Murdoch claims the ad model is dead
News Corporation’s chief Rupert Murdoch claims the ‘old’ advertising model is “dead”.
Writing in his own newspaper, The Wall Street Journal, Murdoch said newspapers cannot rely on ad revenues.
“The old business model based mainly on advertising is dead,” he wrote. “Let’s face it: A business model that relies primarily on online advertising cannot sustain newspapers over the long term. The reason is simple arithmetic. Though online advertising is increasing, that increase is only a fraction of what is being lost with print advertising.”
Murdoch also used the opportunity to attack websites that generate content from other news sources, “without contributing a penny to its production”, which he says is “theft”.
His comments come less than a month after he announced plans to remove news stories from Google’s search index, sparking a battle between the two giants. In the past, Murdoch has accused Google as acting as a “parasite” for featuring news stories.
However, on a more positive note, he wrote that the future of journalism is more promising than ever – although pointed out that this is based on publishers adopting the paid-model, which Murdoch intends to implement across his portfolio of news sites.
The new model, which Murdoch hopes to action by the end of News Corp’s financial year in June, will charge users to access newspaper sites including The Sun, The Times and The New York Post.
Murdoch said people will pay for content if it is of good and useful value. “Our customers are smart enough to know that you don’t get something for nothing,” he said. “That goes for some of our friends online too.”
Murdoch first unveiled plans to starting charging users to access his UK newspaper sites in June this year. At the time, he said: “Quality journalism is not cheap. 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.”
Speaking at a shareholder meeting months later, Murdoch said he wants “to take a leadership position in creating an economic template for the future” with his incoming paid-model.
However, News Corporation is yet to confirm which model it plans to use. Several options have been talked about, including a metered approach, micro-payments, charging for premium content only and introducing a subscription fee.
Last month, Murdoch also admitted that the company is behind schedule to introduce a paywall by June 2010. He didn’t explain the reasons for the delay but said: “It’s a work in progress and there’s a huge amount of work going on.”