Sales and marketing experts are fond of saying that you should never discount, because it makes it almost impossible to raise your prices later on. Just don't tell Rupert Murdoch, chairman and chief executive of News Corporation, who has announced that News Corp will charge for content on the previously free websites such as The Australian, the Herald-Sun and The Daily Telegraph.
Rupert had decided he has to make a stand. He argues that quality journalism costs money and allowing hundreds of millions of people around the world to read your content for nothing is unsustainable - the advertising revenue simply isn't big enough to make the combined newspaper/website operations profitable.
Rupert's right - he has no choice but to try the strategy of charging for content online. His newspapers are losing big dollars and if he doesn't start looking for alternative revenue streams, News is going to have to start shutting newspapers, sacking journalists and closing some websites.
But will it really work? That's another question entirely.
Murdoch believes so, and points to the success of the Wall Street Journal, a premium financial newspaper which has had success selling online subscriptions.
Fair enough, the model can work - indeed, it seems to work best with business and financial publications, for some reason.
But getting people to pay for the Wall Street Journal is very different from getting them to pay for an online subscription to The Australian or the Herald Sun. While these are high quality publications, they are hardly producing niche information like the Wall Street Journal does.
Surely online consumers looking for general news will simply switch to free news sources, such as Government-owned content providers like the ABC.
Murdoch acknowledged this fact overnight, citing the BBC as a big threat. But he claims News will be able to highlight its quality reporting so as to differentiate itself from free news sites.
This sounds great in theory, but it won't be easy in practice. Essentially, what Murdoch needs to do is retrain hundreds of millions of online consumers to pay for something that has been free since the dawn of the internet.
And he's got to do this in an environment where thousands of free news sites, blogs, online newsletters and even Twitter streams are being launched every year.
So while Murdoch has no choice other than to change strategy, he's stuck between the proverbial rock and a hard place.
The fact that everything is free on the net means he can't make money giving his content away. But the fact that everything is free also means he's going to have a very hard time making money by charging for content.
Read more on:
written by creardon, August 06, 2009
written by mostryn, August 06, 2009
written by ChrissieF, August 07, 2009
However when it comes to the general news sites, I often wonder whether they're worth my time, let alone money.
Unless these online publications are going to improve significantly, they're not going to make money from subscriptions. When you're providing the exact same stories that people can hear about from peers on social networking (and with the same spelling mistakes to boot) then why would people pay?
The way I see the industry, the entire model of journalism is changing. People will pay for online content, but only that which is of interest to them - so industry- or interest-specific publications, or those sites that offer more in-depth analysis of current affairs (think Crikey).
The thing that's especially great about journalism on the net is that you can target a niche audience and still get good returns, because you can reach that niche on a much larger scale. The media needs to stop looking at the mass market (read: mainstream) and start looking at the wants and needs of individual groups.
