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Is free news a thing of the past?

6 August 09 15:56 GMT

By Clare Davidson
Business reporter, BBC News

In recent years, we have grown accustomed to the idea that news is free.

Distributors of free newspapers thrust their product upon you on the street, and much newspaper content is freely available online.

But Rupert Murdoch's latest move could mark a bold change.

The media tycoon has said his News Corp will charge online customers for news content across all its websites.

Alfonso Marone, analyst and partner at Value Partners Group summarises the problem: "Online advertising is not working, so [News Corp] is basically asking itself, 'What can we do'."

Business model

"The challenge with digital media is how to monetise it," says Mathew Horsman, an analyst at Mediatique. A new pricing model has to be developed, he explains.

Analysts cite the Financial Times and Wall Street Journal - which is owned by New Corp - as successful models.

In its recent earnings report, the Financial Times said it was seeking to rely less on advertising revenue - which has fallen significantly during the recession - and more on subscriptions.

But Douglas McCabe, an analyst at Enders, says these websites both fit "very firmly" in the business content category - not the general news model.

They provide specialist news and charge for premium content.

"Businesses [which tend to subscribe the the FT or Wall Street Journal] are used to digitally delivered newswires, they are familiar with paying for news," says Mr McCabe.

But for other types of news, this is not the case.

Entertainment

So clearly, consumers are more keen to pay for some forms or content over others.

People pay when you have given them what they want or you make it "impossible to do anything else", says Mr Horsman.

In this category comes live sports coverage, Hollywood films, and some specialist interest content - in general terms, entertainment.

But for news, it is harder. If, for example, an election is made freely available on several outlets it is unclear why individuals would pay for such coverage.

Today there is huge choice at no cost. Audiences aren't as loyal; they don't need to be.

Newspapers worked because they were a package. But once you start breaking it up, people are far less prepared to pay for segments, analysts argue.

'Oil tanker'

Mr McCabe predicts some forms of charging will emerge and different models will be tested.

"The problem is that it will never be of the monetary volume that is enjoyed today for newspapers."

He says attempts to transfer the old newspaper model online is "like an oil tanker - it's too difficult to turn around".

Newspapers will need to think differently about their audiences and how to segment them as well as think about how to divide content, according to their strengths, he argues.

So the key is to not to have everything freely available - to have a model in which there is free content, but there is also more specialised, bespoke, paid-for content.

"There has to be more to do than watching each other's Twitters. We want narrative and quality," says Mr Horsman.

Intermediary

For others, ease of access is key.

Mr Marcone 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]. Each 5p or 10p adds up to a significant number".

But he warns that it would be hard to make people open accounts for individual papers.

Instead, intermediaries could provide access to a range of publications.

Mr McCabe says: "Intermediaries might work, but they won't start tomorrow." In the interim, a mixture of micro-charging and subscriptions is likely to continue.

The news landscape has changed dramatically in the past decade, and so have our news habits.

However News Corp develops its new charging model, it seems clear that media firms will have to try an alternative to both the paid for traditional newspaper and the everything-is-free online model.

Even if News Corp does start charging and others follow suit, analysts say doing a U-turn on the free news model will be hard to pull off.

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