Psst – want to buy some content?

Simon Brock Read more August 18, 2009

Last week News Corp reported a $3.4 billion loss. The same week, Rupert Mudoch’s media machine announced it was going to start charging for content in all sorts of places. It had tried the scheme on one site and it had been a great success and as such it was going to start rolling out across the world — the first UK site was going to be The Sunday Times. Every other news organisation carried the story — the BBC suggested people might pay to see the exclusive Michael Jackson rehearsal footage which The Sun’s website had published a few days before.

Oh and last week, News Corp reported a $3.4 billion loss.

I thought I would mention the loss again as no one seems to be talking about it. On the other hand everyone is talking about charging for content. Will it really be the case that some time soon, everyone will be charging for content? Will it be the case that to read this blog post (and other better ones!) you will be getting out your credit card/debit card/micropayments wallet to fill the coffers of PC Pro? I doubt it…

Firstly, let us look at the News Corp story. News Corp made a loss of $3.4 billion to the year ending June 2009. In the US, News Corp has had other bad press — it has to pay $300 million damages to another company. There are some exceptional things in the loss — a write down for MySpace which News Corp bought in another blaze of publicity four years ago. It seems that most of the problems are arising from a down turn in advertising revenue which has been caused by a recession.

Of course, in old media if there was a recession, your advertising revenue went down, you printed less pages and sold them to less people. As the publications were smaller, you shed staff as well to cut costs. In new media, when the advertising goes down you could produce fewer pages but the chances are the same number of people will read them. However, compared with old media you have no printing costs and distribution costs which should be going down.

Secondly, is anyone actually going to pay for ‘mass market’ content? The short answer is ‘no’ because of the way that people find that content. At a publishing conference last year, someone from The Times Online said that the biggest proportion of traffic to the web site came from Google. Unless Google were to change, you introduce barriers and your content does not get listed which means you don’t get the traffic. Even if your charging site is listed, users will learn and they will not click on your links, which will lower your ranking and you will lose traffic.

So if you introduce charging, you will lose the traffic you need for the charging to work. In narrower B2B markets, people do pay for web content already because the content is unique and the users can see the benefit. It is doubtful that will work in the mass market.

Lastly, how are News Corp going to get the money? Obviously you are going to do it via micropayments. Micropayment platforms come in two forms: one where you put credit somewhere which you then make micropayments from; and one where the micropayment comes directly from your bank account. The former platforms have been successfully used outside of the web — the Oyster Card on London transport, for example — but from Mondex to Barclaycard Pulse they have failed in the mass market.

It seems unlikely that real micropayments from your bank account is going to happen any time soon. This is the real problem. If The Sun wants to charge me for the latest celebrity footage or PC Pro wants to charge you to read the latest iPhone review, how are they going to get the money? It seems unlikely I will charge up my ‘Sun Micropayments’ account (or even my News Corp one) for one thing.

If News Corp wants my money they have to find a way of getting it off me which is, at the moment, very hard. Things might change here but it will take some time for a platform to appear. The payment industry is littered with platforms which went nowhere — anyone remember Secure Electronic Transactions (SET), which is how we were all going to pay for things on the web?

So is charging for content is just a good way of burying bad news? Probably. After all, when the recession ends and the advertising revenue returns — it may well be business as usual. And everyone will have forgotten about what was said this week.