Is Rupert Shooting Himself in the Foot?

Rupert Murdoch’s announcement that News Ltd will start charging consumers for online news is a bold strategy – but will it work? There is no doubting that the traditional media outlets are hurting, and they are hurting bad: profits falling, circulations falling and staff getting the chop. Things are so bad Fairfax Chief Executive Brian McCarthy has even floated the idea of holding talks with rivals News Ltd to “join forces” to charge for news online
(http://www.theaustralian.news.com.au/business/story/0,28124,25975971-643,00.html).

The news organisations are partly to blame for this great calamity - years ago when the internet was in its infancy, the newspapers thought, hey! let’s start putting our content online for free, surely that would never affect our circulation.

So is charging users access to online news content the great saviour for the media outlets?

I think that there are three BIG problems that need to be solved here:

1. Users HATE paying for content that they can get for free elsewhere such as ABC Online.


2. As soon as they start charging for content, page impressions are going to fall, causing a drop in advertising.


3. When they start charging – will they still run advertisements?
   

So here are some of the solutions that I thought would be worth considering:

1. Offer a premium service for content, i.e. no ads, faster access, premium content such as video. The existing service stays, but with ads.


2. Data costs money, specifically if you are using a phone to access the site. Consider striking a deal with the major telco networks (such as Telstra), that will give paying users unlimited downloads from the news site. If you can convince users that they are already “paying” for accessing the site through download charges, and transfer this cost – the user won’t end up paying any more for it.


3. If they are still running a free service, consider some kind of user registration process (this may be basic). As part of this process, get some basic demographic details – details that will help advertisers target their audience more effectively (Facebook for example does this quite effectively). The current way banner advertising works is a very shotgun approach - advertisers can be charged more for less impressions if they know their ads are hitting their target audience.
   

This is BIG wakeup call for the rest of the media industry (especially the broadcast media) – so they should start making plans now, because the internet in 5-6 years is going to erode your market share.