Wednesday, May 20, 2009

The Death of Free Online News

By Robert Gammon
Wed, May 20, 2009 at 11:53 AM

MediaNews, owner of the Oakland Tribune, the Contra Costa Times, and the San Jose Mercury News, plans to start charging for online content in the coming months, in a move that could ultimately spell the death of free Internet news. MediaNews top officials Dean Singleton and Jody Lodovic announced their plans in a letter to employees earlier this month. Hearst Corporation, owner of the San Francisco Chronicle and other newspapers, is also seriously exploring the idea of charging for content on its news websites. And Rupert Murdoch, owner of an array of newspapers around the world, said recently that his company would begin charging sometime in the next year.

Newspapers have been hurting financially for several years now, and can no longer afford to give away content online. Newspaper owners had hoped that online advertising would allow them to keep offering free Internet news, but web ad sales have been extremely disappointing, and can't support a full-scale news operation. Singleton and Lodovic said that free online news also devalues their newspaper print editions and hurts their bottom line. "We continue to do an injustice to our print subscribers and create perceptions that our content has no value by putting all of our print content online for free," they said in their letter. "Not only does this erode our print circulation, it devalues the core of our business - the great local journalism we (and only we) produce on a daily basis."

Judging from the letter, MediaNews still has to work out the specifics of how it would charge customers and how much it would charge them. But one thing appears certain, the company plans to allow paid subscribers of their print editions to view content online without an additional charge. The company also plans to start creating and providing content online that is not available in its print editions to add value to its websites. MediaNews also appears determined to change the perception of online news. "To be clear, the brand value proposition to the consumer is that the newspaper is a product, whether in print or online, which must be paid for," Singleton and Lodovic said.

Some critics have warned that if newspapers start charging for content, it will severely hurt their online traffic. That likely will be true, but it's also true that online fees will bring in much-needed revenue for struggling news operations. And if all or most newspapers begin doing it, then consumers will basically have no choice but to pay - except for blogs that summarize the news or do their own newsgathering, assuming that they remain free of charge. It's also not as if it hasn't happened elsewhere. The music industry successfully put an end to widespread free online music content, and now customers have to pay to download their favorite recordings. In addition, the book industry is now launching online editions for a price. Amazon.com is marketing its second-generation Kindle, which allows customers to download books for a fee onto a hand-held device.



P.S. The Express, which offers its print edition for free, has no plans to begin charging for online content.

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