Charging for online news will not save the media

RUPERT Murdoch is a demigod in the media industry. Everything he says is treated as sacrosanct. That&rsquo;s why his public ruminations on the free online newspaper, which he dubbed a &ldquo;malfunctioning business&rdquo; model, has whipped the media into a frenzy, and caused countless commentators and analysts to predict a new dawn, where consumers pay subscriptions for online news content.<br /><br />Part of this hype is understandable. Even The Guardian, which launched its website back in 1999, now admits that online advertising revenues will not plug the chasm left by declining print sales. For most news publishers, online ads barely count for 12 per cent of total revenues.<br /><br />And the online ad industry has started to shrink; if you add up the first quarter revenues of the four ad bellwethers &ndash; Google, Yahoo, Microsoft and AOL &ndash; they come to $7.9bn (&pound;4.9bn), a 2 per cent year on year drop and a 7 per cent quarterly fall. Although online advertising was supposed to reach the sky, it has barely cleared the trees.<br /><br />But the record industry shows us why throwing up a pay wall is no panacea. For years, the record labels have attempted to get consumers to stump up, with virtually no success. Estimates put the proportion of downloaded music that is illegal as high as 95 per cent. Privately, record execs talk of Armageddon.<br /><br />If newspaper websites follow a similar path, it will be hard to stop users from sharing the content among themselves. And bloggers are sure to subscribe and paraphrase or replicate the material on their own sites. The newspaper that takes the plunge first will be acting like a kamikaze pilot. Even if publishers decide to act in tandem &ndash; a highly unlikely scenario &ndash; the BBC&rsquo;s free-to-access news website will be the main beneficiary.<br /><br />The subscription model has worked for some. The Financial Times and Wall Street Journal run profitable websites &ndash; but they provide specialist content that customers need to earn a living. One option would be for others to start charging for their own unique content, perhaps using a micro payments system, charging 10p an article. Where would teachers read about the curriculum if The Guardian stopped offering its education pages for free?<br /><br />One firm hoping to make inroads in this area is Journalism Online, an outfit headed by Gordon Crovitz, the former WSJ publisher who pioneered the title&rsquo;s online strategy. He is developing a system that would let customers pay a monthly subscription and provide them with a pass to certain news sites. In time, the service will offer deals providing access to social networks, premium internet TV, newspaper sites and even other goods and services &ndash; a book a month from Amazon, perhaps.<br /><br />But this kind of service will take years to catch on. Until then, the answer to the perilous state of the media industry remains unclear. One thing is certain: throwing up a pay wall in the middle of a recession is not the answer. Surely Murdoch knows that.