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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Rupert Murdoch’s Line in the Sand

When it comes to the newspaper business, nothing draws attention faster than a discussion of free versus paid content. Journalism is full of those who believe that newspapers made a fatal mistake when they failed to demand a subscription from their readers the day they launched their first websites. But even if that were the case, their critics reply, after a decade of serving up free content, there is no way to put the genie back in the bottle.
Rupert Murdoch, though, is willing to try.
On an earnings call last week, the News Corp mogul told reporters and analysts:

We intend to charge for our news websites. The Wall Street Journal‘s WSJ.com is the world’s most successful paid news site and we will be using our profitable experience there and the resulting unique skills throughout News Corp to increase our revenues from all our content.

The new business model, he said, would be put in place over the course of the next fiscal year.
That announcement has spurned no small amount of debate already, but missing from much of the discussion is analysis of what Murdoch’s decision will look like in practice.
The Wall Street Journal has found a successful model for charging for subscriptions online. But its readership is fairly unique — made up of people who can afford to pay a premium for important information and then in turn derive value from that information in their own work. On top of that, online editors at WSJ.com make certain stories available to the entirety of the Internet for free, everyday.
Even the Wall Street Journal can’t escape the dominant business of the Internet — the link economy.
That fact makes it even less likely that an institution like the New York Post will be able to put the entirety of its content behind a paywall. There are simply too many other options for a reader who is willing to look for the same news for free somewhere else. Instead of setting up their own paywalls, Murdoch’s competitors are likely to advertise the fact that their content is completely open. And even if the New York Daily News were to start demanding a subscription fee as well, sites like Gawker — which have found a way to thrive using advertising dollars — will happily continue to churn out tabloid content for all its readers without ever asking them to pay a dime.
That’s the dilemma facing almost any news organization that tries to demand its readers pay for the privilege of accessing its website. There will always be competitors capable of producing similar news, who are willing to publish it for free. And many of them won’t be bloggers or news aggreagators. They’ll be traditional journalists who are willing to innovate.
Vivian Schiller is a former head of nytimes.com and the current CEO of National Public Radio. She ended the Time’s famous experiment with charging a premium for its op-ed page and has since overseen a redesign of NPR.com. She says that she is a “staunch believer that people will not in large numbers pay for news content online.” She is working to position NPR to accept the web traffic of those who try.
Chris Ahearn — the president for media at Reuters — is another believer in free content. He has written that:

Blaming the new leaders or aggregators for disrupting the business of the old leaders, or saber-rattling and threatening to sue are not business strategies – they are personal therapy sessions. Go ask a music executive how well it works.

Murdoch says that News Corp will vigorously defend its copyright against those who would excerpt and link to its content, but Ahearn writes that Reuters believes that kind of attention is fair use and welcomes the traffic it drives.
We shouldn’t write off this experiment before it starts, however.
No one has announced that the News Corps subscription service will function just like that of the Wall Street Journal. Murdoch only said that his company will begin to charge for its web content, and we don’t know the form it will take. Even if News Corp can’t escape the link economy, there is an opportunity for the company to offer different kinds of premium content through all of its online properties.
And this is an experiment whose time has come.
Fred Wilson — a venture capitalist who spends a lot of time thinking about the future of news — wrote that he welcomed Murdoch’s announcement.

We can talk until we are blue in the face about whether people will pay for news or not. Talk is cheap. Actions are not. So I’m eager to see the experiments begin.

Until someone actually launches a serious effort to make paid content work across a network, the arguments about the merits of free media are never going to end. This is a time for innovation in journalism, and News Corps will certainly devote smart people and serious resources to making this effort a success.
That success just might not look like what Rupert Murdoch expects.

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