Rupert Murdoch's News Corporation has had a tough time making money this year, but Murdoch has a solution for the company's woes: online content protection and paywalls, which allow only paid subscribers to access certain content on a Web site.
News Corp yesterday reported its profits were down eight percent this year compared to fiscal year 2008. In a press release, Murdoch said 2009 was "the most difficult [year] in recent history" for the company. To slow the financial bleeding, Murdoch has decided that all of News Corp's newspaper sites will institute a paywall by next summer, according to the Guardian.
Echoing the sentiment "content isn't free," Murdoch yesterday told reporters during News Corp's earnings call that all of the company's newspaper properties would model their paywalls after the structure currently in place on The Wall Street Journal's Web site, according to tweets from Paid Content's Staci D Kramer.
The paywall at WSJ.com is often seen as the most successful model of its kind in the news business. The online version of the WSJ features a mix of freely available content, with certain premium articles--mostly financial news--available only to paid subscribers. Since News Corp owns many popular newspapers around the world, it's likely Murdoch's decision will have a ripple effect across the newspaper industry. The News Corp media empire contains some of the biggest newspaper properties in the world including The Wall Street Journal, The New York Post, as well as the U.K.-based papers The Times and News of the World.
Before Murdoch's statements, The New York Times was already thinking about reviving its own paywall--even though its previous paywall models were relatively unsuccessful. And in May of this year, newspaper executives from across the country met in Chicago to discuss the fate of their industry. The common theme at the meeting was that most newspapers would eventually start charging for some online content in an attempt to earn some money online, according to the Atlantic.
During the earnings call Murdoch also said that once News Corp properties start charging for content, the media company will move to aggressively protect its copyrighted content. The Associated Press recently announced a similar content-protection policy. The AP intends to use a piece of software to monitor where its news content appears online, and then attempt to charge money to third-party Web sites that overuse its content.
But will monetizing newspaper content work?
The problem with paywalls is that these models have been unsuccessful in the past. Many newspapers have done away with this system in recent years opting for ad-supported Web sites; however, Web advertising has not been able to make up for lost revenue from its physical newspaper product. So far, the only response newspapers can think of to stem the tide of lost dollars is to charge for their content.
But will customers be willing to pay for content they are used to getting for free? I think it's possible, but it depends on how much newspaper content ends up behind paywalls.
The other question is whether newspapers would allow the common trick of using Google to get around the WSJ paywall. When you want to read something on WSJ.com that's behind its paywall, all you have to do is copy the headline, plug it into Google and follow Google's link to read the complete article for free. The WSJ allows this loophole so it can grow its readership, and the paper probably hopes some of those free readers will subscribe in the future. Since Google helps to increase WSJ readership, the Google loophole is likely to remain in place and could become a trend at least for News Corp sites. But if that's the case, I wonder whether readers will be willing to fork over subscription fees, or whether the "Google washing" technique to keep on getting free content will become a common tactic among online readers.