Murdoch's adventures in China

When Rupert Murdoch took control of The Wall Street Journal in 2008, he collected another less prestigious Dow Jones monthly publication called The Far Eastern Economic Review. It was as the New York Times called it an incidental addition to the vast global stable of Murdoch's News Corp. Murdoch promised editorial independence to all of the Dow Jones stable as part of the price he had to pay for the Journal. But given his reputation, it was no surprise to find there would be a chilling effect whenever a story appeared that affected Murdoch.

The Review’s editor Hugo Restall had hired Australian writer Eric Ellis to write a review of Bruce Dover’s book “Rupert's Adventures in China: How Murdoch Lost a Fortune and Found a Wife." The book is a privileged insider’s account of Murdoch’s attempts to woo the Chinese Government in the 19990s and his relationship with third wife Wendi Deng.  The book got a big reception in Asia in 2007 and Restall hired Ellis to review the book in January 2008. But by February, Restall had got cold feet and told Ellis the book “looks more like the work of a disgruntled ex-employee rather than an analysis of the business."

The book was nothing of the sort, as Ellis realised. In his spiked review, Ellis said for a businessman who has left such a mark on the world’s media, Murdoch himself was under-analysed and his personal life off-limits.  It was this reason why the book is of great service: because Dover (now the chief executive of ABC’s Australia Network charged with beaming content into Asia) was the Sun King’s chief courtier in the Forbidden City in a time when China meant everything to the boss. 

Dover tells the story from the time Murdoch bought STAR TV in 1993 for $1 billion to the time 10 years later when Dover has been sacked and Murdoch realised he could not replicate the success in China he had elsewhere. By 1993, Murdoch had defeated the British print unions in Wapping, was starting to make big money with BSkyB and the Premier League and expanding his footprint in America. The 23-year-old Richard Li’s STAR TV was a satellite operation that beamed programming to an area that stretched from the Philippines to the Middle East with the potential to reach two-thirds of the world’s population. 

But Li could never make money from STAR TV subscriptions as most of its users pirated the unencrypted service. He changed the model to advertising and charged big rates though no one could be exactly sure how much of an audience he was aggregating.  Li’s father Li Ka-shung was Hong Kong’s wealthiest businessman and a friend of Deng Xiaoping and he quietened ruffled feathers in Beijing over the fact the uncensored service was available at all in mainland China.  But Xiaoping told Ka-shung the business had to go and Li reluctantly sold to the highest bidder in 1993. Pearson PLC (owner of the Financial Times and Penguin Books) offered the same money as News Corp but wanted Ka-shung to stay on in some capacity. Murdoch had no such qualms.  

The problem was Li never sought approval from Beijing on the sale. When the Chinese politburo found out who STAR TV’s new owner was, there was deep concern. The Chinese saw only too well how Murdoch intervened in the politics of every other country he had interests in and feared the same would happen to them.  These fears intensified after a major speech Murdoch made in London’s Whitehall Palace. Murdoch was the main speaker in a night celebrating BSkyB’s new multi-channel offering. With the Internet still in its infancy, Murdoch used the speech to laud the new forms of communications which he said were a threat to “totalitarian regimes everywhere”. Orwell had got it wrong, Murdoch said, mass communication technologies did not subordinate individuals but liberate them. Telephony and satellite broadcasting, he enthused, made it possible to by-pass state control of information.

Murdoch would later claim he was talking about the recent collapse Communism in Eastern Europe. But the politicians in Beijing had no doubt he was talking about them. Premier Li Peng was incandescent with rage.  The Butcher of Beijing at Tiananmen was at the height of his powers four years later and he saw Murdoch’s speech as a threat to Chinese sovereignty. Within a month he banned the distribution, installation and use of satellite dishes in China, dashing STAR TV’s expansion plans from the word go.

Murdoch is nothing if not determined and quickly realised the extent of his blunder. He moved to Hong Kong with then wife Anna and started a long and assiduous campaign of wooing the Chinese leadership to see his position. The problem was that all contact with Zhongnanhai was funnelled through the State Council Information Office and Murdoch was allowed to meet no-one above the rank of vice minister.  In 1994 he used the excuse of limited transponder space on the satellite to drop the BBC from STAR TV but he later admitted to biographer William Shawcross it was because the Chinese leaders hated the BBC. Nevertheless it changed nothing and Murdoch remained persona non grata. 

The new play was for Murdoch to befriend family members of Deng Xiaoping.  He got Harper Collins to publish Deng’s daughter Deng Rong’s hagiography of her father.  He also feted his disabled eldest son Deng Pufang in an artists’ tour of Australia. The problem was Deng slipped from power in 1994 and new leader Jiang Zemin was not like the emperors of old. Deng’s children were out of favour and with them any chance of Murdoch patronage. Zemin enforced the crackdown on China’s half a million satellite dishes.

Dover himself was in China by this time trying to negotiate a joint venture with the People’s Daily. This strange alliance with the conservative communist organ was another peace plan and one tacitly approved by the politburo. The paper was under pressure to reduce its reliance on state handouts and proposed a business news magazine with News Corp. However, once again SCIO were not across the deal and did their utmost to ensure the new joint venture would never get off the ground. It was not the thaw in relations Murdoch needed.

Murdoch next’s ploy was to get into bed with businessman Liu Changle. Changle took half share in the Phoenix TV joint venture with STAR TV. Liu had cultivated several key Beijing decision makers and Murdoch was told by senior leaders this was his only way into China. Phoenix proved popular and shook up the tawdry domestic TV market. But Murdoch hated Phoenix because Changle retained day-to-day control.

Murdoch looked to the new information superhighway for a solution. As Beijing wrestled with control of the internet, Murdoch started a new joint venture with People’s Daily called PDN Xinren. The first product ChinaByte was launched to fanfare in January 1997 and soon became the most popular site in China. But after the tech bubble burst Murdoch lost faith in the product and by April 2001 has sold his foothold in the fastest growing internet market in the world.

Dover documents other manoeuvres such as getting rid of anti-Chinese China correspondent Jonathan Mirsky from the Times Hong Kong bureau. Murdoch had promised The Times editorial independence but he invited the Times editor Peter Stothard on a charm offensive of China. Southard would later spike so many stories from Hong Kong and Mirsky resigned citing Murdoch’s heavy hand. Murdoch also spiked the HarperCollins autobiography of former Hong Kong governor Chris Patten on Chinese instructions. Murdoch competed with great rival Time boss Jerry Levin to fawn over Chinese leaders and promise anything for a toehold in the country. Finally Murdoch made a speech which was a mea culpa for Whitehall where he conceded cultural and social values of a country trumped open communications. 

