Sixteen years ago, an eternity in Internet years, media mogul Rupert Murdoch became one of the first newspaper publishers to venture online. In a now-forgotten deal, his sprawling News Corp. empire snapped up Delphi Internet Services, one of America’s first dial-up providers, with a plan to meld it with his newspaper and TV content. Analysts were ecstatic at the prospects. “Rupert Murdoch has bought an electronic engine for his media empire,” one gushed. But the engine didn’t just sputter; it more or less failed to start altogether. Since then the newspaper industry has been marred by bankruptcies, mass layoffs and plunging advertising sales as publishers stumbled from one flawed Internet strategy to another. Just last month Editor & Publisher, the 125-year-old industry bible that has chronicled scores of newspaper closures, was forced to write its own obituary online, ahead of its final January issue.
But momentum is building in the media industry for a counteroffensive, and Murdoch is once again leading the charge.
The News Corp. founder and CEO, and other publishers, have trained their guns on search engines and news aggregator sites like Google and Digg.com, calling them “content kleptomaniacs” and accusing them of stealing content to line their own pockets. More importantly, large numbers of publishers and news wire services are on the verge of erecting pay walls around their online media properties, cutting off much of the torrent of free content that fuels the Web 24/7. “The Internet now is this socialist model where everybody can access everything for free, but the democratization of the industry has become unsustainable,” says Alfonso Marone, a media strategist with Value Partners in London.
Everyone is mocking the 78-year-old tycoon, he adds, but at the same time, they’re praying he succeeds. As Murdoch sets out to stop the Internet, all eyes are watching. Because if he wins, his campaign could shape the very nature of the Web and how we use it.
Murdoch and his lieutenants have begun their assault with a barrage of vitriol, most of it directed at Google. “Should we be allowing Google to steal all our copyrights?” he asked a gathering of publishers last year. In November, Murdoch laid out his opposition to the Federal Trade Commission in Washington, which is looking into the fate of the newspaper business. “There are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production,” he said. “They are feeding off the hard-earned efforts and investments of others. And their almost wholesale misappropriation of our stories is not ‘fair use.’ To be impolite, it’s theft.” Other News Corp. executives have been even more scathing. Robert Thomson, for instance, the editor-in-chief of the Wall Street Journal, has called Google and news aggregators “parasites or tech tapeworms in the intestines of the Internet.”
Murdoch has vowed to back up his tough talk with action. His main tactic is to block Google’s search engine from indexing News Corp. sites.
Theoretically that would mean stories from his papers would not appear among the assembled headlines on Google News or pop up in Google search results. While keeping mum about the exact timeline, News Corp. says a final decision could be made within months. The move, not surprisingly, has drawn scathing criticism from fans of Google, and even the company itself. For one thing, they say, if Murdoch really wanted his content off the search engine, he could have done so at any time by adding some simple programming code on its websites to block search engines from indexing its pages. “If publishers want their content to be removed from Google News specifically, all they need to do is tell us,” the tech giant said in a statement, adding it sends news outlets around 100,000 hits a minute. “Google is the scapegoat for newspapers,” says Sarah Rotman Epps, a media analyst at Forrester Research.
“That’s unfortunate because it’s blinding newspapers from focusing on real solutions to their problems.”
Yet for all Google’s talk about how much traffic it sends to newspaper websites, the company has profited wildly from all the free content on the Web, earning billions of dollars from its ability to sell advertising alongside search results. At the same time, Google has made it a snap for anyone to access stories hidden behind existing newspaper pay walls. A quick search on Google generates a multitude of tricks for using the search engine to pilfer premium content. In fact, Google is a bit like a key cutter who willfully ignores that little message stamped onto some keys that says “Do not cut.” Or at least it was. Shortly after rumours started to swirl in November that News Corp. is in talks to give Bing, Microsoft’s search engine, exclusive access to its news sites, Google beat a partial retreat. The Mountain View, Calif., company has agreed to give publishers more control over their paid content. Readers who access a paid site through a link from Google will be limited to five free page views a day before being told to register or subscribe.
Score one small victory for Murdoch.
I t’s now obvious the decision to throw the doors wide open to free stories was a colossal mistake from the start for newspapers. Walter Hussman, owner and publisher of the Arkansas Democrat-Gazette, could have told anyone that.
Prior to 2002, the paper had followed the lead of bigger news organizations and made all of its content available online for free. But after watching in horror as readers cancelled their subscriptions, Hussman put his foot down and began charging for all online news. “We were just throwing it all away,” he recalls. Many readers were angry at the decision, but Hussman would calmly inform them that the paper pays $10 million a year to run its newsroom and maintain a bureau in Washington, one of a dwindling number of papers to do so. And while some readers probably stayed away, most came back. Between 1998 and 2008 the Democrat-Gazette maintained its paid circulation at 270,000, while other papers in the region that stuck with the free model saw subscriptions plunge more than 40 per cent.
Traditionally, newspapers earned about 80 per cent of their revenue through advertising, with the rest coming from subscriptions. Many believed the sheer number of eyeballs on the Web would help maintain that model, even if some newsprint readers cancelled their subscriptions. But while the professional content produced by reporters and editors was eagerly snapped up, copied and pasted across the blogosphere and online news sites like Newser, newspapers themselves have gotten little in return. Newspapers in the U.S. earned just US$623 million in online advertising in the third quarter, compared to US$5.8 billion from the dead tree variety, according to the Newspaper Association of America.