Paywalls: The Guardian v Murdoch… the battle lines are now firmly drawn

Newsline columnist Raymond Snoddy explains why The Guardian “can’t see the point of choking off digital growth in return for the relatively modest sums that they believe pay walls would produce” …

There were some of the most dramatic numbers imaginable in The Guardian editor Alan Rusbridger’s Hugh Cudlipp lecture this week.

In 1956, when The Guardian was still the Manchester Guardian, the paper’s “worldwide sales” totalled 650 and the paper had more readers in the Colwyn Bay area than in the rest of the world.

In December, the journalism produced by the Guardian stable was read by 37 million readers around the world – roughly one  third in the UK, one third in the US and one third in the rest of  the world.

And if the New York Times really does start charging for its  content then, according to Rusbridger, the Guardian could become the newspaper with largest web English-speaking readership in the world.

The Guardian‘s opposition to the introduction of “universal” pay walls and commitment to open journalism – at least for now – is a direct riposte to Rupert Murdoch’s plans to start charging for online content.

They obviously can’t both be right. Or can they?

Will a whole series of new models emerge to fund journalism in the future as a result of continuing experiment – different models for different parts of even the same newspaper?

After all, The Guardian charges for its splendid iPhone “app”, although the one-off charge of £2.39 seems a touch eccentric. Wouldn’t £2.99 or even £3.99 be just as acceptable for all those stories.  More could obviously be charged in the future for mobile content.

Unfortunately, there are serious problems with The Guardian‘s attachment to web advertising – not least that the paper is seriously loss-making at the moment.

The push into online has produced revenues but not nearly  enough and there is a fundamental structural problem. The endless online inventory makes it impossible to impose a floor on online  advertising rates.

Despite such difficulties last year, The Guardian earned £25 million from digital advertising, not exactly a trivial sum, as The Guardian editor noted.

Rusbridger eyes enviously Sir Martin Sorrell’s $60 billion pot of annual advertising billings and the Sorrell belief that digital could amount to a third of WPP’s business in 2014. After that the WPP chief executive ponders that 40 per cent or even 50 per cent might be possible.

“Sorrell is not saying all this advertising is going to newspapers and he has some sympathy for the pro-pay wall arguments,”  Rusbridger conceded.

Absolutely right. Sir Martin believes it is absolutely insane for  newspapers to give away expensively assembled content for free on the web and has said so repeatedly.

But deep in the bowels of the commercial departments of The Guardian important testing of six different pay wall models has been under way.

They remain unconvinced and reject the argument that free digital content cannibalises print because The Guardian share of the print market has been growing not shrinking despite the aggressive push into digital.

At the moment they can’t see the point of choking off such digital growth in return for the relatively modest sums that they believe pay walls would produce. And many millions fewer would be reading Guardian journalism.

Anyway, argues Rusbridger, how can you charge for even the best exclusive these days, unless it is highly market sensitive, when the heart of the story can be picked up and sent around the world within three minutes.

So, where does this leave Rupert Murdoch and his plans to erect  pay walls at his general newspapers such as The Times and The Sunday Times later this year?

In some difficulty is the obvious answer if universal pay walls are planned and if you exclude special cases such as The Financial Times and The Wall Street Journal.

Basic news of reliable quality will continue to come online from the BBC, which is why News International chief James Murdoch so roundly attacked the Corporation and its “state-sponsored news” at last year’s Media Guardian Edinburgh International Television Festival. The Sun‘s alliance with the Conservatives is equally clearly an attempt to seek redress against the BBC by political means.

Add in the all the “free” online journalism of The Guardian and The Observer plus the Daily Mail, which is equally sceptical about online pay walls, and there is going to be an awful lot of information out there – enough perhaps for most people’s needs.

Then on top of that there is Sky online. As Rusbridger noted there is no sign of Murdoch planning to charge for that.

So, will he end up competing with himself?

Stir into the mix free papers such as the Evening Standard, The Metro and CityAM, and the future of most pay walls starts to look problematical unless they are very cleverly constructed and marketed.

The Guardian‘s determined opposition to universal pay walls, although clearly the paper does not rule out charging for specialist content in the future, means the battle lines are now firmly drawn.  It also means that there will not be a single business model for the future funding of newspapers.

All of which is a good thing – as long as some approaches can ultimately be made to work.