Last week ABC managing director Mark Scott launched a pre-emptive strike in the emerging battle between those who want us to pay for content online on the one hand, and public broadcasters on the other.

Predictably, News Limited returned fire this morning. News Digital Media’s CEO Richard Freudenstein takes the battle up to Scott, attacking the taxpayer-funded model head on and describing Scott’s arguments as “as laughable as (they are) disingenuous” and “egregious” given that the ABC is shielded from commercial realities. ABC content is not free, says Freudenstein. It is funded by the taxpayer dollar. We pay whether or not we want to. Freudenstein paints commercial operators as virtuous by comparison, because they “live or die by the value of their content”.

Don’t underestimate this battle. It is not new. As I have written previously, pay-television operators are already arguing to government that in the era of media plenty, there is no justification for taxpayer funded “broadcasting”. These attacks will intensify, as Scott well knows.

What is new today are the hints in Mark Day’s column, which for the first time gives us some insight into how Rupert will carry out his charging plans. He will not simply erect a paywall around existing products, but rather redevelop what News Limited does into a series of niche products including social networks or, if you like, private clubs with a fee for entry.

So, what to think of all this?

Well, of course, Freudenberg is right to a point. There is no such thing as free-to-air content. The ABC and SBS are paid for via taxes, and we pay whether or not we watch the ABC. On the other hand, commercial free-to-air broadcasters and most newspapers rely on advertising revenue, and the cost of those ads is wrapped into just about every product and service we buy. We pay for margarine advertising at the checkout, whether or not we have watched the content the ads support..

But there is a difference. The tax system, for all its legion faults, is structured so that those on low incomes pay less, or nothing. Supermarkets don’t work that way.

It’s a point about equity. If all content has to paid for up front, then necessarily we will create a class of people who cannot afford to pay, or not afford to pay as much. Since information is power, this is of real concern to the health of our democracy.

Now the ABC has traditionally played largely to middle-class, well-educated audiences, while commercial TV has dominated the rest. The SBS began as a practical means of enacting government polices of multiculturalism, and in recent times has largely moved away from that mission. So it could be said that both public broadcasters are vulnerable if the justification for their existence is based on arguments of social equity.

But in the future, public broadcasters can and should play a real role in making sure that news and information is available to all. I think the ABC already fulfils that role to some extent in regional and rural areas, where the record of commercial providers is woeful and the “private club” model is unlikely to work. But public broadcasters will have to do more and in more places.

And what about Day’s revelations that the News Limited plan is to charge for niche content aimed at particular demographics? Well, it may work. While mass media will not go away, most of the interesting things in the future will be happening in niche media.

Historically, commercial content providers have relied on assembling large audiences in single places and selling their attention to advertisers. Fragmentation erodes that business model, whereas the ABC can embrace audience fragmentation, moving to meet small groups of audience wherever they may assemble.

Now Rupert plans to move into the same niche territory. Do you need to look any further for reasons why the battle between pay per view commercial content providers and public broadcasters will be one of the defining stoushes of the new media century?

I have always thought (and even Scott acknowledged, despite his rhetoric) that charging for content would work for some things. If I can point to one small example close to home, in the same office from which Crikey is produced there are two business-oriented publications. Eureka Report is a relatively high-cost subscription service aimed at small investors. Business Spectator is free to the reader and provides broad-based business news as well as commentary by “brand name” financial journalists.

Eureka Report is like a private club, offering perceived high-level benefits to subscribers. Its content is not searchable by Google. The conversations it engenders are not public. Business Spectator, on the other hand, can be found on a Google search, and both aggregates and is aggregated by others. It is part of public conversations.

Like Day, I am not privy to the inner counsels of those who pay my retainer, but I am told both are successful models.

Crikey itself is a mix of free content on the website, including a network of blogs, and the paid for subscription newsletter. Crikey will never make a mint of money, but it is a sustainable business model with growing audience numbers.

Interestingly, since it was redesigned and the network of blogs developed, the Crikey website has attracted an entirely different audience to the email newsletter you are now reading. The free content brings younger readers, as perhaps you would expect, while the email newsletter plays to an older, male-dominated audience. (Sorry guys.)

It sounds as though what Rupert is planning to create is a series of large private clubs, while also staying in the mass media, searchable game. He will try to make the latter pay by charging the aggregators and the re-publishers, as this story.

The truth is nobody knows if this will work. How big will the clubs need to be to be sustainable? How much will people pay, and for what? Will Google pay, if put to the test? Nobody knows the answers to these questions.

But clearly Rupert’s plans, and for that matter the future of pay television and a host of other commercial media plans, have a much higher chance of working if the pesky public broadcasters are under-resourced or out of the road. This is particularly the case in the United Kingdom, where the BBC is a media behemoth that makes our ABC look puny.

Expect more shots in this battle.