more murdoch madness

Posted on November 10, 2009

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its an interesting view that Murdoch has, maybe i am just to young to understand how this makes things better for readers? will investigative journalism die… i doubt it. when was the last time you saw a piece of investigative journalism from a daily newspaper – or even cared who broke the story?

 

http://www.vanityfair.com/business/features/2009/11/michael-wolff-200911
?currentPage=2

Rupert to Internet: It’s War!
Rupert Murdoch is going to battle against the Internet, bent on making
readers actually pay for online newspaper journalism-beginning with
his London Sunday Times. History suggests he won’t back down; the
experts suggest he’s crazy. Is he also ignoring his industry’s biggest
problem?
By MICHAEL WOLFF November 2009
War is Rupert Murdoch’s natural state. When he launched the Fox
Broadcasting Company, in October 1986, he went to war against the
hegemony of CBS, ABC, and NBC. With Fox News he crossed swords with
CNN’s Ted Turner. At Sky, his satellite-TV system in the U.K., he went
up against the BBC. He’s battled China, the F.C.C., the print unions
in Great Britain, and, recently, most of the journalism community in
his takeover of The Wall Street Journal. He relishes conflict and
doesn’t back down-one reason why he’s won so many of his fights and so
profoundly changed the nature of his industry.
Now he’s going to war with the Internet.