With relations warming slightly, Dover tells the amusing story of when Murdoch met Vice Premier Zhu Rongii in Australia in 1997. Zhu asked Murdoch to tell him the story of his rise to power and the pair had an animated conversation. At one point Zhu put his hands on Murdoch’s wrists, looked him in the eye and spoke in Mandarin.”I see when you needed to expand your business interests in the US you became a US citizen,” he said. “Maybe you should think of applying for Chinese citizenship to further your business interests in China”. Murdoch blinked when he heard the translation and spluttered a reply. Zhu burst into laughter and said he was joking.  

Murdoch did in the end apply for Chinese citizenship – by marrying his young Yale-educated interpreter Wendi Deng. Deng had the language skills but not the contacts in the politburo and the Chinese kept one step ahead of the Murdochs. Just as they successfully cultivated Zemin’s Shanghai clique, the leader was replaced by Hu Jintao. Dover was on the outer too, his boss frustrated by his inability to penetrate the Great Wall.  Hu closed down STAR TV’s intrusion into the Chinese “grey sector” and insisted China retain control of Chinese television, banning cooperation between local stationsand foreign companies. 

 

After 12 years of trying, Murdoch finally admitted he had hit a brick wall in China. In 2006 he sold his remaining interest in Phoenix and reposition STAR TV towards the Indian market. But it was not a total failure. Bruce Dover said Murdoch was a major catalyst of change in China both of its media and its attitude to the Internet (which the party wanted to ban entirely).  Phoenix transformed Chinese television with its brash, downmarket programming but control remained in Chinese hands. Dover said in seeking to woo China’s leaders, Murdoch overstepped the mark. “He became too impetuous, too imprudent,” he concluded.

Manne bites Australian

Not that it should be a surprise to anyone but Australia’s national daily newspaper The Australian has been wasting scarce journalist resources on a vendetta again. The latest victim is one of the country’s leading media writers Margaret Simons whose 2007 book The Content Makers remains the definitive account of the geography of Australian media (though someone needs to update it for the last five years). In recent weeks, The Aus has unleashed its attack dogs over claims Simons has somehow caused a breach of practice by her actions in the recent Finkelstein Review into media which in turn was inspired by the serious criminal behaviour of one of The Australian's sister publications in the UK.  There are many ways in which this attack on Simons is risible and they are all brilliantly exposed in Robert Manne’s new Monthly essay.

The point Manne is making about the tactics of the newspaper is twofold. Firstly, it doesn’t matter if your allegations are true or false you just have to make enough of them and some of the mud will stick. Secondly, it is another shot across the bows of anyone who dares be critical of the newspaper with treatment similar to Julie Posetti and Larissa Behrend which will be dragged out time and time again whenever a punchbag is needed.

The newspaper fulfils a crucial function in our democracy as one of the few media outlets with a truly national outlook. But it would appear the power conferred by being one of the central squares of Australia's public sphere has gone to the broadsheet’s head. In its constant efforts to defend itself against critics, it has warped in on itself and forgotten what it is there for: to give Australians enough information to give them a useful perspective on the important news of the day.

The biggest problem with the Australian is that appears not to want to learn from its mistakes. It never admits it is wrong. Under Chris Mitchell in particular (editor in chief since 2003) it has been front and centre in a culture war.  The newspaper and its Saturday companion have built up an armada of columnists which can recite the party line in their sleep who regularly trot out the house rules. 

There are still enough good writers at the paper to provide the news function. They cover politics, business, law and international affairs in some detail (with the help of good Murdoch sister papers such as the Wall St Journal and The Times). But their editorial and opinion pages have become barren wastelands of News groupthink where writers like Greg Sheridan, Chris Kenny, Dennis Shanahan and Christopher Pearson flourish. Even when turning to unorthodox opinion it favours those who unorthodoxy is mostly directed against the left and the greens (Brendan O’Neill, Frank Furedi, Bjorn Lomborg) .

As Manne said (and as I can corroborate from discussions with News journalists) there are many within the organisation that are appalled by the blatant and biased political tone set by the editor and his inner team. Manne reckons they should speak up which would be a better way of dealing with the issue than any outside body Finkelstein could recommend. Indeed there is a precedent when journalists at the Australian went on strike in 1975 in protest as Murdoch’s open support of Malcolm Fraser in the lead up to the election.

But it is unlikely any uprising will come from within. News is one of the last 20^th century media empires and most workers there fear for their future. It is not making a graceful transition to the digital age though it remains an extraordinarily wealthy company and very powerful in the local market. The Australian, often described as a Murdoch vanity project, is not driving any of this wealth. But it remains very influential with its high demographic readership and its access to power. Politicians of both major parties are wary of criticising it though the Greens have dubbed it hate media.

This is unsurprising as much of Mitchell’s vitriol is reserved for the party which his paper has openly called to be destroyed at the ballot box. Why it even feels it has a right to make such a recommendation is a revealing aspect of its DNA. “We know best,” it screams, and we will punish anyone who has the temerity to think otherwise. No wonder it cannot deal with the sharing tools of 21^st century social media when its views are steeped in 20^th century paternalism. It prefers intimidation to trust as a way of maintaining its authority. But The Australian is on borrowed time and not just because Murdoch will sooner or later die. Its thrashed brand is a tragedy as much of Chris Mitchell’s making as Rupert's and one which must not be repeated by whatever colonises its habitat when it is gone.

Wanting less News: Pay TV piracy and News Corp

If there was any doubt that News Ltd have too much power in Australia, it should be dispelled by their aggressive handling of the allegations of global Pay TV piracy this last week. The issue was launched internationally by a BBC Panorama program called “Murdoch’s TV pirates” and it was given a local angle with long time Murdoch tormentor Neil Chenoweth’s series of articles in the Australian Financial Review (Chenoweth was also an adviser to the BBC program). News Ltd has tried to bully the AFR out of their allegations while also questioning SBS for showing the documentary hinting it does not correspond with the station’s code of practice.

