Friday, January 25, 2008

Murdoch changes mind on online fees

RUPERT MURDOCH has done an about-face on his plans to scrap fees for The Wall Street Journal online, deciding to keep charging readers amid fears a recession in the United States will hit advertising demand.

His turnabout came just weeks after News Corp finished its $US5.6 billion ($6.3 billion) acquisition of Dow Jones, the publisher of the Journal. Earlier this month the company offered the finance paper's editorials and opinion columns on the internet free.

"We're sort of dividing it up," Mr Murdoch told a panel at the World Economic Forum in Davos on Thursday. "Those things that you can get more or less as a commodity on different sites about finance, that will certainly be free." But the "really special things will still be a subscription service, and sorry to tell you, probably more expensive", he said.

Only two months ago, Mr Murdoch said the site, which has about 1 million subscribers, would be made free to boost user numbers to up to 15 million and "attract very large sums of advertising". Brushing off concerns the site would lose $US60 million in annual subscription fees, he said on another occasion that "if the site is good, you'll get much more".

But with talk of a recession, the advertising outlook is more uncertain. Advertising spending is closely tied to the health of the economy. Morgan Stanley this week cut its price targets for shares of Time Warner, the world's largest media company, and CBS, the biggest US broadcaster, saying the downturn would hurt advertising spending this year and next.

"It's all about protecting revenues," said Mark McDonnell, an analyst at BBY. At News, "they may have done the maths and said we're going to lose an x amount of money" by scrapping the charges, he said.

Mr Murdoch may also have come to the conclusion Journal customers would willingly pay for the depth of specialised content on the site, media analysts said.

Instead of giving up fixed subscription fees and become hostage to the volatile advertising market, News Corp has settled on a hybrid model - and plans to ask its subscribers to fork out even more: fees will rise to $US119 a year, from $US99, the Journal said.

Mr Murdoch's original comments, and The New York Times's move last year to drop online charges in favour of boosting advertising dollars, had sparked a debate on whether subscription-based journalism on the internet was feasible, putting pressure on Fairfax Media's site to follow suit.

Two months ago simplified its pricing model, but rebuffed suggestions it should offer free content to increase its readership and ad revenues.

with agencies

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