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February 06, 2011

Rupert Murdoch's Paywall and the Goldilocks Price

Newspapers are dying, and they've been dying for quite a while although they've outlived several News 2.0 operations that predicted the demise of print. While the papers' problems didn't start with the Web, wags will tell you that the Web will be the straw that broke the camel's back. Every attempt to move online newspaper content behind a paywall (aka the subscription model) has failed. The most notable paywall failure was the New York Times, and you'd think they would have succeeded if anybody could.

The significant exception is with specialized publications; both the Wall Street Journal and the Economist have succeeded with paywall operations. Subscriptions have not worked well with general news outlets.

Here in Pittsburgh, we have PG Plus, which is a subscription-based paywall for added-value content - the newspaper is still available online, but the extra goodies cost about $4/month, and there's a sticky community dimension in that subscribers get to make comments.

Over in London, Rupert Murdoch announced his intention to move his News Corporation content behind a paywall. If you want to see The Daily, which is Murdoch's iPad-only iNewsPaper, you have to download the free App and then subscribe. It's pretty straightforward.

Murdoch is publishing The Daily's webpages onto the web so that Google will index them, but Murdoch is not presenting any homepage or index to his articles online.

The value of News is in its freshness. Breaking news is valuable. Outdated news is, well, "yesterday's news".

If you want Murdoch's news fast you have to subscribe, and if you want his news when it's aged you can find it on Google, which maintains his position in the pantheon of information sources. In other words: fresh will cost, and stale is free. And all is well in MurdochLand.

Except for Andy Baio, who realized that the content was online without any links leading to it. So Mr. Baio is publishing his own index to Murdoch's quasi-hidden content at Now you can open TheDailyIndexed in your browser and see links to all the content, which you'd otherwise have to subscribe to see.

This is being heralded as New Media Trumps Old Media, or David Beats Goliath 2.0, or Information Wants To Be Free 3.0. It strikes me that Murdoch can't be that stupid; he hasn't been so far.

I think Murdoch Inc. must be measuring leakage to determine subscription price points for The Daily. If the unauthorized access is too high, they've got something people will be willingly inconvenienced to read but the price is too steep; if the unauthorized access is too low, they're probably giving it away too cheaply. Somewhere along the spectrum, they'll calculate the Goldilocks Price, and it will be just right.

If that what Murdoch is doing, he's paving new ground. He's using Google and web metrics to establish market prices in the same way that people use EBay to determine prices.

If Murdoch puts his content on the street (on the web) and somebody picks it up, packages it, and manages access to it, is that wrong? Isn't that how Google works?

It's an interesting story in that we're seeing the middle state. The initial state was AOL and the NY Times. The middle state is Murdoch's foray. The end state, or at least the end-of-phase state, is yet to be seen.


MH said...

Every attempt to move online newspaper content behind a paywall (aka the subscription model) has failed.

That's doesn't seem right. The WSJ has been successfully selling $100 online subscriptions for years, since before Murdoch owned it. I don't know if that is enough to be called 'a success' because I don't know how much it takes to produce the content, but it worked much better than the NYT.

As you noted, people will pay for fresh news, which is what the WSJ keeps behind the paywall. The editorials and fluff are free. The NYT tried to paywall the editorials and I think that was part of the source of their failure.

Vannevar said...

Dear MH, Check my second paragraph, where I tried to tease out a very similar point to yours. Upon re-reading it, I could have worded that line you mentioned better -- Every attempt to move general newspaper content behind a paywall etc.

Thanks (as always) for the comment.

MH said...

Ooops. My eyes must have floated down to PG+. I feel vaguely guilty for not signing up. Like I didn't buy girl scout cookies or something.

Bram Reichbaum said...

I think the P-G would have more success if they marketed it more like membership to public television and radio. "Please, we need your money to survive. Don't be a freeloader. Join, and maybe we'll give you a coffee mug." Meanwhile, put all the innovative content online free for all (so you can really see what works!)

I'm not sure there IS a Goldilocks price point for most things. Taking a credit card out of your wallet, filling out a long page, thinking up a new User ID and password, and converting an e-mail confirmation is all an inconvenience, even if it's only costing a penny. By that time, I will have forgotten what I was interested in reading, and will have clicked on to something equally stimulating that is available freely and immediately.

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