Rupert Murdoch’s digital-technology savvy is a source of hilarity in
his family. Photo Illustration by Darrow.
It hasn’t been a good year for Murdoch-the largest publisher of
newspapers in the worst year in newspaper history. His purchase of The
Wall Street Journal is widely seen as one of the worst moves of his
career-News Corp. has already taken a $3 billion write-down on the
purchase. His beloved New York Post, always a money loser for him, is
now suffering such great losses that Murdoch is considering a
partnership with or even sale to the Daily News, the Post’s
arch-enemy. His once highly profitable newspaper groups in the U.K.
and Australia are faltering. News Corp.’s share price has been among
the hardest hit of any major media company.
And yet, Murdoch, at 78, would double-down in a heartbeat: he
strategizes constantly about how he might buy The New York Times. But
first he might have to save the newspaper business itself. As it
happens, he, unlike almost everyone else in the business, believes
newspapers are suffering not at the hands of technological forces
beyond their control but at the hands of proprietors who are weaker
than he is.
After fulminating for a year about how people on the Internet should
pay for news, he made it official. Announcing in August the biggest
losses his company has ever sustained, he added that he’d had enough
and if people wanted to read his newspapers they could bloody well pay
for them.
I should say I am not a neutral party here. Two years ago, I helped
found Newser, a news aggregator that summarizes the stories of other
news providers, which, along with the Huffington Post, the Daily
Beast, and Google News, has become a focus of the print world’s
antipathy. (When I tried to explain Newser to Murdoch, he said, “So
you steal from me.”)
The current battle for how the Internet will “monetize” news divides
pretty cleanly between managers of established media properties and
people who spend their working lives in the new-media business.
Traditional media managers, who once rushed into the Internet hoping
to establish new businesses as well as their new-media bona fides,
have all now been chastened by its economic realities and want to take
back their free content. “Obviously we will all be closely following
Rupert’s efforts in this direction,” said John Huey, Time Inc.’s
editor in chief, when I contacted him-a curious throwing up of the
hands from Time Warner, the world’s largest magazine publisher and the
world’s largest media company, which has tried more strategies on the
Internet than any other traditional media company.
Almost all Internet professionals, on the other hand, think that
charging for general-interest news online is fanciful-“Rubbish …
bonkers … a crock … a form of madness,” in the description of Emily
Bell, who has long run the Guardian newspaper’s Web site, one of the
industry’s most successful-and, in fact, it has been tried before and
failed. “It’s Groundhog Day,” adds Bell. The New York Times tried to
levy a subscription charge for its columnists but reversed course and
declared itself free again. Even Murdoch’s Wall Street Journal, the
model of subscription content online, has made more and more of its
site free.
I have-in nine months of conversation with Murdoch, writing his
biography after he bought the Journal, in 2007- often argued the
nature of Internet culture with him to little avail. Murdoch can
almost single-handedly take apart and re-assemble a complex printing
press, but his digital-technology acumen and interest is practically
zero. Murdoch’s abiding love of newspapers has turned into a personal
antipathy to the Internet: for him it’s a place for porn, thievery,
and hackers. In 2005, not long after News Corp. bought MySpace, when
it still seemed like a brilliant purchase-before its fortunes sank
under News Corp.’s inability to keep pace with advances in
social-network technology-I congratulated him on the acquisition.
“Now,” he said, “we’re in the stalking business.”
Internet business strategies are often an intractable issue for media
companies because they involve turf wars among contrary skill sets,
business models, and corporate cultures. The result is usually
bureaucratic stasis.
But News Corp. isn’t like other media companies. Murdoch can cut
through and level all bureaucratic confusion and inaction. If he says
it will be paid, then all the voices, which in other companies would
tell you why this, logically, might not work, go silent at News Corp.
The logic of the situation is remade around Murdoch’s logic. Where, in
another company, Internet responsibilities might reasonably be given
to those most enthusiastic about the medium, London is ground zero in
Murdoch’s Internet war because the executives there are the ones most
devoted to newspapers. (His 36-year-old son, James, who seems
determined to do even more of whatever his father would have done, is
responsible for the London operation.)
There has been, as it happens, a significant turf war in London, which
might have produced a classic stasis, but which became a solution. The
Times of London and The Sunday Times, historically separate papers,
have long shared a Web site, controlled, to the consternation of the
Sunday editor, by the daily. The decision (after a long political
tug-of-war) to separate the two suddenly became an opportunity in the
new Murdoch logic of making people pay. Because The Sunday Times has
not had a Web site before, it would not, if it launched one with a pay
wall, lose any users. Everybody who subscribed would therefore be a
plus.
In Murdoch-think, there is, too, the magic of the Sunday paper.
Murdoch believes people can’t do without a Sunday paper. (Two years
ago, he personally supervised the makeover of the Sunday New York
Post.) Ipso facto, if people can’t live without their Sunday paper,
then they’ll buy it on the newsstand or pay for it online-no matter
that it comes out once a week and the Web is a minute-by-minute
medium.
And then, Thelondonpaper. Three years ago, Associated
Newspapers-publishers of the all-powerful Daily Mail-launched the free
afternoon paper Standard Lite (later London Lite), forcing News Corp.
to launch its own free sheet, Thelondonpaper, which undermined News
Corp.’s other papers. Murdoch never shuts a paper and never backs down
from a war. Except now, with his new war against free, there was
suddenly the logic to do what everybody had been begging him to do:
close the damn free thing-which he did, suddenly, in August.
Still, saying that when Murdoch speaks things happen does not mean
that anyone in the company has quite figured out what exactly he wants
to happen. Will Fox News charge for its online content and cede the
online market to CNN and MSNBC? What happens to the New York Post,
whose site, because of its outdated technology, is often hard to
access-even for free? And whither MarketWatch, the free financial-news
site bought by The Wall Street Journal’s parent company precisely
because it wanted a free site?
It is difficult not to sound catty when discussing News Corporation’s
adventures with the Internet. But the litany of its failures-even more
extreme than those of most other media companies that have struggled
unsuccessfully online-is, I think, relevant to understanding exactly
what Murdoch might really be trying to do.
From the failure of Delphi, one of the first public-access Internet
providers, in 1993, to iGuide, the precursor to Yahoo and Google,
which closed within months of its launch, to his son James’s aborted
Internet-investing spree in the late 90s, to the great promise of
MySpace, which was shortly flattened by Facebook, to the second launch
of Pagesix.com, which Murdoch closed this year, after four months of
operation, Murdoch’s Internet starts and stops have engendered at News
Corp., in the description of Peter Bale, who once ran the Web site of
The Times of London and now runs MSN in the U.K., a relative “fear or
abhorrence of technology.”
In one of my favorite Murdoch stories, his wife, Wendi, who had
befriended the founders of Google, Larry Page and Sergey Brin, told me
about how the “boys” had visited the Murdochs at their ranch in
Carmel, California. When I marveled at this relative social mismatch
and asked what they might have talked about, Wendi assured me that
they had all gotten along very well.
“You know, Rupert,” Wendi said, “he’s always asking questions.”
“But what,” I prodded, “did he exactly ask?”
“He asked,” she said, hesitating only a beat before cracking herself
up, “‘Why don’t you read newspapers?'”

