The notion of charging the public for digital access to news is gaining support, writes DAWN CHMIELEWSKI
AS NEWSPAPERS struggle with declining readership and advertising revenue, executives at Rupert Murdoch’s News Corporation have been meeting in recent weeks with publishers about forming a consortium that would charge for news distributed online and on portable devices – and potentially stem the rising tide of losses in the newspaper business.
Chief digital officer Jonathan Miller has positioned News Corp as a logical leader in the effort to start collecting fees from online readers because of its success with The Wall Street Journal Online, which boasts more than a million paying subscribers. He is believed to have met such major newspaper publishers as The New York Times, The Washington Post, Hearstand the Tribune, publisher of the Los Angeles Times.
“The reality is that unless a lot of people who produce news act in unison to start charging for content, then individually they will fail,” said Alan D Mutter, a former newspaper columnist and editor and a consultant on new media ventures.
News Corp’s solution is the latest proposal for publishers seeking to wring money from internet readers in order to offset double-digit drops in print and online revenue. Steve Brill’s Journalism Online initiative garnered wide attention this spring when it announced plans to create the tools to allow publishers to collect fees for digital distribution, and recently announced that more than 500 newspapers had joined.
The notion of charging for digital access to news, either online or on devices, has been gathering momentum since news agency the Associated Press’s annual meeting in San Diego in April. William Dean Singleton, chairman of AP and chief executive of MediaNews Group, railed against what he called the “misappropriation” of news on the internet – a reference widely interpreted as a swipe at search giant Google.
“We can no longer stand by and watch others walk off with our work under misguided legal theories,” he said. “We are mad as hell, and we are not going to take it anymore.”
Wall Street Journal editor Robert Thomson added to the invective, saying news aggregators such as Google, which profit from teaching internet readers that content should be free, are “parasites or tech tapeworms in the intestines of the internet”.
The hot rhetoric has gradually given way, however, to a more cold-eyed assessment of how to make money from the digital distribution of news. Rupert Murdoch told investors this month he hoped to “build significant revenues from the digital delivery”. News Corp is among the world’s largest newspaper publishers, as the owner of the New York Post, the Times of London, and nearly two dozen papers in Australia.
Industrywide, ad revenue plummeted 28 per cent in the first quarter of 2009, according to the non-profit Newspaper Association of America.
Researchers such as the Pew Research Center’s Project for Excellence in Journalism say half of that decline can be blamed on the poor economy. The rest can be attributed to structural changes buffeting the industry, as readers and advertisers go online. Although newspapers had made major strides in building online readership, the revenue hasn’t followed.
Internet ads account for just 12 per cent of a newspaper’s revenue, according to the association. Analysts are sceptical that any efforts to collect online subscription fees, or even small payments for individual articles, will amount to a significant new source of cash for newspaper publishers. Specialised financial publications, such as the Wall Street Journal and the Financial Times, have succeeded because they provide access to information which traders need to make money. It’s not clear that there’s any willingness to pay for more general information.
Mutter said efforts to erect “pay walls” around news stories were doomed to fail. Instead, he said, a consortium such as the one News Corp is proposing could create a single online registration for readers to use across all news sites and track the stories each person reads. When married with geographic and demographic data, this anonymous reader information would be valuable to advertisers seeking to reach a particular consumer.
Murdoch has been in search of a solution to the industry’s broken business model.
The search has led to meetings with representatives of ventures such as Journalism Online, as well as makers of e-readers, and portable devices whose screens simulate the appearance of ink on paper.
As with other newspaper publishers, Murdoch has been frustrated with Amazon.com’s e-reader, the Kindle, in part because of the unfavourable terms offered by the online bookseller, which keeps 70 per cent of the revenue from digital subscriptions and owns the relationship with the reader. He has been interested in finding a way to distribute news to multiple devices.