Rhody Trader

I’ve been taking in some of the reaction to the announcement from Rupert Murdoch that soon there will be a charge for use of News Corp websites. There are definitely those out there slamming the idea, like the Australian site Crikey. They basically take the view that if Murdoch does this he will basically hand over market share to his competitors who don’t (also referring to his miserable track record when it comes to online things – like My Space). Daily Kos suggests this move could actually hasten the death of the old print and broadcast media model, upon which News Corp was founded, of course. Responders to an LA Times blog entry on the subject were strongly vocal from several different angles.

I personally am not sure how it’s going to fall out. This could actually work quite well, but only if other media companies follow along. If News Corp is just hanging out there by itself while others are able to carry on with a free model then it could get absolutely buried by the competition. There is inevitably going to be a consumer backlash when the charges start to hit. If they have a choice they’ll go elsewhere, but if not it will just be a lot of sound and fury with no meaningful impact.

I’m not one of those who thinks everything on the internet should be free. It takes time and effort to create the content. It’s only fair folks get compensated for that work.

The problem is most people don’t think in terms of value. I see it in new traders. They are always looking to get something for free. They fail, however, to account for the time it takes them to aquire the free stuff which could be had more quickly and easily for a nominal price. They also fail to take into account the fact that free can also come with a lower quality of product (see When Free Isn’t and Paying Makes Much More Sense). More experienced traders (and business people in general) will understand the value/cost trade-off and make decisions in that way.

The head of my business unit expressed the view that this move by News Corp could help to tier content, especially in an area like ours dealing with markets and analysis. He  specifically offered up as example of the free level a trader who has a thousand people reading his stuff, but has no professional background and no real understanding of the markets. Naturally, not every trading blogger falls into that category, but his point is fair enough.

I see two potential influencing factors here. One is the fact that there’s only so much advertising money and there’s a rapidly increasing number of places it can get spent online. Economists would probably say that some kind of equilibrium will be found where the competition for advertising dollars will make it a challenge to really get ahead with that as a primary income source – at least at certain levels.

The other factor is that there are many other non-direct-profit motives for providing free content online. That means there is an on-going conflict between those who want to charge and those willing to give it away. The ability of those looking to charge to create value (at least the perception of it, anyway) beyond what can be had for free is what will decide the outcome.

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