Murdoch seeks online value with 'pay per click' plans

Published on Saturday 8 August 2009 14:09

A FRESH battleground for the news industry has opened up after the Financial Times followed Rupert Murdoch in announcing plans to charge for online newspaper content.

Murdoch, chief executive of News International, has said he intends to charge for all his news websites. which in the UK include the Sun, the Times, the Sunday Times and the News of the World.

The bold move has been followed by the FT. Rob Grimshaw, managing director of the FT Group, is understood to be looking at "micro-payments". This follows the model used by Apple and Amazon who have attracted consumers with easy ways to pay for the products they download.

Senior executives say the fact that Murdoch is prepared to embark on one of the largest shifts in the history of News International suggests he is eager to encourage competitors to follow his lead.

Analysts last night backed Rupert Murdoch's controversial drive to revolutionise digital content, arguing that "pay per click" could save the newspaper industry.

Lorna Tilbian, media analyst at Numis, said that Murdoch can succeed, as he has done it before in making the public pay for television.

She said: "I remember going to the 1988 breakfast meeting at the Savoy when he talked about his pay television vision, and most people thought it was a joke. Thinking back to how he achieved it, there was unique content – sports and movies – and also technology with the set-top boxes and now Sky Plus. I guess with newspapers, there will have to be great insight, great analysis and scoops – must-have content that's different.

"The number-one hobby in the UK was TV and people thought it was number one because it was free. But he gave people what they loved most, and gave them choice. So if you give them their favourite papers online and have a 24/7 relationship instead of once in the morning then maybe that's the way forward."

It is a view echoed by Tim Luckhurst, professor of journalism at Kent University and a former editor of The Scotsman, who argues that Murdoch is facing up to the fundamental truth people have been ignoring for ten years – hits on websites do not add value to newspaper groups.

"It's better to have 1,000 paying customers for your site than five million non-paying visitors," said Luckhurst. "What Murdoch is trying to do is ensure that people who create content for websites – the journalists and their publishers – get the money from it, not aggregating sites such as Google.

"But this will also kill the notion that you can run newspapers on the cheap. They will need to be well staffed by experts to produce high-quality content. I think Murdoch is committed to high-quality journalism – yes, he likes making profits, but if he was just out for profits then he wouldn't own newspapers because there are easier ways to make money."

Newspaper revenues have been badly depleted, with executives unable to extract as much money from online readers as they do from those who buy the paper.

The Times, which has long struggled to turn a profit, lost 42m this year, up from 15.7m in 2008.

But as Sam Hart, a media analyst at Charles Stanley, said: "You certainly shouldn't write off anything that Rupert Murdoch does. He's proven over the years to be a trend-setter in a number of different types of media so it may well turn out that he proves to be correct in this case."