Fred is right and Rupert is wrong

As the Wall Street Journal is breathlessly reporting, Rupert “Just Try and Stop Me” Murdoch has apparently relented on his much-discussed plans to open up the Journal’s content and get rid of the paywall, and will be keeping some subscription products (and boosting the price for them, oddly enough) while letting more stuff move outside the wall. In other words, he will be trying to have his cake and eat it too.

I know that there are a lot of smart people out there who believe that you can do both — one of them being Rex Hammock, who has been predicting for some time that Rupert would see the light and go for a mixed strategy. I would not claim to have the expertise in publishing that Rex has, but I do know one thing: the kind of content that newspapers produce, in virtually all cases including the esteemed WSJ, is either a commodity (in which case charging for it is nonsensical) or something with added value. In both cases I think it benefits the paper to release it into the wild.

Obviously if it’s a commodity then it should be free. But I would argue that it’s almost more important for the added-value content to be free as well. And here I am in violent agreement with Fred Wilson of A VC, who says that he believes Rupert has made a big mistake by keeping content locked up. As he puts it in his post on the topic:

“Here’s the deal. Digital media is not about scarcity and never will be. That’s the old media game. Online it’s about ubiquity, about being part of the conversation, about links, authority, page rank, and if you are a news organization like the WSJ – its about anchoring the discussion.”

This is the same debate that the New York Times went through, and it eventually decided to get rid of the wall. Was it not making money? No, it was making plenty of money — but that pie wasn’t growing. And it certainly wasn’t growing as quickly as the NYT’s traffic has been since it removed the wall. I think the Journal would be wise to trade the bird it has in its hand for two or three (or twelve) in the bush.

Free means never having to say you’re sorry

Not surprisingly, the decision by the New York Times to tear down its pay wall has fueled speculation that Rupert Murdoch will do the same thing with the Wall Street Journal — speculation that has been around for awhile now, primarily because ol’ Rupe keeps talking about it (of course, knowing Murdoch, that’s probably just a way of keeping the media writing about him).

I’ve written about this before, after the Australian billionaire took over the Journal, and I hope by now I’ve made it clear that I think free makes the most sense not just for the Times or the Journal but for virtually every newspaper including the one I work for. There are those — like former journalists Mark Potts at Recovering Journalist and Dorian Benkoil at Corante who disagree, and think that subscription is a model that works, but they are wrong.

I should clarify that. They are right in the short term, but wrong in the long term. As the Times has admitted, charging people for content created a subscription business that made money, but one that wasn’t growing very much (if at all). I’m not privy to the numbers at the Globe and Mail, but I wouldn’t be surprised if we have seen a similar pattern. Steve Boriss argues that this could be because the NYT did it wrong, but I’m not convinced.

Scott Rosenberg of Salon, among others, has written about the difficulties of financing a large newsroom through online revenues only, and that is definitely a concern. But I believe — as Jay Rosen and other smart people do — that being part of the online ecosystem (which includes permanent links to archived stories) is going to be a lot more valuable in the long run than charging people a nickel or two to read the paper online every day.

Should Murdoch make the Journal free?

If you’re a traditional journalist with any interest in online media whatsoever, one of the central questions hovering over the acquisition of the Wall Street Journal is whether the Journal’s new proprietor, Australian billionaire Rupert Murdoch, will remove the pay wall and give the Journal away for free. He has said several times that he is considering such a move, but he has also mused about whether it would be worth it or not.

snipshot_e4udb69k0ux.jpgI know that many newspapers have looked to the Journal as a model for what a paper can do online, because it is one of the few that has charged for its content from the very beginning and built what appears to be a successful business doing so. But does it make sense now? This Wall Street Journal story notes that Murdoch commissioned a study that looked at what going free would mean for the paper, and from that he concluded that while readership would grow by a factor of 10, advertising would likely only grow by a factor of five, and the loss of subscription revenue would effectively make the whole thing a wash. In other words, maybe’s it’s not worth it. However, Murdoch has asked questions like this:

“What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks.”

