If Murdoch doesn't 'get' online, online still doesn't 'get' business

I am definitely no fan of Rupert Murdoch but to me it seems to me that some of the reaction to the erection of paywalls on the Times’ website is one sided and naive. We might all want all websites like the Times to be free but either we need to find ad models that work or accept that they must cut costs, and hence quality, significantly.

A lot of online business models are still unsustainable and many websites are hemorrhaging money; even Facebook has only just started to break even and it takes about 20% of all online display revenues. Murdoch’s competitors are well aware that the current media business model is broken, they can see their own balance sheets after all, so vilifying him as a greedy traditionalist who doesn't ‘get’ the web seems unhelpful. ‘Getting’ the web still appears to mainly involve convincing wealthy venture capitalists to prop up a popular site which generates little to no revenue (a la Twitter).

It’s all very well for the likes of Chris Anderson to hold the shimmering example of the almighty Google as a model for how to make ‘free’ services work online but its a bit like comparing vending machines with shops. Google is basically a clever piece of automated maths with low outgoings (relatively speaking), enormous reach and an ad model which is considered extremely effective. Content producers such as newspapers on the other hand are facing large production bills, smaller. defined audiences and persistent concerns from advertisers about the effectiveness of online display advertising.

Given the poor results, Murdoch’s pay-wall is clearly not the answer, and the blanket nature of the paywall does seem naive but more serious businesses need to get involved more seriously in the business of sorting out the online revenue deficit.

Early signs from the iPad suggest it may have some of the answers and users are more willing to pay for similar content served on it. This raises some interesting questions as to why this is, perhaps because the iPad provides an experience closer to magazines, maybe consumer price anchors for websites were simply set too low initially for online leading to a massive gap between consumer expectations and business reality. Either way total iPad sales, whilst encouraging, are some distance from being sufficient to adequately fund websites alone.

Personally I wonder if the largest consumer barrier with paywalls might not be actual cost but rather inconvenience. In the same way that text donations were a revelation for Haiti Relief perhaps a simpler automated payment system online based around a Paypal style operator might provide an answer?

Babybarista, the blogger that quit the Times left the following parting shot “There are so many innovative ways of making cash online and the decision to plump for an across-the-board blanket subscription over the whole of their content makes them look like a big lumbering giant”.

Maybe, but in the big business world of volatile stock prices and large employee payrolls, simple dependable solutions are needed. No competitor is doing any better than Murdoch at finding them right now.


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