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.

It’s unlikely that these readers are prepared to pay for the paper’s commentary on public affairs, or for that matter for “news”, but rather for up to date information which materially affects their investment and business decisions. There’s always been a market for such information – legal publishers exploit something similar when they charge companies for updates and guides to domains such as employment law, where that information is crucial to organisational success. Celebrity gossip, or political speculation, or crime reports, are just not the same category of product.

Update: Robert Gottliebson on the role of the public broadcasters.

Update: Bronwen Clune.

Media tycoon Rupert Murdoch expects News Corporation-owned newspaper Web sites to start charging users for access within a year in a move which analysts say could radically shake-up the culture of freely available content.

Speaking on a conference call as News Corporation announced a 47 percent slide in quarterly profits to $755 million, Murdoch said the current free access business model favored by most content providers was flawed.

“We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning,” the News Corp. Chairman and CEO said.

“We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues in return for our shareholders… The current days of the Internet will soon be over.”

Now, all snark about the particular value of News Corp publications aside (as noted in the story, readers of the Wall Street Journal will very likely pay good money for that content), Murdoch does have a point about how the current model for online news distribution is not generating enough income to pay for traditional journalism. The newspaper industry in the US is in a tailspin of falling advertising revenues and drops in circulation that has already led to many titles going out of business. “Everybody knows” that the press is full of hacks, but that’s (a) true of any industry you like to point at; and (b) irrelevant to the public discourse benefits we all derive from traditional journalism, warts and all.

Having people who derive a regular income from questioning people in the public eye (and people behind the scenes of public events) ensures a level of transparency to political and business proceedings that simply would not exist at all without journalists willing to ask the occasional difficult question. If newspapers don’t have the money to pay for traditional journalists then all they will pay for is people who are good at summarising and regurgitating what they are fed in press releases. For many media companies that’s all they are doing already.

More crucially, without the structure of traditional journalism, no journalist will be able to specialise in investigative journalism or rigorous analytic journalism with the full resources of a newspaper behind them, and the effects on public discourse will be dire. The blogosphere has a strong cohort of writers capable of decent analysis, true – but where will they find the information to analyse without traditional journalists ferreting out content beyond the PR spin?

But what subset of a newspaper’s readers are willing to pay for quality journalism rather than just uncritically consume the regurgitated press releases and celebrity gossip?

Joshua Benton, Director of the Nieman Journalism Lab at Harvard University, said Murdoch was not the only executive looking to generate new income streams from online content.

“News executives are starting to recognize that online advertising revenues are not enough on their own,” Benton told CNN.

But he said the challenge for media organizations was finding a balance between advertising and subscription revenues and figuring out how to charge for content without alienating existing users — which could lead to Web sites offering tiered levels of free and paid-for material.

“I suspect within any readership there is a small slice — maybe three percent — that is willing to pay. News organizations are going to have to find a way of getting money from that slice without driving away everybody else,” Benton said.

“I don’t think you can afford to put a lock and chain on the front page. It is a matter of figuring out which products you can charge money for.”

Benton said the U.S. newspaper industry was in a “horrible state” which was likely to get worse.

“We’re starting to see holes where newspapers were. The question is, will new Web sites fill the holes, will traditional names come in — or will they just not get filled?”

The other side of this move towards a mixed subscription/advertising model of news publication is what it will mean for the relationship between media corporations and journalists. Will any growth in revenue actually go to fund the traditional journalism I described above? Or will the slide towards ever more superficial and lowest common denominator content accelerate due to our old friend cynical greed in management? Now that the barriers to publication and dissemination of content online are so low, can journalists band together to become a source organisation onselling their content without sheltering under the umbrella of the media magnates? If they do move out from under the magnates’ wing, will they still have access to the movers and shakers in order to ask those persistent and sometimes revealing questions?

There’s loads more questions to be asked about the consequences of moves towards less free online news content. Have at it.

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