Murdoch decides NewsCorp to charge for online news

August 6, 2009

After the release of their annual figures, NewsCorp have finally announced that they will be charging for news online by next summer.

The figures themselves don’t make good reading: a $680 million quartley loss, overall revenues down 7.8%, and a $3.4 billion loss at the end of June, compared to a $5.4 billion profit the year before.

Rupert Murdoch (Creative commons

Rupert Murdoch (Creative commons)

PaidContentUK have some more figures:

News Corp. reported both its full fiscal year and quarter results today—swinging to a loss for both. For FY09, the company showed a net loss of $3.4 billion, compared with net income of $5.4 billion in FY08. Revenues were down 8 percent, to $30 billion from $33 billion. News Corp. took a pre-tax impairment charge in FY09 of $8.9 billion for goodwill and intangibles.

It appears that Rupert Murdoch has chosen to announce his online charging plan on the same day NewsCorp’s figures are released. This gives him the opportunity to show a wider context as to why users will soon be paying for material they used to receive for free. From Media Guardian:

“Quality journalism is not cheap,” said Murdoch. “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.”

The Australian-born press and television baron was speaking as his News Corporation holding company slumped to a $3.4bn (£2bn) net loss for the financial year to June, hit by huge writedowns in the value of its assets, restructuring charges and a dive in commercial revenue.

It seems that David Simon, who created something of a blogosphere storm with his recent article in the Colombia Journalism Review, ‘Build the Wall’, has got his wish:

If the only way to read the Times is to buy the Times, online or off, then readers who clearly retain a desire for that product will reach for their wallets. And those comfortable acquiring their news at a keyboard will be happy to pay much less than they do for home delivery.

Bobbie Johnson sees a clear divide in the media between those charging for content, and those advocating a free model where journalism becomes something else entirely. This might be an overly simplistic way of analysing the debate – few media platforms will be all free, or all charged for – but it’s worth a look at the full article:

Proponents of free news say it is impossible to succeed by charging readers when there are so many competing sources of information prepared to give their services to readers for nothing, echoing the words of the famous futurist Stewart Brand, who said “information wants to be free”.

So far at least, history is one their side: while specialist news publications such as the Wall Street Journal, the Financial Times and the Economist charge for access to some of the information they publish, few mainstream publications have managed to succeed in implementing pay walls.

Of course, the kickback will be that users won’t pay for the content, but Murdoch believes he has found a simple solution:

The News Corp boss pointed to the Telegraph’s recent run of scoops about MPs’ expenses as an example of journalism readers would pay to read: “I’m sure people would be very happy to pay for that.”

Rarely afraid of a confrontation, Murdoch made it clear that he was gearing up for a bruising fight: “Our policy is to win.”

In the age of 24 hour news channels, and 24 hour newspaper online publishing, how often does a scoop like the Telegraph’s come along? For those slow news days, when papers are reporting the same stories, with similar quotes, figures, and pictures, will users will be willing to go to The Sun, The Times and the News of the World?

Unsurprisingly, Jeff Jarvis is having a field day, and points out one of the biggest problems with charging online – even the smallest cost allows you to be undercut by a website offering content for free: a business model where there is no direct charge to the user:

Charging for content brings marketing and customer-service costs. Online, it reduces audience and the advertising they justify. Putting content behind a wall cuts it off from search and links; they cut off your Googlejuice.

When publishers build those walls, they open the door for free competitors, who can now enter the content business with virtually no barrier to entry. Publishers who fool themselves into thinking pay will save the day only further forestall the innovation and experimentation that is the only possible path to success online.

If their content is behind a pay wall, NewsCorp will of course be looking into protecting their material, to a drastic extent. This from the Inquisitr:

Harold Mitchell, the founder of one of Australia’s largest advertising groups and a man connected to News Corp locally, said in a radio interview Thursday (local time) that News Corp. is preparing to sue Google and Yahoo to stop both from linking to, and quoting News Corp content.

Charlie Beckett reckons Murdoch could be going down one of three paths:

1. ‘Asset-stripping’: get as much cash out of these businesses as you can without completely killing the customer base to pump up the balance sheet while other media organisations burn their capital and plunge further into debt.

2. ‘The gamble’: If a few titles go down that just proves their weakness. Whatever is left standing will dominate a depleted market as the rivals follow in the wake of News International. In the same way that putting the price up of the Sunday Times actually strengthened its market dominance. If you are a sector leader – such as The Sun – then you have the brand community to set the pace and help dictate consumer behaviour.

3. Genius: Murdoch understands that enough of the public want to preserve their source of news and will be prepared to pay. They realise that they have had a free ride.

