James Murdoch: Free online content cannot be monetised
James Murdoch, chairman and chief executive of News Corporation, has said that online content cannot be monetised efficiently if it is given away for free.
Speaking at the Monaco Media Forum, Murdoch said: “The first rule: if you are going to monetise something [online], you probably shouldn’t give it away for free.”
News International, a wholly owned subsidiary of News Corporation, recently erected paywalls around both The Times and The Sunday Times’ respective websites and is the first generalist UK newspaper group to charge for its online content.
At the beginning of November the company published the first official subscription figures on the impact of the pay wall around both of the websites.
The UK arm of News Corporation said that there were 105,000 total transactions for its digital content between July and October.
There are also a further 100,000 print subscribers to The Times who have activated their free digital accounts.
Murdoch added: “You cannot start developing pricing models [for online content] until you have a retail price…We are transforming the business of digital journalism at News International.”
He went onto criticise newspapers specifically, saying that the “key metrics that these business were chasing were not creating value for them” – notably how many unique users each content site manages to attract each month.
He said that the “number of uniques” were the wrong metric to focus on as all parties “were losing an absolute fortune” by giving their content away for free.
Murdoch said that News International was happy to invest more in a product, price it “fairly" and accept that “not everyone would pay for it”.
His position was in stark opposition to Eric Hippeau, the chief executive of The Huffington Post, a popular US aggregator and blog, and a fellow speaker at the Monaco Media Forum.
Speaking at the event yesterday, Hippeau said: “We will never charge our users for content…We would lose engagement with a valuable audience.
“Everyone who has tried to charge in the news category has had a terrible experience. It doesn’t work. …News wants to be free.”
The Huffington Post, which claims it is profitable, makes its money through display and video advertising.
Murdoch, when asked how News Corporation would use technology to monetise content, said that the key to success was increasing their investment in new products such as iPad apps.
“Our flagship newspaper products are our iPad apps,” he said, just after pointing out that Apple was 10 times the size of News Corporation.
He said that news apps were cannibalising traditional newspaper sales: "The problem with the apps is that they are much more directly cannibalistic of the print products than the website. People interact with it much more like they do with the traditional product."
On the question of MySpace, the troubled site which News Corporation has just relaunched as a music and entertainment portal, Murdoch said the company was “watching it closely”.
He admitted that the social networking industry was “not an easy space” to be in but he was hopeful that the redesign would be a success.
MySpace has come under increasing pressure from its parent News Corporation, which bought the site in 2005 for $580m (€426m) in 2005, to reverse its ailing fortunes.
On an earnings call at the start of this month, Chase Carey, News Corporation’s chief operating officer, said: "We've been clear that MySpace is a problem.
The current losses are not acceptable or sustainable." And that he wanted "a clear path to profitability" on a timetable measured "in quarters, not in years”.
MySpace lost $156m in the quarter that ended in September 2010 compared to a loss of $126m in the same period last year, on revenues of $298m, down 25.5pc.