What the future of a News Corp. newspaper spinoff should look like

After much speculation, News Corp. has confirmed that it is considering a split that would see the media and entertainment conglomerate cleave itself in two, with the newspaper (and book publishing) assets carved out as a separate unit from its TV and movie businesses. Although the company could still decide not to do so, the idea raises an interesting question: Assuming that chairman and CEO Rupert Murdoch is interested in seeing that newspaper-only unit succeed — as opposed to just selling it to someone else or slowly liquidating it — what would he have to do in order to make that happen? (Update: News Corp.’s board approved the split in principle late Wednesday night, according to the Wall Street Journal)

When it comes to the digital aspects of its newspaper business — which includes the Wall Street Journal, the New York Post, the Times of London and the Australian, among other prominent names — News Corp. is a creature of contradictions. Many have criticized Murdoch for being too quick to erect “hard” paywalls at newspapers like the Times (as opposed to soft or metered paywalls like the one at the New York Times), since that resulted in a massive loss of readers for the venerable British paper. Murdoch also maintained the paywall at the Wall Street Journal after buying it in 2007, despite initially saying that he planned to remove it.

At the other end of the spectrum, there’s The Daily, a bold experiment aimed at creating a digital-only newspaper designed and produced specifically for the iPad and other tablets. Even if you see the venture as something of a failure — given that it doesn’t seem to have come close to the readership or revenue targets News Corp. envisioned when it was launched — it is still a substantial ($ 30 million plus) bet on the mobile and digital future of news. It may be an attempt to duplicate the old scarcity model of news, but that’s a much bigger investment than many other traditional media entities have made in the potential future.

Less like The Daily, more like the Pulse deal

Is The Daily something that News Corp. could build on or expand with its other newspaper properties? It no doubt has lessons it could teach the conglomerate’s other papers about what works and what doesn’t in terms of mobile or digital apps, but to some extent the iPad newspaper is a very different animal. For one thing, it still doesn’t even have a website where you can go and browse the content the way you would with the Journal or the Australian — so it is more or less a hermetically sealed tablet product, and it’s not clear yet whether that’s what readers (or enough readers) actually want.

Arguably more interesting as an indicator of future direction are some of the moves the Wall Street Journal has been making. As we’ve noted a number of times, the Journal has been experimenting with a variety of ways of moving what it does into a digital future, including the expansion of its video offerings — which my colleague Jeff Roberts has described in more detail — as well as more recent ventures like the partnership it signed on Tuesday with Pulse, the news-reader/aggregator app for the iPad.

What’s particularly interesting about the Pulse arrangement is how it differs from a similar deal that the New York Times struck with Flipboard, another news-reader/aggregation app. While the NYT is distributing content to existing subscribers through the tablet app and hoping to generate additional revenue from advertising within Flipboard, the Wall Street Journal is actually selling subscriptions to some of its content in a new way: readers can click and get access to just the Water Cooler, the Technology Digest and other sections rather than having to subscribe to the whole newspaper.

Is that how people want to read the news? No one really knows yet, but at least the Journal is experimenting with one possible solution — and you could argue that it is a smart way of taking advantage of the brand value that the newspaper has in the financial sector, where readers are theoretically more likely to want to pay for content. With the Pulse deal, they can subscribe to only the specific content they want (which might attract more casual readers than a blanket subscription to the whole paper) and they also take advantage of the alternative distribution method that Pulse represents. Those are both arguably smart moves.

Let the content flow and monetize it elsewhere

So what does the future hold for a standalone News Corp. newspaper company? Undoubtedly, there would have to be cutbacks and even asset sales, since the newspaper operations will no longer have the financial support provided by the parent’s entertainment assets — and $ 30-million bets on experiments like The Daily would probably also be a thing of the past, for the same reason. As media analyst Ken Doctor notes in a post on the future of News Corp., Murdoch might even wind up deciding to sell or dispose of everything other than the Journal.

But if News Corp. (or whoever winds up owning the newspaper assets) wants to try and make the transition to a digital future instead of just liquidating its properties, it would do well to continue the kinds of experiments that the Wall Street Journal has been implementing: in other words, let content flow through different channels like the Pulse app or Flipboard and find readers wherever they are, and then monetize that content where it is being consumed instead of pushing people to a website. And think more about how to make use of video — and other alternative content forms — rather than just the traditional news story.

At some point, the Journal and some of Murdoch’s other properties could also try to implement some of the ideas that former Washington Post managing editor and now WSJ managing editor Raju Narisetti has proposed with respect to a “reverse paywall” approach — one that focuses on membership benefits for devoted readers, rather than simply penalizing everyone with a paywall. Whether News Corp. or its successor company have the gumption to try something like that, however, remains to be seen.

Post and thumbnail images courtesy of Flickr users Mark Strozier and Rego Korosi

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