Murdoch’s son-in-law Matthew Freud-married to Elisabeth Murdoch, and
one of the most well-known P.R. men in the U.K.-explained to me what
he believes is the essence of Murdoch’s approach to business: Murdoch
is not a modern marketer. He runs his business not on the basis of
giving the consumer what he wants but through more old-fashioned
methods of structural market domination. His world, and training
ground, is the world of the newspaper war-a zero-sum game, where you
wrestle market share from the other guy. Curiously, his newspaper
battles have most often involved cutting prices rather than, as he now
proposes to do on the Internet, raising them. (Murdoch has contributed
as much as anyone, with his low-priced papers, to the expectation that
news is a de-valued commodity.)
But more than being about cost, his strategy is about pain. What he is
always doing is demonstrating a level of strength and will and resolve
against which the other guys, the weaker guys, cower. He can take more
pain than anybody else. While others persist in the vanity of the
Internet, he will endure the short- or medium-term pain necessary to
build a profitable business.
He is also a scold who can intimidate the market into doing what he
wants it to do. Part of his premise now is to invite and scare other
publishers and content creators into a self-created monopoly. If
everybody charges, consumers will have no choice but to pay. If all
publishers have the opportunity to get paid, why wouldn’t they take
the money?
In the Murdoch view, media only really works as a good business if it
achieves significant control of the market-through pricing, through
exclusive sports arrangements, through controlling distribution (he
has spent 20 years trying to monopolize satellite distribution around
the world).
And, indeed, by announcing his all-paid-content intentions, he has,
almost single-handedly, not just made the paid model the main topic of
digital strategy in other traditional publishing companies but imbued
it with nearly the force of a fait accompli.
“It’s a done deal,” says a journalist I know who’s suffered in the
downturn, arguing that Murdoch, for so long journalism’s great
debaser, is now its last protector.
The Murdoch plan is, however, in the estimation of almost anybody
whose full-time job is occupied with digital business strategies, not
just cockamamy but head-scratching.
It seems that Murdoch has, in a fit of pique, made certain
pronouncements which may have to be humored by the people who work for
him, but which will be impossible to implement and will have no
business consequences. Or that Murdoch, a man with something of a
divine gift for acting in his own self-interest, has a plan not yet
quite evident to other, mere media mortals.
The position of Internet professionals is straightforward: while it’s
possible to charge for certain kinds of specialized
information-specifically, information that helps you make money (and
that you can, as with an online Wall Street Journal subscription, buy
on your company expense account)-there are no significant examples of
anyone being able to charge for general-interest information. Sites
where pay walls have been erected have suffered cuts in user traffic
of, in many cases, as much as 95 percent as audiences merely move on
to other, free options.
“What Murdoch seems to be talking about only has a logic if you don’t
introduce the behavior of the audience into the equation,” says Emily
Bell.
There is, alternatively, the compounding and intoxicating effect of
free. While there may not yet be a way to adequately monetize free
traffic, it has opened up, for many publications, great new audiences.
The million-circulation New York Times has an audience of more than 15
million online. The U.K. paper The Guardian, with its 350,000
circulation, has become, online, with 10 times its print readership, a
significant international brand. One theory about the decline in the
fortunes of The Wall Street Journal (which allowed Murdoch to buy it)
is that, because of its paid wall, the Journal was not a factor in
Google searches, causing a fundamental decline in its importance,
impacting its brand and standing with advertisers.
Murdoch believes that The Sunday Times has certain franchises so
valuable that he will surely be able to capture a paying audience.
Jeremy Clarkson is one of News Corp.’s strongest cases. Clarkson, who
writes a column about cars, is a veritable British
