Wall Street Journal (WSJ) honcho Rupert Murdoch wasn't kidding when he said that his properties would start charging for all online content.The WSJ has placed at least three different ads seeking executive-level editors for "a new business Web site." One of Murdoch's ads reads:
This is a rare opportunity to help shape a new site that will break ground in the paid-content arena.
The question is whether this paid-content strategy will help News Corp. and other struggling publishers recapture revenue and profits, or whether it's an ill-conceived and anachronistic approach concocted by a septuagenarian tyrant who was never terribly good at running a news business to begin with.
I vote for the latter. The problem with the newspaper industry isn't that free online content has destroyed its business model, but rather that the Internet has exposed and exacerbated its inherent weaknesses.
Newspapers are still run like 19th century businesses (never mind the 20th century), particularly on the newsroom side of the operations, making little or no use of technology to improve efficiencies.
Meanwhile, claiming that readers of hard copies pay for content is disingenuous. What readers pay for is the convenience of delivery (either to their homes or to the newsstand) and the cost of paper and ink for each individual paper. Advertisers pay for the content - and always have. Readers shouldn't have to pay for online content because there's no incremental additional cost associated with their usage of that content -- the "copy" they read online doesn't cost the publisher an extra cent to produce.
The problem isn't free content -- although one problem is certainly poor strategy on the ad sales side, which has accustomed advertisers to getting online ad placements as giveaways in exchange for placements in the print periodicals. Little wonder that advertisers don't value online placements when the people selling it don't value it either.
To those who would argue that Murdoch made his fortune as a newspaper publisher, I'd have to agree with the New York Times' assessment that despite his attachment to the role of press baron, Murdoch isn't very good at that part of the business.
Murdoch… faces a depressing reality: his lifelong fondness for newspapers has become a significant drag on the fortunes of his company, the News Corporation. The company recently took $8.4 billion in write-downs, including $3 billion on its newspaper unit, which includes The Journal's publisher, Dow Jones & Company.
It's not that, to quote a much-maligned dictum, information wants to be free, but rather that information has always been free. The trick in the Internet age is to provide advertisers, not readers, with services they're willing to pay for.
I'm reminded of a story from the first years that Murdoch bought the New York Post. The story goes that he brought a group of his core local advertisers -- Alexander's department store, Crazy Eddie's electronics retailer, etc. -- for a meeting, and complained that they weren't buying enough ad inventory, considering that the Post was beginning to outpace circulation figures of rival tabloid The Daily News. To which one of his advertisers was said to have responded, "Mr. Murdoch, with all due respect, your readers are our shoplifters."
Murdoch and his ilk need to start convincing advertisers that their readers are more than shoplifters, rather than trying to pick the pockets of those selfsame readers.