Rupert’s pathetic pay wall

March 26, 2010 by Jeff Jarvis

I mince no words in a post I wrote for the Guardian on Murdoch’s announcement that the pay wall is finally going up around the Times and Sunday Times of London. The discussion at the Guardian is already lively; please go there to join in.*

* * *

Rupert Murdoch has declared surrender. The future defeated him.

By building his paywall around Times Newspapers, he has said that he has no new ideas to build advertising. He has no new ideas to build deeper and more valuable relationships with readers and will send them away if they do not pay. Even he has no new ideas to find the efficiencies the internet can bring in content creation, marketing, and delivery.

Instead, Murdoch will milk his cash cow a pound at a time, leaving his children with a dry, dead beast, the remains of his once proud if not great newspaper empire.

I used to work for Murdoch at his American magazine TV Guide. I respected his balls. It is a pity to see them gone.

According to his biographer, Michael Wolff, Murdoch has not used the internet, let alone Google (he only recently discovered email) and so he cannot possibly understand the dynamics, demands, and opportunities of our post-industrial, now-digital media economy. I use the internet and teach it and write about it and I still can’t grasp the complete implication of the change. I don’t think even Google can.

So to try to transpose old business models to this new business reality is simply insane. Just because people used to pay in print they should pay now—when the half-life of a scoop’s value is a click, when good-enough news that’s free is also a click away, when the new newsstand of Google and Twitter demands that you stay in the open, searchable and linkable? This argument I hear about pay walls comes from emotional entitlement (readers should pay—when did you ever see a business plan built on the verb should?), not hard economics.

The hard truth is that news organizations will shrink or die. No longer monopolies or oligopolies, the barrier to entry to their kingdom and business reduced to an inch, they simply cannot maintain their old scale, the size and margins that the City demanded. A new ecosystem of news, made up of countless smaller players operating under varying means, motives, and business models, will undercut the big, old institutions. The hard iron that once was their advantage—the presses and trucks—now become a killing weight around their craggy necks.

But in Murdoch’s folly, I see opportunity. As a Guardian writer, I should rejoice at the added readers and influence we will get (though all these challenges are ours, too). As a teacher of entrepreneurial journalism at the City University of New York, I see openings for my students to compete with the dying relics by starting highly targeted, ruthlessly relevant new news businesses at incredibly low cost and low risk. My students understand the new media reality that has scared the once-indomitable Murdoch. They are, as he himself put it, digital natives.

Murdoch is a stranger in a strange land. All he has left to do is build a wall around himself and shrink away, a vestige of his old, bold self. Who would have thought that we’d end up feeling pity for the man? It’s almost enough to make me want to throw him a few quid. On second thoughts….

*[Didn't mean to have comments also turned off here; they're on now.]

  • Stan Hogan

    Murdoch finally recognized the folly of a strategy that had no sustainable business model. He decided to stop milking his cash cow to sate the thirst of people like Jarvis.

    If the rest will follow, value will again be recognized and foolish strategies imagined by people plying themselves as visionaries will be left for they alone to pursue. And good luck with that.

    • mishari

      He (Rupert Murdoch) is not reporting on himself because even less than most news outlets, Murdoch outlets have no objective sense when it comes to their own interests (or the boss’s interests), or willingness to ask questions which the boss might find uncomfortable, or penchant for anything but the party line. The news from News Corp. is always snarlingly good—even when it is very bad.

      My sources say that not only is nobody subscribing to the website, but subscribers to the paper itself—who have free access to the site—are not going beyond the registration page. It’s an empty world.

      The wider implications of this emptiness are only just starting to become clear. A Murdoch and Fleet Street veteran with whom I’ve been corresponding about the paywall reported to me on his recent conversation with an A-list entertainment publicist: “What was really interesting to me was that this person volunteered a blinding realization. ‘Why would I get any of my clients to talk to the Times or the Sunday Times if they are behind a paywall? Who can see it? I can’t even share a link and they aren’t on search. It’s as though their writers don’t exist anymore.’” -Michael Wolff on newser.com, July 14

      You’re analytical skills appear to be on a par with Murdoch’s, Stan, Good luck with that…

  • Andy Freeman

    > The hard truth is that news organizations will shrink or die. No longer monopolies or oligopolies, the barrier to entry to their kingdom and business reduced to an inch, they simply cannot maintain their old scale, the size and margins that the City demanded.

    SOME news organizations will shrink or die but the future of news as a whole is still unclear.

    I wouldn’t be surprised if there were more people making a living as journalists in 5-10 years than there are today.

