Opinion: Rupert Murdoch's biggest battle yet may be a fatal one

Given his age, this might be his last battle. But, man, is it a huge one.

Rupert Murdoch, one of the top newspaper publishers of all time and majority owner of News Corporation, is planning to take on the Internet in order to save his business. He isn't taking on the Internet per se, but the notion of freely available news. The Globe & Mail picks up an Associated Press story:

Mr. Murdoch told analysts late Wednesday that the company plans to start charging at all of the company's news websites. It wasn't immediately clear whether News Corp.'s broadcast Web sites would be included; spokeswoman Teri Everett had no further details Thursday.

Among News Corp.'s stable of dailies is The New York Post, The Times of London and The Sun, a popular British tabloid. News Corp. already charges for some access to The Wall Street Journal's Web site. It also owns the social-networking site, MySpace.

The idea of charging online is a reversal for Mr. Murdoch, who talked about throwing open the Journal's paid site when his company took over the newspaper in 2008.

...

“The Wall Street Journal's WSJ.com is the world's most successful paid news site,” he said, “We will be using our profitable experience there and the resulting unique skills throughout News Corporation to increase our revenues from all our content.”

Asked how News Corp. will keep readers from simply jumping to free sources of news, he said, “I believe that if we are successful, we will be followed by other media.”

The CEO of New York Times has indicated that she wants to try charging for news as well. So have a few other major newspapers in America.

This is going to be a really battle and odds are stacked against Murdoch. My feeling is that this is going to be one of his few losses in his life—but it may be fatal.

A lot of people keep pointing to the pay-only (for the most part) structure of The Wall Street Journal but I don't believe that model is applicable elsewhere. As far as I'm concerned, the reason the WSJ makes money even with a pay-only publication is because most of its readers don't pay for it directly. A lot of the WSJ subscriptions are paid by businesses and that cost is expensed. The same doesn't apply to the vast majority of newspapers and magazines where the end-user pays for it directly and cannot expense it on their tax filing. There are a few other publications that are highly profitable while being pay-only and those, again, are similar to the WSJ in that they cater to specialists (doctors, lawyers, scientists, etc) who do not pay for it directly and, is, rather expensed by their employer.

Even if one gets quite a number of paid subscribers, newspapers will still struggle. Depending on the paper and the market they served, they made as much money on classified and certain types of advertising (that only they had). With the Internet, that's not the case. They have permanently lost their classifieds, whether it is selling cars or used goods or home rentals, to Internet companies such as Ebay, Craigslist, Google Maps, Edmunds.com, and so on. Advertisers, who used to value the ability to localize ads in newspapers, get even more benefits on the Internet. Not only can you advertise to someone in Toronto using the Internet, you can choose to advertise to Torontonians who watch movies (by targetting visitors to movie websites.) Some of the advanced platforms available from Google, Facebook, and others, may even allow you to pick off the age group (won't be perfect but better than sticking an ad in a Toronto newspaper and hoping your target demographic catches it.)


Although I'm not a fan of Murdoch and his conservative publications but I wish him luck—he will save liberal media as well, if he is successful. I gave up my pursuit of newspapers (as an investment) after coming to the conclusion that the business characteristics have changed. When Warren Buffett said that he wouldn't invest in newspapers at almost any price, that sealed the fate and I stopped pursuing them completely. The industry will survive in some form but it will be really tough for everyone involved. I just hope that the quality of journalism is somewho maintained in the online world.