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Thursday, 6 August 2009

Rupert Murdoch's decision to start charging for readers' access to its news websites comes after a long PR campaign designed to pass the blame for poor overall media performance to content aggregators such as Google News. If websites such as such as The Australian and The Daily Telegraph go 'paid', will anyone read them?

The ABC's finance reporter Alan Kohler says "Good luck with that".

Back at the end of May, Murdoch cited Google's "shameless promiscuity" as the reason news publishers would be forced to ask customers to pay for online news.

Two days earlier Campbell Reid, News Ltd's group editorial director had said that “Poor management, poor newspapers, I think are responsible for the death of some newspapers".

Who's right?

News Ltd's shares rose about 40 cents today on the back of its announcement. "I think the worst may be behind us," Mr Murdoch said, "but there are no clear signs yet of a fast economic recovery." But the main culprit seems to be News' lack of perspicacity in terms of its online ventures.

News Corp's division that includes Fox Interactive Media, which includes the social networking site MySpace, posted a $US136m operating loss due to ad declines and the cost of launching MySpace Music. The unit suffered turmoil during the quarter as it lost ground to rival Facebook and slashed its work force by nearly a third.

Facebook recently announced that its membership had passed 250 million and a valuation that occurred at the time of a recent sale put it as $6 billion. When Microsoft bought a share some years ago it was valued at $15 billion. But it's still doing better than MySpace.

This result augurs ill for Murdoch's capacity to blend online with traditional media production methods. If he cannot choose the right vehicle to run with - I rejected MySpace as soon as I saw it and joined Facebook as soon as I saw it back in 2007 - what are the chances that he can replicate the Wall Street Journal's success charging for access, in his other vehicles?

I'm sceptical.

Murdoch invested in MySpace soon before being quoted in his flagship newspaper, The Australian, welcoming in a qualified manner the advent of the blogoshpere, during which he called what was starting to appear on the internet "mainly rubbish".

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