Saturday, August 8, 2009

Paying for internet news


Media Baron Rupert Murdoch’s News International has recently made a net loss of £2Billion. In response Mr Murdoch has announced that he is to charge for access to his news internet sites such as The Times, The Sun and the News of the World (and Sky News?).

The Guardian quotes him as follows:

"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 websites."

http://www.guardian.co.uk/media/2009/aug/06/rupert-murdoch-website-charges

This has raised eyebrows in the UK, partly because no one has ever successfully charged for the news and partly because of News International’s history.

This company changed the way newspapers were printed in London in the Battle of Wapping, the second great strike of the Thatcher era that sought the Unions brought to heel. Briefly, News International moved printing out of Fleet Street, where obsolete hot metal presses were wildly overmanned by ludicrously overpaid and underworked print workers, to Wapping (now Docklands,), where modern computer technology was employed. This opened the floodgates and within a few years all the major papers followed.

http://en.wikipedia.org/wiki/Wapping_dispute

Mr Murdoch had some interesting comments that are reported (in an edited version) here:

http://www.city-journal.org/article01.php?aid=1631

The paragraphs that I find interesting are:

“Today the pace of technological change is quickening, while the direction of change remains unpredictable. Technology is unpredictable partly because it depends upon the act of invention, and partly because even inventors cannot accurately imagine the place which their inventions will find in our lives. When Thomas Edison invented the phonograph, he imagined that voice recordings would be sent through the mail to replace written letters. The classic recent example is the fax machine. Many experts saw no place for it because they thought transmitting information by modem was more efficient. The funny thing is, they were right; modems are more efficient, but they are apparently not as effective, given the way we are organized right now. The history of invention is riddled with such tales.
The only thing we can be sure of is that, while technology adapts quickly, governments do not, which is why government policy is so dangerous in this field. Placing one’s faith in the thousands of voluntary decisions that together constitute a free market is not easy. One finds that faith only in highly developed societies, and even then it is a fragile late-season blossom, easily dashed by war or other crises. The decision to rely on market forces is the essence of modernization. Yet technological change often provokes atavistic, authoritarian responses. The real danger of the present technological revolution is that we may be panicked by future shock into regressive schemes of regulation.”

He was wrong about emails, fax was a very short lived technology, but is he right about the plan to charge for internet news content? Will anyone pay to read stories free elsewhere? Is News International riding the new technological wave into the future or are they responding with an “atavistic, authoritarian response”, to use his own words?

8 comments:

C Kelsey said...

People will pay for news, but only in very limited areas of interest. It's a model successfully employed by Janes and also by the small but interesting defenseindustrydaily.com. For general news (or the fear and sex that the current news channels sell over here) it will have to be a unique strategy indeed to get people to pay for what can be found elsewhere for free.

Interesting post.

Kate said...

Hi John,

More evidence that story fodder can be everywhere - what would the world look like if this was successful?

That grinding noise you hear is the gears in my head turning.

Ori Pomerantz said...

That's what I love about the free market - people are every bit as stupid as in command economies, but they get to learn they are being stupid.

John Lambshead said...

Dear Chris

I think you have hit the nail squarely. Specialist information that is not generally available and that has a market is worth money online. Most scientific journals require a subscription.

It is difficult to see why someone should pay to read highlights from the Times when you can pull up the Guardian or Telegraph for free.

I am not convinced that Murdoch understands the internet generation.

John

John Lambshead said...

Dear Kate,

Anything can inspire the creative mind.

John

John Lambshead said...

Ori

It has always seemed to me that the free market is analogous to evolution. It is near impossible to predict winners in advance but ruthless natural selection sure weeds out the losers - or the unlucky.

I thought there was an interesting irony in this story. The print workers tried to freeze the use of an obsolete technology/system that suited them personally. It could be argued that Mr Murdoch is now repeating that error by tring to enforce an old system on a new technology.

In the long run, the radicals always win. The message from evolution is evolve or go under - often you evolve and go under.

Ori Pomerantz said...

It could be argued that Mr Murdoch is now repeating that error by tring to enforce an old system on a new technology.

Definitely. Now that the status quo is on his side, he doesn't want it to change.

Well, that's nice. There are a lot of things I want too. Some of them I might actually get.

Anton Gully said...

It is difficult to see why someone should pay to read highlights from the Times when you can pull up the Guardian or Telegraph for free.

Once one big newspaper group starts charging, the others will be paying close attention to see how it works out. National Newspapers are on their last legs and any new revenue streams are going to look attractive.

The real threat to this business model isn't from other newspaper websites. It's from news.bbc.co.uk, if you're in the UK and probably CNN.com in the US.