Not only did Australia’s two main print news media organisations reject Amazon’s Kindle book reader, both made their rejection public. Fairfax went overboard, publishing versions of the story in The Sydney Morning Herald, The Age and on its youth-focused site, The Vine. However, it didn’t run in The Australian Financial Review.

News Corporation has been less vocal, although Rupert Murdoch did mention his dissatisfaction with the reader in comments following his company’s annual results.

As this story in The Sydney Morning Herald explains, the problem is Amazon wants to clip the ticket by too much. Some reports suggest the company takes as much as 70 percent of the price of ebook sales and is seeking similar highmargins from newspaper subscriptions.

Sony and Apple are mentioned as possible alternatives. One aspect of this story is the assumption people will want to read online newspapers via a special reader rather than with a PC or smartphone.

Kindle Rejected By Australian Newspapers | Fairfax Media, News Corporation.

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The signals coming from Fairfax may be slightly jumbled, but the message is clear. Australia and New Zealand’s largest publisher plans to follow Murdoch and charge for online news.

I describe the signals as confused because on Friday, Stephen Hutcheon at the Sydney Morning Herald wrote a story about readers’ reluctance to pay for online news. On one level Hutcheon’s Not happy, Rupert: readers say they won’t pay for online news was a simple dig at the rival News Corporation – complete with an unflattering photograph of Rupert Murdoch. He says News’ announcement was followed by 140 reader comments – mainly from angry readers threatening to go elsewhere the moment charges are applied.

Clearly Fairfax’s left hand doesn’t know what the right hand is doing because Sunday saw Tom Hyland write Fairfax, News to charge for online at The Age website. He also wrote the longer Stop the presses. Hyland had the unenviable job of quoting Fairfax chief executive Brian McCarthy who told him; “charging for online access was essential if publishers were to maintain their newsroom staff.”

You always know things are going to get tricky when a newspaper executive uses a word like ‘monetising’ and Hyland quotes McCarthy getting his teeth around that in the very next paragraph. He went on to talk about a two-level model at the The Age and the The Sydney Morning Herald websites.

Of course Fairfax is no stranger to charging for online content. The company’s The Australian Financial Review has long been one of the regions few major titles to eschew the free online model and charge readers. By all accounts the AFR’s paywall hasn’t been very successful, but it will have taught the company some useful lessons about how to turn reader clicks into real money.

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Dan Conover at Xark has written a great piece arguing against the newspaper publishers’ campaign to charge readers for on-line news.

Conover describes the move as a suicide pact. While describing the idea that readers should pay for the professionally created content they consume as reasonable, he says attempts to force them to pay are “post-rational”.

He points out some of the main flaws, including the fact that consumers don’t want to pay for news and that previous attempts to make them pay have failed. But Conver points out newspaper publishers are no longer listening to reason and are determined to plough ahead with paid content.

Speaking as someone who has spent more than 30 years working as a journalist – most of that time on newspapers – I’d love to see publishers find a way to make on-line news profitable.  But it’s a fantasy.

If Fairfax can only convince a handful of Australian business people to stump up cash to read the highly-targeted and immensely useful Australian Financial Review on-line, what chance to other newspaper publishers have?

You need nerves of steel to bet against Rupert Murdoch, but this time, he and the other newspaper owners are going in the wrong direction – readers are not going to pay to read news. And they definitely will not do so while there are free alternatives.

Xark!: The newspaper suicide pact.

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There’s a major debate in publishing circles about whether consumers can be made to pay for online content. Rupert Murdoch recently moved from the free content camp to thinking out loud about charging readers micropayments to view news content (see Will readers pay for Murdoch’s web content?)

Now Murdoch’s Wall Street Journal has announced it will be pressing ahead with a micropayment scheme in addition to more conventional subscriptions.

Reuters columnist Eric Auchard looked at some possible newspaper business models for The Guardian in Pay a small toll to read this news story.  He concludes; “the newspaper industry must find a way to make work one or several of these proposals to make consumers pay for online news. The alternative is to accept that newspapers have had their day.”

Why micropayments?

In theory the subscription model should be a perfect way for delivering digital content. In practice only a handful of businesses have managed to succeed in persuading consumers to pay an upfront fee for pure online content – the best known examples are the adult sites.

