Rupert Murdoch has become the first media mogul to make bold changes to his company’s newspaper monetization strategy that may reshape the way people receive their news--by paying for it.
Up to this point, web publications have primarily relied on advertising alone for revenues but this has had problems because online advertising rates are so much lower than those in print. Murdoch and others in the traditional media are seeking to change that by creating a system where readers and viewers are required to pay a subscription fee as well.
There is certainly a motivation to try something different. Overall, News Corp.’s operating income dropped by over 30 percent in its latest earning report. Its cable networks are the only holdings to be driving growth this year, with Fox News’ operating income increasing by 50 percent.
Clearly, much of News Corp.’s struggles are due to the recession, but newspapers have been struggling long before the recession. With content available for free online, fewer people are paying to subscribe to newspapers and magazines.
Americans have been reluctant to pay for subscription fees for news content online, especially after having received it for free for fifteen years, so will News. Corp’s plan succeed? There are not many details as of yet on what kind of subscription plans Murdoch plans to establish, but there has been a lot of attention as of late on a plan put forth by newspaper editor-turned Silicon Valley CEO Alan Mutter. At a meeting of newspaper executives in May, Mutter talked about his new venture, ViewPass.