Murdoch Explains Life – Pay

Michael Hedges May 11, 2009 Follow on Twitter

Last week was slow for media news. That gave plenty of attention to the “malfunctioning” of media’s business model, according to Rupert Murdoch. Everything The Elder says is staged, just like Janet Jackson’s wardrobe “malfunction.”

Rupert Murdoch, principal owner and CEO of News Corporation, needed to give grist to financial analysts, themselves looking for a return to simpler times. “The current days of the internet will soon be over,” said The Elder to the bear market choirboys (May 6) about more money on the horizon as News Corp’s share price fell.  News Corp’s newspapers, he said, would begin charging for online access.

At almost the same moment Alexander Lededev, new owner of the London Evening Standard, threw The Elder a cold fish. Monday (May 11) the Evening Standard will give away more than 600,000 copies of the rebranded daily. Lebedev said he is contemplating lower, not higher, newsstand prices for his newspaper to compete in London’s newspaper rich (or poor) market.

Mr. Murdoch is, arguably, the last in a long line of media magnates firmly committed to forcing the great unwashed – the public – to buy what they don’t need. The Web has accentuated access to lots of content, much of which people look at as a diversion from their daily routine. The Elder, like the other old media people, don’t get the concept that business models don’t “malfunction.” They wear out their usefulness.

The advertising people finally figured out that the Web easily and effectively connects them to target customers. The old business model hasn’t changed. Reach people and revenue follows. YouTube and Facebook ascend… more or less.

Sure, more ad money is coming to the Web. Most of it is taken from newspapers. Looking more carefully it’s the newspapers (and television, and radio) least connected to real people that are hurt most. In the parlance of radio broadcasting, listeners stick to DJs.

The consumers’ willingness to pay for media content, even Web distributed, also follows well-known economics. It’s called the demand curve. Web junkies, pining for the good ol’ days when venture capital flowed like bad beer in Bristol, continue trying to make the case that the Web changed consumer economics. Too bad they slept through that class.

Special interest content, which runs the gamut from highly qualified analysis to slut, always finds buyers. It’s the general interest – nice to know – content that attracts Web surfers who kill time looking for a free tid-bit. Water-cooler news – nice to bring up in a conversation on break but not worth paying for – doesn’t pass the need-to-know test. But as free content accessible to all and suitably indexed by Google News (and other aggregators) mass audiences are attracted. Mass audiences attract mass audience advertising. It’s amounts of money that perplex the accountants.

And that is precisely where old media barons like Mr. Murdoch and the new media geniuses fail to communicate. Cost structures in old media land include shareholder benefits, bank fees and legacy contracts. New media people unencumbered – so far – by any of that simply look for more ways of attracting people. Mr. Murdoch said MySpace, owned by News Corp, would not be following the Facebook model of “getting hundreds of millions of people who don’t bring any advertising with them at all.”

Mr. Lebedev also announced this past week he’d be launching a business-oriented talk radio station in Moscow. His doctoral dissertation in economics was based on research into the problems of debt and the challenges of globalization. Perhaps Mr. Murdoch might pay somebody to tune it.

See also in ftm Knowledge

Rupert Murdoch and News Corporation

News Corporation has a global footprint. Rupert Murdoch has a global fingerprint and when he talks everybody hears it. Update includes News Corporation and News International resturcturing, European television and newspapers. 108 pages PDF (April 2009)

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