Thursday, June 17, 2010

What's Wrong With This Picture?

From Bloomberg.com:

Now that The London Times is going to a pay-for-content model, Rupert Murdoch of News Corporation fame is using some creative methods to rope people in to shelling out, most of which include some form of freebies.

Murdoch’s News Corp., which this week offered to buy the rest of U.K. pay-TV operator British Sky Broadcasting Plc for 7.8 billion pounds ($11.5 billion), is pushing a business model with clients paying for content as a driver of revenue growth. He’s using that same strategy at the Times and the Sunday Times. The Times is now offering paying subscribers access to free events and discounted products through its ‘Times+’ service in an effort to build customer loyalty.

I'm certainly no business wonk, but it seems to me that if you have to entice people to pay for something by giving them something else of even more value, your business model is a bit suspect.  Some people might be willing to hold on to your service after spending their freebies, but how long could your revenue remain outpacing your costs?

Irrespective of the practical issues involved, I agree with Rupert Murdoch in principle.  He has every right to change for the content that he and his investors have put their hard-earmed money on the line for.  The problem is that the Internet is the world's most perfectly realized exchange for unfettered information.  Anyone who has tried to research through any of a number of unreliable reference sites can attest to that.  Just because Rupert Murdoch sees paid content in his future, doesn't necessarily mean that's the future of all content everywhere.

Perfectly realized unfettered information exchange means perfectly realized competition.  The competition isn't just between papers of like size and circulation anymore.  I hope for Rupert Murdoch's sake, he's taken all of these factors into account.  Now that the internet is almost as pervasive as the television set, it may be even more influential -- and no one man will be able to dominate the medium. Viva la web!

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