Fred Wilson has made it clear what his view is: Murdoch should make the WSJ free online, before he does anything else. Fred points out that the New York Times gets 10 times the traffic that the Wall Street Journal does, and is far more often the centre of an online discussion about business or financial matters. That kind of thing is going to drive Murdoch crazy.

Larry Kramer, formerly with Marketwatch, has a different idea about how Murdoch can keep charging for the Journal and use Marketwatch as a free alternative, an adjunct to his much-anticipated Fox Business Channel, but I’m not sure that would work. I’m going with Fred on this one. The Journal could be so much more relevant online if it were free, and Murdoch is just the guy to do it.

Further reading:

Darian Benkoil at Corante, a former AP correspondent and ABCNews editor, does the math and says that it doesn’t make sense for the Journal to go free (although I think one could question some of his assumptions), and Joe Wiesenthal has some thoughts over at Techdirt. Tony Hung at Deep Jive Interests isn’t so sure going free would be such a good thing for the Journal.

Murdoch shoots from the lip on WSJ

snipshot_e41fq5c7raj8.jpgTime magazine managed to land an exclusive interview with Rupert Murdoch (maybe it was by promising him the cover and a cover line like “The Last Tycoon”), and — as is typical for the blunt-spoken Australian — he holds nothing back. While some of the reporters for the illustrious Wall Street Journal took some unauthorized time off to protest Murdoch’s acquisition of the paper, the billionaire came out with jewels like this:

— “They’re taking five billion dollars out of me and want to keep control,” Rupert Murdoch was saying into the phone, “in an industry in crisis! They can’t sell their company and still control it — that’s not how it works. I’m sorry!”

— “The price of the Journal,” says Murdoch, “is $60 plus vitriol.”

— “When the Journal gets its Page 3 girls,” he jokes late one night, “we’ll make sure they have M.B.A.s.”

and finally:

— “What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts.

And then you make it free, online only. No printing plants, no paper, no trucks. How long would it take for the advertising to come? It would be successful, it would work and you’d make … a little bit of money. Then again, the Journal and the Times make very little money now.”

Classic Murdoch. Kevin Maney says in Portfolio magazine that he hopes Murdoch starts a bidding war for journalists.

Rupert goes for the brass ring

Say what you will about Rupert Murdoch, the Australian brawler who runs the entertainment and media conglomerate known as News Corp.: he doesn’t shy away from big bets. He’s just written what amounts to a cheque for $5-billion U.S. and dropped it on the desk of the Bancroft family, which controls Dow Jones, and with it the Wall Street Journal — one of the world’s most prestigious media properties, both online and off.

murdoch.jpgThe offer, which the Dealbook blog at the New York Times says (quoting David Faber of CNBC) has been in the works for a couple of weeks now, pushed the share price of Dow Jones up by more than 60 per cent at one point, to its highest level in more than five years. As one analyst pointed out, that’s going to make it pretty hard for the Bancroft family to resist. It’s well known that the family has been unhappy with the performance of Dow Jones for some time. The company’s first-quarter profit fell by more than 60 per cent, according to a report from Bloomberg. On the other hand.

An acquisition by Murdoch would definitely cause some fireworks in the U.S. media industry — not just because he runs a giant conglomerate, or because he’s Australian, but because he’s most closely associated (in the U.S. at least) with down-market entities such as Fox News and the New York Post, as Cynthia Brumfield points out at IPDemocracy. That’s probably not going to sit too well in some circles, including (possibly) the Bancroft household.

With Sam Zell buying the Chicago Tribune, and Rupert Murdoch paying a huge premium for the Wall Street Journal, does this mean newspaper stocks have hit bottom? And could the New York Times be next?

Further reading:

Salon co-founder Scott Rosenberg has some thoughts on the deal that are well worth reading — and notes the irony that the WSJ, the bastion of all things capitalist, is getting a fairly strong dose of its own medicine with this bid. And the Newsosaur says the premium was a signal to potential bidders (such as Bloomberg) that Murdoch is determined to do whatever it takes to get the Journal. Om thinks it could be the beginning of an acquisition wave.