First mover disadvantage

Yesterday’s announcement that News Corp has restructured its divisions and created a new division to house The Australian has sparked a flood of speculation that News Corp will start charging for content by the end of the year.

News Corp hasn’t denied the suggestions and certainly Rupert Murdoch has made it clear that he wants internet users to start paying sooner rather than later, or his papers will be in serious trouble.

Charging for The Australian, rather than say, the Herald-Sun or The Daily Telegraph, looks like a good idea. It is News Corp’s premium product in Australia and if consumers are going to pay for anything, you’d think it would be detailed political and business news and commentary, rather than sports and local stories.

However, what strikes me as being most important is Murdoch’s timing and particularly whether its rivals around the world – specifically Fairfax in Australia – follow his lead quickly, or slowly.

If Murdoch moves first in charging for content from The Australia and Fairfax decides not to follow, users are going to be left with a pretty easy decision. Pay for something, or get a very similar thing for free (and let’s face it, the content of The Australian and The Age/Sydney Morning Herald is hardly that different).

A pretty easy choice, I would have thought.

However, if News and Fairfax move at around the same time, the consumers’ choice is very different. If everyone is charging, they might well be prepared to part with their cash.

Both options would have their appeal at Fairfax. If Fairfax eventually want to move to a paid model, then moving at around the same time makes sense, as this could force a sudden change in consumer psychology and behaviour.

On the other hand, waiting to see how consumers react to being charged for news content has its advantages too. You can see what pricing and payment models work, what content is actually worth locking up, and how advertisers react.

The question of charging for news seems to be settled – it’s going to happen eventually.

But the question of timing could be even more important, and the advantage appears to lie with the second and third movers.