Witnessing The Death Throes Of An Old Media Dinosaur
By Darryl Mason
A short round-up of the global losses of the Rupert Murdoch media empire, culled from this story :
* News Corporation net loss in 12 months - $US3.4 billion.No wonder ex-Australian Rupert Murdoch was reading, grimly, by phone, from a prepared statement when he tried to explain to shareholders that while the news about News Corp. was shockingly bad, next year was looking better because he intended to make people....umm....pay to read the news online.
* Full year operating profit drops by 32%
* Growth in cable TV fails to compensate for massive losses in films, books, magazines, newspapers.
* In April/May/June quarter 2009, News Corp. smashed by $203 million in losses. In comparison, same quarter 2008 saw $1.1 billion profit.* Advertising revenue for Murdoch's British papers - The Sun, The Times, News Of The World - plunged by 14%.
* Murdoch's 20th Century Fox film division, profits slumped from $1.24 last year to $848 million this year.
* Profits from Murdoch's Fox TV division - US, UK, Asia - were slashed by more than 80%.
Pay to read the news online? Who didn't laugh when they heard that the first time? This is a visionary strategy to save a massive global corporation from destruction?
Who is this crazy old man and what has he done with the Dirty Digger?
Stephen Mayne, the founder of the profitable online news site, Crikey, was interviewed on ABC Midday News on Thursday, as news broke of the ex-Australian's media empire being blitzed by billions in losses.
"The problem Rupert has got is that he is in the dinosaur industry of newspapers"
Mayne doesn't necessarily think that the ex-Australian will be left completely fucked and bombed by the 'You Will Pay!' experiment, but it's not looking good. Mayne believes the Murdoch product soon to be for sale is not good enough, and Murdoch will always be ten steps from disaster as long as he continues printing actual newspapers.
"I think for Rupert Murdoch to declare that the Herald Sun, the Daily Telegraph, every one of his newspapers in the world, and he is the world's biggest newspaper owner, for them all to charge is a very risky proposition," Mayne said. "And I predict they won't get much revenue, and they'll simply lose a whole heap of (reader) traffic."
Mayne said Murdoch's biggest problem was not simply convincing people to read Pay To Read online, but to give them enough reasons to want to pay.
"A lot of what Rupert does isn't particularly high quality, and if there's other high quality material from Fairfax, or other rivals in Britain and the US, that is still free, then everyone will just go to their websites. So you can only charge if (all the other news media) is charging and if your content is particularly fantastic," Mayne said.
"So the big challenge for Rupert, is to round up all the big newspaper publishers around the world and to get them to all collude and agree to change the business model. And that will be very hard given they all compete so aggressively."
The ex-Australian will continue to suffer while he clings to the 20th century.
"The problem Rupert has got is that he is in the dinosaur industry of newspapers," Mayne said.
"The industry is collapsing, his advertising revenue is down 20% across the board. Google has cut everybody's lunch. And i think the only real way he can get out of it is to get companies like Google to start paying him money in return for aggregating their content. Get everyone together, start charging, and then do a big deal with Google to try and scoop up some of their billions in annual advertising revenue derived from aggregating newspaper content."
Doing away with actual newspapers, Mayne predicts, will be an inevitable part of returning Big Media to shareholder-applauding profit. That is, if profits enough to survive are even possible again for a corporation as large and expensive and bloated with seven figure executives as Murdoch's News Corp.
"I think newspapers...it's a dying industry," Mayne said.
"Publishers have been screwing advertisers for 100 years. Technology has now turned the tables"
Economist Alan Kholer says Rupert Murdoch is crashing and burning because advertising income online compared to print has proved to be so gaping :
....who was to know that the price of online advertising would settle at about a tenth of the price of print advertising?An editorial in Crikey ouchingly brands the newspapers Murdoch clings to as "legacy media" :
This is, after all, a classic business event: a technological change that causes a price reduction. And the result is always the same - lower costs.
While absurdly high print advertising prices (in print) have subsidised large editorial budgets, and low or zero cover prices, it won’t do it online.
It is the fact that the price of advertising has collapsed. Murdoch’s real problem is that the balance of power between publishers and advertisers has entirely flipped.
Advertisers and their agencies now rule the roost. They refuse to pay more than a tenth or so per unit of what they pay in print, and they demand much better service, such as only paying for actual new customers, not simply for “branding” that can’t be measured.
And why shouldn’t they act this way? The publishers have been screwing them for a hundred years, charging outrageous prices to access their treasured audiences. Technology has now turned the tables.
We are merely witnessing the death throes of an oligopoly’s hubris.
"...this is all a gigantic gamble by desperate newspaper owners to plug the deep cracks in their business models that have turned newspapers from 20th century money machines into 21st century legacy media.
Saying that quality journalism is not cheap to produce is self-evident. But the fundamental problem for most quality newspapers is not that people aren’t paying for that journalism, it’s that advertisers — especially classified advertisers — have found a better and cheaper medium than newspapers. And it’s the advertisers, not the readers, who pay for the quality journalism that made newspapers so profitable and powerful.
