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Murdoch signals end of free news

6 August 09 17:16 GMT

News Corp is set to start charging online customers for news content across all its websites.

The media giant is looking for additional revenue streams after announcing big losses.

The company lost $3.4bn (£2bn) in the year to the end of June, which chief executive Rupert Murdoch said had been "the most difficult in recent history".

News Corp owns the Times and Sun newspapers in the UK and the New York Post and Wall Street Journal in the US.

'Revolution'

Mr Murdoch said he was "satisfied" that the company could produce "significant revenues from the sale of digital delivery of newspaper content".

"The digital revolution has opened many new and inexpensive methods of distribution," he added.

"But it has not made content free. Accordingly, we intend to charge for all our news websites. I believe that if we are successful, we will be followed by other media.

"Quality journalism is not cheap, and an industry that gives away its content is simply cannibalising its ability to produce good reporting," he said.

In order to stop readers from moving to the huge number of free news websites, Mr Murdoch said News Corp would simply make its content "better and differentiate it from other people".

Charging options

Newspapers across the world are considering the best way to make money from the internet, particularly in a time of falling advertising revenues.

The risk is that charges may alienate readers who have become used to free content and deter advertisers.

When the New York Times abandoned its subscription model - visits to its website jumped from about 12 million per day to almost 20 million per day, said the former general manager of NYTimes.com, Vivian Schiller.

Ms Schiller, now chief executive at National Public Radio (NPR) in the US, told the BBC's PM programme that the higher audience had "more value than the limited number of people who were prepared to pay for content".

However last month the paper said it was studying different ways to charge for access to its website. The Financial Times and Wall Street Journal already charge readers.

Different news organisations have tried alternative charging structures - either pay-per-article or a monthly subscription fee.

The FT allows users to access a certain number of stories for nothing each month; if they want to access more than that, they need to subscribe.

'Well-differentiated content'

Some analysts say that financial newspapers are better placed to charge readers for online content, because of the specialist nature of the information they provide.

Alfonso Marone, analyst and partner at Value Partners Group, told the BBC that the model could work "for well-known publications - for must-read, must-know content. The Wall Street Journal and the Financial Times are already charging for content, for example," he said.

He believes that a micro-charging structure, where readers pay just 5p or 10p to access an article, might work. "This is less than the price of an SMS [text message]," he argued.

"This is definitely the way the [newspaper] industry is going," he concluded.

Sly Bailey, the chief executive of Trinity Mirror, said that while a "paid online model already exists for unique, high value and well-differentiated content", she doubted "that it is possible for publishers to charge for general news content when the same content is given away for free by the BBC, Google News and others".

"I don't think this is about what Rupert Murdoch wants. It's about what the consumer is prepared to pay for. And why would you pay when you can get the same thing somewhere else for free?" she said.

Recovery

News Corp has suffered from falling advertising revenues.

"Our financial performance clearly reflects the weak economic environment that we confronted throughout the year," Mr Murdoch said.

He did, however, say that there were signs of life in the advertising market.

"I think the worst may be behind us, but there are no clear signs yet of a fast economic recovery."

He added that News Corp was "particularly well-placed for the coming recovery".

New Corp's $3.4bn loss was due to $8.9bn in write-downs already announced, compared with a $5.4bn profit a year earlier.

Revenues at the media giant, which owns BSkyB and 20th Century Fox, fell 7.8%.

In the fourth quarter of its financial year, News Corp lost $203m compared with a net profit of $1.1bn in the same period a year ago.

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