“We intend to charge for all our news websites”, Rupert Murdoch announced this morning, after unveiling News Corp’s 32% profit downturn for the past financial year.

“Quality journalism is not cheap, and an industry that gives away its content is simply cannibalising its ability to produce good reporting.”

It all sounds so rational. Quality journalism is expensive, readers are accustomed to paying for it on newsprint, and just to make sure there won’t be a migration of readers to free websites, Murdoch says his newspapers will be “making our content better and differentiated from other people”. After 15 years of giving away their content online, newspaper publishers will simply flip a switch, make the content better, erect a pay wall and expect people to pay for something they can get for nothing elsewhere.

No-one, even Rupert Murdoch, knows how many people will pay for online journalism. No-one knows what will happen to online advertising revenues if that switch is flipped. No-one, including Rupert Murdoch, knows what impact such a move will have on the circulations of newspapers. And therefore no-one knows how charging for online content will disrupt or benefit the newspaper business.

Despite the bravado and the apparent rationality of the argument, this is all a gigantic gamble by desperate newspaper owners to plug the deep cracks in their business models that have turned newspapers from 20th century money machines into 21st century legacy media.

Saying that quality journalism is not cheap to produce is self-evident. But the fundamental problem for most quality newspapers is not that people aren’t paying for that journalism, it’s that advertisers — especially classified advertisers — have found a better and cheaper medium than newspapers. And it’s the advertisers, not the readers, who pay for the quality journalism that made newspapers so profitable and powerful.

Unless readers are prepared to replace the lost classified advertising revenues — which in the case of a newspaper like The Sydney Morning Herald would require every buyer to pay something like $250 a year extra for the content — the problem of funding quality journalism won’t be solved.

“Making our content better and differentiated from other people” is such an attractive homespun recipe to induce people to pay for content to fund quality journalism. If only it were so simple.

Peter Fray

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