The Panorama program focussed on a British issue. It alleged the then News Corp security arm NDS (headquartered in Israel) hired an expert team of Pay TV hackers from the piracy site called The House of Ill Compute (THOIC). Originally known as News Datacom Systems, NDS established the “Operational Security” group in the 1990s to ensure the security of Murdoch’s growing pay TV interests. Cracking codes is not illegal but spreading the cracked code to encourage piracy is. NDS busted THOIC piracy but instead of prosecuting them they hired them. The THOIC brief was to open up the security codes of NDS competitors, Canal+ (from France), and flood them on the market. This action, Panorama said, was directly responsible for the death of On Digital (later called ITV Digital) which used the Canal+ system. On Digital was the biggest pay TV threat in the UK to Murdoch’s BSkyB which had smartcards made by NDS.

Panorama tracked down Lee Gibling, the former head of THOIC who told them NDS hired him to break competitors’ smart card systems. Panorama also secretly filmed two other key witnesses, former NDS employees Ray Adams (previously Metropolitan Police commander) and Len Withall and aired the footage without their permission. The footage found evidence that emerged in 2002 showing links from THOIC to News Corp. Canal+ sued News Ltd who dealt with the problem by spending $1 billion on an Italian Pay TV company called Telepiu, owned by Vivendi Universal which was on the brink of bankruptcy. Vivendi Universal also owned Canal+. The terms of the deal was to drop the lawsuit and the Canal+ Tech team that developed the smart cards was also disbanded.

Here in Australia, the AFR published the end of what they called “a four year investigation” into similar allegations into the local pay TV market. They published an archive of 14,400 Ray Adams emails and said piracy cost Australian pay TV companies $50  million a year at its height in 2002. It helped cripple the finances of Austar, which Murdoch’s part-owned Foxtel (which uses NDS) is now buying. The AFR published emails which were submitted in legal cases brought against NDS by rival pay TV operators in the US (DirectTV, Echostar) Europe (Canal+ and Sogecable) and Malaysia (Measat). Like the way they dealt with Canal+, News Corp bought 34 percent of DirectTV to end that case. In the only one to go to trial, Echostar won three of six counts, but won only minimal damage and had to pay court costs.

In Australian law, unauthorised access to electronic networks and illicit modification of databases are criminal offences. But Bruce Arnold, Law Lecturer at the University of Canberra, is only prepared to say News Corp may have exacerbated the issue. “Academic and industry research over two decades indicates the problems experienced by the defunct or ailing television networks were primarily attributable to poor management, poor marketing and inadequate capitalisation,” Arnold said.

Finding hard evidence is not easy, as Terry McCrann alluded to when hauled out by the Herald-Sun to defend News. McCrann wanted to see an email quoted in the AFR. “You know, something like: Murdoch to 007: My plan for world pay-TV domination rests on your piracy skills. Let's target one million pirated cards by Christmas.”

McCrann was flippant but giving the nastiness at the heart of News Corp exposed in the Levinson Inquiry, it not beyond the bounds of reason to think Murdoch wanted to see exactly that: one million pirated cards on the marketplace by Christmas. Such thoughts never make it to an email. Britain’s TV regulator Ofcom is currently examining if Rupert and James Murdoch are “fit and proper” to be in control of BSkyB based on the phone hacking scandal. One of the hacked MPs Tom Watson says the pay TV allegations should be added to that investigation.

Here the ACCC (Australian Competition and Consumer Commission) is reviewing the $1.9 billion Austar takeover bid. With such a cloud over the Empire, it seems beyond belief the Australian Government should allow yet another contraction of ownership in the most concentrated media landscape in the western world. Yet time after time, Murdoch gets his way in Australia. Robert Manne explains why this is a problem: “The more the media is concentrated, the greater is the problem for the health of democracy”, Manne writes. “Yet the more the media is concentrated, the less likely it is that the issue will be debated freely in the only appropriate forum for the discussion, the media itself.” News Ltd Australia should be broken up, not expanded.

Guardian's Rusbridger and Davies: Media Personality 2011

The third annual Woolly Days media personality of the year (after Mark Scott in 2009 and Julian Assange in 2010) is shared between Guardian editor Alan Rusbridger and Guardian journalist Nick Davies. Rusbridger and Davies win the 2011 award for their disciplined and determined expose of the insidious tactics of the News International empire in illegally hacking phones for dubious journalistic ends.

The pair’s actions caused the folding of the News of the World and the resignation and charging of several high profile current and former News International execs including David Cameron’s spin doctor Andy Coulson who was forced to resign twice over. It also hastened the end of the Murdoch dynasty as the public furore caused in the wake of the Guardian’s revelations put a cloud over James Murdoch's ability to lead the company. The biggest economic impact was the loss of the money-spinning BSkyB takeover which looked inevitable as recently as a week before the scandal broke.

Rusbridger told the remarkable story of the phone hacking in his 2011 Orwell lecture. In January 2007 News of the World royal reporter Clive Goodman was jailed for hacking into the mobile phones of three royal staff, an offence under the Regulation of Investigatory Powers Act. News International chair Les Hinton told a 2007 House of Commons select committee on culture, media and sport Goodwin acted alone and without their knowledge.

News continued its strenuous denials of a wider conspiracy until 2009 when Davies splashed his Gordon Taylor revelations. Davies revealed Murdoch had paid out over a £1m in legal cases that threatened to reveal the phone hacking. Professional Football Association boss Gordon Taylor was paid £700,000. Davies revealed the suppressed legal cases were linked to the Goodman case.

A News private investigator Glenn Mulcaire was also jailed in January 2007. Mulcaire admitted hacking into the phones of five other targets, including Taylor (the others were Lib Dem MP Simon Hughes, celebrity PR Max Clifford, model Elle MacPherson and football agent Sky Andrew). In 2008 Taylor sued News on the basis that they must have known about it. News submitted documents to the High Court denying keeping any recording or notes of intercepted messages. But Taylor's lawyers demanded detailed police evidence which revealed Mulcaire had provided a recording of Taylor's messages to a News of the World journalist who emailed them to a senior reporter. The evidence also found a News of the World executive had offered Mulcaire a substantial bonus for a story specifically related to the intercepted messages. The News case immediately collapsed causing the payout.

When the Guardian revealed the story, News and its supporters in blue closed ranks. The News of the World furiously attacked the Guardian while in The Times the police assistant commissioner in charge of the original investigation downplayed the disclosures saying there were a handful of victims of hacking and only a few hundred targeted. According to Rusbridger, the police conducted the quickest review in recent history – a few hours. News International exec Rebekah Brooks (ultimately undone by the scandal) said the Guardian had "deliberately misled the British public".

