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Charging for online news: applying game theory to the grand experiment

Ross Dawson, December 9, 2009 4:51 PM US PT

I was interviewed yesterday on Sky Business about plans by Rupert Murdoch and others to charge for online news and content – the video is below. We discussed plans to charge for content, whether the news aggregators can be charged or blocked, and differences in the Australian news media landscape.

In the interview I mentioned in passing the application of game theory to media strategy. Below is an excerpt from our Future of Media: Strategy Tools framework , which gives an overview of a number of strategy tools for the media industry. In essence, game theory is about mapping how players might respond to each others’ moves.

I have seen many analyses of what the impact in revenue for new organizations would be if paywalls were introduced for content. These are usually based on the proportion of readers who would pay, and the resulting impact on both subscription and advertising revenue.

These kinds of analyses are close to useless, as they look at the media property in isolation. The only meaningful approach is to examine the entire industry landscape, and how all participants, including both publishers and consumers, might respond to changes in paywalls.

We are currently doing a proprietary game theory analysis for a news provider to help them make effective decisions on whether and how they should charge for news, or what other revenue streams will be most relevant. In the grand experiment which is the future of news, any strategies must take into account a many-player view of the landscape.

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1 Comments

James Robertson said:

Hi Ross, it might be worth getting a copy of the current Economist, as there's a brief article on this topic.

The summary (from memory):

* users are promiscuous, and just because they read one printed newspaper, doesn't mean they have any online loyalty

* users read a lot of different online sources

* if their newspaper started charging for news access, some small (

* if *every* newspaper started charging, an even lower percent would pay

An unexpected result, but perhaps it makes sense in the context of game theory...

December 10, 2009 2:19 PM

Ross Dawson is globally recognized as a leading futurist, entrepreneur, keynote speaker, strategy advisor, and bestselling author. He is Founding Chairman of four companies: professional services and venture firm Advanced Human Technologies, future and strategy consulting group Future Exploration Network, leading events firm The Insight Exchange, and influence ratings start-up Repyoot.

Ross is author most recently of Implementing Enterprise 2.0, the prescient Living Networks, which anticipated the social network revolution, and the Amazon.com bestseller Developing Knowledge-Based Client Relationships (click on the links for free chapter downloads). He is based in Sydney and San Francisco with his wife jewellery designer Victoria Buckley and two beautiful young daughters.