I'm not sure whether Murdoch considers that the Times paywall has 'failed' as he wants to extend it to the News of the World.
All the evidence suggests that readers of serious newspapers are more likely to pay over the odds for their news, than the readers of popular tabloid papers. So if it's failed for the Times, then it's even more likely to fail for NoW.
I suspect that Murdoch is happy with the way it's gone for the Times.
BTW, whilst it's obviously always nice to gloat if Murdoch's feckedup, I would get no pleasure from seeing the Times in trouble – it's still one of my favourite newspapers. Murdoch tends not to have a hands on approach with the Times, as he very much does with the Sun.
As far as why Murdoch has been allowed to develop such an overwhelming grip on the British media is concerned, I reckon all politicians fear him – including the Tories.