A week later Rusbridger and Davies appeared before the House of Commons select committee on culture, media and sport. It was there Davies produced the “For Neville” emails that destroyed News’s case against the Guardian. The emails were for Neville Thurlbeck, Chief Reporter of the News of the World, and they conclusively showed people other than Goodman were aware of the hacking. Yet police commissioner Paul Stephenson told Rusbridger Nick Davies was barking up the wrong tree. In November 2009 the Press Complaints Commission rejected the Guardian’s claims in November 2009, but were forced to change their tune in July 2011 after the Milly Dowler affair came to light.

On 4 July, Davies and Amelia Hill revealed the News of the World illegally targeted missing schoolgirl Milly Dowler and her family in March 2002 using records stolen from BT’s confidential records. The affair seemed particularly horrific to the public because of the revelation NotW deleted messages from Dowler’s full message bank giving her parents false hope she was alive. The paper made no effort to hide that fact even publishing details of a message in a 2002 article. The Met Police’s QC now says the messages were probably automatically deleted but the damage was already done. Murdoch was forced to personally apologise to Dowler’s parents and his empire started unravelling as allegations each more damaging than the last followed in the Leveson Inquiry.

Nick Davies was honoured for his series of articles with a swag of awards. He was named journalist of the year at the Foreign Press Association Media Awards 2011, won the Frontline Club award for his investigation and also won the FPA print and web news award along with Hill for the Dowler story.

Rusbridger meanwhile used the Orwell lecture to stake out a new future for a troubled industry. He said self regulation was a joke and the PCC had no powers. He said they needed a mediation power which would be cheaper to access than a libel trial and would be a vital input in any court action. Rusbridger also asked deep questions about what the “public interest” means: “It is not only crucial to the sometimes arcane subject of privacy,” he said. “It is crucial to every argument about the future of the press, the public good it delivers and why, in the most testing of economic times, it deserves to survive.” For raising these questions and for relentlessly following the evidence when it seemed they had little to go on, Alan Rusbridger and Nick Davies were a breath of fresh air to a deeply troubled media industry, economically and ethically.

The Australian rages against the changing tide

“Little men tapping things out - points of view
Remember their views are not the gospel truth” The Jam

The insufferable arrogance of the Murdoch press in Australia knows no bounds. While News International reels from one disaster to another, with government inquiries subpoenaing both Murdochs, Rebekah Brooks hung out to dry and Andy Coulson facing criminal proceedings, the local organisation acts as if they are the ones wronged. A siege mentality has descended upon News Ltd as the certainties of its untrammelled power begin to crumble. Politicians throughout the world are finally using Murdoch’s difficulty as their opportunity to develop a backbone. Yesterday The Australian lashed out against The Age for its own dodgy behaviour in accessing ALP records, though The Age has a legitimate defence of public interest, so conspicuously lacking in the numerous Murdoch hacking cases. The passive voice of “Age accused of hacking hypocrisy” hides the fact it is News Ltd who are making the accusations.

Also in yesterday’s Australian, the news that Prime Minister Julia Gillard was thinking of launching her own media inquiry was treated with the fatuous headline “this is no time for the PM to bow to Brown”. The paper’s consistently-biased political reporter Dennis Shanahan called the inquiry an “incendiary into an already febrile political debate” and a “distraction”. The report also fed into the long-running campaign the newspaper has waged against the Greens with increasingly deranged editor Chris Mitchell openly calling for the party to be obliterated at the polls: “We believe [Senator Bob Brown] and his Green colleagues are hypocrites; that they are bad for the nation; and that they should be destroyed at the ballot box.”

The Australian follows the party line laid down by News Ltd CEO John Hartigan. For Hartigan, the News of the World hacking affair was a classic case of rotten applies, an isolated affair in one small infected branch of the company. It was, said Hartigan, “an affront to all of us who value the integrity and credibility of good journalism, the reputation of the company and our own reputations as professionals.” Perhaps Hartigan did not see the joke in his words or perhaps he did. The credibility and reputation of News Ltd in Australia was poor well before the hacking scandal. Its metro tabloids are on the nose and suffering declining circulation. Like them, its flagship broadsheet is a walking advertisement for the Liberal Party and despite its own hypocritical bleating pushes a dangerous climate change scepticism that inhibits government leadership, delays effective policy action, and allows clowns like Tony Abbott a free run in which to destroy the long-term future of this nation.

Yes, there are good journalists aplenty at the Oz and when it gets its hands out of Abbott’s pockets it is capable of good and sometimes great journalism. But as George Monbiot points out, the purpose of The Australian and all of Murdoch’s 300 or so publications across the globe is to “ventriloquise the concern of multi-millionaires”. Monbiot says corporate media is a gigantic astroturfing operation: “a fake grassroots crusade serving elite interests”. This is true everywhere to some extent but it is the Murdoch empire which has it encoded into institutional memory.

Nevertheless I don’t agree with Monbiot a Hippocratic oath is needed. Journalists and their editors need to follow their existing code of ethics and stand up to internal pressures. The biggest threat to the media industry worldwide is not declining circulations but spineless leaders in the industry who are responsible for a deepening lack of trust and a cancerous cynicism in the audience. It is time for that cancer to be cut out. It is also time to move on from Murdoch's reign of terror. Bring on Gillard’s inquiry.

The end of the world as we know it: Time for Rupert Murdoch to stand down

Never mind the News of the World for a moment, what the Murdochs are doing is thrashing the reputation of journalists everywhere. It wasn't the likes of Clive Goodman or Glenn Mulcaire who gave false hope to the parents of Milly Dowler by deleting a dead girl’s phone messages, not was it Rebekah Brooks or Andy Coulson, this one goes right to the top:Rupert and James Murdoch. It was the Murdochs too who invaded the personal space of 4,000 others in the name of getting the story. Most blatantly was the Murdochs who then washed their hands of it by sacking 200 innocent staff and thrashing a 168-year-old brand to rid them themselves of the problem and give them a perfect start to setting up a Sun on Sunday with low overheads. It is the actions of people with no regard for anyone except themselves.

The Australian-born US-citizen Chinese-wifed Rupert Murdoch encouraged a culture of getting the news at all costs so assiduously pursued by Andy Coulson and Rebekah Brooks. The people at the bottom of the food chain did it because they know the company would turn a blind eye. “Get the story, no matter what,” is the amoral mantra actively pursued by Murdoch publications throughout the world.

