Has Murdoch lost the plot? - TechCentral

Has Murdoch lost the plot?

Duncan McLeod

[By Duncan McLeod] Rupert Murdoch, the leader of News Corp, is on a mission to get people to pay for his company’s journalism. He ’s even threatening to pull News Corp content off Google and to do an exclusive deal with Microsoft instead. Has he lost the plot?

We all know the story by now. The Internet is inflicting enormous damage on print media as readers abandon newspapers for the almost limitless supply of free content on the Web.

The latest US newspaper circulation figures paint a grim picture of an industry in steep decline. It’s not that the readers have disappeared. It’s just that a growing number of them prefer to read their news online.

The problem is that newspapers haven’t figured out how to make enough money from the Web to fund the sort of journalism they do (or used to do) in print.

Few have dared to throw up pay walls around their websites. Most big news stories are covered by any number of online news sources, so people will simply click on a link where they don’t have to pay. Most news publishers that had pay walls around their websites removed them long ago.

So Murdoch took everyone by surprise in August when he announced that he intended to construct pay walls around News Corp websites, including The Wall Street Journal, The Times of London and even The Sun.

“An industry that gives away its content is cannibalising its ability to do good reporting,” Murdoch said at the time.

If he actually does it — and I doubt he will — it will be an audacious move. But it’s also one that is likely to fall flat on its face.

Nothing has changed to make people more inclined to pay for online content. The Wall Street Journal may make it work. The Journal did once before — the sort of quality financial news and intelligent analysis it produces is worth a premium. However, general news websites that throw up pay walls will simply lose their readers.

I find it hard to believe that Murdoch doesn’t understand this. He may simply be posturing, hoping to cajole other newspaper publishers into joining him. If all the world’s newspapers were to start charging for online news, perhaps they could convince readers to open their wallets. But Murdoch can’t collude with his rivals to do this or he’d be in trouble with regulators faster than he can say “antitrust investigation”.

If anything, Murdoch is taking on Luddite trappings. Last week, he said he would remove News Corp content from Google’s content aggregator, Google News.

Google takes headlines from news sites around the world and ranks them using various algorithms to create its own news site. People who click on headlines in Google News are directed to websites operated by publishers, helping drive vast amounts of
online traffic.

If Murdoch removes News Corp websites from Google News, it’s Murdoch’s business that will suffer, not Google’s. It’s nonsensical and suggests that Murdoch doesn’t understand the dynamics of the Web.

News Corp says it is in discussions with Microsoft about offering its content exclusively to the software maker. But that also makes no sense. Google is the dominant online search engine, and Google News is the dominant news aggregator. Microsoft’s search engine, Bing, is almost irrelevant.

Talk is that Microsoft is prepared to pay News Corp for access to its content. But would this be sufficient to offset a decline in advertising revenues following an inevitable decrease in traffic to News Corp? It’s unlikely.

Murdoch may have some sort of grand plan to make money on the Internet. If he does, it’s hard to figure out what it is. Either he’s on to something the rest of us are too thick to see yet. Or he has genuinely lost the plot.

  • This column is also published in the Financial Mail
  • McLeod is editor of TechCentral

2 Comments

  1. Murdoch knows that cover price has only been around 20% of revenue and probably will not make a significant difference. online newspapers seem to garner 10x their readership online than they do in print (partly because its free, partly because its easier). The payment for search rights and search exclusivity is a very interesting angle, as it changes a number of dynamics in the online advertising space which are working against publishers, primarily Cost Per Click – which is the revenue model employed by google. By charging for search rights large publishers can really reduce the power of the search platforms (impacting their margin and reducing the effectiveness of the search results) and increase the value of the actual article. then again, Murdoch could just be going crazy 🙂

  2. Sibonelo Radebe on

    The search for a model that will support journalism as we know it on the web will come down to one simple principle, value proposition. Newspaper editors and executives have been spoilt by an oligolistic market which allowed them to rake in big pay checks with little regard to value. As we speak newsroom resources across the country and offcourse globally are being depleted under the guise of adjusting to harsh economic conditions. A closer look will show that the quality of news is suffering. While I understand that the prevailing economic conditions call for efficiency but one cannot speak of efficeincy when product quality is being compromised. The internet is opening up the news market which should improve competitiveness and ensure that custormers/advertisers get value for their money. I have no doubt that an open market will reward value added journalism on the web. Those who were hoping for a free ride by replicating poor print practices on the web will be disappointed. On Murdoch,my take is that he has freedom to pursuing a pay for access model. Let the market sort him out.