Future of web 'free stuff' in the air after Murdoch's move

Herald business editor Liam Dann.

Rupert Murdoch has stuck his neck out and put a date on plans to charge for online news. Within 12 months he plans to make readers pay for content on all News Corp's sites from tabloids such as the Sun to heavyweight sites like the Australian.

Whether or not you think it will work - or should work - it is an exciting development in a business story that is one of the most dynamic outside of the global credit crunch and its economic fallout.

There's no doubt this is a sensitive topic for the news industry.

Murdoch's media rivals will be watching with interest, torn between the natural competitive instinct to hope he falls on his face and the understanding that if he gets it right there is an upside for the entire industry.

But the issue of the internet and "free stuff" is much bigger than just the news business.

The free-ness of the net is causing big problems for the music industry, the movie industry and the television network model.

It is very difficult to suppress distribution of creative content once it is digitised. You can make a good moral and legal case for that distribution being a theft but the problem is that putting anything on the internet is like leaving it out on the street overnight.

When taking something becomes that easy, people stop thinking of it as theft. And that's largely what has happened to content on the web.

People expect free. But there is "free" and there is the "free lunch" - which of course doesn't exist.

News consumers who listen to a radio station such as Newstalk ZB aren't paying for their news. Except that they aren't exactly getting it free. They are offering up their ears to advertisers for a set number of minutes in return for news content.

And users of the free social networking sites such as Facebook open themselves up to more specific advertising which is tailored by marketing companies that trade online quizzes and games for access to their personal profiles.

Most news websites are still in the process of developing an advertising model that can generate enough revenue to ensure that they have a long-term sustainable future.

That is an evolutionary approach to the business which will rely on new technology - the strength of the web - to create advertising that can generate more revenue without turning readers off.

Murdoch is clearly sick of waiting and has called for a revolutionary model.

That is a big risk. On the internet the stakes are already high. Brand loyalty is weak and because of the ease of checking numerous sources consumers are far more fickle than consumers of traditional media.

Charging for good-quality news product still works in physical newsprint and is working online for specialist business titles such as the Financial Times and Wall Street Journal.

But the trick for Murdoch will be to get people paying for mainstream titles such as the Times and the Sun.

Right now he has the industry wondering if he still has a card up his sleeve. If he does then it will have to be a good one.