But apart from screwing up the lives of all the people they hacked, they also stuffed up the reputation of every other journalist who will be tarred with the same shitty brush. I'm fairly new to to the game, but I value my reputation, which Murdoch has just besmirched. In my paper last week, I took a very heavy editorial line against the local council. Now people are well within their right to ask, why should they treat me seriously, this bugger is probably hacking people’s messages.

This is what I have to say about the matter in my editorial this coming Tuesday: “logging on to phones to hack people’s messages is criminal and wrong. If there is information I want, I’d expect to find that through legal channels. I care about my actions because I want to be trusted. People will judge me for my behaviour just as councillors are judged for theirs."

The media is full of shonks but this affair confirms News Corporation are rotten to the core despite John Hartigan's pious bullshit as anyone with a passing exposure to Fox News or the Sydney Telegraph would know.

Or maybe they wouldn’t. 70 percent of Australia’s media is controlled by Murdoch and it is unlikely anyone reading them would get a full flavour of the problem now dominating world headlines. Even some of the most powerful international media commentators of the world cannot be totally honest about what is going on in the industry locally.

NYU Professor Jay Rosen tweeted “If the story of criminal intimidation tactics at News Ltd. in Australia ever came out, today's events in the UK would look different,:”
However he refused to elaborate on what he meant when asked by Woolly Days and others.
“Can't help you, sorry,” Rosen said to me.
“The events of which I spoke are not public knowledge. That is why I said, "if the story was known..."
I then accused him of being a tease. Rosen responded, “Best I can do. The other option was silence.”
Narked, I wrote back quickly saying “I think you can do better”.
On advice and reflection, I later apologised to Rosen for being abrupt.
Rosen replied saying he was not offended.
“It's your media culture, not mine,” he said.
“Australians have to learn how to stand up to the Murdoch forces.
“I was simply trying to reach the people who can do that.”

Whose Australian?

Finding articles to criticise in The Australian is like shooting fish in a barrel, all too easy. It is also usually eminently resistible, like the paper itself. While the so-called national broadsheet and its weekend equivalent continue to outdo each other in paroxysms of confected right-wing rage, they are usually best ignored. However occasionally the paper publishes a particular egregious piece that so obviously serves no purpose other than the publisher’s own ends, it needs to be called out for the hyperbolic sham it is. Such an article appeared in the Weekend Australian this Saturday called “whose ABC?” penned by journalist and former Alexander Downer media adviser Chris Kenny.

The long piece appeared in the Inquirer section giving it a veneer of investigative journalism it did not deserve. This was 2,700 words of News Ltd propaganda, with complaints from a few politically motivated but unnamed sources and only one source on the record, former ABC board member Ron Brunton who despite being ideologically motivated as a member of the IPA, was only identified as an “anthropologist”. The self-serving article had a companion piece, an even more pious anti-ABC editorial that drove home the message from Kenny’s talking points.

The articles take as their starting point a piece in the Guardian (coyly described as a “progressive newspaper" by Kenny and “a left-of-centre newspaper” according to the openly more hostile editor) about ABC boss Mark Scott and his well-documented stoushes with News Ltd. The enraged Australian was anxious to do a gotcha on Scott, particularly on his use of the phrase “market failure broadcasting” which Kenny said was code for a political and cultural counterpoint to the commercial media.

Kenny achieves his aims with a remarkable leap of logic. Rather than go through the tiresome process of proving his points, he asks the readers “to assume, just for argument’s sake” the ABC critics are right. This assumption allows him to airily dismiss flaws in his argument and immediately swing into action rectifying the “problem”. Without a shred of evidence, Kenny suggests the organisation is unaccountable and then gets to the nut of his complaint, the ABC “caters for an inner-city progressive elite”. Apart from the breathtaking arrogance of ignoring how many people in the bush enjoy the ABC, it also brings in the familiar right-wing weasel words “inner-city” and “elite” which are conflated to mean “other” (never mind that it insults the paper's own demographics) in opposition to equally imprecise but culturally loaded phrases like "battlers". According to the editorial, the ABC had the temerity to turn to Qatari Al Jazeera for its Osama news instead of the less well-informed but racially more acceptable BBC or CNN. What this proves is Auntie has been the victim of "a left-wing coup" where a “coterie of like-minded inner-city” staff members “commandeered” the airwaves to broadcast to “the vocal minority that share their prejudices”.

Both editor and Kenny were keen to share their prejudices too. Kenny's ones are dated and rehashed from the culture wars of the John Howard era. There is a tired argument about Counterpoint, a program seven years old, and a tedious diatribe about David Hicks, who has not been a newsworthy citizen for over four years. He also reheats the coals of the long-forgotten Brissenden/Costello affair (which also embroiled two non-ABC journalists) from 2007 and has a moan about The Drum, the ABC’s public opinion site.

Kenny’s and the editor’s central argument is their fury over market failure broadcasting: that of “taxpayer’s funding” serving a “small audience”. The ABC audience remains a lot larger than the Australian's audience but more to the point it has always been a market failure broadcaster. Scott denied making the politically sensitive market failure statement and the actual words in the Guardian was that Scott “thinks of the ABC modestly as a ‘market failure broadcaster’”. The use of “thinks” rather than “said” suggests the Guardian is paraphrasing rather than quoting but Scott need not back away from it.

From the start of radio in the 1920s, there was a strong tradition of public ownership of broadcasting medium (except in the US where market failures are anathema) both as an information service in the service of democratic debate and decision making and also as a counterpoint to the partisan and usually right-wing press. The ABC was founded in 1932 along these lines but it also had a cultural aim inherited from the BBC. As its boss in 1934 WJ Cleary put it, the ABC’s task was to promote “the finer things in life” in order to teach people to “find interests other than material ones to live by more than bread alone”.

This paternal Reithian philosophy was conservative and hypocritical at the time - the BBC refused to cover the 1926 General Strike - and it still exists in some parts of the ABC but today’s market failure broadcasting is not about bringing ballet to the hoi-polloi. It is about defending the public’s supposed right to have free access to news in digital platforms, and this is where the ABC steps on News Ltd’s commercial toes. Whether ABC should have that right is an economic argument well worth having, though the Australian studiously avoids it in its sanctimonious stance. Perhaps they don’t want anyone looking too closely at their own market failures. One could argue given several full page ads from Telstra in the same edition, your telco bills are subsiding the Australian's own small, elitist audience.

Insufficiently robust: Murdoch issues a mea culpa on phone hacking

There’s a joke doing the rounds. A banker, a Daily Mail reader and an income support claimant are sitting round a table. There are 12 biscuits on a plate. The banker takes 11 and tells the Daily Mail reader, "You want to be careful, that scrounger's after your biscuit."

