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October 20, 2009

Are yesterday’s news providers punching far above their weight?

It was an unusual choice of venue given the stance of the country’s censors, but it didn’t stop News Corp’s Rupert Murdoch and AP chief executive Tom Curley from issuing blistering attacks on the search engines at the World Media Summit in Beijing, describing them as “plagiarists” and “kleptomaniacs”. Yesterday’s news providers may have a point, but is this the right way to go about it, spoiling for a fight with Google, Microsoft and the rest of us?

James Murdoch (Rupert’s son-in-chief), recently issued a fierce assault on the BBC, but this time the speakers at the Beijing summit have taken on not only Google and Microsoft but the entire concept of new media: out goes free news content, together with all indexed pages, RSS, traffic and ad revenue and in comes the paywall. And this is at a time when one of Mr Murdoch’s titles, The Times of London, shows online readership in steep decline.

Next March Mr Murdoch will be 78 years old. Maybe that is the reason he doesn’t “get” new media. I have written before that the model he is soon to unleash on those that read his titles failed in the past and will do so again. And he seems to have totally overlooked the fact that search engines, like Google and Bing, have helped News Corp’s bottom line by driving huge amounts of traffic to its websites.

From our industry’s stance, this content removal is a worrying and nonsensical departure. A comment on theglobeandmail.com bears this out: “Amazing how these dinosaurs still roam the earth. Sadly much of the ‘aggregators’ out there get feeds direct from these news organizations via RSS which these new organizations freely post on the internet for all to use and see. It’s sad to see the absolute lack of understanding for today’s technology by these organizations not willing to adapt or embrace the possibilities until they are looking down the barrel of bankruptcy, and then its blame everyone else for their folly.”

Well, perhaps. But their claim is that “many news companies contend that sites such as Google have reaped a fortune from their articles, photos and video without fairly compensating the news organizations producing the material”. The obvious rebuttal is, of course, that the advertising revenues generated from this source are huge, but no matter.

Most of us understand the concerns of the media industry as it struggles to survive in the internet age, but paying to read The Times of London and the Wall Street Journal online, while other newspapers are still publishing their content for free, does seem, well, rather reckless. That is, it’s either all newspapers or none.

Mr Curley told the meeting: “We content creators have been too slow to react to the free exploitation of news by third parties without input or permission.” This point has been a bone of contention for over a decade. Then came along RSS. Now, it seems as if the argument is to be taken to a new level of determination, although to my knowledge there has been very little reaction forthcoming from the search engines themselves.

But it was Mr Murdoch’s language at the summit, in this spirit of recklessness, which was most telling: “The aggregators and plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid content, it will be the content creators — the people in this hall — who will pay the ultimate price and the content kleptomaniacs who triumph.”

Maybe they won’t triumph, but let’s take a look at the probability factor of paid content actually benefiting News Corp. The Guardian newspaper published figures from the Audit Bureau of Circulations Electronic as follows: “Traffic at Mail Online has jumped almost 60% in the last year…The Guardian was down 7% compared with the previous month to 26,990,072 unique users; the Telegraph was also down by 2.5% to 26,479,638 unique users and traffic to News International’s Times Online dropped more significantly, from 21,216,797 uniques to 18,873,975…an 11.04% decline…Annual traffic growth at Times Online is the lowest of any national newspaper site…” Doesn’t sound too promising when these diving uniques are confronted with a paywall anytime soon.

According to Google’s view on the future of business: An interview with CEO Eric Schmidt on how the internet will change the nature of competition, innovation, and company operations, he stated: “Free is a better price than cheap. And this simple principle has been lost on many a business person. There are business models that involve free with adjacent revenue sources. And, in fact, free is a viable model with branding, service, and other things. But it’s a different business model from what most of us are used to.”

He went on to say, “In the digital world, for digital goods, the marginal cost of distribution and manufacture is effectively zero or near zero. So, certainly, for that category of goods, it’s reasonable to expect that the free model with ancillary branding and revenue opportunities is probably a very good thing.” Writing content for online isn’t exactly a “marginal cost” as he describes. But again, it doesn’t look too promising that Google will cough up.

There was a furore about this years ago, when the National Union of Journalists (NUJ UK) recommended a certain price per thousand words for print and an additional amount if it was placed online. To my knowledge, no journalist has ever been paid extra by a publisher when these stories appeared in both.

So how does this square with Mr Curley at AP? “We will no longer tolerate the disconnect between people who devote themselves — at great human and economic cost — to gathering news of public interest and those who profit from it without supporting it.” But they do support it; they fundamentally support your online ad revenue, although he claims they are losing millions.

In contention, AP is about to roll out a “news registry” system that will detect unlicensed uses of their online content. According to an article by Google, what AP and its member newspapers argue is that unauthorised use of this material is “costing them tens of millions of dollars in potential advertising revenue at a time when they can least afford it.”

It’s the music industry all over again. They too couldn’t find an appropriate model when content was copied and exchanged. And then iTorrent went on to circumvent the profits of the film industry.

It strikes me that Rupert Murdoch is certainly not the visionary of new media he thinks he is. The media mogul who once got it right is almost certainly to come unstuck, when not only will he have to go up against the titans of Google and Microsoft in an age where his mainstream online news is failing but, more importantly, he is offering a model of paying for yesterday’s news. Today, people demand breaking news and people’s news with tweets, not content we have already read the day before published by someone else.

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