Online Newspapers

News Corp's recent announcement of a complete subscription based digital strategy by 2010 seems to have generated a degree of excitement amongst commentators, based principally on the premise that if anyone can do it, News Corp can. And yet at this time that enthusiasm is grounded in very little substance. News Corp has not shown the same business acumen in the digital world as it has in the print one; MySpace is a prime example, as are failed attempts in the past to impose subscription models for news.

There is a danger here that newspaper people are looking at other models such as mp3 and online video, and rationalizing that if people are willing to pay for those, then they will be more than happy to pay for news on a per article basis. The FT seemed very pleased with itself last week, comparing it's proposed model favorably to iTunes. But there is one major flaw in this approach - a prosaic newspaper article does not hold the same value proposition as an mp3 track by my favorite artist. I will pay for music, which is something I will derive pleasure from listening to over and over again. Can the same be said for the headline article ('Briton May Hang for Killings in Baghdad') in the Sunday Times at this very moment? No matter how passionate I may be about news, and even if I were to pay whatever over-inflated price that will in the future be charged per article, I will never read that piece again. Even the most enthusiastic consumer will quickly realize that a per article model has a very poor value proposition. And add to that the fact that news is also available 24/7 on television, radio and on the Internet, the idea of paying for individual. articles on a pay as you read basis, already sounds DOA.

Some specialist publications such as financial papers will likely find a more willing subscriber base; though taking the FT for example, buying a physical paper will likely be a lot more economical than paying for every article one by one. And therein lies what will be a big problem with a model such as this; an online newspaper should be cheaper than the physical copy. This is one area where Murdoch and co. can actually learn from the experience of music execs; your customers know that online should be cheaper, do not take them for fools.

This does not mean that there are not going to be new business models out there that newspapers might be able to employ; they just don't seem to be coming up with them yet. The newspaper that institutes an appealing subscription strategy will not only profit from the viewpoint of revenue, but in a future world of closed digital newspapers, will likely also pull in new subscribers at the expense of the competition. These should be powerful incentives to get it right first time.

And then there is one last point. Perhaps a change in technology and the resulting availability of information, may mean that the model of a newspaper as a crucial vehicle for information is no longer a relevant one. Perhaps newspapers, as a mainstream entity, are going to go the same way as the telegram. What is for certain is that we will now in the next five to ten years.

By M. Sumra, MBA Class 2010