Rupert Murdoch says News Corporation will start charging for access to its news websites within a year. The Guardian quotes him saying this will fix what he describes as a ‘malfunctioning business model’.

Unless he has something clever up his sleeve, his words are just 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 business model for online news is broken.

Newsgathering and production is expensive to do properly. It requires far more than the pittance that can be earned from Google Ads.

Newspaper publishers historically made their money from two revenue streams: 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.

Rivers of gold

Elsewhere, advertising is the bulk of a paper’s revenue. Kerry Packer famously once described the advertising going into Fairfax’s Australian metropolitan newspapers as ‘rivers of gold’. New Zealand newspapers have also done 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 awful.

Print advertising revenue is dropping fast as advertisers move online. This is particularly true for the small advertisers who once paid for classified ads. Those dollars now go to web businesses like eBay, Google and, in New Zealand, Trade Me.

It won’t work for mass audiences

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

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

Murdoch owns a lot of papers around the world. If they all impose a charging model at the same time they might attract paying customers. They may not attract enough. The Murdoch papers certainly aren’t noticeably better editorially than their rivals.

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 dollars per month for those kinds of services. There may be a electronic news reading device — perhaps it works on a subscription model. It would have to be good, simple-to-use and  inexpensive.

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