Why paywalls makes free news better

Almost a year ago Rupert Murdoch started talking about how News Limited would start charging for news content online. It's interesting that he started doing this, not in a time of record profits for News Limited, but at a time when they were suffering record losses - this is the first hint that his idea may not be a good strategy, i.e. that it didn't come out of some noble concept of how to make news better, but rather out of a desperation in trying to turn a buck.

But the trouble with Murdoch's idea of paid news is that in simply setting up your business model, you help your competitors.

You see, at the moment, there are lots of free news services - and they're all competing for advertising dollars, which comes from eyeballs on websites. If Murdoch puts his quality content behind a paywall then that means more eyeballs for his competitors, who will then be able to offer better quality news.

Traditional media is struggling to turn a dollar in the online world, yet strangely enough new media companies seem to be quite comfortable with their online ventures - maybe the problem is not with the ability to turn a dollar in online news, but simply the expectations and preconceptions from old media moguls as to how online works.