Although this business path is not inevitable, it needs to be experimented with – and if anyone can try it, it will be Murdoch. But if nothing else, as Matt Wells says in the Guardian – it is one hell of a gamble.

Sunday Times to publish on stand-alone, paid-for website

August 4, 2009

PaidContent.org reports that the Sunday Times is due to launch a stand alone website, separate from that of the Times, and access to the content would charge the user. Editors web blog details the current situation for the Sundays:

Currently, the Times titles, including the Sunday edition, are merged together on the Web for the sake of attracting large numbers of people to the one site. Most of the UK’s quality newspapers operate in a similar vein and include the Guardian, Telegraph and Independent, which currently house both their weekday and weekend editions under the one same virtual roof. Given the popularity of weekend editions, then, a new standalone site is likely to affect the traffic of the original. Although, it is possible that if News International gets the balance between charging and offering content free right, the traffic of the two different sites combined, could turn out to be greater in the long run.

PaidContent is sceptical of whether a separate website for a Sunday paper would be successful:

But can a Sunday newspaper website ever work? The paper publishes the sort of content news execs feel confident about charging for: exclusive news, columnists, features and the rest, published just once a week. Although, you can read similar news from other Sunday papers online for free and the title doesn’t have the same must-have niche news that FT.com successfully sells online.

The Press Gazette gives a little analysis of how this move may fit into Newscorps wider strategy:

The launch of a stand-alone Sunday Times website underlines News International’s contrasting approach to national newspaper publishing.

The Telegraph Group, Independent Newspapers and Guardian News and Media have merged their daily and Sunday newspapers online – and largely integrated their daily and Sunday editorial teams. But News International’s Sun, News of the World, Sunday Times and Times remain complete editorial independence from each other.

However Nicole Green, a freelance journalist in London, feels the nature of Sunday papers is enough for a paid for, Sunday paper website to fall on its face:

Most people I know savour the Sunday papers, spending lazy mornings (and afternoons) over coffee, losing their breakfast table under reams of newsprint and fighting over supplements. This image loses some romance if you imagine perching on a swivel chair with the rest of the household, scrabbling over a mouse and spilling croissant on your keyboard.

Maybe this isn’t true of everyone, maybe most people will be willing to drag themselves out of bed on Sunday to look at a computer screen. I doubt it somewhat.

Shane Richmond, Communities Editor at the Telegraph, (via Nicole Green) expresses his scepticism on a number of well-worn arguments, and also this gem:

Separating a Sunday newspaper from its daily sister seems like a recipe for online disaster to me. Will the new, stand-alone Sunday Times update on a weekly basis? If so, will it release its new edition on Sundays, when web traffic is low, or earlier, potentially damaging print sales, or later, giving readers little reason to buy? Does going weekly force the paper into competition with the Economist and the Spectator and can a generalist publication win those battles? If the paper updates daily it will end up competing with its sister title and risks becoming the ‘premium’ version of the Times, potentially damaging the daily.

As Fee or Free has reported, Rupert Murdoch has already voiced his desire to seriously consider charging for content, including potentially news. An additional problem with a separate website is that of topics and linking: would all the articles on Israel and Palestine for example in the Sunday Times, link to articles in the Times – a separate site? Would this work the other way round, or would it simply create a pay wall within what was previously a converged, seamless website? The second question is whether the Sunday Times is perceived as seperate enough from the Times to avoid the feeling of paying for one day a week’s worth of the same newspaper – if this is true for any paper, it’s likely to be true for the Sunday Times (see the above Press Gazette report). But it’s unlikely to be adequate.

The Sunday Times has produced substantial amounts of quality, investigate reporting over its history, often alongside campaigns which are unmatched in the broadsheet press. Putting its content behind a pay wall could potentially jeopardise this reputation – or enhance it, by raising revenue to spend on journalism. But are any of the Sunday papers of sufficently high quality that users would pay for a weekly publication, while receiving similar coverage throughout the rest of the week – especially now that the Saturday editions are almost as thick as those you buy the day after?


Channel 4 News interviews Lionel Barber, FT Editor, on charging for content

August 4, 2009

Channel 4 News has an extended interview with Lionel Barber, Editor of the Financial Times, on the paper’s policy of charging for online content and the challenges faced by the print media in this wider industry.

Fee or Free reported on Barber’s speech to the Media Standards Trust, when he predicted that major newspaper organisations would be charging for content within a decade. The above video will also be featured in an upcoming in-depth look at national newspaper’s policies for charging online on Fee or Free.


Trinity Mirror planning to charge for specialist online content

August 3, 2009

As reported on Media Guardian, Trinity Mirror is planning several specialist sites – namely ‘MirrorFootball’ and a 3am.co.uk gossip site – for which it will charge online. Sly Bailey, Trinity Mirror CEO, said that there was little point charging for news content when it was offered, and will continue to be offered, by the BBC were free. Similar sentiments were offered by Peter Morrell, Head of Multimedia at Media Wales, when Fee or Free spoke to him recently.