The Mail has got a lot of biscuits of its own, selling over two million copies a day as does its Sunday edition. Only two British papers sell more (the Sun 2.7 million and the News of the World at 2.6) and they both belong to Rupert Murdoch. (photo:Reuters)

The latest sales figures show the circulation of all four papers is going down, however the News publications were experiencing a greater decline. The Sun has to try harder to reach a more diffuse audience than the died-in-the-wool Tory Mail. The last survey of readership by voting intention in 2004 showed over twice as many Tory voters than Labour read the Mail but the Sun had a 41-31 preference of Labour voters.

Murdoch's publications can’t take a hard reflexive pro-Tory line without alienating a substantial number of its readers. Far easier than talking about stealing biscuits is to give their audience an apolitical ration of tits, titillation and celebrity gossip. But the News of the World’s attempts to get inside access to the gossip that fuels their pages has ended up in the courts and a criminal investigation. There is likely to be great cost to Murdoch’s pockets in a case that has already had one high-profile casualty, Prime Minister David Cameron’s spinner-in-chief Andy Coulson.

Coulson was editor of the News of the World in 2006 when police finally exposed its phone hacking practices. No one can say how long it had been going on, but to this day Coulson denies he knew about the activity, a position that makes him either a liar or a fool. The only employee who has admitted guilt so far is former royal reporter Clive Goodman. Goodman had a reputation for scoops and held the paper's record for the highest number of consecutive front-page leads. But his thirst for inside information led him to hack private phone messages.

He hired a private investigator named Glenn Mulcaire to help him. Mulcaire managed to access message bank pin codes to listen to messages. Royal aides were confused when they found unread messages in their inbox appearing as already read. When Goodman then reported unusual information that only a handful of aides were privy to, the royal household rang the counter-terrorism branch of Scotland Yard. Goodman and Mulcaire were arrested and police raided the offices of the newspaper for evidence. With Goodman more or less caught red-handed, he pleaded guilty to intercepting phone messages when he faced court in January 2007. He got four months jail. As Justice Gross said in sentencing, the case was not about press freedom. “It was about a grave, inexcusable and illegal invasion of privacy," he said. Coulson had resigned two weeks earlier, seeing the writing on the wall. His departure wasn’t formally announced until the 25th when Mulcaire also pleaded guilty and got six months. Police found a hit list of other celebrities in his diary; celebrities not normally covered by Goodman in his royal round, but did little with this information.

The News of the World hid behind the ‘rotten apple’ and ‘rogue reporter’ defence. It would take another two years before the world would learn the hacking’s tentacles went a lot further than Goodman. Three phone companies told The Guardian at least 100 of their customers’ pin codes were compromised, which contradicted earlier police and News of the World claims only a handful was involved. The Guardian said those tapped including then Deputy Prime Minister John Prescott, Manchester United manager Alex Ferguson and PR guru Max Clifford. The Guardian also said Coulson was aware of the tapping. By then the Tories were in power and Coulson was Cameron’s right hand man. With Labour calling for his head, ConservativeHome.com blog editor Tim Montgomerie asked how many times did Andy Coulson have to resign for the affair. Twice was the answer, after he left the government job in January 2011.

Meanwhile, the net was widening back at NOTW. MPs on a culture, media and sport select committee accused News Limited executives of collective amnesia, as well as ignorance, lack of recall and deliberate obfuscation. They said it was inconceivable no one else knew about the hacking. Several victims took the paper to court and won substantial out of court settlements that preventing discussion of the affair. Max Clifford won $1m on condition the list of journalists involved was not read out in the court.

In September 2010, the New York Times revealed why Police had no enthusiasm for the investigation. Parliamentary committee chair John Whittingdale said Scotland Yard didn't want expose widespread tawdry practices in the newsroom because it was "a heavy stone that they didn’t want to try to lift.” A former reporter told NYT the News of the World had a “do whatever it takes” mentality under Coulson and the then editor was present during discussions about phone hacking.

With Coulson denying the claim under oath, it has been difficult to mount a criminal prosecution. The Metropolitan Police has re-opened the investigation following what they said was significant new information. However it has been mostly left to the aggrieved to take to the civil courts. Sky Andrews, Sienna Miller, Steve Coogan, Chris Tarrant and Andy Gray have all taken legal action against the paper.

Desperate to avoid the extent of the crime being revealed in open court, Rupert Murdoch was finally forced to take decisive action. On Thursday he apologised to eight victims and admitted the practice was rife at the News of the World. Murdoch said internal investigations into the matter were not “sufficiently robust" and has offered unreserved apologies to some of the victims (though it continues to fight allegations by Coogan and jockey Kieren Fallon). Murdoch has offered up to a million pounds, though some expect the bill to reach £40m. With new evidence there may have been 3,000 people on Mulcaire’s lists, there is a lot of people looking for crumbs from Murdoch’s biscuits. The question becomes how high a price News is prepared to pay to avoid making public the reasons why their internal investigation wasn’t sufficiently robust.

And there it rests: Lessons from Twitdef

On Tuesday, News Limited attempted to draw a line under its latest battle with new media which went under the tag of #twitdef. In a terse and tired sounding article by media writer Caroline Overington, The Australian admitted Canberra journalism academic Julie Posseti probably didn't commit a crime when she live-tweeted the words of a speaker at a conference. The broadsheet made the admission after it heard the audio evidence about what Asa Wahlquist said at the recent Journalism Education Association Australia conference in Sydney. Posetti, said Overington, had produced a “fair summary”.

Mitchell had earlier threatened to "unremarkably" sue Posetti for defamation (though given his well documented climate change agnosticism it was never clear what Mitchell thought he was defending his reputation FOR). Few people would have have been surprised to hear Wahlquist, who recently quit News after many years as a journalist, faced intense editorial pressures to conform to a party line when reporting on climate change and other political matters. It also corresponds to what I have personally heard (off the record) from other News Ltd journalists when they file copy.

Defamation was always an idle threat in this exercise. Mitchell’s real intention was to project power by creating a chilling effect in Twitter. It didn't work because Mitchell has no idea how the medium works. His non-apology apology via Caroline Overington claimed Wahlquist told Mitchell her comments were taken out of context and Posetti “should have contacted him to get his side of the story.”

