How Much Would You Pay for Internet News?

Aug. 7, 2009— -- A price tag is about to accompany more of the news you read online.

In a call with investors Wednesday, media magnate Rupert Murdoch signaled that his company, News Corp., is preparing to charge for some news content provided by all its Web sites, from the Wall Street Journal, which already charges customers, to Fox News, the New York Post and newspapers in the U.K. and Australia.

"The digital revolution has opened many new and inexpensive methods of distribution," he said. "But it has not made content free. Accordingly, we intend to charge for all our news Web sites."

And he didn't stop there. Assuming the strategy works, Murdoch predicted other companies would fall in line.

"I believe that if we're successful, we will be followed by all the media," he said later, adding that the company was thinking about making the changes by next summer.

Although Murdoch has raised the possibility before, and isn't the only one to consider a paid approach, his comments sent ripples across the Web, as industry watchers pondered the implications of the media giant's decision.

'Free' and 'Paid' Come in Many Shades

But although they said News Corp.'s move could herald a shift in Internet news, media experts caution that the issue is hardly black and white. There are many degrees in the spectrum from free to paid content, they say, and news Web sites are expected to experiment with many of them in pursuit of the Holy Grail.

News Corp. did not immediately respond to requests for comment from ABCNews.com, but David C. Joyce, a media equity analyst for investment firm Miller Tabak & Co. LLC, said that if the company didn't start charging for content, the quality of the news would diminish over time.

As media companies see that revenue from advertising isn't following them online, he said, they need to find other revenue streams, like those from paid subscriptions.

And although it won't be easy at first, he said, it's better to retrain customers sooner rather than later. "They're trying to put the free genie back in the bottle," he said. "It's tough to get the consumer to pay for something that they're used to getting for free."

But as customers continue to see quality decrease at sites that are free or watch the pool of free sites slowly decrease altogether, they could come around, he said.

News Sites Not Expected to Charge for Everything

Given its success with the Wall Street Journal and the infrastructure it already has in place, he said, News Corp. is well-positioned to be the leader in expanding this field.

Bill Mitchell, head of the Poynter Institute's News Transformation initiative, which focuses on emerging economic models for news, said he expects more news organizations to charge for content but that each will have to figure out the special sauce that works best for its particular audience.

"I don't think it's a matter of all one way or the other," he said. "The smartest examples of paid content have been selectively applied for content that really offers a discernable value for the person making the decision to buy. I'll be surprised if many news organizations simply drop a pay wall in front of their content."

In addition to the Wall Street Journal, he pointed out that Consumer Reports and ESPN offer paid content online, but their approaches are not the same. Visitors to Web sites for each of the publications will notice that some content is available for anyone, while other content is for subscribers only. But the balance of free and paid content differs for each.

Analyst: WSJ.com Is a Unique Case

Still others doubt paid content will take over the Web.

"I think the unfortunate nature of the model is that, realistically, I think it's very, very unlikely that all online news will switch to a pay for model," said Jon Gibs, vice president of media analytics for media research firm The Nielsen Company.

Gibs said Murdoch is basing his long-term strategy on the success of the Wall Street Journal and the needs of online news businesses to drive more revenue. "But the problem with that is that the Wall Street Journal online has held a unique place in the online news industry," he said.

Not only is the content fairly unique, individuals often have their companies pay for them to access the content and it's historically been a pay service.

For the most part, he continued, news is a commodity and unless the Web sites can differentiate and create an added incentive for users to choose one site over another, it will be hard for them to succeed.

Paid Content Not Ultimate Answer to Financial Woes

Tom Rosenstiel, director of the Pew Research Center's Project for Excellence in Journalism, said he agreed with Murdoch's assessment of the economics of the Web, but added that even a successful paid content model might not solve the problem.

"In print, news producers only make 20 percent [of their revenue] from subscriptions and 80 percent from advertisers," he said, emphasizing that the advertising dollars aren't migrating to the Web.

Charging for content is a beginning, but it's not the ultimate solution, he said.

News sites need to expand their options even further, he said, and look at ways to marry e-commerce and services with editorial content.

For example, he said, if a local news site could help a user not only search for a pair of shoes but also host the transaction, it could potentially collect a fee from that service.

Still, he said, Murdoch's comment, coming from such a high-profile company, might have inspired a bit of gratitude from news executives eyeing paid options themselves.

"Almost everyone in the news industry wants another bite at this," he said. "Having that conversation out loud, having people talk about it ... all of that will help test the waters, develop experiments, [and] get people thinking."