Tuesday, September 7, 2010

"Paywall" AND Bust

Rupert Murdoch
http://www.flickr.com/photos/worldeconomicforum

Rupert Murdoch made good on his plan to opt-out of the link economy and charge readers directly.
"The Times" and "The Sunday Times" now require a subscription account to view any content. "News of the World" will soon follow suit.
The papers projected a 90% drop in readership following the implementation of a "Pay Wall", and many observers think that may have been optimistic.

Even with a 90% drop in readership, this might be a good short-term business plan.
10% of the readers paying a subscription fee may very well be more money than they were making on ads for that other 90%.

But I say "short-term" because opting out of the link economy also removes you from the awareness of the younger readers. You also opt out of the promotional aspect of search engines and the blogosphere/Twitter/Facebook.
You're limiting your entire possible audience to those that already consume your product. When these reader die off or move to another publisher, there will be no more.

But it's even worse than that.
In the short term, Murdoch will lose the remaining advertising revenue. So the only income will be from subscriptions.
And who want to right to a declining audience? Shouldn't be long before the talent leaves as well.
Which probably means prices will have to increase, and subscriptions will decline even further.
While I believe that Murdoch is in complete denial about the future nature of publishing, I don't want to see great established papers spiral into the ground.
Aspects of these operations can and should be saved. But I fear that News Corp is committed to this delusional vision of the future and that it's going to crash and burn.

Or maybe it's just a bleak and dreary morning and I need some caffeine.

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