I have a great deal of respect for Rupert’s business acumen but I can’t help thinking that his desire to charge a subscription fee for accessing the content that is now provided free just won’t work.
Rupert Murdoch has flagged an aggressive push to start charging readers for News Corp’s newspapers online over the next year, seeking to put an end to the company’s profit erosion as advertising dollars shift to the internet.
“There is no doubt that the traditional newspaper model has to change, even though the present situation I think has been greatly exaggerated by the current recession,” Mr Murdoch told analysts on a conference call this morning, announcing a 97% earnings slump at News Corp’s newspapers and information services for the third quarter.
“Classified revenues are undoubtedly migrating to the web, probably not to return.”
The reason I think that this plan will fail is simply because there are just too many alternatives that will continue to be available for free and that he is approaching the desire to counteract the decline in newspaper revenues the wrong way. Perhaps what he should be seeking is a way to make online advertising more profitable. I suspect that part of the problem is the nature of online content, the fact that it can be viewed everywhere on the planet so although advertising copy will be seen my many the advertising can not be very well targeted in terms of the geography; no one wants to buy a product from a supplier on the other side of the planet.
Maybe the real solution for advertising on the net is to develop a way to make it more location specific but then it would be more something sold by service providers rather than content makers, Hmm maybe Rupert has missed the boat after all.