Rupert Murdoch and Jewish New Media

title_new_mediaDoes Rupert Murdoch’s vision of online journalism have something to say to Jewish media? Murdoch talked about his new-media strategy in a recent interview on his SkyNews channel in Australia, making the case that online readers will pay for content. Given the unorganized marketplace of the Jewish Web, that question is pertinent in the Jewish context as well.

Of course Murdoch is flouting the conventional wisdom that “information wants to be free.” In response his critics assail him with stereotypes: he’s too old, he’s too wedded to old-media paradigms, he’s a venal capitalist, or he’s a megalomaniac. But a stereotype is not an argument. And there are good reasons why Murdoch might be right.

Web users have become accustomed to surfing the world’s media for free. Many assume that the model is sustainable because it’s been around for a while, but the opposite is true. News Websites are subsidized by print or broadcast owners whose revenue is plummeting. Sooner or later the crunch will come and there won’t be any money for subsidizing their Web presence. And virtually no Websites can sustain themselves on the little advertising revenue they earn, even if that revenue were to multiply.

Although the writing has been on the wall for some time, no mainstream outlet has dared to be first to require paid subscriptions, for fear of losing traffic to the ones that remain free. Yet pricing strategies in other industries often shift when one player makes a move in the hope its competitors will do the same. Among airlines, another money-losing industry, the cascade of fuel surcharges, baggage surcharges, and meal surcharges spread across the industry because every airline stood to gain. Cash flow is more important to them than market share – just as it is to The New York Times or the Tribune Company.

When people hear that the NewsCorp sites will be charging money, a typical reaction is “I’ll just get my news somewhere else.” But what if most of the major news sites do the same? We know the answer because we’ve been down that road before. When cable TV came along, the conventional wisdom was that it couldn’t compete because viewers would never pay for what they were getting for free. Now most U.S. homes that can receive cable subscribe to it, and 40,000,000 people pay extra for HBO/Cinemax. In the Napster era of the 1990s the future of online music was said to be free; now iTunes is the largest music retailer in America.

The fact is, people have always paid for content like news, lectures, movies, theater, and concerts. The only reason to believe that’s changing is the faith that the Internet rewrote all the rules. That faith has taken some hard knocks, though, starting with the tech bust of 2000-01.

The Jewish online world is especially ripe for a fee-based Website. It’s a niche with a lot of content not available elsewhere – which is just what users are most willing to pay for. And the numbers add up. Let’s assume a strong new Jewish site could attract a million unique visitors per month. (Compared to the 2.5 million currently claimed by that’s an attainable number.) And let’s suppose users had to pay for access beyond the home page. If 5% of them subscribe – a conservative assumption, considering that around 10% of public radio listeners make annual contributions that are entirely voluntary – and if those 50,000 subscribers paid just a dollar a month for access, that’s $600,000 in revenue.

Several Jewish print publications currently have subscribers numbering in five figures, and some of them charge $50 or even $90 a year. In other words, there are already a lot of subscribers to Jewish content who pay a lot more than a dollar a month. At $2.50 a month, the revenue from 50,000 online subscribers would be $1.5 million. That looks like a real business to me.

Bob Goldfarb, the president of the Center for Jewish Culture and Creativity, is also a consultant and a Harvard MBA. A regular contributor to eJewishPhilanthropy, Bob lives in Jerusalem.