

WSJ was always profitable as paid online content. Resuming this does not depend on other outlets following suit.

The fact is, charging for basic news simply won't work. As I point out at http://bit.ly/11JVa1 , consumers don't see any sort of prestige in Murdoch's news and won't see any reason to pay when they can quickly and easily switch to a free news site. What he really should look into is other ways to make profit online.

I've always considered Rupert Murdoch as a visionary. In this actual context it's clear for me that paying for the Internet information is the right thing to do. We are talking here about the elaborated information of the media and not about some random blogs. Orange County SEO

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