Here’s the problem: The advertising model for online content isn’t very good – at least, it’s not sustainable. Most people are perfectly capable of mentally filtering out the spam so that they hardly notice it at all.
To make money you need a lot of traffic and next to no costs. That’s why Guido can make a profit whilst the mainstream media loses money on their their online outlets: the costs of running an online edition of a newspaper are unlikely to be recovered from advertising alone.
From Murdoch’s point of view, the cost of generating the content along with the bandwidth costs is being paid for by the company, resulting in multi-billion dollar losses. Boo hoo, you cry – and I’m with you on that – but you can’t realistically expect News International to bankrupt itself giving away it’s content for free. That’s not a viable business model – the hope that content could be paid for by advertising along has turned out to be a pipe-dream.
The same content being available online could be one of the reasons for drops in sales of newspapers – from personal experience I’ve often wondered what the point of spending money on a paper when the same content is available for free on the Internet.
So, again, from Murdoch’s point of view charging for online content has some instant benefits – it means that his own newspapers are not competing with free versions of themselves. It means he’s not paying the bandwidth costs of serving up pages to millions of daily readers. It also means he’s going to attempt to brand his online content as ‘premium’ content. There’s enough people in this world that will willingly choose the pay per view option over the alternative if it’s better (or they think it is) – consider Sky vs Freeview, for example.
If Murdoch is successful and manages to halt the losses then expect the other newspaper groups to follow his example. If he fails then things are going to get even sticker for the news industry.
If something has value to us, we should be willing to pay for it (we do pay for BBC News Online already) – and that goes for news, too.
