(Photo by Arenamontanus)
Perhaps the most terrifying phrase in the English language is the one that announces “all bets are off”. This is the panicky moment where there is no going back. Regret about actions and inactions is inevitable but usually momentary. Perhaps Rupert Murdoch felt that slight fear when he announced that News Corp was going to start charging for online content from 2010 onwards. This is a voyage into the unknown.
Necessity was the mother of Murdoch's action: News Corp posted a $3.4 billion loss in fiscal 2009. Change is difficult, but as a businessman Murdoch understands how evolution works. The alternative is death. Change has no moral charter however, and the jump from Charles Darwin to World War I took just thirty years.
The notion of objective journalism arose in the early 20th century to report on the complexities of those times. A hundred years on, faithfully reporting the facts remains the key to influence in a media-crowded environment. More than ever journalism is a crucial component of democracy due to abilities to ask questions and its first loyalty is as always to citizens. Citizens are the people and it is now easier that ever for the people to spread their own messages. The Internet has provided the means of production to the masses. The "inter network" is one of the most important innovation commons ever devised. But it is not a free entity. It owes as much to Adam Smith as to Marx. People who are horrified about paying for content on the Internet don’t seem to complain too much about paying for access and equipment.
It is important to understand how the market will bear the costs of Murdoch’s content. But it will also be useful to observe how people will exploit the new niches left vacant in the attention economy. There is plenty of information waiting to fill the gaps for those who want to find their news, opinion and analysis in a frugal fashion. Announcing a new millennial culture The Cluetrain Manifesto hailed the power of the networks and how hyperlinks subvert hierarchies. The Communist manifesto for the 21st century was a post-Weber prescription for how to do business in an age where information has gone from being scarce to being hyperabundant.
Citizens are increasing gathering a larger part of the puzzle. When the shooting of two London policemen occurred earlier this month, Sky News found the ideal picture to accompany their report on the Twitter picture service Twitpic. A man named Joe Neale had snapped a picture of the scene as he walked to a meeting. But Sky did not seek Neale’s permission to use the photo nor did they realise that Neale was an ex-employee of Murdoch at Myspace. Neale used Twitter’s terms of reference to shame them in to not only giving him attribution, but also payment. It was a piquant Neale who pointed out the consequences of their actions. “Rupert Murdoch has announced people will have to pay to access his sites from 2010, meantime he doesn’t seem to mind not paying for material and happily infringes on other people’s work” he said.
Mister Murdoch may not have fully considered the hyperlocal consequences of having to pay his suppliers but he will have considered how he can lose a large audience share and still turn a buck. His personal wealth dropped from $7.9 billion to $3.4 in the last 12 months, but he was far from alone in suffering carnage from the GFC. And he does have the industry in his blood. Michael Wolff’s feature on the billionaire publisher in Vanity Fair portrayed him as “the last mogul standing who truly loves print”. Australian journalist Frank Devine, who had a working relationship with him from 1983 up to his death last month, was probably closer to the mark when he said Murdoch was motivated less by money than by the intrigue of business. He said Murdoch finds “near total fulfilment” in constantly telephoning, travelling on whims, out-thinking rivals, balance sheets, and calculating risks”. Murdoch will have a fair idea of just how risky this is.
But he will also know the benefits. In The Sociology of News, journalism academic Michael Schudson set his readers the following riddle: When should a profit-seeking newspaper seek fewer readers? His answer was “when the readers it loses have, on average less income than the readers it keeps”. Newspapers make 80 percent of their income from advertising and for advertisers the perceived quality of a publication’s readership is as important as its quantity.
Sale price is almost unimportant by comparison. The crucial metric is instead demographic. As a Bloomingdale executive allegedly once told Murdoch, his store did not advertise in the New York Post because “your readers are our shoplifters”. News Corp is now going after the non-shoplifting reader so they can bring guaranteed wealthy eyeballs to advertisers.
Isolation is a reasonable business plan, but News Corp's content would look even more attractive if it was difficult to get elsewhere. So he has been keen to seek support. His wooing of the New York Times, the Washington Post and Hearst to join them behind the ring-fence has been compared to “Vito Corleone calling for a meeting of the Five Families”.
In Australia, the media godfather's only other serious private rival Fairfax (who themselves lost $380m last year) has also expressed interest in getting behind the paywall. Fairfax Media managing director Brian McCarthy announced he would be “happy to talk” to News Ltd about charging for online content. The Australian Competition and Consumer Commission (ACCC) has said it is watching for anti-competitive or collusive behaviour and has warned News and Fairfax to consult with it before entering into any paid online content arrangement.
But perhaps the ACCC is being a little too precious. Even if a news cartel can form a working paywall, will it really usher in a two-tiered era of the information rich and the information poor? The Internet has long interpreted censorship as damage and routes around it. It may treat large paywalls the same way. Would Australia be losing much if News and Fairfax hid their content much of which is vacuous? There are plenty of other ways of getting important overseas information and the ABC will be left as master of the local unfenced field. The former audience will become more active users of news and not mere consumers. Established bloggers who do not charge for their content may find influence expanding as well as their trustworthiness.
It is also likely there will be significant leakage of paywall content into the public commons and with it new legal quagmires. Associated Press have announced they will charge for content at $2.50 a word but re-publishers may claim fair use privilege. Copyright law will be sorely tested too. Judges who may be asked to decide on such matters must realise that, as Terry Flew says, information is a metapublic good. It generates the most positive benefits to a community when it is freely available. It is the miracle of the knowledge economy which as Charles Leadbeater says exists on thin air. Those with the best images and ideas are quicker to adapt than those weighed down by assets that have outlived their usefulness.
The question will be whether Murdoch has absorbed that lesson with his new plans. He is a flying a flag for those who believe the era of free on-line content is over. They argue pay per view is necessary to support quality journalism.
But others say that quality journalism is dying anyway thanks to the profit motive of the late 20th century newspaper where budgets were reduced and journalists were asked to write more stories per day and were given less time to check facts. Wired editor Chris Anderson argues that the age of information abundance is leading to the rise of freeconomics driven by the underlying power of the web. Everyone with the skills to become a journalist may find unexpected advertising possibilities opening when News Corp turn off the Google juice.
For now, all bets are off.