Can Murdoch Pull Media Rivals Together?

Can Rupert Murdoch do the impossible by uniting his competitors and saving the newspaper industry?

That's what he seems trying to do with a new plan for a paid content consortium being discussed with the New York Times Company, the Washington Post Company, Hearst Corporation, and the Tribune Company according to the Los Angeles Times.

The tentative plan—much like Steven Brill's Journalism Online—would unite disparate papers in a pricing policy to force readers to pay for content. Forget those free newspaper sites or those aggregators acting like (in the words of the Wall Street Journal's Robert Thomson) parasites. And you can just go and forget that early internet chestnut "information wants to be free," because you'll have to start paying.

Why Murdoch would want this is no surprise: Who doesn't need a revenue stream in this market, especially when the News Corporation chief saw his compensation drop by 40 percent this year. The company has closed one of its free London papers last week and may be putting the Dow Jones Market Index up for sale.

Charging for content makes perfect sense for Murdoch, but will it make sense for consumers?

"Consumers are paying for other kinds of information," Desilva + Phillips's Reed Phillips III told Portfolio.com. "It's time to figure out how to get consumers to pay for this information."

"Now's the time to do it," he noted, since newspaper companies are under more pressure than ever. The Times' Dawn C. Chmielewski cited Newspaper Association of America figures showing a 28 percent decline in ad revenue industry-wide in the first quarter of 2009.

In Phillips' view, "It may require working together where a year ago they wouldn't."

Of course, "working together" and setting prices raises certain concerns, namely in the eyes of the Federal Trade Commission.

"I hope it works," John E. Morton of Morton Research Inc. told Portfolio.com of the proposed partnerships. "The danger here is that the anti-trust division will get excited about a conspiracy. How they get around that, I don't know... It's in all of their interests to come to some kind of agreement."

Phillips suggested the creation of new, separate entity so that the partnerships are not between the media companies directly.

"I think it's gonna be bumpy," Morton continued. "It's gonna take some effort and difficult times to try to convert people to paying for what they've become accustomed to getting for free." Will readers ever pay for news? "Consumers are paying for other kinds of information," Phillips said, pointing to Apple's iTunes music store and the Amazon Kindle.

Then there's question of aggregators. Will the consortium be enough to knock out Google, which controls 76 percent of search traffic in the US and sells ads against newspaper's content through its Google News portal? And what about The Huffington Post, which uses summarized stories from newspapers, wire services, and magazines as well as its own content and attracts upwards of 8.9 million unique visitors some months. A percentage of traffic leaks from that site over to the newspapers, which may explain why, the Washington Post's publisher Katharine Weymouth thanked the site's founder, Arianna Huffington in May. "I think Arianna has built an amazing site and drives a lot of traffic to us, so thank you!"

Not everyone who runs an aggregator wants to play nice. Michael Wolff, who runs Newser, relishes the perception that he's in competition with traditional news organizations. Wolff titled a recent blog post I'm proud to Kill the News and boasted, "We aren’t stealing from the Times and other big news brands, we’re making their stuff better—or at least different."

"We’re doing what journalism is supposed to do best: giving the customer what he wants."

John Morton, like the WSJ's Thomson, is not at all sympathetic towards these sites. He calls aggregators "news thieves." ("I'm tired of being polite about this," he said bluntly.)

Finally, one wonders if Murdoch is the right man to unite all these organizations. Usually portrayed as a cartoonishly-ruthless businessman, Murdoch seems to thrive on competition, not cooperation. At times he has seemed willing to do anything—even lower a paper's price—to gain an edge over a rival, but when he needs to be, he's shown a willingness to work with competitors.

In 2006 News Corp's MySpace's cut a search deal with Google and in 2008 plans for the New York Post to share some printing costs with its blood rival the New York Daily News were floated in the press.

"I think Rupert's hyper-competitiveness is the fly in the ointment," Desilva+Phillips' Reed Phillips warned.

However, he continued, "I would say that ultimately, Rupert is a pragmatic person. He's gonna make the decision that's right for his business which in this case, is the decision that's right for his whole industry."

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Matt Haber is the media blogger for Portfolio.com.