Larvatus Prodeo

There’s an interesting take in Australian Policy Online from my QUT Creative Industries Faculty colleague, Terry Flew, on the whole question of business models for online news, which has had quite the airing of late. My own view is that the reports that competition regulators were concerned about Rupert Murdoch’s attempts to corral a number of American news corporations into an “alliance” might constitute a cartel are telling. It’s redolent of a certain mindset which goes far beyond the nuts and bolts considerations of revenues and costs.

Flew riffs off an argument made by Shaun Carney in The Age:

What Shaun Carney points to – as does Rupert Murdoch – is that the business of getting news is not free. As economist Tyler Cowen puts it, all of the major news providers have found that their revenues are falling below their average costs curves, and they are not prepared to make losses indefinitely. The problems are that no-one knows what the price should be, what is the best approach to charging (subscriptions, pay-per-view, freemiums, or what?), or whether enough consumers will pay to offset the losses arising from those who will inevitably opt out once some form of charging for news is introduced.

At this point, two further complications emerge. One is the possibility that new opportunities may emerge for commercially viable free news services that capture the convenience users who opt out of pay models. This may be a new provider who also captures the imaginations of those who are now vocally critical of what they term the “mainstream media”, and who access sites such as The Huffington Post in the U.S.

The second is that it is unlikely that the public service media providers – ABC, BBC, SBS, NPR etc. – will charge for news, as it is contrary to their Charter obligations of providing universal access. At any rate, I doubt that Shaun Carney is right that consumers will simply accept paying for what they are currently getting for free simply because they recognise the costs that exist for the established news providers.

It’s also worth considering the value readers receive from particular types of news. Rupert Murdoch, according to Wired UK, had his thinking shaped by the propensity of Wall Street Journal subscribers to pay a premium for online news. But there’s a fundamental category error here.

Continue reading ‘Will anyone pay for online news?’