Will Murdoch succeed in putting up a media pay wall?

Given the amount of skin he has in that particular game, Murdoch made quite a splash last Wednesday during an earnings call for the News Corp.

“Quality journalism is not cheap, and an industry that gives away its content is simply cannibalising its ability to produce good reporting,” he said. “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.”

With characteristic confidence, he added that “I believe that if we are successful, we will be followed by other media.” Yes, perhaps when the change takes place over the coming fiscal year, he will be greeted by the sound of hearty applause from his fellow media companies. Or he may just hear crickets chirping.

Certainly he is not alone. Many news organisations are wondering how to delicately perform some kind of cashectomy on digital consumers. The pay wall idea is neither new nor untried. The ‘New York Times’ seems to be having a bit of a change of heart. After dumping ‘TimesSelect’ two years ago, the newspaper is exploring various models on the web, although nothing as firm or far reaching has been announced, and a spokesman for ‘The Boston Globe’ said  that the newspaper was “heading toward some sort of consumer pay model.”

Setting aside the execution risk of such a plan, it’s difficult to tell how serious Murdoch is, given his history of grand statements that were only that. Perhaps he was making an unsubtle effort to change the subject during a bleak earnings call for News Corp: Fourth-quarter operating income, adjusted for certain items, dropped more than 30 per cent and after taking $680 million in charges, mainly from the unit that houses MySpace, the company reported a net loss of $203 million.
Finding Murdoch shouting from the top of a pay wall is a bit of a head snapper, given that after he bought ‘The Wall Street Journal’ less than two years ago, his first order of business seemed to be changing that newspaper’s paid web model to free.
“We are studying it and we expect to make that free, and instead of having one million, having at least 10 million to 15 million in every corner of the earth,” Murdoch said to shareholders in November 2007. Executives at the property he bought convinced him that it would be a bad move, and so The Journal’s paid model is now held out as a way forward for much of the industry.
Murdoch may lack a consumer’s perspective on the digital matters. Michael Wolff, the owner of Newser.com and the author of ‘The Man Who Owns the News,’ a biography of Murdoch, maintained in a blog post last week that Murdoch had, as of a year ago, never browsed the web by himself. And while you don’t have to possess a knack for brain surgery to run a hospital, the organic activity of surfing offers this object lesson: When you bump into a wall, you tend to go elsewhere.

But it may depend on the wall. ‘The Financial Times’ has had some success with a metered approach and may add in an iTunes-like menu for buying individual pieces. And ‘The Wall Street Journal’ uses a leaky wall that allows sampling, but extracts a convenience charge for those who want easy access to the entire package.

No one expects Murdoch to erect a barrier around his entire enterprise. News Corp has the kind of scale and robust media brands that will allow the company to experiment with bundling various kinds of content along topical or geographical lines to see what will click.
The problem, both for Murdoch and the industry at large, is that it is dangerous to generalise the success of ‘The Wall Street Journal’ or ‘The Financial Times’ with paid subscriptions on the web to other media properties. Those newspapers contain useful data, with a network of alerts and specialised features that make it extremely valuable to people who need up-to-the-minute information to do business.

The deeper problem for Murdoch and every other newspaper owner is that although the revenue picture for newspapers has changed considerably in the past two years, the consumer is still stuck on zero when it comes to what he or she will pay for the vast majority of content.

“Nothing has changed in terms of the consumer expectation,” said Richard Greenfield, a media analyst at Pali Research. “What has disappeared is the belief that you could have a news business that is sustainable as an advertising-only proposition.”

Regardless of what his competitors do, Murdoch has some work to do with consumers. When word came down in Australia that he would be expecting fees from readers of news.com.au in the coming year, readers rained invective and ridicule on the idea, including a commenter identifying himself as Alan Gilbey:
“Now let’s see. Delete bookmark. Navigate to different news site. Create new bookmark. Rupert who??”