There is no doubt about it; news organisations are in serious trouble. Budgets have been slashed, left, right, and centre. Papers that have been around for well over 100 years, like The Rocky Mountain News, have shut their doors. Even the worlds most respected paper, The New York Times, is planning to cull over 100 staff before Christmas.
Journalists are losing their jobs everywhere. In Australia, Fairfax Media used the start of the global financial crisis last year to shed 550 staff, and despite assurances from management, the quality of news suffered almost immediately.
The problem is that people just aren’t buying papers in the quantity that they used to. Everyone wants to read their news online. After all why pay for content, which you can get for free? It’s also cheaper, more up-to-date, and far more convenient.
Media organisations understand that people want to read the news online, so they happily provide the content, much of which is directly taken from the print versions, offering no clear incentive to buy a paper. Plus the online market is not making enough money. Advertising revenues are one tenth of what they are for print. Online sites simply can’t support the industry in their current form.
Most media executives have spent the last few years trying to come up with a solution. The one that seems obvious to everyone is to put the content behind a pay-wall.
Rupert Murdoch certainly believes that’s the answer. He recently committed News Corporation to charging for content on all its online websites.
Online editor for The Courier Mail in Brisbane, John Grey, says it will take a while for Australians to get used to the idea, but they will have to accept it eventually.
“There will be broad and loud objection. There will also be quiet and rational acceptance of the reality that while publishing is now cheap, newsgathering is not,” he said.
But News Ltd in Australia, already have one successful international example to copy, The Wall Street Journal. The Journal allows users to view some of its content, but much of the site is restricted through a subscription-based service. Users can opt to subscribe to just the online version, or to both the online and paper versions.
Mr Murdoch has already stated that he intends to replicate this model worldwide.
“Quality journalism is not cheap, and an industry that gives away its content is simply cannibalising its ability to produce good reporting,” Mr Murdoch told journalists in August. “The increase we have seen in our Wall Street Journal subscription proves to me that the market is willing to pay for that quality.”
It is, however, important to remember that Rupert Murdoch bought into the idea of paid content through his purchase of The Wall Street Journal in 2007. This success was not a direct result of any input or ideas from Murdoch or News Corporation. The Wall Street Journal had already proven its paid content model sustainable.
One of the alternative methods to a subscription based news service is the idea of micropayments. A micropayment news site would charge users a very small fee to access individual stories. It is an idea similar to how iTunes works with music, or the iPhone works with applications. Users have an account with a credit card on file, and then click a button to instantly bill their accounts and access an article. It’s a novel idea, and one that could generate significant amounts of money if it succeeded.
But General Manager of Reload Media, a web development and strategy company, Craig Somerville, says that the idea of micropayments would not work for news organisations.
“The problem I see with this is that people don’t see a news source as a collection of articles each worth 2 cents, they see a news source as providing an overall summary of where the world’s at, and therefore you can’t put a price on each article individually,” he said.
The micropayment option would definitely have some challenges, especially with trying to convey to consumers that they are getting their moneys worth. Whether news organisations adopted a subscription, or micropayment model, the idea of paying for news just won’t sit well for many people.
Erica Smith, former advertising copywriter and producer, now full-time mum, is just one of the many people who will object to paying for online news.
“I would never considering paying for a service that I can receive adequately elsewhere for free,” she said.
Mr Somerville says that many consumers will just find other ways to get their news for free.
“It’s more than likely that rather than pay for services they have previously enjoyed for free, online users will find other free alternatives,” said Mr Somerville. “Brand loyalty with websites is not the same [as] with other offline consumer goods, people are much more likely to switch to the next best thing in a heartbeat. The current generation of Internet users have been brought up with the Google mentality, which means that they expect information to be freely available online.”
And Australia, like the UK, will always have alternative news services available, due to our public broadcaster. The Australian Broadcasting Corporation provides free news content, and it is likely that many users will switch to them rather than pay. It is usually high quality, in-depth coverage, and the websites are far more innovative than other Australian news organisations. Paid media will need to differentiate themselves if their plan is to work.
ABC Managing Director, Mark Scott, has already gone on the record to say that Murdoch’s plan would not work because he needs to focus on quality journalism.
