Pay wall a tough climb for Murdoch
Greetings from an uncharacteristically mild New York, the locus of a fascinating debate I have touched on in earlier columns.
Manhattan is the adopted home of Rupert Murdoch, the great media baron who's becoming increasingly concerned that the prized assets within his castle are likely to be abducted by internet-born night raiders.
As a fan of Rupert the Great, it gave me no pleasure to write a media obituary of his empire in this space a month ago.
Murdoch's touch remains as sure as ever. As a skilled news editor, he can spot talent and picks his key personnel with great skill. One of the New York Post's front-page headlines this week focused on Tiger Woods' domestic difficulties with the deathless headline: "Tiger Admits... He's a Cheetah!" A classic of its kind.
Events have moved on in a business sense this week in the struggle between Murdoch's News Corporation and Google, the massive corporation that is seen by many as the people's champion. Certainly, Google is an advocate of content that is free to users, though that of course allows Google to charge the substantial rates it does to advertisers. News Corporation's policy, dictated directly by Rupert, is to make sure that a substantial chunk of its content is kept behind a financial fire wall, known as the pay wall. Google has been attacked for allowing users to have access to content that the likes of News Corporation wants to charge for.
This week, Google has made a conciliatory gesture, by offering to limit the free pages to the first five on display. Now lawyers may wish to argue about "fair use" and the like, but I can tell you that most commentators and analysts will tell you that if they can aggregate five news items, they have all the data they want for a first take on just about anything. Aggregate five items from a dozen different sources, and it's quite likely an analysts might have all the data, and a good grasp of all the arguments on a given topic – and all for free.
Industry figures show that Google News sends hundreds of thousands of users per minute to online newspaper sites. Most of these, of course, are free.
I've been looking at the paid-content conundrum, on and off, for a decade. The issues have remained largely the same. And free content wins, every time.
In a sense, the whole news content debate is a symbolic battle. I feel that Murdoch doesn't care that much about his commentators and his news operations as purveyors of actual information. The political influence that comes with owning media outlets is hugely important to him, of course. But the content per se? I'd suspect he doesn't really care.
But it's vitally important to him to win this battle, and be able to ring-fence some content and brand it as "paid-only".
Why's that? Because the real fight is going to be fought between the free information on the internet and News Corporation's movies and sports content. Murdoch's problem is that he's invested massively – and perhaps too soon. The current News Corporation business model is that of the video rental. You can protect the video cassette (if there are any left in the world) but not online content. The terrible problem for News Corporation is that everything is, or soon will be, online. And the rule is that everything on the internet tends towards becoming free . That's the market, folks. The price comes down and down – the content's a loss-leader to grab the users' attention in the hope that they'll click on an advert.
So the real fight between paid-for and free is in the movies and sports area. Google is not the true foe, but You Tube is. You Tube is the new Napster, the site that allowed users to download music for free. But, unlike Napster, it will not be cowed. If more lawsuits were launched, and it were, there'd be a host of imitators within weeks.
I think the medium-term ramification of the impending destruction of the pay wall is going to have discernible global effects. These effects will be far more noticeable in the arena of sport than in the movies.
In the forthcoming round of negotiations for football television rights, News Corporation will massively reduce the sums on offer. It's easy to watch English Premier League games anywhere in the world for free. Murdoch's negotiators will use that as a bargain chip, that's for sure. I predict that in the next three years there will be very many insolvencies among EPL and other English football clubs in lower divisions. The schadenfreude will be huge.
Even now, I can see the columns dripping with venom as they deride the advent of the era of footballers with begging bowls, etc. Movies, perversely, are increasingly being seen as events.
Just as music CDs are on the wane, but live music concerts are doing well, so going to the movie theatre is robustly popular activity. Here in the US, the newspapers were full of the biggest-ever Thanksgiving week-end take at movie theatres this year.
- Martin Baker is a journalist, author and commentator on international business affairs
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