    That said, the market for commentators and folks who rewrite press releases is going to be brutal. Since they’re not really journalists and the latter were giving journalists a bad name ….

    Good, valuable, unique is the key and good is the least important of the three. Valuable without unique forces you to fight with your customers. Unique without valuable means that no one cares. If you’re valuable and unique, “not good” is really just “could be better”, and that’s always true.

  • http://www.retailsmart.com.au Dennis

    Jeff
    I am long time lurker – rarely comment. But it should be fair to say that every organisation (commercial entity) MUST have a paywall of some sorts. It is just where it is built that is salient.

    Rupert should build his around the core business of collecting news and not include the paper (distribution platform) and the platform should procure news form the core.

    You can gather that I don’t think citizen journalism will ever replace (only compliment) professional journalism.

    The paper – any paper – any platform – can then buy the journalistic product from the core.

    Rupert is right that the internet feeds off their capabilities, but I obviously disagree with his response. If you can imagine a world without professional journalism, then we would be swimming in a very shallow cesspool of opinion indeed, so there is intrinsic value that I for one am prepared to pay for.

  • http://www.edwalker.net/blog Ed Walker

    I can see some sense in the News International plan, would you rather have 100,000 unique visitors or 40,000 unique visitors, paying, and you know who they are (it looks like NI will have a decent CRM system behind the paywall) so can build targeted products for them.

    If I’m paying £2 a week and The Times knows what I like, and where I live, then when a new product launches or relevant news/feature/one-off special comes – they can ping me an email, let me know and I’m happy. I might even pay extra on top of my £2 if the product offering is right e.g. signing up for premium election coverage or live updates of Formula One for example.

    It would also create a better market for advertisers. Yes they might not reach the same number of people, but at least they know who they are getting – not 10% of them being Russian nationals when they are trying to reach the British market.

    Yes, they will lose traffic from people hitting the site and turning away – but how many will stay and will pay? I await the first figures with interest and I don’t think it will be as disastrous as some people think it will be.

    • James Fernie

      Ed – NI don’t have to charge you the £2 a week in order to get your details in order to tailor content to you…all you need to do is register. Users are more than happy to register in order to get content for free. This is a proven model. The paywall ought to be a registration wall, forcing users to complete a profile in order to get to the content and make the advertisers pay a premium for tailoring ads based on profile information. It makes ad money go further and offers unprecedented customer profiling and keeps advertisers spending. This pays for proper, professional journalism and at the same time, encourages non-professional (but equally relevant / engaging) contribution which adds value to the content in turn.

      Anyone who honestly believes that the paywall will bring in more sustainable income via a very small percentage of the previous audience, than by keeping content free and providing better reasons for advertisers to advertise is living in the past. Just like Murdoch.

    • Peter

      Ed, I’m sure you just used numbers for illustrative purposes, but I would be massively surprised if they’re traffic only decreases 60%.

      Has anyone got insight onto what they may be able to expect traffic-wise?

  • http://josephstashko.com Joseph Stashko

    I largely agree with what Ed has said above.

    I read the Guardian, it’s hands down my favourite newspaper. I’ve occasionally fallen out of love with it, but have always returned in the end.

    What I can’t get to grips with is the smug nature and smirking of many at Guardian HQ over Murdoch’s paywalls. Emily Bell and co. proudly stating that the Guardian will never set up paywalls, because it’s not in their ethos. All this from a paper that at one point, was losing £100,000 a day!

    Murdoch’s may be a dinosaur, and he may not understand the internet like some “web gurus”. But at least he’s giving it a go, which is more than can be said for any of his competitors. On that level, he has to be admired.

  • http://www.culturahq.com Jason Lorimer

    I think the answer on pay wall vs. community monetization isn’t so much a right or wrong one. The problem is that Murdoch and his team are sitting around a conference room trying to sort it out amongst themselves.

    Why not come to the readership and say: Listen, we love creating this content for you and we know you love consuming it. We can’t do it for free and people aren’t buying newspapers anymore.

    We’ve come up with a few ideas and here they are. Please send us your feedback on these and suggestions of your own. We’re all ears.

    Companies in other industries would kill for the loyal advocacy that some of these media brands have. Create community around content and try different things to monetize. Just be open about it. People will tell you if you ask them.

  • http://ianmrountree.com Ian M Rountree

    “Slam a wall in front of it” has never been a business plan. As with any service, success lies in not just real value, but the perception of value. Even the term “pay wall” itself limits any possibility of perception of value.

    It’s a silly move, likely to earn poor Mr Murdoch a few nominations to the business equivalent of the Darwin Awards – unless he can convince people there’s a secret prize behind the wall. It’s a Monty Hall scenario.

