Peter Kafka

Recent Posts by Peter Kafka

Murdoch: Get Ready to Pay for Our Stuff Online–But Not on a Kindle

tollsCharge people who want to read stuff online? Heresy in the media world until recently. Now everyone is noodling with it.

And News Corp. (NWS), whose Wall Street Journal has long required a subscription for full access to stories, is among the most most aggressive. During his earnings call this afternoon, CEO Rupert Murdoch said he planned on exporting the WSJ’s online pay model to other News Corp. sites.

“We’re absolutely looking at that,” Murdoch told a reporter. Expect to see movement on some of his stronger properties “within the next 12 months,” he said.

But Murdoch also made it clear that he doesn’t plan on selling his content via the Kindle, as publishers like the Washington Post (WPO) and the New York Times (NYT) are doing. Here’s part of his opening remarks:

That it is possible to charge for content on the web is obvious from the Journal’s experience. We are now in the midst of an epochal debate over the value of content and it is clear that, for many newspapers, the current model is malfunctioning. We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues and returns for our shareholders.

I can assure you that we will not be ceding our content rights to the fine people who created the Kindle. We will control the prices for our content and we will control the relationship with our customers–any device maker or website which doesn’t meet these basic criteria on content will not be doing business long-term with News Corporation.

What’s that all about? During the call, Murdoch reiterated News Corp.’s interest in investing in a Kindle rival, though he insisted it would be relatively small, and that the company is “neutral” about different mobile platforms–”we’re not appliance makers.”

Presumably there are some specific issues News Corp. has with Amazon (AMZN), but I have a hunch that this is one of those cases where it’s straightforward: News Corp. wants to control the price of its content, and it wants a direct relationship with its customers, and Amazon doesn’t allow that.

UPDATE: This PaidContent story spells out one problem: Amazon is demanding 70% of revenue from digital subscriptions it sells, at least from papers the size of the Dallas Morning News. That’s the inverse of the ratio at iTunes, by the way: Apple keeps about 30% of each transaction and the content owners get the rest. Presumably big players like the Times, the Post and News Corp. could cut  a better deal, but Murdoch would want the lion’s share of revenue, and Amazon seems unwilling to give that up.

I also assume that the company is wary of repeating the music labels’ iTunes error, which has led to Apple’s stranglehold on the digital music market.

Then again, Murdoch also boasted about The Wall Street Journal’s new iTunes app, which he said been downloaded 360,000 times in the few weeks following its release. And last time I checked, Apple (AAPL) kept a pretty tight grip on its iPhone apps. So perhaps one of my corporate cousins–News Corp. owns Dow Jones, which owns this site–can explain the difference.

[Image credit: billjacobus1]


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