Margaret Simons writes:

Here’s a guessing game
for you. How much do you think you would need to pay to get a month’s worth of
the Sydney Morning Herald and The Age, plus news from the ABC, CNN and Sky News?
The answer is a measly $3 a month – when you sign up for the “Information Pack
with Hutchison 3 mobile phones.

This is not an
advertisement. Similar deals are available with Hutchison’s competitors.
Yesterday Fairfax signed a
deal with Optus to complement existing arrangements with Vodafone, Hutchinson
and Telstra. This means that the guts of the Sydney Morning Herald and The Age
are now available at cutthroat prices on all of Australia’s 3G mobile
phone networks.

This raises the key
question in the digital revolution. Who will pay for the journalists? Will
there be enough of them, or does the future consist of multiple repackagings of
diminishing supplies of content?

The head of Fairfax
Digital, Michael Game, boasted yesterday that “theage.com.au and smh.com.au are now the only newspaper brands to enjoy this
position in the mobile market”. True. But isn’t Fairfax cutting off
its nose to spite its face? Why would any 3G mobile phone owner bother paying
the cover price for the hard copy version when they can get the content,
ad free, on their mobile phones?

At $3 a month, nobody
is making money. So why do it? It’s all about branding, and it’s a bit of a
gamble. Fairfax is betting
that if people get used to using and trusting the “brands” no matter where they
encounter them, then one day this will be able to be turned to profit.

It’s a quite different
approach to that of News Limited newspapers, none of which are available on 3G phones.
Murdoch is exploring entirely new digital businesses, like MySpace.com, rather
than cannibalising his existing newspaper businesses in the race to stake out
territory in new media.

So which strategy will
succeed? Time will tell. All media companies face a challenge in
bridging the
divide between the present and the future. Not all will make it across
the
chasm, and most will be fundamentally altered. Fairfax are
industry leaders online at the moment, but even though revenue is up it
is
nowhere near the levels needed to pay for the journalists who write the
stories. Meanwhile the RSVP and TradeMe businesses are examples of how
revenue-earning advertisements can be separated entirely from costly
journalism.

Peter Fray

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