  • Perry Gaskill

    Combine the Times’ paywall with the announcement this week that The Wall Street Journal intends to charge twice as much for the iPad edition as the paper one, and I can’t help but be reminded of the old Hunter S. Thompson line that when the going gets weird, the weird turn pro.

    @Dennis – “If you can imagine a world without professional journalism, then we would be swimming in a very shallow cesspool of opinion indeed, so there is intrinsic value that I for one am prepared to pay for.”

    Well said, sir. Still, a recent study by ITZ/Belden indicates that there’s a huge perceptual gap between publishers and readers in terms of who will pay and how much; roughly half of readers say they will pay, but only at a level of less than $5 per month. Given the addition of, for example, customer service issues and transactional costs, it makes you wonder if a paywall is worth the effort, particularly in light of the fact that 80 percent of a paper’s revenue has traditionally come from advertising with rates keyed to readership.

    @Andy Freeman – “Good, valuable, unique is the key and good is the least important of the three. Valuable without unique forces you to fight with your customers. Unique without valuable means that no one cares. If you’re valuable and unique, “not good” is really just “could be better”, and that’s always true.”

    Point taken, but I wouldn’t discount too much the “good” part in the old-fashioned sense of the well-told tale. It also seems to me that your good, valuable, unique paradigm relates, at least in part, to some ideas brought out at an SXSW panel last week on the notion of putting stories in context. And some of that goes back to a piece panelist Matt Thompson did not long ago on The 3 key parts of news stories you usually don’t get. These include how we know what we know, deeper background, and what we don’t know.

    As things stand, it seems evident that the journalism side of the news business equation is better prepared to bail itself out of its current jam than the business side which is pretty much freaking out. A situation which is understandable if you consider the following factoids: 1) Google’s ad revenue is now roughly equal to all U.S. newspaper ad revenue combined, with 1500 daily newspapers alone, and 2) Anecdotal evidence has it that about 30 percent of advertising for all media has evaporated because companies have shifted marketing spend into direct-to-consumer things such as social media.

    The main problem with Murdoch’s paywalls isn’t just whether or not they’re bad, which they probably are, it’s that they tend to be a distraction from what should be more critical priorities.

  • http://brandireland.wordpress.com/ Stiofain MacDhaibhead

    Here in Ireland the Irish Times operated a pay wall for some time but were forced to remove it because traffic was being diverted towards competitors who didn’t have a pay wall.

    At the end of the day these newspapers are businesses, they exist to pull in revenue (and lots of it) as oppossed to offering us quality journalism. Surely they should be concentrating their efforts on quirkier forms of advertising through the online newspaper, if the product is free the number of visitors are up making it a more attractive proposition to advertisers.

    Newspaper circulation is not only falling simply because of subscription-free newspaper websites, its also the victim of the age we live in. The public are bombarded with news from an array of sources from smart phones to social media. Newspapers are becoming less relevant in our lives.

  • Eric Gauvin

    @Freeman: If “good, valuable and unique” had anything to do with the news media business we wouldn’t be in this mess. I hardly think consumers are that discriminating. It remains to be seen if consumers will pay for news. I believe they will in part because a price tag is associated with value.

    @Jarvis: it’s interesting that you bash monopolies, yet look at the internet. It has only a few big players. For example, craigslist could easily have competitors (I would say it NEEDS some), but it’s nearly impossible for a lot of reasons unique to the internet. I would say craigslist has a monopoly. As for news on the internet, I could easily envision a world with a small handful of “newspapers.” For example, once we move to a paid model, which I’m confident will eventually happen, The Hartford Courant will go away and be replaced with a lively stew of free local alternatives (the kinds of things you tout), but the NY Times’ influence, strength, reach and credibility will only increase.

    Also, where’s “the link economy” in all this? Did you finally abandon that flakey theory? Seems like it would be extremely relevant to this topic.

  • Andy Freeman

    > Point taken, but I wouldn’t discount too much the “good” part in the old-fashioned sense of the well-told tale.

    My description was incomplete. I was commenting only on what it takes to get paid. Good isn’t required, but valuable and unique are. If you have other goals, good may be required.

  • Andy Freeman

    > @Freeman: If “good, valuable and unique” had anything to do with the news media business we wouldn’t be in this mess.

    Really? You think that the news biz has been producing good, valuable, and unique? Reprinting and rewriting AP is not “unique”.

    > I hardly think consumers are that discriminating.