Apart from the blundering suggestion Twitter must follow the conventions of “he said, she said” journalism, Mitchell also refused to accede to the truth of the matter. He still maintained Posetti had defamed him though the ambiguous sounding “And there it rests” suggested he was not going to take the matter further. After the Twitterati picked this ambiguity up, Overington issued a coda saying it simply meant “she had no more” to offer. It allowed Mitchell to maintain the pretense of keeping his legal avenues open.

Mitchell couldn’t apologise properly to Julie Posetti because it was not in his nature. Stephen Mayne sussed him seven years ago when Mitchell was first appointed editorial boss of The Oz.
“[He] is known for his hardline political views and aggressive style - The key to understanding Chris Mitchell is to know that he is a right-wing social engineer who happens to be a journalist," Mayne wrote perceptively.

New York University's Professor of Journalism Jay Rosen probably hadn't heard of Mitchell in 2003 but he certainly knows about him now. He believes Mitchell’s social engineering is a major problem.
“I think The Australian is fast becoming a malevolent force and for some reason that I do not fully understand it is not met with the sort of public opposition it deserves,” Rosen told me by email yesterday.

I contacted Rosen because I was curious to know why he injected himself into recent News Ltd stoushes against new media such as the outing of Grog’s Gamut and now the hounding of Posetti.

Rosen told me he saw it as a critical part of a larger battle.
“As the Murdoch empire faces the loss of the emperor--his lost grip or his eventual passing--it starts behaving erratically and in that state it becomes rather dangerous: to itself, but also to other people and to cultural treasures like freedom of the press,” he said.

But the Empire has an Achilles heel, according to Rosen: “Murdoch cannot master digital.”

“He tried, but the thing has eluded him. That is unacceptable for a mogul. But it is also a fact. Put those two things together--an unacceptable fact that is also true--and you have a dangerous situation for a news empire. Rupert is trying to impose an order on the digital world that it does not have. This creates problems for his editorial employees. They have to believe in an analysis that is 'shitty' but also saintly because it comes from the top. They get into trouble when they try to prove the emperor right, and behave like little emperors themselves.”

Rosen said the dynamic is being forced down through the hierarchy so that it reaches the reporters at The Oz, “who think they can impose order, knock heads and,for example, demonstrate to the blogosphere which rules it has to obey."

“Notice how often people from The Australian say there's ‘nothing special’ about Twitter, or that it doesn't get a pass, that it isn't an exception. That's the echo, way down the line, of the unacceptable fact that is also true. ‘There's nothing different going on here. We got this under control.’ When they are criticised for taking what is, in effect, a party line, people from The Australian have a strange habit of hearing criticism as a charge of conspiracy. Then they laugh at the overheated image of a conspiracy which in turn protects them against the criticism.

Rosen agreed with my suggestion that Australia’s dangerously concentrated media landscape was a reason the Twitterati have been so feisty in opposition but said there was an important second factor.

“The above ground opposition is weak. Online, there is a lot of juvenile sneering at News Ltd. which reflects how rarely the respectable people criticize and investigate what's rotten in the empire. How many journalists who were there when Asa Wahlquist made her remarks spoke up about what they heard?" he asked.

"For the professional culture of journalism in Australia, which extends to the academic centres where journalism is studied, that is a significant number," Rosen concluded.

While the Oz attempts to thrash Posetti's reputation as much as their own via #twitdef, the climate change that started it all continues to be ignored. As another journalism educator Marcus O'Donnell pointed out today "even a threat of US walkout at Cancun is relegated to p15 of SMH".

Chris Mitchell, it would appear, is not the only social engineer running mainstream Australian media.

And there it rests.
====
(The full text of my question and answer session with Rosen is attached below)
====
DB: Firstly, given your geographical position in the intensely creative hub that is New York why would what is going on in the boondocks of Australian media be of interest to you enough to take part in the debate?

JR: Within the Australian press culture, blogging and journalism academic worlds, there's a decent number of people who are interested in my work, so I have taken an interest in what's going on there, especially after my latest visit. Twitter allows them to follow me and me to follow them, which is also a big factor. At a certain point you acquire enough background knowledge that you can monitor events in another country without feeling lost; after my last visit to Australia, during the elections in August of this year, I felt I had reached that point. I know what Telstra is. I know about the marginal seats in western Sydney. I've watched Tony Jones on Q&A.

Finally, I think The Australian is fast becoming an malevolent force and for some reason that I do not fully understand it is not met with the sort of public opposition it deserves.

DB: Is there lessons from the Australian experience in the current old/new media "war" for the American mediascape?

JR: As the Murdoch empire faces the loss of the emperor--his lost grip, his inability to master digital, or his eventual passing--it starts behaving erratically and in that state it becomes rather dangerous: to itself, but also to other people and to cultural treasures like freedom of the press.

DB: Are the likes of Chris Mitchell just being Canutes trying to stop the tide or can the Murdoch Empire really stamp its authority over the old/new media landscape worldwide?

JR: Here's one hypothesis: Murdoch cannot master digital. He tried, but the thing has eluded him. That is unacceptable for a mogul. But it is also a fact. Put those two things together--an unacceptable fact that is also true--and you have a dangerous situation for a news empire. Rupert is trying to impose an order on the digital world that it does not have. This creates problems for his editorial employees. They have to believe in an analysis that is "shitty," but also saintly because it comes from the top. They get into trouble when they try to prove the emperor right, and behave like little emperors themselves.

This then draws ridicule in the new media environments they disdain but also have to participate in. Which enrages them, causing them to say and do stupid things, as Chris Mitchell did. The dynamic is being forced down through the hierarchy so that it reaches even the reporters at The Oz, who think they can impose order, knock heads and, for example, demonstrate to the blogosphere which rules it has to obey.

Notice how often people from The Australian say there's "nothing special" about Twitter, or that it doesn't get a pass, that it isn't an exception. That's the echo, way down the line, of the unacceptable fact that is also true. "There's nothing different going on here. We got this under control." When they are criticized for taking what is, in effect, a party line, people from The Australian have a strange habit of hearing criticism as a charge of conspiracy. Then they laugh at the overheated image of a conspiracy, which in turn protects them against the criticism. Sally Jackson did this just the other day:

http://twitter.com/Sally_Jackson/statuses/9104914064084992

In the case of Matthew Franklin, I documented the pattern here:

http://jayrosen.tumblr.com/post/102744512/massively-multi-player-denial-when-do-we-grok-the#comment-84775968

Even after I showed it to him, he had no idea what I was talking about.

http://twitter.com/#!/franklinmatthew/status/26621708341


DB: Is it perhaps because the mainstream Australian media scene is so dominated by one publisher, that the underground movement as represented by Australia's Twitterati is so lively?

