Business | Technology
Media baron Murdoch cries foul
Murdoch's suggestion that google and microsoft are stealing content has infuriated digital evangelists saying that news corp head is senile
- Financial Times
- Published: 00:00 November 23, 2009
- Image Credit: Nino Jose Heredia,Gulf News
As usual last week, Rupert Murdoch infuriated a lot of people by thinking out loud. He accused Google and Microsoft of "stealing" stories from News Corporation's papers such as The Wall Street Journal and The Times and threatened to withdraw them from Google's search engine.
Digital evangelists were apoplectic, with the crude suggestion that 78-year-old Murdoch was senile a common theme.
"Have a delightful, Howard-Hughesian dotage, acting out a crazed, Moby Dick dumbshow against the internet," wrote Cory Doctorow on the Boing Boing blog.
The heated digital rhetoric continued at a conference in Monaco later in the week. "You are incredibly convincing and you will be proved incredibly wrong," Arianna Huffington, the founder of the Huffington Post website, told Mathias Dopfner, chief executive of the Axel Springer media group, as they debated the topic.
Dopfner's offence had been to claim that consumers were willing to pay for high-quality news, and not simply to obtain it free through Google News and news aggregators such as the Huffington Post.
As owners of news organisations stare into the abyss, with revenues from print falling rapidly while they distribute the same material free online, many news publishers' eyes are pinned on Murdoch. If the old rebel cannot lead them out of the free content trap, who will?
But Murdoch has so far been bigger on talk than action. While he talks of cracking down on "content kleptomaniacs" who take snippets from his papers, including The Times and The Sun, he has not yet secured his doors against them.
Two years ago, the chairman of News Corporation was seen as a digital visionary among moguls. He won praise for buying the social network MySpace and talked of removing an online subscription barrier to the Journal, whose parent company Dow Jones he had bought for $5 billion (Dh18.35 billion).
Since then, the Journal's ability to get people to pay online to read articles has made it, along with Financial Times, an object of envy to other newspaper publishers and has changed Murdoch's tune. Others including The New York Times and The Guardian remain free online while losing millions.
"[The New York Times] charges $2 a day for a product [younger consumers] don't want and gives them the product they prefer free ... In some circles, that might be seen as an illogical business model," said Steve Brill, a media entrepreneur, at the Media & Money conference in New York this week.
Those circles do not include new media evangelists such as Jeff Jarvis, the blogger and journalism professor, who insists that news must be freely accessible through search engines and aggregators in order to participate in the "link economy".
That sounds nice but people who click on to news sites from search engines or aggregators increase traffic without producing much revenue.
"Who knows who they are or where they are? They do not suddenly become loyal readers of our content," Murdoch said in an interview with Sky News in Australia.
Loyalty matters, both editorially and financially. Murdoch's change of tone stems from the fact that online economics have not worked out in the way news publishers hoped. Many have vastly increased the number of people visiting their sites but advertising revenue has stagnated.
That is partly cyclical — internet advertising revenue in the US fell by 5.3 per cent in the first half of this year — but is also due to the fact that advertisers do not value random traffic. What Jarvis lauds as "Googlejuice" — attracting readers, buzz and attention through links to your articles — is a pretty weak brew.
The Journal and Financial Times charge advertisers high rates to reach people who pay subscriptions, or even register, to read their news sites because it turns them into customers, not just readers.
Traffic from Google accounts for 25 per cent of WSJ.com's total, according to Hitwise, but draws a fraction of the price.
That leaves many news publishers in the worst of all possible worlds. They have no subscription revenue, inadequate advertising revenue, and have not only permitted but tacitly encouraged others such as Huffington to build competing businesses with their freely available content.
Affluent readership
The question is whether general news publishers can succeed in charging readers to come to their sites for news stories that can often be found elsewhere. Business publishers not only have affluent readerships but unique content, while general news is more of a commodity.
Some publishers are remarkably candid about the low value of their product. Emily Bell, director of digital content for Guardian News and Media, which is cutting 100 jobs after losing £36 million (Dh216 million) in its last financial year, has called subscription pay walls "a stupid idea in that they restrict audiences for largely replicable content".
That makes things harder for Murdoch because, if he charges people to read The Times online, they will be able to keep reading news from the BBC and The Guardian free. His rhetoric this week is no doubt intended to give other newspaper publishers a heavy nudge to follow him.
Murdoch has been reviled before for doing unpopular things, such as breaking the Fleet Street print unions, from which his rivals later benefited. The fact that he is surrounded by digital placard-wavers accusing him of everything from senility to greed will spur him on, as it should.
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