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Good luck, Rupert

Rupert Murdoch's Times of London will be charging a subscription for access to its web site. They say it will be $1.50 per day or (for bargain hunters) $3.00 a week.

Good luck with that.

Everybody wants to charge for on-line content. Murdoch does, I do, everybody does. A lot of folks like Murdoch are watching their traditional income sources wither away and hope to get that back through the web.

Again, good luck with that.

Why not just run ads? Heck, that's what I do, right? Sure, but ads are just extra money for me - the main purpose of this website is to advertise my consulting services. That's where my real money comes from. The main purpose of a newspaper is to sell ads - there's nothing else. And Internet advertising pays far less than print advertising - not enough for the Murdoch's of the world to live in the style they prefer.

Murdoch thinks that he is powerful enough to buck "free". His confidence might come from the vast span of newspapers he owns: if he starts charging for all of his on-line content, that represents a very large chunk of available on-line news.

But not ALL of it.

That's the problem for Murdoch and anyone else who wants to put their content behind a pay wall: there will always be free sites. Unfortunately for Murdoch, the economics works against him. The free sites will pay the lousy $3.00 a week to a few pay sites, gather the important news and publish their own free news sites. Because they have low acquisition costs (a few dollars for subscriptions), they can exist quite nicely on advertising.

So, good luck with that, Rupert. It's not going to fly.

The only way to extract money from web usage is for ISP's to collect and distribute access fees - conceptually similar to ASCAP royalty fees for music. Let's say that we had to pay some fraction of a cent per website accessed. Our ISP would probably pre-charge for an average number of pages and we'd only pay for excess. The ISP in turn would pay website owners, probably with some minimum traffic level required before any payment. Big, popular websites would get big payouts, the little folks would get less or nothing at all and the ISP's would get a cut of everything.

That would work and would obviously be fair to everyone, but I don't know if it would pay the bills. For example, to match advertising income, I'd need to see half a cent per visitor. I'm not sure how many sites the average person visits in a month, but I suspect that half cent would be too much in the aggregate. If you hit 2,000 sites per month at a half cent per day per site, that's only $10, but if it's 10,000 sites, it's too much money.

Rupert would likely make out pretty well at a half cent per visit. So would many big sites like Wikipedia and the other giants. Of course they'd do well even at a hundredth of a cent per visitor.

However, they'd likely be tremendous consumer resistance to even a $10 per month increase, so that isn't likely to fly either. My guess is that "free" will continue forever.



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© Anthony Lawrence







Sat Mar 27 01:49:11 2010: 8282   AndrewSmallshaw

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It's not often I find myself agreeing with Murdoch but in this instance I think he's right, in broad brush terms if not in the details of this specific offering.

Adverts CAN'T fund every website out there - if large parts of the economy depend on nothing but advertising it stands to reason the pie will be sliced too thinly to support anyone - the "real" economy is only ever going to spend so much on advertising, and ultimately that places a limit on the amount entering the system. That is without even considering all the junk out there - if your personal home page gets half a dozen vistors a week then it is not surprising you get no ad revenue: your content isn't worth anything regardless of the effort spent writing it.

However, I do question the model being used. Yes, newsgathering is expensive but 1 per day is too steep - it is the same as a physical copy. Transaction processing costs are likely to be much higher than a physical copy but there are no printing or physical distribution costs, and that is what the consumer sees. Even 2 per week may be too high.

In my view what is needed is a micropayments system that would allow charging on a per article basis, and that would actually reward creators of high quality content: for an opinion piece you may be able to get one or two cents. An in depth review may be worth a bit more, say ten cents. A solid, high quality technical article is worth more again - if a web search leads you to a particular article, that solves the issue you have, then that fifty cents it is asking for is going to get spent, if actually spending the money only takes a few seconds and not minutes.

There are companies that have tried micropayments but they all miss out somewhere. A good system would need widespread support, be very fast and highly secure. That isn't insurmountable but it hasn't happened yet. The ability to make such transactions, coupled with a realisation by users that content does cost money, would finally mean the Internet has grown up.

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