Murdoch Pay-For-Content Strategy A Dud

Murdoch and others are the King Canutes of the business world, trying to hold back the tides.
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Words and images diminish in value, commercially speaking, because the Internet has turned everyone into a writer, publisher, anchor, newspaper editor and network producer.

"Professional" content is now freely obtained online and repurposed by users. At the same time, "professional" content is losing "mind share" to the musings and videos of peers on social sites, blogs, YouTube and other digital media venues.

Last week, media mogul Rupert Murdoch of NewsCorp. waded into this situation by announcing a "new" old business model: By next year, he will be charging for access to all his websites and enforce copyright protections through the courts. First to be "fire-walled" and no longer free is the venerable Times of London. His Wall Street Journal already is partially walled off and, presumably, so will all his sleazy tabs like the New York Post, News of the World and his Fox TV empire with its websites.

"Quality journalism is not cheap and industry that gives away its content is simply cannibalizing its ability to produce good reporting. The digital revolution has opened many new and inexpensive distribution channels, but it has not made content free. We intend to charge for all our news Web sites," he said.

More lemmings or visionaries?

He forecasted that others will follow, and another two or so media outlets said they would do the same. Some, like Barry Diller, said Murdoch's new strategy is correct because people have always paid for content.

But Murdoch and others are the King Canutes of the business world, trying to hold back the tides.

I would argue that people have not paid for journalism or television content because it has been a loss leader subsidized by advertisers for decades.

(Newspaper subscribers pay the cost of delivery, not much more, with the rest of costs covered, and profits provided, by ads.)

So the real challenge for media empires is not that people refuse to pay for content but that younger readers and viewers bypass the newspaper and TV advertisements and commercials by going online for news and entertainment.

This has forced the advertisers to reduce their spending in order to follow the under-50 year old eyeballs into the digital world where they roam. Thus advertising revenues to media outlets have been plummeting worldwide and companies are being shuttered.

This underscores the problem with Murdoch's media "solution". The only way it would work is if all the world's brand-name media outlets ganged up, monopoly-style, and decide to charge for their websites. Even so, piracy would flourish. Just one subscriber or viewer, listener or ticket-holder could steal content then peddle it all over the world or give it away then hide and resurface.

Enforcement is difficult because taking and sharing content is now done by millions, which means that armies of litigators cannot collect damages because most people would be judgment proof, or without any assets to recoup. This is what happened to the music business model.

New world, new media

Frankly, the world unfolds as it should and the media industry is adapting. Legacy media is cutting costs and growing digitally. New media has found different business models such as blogs which don't charge or pay for content then monetize their audiences by attracting advertisers if their traffic is huge.

Tax supported and not-for-profit support for "good" journalism are taking up some slack. The world's citizen journalists, with their cellphone cameras, are filling the vacuum left by the ponderous or depleted media such as the footage the world saw during the latest uprising in Iran.

Frankly, the party ended when the barriers to entry fell. The Internet meant that the Power and the Glory no longer belonged to those with millions to spend on presses and delivery or to the high priests and priestesses who wrote for them.

Everyone I know in the media is working harder than ever for less money. Frankly, it's not a disaster, nor is it reversible which Mr. Murdoch may soon demonstrate.

Diane Francis blogs at Financial Post and CanWest newspapers

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