Bailey continued:

The next launches you’re seeing from Trinity Mirror are on August 6, MirrorFootball.co.uk, taking us in to an area where we do have unique content in the form of our archive, and developing an engaged audience who are passionate about that, that is more definable than a general news audience … thinking over time about how we might develop audience and what the pay model might be over time.

The Times has it’s crossword, the FT it’s financial reporting – what is the specialist content and tools offered by other papers? It appears the debate is shifting from charging for news, to charging for high quality, unique content and services that an outlet can offer.

Bailey’s latest comments come after a fall in profits at Trinity Mirror, though she also considered the industry to have hit the financial bottom of the advertising slump.


Fee or Free profiles Media Wales

August 3, 2009

In the first of our paper profiles, we speak to Peter Morrell, Multimedia Director for Media Wales which publishes Western Mail, South Wales Echo and Wales on Sunday among others.


Jeff Sonderman on the mentality behind paid content models

August 3, 2009

Jeff Sonderman, a US local news editor, writes at NewsFuturist about the news organisations mentality when complementing charging for online content. An extract:

The huge fallacy I hear all the time behind arguments for requiring readers to pay for news goes like this: Our work is IMPORTANT and EXPENSIVE to produce. Society needs it, and we incur huge expenses to provide it, so consumers should pay us.

As a journalist, I completely agree that good journalism is vital to a healthy society. But that says nothing about whether it should be paid for by the consumer. Things even more essential to our survival — air and sunlight — we pay nothing for. Why? Because they are abundant and freely distributed.

His conclusion then, is:

Consumers couldn’t care less how much it costs to produce a product, be it news, clothing or cars. They don’t inspect your production facility and balance sheets to determine whether the price is fair.

Price is determined by the UNIQUE value your product provides TO THE CONSUMER. Both parts of the equation matter: how useful/valuable is it to the consumer, and could the same value be obtained elsewhere for less?

Of course this doesn’t offer a solution to the financial crisis in print journalism. But it does raise a point that newspapers should not be charging for content on the back of their own importance to society – after all, if they were so important, circulation would be continuing and they wouldn’t get any hits on their websites.

Sonderman also comments on charging not as much as the market can bear, but the bare minimum it can bare, an idea explained by Jeff Jarvis:

Yes, it’s important and valuable, but as long as there is abundant, elastic supply, competition will drive the consumer price to zero.

By charging nothing, next to nothing, or a small amount for a premium service – just like Flickr and Skype do – you avoid being undercut by any competitors. Unfortunately for newspapers, this means any charging allows them to be undercut. Even if they charged a penny a day, the hassle of registering and setting up an account would put many users off.


GMG releases full year profits

July 31, 2009

The Guardian Media Group (GMG) has published it’s financial results for 2008-2009.

With a turnover of £405.4 million, it would appear GMG is managing to weather the financial storm – but it also had pre-tax losses of nearly £90 million, having turned a profit o £306.4 million in 2008.

Amelia Fawcett, Chair of GMG, said

“While declining revenues were a factor in our financial performance, the reported loss is also due to the restructuring of the portfolio over the last two years – specifically the partial sale of Trader Media Group and investment of the proceeds in long-term assets

The Guardian webste is still a source of pride for GMG:

During the year guardian.co.uk achieved a record audience of nearly 30m unique users. It is now not only the UK’s largest newspaper site but also one of the biggest in the world.

GNM’s aim is to emerge from the economic downturn a leaner and stronger organisation: leaner due to a bottom-up reappraisal of the cost base to ensure it is affordable; stronger because it will continue to invest in its journalism and in maintaining its market-leading positions.

Despite this, Guardian News and Media made a loss of £36 million. However it is local and regional press, unsurprisingly, that is suffering the most. The results reveal that GMG is in fact operating these publications at a loss for the last six months:

GMG Regional Media’s operating profit declined to £0.5m (2008 £14.3m) on turnover of £94.5m (2008 £120.5m). This steep decline was driven by a 30% fall in classified advertising revenues. Recruitment fell by 34%, motors by 16% and property by 46%. Display revenues slipped by 7%.

As reported by how-do, which reports on the media industry in the North West, the drop is classifieds has been significant for GMG.

The Guardian is the advantageous position of not being required to turn a profit, thanks to it’s ownership by the Scott Trust. It has been suggested that one of the survival routes for newspaper journalism is to be administered by charities or philanthropic organisations, rather than aggressive companies. The journalism still has to be paid for, but is free experiment more widely and undertake some projects at a loss.