Murdoch: the current days of the Internet will soon be over

Internet news, that is. From CNN:

Media tycoon Rupert Murdoch expects News Corporation-owned newspaper Web sites to start charging users for access within a year in a move which analysts say could radically shake-up the culture of freely available content.

“it is clear to many newspapers that the current model is malfunctioning”
Rupert Murdoch

Speaking on a conference call as News Corporation announced a 47 percent slide in quarterly profits to $755 million, Murdoch said the current free access business model favored by most content providers was flawed.

“We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning,” the News Corp. Chairman and CEO said.

“The current days of the Internet will soon be over”
Rupert Murdoch</em

“We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues in return for our shareholders… The current days of the Internet will soon be over.”

Now, all snark about the particular value of News Corp publications aside (as noted in the story, readers of the Wall Street Journal will very likely pay good money for that content), Murdoch does have a point about how the current model for online news distribution is not generating enough income to pay for traditional journalism. The newspaper industry in the US is in a tailspin of falling advertising revenues and drops in circulation that has already led to many titles going out of business. “Everybody knows” that the press is full of hacks, but that’s (a) true of any industry you like to point at; and (b) irrelevant to the public discourse benefits we all derive from traditional journalism, warts and all.

Having people who derive a regular income from questioning people in the public eye (and people behind the scenes of public events) ensures a level of transparency to political and business proceedings that simply would not exist at all without journalists willing to ask the occasional difficult question. If newspapers don’t have the money to pay for traditional journalists then all they will pay for is people who are good at summarising and regurgitating what they are fed in press releases. For many media companies that’s all they are doing already.

More crucially, without the structure of traditional journalism, no journalist will be able to specialise in investigative journalism or rigorous analytic journalism with the full resources of a newspaper behind them, and the effects on public discourse will be dire. The blogosphere has a strong cohort of writers capable of decent analysis, true – but where will they find the information to analyse without traditional journalists ferreting out content beyond the PR spin?

But what subset of a newspaper’s readers are willing to pay for quality journalism rather than just uncritically consume the regurgitated press releases and celebrity gossip?

Joshua Benton, Director of the Nieman Journalism Lab at Harvard University, said Murdoch was not the only executive looking to generate new income streams from online content.

“I suspect within any readership there is a small slice — maybe three percent — that is willing to pay. News organizations are going to have to find a way of getting money from that slice without driving away everybody else,”
Joshua Benton

“News executives are starting to recognize that online advertising revenues are not enough on their own,” Benton told CNN.

But he said the challenge for media organizations was finding a balance between advertising and subscription revenues and figuring out how to charge for content without alienating existing users — which could lead to Web sites offering tiered levels of free and paid-for material.

“I suspect within any readership there is a small slice — maybe three percent — that is willing to pay. News organizations are going to have to find a way of getting money from that slice without driving away everybody else,” Benton said.

“I don’t think you can afford to put a lock and chain on the front page. It is a matter of figuring out which products you can charge money for.”

Benton said the U.S. newspaper industry was in a “horrible state” which was likely to get worse.

“We’re starting to see holes where newspapers were. The question is, will new Web sites fill the holes, will traditional names come in — or will they just not get filled?”

The other side of this move towards a mixed subscription/advertising model of news publication is what it will mean for the relationship between media corporations and journalists. Will any growth in revenue actually go to fund the traditional journalism I described above? Or will the slide towards ever more superficial and lowest common denominator content accelerate due to our old friend cynical greed in management? Now that the barriers to publication and dissemination of content online are so low, can journalists band together to become a source organisation onselling their content without sheltering under the umbrella of the media magnates? If they do move out from under the magnates’ wing, will they still have access to the movers and shakers in order to ask those persistent and sometimes revealing questions?

There’s loads more questions to be asked about the consequences of moves towards less free online news content. Have at it.


Categories: media, technology


4 replies

  1. My first thought, honestly, is about what it would do to blogging. What would blogging look like if bloggers have to pay to read news content — how would our ability to analyze a large swath of news be limited compared to the access we have now? How would blogging be limited even further than it is now based on socioeconomic status? And how would readership be limited when they can’t go to check out the source material themselves without paying?
    I’m obviously aware of the huge problems with a lack of funding for journalism. Something needs to be done. But I’d really like for there to be a way to fund journalism without limiting access to it.

  2. You’re right, Cara.
    The fact is, most blogging sites and many other internet sites are supported by the investigative efforts of newspapers and other news gathering organizations, without recompense. I don’t think it would be right to require bloggers to pay to use it, but I’m not sure how else we could do it.
    It is too easy to separate content from advertising for advertising on the web to make up the same percent of the cost of producing the news as it does in print.
    ASCAP and BMI have essentially “site licenses” that allow a radio station, a store, a music venue to play music for a flat fee per month. Perhaps ISPs could do the same? But then everyone would use an ISP somewhere these fees aren’t charged.
    I have repeatedly tried to get the news organization I work for to hook up with, put links to books, CDs, DVDs and so on. The agreement gives you a commission on everything the user buys on that day, even if it’s not what you get them to click on. They’re still thinking about it, three years later.
    It’s depressing. We just let a huge chunk of our newsroom go last week, and it wasn’t because they weren’t doing their jobs. Many were at the top of their field. We just do not have the money.

  3. As a former reader of Western Australia’s one and only daily newspaper I’ll be honest: I gave up my subscription to the paper because I didn’t see the point of paying for what they defined as “news”. I’m not interested in celebrity gossip, manufactured controversies, and whichever political agenda the owner of the newspaper is pushing this week. I want to know what’s happening, and I want to know it in as much detail as is legally possible. I want depth, I want background information, I want some discussion of the deeper issues. I wasn’t getting it, and I don’t know where I could get it from in the mainstream media – although quite often the blogosphere is the better provider in this respect.
    It’s worth pointing out I don’t register on the newspaper’s list of priorities as I’m a reader rather than a shareholder. They aren’t interested in satisfying me, because it would cost more. Instead, they’ll supply the celebrity gossip, the manufactured controversies, the easy stories, the rehashed publicity material, and say that’s “news”. Enough people will buy it to pay for the advertising space they’re selling to turn a fair profit, and the shareholders will be happy as a result. Let’s face it, the various media proprietors aren’t selling information – what they’re selling is advertising space, eye contact, and air time. They use news content to do this, the same way they use drama and human interest in things like reality television.
    The problem Mr Murdoch, and so many other media proprietors are having is because they’ve so saturated the market for the print media (newspapers, magazines etc) and the visual media (television, film, internet) that their readers and viewers physically don’t have enough time to consume more of their product. They’ve hit the edge of the time budget, and as a result they’ve run into the limit of what can be done. The visual ratio of content to advertising space has been exploited to its maximum and there is nowhere else for them to go. They’ll sacrifice journalism next, because the people who want actual journalism (such as myself) are a minority, and we’re able to be sold to the advertisers in other ways.

  4. Dear Mr Murdoch,
    Read my keystrokes.
    I. WONT. PAY.
    All a blanket pay-for-content policy will do is empower those public behemoths you despise, like the BBC, who WILL continue to provide free news because they are legally obliged to provide this as a public service. You live by the shareholders, you die by the shareholders.