Rupert Murdoch is continuing his crusade to get all the big newspapers to charge for their online editions. He is in a difficult situation. He knows that if he starts charging for his online content and none of the other publishers follow, his websites will struggle and probably fail. However, because of strict competition laws, he can’t be seen to be colluding with his competitors so he has had to wage his campaign in the public domain through speeches, interviews and press releases.  


So are his competitors listening?


My guess is they are sitting on their hands waiting for Mr Murdoch to put his money where his mouth is. They will then decide what to do. If they pick-up a lot of readers from Murdoch’s sites they will probably remain free. If they see Murdoch’s sites prospering, they may follow.


The truth is, as every internet veteran knows, the experiment will fail. 


Internet users will not pay for content which they can get for free elsewhere and general news is available from hundreds of sources. The Wall Street Journal and Financial Times have done alright because they provide niche content to niche markets where there are fewer free, quality alternatives.


General news is available everywhere and indeed today the blogs often get stories long before the big publishers. Everything in News Corps national newspapers has free alternatives.


I’m not the only one who thinks this. Eric Schmidt, the CEO of Google, said in a recent speech.


“in general these models (paid content) have not worked for general public consumption because there are enough free sources that the marginal value of paying is not justified based on the incremental value of quantity.” 

He continues: “So my guess is for niche and specialist markets ... it will be possible to do it (charge) but I think it is unlikely that you will be able to do it for all news.”

Eric has hit the nail on the head.

It has been forever thus.

People will not pay for abundance, but will pay for scarcity.

In the olden days news was scarce and controlled by a handful of publishing companies and broadcasters. People were happy to pay for a newspaper as they didn’t have an alternative. Today news is abundant and available for free over the internet. If Murdoch thinks he can make general news scarce again by putting up a pay wall around his content he needs to change his advisors or get out more. 

But abundance in one area usually creates scarcity in another. 

Fifty years ago food was scarce and expensive. Today food is abundant and cheap, but this abundance has led to obesity and now good health is scarce. This has created opportunities in dieting, health clubs and private health insurance . 

In the content world general news is abundant and as a result has little value. However there is a scarcity of highly focused specialist content provided by people with a deep understanding of their niche. Before the internet it was often too expensive to create, market and distribute this information, but today any expert can reach a global audience for little cost. People WILL pay for this unique, exclusive and targeted content. An example is the wine tasting notes of a recognized master of wine. This content is unique, exclusive and targeted and people interested in wine will pay for access. Take a look at the successful site of Jancis Robinson for proof. 

If the big newspaper publishers are going to survive and prosper they are going to have to use their general news content to build their audience and then generate revenues by charging for scarce content, products and services which their readers can’t get elsewhere for free.

This transition and change of mindset is not going to be easy and it probably won’t be the old guard, like Murdoch, who lead the way. However change is not optional; those that blindly pursue the paid content business model for substitutable news will fail. Those who understand the value of scarce, niche content will prosper.

The jury is out about what will happen next.