As many news-based organization are now weighing if, or how much, to charge for access to their content, I have seen a recent example of how NOT to make the transition.

I think that most everyone is aware that the media mogul Rupert Murdoch had said a few months ago that he plans on charging for access to his content.  He owns a lot of stuff, and will be, I think, a trendsetter in the 20-year struggle of how to make money from online news.  The advertising model has clearly failed and he is trying to figure out a way to make money by charging for content.

He can do it.  He’s got lots and lots of news properties.

On the other hand, Jack O’Dwyer runs “O’Dwyer PR,” which provides rankings for global public relations firms based upon revenue.  His site also offers  other things like links to blogs and a section for job seekers.

To cut to the chase,  Mr. O’Dwyer recently created a new fee structure for agencies, aside from the $295 per subscription that he was charging:

“The firms we have made this demand to are firms with $2M to $25M and more in fees that give us minimal business.”

So essentially, he set up a fee structure – the more revenues you have, the more you pay.  In fairness, this is how many trade associations operate, the principle being that the more money you make, the bigger stake you have in the industry.  Not so much here.

BUT –  if you are considering charging more, the last thing that you want to do is to take your battle public and get into a pissing match with a client.  Oops.  He did.

Waggner Edstrom dropped their subscription, stating, on their Panorama blog:

Jack O’Dwyer, publisher of O’Dwyer’s annual list of PR agencies, recently made it clear that he will begin charging participants a fee to be included. We at Waggener Edstrom have decided that this arrangement does not support our business objectives. While we have participated in prior years, O’Dwyer’s list has not had a measurable impact on our business efforts for some time.

We are, however, taking part in other industry rankings that do not require payment, and which have proven to deliver as good, or better, results for our business. But because of our decision, O’Dwyer has singled us out for declining to advertise.

In his blog, O’Dwyer regularly calls on agencies to support trade media. The reality is that we do support the industry.

We have advertised with other publications such as PR Week, and we will continue to sponsor events that offer a thoughtful dialogue on emerging industry topics. We are also a member of the Council of PR Firms — another organization that O’Dwyer has taken to task for not financially supporting his business to the extent he deems sufficient.

Ouch.

One would think that a quiet “it’s been nice, but we aren’t going to do business anymore email” would have been more effective.  But Jack apparently didn’t get the memo, responding to Waggener Edstrom:

“Waggener Edstrom, with $119 million in revenues in 2008, 843 employees, and No. 2 on our rankings, has only one web/NL sub at $295. It refuses to pony up a nickel more.

We just don’t fit into their “marketing plan,” a marketing executive told us. Several other large ranked firms have the same attitude.

So we’re booting Wagged and the others off the rankings. They’re not “PR” firms.

Rather than having any sense of community, they only have a sense of what’s in it for them. They don’t like independent media that can challenge them. They don’t live up to the term, “public.”

Why are we forbidden reading material at Wagged? What are they afraid of? PR people should not be afraid of news and information about their own industry.”

I could go on and on at my astonishment of how a veteran of public relations could handle the impact of the loss $590 a year by going public with an online temper tantrum, “booting” them from your list and risking alienating many other large firms, but I am not in the business of providing crisis communications counsel – unless you hire me.

Lists and organizations like this are, in my opinion, a dying breed.  Before unilaterally deciding upon a price increase, no matter how modest, I would advise Mr. O’Dwyer to consult something called “The Laffer Curve.”  This economic model became popular in the Reagan Administration and its basic premise is that there are diminishing returns beyond a certain point of taxation.  If you tax individuals and corporation at 90 percent, you will actually bring in LESS revenue to the government because people will intentionally produce less and businesses will have less money to spend on things like hiring new employees.

It’s the same basic thing here.  If you charge more — and call out a former ally, it is likely that your revenues may actually DECREASE.  Especially if it is handled in this manner.

Mr. O’Dwyer:  here’s some free advice.  If you have a time machine, hop in it, go back and figure out how much more revenue you will gain from your new model and compare it to the firms that you will lose by publicly calling out a firm in what looks to me an act of petulance and desperation.

And for the love of God, as someone who has built a business on developing good relationships with public relations firms (I find irony in the use of “public relations”), don’t get into an online pissing match with a well-regarded $119 million-dollar firm — and risk alienating other firms – over a measly $590.

Take it offline and stop shouting down everyone who disagrees with you.

Mr. O’Dwyer – you are no Rupert Murdoch.

Mark