    Their lack of discrimination is why unique is important. If I can get the same thing from a free source, I’m not going to pay you. Lack of discrimination makes unique harder.

    > It remains to be seen if consumers will pay for news. I believe they will in part because a price tag is associated with value.

    We’ll find out how many folks will pay when they can get the same for free. Remember, they don’t discriminate, so “same” is pretty broad.
    Also, Craigslist proved that news as previously practiced has relatively little value.

    News as a Velben good is another idea…

  • http://eplixo.com Gerard Brandon

    There is an avenue that is likely to be potentially valuable if they looked outside the box a little more. For instance the iPhone has pretty much created a commodity of the mobile carrier as all the iPhone applications are customers of Apple and not AT&T or other carriers who provide the phones.

    There is also a major problem facing mobile carriers who are seeing ARPU eroding to the likes of Apple and this is why they too are trying (hopelessly) to create their own proprietary application stores.

    Now if the local providers work with the likes of NI and other local news providers they could perhaps undertake a revenue share with the carriers for access to premium services that are provided through the carriers and not through the likes of Google.

    This has already been initiated with the Wall Street Journal placing a premium on a very restricted access. (i.e. if you want it on your iPad then you pay more). This has only been done because the business model of Apple is create an Access (Pay) wall around the source of the content through that channel.

    • Andy Freeman

      WSJ is an example of “good, unique, valuable”.

      > Now if the local providers work with the likes of NI and other local news providers they could perhaps undertake a revenue share with the carriers for access to premium services that are provided through the carriers

      Most people hate premium bundles wrt cable tv, so what makes you think that this will be any different?

      > and not through the likes of Google.

      What do you mean by “through the likes of Google”? Google News shows content by permission. Why isn’t that a candidate for your “premium bundle”?

      I ask because many journalists seem to be under the mistaken impression that Google search shows content. It doesn’t; GS provides links to content. The reader doesn’t see the content unless he clicks said links. If he does, said reader goes to the site where the content is hosted, and that site is free to do whatever it wants to monetize said content.

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  • http://www.siliconvalleywatcher.com/ Tom Foremski

    Jeff, you run a program at City University studying new business models for news — yet you attack Rupert Murdoch for trying to create a new business model for news. I don’t get it.

    Having a paywall doesn’t mean you have no advertising, it doesn’t mean you have no new ideas. You can have both.

    Rupert Murdoch now has more to play with, he can experiment with creative paywall ideas and creative advertising. He can play around with what content goes behind the paywall and what is free.

    What Rupert Murdoch is doing is a fascinating media experiment. We need more of that kind of experimentation — not less.

    • Mortimer

      Slamming a paywall up and denying access to visitors who will then go elsewhere is “a fascinating media experiment” are you fucking insane

  • bustem

    “when good-enough news that’s free is also a click away”

    Yeah, um, not for long. But what would happen if all the good newspapers put up a paywall or go bankrupt.

    There is no question that people will pay for quality journalism. The key point is that no one is making money online–print revenues are subsidizing their online websites. If you have difficulty comprehending this, ask yourself where the revenues come from that pay the salaries of the journalists whose articles you read on NYT.com.

    And besides, if a shareholder is unhappy with Murdoch’s move, he can sell his shares. The Guardian is different–it’s owned by a nonprofit, not that it makes any profit in the first place.

    And what are these online ads everyone is talking about? I can’t see them–must be my adblocker extension…

    • Andy Freeman

      > But what would happen if all the good newspapers put up a paywall or go bankrupt.

      What makes you think that those are the only possibilities?

      > There is no question that people will pay for quality journalism.

      True, but the question is how much will they pay for it. Note that the hassles of a billing system are part of the costs that they pay, even though those hassles aren’t part of the revenue received.

      Revenue is decreasing in the off-line world, which suggests that they’re charging too much for what they deliver.

  • http://buzzbroz.com Ken Sheetz

    Rupert a smart guy but without firsthand knowledge of the web he also a blind guy. What I wonder is how much of kiss ass team he must have around him to let him pull such a blunder?

    I have a slide show up on our BuzzBroz.com website called ARE YOU READY FOR SMM? Rupert might want to have one his yes men play it for him.

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  • Tim Leon

    I think the benefits to users of a free and open model with low barriers to entry are obvious. One of the resulting problems, however, is that the internet has become inundated with a ton of garbage and I for one am getting tired of having to sift through it all to find information that has some value. If there was a source that provided information that was consistently and reliably of higher value and it wasn’t too expensive I think I would be willing to pay for it. I’m just sayin’.

    By the way, I love “This Week In Google” and I think you and Gina are top notch!

