Free news costs too much. But how do you suddenly start charging?
Raymond Snoddy on News Corp’s problems with geeks bearing gifts and the true cost of giving news away.
When it comes to charging for online newspaper content it is News Corporation boss Rupert Murdoch who has made all the headlines.
The language has been colourful as the great media survivor has accused organisations such as Google of being parasites while threatening to sue the BBC for kleptomania. (Of course, Murdoch may see things in a more favourable light now that Google is allowing publishers to limit free access.)
But the most coherent case on why the present status in the newspaper industry cannot be allowed to continue came yesterday from one of Murdoch’s top lieutenants, Les Hinton, at the World Association of Newspapers (WAN) congress in India.
Hinton acknowledged that “lavish language” had been used to stir things up and indeed used some of his own – “Beware of geeks bearing gifts.”
But once he had got that out of his system there was sober analysis and abject confessions to be made.
Hinton admitted, what many had long suspected, that the newspaper just didn’t “get” the internet and then had overacted badly with economically devastating consequences.
“Like an over-eager middle-aged dad, desperate to look cool, we ended up dancing obediently to other people’s tunes,” Hinton conceded.
The uncomfortable truth was that the newspaper industry had been the principal architect of its own difficulties.
It had allowed billions of dollars worth of journalism every year to leak onto the internet, surrendering hard-earned rights to search engines and aggregators.
News was a business and the newspaper industry should not be ashamed to say so.
“Free costs too much,” emphasised Hinton, chief executive of Dow Jones.
To back his case there were the findings from the Poynter Institute that the newspaper industry in the US had gone from being a $60 billion business in 2006 to a $39 billion industry now, though presumably the recession was part of that process. As a result spending on journalism had fallen by $1.5 billion.
Advertisers were starting to get the message and realising that counting clicks did not amount to brand building.
The News Corp executive cited a study by comScore and the Online Publishers Association that found that 80% of display ad clicks came from only 16% of internet users… and they tended to be younger and lower paid that the average web user.
Hinton was also strong on how newspapers had to co-operate more and share such things as printing facilities instead of duplicating unnecessary costs.
“Unique content wins unique users – unique facilities don’t,” said Hinton although it is already late in the day to be making such arguments.
Overall it was great analysis so far. Unfortunately there was a great hole in what should have been the next page of his speech – having been misled into giving everything away for free by the geeks bearing gifts how do you suddenly start charging?
Answer came there none – apart from the experience of the Wall Street Journal, which is relevant certainly to the Financial Times but not many other papers.
The WSJ certainly can charge for its specialist information online – up to $149 a year, with iPhone or Blackberry feeds costing $100 a year.
Naturally, to finish Hinton doffed his cap in the direction of his boss Rupert Murdoch who was also addressing the issue at the Federal Trade Commission yesterday.
“Free costs too much. Good content is valuable. That hasn’t changed. It never will. The question is who will provide the content and who will be compensated fairly for the value delivered,” said Murdoch.
That is indeed the biggest question, not just for News Corporation but for the entire newspaper industry.
There is no sign of an answer yet for general news which is available by the bucket load for free all over the internet.
All we know so far is what Times editor James Harding said at the Society of Editors conference, that the Times planned a 24-hour access fee. Apart from that, very little.
There is a growing view that after all the huffing and puffing it may now be time to actually get on with it. At least Johnston Press has got beyond the rhetoric phase and is doing something.
It remains unclear how much different models of charging for online versions of the Whitby Gazette and the Worksop Guardian will tell us about the future of the industry.
Charging £5 for three months access to Whitby‘s online information doesn’t seem a huge amount even though the good folk of Yorkshire have a certain reputation when it comes to paying.
And giving the first line of Worksop stories and then telling readers to buy the paper if they want to know more hasn’t gone down a bundle so far.
But if you own nearly 300 newspapers then carrying out experiments on half a dozen different models is rational – uncharacteristically rational for the newspaper industry.
Rupert Murdoch and Les Hinton will be awaiting news from Whitby and Worksop with bated breath.
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