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Newspapers Must Charge For Online Content

April 5, 2009

News Corp. chairman Rupert Murdoch said U.S. newspapers need to begin charging for online content if they wish to survive.

Murdoch, whose media company owns one of the few papers that charges customers to read its news on the Internet, said online advertising revenue, which many publishers hope will offset ad revenue declines from their print operations, will not cover costs.

In 2007, Murdoch acquired The Wall Street Journal, which had been charging for online access years before, and its parent company Dow Jones & Co.   Other newspapers in Murdoch’s media empire include the Times of London, the New York Post and other papers in Australia and Britain, which are available online for free.

“People reading news for free on the Web, that’s got to change,” said Murdoch, speaking in Washington D.C. at The Cable Show, an annual cable television industry event.

Murdoch cited The New York Times, the Journal’s chief U.S. rival, as one example.  Although The Times has one of the most popular newspaper Web sites in the U.S., it still cannot cover its costs with online advertising, he said.

Murdoch’s remarks coincides with the Times’ semi-public debate about whether it should reconsider charging readers for access to some or all of its online content.  It canceled an earlier initiative, known as “TimesSelect”, that charged for columnists and other content because the paper made more money from ads.

The Journal charges its readers for access to its Web site, something Murdoch said was “not a gold mine, but it’s not bad”.

When he first bought the paper, executives at News Corp. and Dow Jones looked at making the site available for free, but ultimately decided to keep charging for most, but not all, of its content.

Amid shrinking growth in online ad revenue, publishers are rethinking whether charging for access would generate revenue, or whether readers would merely stop visiting their Web sites altogether.

The clock is ticking, with some U.S. publishers, such as Tribune Co., having already filed for bankruptcy.  Others, such as EW Scripps Co. and Hearst Corp., have been discontinuing their big city daily publications.  Meanwhile, still others are furloughing employees, reducing pay and laying off or buying out off thousands of staff.

However, publishers are still seeking ways to attract more readers.

For instance, Murdoch told Cable Show attendees that his firm is investing with partners in a new portable device that would offer readers electronic versions of their daily newspapers. The company is also investing in a device similar to Amazon’s Kindle and Sony’s Reader, but with a larger screen better suited for reading newspapers, Murdoch said.

Other publications, such as USA Today and the Financial Times, are partnering with a California-based company called Plastic Logic on newspaper reading device set to launch early next year. 

Murdoch also addressed publishers’ concerns that Internet search firms such as Google and Yahoo, which help users find news stories by gathering links to newspaper Web sites, are extracting ad revenue that publishers say should go to the papers themselves.

“The question is, should we be allowing Google to steal all our copyright… not steal, but take,” a Reuters report quoted Murdoch as saying.
 ”Not just them but Yahoo.”

Google CEO Eric Schmidt is expected to discuss the matter at the upcoming annual conference of the Newspaper Association of America next week in San Diego.

Separately, Murdoch said he remains “slightly pessimistic” about the economy, and does not envision things returning to previous levels for another two to three years.

In addition to hurting its newspaper businesses, the recession has contributed to a drop in ad revenue at News Corp’s U.S. local television business as well.

Murdoch also spoke about the financial industry’s role in triggering the current economic crisis.  Although there have been some executive excesses, he said, the federal government should go easy on regulation.

“We need to get an SEC that’s awake and maybe a few more regulations but not too many,” he told the Reuters.

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