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

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.