I also wrote a Comment piece for this morning’s Observer about the now-operational Murdoch paywall. Excerpt:

When the web took off, most newspapers were bewildered by it. Fearful of falling behind, they began to put their content online – for free. Insofar as there was a business model behind this, it was the belief that: "If we build it they will come." And if the readers came there would surely be a way of "monetising" all those resulting eyeballs.

For the most part, however, the monetisation lagged way behind the costs of online publication and newspapers began to think that, while the web might indeed turn out to be the future, most of them would be insolvent long before the online bonanza materialised.

One unintended consequence of this triumph of hope over experience was that several generations of internet users came to believe that online content comes free. As every economist knows, in a competitive market, the price tends to converge on the marginal cost of production, which, in the case of online news, appeared to be zero.

But it only appeared to be zero because newspapers weren't charging a price that corresponded to the costs of production. In fact, they weren't charging anything at all. As a result, we have no idea whether people would be prepared to pay for online content published on the web and, if so, what a realistic price might be. The great thing about Murdoch's experiment is that it may provide some answers to these questions…