Rupert Murdoch's jab at Google Inc. during a television interview last week with Sky News Australia turned into a brawl just where you would expect it: all over the Internet.
Blogs, columns, even news stories elicited unprecedented commentary. And most of it underscored the News Corp. chief's overriding complaint that the creation of quality content (emphasis on quality) is an expensive proposition.
Of Murdoch's two-pronged plan -- charging modestly for his newspapers' online content and removing News Corp. sites from Google's search index -- a reader of the Daily Telegraph's account of the interview took on the former: "I for one won't be paying the greedy old b*st*rd anything." As for the boycott of Google, a respondent to the ReadWriteWeb blog offered, "Go for it, dude!"
It's time-wasting communiqués such as these that make subscription models for useful insight and information (emphasis on useful) seem like wonderful things. And the more the Internet gets cluttered with tripe, the more receptive to affordable subscriptions we'll become.
Murdoch understands as much, just as he understands giving content away online that used to generate impressive revenue offline has proved an unsustainable business. "They shouldn't have had it free all the time," he said during the interview. "I think we've been asleep."
While few regard Murdoch as charitable, that's precisely how his characterization of himself and fellow newspaper leaders will be interpreted should the industry ever regain its footing. What if insurance policies rather than news stories had been written with the same mindset? We'd have online freemiums replacing offline premiums. We'd also have another industry sinking alongside newspapers.
Google countered the threat to yank News Corp. content from its searches, saying, "If they tell us not to include it, we don't." This, in turn, would reduce traffic to one News Corp.-owned Web site, WSJ.com, by an estimated 25%.
Making the loss easy to shoulder, however, is that the turned-away traffic would be of little use to advertisers. "Who knows who they are or where they are," Murdoch said. "They don't suddenly become loyal readers of our content."
Loyalty, it turns out, remains surprisingly vibrant among newspaper readers. At a recent CreditSights Inc. conference, analyst Jake Newman cited a Scarborough Research survey that has 48% of the adult population still reading the print version of a daily newspaper. The survey also put the one-year decline in this readership at a modest 60 basis points.
In addition, Newman recognized circulation sales as "the only major bright spot for publishers." Indeed, for the four publishers he analyzed through the first half of 2009, rate increases more than offset circulation declines to produce across-the-board gains in circulation sales.
This display of loyalty among offline readers suggests that those who want their local news want it bad enough to pay increasingly more for it. And it wouldn't be surprising to find a parallel among online readers, too.
In fact, the American Press Institute has already discovered that at newspaper Web sites, the most active users tend to be what Newman called a "small but meaningful" number. The top one-quarter not only visit a newspaper site more than 20 days a month but also account for 90% of the pages viewed. "This is the group that I think newsrooms have to aim for and is the most likely to pay something," the analyst said.
It will be interesting to see how News Corp. seeks to induce payments from its top one-quarter visitors to such sites as The Sun and The Times in the U.K., the New York Post and The Wall Street Journal in the U.S. and a slew of Australasian titles. Its efforts just might receive an unexpected boost from another finding about newspaper sites: If one suddenly becomes unavailable, the API also found, less than 20% of its users believe it could be easily replaced. Or, conversely, more than 80% believe it would be difficult to replace.
What percentage of this group would be willing to pay to resume access to the site -- and how much it would be willing to pay -- are issues Murdoch is well positioned to explore. As the leading publisher of English-language newspapers, he has levers galore to pull while experimenting with different pay plans and different content combos. And by standing up to Google, he may even start a sea change. But if he doesn't, well, what's to lose that wouldn't have been lost anyway?
Richard Morgan covers media for The Deal.