The business model for news is and always has been broken and Rupert Murdoch can't fix it

In his remarks to the Federal Trade Commission’s hearings on Journalism and the Internet, held at the beginning of this month, Rupert Murdoch made some characteristically bold statements about his views on the future of journalism.

In Murdoch’s world, the new model of journalism is one where people pay for journalism online.

Murdoch said: “In the new business model, we will be charging consumers for the news we provide on our Internet sites. The critics say people won’t pay. I believe they will, but only if we give them something of good and useful value. Our customers are smart enough to know that you don’t get something for nothing.”

Murdoch is right when he asserts that the old model based on classified advertising is a failure, but he is wrong to suggest that people will actually pay for news. They never have paid for general interest news – not really, anyhow – and there’s little to suggest that this historical precedent will change.

Murdoch is sitting pretty because he can charge for specialized content. His mix of financial news brings a product to a specialized audience that couldn’t get this information elsewhere. Other financial news outlets remain similarly well-positioned, such as Bloomberg and Reuters, where information provided really does equal financial decisions.

But general interest news faces a different reality. As far back as Walter Lippmann, writing in Public Opinion, it was abundantly clear that news readers were fickle and not willing to pay for news.

It’s worth noting in-depth the astute observations Lippmann made that are still relevant today.

“Nobody thinks for a moment that he ought to pay for his newspaper. He expects the fountains of truth to bubble, but he enters into no contract, legal or moral, involving any risk, cost or trouble to himself.”

“He will pay a nominal price when it suits him, stop paying whenever it suits him, will turn to another paper when that suits him. Somebody has said quite aptly that the newspaper editor has to be reelected every day.”

Lippmann’s words are increasingly relevant when it is not just newspapers competing for the attention of fickle customers but a wide variety of blogs and aggregators and personalized RSS feeds that scan news. If one newspaper starts charging, another newspaper source can easily be found that does not. The observation that in a competitive news environment, brand loyalty is a misnomer is an important one – especially now.

Lippmann makes some other key distinctions worth mentioning about the attitude between the reader and his news source. First, readers believe that news should be free, “supplied gratis” and that readers “expect the newspaper to serve us with the truth however unprofitable the truth may be.” In other words, don’t look to readers to start paying for expensive investigative stories.

Maybe the dearth of investigative news will continue to inspire public radio-style donations for to continue to produce crowd-funded journalism. But Lippmann was careful to note that most people don’t think of journalists in the same category as they do other institutions, such as public schools, law, medicine, religion, or engineering, for example.

In journalism, the business model works like an anti-business as far as the news organization is concerned, since the reader pays for the product below cost. Readers also expect journalism to be held to the ethical standards of journalism is compared ethically along with a church or a school.

But a church is supported by collection and subsides, and schools supported by the taxpayer or tuition fees, so people are paying, in a sense for a product. And, Lippmann argues, you can’t compare journalism to law, medicine or engineering, because the consumer is actually paying for the service.

As Lippmann smirks, “A free press, if you judge by the attitude of the readers, means newspapers that are virtually given away.”

The business model is broken, we know that. And it’s always been broken – as far as the reader has been concerned – no reader has ever paid for their full share of what it takes to actually produce that day’s newspaper. And now we give content away for free.

So therein lies the dilemma – we expect the truth to come for free, but it comes at a price. And without anyone paying for the truth, how will it be delivered to news consumers?

[Editor’s note: OJR will not publish on Friday, due to the Christmas holiday. But we will be back next Wednesday.]

About Nikki Usher

Nikki Usher is a doctoral student at the Annenberg School for Communication at the University of Southern California.


  1. says:

    The full Lippmann quote can be read here:

  2. I guess you don’t believe Murdoch means it when he says people will pay *if* :we give them something of good and useful value.”

    If you stipulate that, your post makes no sense, does it? You arguing that his plan won’t work because he isn’t offering something of value. Then you contradict that with WSJ example.

    Why not just say “online users won’t pay for commodity news”? Pretty much everybody understands that. Shouldn’t the debate be about whether we can create products and services around news that the will pay for?

    The alternative, it seems to me, is that there is nothing at all about news that people will pay for. That hasn’t been tested, much less proved.

  3. I really cannot see a large number of people paying for general news. If it is specialised advice or recommendations. However, with the amount of news websites available, why would a person pay for one website when they can get the news for free elsewhere?

  4. says:

    Unlike a lot of whiners who don`t accept what

  5. Murdoch is saying nothing that we dont alrady know. Many forms of content are going the way of the internet; its faster, easier, it can be updated quicker, and in many businesses it streamlines enterprises allowing it to reduce its costs.

  6. says:

    In a sense, I don’t agree with what Rupert Murdoch have said any more, there is no doubt that the consumers must pay for the news after enjoying the service, if they don’t, who will?