Rupert Murdoch's Plan

Rupert Murdoch, founder and CEO of News Corp., has a big problem on his hands. His media company has reported massive losses in the past year as both its print ad revenue and online ad revenue have dropped hard in the current recession. The rise of new media has changed the landscape of business today, and old media companies with old media business models, such as News Corp., have struggled to generate revenue in the world of free flowing information. Rupert Murdoch isn't going out without a fight though, and over the past couple of months we've seen him slowly roll out his plan for turning around News Corp.'s fortunes.

First, News Corp. started out by announcing that Hulu (a joint venture between ABC, NBC and Fox) would soon start operating with a subscription model. Then News Corp. announced that MySpace Music would also begin charging for access to its content. And now the next big shake-up comes from News Corp.'s Wall Street Journal, which has announced intentions to remove its content from Google's search engine and forge an exclusive deal with Microsoft's Bing search engine.

Rupert Murdoch is essentially calling for an end to the internet free-for-all. He wants consumers to start paying for access to his online content. Murdoch's plan is to place his major online properties behind a paywall and restrict free access to premium content. If successful, he expects other major content providers will follow suit. It's a bold plan to say the least, but it does make you wonder about the risks News Corp. faces in implementing such a plan. Can Murdoch reverse the tide of free flowing information and create a successful revenue stream from his online content?

It can be done, but not with Murdoch's current approach. It's understood that News Corp. needs to change its business model in order to generate revenue in the online world, but Murdoch's current plan of attack is flawed and short-sighted. Aside from Hulu, which has a valid shot with a freemium business model, Murdoch's other web properties won't fare so well if he decides to put them up behind a paywall. MySpace Music isn't as hot as it used to be and has been leapfrogged by other music sites. The Wall Street Journal may be a prestigious news source, but there are many other reliable news sources on the web that would be more than willing to step up and fill the void. Murdoch will lose major online traffic volume and could see his precious web properties relegated to the archives of internet history. The news will continue to flow freely on the internet even without the presence of the Wall Street Journal.

My suggestion to Rupert Murdoch: instead of trying to remove value from the system, why not add more value into the system? I like the idea of working on an exclusive deal with Microsoft; why not try to work on an exclusive integration of WSJ material (and other News Corp. content) into Bing? Other search engines can still access the basic content, but only your exclusive partners would have access to your enhanced coverage. Use innovation and creativity to devise new ways to deliver material and enrich your reader's experience.

Information is meant to be free, and will remain so on the internet. How you package and deliver that information is where you'll find opportunities to capture market share and create profit for your business.