Rupert Murdoch, chairman of News Corp., Fox, the Wall Street Journal, etc., etc., etc., made a rather surprising about-face this week on the issue of paid access to online news content. Rumors began a year and a half ago that they were leaving the paid model, and were partially confirmed in January 2008, when Murdoch said they would “greatly expand and improve the free part of the Wall Street Journal online, but there will still be a strong offering (for subscribers).”
It seemed inevitable that Murdoch’s properties would “devolve” to the standard ad-supported free content model that reigns on the Internet. But now Murdoch says that’s just not the case. Apparently this walled-off paid content program is going so well, they’re not only keeping it, but possibly expanding it, according to the Guardian:
Encouraged by booming online subscription revenues at the Wall Street Journal, the billionaire media mogul last night said that papers were going through an “epochal” debate over whether to charge. “That it is possible to charge for content on the web is obvious from the Wall Street Journal’s experience,” he said.
Asked whether he envisaged fees at his British papers such as the Times, the Sunday Times, the Sun and the News of the World, he replied: “We’re absolutely looking at that.” Taking questions on a conference call with reporters and analysts, he said that moves could begin “within the next 12 months‚” adding: “The current days of the internet will soon be over.”
In their results from the first quarter of the year, News Corps’ newspaper division, which includes the WSJ, the New York Post, and several papers in Australia, Ireland and the UK, “barely broke even,’ says the Guardian. Quarterly profits fell from $216M to $7M YOY.
I know the knee-jerk reaction when your profits fall almost 3100% is to immediately raise prices—we have to make more money off our inventory. But the law of supply and demand (which I know Murdoch knows) dictates otherwise: if you lower your prices, you’ll sell more inventory and make more money.
In the online newspaper world, this usually translates to dropping the subscription model (and possibly the print edition) and going to the ad-supported free content model. However, this isn’t a winner for News Corp either:
“Advertising revenue in Britain fell by 21% and Murdoch revealed the Sunday Times is struggling: ‘It’s still in profit, but only just so.’ The tabloids had fared better, aided by price battles at supermarkets which spend heavily on print promotions.”
If Murdoch’s already proven that they can get people to pay for their content and their advertising revenue is falling, then maybe it really is the way to go.
What do you think? Is a subscription model for news content viable in this day and age?
Photo by the World Economic Forum