Unless readers are prepared to replace the lost classified advertising revenues — which in the case of a newspaper like The Sydney Morning Herald would require every buyer to pay something like $250 a year extra for the content — the problem of funding quality journalism won’t be solved.
I've been a newspaper junkie since my early teens. I brought 2 or 3 newpapers a day, every day, for decades, until about 3 years ago. Now I only regularly buy weekend newspapers.
I spent about $10 on newspapers last weekend, and except for a Louis Nowra piece in The Australian, most of the weekend paper pile remains unread. I read most of the news elsewhere online, the day before. I can barely bother to read columnists like Greg Sheridan, Philip Adams, Miranda Devine and Sun Herald, Sunday Telegraph and The Australians editorials, online, let alone devoting offline time to getting through them.
It seems an unimaginable reality. What do you mean they don't print newspapers anymore?
None of the weekend papers feel essential anymore. It doesn't feel like I'm going to miss out if I don't buy them and read them comprehensively. When I was in my early 20s, I often chose buying newspapers over buying Saturday morning breakfast. The idea of doing that now seems insane.
There are probably thousands of bloggers, and dozens of indie media sites, run by juiced New Media 20-somethings, who snort and cackle and giggle with delight at what is happening to the old corporate media these days, and some seem to take a particular delight in believing that actual newspapers won't be found some day soon in racks at the 7-11, or piling up the gutters on windy days.
It's seems an unimaginable reality. What do you mean they don't print newspapers anymore?
You had to wait for the newspaper once. You had to wait for it to go on sale, or for the newsagent to open. There was many a 2am Saturday or Sunday morning when I haunted all night newsagents in Kings Cross or Central Station (coming home from work, or from seeing gigs) hassling to get bundles cut open so I could get what I wanted and rush home to read them before sleep overwhelmed.
Now I can just read all that vital news on an iPhone as I stumble home instead.
And if there are days when I can't be bothered to visit online news sites, let alone pick up an actual paper, I'm confident that the array of writers, journos, media junkies, I follow on Twitter will alert me to plenty of quality news from all over the world, including much that I would never bothered to read had they not recommended it.
And Twitter is the nail through the palms of all the big, vastly expensive news media online today. Murdoch execs in particular still seem to have no idea what this instant news sharing system is going to become. None of them dare to say the word 'Twitter' out loud right now, even as they loudly repeatedly denounce the legitimate competition for eyeballs and attention from one person blogs, as they attempt to degrade and discredit the credibility of a thrilling storm of independent New News Media.
"You need us to tell you what's going on."
Really? Do we?
It doesn't feel like that anymore.
All media execs are terrified of Twitter. Trying to fit a chunk of news or info into just 140 character posts is is training millions how to write clearly, succinctly. Twitter is training people in how to reduce an explanation of what is happening to them, or people they know, or people they've just read about, into a handful of words. Experienced twooters can compress a 1200 word front page story in The Australian to its most essential facts spread across a couple of posts.
If you want to know the latest news on anything, tossing subject key words into the Twitter search engine more often than not delivers you the very latest on the news you're interested in, sometimes literally a minute or less after it happens.
The idea that the average person needs a journalist, or a columnist, to explain to them what is happening in their local community, their city or state, their country, to interpret and filter information, feels very 20th century.
As 20th century as that file pile of weekend newspapers a few feet from me, that now feel like more of a chore than a pleasure to leaf through.
I live without daily newspapers now, and I'm sure I've almost been rehabbed enough by a world of online news to dump the weekend newspaper habit as well.
If the Old Media now so desperately trying to save itself from financial ruin and irrelevancy can't convince a full-blown news junkie like me to buy their gear in print or online, what hope do they have to convince the majority who have only a casual news habit?
I feel absolutely no devotion or allegiance to any Old Media. What do they serve up that I can't get elsewhere online, if not immediately, then a bit later from elsewhere?
I'd rather pay Fairfax columnist Annabel Crabbe $30 a year to write her columns for her own blog and then alert me to those stories via Twitter than to pay Fairfax $100 or more a year for a whole slew of content I don't want, don't need, won't read. If Crabbe charged, say, $60 a year and mailed me a book she'd either written or one she highly recommended, I'd sign up tomorrow.
To me, the biggest problem the Old Media in Australia, all over the world, face right now is overcoming the dawning reality that they are no longer essential.
The monopoly on information and news enjoyed for so long by a handful of media corporations has been smashed by the Big Free, by thousands of blogs and independent news sites and comment boards on MySpace and on aggregators (and summarisers) like Digg and Reddit and free access forums on anything you can imagine, contemplate or question.
Information and news is Free, and that cannot be changed back now. No matter what former gods of public manipulation and opinion shaping like Rupert Murdoch try and do, the sharing of news and information can never go back to what it once was.
Those days are over.
Curiously, while the media giants are being stripped by market forces of their wealth and influence, there are plenty of blogs and independent news media who are doing very well for themselves right now, and free information exchangeries like Twitter only help to expand their online audiences.
When the true desperation sets in for media giants like Murdoch, and it wont be long now, the real down and nasty war against all that enthusiastically free competition from bloggers and indie news sites will begin. And it will be an ugly.