Peering beyond the paywalls: Life after Murdoch

(Photo by Arenamontanus)

The most terrifying phrase in the English language is “all bets are off”. This is the panicky moment where regret about actions and inactions is inevitable but momentary. Perhaps Rupert Murdoch felt that fear when he announced News Corp was going to start charging for online content in 2010. Necessity is the mother of this action – News Corp posted a $3.4 billion loss in fiscal 2009. Change is difficult, but Murdoch understands how evolution works. The alternative is death. Change has no moral charter however, and the jump from Charles Darwin to World War I took just thirty years.

The notion of objectivity journalism arose in the early 20th century to report on the complexities of the times. A hundred years on, faithfully reporting the facts remains the key to influence in a media-crowded environment. Journalism is a crucial component of democracy and its first loyalty is as always to citizens. It is now easier that ever for those citizens to spread their own messages. The Internet has provided the means of production to the masses. But it is not a free entity. It owes as much to Adam Smith as to Marx. People horrified about paying for content on the Internet don’t complain too much about paying for access and equipment.

It is important to understand how much the market will bear the costs of Murdoch’s content. But it will also be useful to observe how people will exploit the new niches left vacant in the attention economy. There is plenty of information waiting to fill the gaps left to those who want to find their news, opinion and analysis in a frugal fashion. Announcing a new millennial culture for the 21st century The Cluetrain Manifesto hailed the power of the networks and how hyperlinks subvert hierarchies. It is an anarchic age where information has gone from being scarce to being hyperabundant.

When the shooting of two London policemen occurred earlier this month, Sky News found the ideal picture to accompany their report on the Twitter picture service Twitpic. A man named Joe Neale had snapped a picture of the scene as he walked to a meeting. But Sky did not seek Neale’s permission to use the photo nor did they realise that Neale was an ex-employee of Murdoch at Myspace. Neale used Twitter’s terms of reference to shame them in to not only giving him attribution but also payment. Neale pointed out the consequences of their actions. “Rupert Murdoch has announced people will have to pay to access his sites from 2010, meantime he doesn’t seem to mind not paying for material and happily infringes on other people’s work” he said.

Murdoch may not have fully considered the hyperlocal consequences of having to pay his suppliers but he will have considered that he can drop audience and still turn a buck. His personal wealth dropped from $7.9 billion to $3.4b in 12 months, but he was far from alone to suffer carnage from the GFC. Michael Wolff’s feature on the billionaire publisher in Vanity Fair portrayed him as “the last mogul standing who truly loves print”. Australian journalist Frank Devine, who had a working relationship with him from 1983 to his death last month, said Murdoch was motivated less by money than by business intrigue. He said Murdoch finds “near total fulfilment” in constantly telephoning, travelling on whims, out-thinking rivals, balance sheets, and calculating risks”.

But he will also know the benefits. In The Sociology of News, journalism academic Michael Schudson set his readers the following riddle: When should a profit-seeking newspaper seek fewer readers? His answer was “when the readers it loses have, on average less income than the readers it keeps”. Newspapers make 80 percent of their income from advertising and for advertisers the perceived quality of a publication’s readership is as important as its quantity.

Sale price is unimportant by comparison. The crucial metric is demographic. As a Bloomingdale executive allegedly once told Murdoch, his store did not advertise in the New York Post because “your readers are our shoplifters”. News Corp now wants to bring wealthy eyeballs to advertisers.

Isolation is a reasonable a business plan, but News Corp ring-fenced content would look more attractive if people thought it was difficult to get elsewhere. His wooing of the New York Times, the Washington Post and Hearst media has been compared to “Vito Corleone calling for a meeting of the Five Families”.

In Australia, his only other serious private rival Fairfax (who lost $380m last year) is interested in getting behind the paywall. Fairfax Media managing director Brian McCarthy announced he would be “happy to talk” to News Ltd about charging for online content. The Australian Competition and Consumer Commission is watching for anti-competitive or collusive behaviour and has warned News Ltd and Fairfax to consult with it before entering into any paid online content arrangement.

But even if a news cartel can form a working paywall, will it really usher in a two-tiered era of the information rich and the information poor? The Internet has long interpreted censorship as damage and may treat large paywalls the same way. Would Australia be losing much if News and Fairfax hid their content much of which is vacuous? There are other ways of getting overseas information and ABC is left as master of the local unfenced field. Trusted bloggers who do not charge may find their influence expanding as well as their audiences.

There will be significant leakage of material of paywall content into the public commons and with it new legal quagmires. Associated Press have announced they will charge for content at $2.50 a word but re-publishers may claim fair use privilege. Copyright law will be sorely tested too. What judges who may be asked to decide on such matters must realise that, as Terry Flew says, information is a metapublic good. It generates the most positive benefits to a community when freely available. It is the miracle of the knowledge economy which as Charles Leadbeater says exists on thin air. Those with the best images and ideas are quicker to adapt than those weighed down by assets that have outlived their usefulness.

The question will be whether Murdoch has absorbed that lesson. He is a flying a flag for those who believe the era of free on-line content is over. They argue pay per view is necessary to support quality journalism.

Others say the death of quality journalism was caused by the profit motive of the late 20th century newspaper where budgets were reduced, and journalists were asked to write more stories per day and were given less time to check facts. Wired editor Chris Anderson argues the age of information abundance is leading to freeconomics driven by the underlying power of the web. Everyone with the skills to become a journalist may find unexpected advertising possibilities opening when News Corp turn off the Google juice.

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