Media Guardian today reports Rupert Murdoch (the Chairman of News Corporation) asserting that the concept of free newspaper websites is a ‘flawed’ business model.
Media owners such as News Corporation are seeing declining newspaper circulation, and hence advertising revenues off the page, which are not adequately off-set by increasing ad revenues from their online assets. In a nutshell, increasing online readers is not translating into enough advertising revenue.
So Mr Murdoch expects to start charging for access to News Corporation’s newspaper websites within 12 months. News Corp’s recent aquisition, the Wall Street Journal in the US already successfully charges for subscription and it is clearly a model Mr Murdoch believes will become the norm and he confirmed that they are looking into the approach for all his UK papers including the Sun, News of the World and the Times.
Advertising revenues declined 21% in News Corporation’s UK newspaper business last year.
The interesting question is whether this trend will spread across other websites, many of which are heavily loss making and rely on a flawed advertising model to generate revenues –a classic example of this would be Youtube.com or indeed the social networking sites.
So the days of simply paying for your broadband connection may be coming to an end – you may also be faced with a charge to get into the most attractive websites. As Mr Murdoch added ”The current days of the internet will soon be over.” And this seems to us a great shame.