There have been famous failures to attract subscription revenue. Slate magazine started out free, then attempted to move to the subscription model. Less than five percent of readers were willing to pay even a modest fee to read the magazine. It has since returned to the ad supported free online newspaper business model. This five percent figure crops up a lot in the context of online subscriptions, but few publishers have ever reached such giddy heights.

Buy print subscription, get digital free

There are some interesting variations on the subscription theme, for example The Economist a British weekly newspaper-magazine has an excellent web site. Initially only subscribers to the print edition had full access to the entire site. Today, The Economist also offers a digital only subscription, it’s about 20 percent of the price of a print subscription. The New Scientist has similar offers.

Another variation is where Internet users can trade their personal information for a subscription. The New York Times allows access to a basic set of pages, but for full access you have to fill out a questionnaire. Fairfax Media’s Stuff site in New Zealand allows registered users to customise pages and news feeds. Fairfax’s Australian sites let registered users take part in competitions and receive custom alerts. In some cases the data from these schemes is used for simple information gathering, in other cases once you’ve signed up you’ll see a never-ending stream of spam.

One reason why many content publishers haven’t yet managed to sell subscriptions is that online payment is still based on credit cards. Although many companies have attempted to introduce micropayment systems, none have taken off. Credit card transactions are simply not economically viable below, say, $10.

Rocky road to micropayments

Although as a journalist and ex-publisher I’d love to find ways of turning my skills into a reliable income once more, I see three big problems with getting readers to pay for online content.

First, for readers to pay money, content has to be valuable and consistently good. The Economist and the New Scientist offer consistently good reading and are reliable, credible information sources.

The same cannot be said for all newspapers. The most popular news stories online tend to be trashy tabloid pieces about celebrities – often hinting at sex or with vaguely sexy pictures. These drag in the punters for online advertising, but few people would pay money for this material.

Second, micropayment schemes would send price signals to journalists. While an economist would argue this is a good thing, it may kill the news business. Newspapers earn their credibility with their markets by the breadth, depth and independence of their coverage. If the easy micropayment dollars all accrue to the trash stories, then quality journalism will be quickly eliminated or relegated to backwaters.

Micropayments will provide newspaper managers with instant financial feedback on the profitability of stories, genres, beats and individual journalists. Journalist will quickly learn to write for salability. Tech Dirt has an interesting perspective on this in Wait… Wouldn’t Micropayments Be Bad For Journalism?

Third, readers may need to set up multiple accounts with multiple publishers. It may be helpful if there was an iTunes style clearing house for online news, but I can’t see a realistic way this could be made to work.

Lastly, the whole idea of charging readers to access news adds considerable friction to the process. Stories behind pay content walls become invisible to search engines. The mere process of a reader stopping and thinking ‘do I have enough credit?’ or ‘is this worth paying for?’ will erode numbers. Regardless of their willingness to pay, the frictionless, free content sites will win the traffic everyday.

What do you think?

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Today The Australian’s Media section ran Readers not averse to paying for online content by Nick Tabakoff. As the headline suggests the story looks at an international study by PricewaterhouseCoopers which found ‘readers could be willing to pay almost as much for some high-quality online newspapers as they do for print versions, particularly in specialist news areas’.

Could this be related to the PricewaterhouseCoopers study referred to by Miriam Steffens in The Sydney Morning Herald’s Readers reluctant to pay for online news?

Indeed it is.

Now, strictly speaking there’s a fairly thin semantic line between ‘readers being reluctant to pay’ and ‘readers not adverse to paying for’. One does not directly contradict the other. But the two headlines are clearly two different interpretations of the same data.

Or as we say in the media, they each have a different spin.

Which one is more plausible?

Both Rupert Murdoch’s News Corporation, the owner of The Australian and Fairfax Media, owner of the SMH have a vested interest in the story.

Murdoch has gone on the record in recent days saying he wants to charge readers for online content on News Corporation web sites. The headline on Nick Tabakoff’s story squares nicely with Murdoch’s recent statements on the issue. We all know Murdoch interferes editorially in his papers. While it’s extremely unlikely he had a hand in this particularly story, it does reflect the official line now coming from News Corporation.

Fairfax is more complicated. The company’s The Australian Financial Review operates behind a content pay wall. It costs around $3 a pop to view an AFR story, though most paying customers have all-you-can-eat subscriptions. On the other hand the SMH, The Age and the company’s other online properties including New Zealand’s stuff.co.nz are all free to readers and make money from online advertising.

Now which story looks the most plausible?

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