  • http://www.sentril.com f. garza

    I think Murdoch doesn’t understand advertising in the digital age is because he doesn’t understand it. I would almost guarantee he probably doesn’t even use a computer so how can he grasp a medium if he is not comfortable with it.

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  • Holt Street

    It’s a long time since I worked in Britain, but back in Australia, where Murdoch plans to introduce his paywall, you don’t need to be Nostradamus to see a huge flop in the making.

    Why?

    Well, start with the notion that Murdoch papers produce ANYTHING worth paying for. That’s not a political opinion (I happen to be a libertarian conservative, so Murdoch’s politics don’t rub me the wrong way all that much), it’s a statement of fact. He has one “quality” paper, The Australian, which sells only 120,000 a day nationwide. A five percent paying slice of that is, well, not worth the cost of reprogramming his site.

    As for his other papers, they’re rags — and they have been pursuing a deliberate policy of becoming even greater rags over the past two years. Their content is tawdry, trite and, worst of all, increasingly produced by a centralised system that feeds material to local editions of what are, essentially, the same paper. Australia has its regional passions, like anywhere else, and a paper produced for brisbane needs to reflect brisbane, not serve as a cookie-cutter vehicle for editorial content amortised and distributed throughout the whole group. Meanwhile, local newsrooms are b eing winnowed of seasoned staff and worthwhile stories, further alienating those papers from their (former) audiences.

    The Hearst empire withered gradually and died slowly. Murdoch’s colossus, encouraged by the boss’s bad decisions and his army of yes men, will tumble much faster. It will be fun to watch.

    • Holt Street level 5

      “As for his other papers, they’re rags — and they have been pursuing a deliberate policy of becoming even greater rags over the past two years”. …what a nonsense, the papers are selling better than either their US or the UK cousins, this elistist crap is so 2009, lots of people buy them, read them and are happy with them…and each state paper is different form the others…do you actually read any of them?

      • Holt Street

        I read the Courier Mail when I can get it free with a Big Mac. There is a lot more substance in the burger.

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  • Christophe

    Same shit in Belgium … http://goo.gl/PG99

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  • Brandon Landon

    Eric Gauvin – “I could easily envision a world with a small handful of “newspapers. For example, once we move to a paid model, which I’m confident will eventually happen, The Hartford Courant will go away and be replaced with a lively stew of free local alternatives ”

    Did you read this before you sent it??? You’re a walking contradiction….

  • http://readg.blogspot.com Will Pollard

    The Guardian/Observer seems quite Rupert friendly at the moment. Peter Preston thinks a paywall might work. Monday saw Facebook as the real enemy.

    Why not some space in UK print for Jeff Jarvis at this critical time? seems sadly reduced from last year.

  • antony sutton

    I largely agree with Ed Walker.

    My concern is that internet news by others outside of professional journalism is generally ill informed and sparing on verifiable facts. One could level this argument at some of the appalling professional journalism around theses days of course (the BBC news programs spring immediately to mind), but it is more widespread and insidious on the web. Just because 10,000 ill informed people say something is so on twitter, does not make it true.

    I’d like facts reported please, not gossip or opinion and for that I’d pay £10 per month!

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  • http://patrickseabird.blogspot.com Patrick Seabird

    Thank you for your thougths. I’m also surprised, that a man that built up such an empire now neglects to even try to use new business modells and rather tries to survive with climbing behind a big wall.
    I also wrote about one possible business modell for internet newspapers (in german. You can read it for free ;-) in my blog!) by just taking a look at successfull internet companies like Amazon or Google. And if I can do that, why can’t Murdoch. Or why doesn’t he want to?

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  • http://nigelburke.com Nigel Burke

    Murdoch is behind with the times. He needs to get in touch with reality but he also needs to figure out how his business empire is going to survive in the future. It seems online advertising dollars is not pulling in enough money. Even when the new.com.au website is turned into one large ad.

  • ThinkBiggerPlease

    You’re missing the point. Freeing publishers from an advertising dependent financial model means they can design sites around the people who want to read them rather than continually compromising usability and readability to service advertisers and search engines. Just looking around some of the features on the http://www.thesundaytimes.co.uk highlights some fantastic examples of just that – look at the photo galleries for example and compare them to those built around driving ad clicks. Ultimately it’s up to us – pay for the kind of content you want, designed around you the reader, or pay by clicking, and clicking and clicking and clicking………

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  • http://www.geekchoice.com Dagmar Schneitz

    How come Rupert Murdoch isn’t in jail? After that scandal in England and people turning up dead? I’m just saying…