TechCrunch crunches the numbers on News Corp's decision to—gasp—charge money for one of its products, the Times of London. Surprise! Charging money is a great way to raise revenues:
Depending on the actual CPM, financially they are doing at least two to four times better than they were before. And that is with only about 1.5 percent of their former readers becoming paying subscribers. You don't need that many subscribers to make up for lost advertising revenues online.
Emphasis mine. Curiously, TechCrunch's headline, picking up on a report from GigaOm, focuses on the fact that the Times lost a lot of readers who didn't want to pony up. "Meanwhile, the newspapers have been cut off from the news flow on the broader Internet, and the potential benefits of attracting links and commentary from other sites that could help to promote their content," writes GigaOm's Matthew Ingram. "Not a great trade, no matter how you slice it."
Huh? I'd like Ingram to find me a CEO who won't trade cold hard cash for "the news flow on the broader Internet." I mean really: If I'm Rupert Murdoch, do I really give a crap about the broader news flow?
There are a couple of unknowns about the News Corp experiment that could further tip the scale towards pay walls: First, charging money for Times of London's website will likely attract a more affluent audience, allowing the site to raise the rates it charges to the advertisers that remain. Second, by charging money for the website, print circulation may increase as readers decide that, if they're going to pay for content, they might as well be able to use that content for kindling when they're done reading it.
Now, maybe the free stuff zealots will turn out to be right on this one, but count me among the skeptics. It boggles my mind when I hear companies talk about revenue challenges as if it were some great mystery. It's not a mystery. Make stuff and charge money for it:
We think free is a business cancer. Offering some stuff for free is fine as long as you have something else to sell. But "we'll give it all away for free and figure out how to make money later" isn't much of a business model in our minds. We provide our software like a restaurant provides its food, a cabby provides transportation, and a clothing store offers a shirt -- in exchange for money.