Posted by: William Perrin | June 2, 2009

Paying for news online – Rupert in the sky with diamonds

As advertising revenue trickles away, a revenue model for newspapers online is elusive.  Rupert Murdoch has apparently suggested that his prime properties move towards a pay model.

“That it is possible to charge for content on the web is obvious from the Wall Street Journal’s experience,” he said.

Asked whether he envisaged fees at his British papers such as the Times, the Sunday Times, the Sun and the News of the World, he replied: “We’re absolutely looking at that.” Taking questions on a conference call with reporters and analysts, he said that moves could begin “within the next 12 months‚” adding: “The current days of the internet will soon be over.”

In the traditional newspaper market people buy papers one at a time in payments of a few pence.  The best brains of the internet world have puzzled over micropayments. Micropayments just haven’t taken off on the web – the overhead is too high for vendors and people show little appetite for making small payments for things on a daily basis.  Subscriptions haven’t gone too well either, only the FT holding out in the UK.

I haven’t followed the debate very closely, so someone may already have suggested this, but is the internet the right place to look for a payment model?  Does that old chestnut, convergence have the answer?  Rupert Murdoch has a payments engine and an installed base of tens of millions of users all of whom pay him some £20 or more a month.  But this payment engine isn’t ‘online’ – it is the Sky TV platform, DirecTV in the USA.

Is it possible for Murdoch to leverage this installed base by bundling News International premium content with a TV subscription?

If Sky say puts the basic charge for Sky TV up by £1 a month over a year for  nine million subscribers in the UK then the numbers start to get interesting. For this extra pound, Sky subscribers could have access to premium content in the whole NI suite of newspapers – the News of the World, The Times, the Sunday Times etc.  Bundling is well established in the TV market, but less common in print media. The BSkyB platform is a large scale, robust billing system.  Web technologies could easily tie it up with a federated identity management solution across the NI estate.  The Sky contact centres etc must have spare capacity as the recession limits new subscribers to TV.

Making a connection between buying TV and internet news services will be tricky in some people’s minds.  There is premium news content out there that could persuade people to make the leap between media – in this case root around for your Sky account number or identity and enter it into a News International website.  At least once every couple of months there are pics of something so scandalous in the News of the World that I buy it against all my middle class prejudices (last time it was Max Moseley – who is innocent BTW).  Every now and then I even buy The Times for its front page.

A Sky subscription model means you would only have to do it once and they quietly bill you for ever, relying on inertia to stop you un-subscribing –  it’s only a quid and there is a lot of News International stuff out there worth having.  This reduces the overhead of small payments.

Murdoch has used his media assets to relentlessly promote across platforms in the past – in the 1990s his papers were a barker channel for Sky TV (Private Eye for years ran a feature ‘I Sky’ on gratuitous cross promotion) So now they could reverse the trend and have the TV promoting the online news services – Sky News already promotes its website ad nauseam.

Of course such a model wouldn’t raise a theoretical £108m (£1 X 9m UK subscribers X 12 months) and even this would require massive restructuring in a traditional newspaper with its legacy overhead.   A restructuring as radical and bloody as the moves to modern production technologies in the 1980s.

Murdoch has taken radical steps in the past to secure the future of his businesses – the 1986 literal pitched battles with the unions at Wapping pre-date the web, .  Murdoch has shown imagination in new markets he bet the whole business on  launching Sky TV in 1989 and determination to stick it out when the establishment tells him he is doomed to fail.  Would he be prepared to bundle telly with text news content?  Do the economics stack up? Only time will tell.

Declaration – The views expressed here are in a personal capacity in the context of a project experimenting with the future of local news http://www.talkaboutlocal.org – The views here have nothing to do with my former employer, HM Government.

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