Events | 2009.08.06
Sunday Times testbed in Murdoch's plan
• Pay-to-view website to launch in November
• Move follows plunging profits at News Corp titles
Rupert Murdoch will use the Sunday Times as a testbed for a radical new strategy designed to transform the finances of his British newspaper business by charging for online content.
The newspaper\'s website, currently combined with that of its daily sister title the Times, will be launched as a standalone site, Sundaytimes.co.uk, at the end of November, according to senior industry sources.
It is unclear whether News International, the subsidiary that controls Murdoch\'s stable of British papers, will introduce a subscription model or charge for each visit.
The plans form part of a wide-ranging overhaul of Murdoch\'s titles, which also include the Sun and News of the World, after he said they would stop making content available free of charge.
The News Corp chairman said on Wednesday that all his websites would introduce charges by June 2010. He claimed consumers were willing to pay for celebrity scoops and exclusive stories including revelations about MPs\' expenses.
The Sunday Times advertised for web staff earlier this week and a team of executives have been working on plans to charge for content for nearly a year. The posts include several "communities editors", designers and dedicated news journalists.
The Sunday Times is the dominant player in the weekend newspaper market, selling more than 1m copies a week, and has subsidised losses at the Times for many years. It is now thought to be losing money, however. Internal documents are believed to show it made a loss of £16m in 2008/09, the first time it has gone into the red since Murdoch acquired it, and is expected to lose a further £12m this year. It made a profit of £53.4m in 2007 and £42.8m last year.
In a separate move, executives at News International also plan to double the marketing spend used to encourage readers to subscribe to their titles from £7m last year to £13.5m this year.
The fact that Murdoch is flagging up one of the biggest strategic shifts in the history of News International so publicly suggests he is eager to encourage competitors to follow his lead, according to senior industry executives.
Andrew Neil, a former editor of the Sunday Times and one of Murdoch\'s key lieutenants for over a decade said: "It is a very good idea. I think he\'s right and it would help if everybody did it. He knows that this will work better if all the main competitors do it."
Neil said the initiative should be welcomed by an industry that has seen advertising revenues fall dramatically in the face of one of the deepest economic downturns for decades. News Corp revealed this week that advertising revenues at its stable of titles, which also include the Wall Street Journal, have fallen by 17% this year.
Neil, chairman of Press Holdings, which publishes the Spectator magazine, added the anticipated upturn in digital revenue, which would have helped fund the cost of online expansion, had failed to materialise. In fact, years of growth in online advertising have recently been reversed.
"The industry did it [gave content away online] because we thought the advertising dollars would eventually follow the eyeballs," Neil said.
Paul Zwillenberg, a partner at OC&C Strategy Consultants who has advised some of the country\'s leading newspaper groups, said: "The handwriting is definitely on the wall for \'free\'. There are simply too many [web] pages to make enough money from advertising to fund journalism, let alone quality journalism."
Peter Bale, who oversaw digital strategy at the Times for two years, growing the website\'s readership from 1.5m to 9m by the end of 2006, said: "It is a brave move. Someone has to try at some point to reinforce to readers the value of content and the fact it is a costly product."
Bale, who now runs online content, including a news service, for Microsoft\'s UK website, added that Murdoch was now more concerned about protecting revenues from his newspapers than he was chasing online readership. This is partly because the day when online revenues are likely to exceed the cash generated by print now seems further off than ever.
"When I was at the Times we thought that would happen by 2016," Bale said.
Revenues at Murdoch\'s other British newspapers are also under severe pressure. The Times, which has long struggled to turn a profit, lost £42m this year, up from £15.7m in 2008. The Times relaunched its Saturday edition earlier this year, but failed to add many readers despite increasing its marketing budget from £18m to £28m.
Even the News of the World, a cash cow for many years, is making significantly less money that it once did, according to internal figures. Profits of £22m in 2007 fell to £16m in 2008 and just £5m this year.
Neil pointed out that Murdoch\'s websites will have to change dramatically if the initiative is to succeed. "If you are going to charge you have to build a site that is different and has a distinct character. General news has become a commodity in a sense. You have to recreate the paper online."
Richard Lambert, the director-general of the CBI and a former editor of the Financial Times, which successfully introduced a subscription model at its website, said: "The argument [about free content] has been brought to a head by the recession. Murdoch\'s trying to start a debate.
"News organisations have to find some way of capturing the value of their content. Let\'s hope he [Murdoch] succeeds. Regional newspapers are being hammered into the ground because they can\'t capitalise on their web presence even though some of them are doing a very good job."
Several local papers have been closed or merged by their owners this year in the wake of falling advertising revenues.
For more information, please visit
http://www.guardian.co.uk/media/2009/aug[...]-murdoch-sunday-times-strategy
