Rupert Murdoch says News Corporation will charge online readers within a year. The Guardian quotes Murdoch saying this will fix what he describes as a ‘malfunctioning business model’.

Unless he has something clever up his sleeve, his words are wishful thinking. Going by this Reuters report, News Corporation plans to charge ‘micro-payments’.

He has a point

Murdoch is right when he says the online news business model for is broken.

News gathering, writing and production are expensive to do properly. It needs more than the pittance Google Ads pays.

Newspaper publishers historically made money from copy sales and advertising. When I first worked as a journalist in the UK in the early 1980s, copy sales made up the bulk of a daily paper’s revenue.

Advertising was just the cream on top.

Elsewhere, advertising is the bulk of a paper’s revenue. Kerry Packer famously once described the advertising in Fairfax’s Australian metropolitan newspapers as ‘rivers of gold’. New Zealand newspapers also did proportionately better out of advertising than copy sales.

Of course, free newspapers only earn money from advertising. But, in general, and with a few exceptions, their editorial is embarrassingly awful.

Print advertising revenue is dropping fast as advertisers move online. This is particularly true for small advertisers who once paid for classified ads. That money now goes to web businesses like Google and Trade Me.

It won’t work for mass audiences

People might pay for financial or other specialist information if it is important to them and they can’t get it for free elsewhere. Otherwise, readers simply aren’t prepared to pay for content. They certainly won’t do so if they don’t have to. The Sydney Morning Herald reports what everyone working in the business knew already: Readers reluctant to pay for online news.

Previous attempts to charge failed. When one paper charges and a rival doesn’t, the free site gets most of the business. In the past publishers who attempted to run paid news sites either wised up or filed for bankruptcy.

Murdoch owns many papers around the world. If they all impose a charging model at the same time they might just attract some paying customers. I doubt they will attract enough. The Murdoch papers certainly aren’t noticeably better editorially than their rivals.

I can’t see how this will work. Murdoch may be able to cut deals with phone companies and ISPs to deliver News Corporation content to customers behind certain content walls, but I don’t see consumers paying more than a few pennies per month for those kinds of services. There may be an electronic news reading device — perhaps it works on a subscription model. It would have to be good, simple-to-use and inexpensive.

The paid content genie is well and truly out of the bottle. Not even Rupert Murdoch can put it back again.