institution-everybody consults Clarkson before buying a car. He is,
according to in-house estimates at the Times, now responsible for 25
percent of timesonline.co.uk traffic. The thinking is that, even if a
pay wall cuts Clarkson’s traffic, there are enough fanatical Clarkson
readers who will pay enough to make a paid Clarkson more valuable than
a free, ad-supported one. But the problem is for Clarkson: Murdoch’s
potential gain is Clarkson’s loss. It’s an almost intolerable
loss-most of your readers (and their constant and addictive feedback).
“When we opened the Times site to free international traffic,” says
Peter Bale, “suddenly our columnists were getting speaking engagements
in Milwaukee.” At The New York Times, it was the op-ed columnists
themselves who objected most of all when a paid wall choked their
readership and notoriety.
Murdoch has a larger problem still. It is, after all, not the Internet
that has made news free. News in penny-newspaper or broadcast (or
bundled cable) form has always been either free or negligibly priced.
In almost every commercial iteration, news has been supported by
advertising. This is, more than the Internet, Murdoch’s (and every
publisher’s) problem: the dramatic downturn in advertising.
Or, in a sense, the plethora of advertising created the online
problem. When Time Warner’s Pathfinder launched the first ad-supported
site, in 1994, it quickly created a juggernaut of wild advertising
growth online. It was a simple proposition: more traffic, more
advertising money-and a free site got vastly more traffic than a paid
one.
But the recession has, at least temporarily, dimmed advertising’s
promise, creating something of an end-of-the-world panic.
And no one’s panic seems to be greater than that of Rupert Murdoch,
who has a habit of finding himself with his back to the wall during
times of recession (in the early-90s recession, he almost lost his
company because of its great debt load).
It’s Chicken Little panic.
It is hard to imagine that when advertising growth resumes there will
not once again be a rush to encourage traffic growth, but right now,
the news business, supported for a hundred years by advertising, whose
core skill has been selling advertising, believes it must right away,
this second, re-create itself with a new business model where
advertising is just the cream on top and where it’s the consumer who
pays the true cost of newsgathering.
But what if Rupert isn’t really interested in a new business model?
There may be earnest men trying to unlock the secret balance between
the expectation of free content and the exceptions and the methods
that might allow for micro or other incremental payments. But what if
that’s not Rupert?
“Rupert isn’t very nuanced about this,” says Merrill Brown, the former
MSNBC news chief, who is now a consultant to a venture trying to
promote an online charge system.
Murdoch, at 78, doesn’t, practically speaking, have the time to see
the online world into maturity-nor the intellectual interest to want
to be part of the effort. Rather, his strategic effort may more
logically be to slow it down.
The mordant joke among journalists is that, with any luck, the older
among us will make it to retirement before the business entirely
collapses. This may be part of Rupert’s own thinking.
It is not so much that he wants people to pay to read Jeremy Clarkson
online; he wants them, or a portion of them who might otherwise have
read a free Clarkson online, to return to the newspaper.
It is not, what’s more, merely that Murdoch objects to people reading
his news for free online; it’s that he objects to-or seems truly
puzzled by-what newspapers have become online. You get a dreadful
harrumph when you talk to Murdoch about user-created content, or even
simple linking to other sites. He doesn’t get it. He doesn’t buy it.
He doesn’t want it.
Every conversation I’ve had with him about the new news, about the
fundamental change in how people get their news-that users go through
Google to find their news rather than to a specific paper-earned me a
walleyed stare.
The more he can choke off the Internet as a free news medium, the more
publishers he can get to join him, the more people he can bring back
to his papers. It is not a war he can win in the long term, but a
little Murdoch rearguard action might get him to his own retirement.
Then it’s somebody else’s problem.

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