“You can almost hear other proprietors urging Murdoch on, assuring him they are right behind him. And they are, pushing him through the pay wall as they then scurry away to make as much as they can for as long as they can outside it,” Mr Scott said in a recent speech on media empires. “But I suspect too much attention is being given to finding a pay model rather than addressing the content questions in terms of quality and distinctiveness that will really drive audience commitment.”
Currently, the Australian media is far behind the rest of the world when it comes to online news websites. Most of the news sites, such as News.com.au or Smh.com.au, are built around text-based articles and have been poorly modified to try and include other multimedia and social media features.
These hacks have made the websites clunky, and unable to fully utilise the complex array of advantages the Internet holds. Many Australian companies appear to be stuck in the dark-ages of print, even when the exciting new world of multimedia journalism is well established.
This lack of progress may be due to a shortage of adequately skilled staff in newsrooms, or publishers, like Rupert Murdoch, who don’t understand how to utilise the Internet. Whatever the actual reason, it is clear that the media need to do something to solve the problem, or face losing market share. The Internet is still in its infancy, and has already proven, time and time again, the ability for innovative companies to gain instant market dominance.
The move could also create room for more independent competition in the Australian market, which is heavily dominated by News Ltd, and Fairfax Media.
However, Mr Grey says there is already room in the market for new entrants.
“I think that door is already open,” he said.
One of the independent sites in Australia that has been somewhat successful is Crikey.com.au. Crikey charges a subscription fee of $3 per week for a daily email service, which focuses on politics, the media, and other satirical opinion pieces. Currently it has around 15,000 people who subscribe to the service, according to Media Watch, and has solidified itself as a reputable media organisation in Australia. It is also well known for stirring aggravated responses from other journalists.
Former Age Editor and Director of the Centre for Advanced Journalism at the University of Melbourne, Michael Gawenda, says there is room for independents like Crikey, but they can never replace the larger organisations.
“It [Crikey] will never have the resources to do what I call, and what others are calling, public interest journalism. Which up to this point in time has basically, apart from the publically funded media… been done by newspapers, “ Mr Gawenda said, “it’s got a future, just as I think there’s a future in various internet journalism sites being set up through public donation, and public foundation support… but none of these have the resources, and will never have them in my view.”
One of the sites Mr Gawenda is referring to is ProPublica, a non-profit United States based investigative journalism service funded by donations. The interesting thing about the service is that all articles are licensed under Creative Commons and are free for anyone to re-publish as long as they provide attribution.
The organisation is able to support 32 journalists with this model, and can allow them to work stories for years to find out all the information. But this idea will never be mainstream. Rupert Murdoch is already chasing after news aggregator services, such as Google News, which he believes are ‘stealing’ from him. It is not likely that he would allow others to re-publish the news produced by his companies in the near future.
But whether a pay-wall model for online journalism works or not is not really the big issue here. The issue is that news organisations are trying to instantly find a solution to a problem they should have thought about earlier. The Internet is well over a decade old, and most companies are only now starting to become worried.
Some did think about the idea early on and jumped on the pay-wall bandwagon, The New York Times being one of them. A subscription service worked to some extent, but The Times later returned to a free model, citing that advertising held more profit. That back stepping is what news organisations can’t afford to do. They can’t get it wrong. It needs to be right the first time.
Rupert Murdoch is definitely trying to move all news organisations to a similar model to force users to buy the paper again. He has tried to convince the rest of the market that they need to charge money for online journalism. The idea is interesting coming from the man who bought MySpace in 2005 and has no idea how to stop the Facebook onslaught. Facebook overtook MySpace in the comScore ratings in the first half of 2008, and since that time MySpace has not even looked a contender experiencing large declines in global Internet traffic.
The fact is the idea of paid online media in Australia simply won’t work on a large scale. Independents command more niche markets, and so will always have enough audience, but companies like News Ltd or Fairfax are not in that category.
Mr Gawenda says that a pay-wall model simply won’t work in Australia.
“I don’t believe that the move to paid content will succeed in Australia and abroad, and I also don’t think that is the answer to the problems that have come about for, especially newspapers, as a result of the economic model being broken,” he said.
There is only one real solution to the problem in Australia; fix the broken news websites. If the sites were simply more interactive, more innovative, and utilised the Internet better through multimedia, then maybe, just maybe, companies could charge more money for advertising and keep their products free. It’s the only way to really save the industry in Australia.
[Photo credits, Alex Barth, World Economic Forum, shironekoEuro, aresauburn]
