- April 3, 2009
A short dispatch from today’s Wall Street Journal highlights “old media’s” misconceptions about the fundamental change taking place in the information markets.
According to the article, News Corp. is investing in a new e-reader akin to the Amazon Kindle. CEO Rupert Murdoch seems to think that he can reverse the surge towards free content on the web.
“People are used to reading everything on the net for free, and that’s going to have to change.”
Going even further, Murdoch “questioned whether the newspaper industry should continue to allow online news aggregators, such as Google Inc., to aggregate newspaper content without being compensated for it.”
Between a Rock and a Hard Place
Put yourself in his shoes for a minute. Of course News Corp. is entitled to profit from its business operations. And yes, most of their information products are worth a premium (case in point, I gladly subscribe to the online WSJ for $99 a year). Unfortunately for the newspaper industry, they are swimming upstream against a tidal wave of free information and reduced advertising revenue.
I totally agree with his first point. In order to benefit from the access and perspective that traditional media provides, consumers will have to pony up a few bucks. Whether that’s a subscription model or a cost per article (iTunes model) remains to be seen. Given Amazon’s recent move to create an iPhone Kindle application, I would think that yet another e-reader device would be redundant. If I were News Corp., I would create applications to utilize existing devices that are more than powerful enough and wouldn’t require a separate consumer purchase.
Unfortunately for the mobile ad market, advertising revenues are abysmally low. But there is hope. Early studies are showing that mobile ads may be useful to consumers as evidenced by higher response rates and recall.
However, I’m not sure his comment about disallowing Google News is anything more than saber-rattling. I’m sure Mr. Murdoch knows that he can make that a reality with one simple line of code in the WSJ’s robots.txt file. But he won’t, unless he can get every single newspaper publisher to go along with him.
Imagine, if you will, the day that the WSJ blocks Google News crawlers from accessing and indexing their content. Do you really think this will prevent regular people from using Google News? Will they realize what they are missing and phone in their subscription to the WSJ?
No, of course not. All of the traffic that would have gone to WSJ.com will go to other news sites. News Corp. will lose a lot of online advertising impressions and revenue. It’s a lose/lose for News Corp.
An Unenviable Position
So what is a newspaper publisher to do when faced with this conundrum? I wish I knew. I’d be phoning in this blog post from my yacht in the Mediterranean. What is your opinion? Will yet another e-reader save News Corp.? Or will it simply distract them from their primary objective of figuring out how to maximize revenue in a new operating environment?