(Barring government intervention) markets are governed by the laws of supply and demand. And in any market there are brands that stake out premium positions and those that stake out low-cost ones. The market of (on-line) news is no different. Most news has been commoditized, partially by the explosion of blog sites, partially by the stampede of traditional news organizations to post their stories online for free (using advertiser-based revenue models), and partly because of news aggregators such as Google News.
But who says news organizations can only survive if they find a way to be profitable by posting their content online for free? In fact, Murdach’s News Corp. has already shown that it can be profitable with its partial pay wall around its Wall Street Journal online site. True, it’s about the only major newspaper that has shown it can be profitable online, but one reason for that is the same reason it has remained profitable off-line – by positioning itself as a premium brand consistently delivering news and opinions that people are willing to pay for.
Now, Rupert Murdoch is considering raising its pay wall around its sites and de-listing them from Google, offering them exclusively to Microsoft’s Bing – for commensurate compensation. It’s a huge gamble, but brands like the Wall Street Journal have consistently proven that they can deliver content that people are willing to pay a premium for. If he does it, sites like the WSJ Online will certainly lose some traffic, but there’s a good chance that the added numbers of paid visitors plus the additional search engine revenue stream will more than make up for the display advertising loss (which is based directly or indirectly on traffic volume).
Moreover, Murdoch will shore up his brands’ premium positions, because they will have removed themselves from the game of giving away their product (news) for free. Murdoch is playing for long term profitability, and he has a good chance of succeeding.