It official Rupert Murdock is setting his British Flagship papers of Record the Times and The Sunday Times behind an internet paywall. He announced this last summer, and by June it will be a reality. What’s interesting is that there is no attempt to adopt the price point to the audience or the papers content. Nope, as Michael Wolf, Murdock Biographer, said it:

His plan is not to create an online business or, even, to realize significant additional revenues from online readership. The plan is to get you to read newspapers—as in papers.

Basically he is set to charge you the price of a newspaper regardless of the medium, so you are really better off just buying the dead-tree version. To Murdock, who hates all things digital, the Web is just a value add, similar to the DVD inserts that he uses to goose newsstand purchases. This is a bold-faced effort to thwart the online news business, plain-n-simple.

Needless to say, I doubt that this will work. Jeff Jarvis put it best when he said this:

By building his paywall around Times Newspapers, he has said that he has no new ideas to build advertising. He has no new ideas to build deeper and more valuable relationships with readers and will send them away if they do not pay. Even he has no new ideas to find the efficiencies the internet can bring in content creation, marketing, and delivery.

Instead, Murdoch will milk his cash cow a pound at a time, leaving his children with a dry, dead beast, the remains of his once proud if not great newspaper empire.

Some have argued that in order for this to work, financially speaking, a conversion of around 5-10% would be sufficient. Because online advertising is so meager, and the additional cost savings of not printing and distributing paper are so great.  But I will take a bet that he doesn’t crack 3% conversion on digital subscriptions. Less than 1% have expressed a willingness to pay for online content, and my suspicion is that many of those willing to pay, are willing to pay for things like the FT and the WSJ, highly niche journalism; not competitive journalism like what is found in the Times, Sunday Times, Independent, Guardian, BBC,  AP, Reuters, AFP, ect.

All of this is still beside the point; Murdock doesn’t care if his papers make a single dime. They are underwritten by the rest of his media empire: SkyTV subscription fees, Fox News Spot Advertising, Box Office Ticket Sales and DVD Sales of Avatar and Transformers will keep his papers alive, because he loves them. But for the industry, this is a losing proposition, a way to somewhat delay the inevitable.

Ian Grayson is one of the few people arguing that this will work. He makes 4 points, which are worth sorting through.

1. News ain’t news: It’s true that general news has become a commodity on the internet, but it’s wrong to put all news in the same category. While it’s unlikely anyone will pay for celebrity gossip and coverage of breaking events, quality journalism is a very different deal. People who value well written stories, quality audio visual resources and informed comment will be happy to pay for it.

Writing is very much a commodity, the glut of talented writers killing themselves to get noticed, with excellent credentials, had never been greater. The competition among writers, with HD cameras in tote, makes fencing off any group a losing proposition for that group.

2. A one-stop destination: Newspapers work because they bring multiple elements into a single, easily digestable whole. Sure, some of it might be available in other places on the internet, but having content filtered, edited and presently as a whole makes it vastly more usable. It’s called adding value.

Adding value within the medium is exactly what Huffington Post, Newser, and Google News do, to a far better degree than any newspaper site in existence today. How a site, run by a man who hates the internet, and doesn’t know what Google does, will outwit the digital natives, seems more than far-fetched.

3. New platforms: Attention is focused on Apple’s iPad and its clear that it (or future devices like it) will provide a new and compelling way to enjoy news content. Having a slickly presented package of news delivered to such a device will be so compelling people will pay for it

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The iPad does nothing new. The other tables do nothing new, that a laptop can’t do today. If you haven’t been able to innovate for the internet, why is a new device going to save you? How is it different?

4. Quality versus quantity: There’s no doubt that traffic to the websites of The Times and Sunday Times will drop dramatically once the paywall is in place. However the traffic that remains will be vastly more valuable. Rather than getting excited about millions of visitors who come to the sites briefly before clicking away, the papers will have a core group of loyal readers that will visit on a regular basis. Such a group is much more attractive to advertisers and therefore far more lucrative for publishers. Less can be more.

This is an interesting point. It is true that paying website visitors do yield a higher CPM rate than non-subscribers. This is true for two reasons. One is that they are considered a captive audience, more attuned to the site’s brand, and therefore its brand contextual advertising. And two, is the known demographic profile. But there is no reason why you could not create a similar situation behind a free registration wall, rather than a pay wall.

My position is this: People will not pay for the news because they have never paid for the news, ever. When people had subscriptions to newspapers they were paying for delivery/distribution and a small part of the paper costs. (Many times subscription fees did not even cover that cost) But the CONTENT has been paid for by advertising (or patronage) for as long as the newspaper has been in existence. To now say, oh readers have to pay for content, because they OUGHT to pay is ridiculous, emotional entitlement is not economics.

So what would I do instead?

I’ll tell you tomorrow….