Murdoch's gamble to save journalism - News Corp. to begin charging for news sites online content

News Corp. CEO/Chrmn Rupert Murdoch, AP photo/Virginia Mayo, file

Rupert Murdoch's statement Wednesday, "We intend to charge for all our news websites" will go down in journalism history as either the seminal moment when the industry came back from the internet abyss or this century's version of "into the valley of death, rode the six hundred."

On News Corp.'s Q4 earnings conference call, Murdoch prefaced the above with what has been causing consternation in news rooms across the country for a decade now:

"The digital revolution has opened up many new and inexpensive methods of distribution but it has NOT made content free."

The entity that finally develops a workable model to recoup that content cost will not only see it's own profits soar, but bring an uplift of revenue for the entire industry.  Murdoch is clearly intending to position News Corp. as the leader of the charge.

While acknowledging that:

"The business model has to change rapidly to ensure that our journalistic enterprises can return to their old margins of profitability.  The extended downturn has only increased the drumbeat for change"...and..."classified advertising revenues will never again reach the levels that print once offered."

the mogul from down under is not shying away from the challenge.  Unlike Dan Rather at the Aspen Institute  last week or Marburger brothers in last Sunday's L.A. Times , Murdoch is not calling for a White House commission or changes in copyright law to ride to his rescue.

Rather (there's a pun there somewhere) than pining for the past, or begging for help, he (Murdoch) realizes:

"Quality journalism is not cheap.  And an industry that gives away its content is simply cannibalizing its ability to produce good reporting."

Noting that the Wall Street Journal has actually seen an INCREASE in subscriptions since its acquisition by News Corp., Murdoch feels that proves that indeed there is a market willing to pay for quality content. 

He points out that the Journal is the only U.S. newspaper "that has actually expanded both its print and on-line subscriptions during this recession."  Combine the Wall Street Journals uptick with the fact that The Times of London "has a digital audience that averages more than 16 million people across the globe every day" and Murdoch obviously feels he's got a strong foundation to build upon.  I would have to agree with him on that one.

But it is more than just brand names that make News Corp.'s properties successful.  Two quotes are telling:

"Right now we're working with software, hardware, and other publishers within the industry to develop a model that works for consumers" (regarding e-readers and digital papers)

and

"Beyond the economics, it is crucial we maintain a direct relationship with our customers."

In other words, it's the end of the ivory towers.  Newspapers that cling to the "we're going to print what WE want to print and you, the reader, just need to read it" will most certainly join The Rocky Mountain News and Seattle Post Intelligencer as but memories of a bygone era.  (Sulzberger's of the world pay attention.)

While acknowledging "a tough few months ahead", Murdoch sees News Corp. revenues turning in a high single digit increase for FY 2010.  At a time when many in the industry are hoping for just high single digit decreases in revenue, such an outlook may be outside the norm, but that's where Murdoch lives.

If News Corp. can convince a fickle public to pay for content it has been getting for free for years, it truly will be a revolution for the age.  No doubt many are skeptical but as many have already learned, better to bet with Rupert than against him. 

The full conference call can be heard in web-cast form from the News Corp. website:
Q4 2009 News Corp. Earnings Conference Call
You will need to register (free) but it's worth it to hear a positive outlook for a change.