Murdoch to charge for access to news on the Internet

By Calvin Palmer

Rupert Murdoch plans to introduce charges for access to all Web sites in his newspaper empire by next summer.

The announcement came as News Corporation posted a net loss of $3.4 billion (£2 billion) for the financial year to June.

“Quality journalism is not cheap,” said Murdoch. “The digital revolution has opened many new and inexpensive distribution channels but it has not made content free. We intend to charge for all our news Web sites.”

At present, only the Wall Street Journal charges a fee for online access.

Murdoch said he had completed a review of the possibility of charging and that he was willing to take the risk of leading the industry towards a pay-per-view model: “I believe that if we’re successful, we’ll be followed fast by other media.”

He accepted that there could be a need for furious litigation to prevent stories and photographs being copied elsewhere: “We’ll be asserting our copyright at every point.”

Murdoch’s British newspapers suffered a 14 percent drop in year-end advertising revenue as the recession took its toll. Profits across News Corp’s global newspaper division fell from $786 million (£468.6 million) to $466 million (£277.7 million).

Elsewhere, Murdoch’s empire was hit by huge reorganisation costs and write-downs at its interactive media division, which includes the social networking Web site MySpace.

News Corp’s Twentieth Century Fox film studio recorded annual profits of $848 million (£505.5 million), a drop from last year’s $1.24 billion (£739.2 million).

Earnings from cable networks rose by 31 percent to $1.67 billion (£995.7 million) but the group’s television division, including its Fox stations in the US and Star networks in Asia, saw profits fall from $1.12 billion (£667.7 million) to $174 million (£103.7 million).

“The past year has been the most difficult in recent history, and our 2009 financial performance clearly reflects the weak economic environment that we confronted throughout the year,” said Murdoch.

The plan to charge for news probably speaks more to Murdoch’s vanity than it does to good business sense. It is a knee-jerk reaction to make people pay for something that is presently provided free.

Some income will be generated from charging for access to news sites but it will not make up for the shortfall as Murdoch hopes.

For one thing, news is a take it or leave it commodity but, more importantly, it is not the exclusive domain of newspapers or their online presence. TV probably accounts for most people’s access to the news that matters.

And while people at the moment may well flock to Murdoch’s newspaper Web sites to read lurid revelations about some celebrity or other, will people flock to them if they have to pay?I guess it may well depend on how lurid those revelations are.

Once people have gotten used to have something for free, it is difficult to put the genie back into the bottle.

I do not profess to be a typical person but a lot of people may well share my attitude to paying for access to Web sites.

For my sins, and they must be pretty egregious, I follow the fortunes of Stoke City and regularly listened to the match commentaries by BBC Radio Stoke’s match commentaries. Admittedly the means of my access were somewhat dubious but they were free. That was the important part.

The BBC has since clamped down and the free links to match commentaries no longer exist. I could pay to listen but, having had them for free for several years, why should I? And it is not that vital that I listen to every excruciating minute of a Stoke City game, especially if it costs me money.

My behavior might well be indicative of what will happen when newspapers charge for access to their online content. At the end of the day, it doesn’t matter a hill of beans whether I log on to The Daily Telegraph, Los Angeles Times, The Times or Houston Chronicle. If they are free, I will. If I have to pay, I will not bother.

And if the number of hits on these sites start to fall, the newspapers will suffer not only the loss of advertising revenue from print editions, due to falling circulation, but also falling advertising revenues from their Web sites. If fewer people are accessing the sites, advertisers may not be so keen to advertise and certainly will not pay a premium to do so.

And all it takes is for one newspaper not to follow the Murdoch example and everyone will gravitate to its site for free news and forget about the rest. Murdoch is such a true believer in free enterprise that he would never condone a monopoly or cartel, well not if he isn’t the one controlling it.

Newspapers made a big mistake when they gave search engines a free access to their content. They were fooled by the novel concept that they would be in reach of a worldwide audience, and so they are. Now things have turned ugly from a revenue point of view, and people are getting news for free, it appears to have been a major flaw to allow the search engines such a free ride.

But it is also important to remember the ethos of the Internet. Its creator Sir Timothy John Berners-Lee did not make a penny from devising the World Wide Web because he believed people should have free access to information and knowledge.

[Based on a report by The Guardian.]

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