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Cracking the online news code

June 02, 2009 09:46 IST

Rupert Murdoch is the weather vane for the media business. Once he starts swinging in a certain direction, the rest of the media business, largely, follows.

After writing off the Internet in 2001, he became an evangelist in 2005 and single-handedly swung opinion (and dollars) in favour of the Net. So recently when the chairman of News Corporation started talking about charging for news online there was a flutter of hope in the beleaguered news business.

His is one of the more significant voices in what is now becoming a chorus. At a recent World Magazine Congress, our very own Aroon Purie, chairman, The India Today Group, was pretty scathing about the online news business.

"The digital model being followed in developed countries is a pretty dumb model. You have one monopolist (Google) giving out your content for free and then competing in selling digital advertising?" he is reported to have said.

In the absence of a content model, publishers would be spending "dollars to chase cents", reckons Purie.

While much of this is not yet applicable to India because of the internet's abysmal penetration (just about 60 million users), it is crucial for the industry's ability to deal with the future -- a future that is evident in the US market.

The newspaper business has shrunk by over $10 billion dollars in five years and continues to shrink. It is not that people don't want news; it is because they want it in different forms, on different media (usually the internet) and at their own time.

American newspaper companies have tried to do so and most have actually gained audiences. Yet, publishers can't seem to make money from this. In the US, 17 of the 20 most popular news sites belong to old media brands. However, the content on these sites is paid for by advertising generated by the print or TV version of the same brand.

Only five per cent of total newspaper advertising revenue comes from the online business. It is growing quickly but not fast enough, says The State of the News Media, 2008, an annual report on the American news business brought out by the PEW Research Center.

According to one estimate, it may take as long as five years for internet revenues to offset the decline in print. Meanwhile, the offline business which, ironically, is still financing the online content continues to fall. The only one making any money from this content online are aggregators such as Google.

Once the last newspaper has been printed, who will pay for content? By content, I mean the researched, analysed, credible content. For five years now, I have heard all the arguments against traditional journalistic content. But the fact is that in a world of billions of blogs and websites, we still go to a BBC.com or a CNN.com when a major event happens.

We, meaning, audiences that still want the comfort of a good brand when it comes to news and analysis. So, if I don't want to hear thousands of idiots blabbering about what they think of 26/11 or the Indian election, but want to read a good piece or watch informed opinion on what happened and why, I would pick up a good news magazine, a newspaper or go to a credible news channel. There is no substitute for that.

That, however, costs money -- for research, people, overheads. That brings us back full circle. While people want this content online too many, it seems, don't want to pay for it. There seem to be only two profitable ways out of this conundrum.

The first is what the newspapers in the US are already doing: Getting audiences through shopping, jobs, or other utilities. News forms the glue that holds it all together.

Such news sites will be largely free and ad-driven.

The other possibility is that real news or quality content becomes a premium, low-volume game. So people who really want to read, say, a The Wall Street Journal kind of piece will pay to read that piece. That is what publishers like Murdoch are hoping for. The question then is: Is there a large enough audience willing to pay for good content to ensure its survival?

Vanita Kohli-Khandekar in New Delhi
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