Should the Internet be pay per view?

I was lucky enough while in a Super-Box at the St Kilda vs Bulldogs game a couple of weeks ago to not only be enjoying the game with a beer in hand and all the hor d’eourves you could possibly imagine – but also to have an intelligent conversation with one of our hosts about the print media industry.

One of the points that caught my attention was when the discussion turned to the talk of Rupert Murdoch’s News Corporationlooking into how they charge for content on the web…not just to the consumer but also to the news aggregators such as Google & Yahoo. This caught my

NewsCorp has announced they will charge for content

interest because other than publications like the Wall Street Journal (which happens to be owned by NewsCorp) most newspaper publications on the internet are free. Subscription models, unless attached to a specialty publication such as the Wall Street Journal, general don’t tend to work and we have seen numerous attempts at it in the past.

I then came across the article in Bloomberg (which I was able to read for free) from a couple of days back where Barry Diller, chairman and chief executive officer of the company that runs Ask.com and Match.com, said Web users WILL have to pay for what they watch and use in the future and that the era of free Internet content is ending.

My very first interaction with the internet was during my Uni days and involved CompuServe and bulletin boards. Later Mosaic, which was the first web browser and possibly the very reason why we have the internet we know and love today, was released and the online world was changed forever.

In fact just as an interest note Microsoft licensed Mosaic back in 1995 for US$2 million and after modifications renamed it Internet Explorer. (BTW – This information was sourced from Wikipedia for free…)

The original Mosaic Browser

That small quiz night fact to one side, the reason why I raise all of the above is, while Mosaic was never open source despite popular belief, non-commercial use of it was free for all versions and in many cases the source code was publicly available. So the internet as we know it had its roots via freely accessible software which in turn accessed freely accessible information. This is the way we grew up on the internet and this is why we feel that information should be publicly available at no cost.

In fact, if you jump 14 years later from the free distribution of Mosaic you now have Chris Anderson, editor of Wired magazine, arguing in his new book that businesses operating in the digital age should embrace “free” as a pricing concept (…I read this by accessing his book online for…yes…you guessed it..free). This is justified by the belief that Internet’s rapid development and ability to easily deploy makes the production and distribution of content cost close to nothing.  Furthermore due to the abundance of content available producers should be giving away most of their materials for free which, in most cases, they can still sell advertising against with the expectation that core users will pay for premium stuff.  Anderson uses the “freemium” model that is ESPN.com as an example, which has built a huge audience of sports fans by giving away most news and commentary while selling scouting reports and the like to hardcore users.

So back to Murdoch, NewsCorp and charging for content. A news article in a Fairfax publication (accessed for free) at the end of July discussed how Google is now “facing the greatest challenge yet to its might in Australia” with the threat that both Fairfax Media and News Ltd are threaten to pull their advertising business due to Google decision to enter the real estate listings market. The article quotes that Fairfax Media and News Ltd are the two of its largest media customers in Australia.

This is a serious game here – Domain and Realestate.com.au, controlled by Fairfax and News respectively accounts for $144 million worth of classified advertising revenue.

In comparison Google’s model, while they will certainly have Adwords content associated to the results I suspect, is to source listings from real estate aggregators such as Homehound and My Home and opened up the service to allow real estate agents to list their properties free on Google Maps.

But here comes the problem, while nearly half a million people visit property websites in Australia every day, according to Nielsen, and with real-estate and Domain accounting for nearly 90 per cent of that traffic, Hitwise reports that a third of their traffic comes via Google. By the way – the third of traffic that comes from Google to Domain and Realestate do so for Free…

So who needs who more? It will be very interesting to see how this all plays out.

Murdoch - the long reigning media king saying he will charge for content, Anderson - saying it should be free, and Google – stepping on toes in its pursuit of being the reigning heavy weight internet champion of the world.

Google has nothing to lose as they expand and grow their tentacles while Murdoch has got everything to lose as he attempts to shift how users consume his online publications while protecting his current revenue streams – and this just might be the point.

Murdoch is a ruthless business man who has used his control of media to support or attack governments, businesses and individuals in the past. This internet play could define the future of NewsCorp and how we consume media online in the future. A program the other night on CNBC had an author (who I think was Michael Wolff, the Vanity Fair columnist) who had written a biography on the media boss said Murdoch doesn’t personally get the internet – he’s not a big consumer. So, maybe all this means that he is frightened animal cornered by something he doesn’t know or understand, and surely in that case, he will come out fighting with a ferocity we have not seen before.

Should make for interesting reading – even at a price. The question is who will end up picking up the tab?