article

05.05.09

Murdoch's Secret Plan to Charge for Content

The Daily Beast's Stryker McGuire has learned that News Corp. has tasked a global team—reporting directly to the 78-year-old media mogul—with creating a model to charge for online content.

Only a few years ago, Rupert Murdoch described himself as a “digital immigrant” and the Internet as “an emerging medium that is not my native language.” Since then, he has gobbled up social-networking sites like MySpace and digital-content delivery systems like Factiva.

Now, The Daily Beast has learned, Murdoch’s News Corp. has set up a global team, based in New York, London, and Sydney, to create a system for charging for online content in an environment where consumers have come to expect to get it for free. According to a knowledgeable source, the team is said to be “looking at hardware” to deliver the content in a “user-friendly way”—a prospect that will surely catch the attention of the developers of Amazon’s Kindle and the Sony Reader.

The project, still under wraps, will draw on the conglomerate’s wide array of assets, from The Wall Street Journal to The Times, Sunday Times, and the Sun in London.

The source tells me that this team is “personally run and overseen” by Murdoch, 78. Murdoch has enlisted the aid of a longtime trusted lieutenant, Les Hinton, now CEO of Dow Jones, which News Corp. took over in 2007, and Murdoch’s youngest son and heir-apparent, James, 36, the London-based CEO of News Corp.’s Asian and European operations since late 2007.

News Corp. declined to comment on these developments, but my source tells me that the project, still under wraps, will draw on the conglomerate’s wide array of assets, from The Wall Street Journal to The Times, Sunday Times, and the Sun in London. Murdoch’s team is also in discussion with publishers and “other content providers” outside of News Corp., according to the source. The executive handling these talks is Jonathan Miller, the former AOL head who, a few weeks ago, was appointed chairman and CEO of News Corp.’s Digital Media Group and chief digital officer of News Corp. Miller reports directly to Murdoch.

These are significant developments, coming as they do from the company that runs the world’s largest English-language journalism business. News Corp.’s iconic newspaper and TV properties span the globe, from The Wall Street Journal—one of the few newspapers that successfully charges for content—to The Australian to The Times of London to Sky News. News Corp. is also a major provider of sports programming and content.

Murdoch has been criticized for overspending when he paid more than $5 billion for Dow Jones, but Dow Jones businesses—including Factiva and the Mosaic content-management and billing system—have a number of existing, direct relationships with publishers that could prove useful in a content-charging world. Originally, Murdoch talked about making the Journal’s Web site free and advertiser-supported, but he later decided charging was a valuable revenue source.

Murdoch is by no means alone is this very new game. In fact, he’s coming under increasing pressure to get his new plans out into the open as potential competitors roll out theirs. One new player is Journalism Online, which was launched in April by the media entrepreneur Steven Brill (Court TV, American Lawyer); L. Gordon Crovitz, a former publisher of The Wall Street Journal, and Leo Hindery Jr. of InterMedia Partners, a private-equity firm.

As anybody who used to read a newspaper that no longer exists knows, the race by Murdoch, Brill, and others to “save journalism” has taken on an added urgency in recent months. The latest case, but certainly not the last, is the venerable, New York Times-owned Boston Globe, which has been threatened with closure unless it can work out a deal with a union representing more than 600 Globe employees.

The extent of News Corp.’s plans is a well-kept secret, but their existence does not come as a complete surprise. Murdoch vaguely alluded to them last month at an industry show. His favorite in-house editor, Robert Thompson, formerly editor of The Times of London and now managing editor of The Wall Street Journal, has been scathing in his attacks on Internet companies like Google as “parasites or tech tapeworms in the intestines of the Internet.” As he told an interviewer in April, “There is a collective consciousness among content creators that they are bearing the costs and that others are reaping some of the revenue. Inevitably that profound contradiction will be a catalyst for action, and the moment is nigh.”

Stryker McGuire is an American journalist working in London. McGuire is a contributing editor at Newsweek magazine, where he was a correspondent, bureau chief and editor for 30 years; the founding editor of International Quarterly , and an associate at Lombard Street Research, an economics consultancy in the City of London.