JR: Also the fact that the above ground opposition is so weak. Online, there is a lot of juvenile sneering at News Ltd. which reflects how rarely the respectable people criticise and investigate what's rotten in the empire. How many journalists who were there when Asa Wahlquist made her remarks spoke up about what they heard? For the professional culture of journalism in Australia, which extends to the academic centres where journalism is studied, that is a significant number.

News rings management changes as it plans for paywall

News Ltd announced a series of important management changes today affecting their Australian news operation. The most important change was the appointment of News Digital Media chief executive Richard Freudenstein as chief executive of The Australian. Freudenstein keeps his old job and the move was widely seen as a key predecessor to the introduction of online paid-for content which Rupert Murdoch announced for 2010.

The 43 year old Richard Freudenstein joined News Digital Media when it was created 2006. Prior to this he was a key member of the team that launched Foxtel Pay TV in Australia in 1995 and then spent seven years at British Sky Broadcasting. There he was a leading negotiator in Sky's 2004 $2 billion deal for Premiership football. He is also chairman of realestate.com.au Ltd and a director of The Bell Shakespeare Company.

The move also sees The Australian being moved to a new stand alone division within News Corporation Ltd as part of an "aggressive and ambitious growth strategy" for the national broadsheet. Freudenstein will report directly to News Ltd chairman and chief executive, John Hartigan in this role. Up to now, The Australian has been part of Nationwide News, publishers of Sydney's The Daily Telegraph and Sunday Telegraph. "This announcement reflects the significant expansion of our ambitions for The Australian," said Hartigan in a statement. "By creating a separate division and deploying more resources, we aim to enter an unprecedented era of growth."

The establishment of a separate division should give The Australian more flexibility when it comes to negotiating its printing and distribution arrangements with News Limited's other state divisions. But this move is not really about sales of the broadsheet. Hartigan hinted as much when he said News Ltd also wanted to expand The Australian's presence online, on mobile phones and on "new platforms". Nick Leeder will follow Freudenstein from NDM into The Australian as deputy chief executive, but unlike his boss he leaves behind his current post as NDM chief operating officer. Chris Mitchell will continue as editor-in-chief of the newspaper, a role he has held since he joined the paper from the Courier-Mail in 2002.

However the news comes on the same day as the result of a survey shown at The Content Makers that showed 70 percent of Australians would not be prepared to pay for Internet content. The survey by the Australian Research Council Centre of Excellence for Creative Industries & Innovation at Swinburne University’s Institute for Social Research is part of the World Internet Project which is the leading international source of research on how people use the internet.

Eight hundred Australian internet users responded to the question “A daily newspaper costs around $1.50. How much would you be prepared to pay to read an online newspaper?” Another surprising result showed that “news junkies” are those least likely to be willing to pay for it. Perhaps not as surprising is that urban dwellers with limit access to quality papers (ie the ones with “Murdoch only” press) were more prepared to pay for content than those living in Sydney, Melbourne or Canberra. Nevertheless, the findings are challenging for the Murdoch empire and lend credence to crankynick’s observation in Larvatus Prodeo that the paywall may well be aimed more at corporate organisations than individuals. Time will soon tell.

Is Rome burning? Murdoch picks a fight with the ABC

“You want sensitivity training? Don’t hang out in a newsroom, that’s your sensitivity training."
(From Overheard in the newsroom #1979)

Everyone know the media is a harsh business full of oversized egos and a well defined sense of self-importance. So when there is substantial disagreement on a major matter of media principle, it likely the bruises will be public. No noses have been bloodied yet in the big private v public access battle is playing out at the moment but it is only a matter of time. This fight is serious. Corporate media led by Murdoch want to charge for content but are aware they will leak substantial audience to publicly-owned media companies who have no intention of charging directly for content. Public enemy number one in Australia is ABC boss Mark Scott who is fast becoming a talisman for the power of new media.

The charge of Murdoch and his formidable empire is public corporations are inherent anti-competitive institutions whose funding power gives them an unfair advantage. The ABC undercuts private companies’ ability to provide content on the Internet, says Murdoch. Last week, ABC boss Mark Scott took up the cudgels and compared the empire of The Sun King to the Fall of Rome. He ridiculed News Corporation’s plan to charge for Internet content and provided a spirited defence of the national broadcaster’s right to provide "free" news to the masses.

It didn't take long for the Empire to strike back. Today a couple of News big guns took to the columns of its Australian flagship newspaper to defend their turf and attack Scott's assumptions. It was no surprise ABC’s own Media Watch would cover the “conflict” in its program tonight. As an ABC product, Media Watch is not entirely bi-partisan but it is considered an Internal Affairs watchdog and therefore usually not afraid to put the boot into its own employers.

Scott’s speech took on the challenge provided by paid content head on. His theme was end of empire. Taking his cue from Gibbons, Scott charted the progress of the media giants who are now struggling in these “desperate days” to cope with the new realities of Internet. According to media writer Margaret Simons, the Internet’s revolutionary intent is comparable to the printing press which changed religion, democracy and the organisation of societies.

Big Media still has a role to play in the revolutionary new world of the Internet but is hamstrung having has been subsumed into Big Business. There are very few people in the banks and private equity companies that understand how the media business works. In a time of crisis, they are all waiting for Murdoch because he is the only “newspaper man” left. And he is on the defensive. In Beijing he hammered the philistine bloggers and plagiarist aggregators that feast on News’s content. He also condemned the search engines that make their money from pushing around other people’s content without giving anything back to the creators. Murdoch’s son James went further and warned the public their ways must also change. It was essential for the future of independent digital journalism, he said, for a fair price to be charged for news “to people who value it”. The message was the Internet free ride was over.

But Mark Scott said that News “empire” no longer had the power to dictate terms over the cost of the ride. The audience has the power now he says, and media providers must engage with those audiences on their terms. For 15 years people have gotten used to the idea of not paying for online content and are unlikely to start wanting to pay now, he says. News Digital CEO Richard Freudenstein retorted today in Media Australia that Scott was “shielded from the commercial reality”. Freudenstein says people are willing to pay for journalism online but advertising alone won’t work on the Internet. People will pay for online content if it is relevant and delivered in ways they want, he says.

His article was accompanied by a Kudelka cartoon which shows an appreciative Prime Minister Rudd hugging Scott for thinking he had come up with a way not to require government funding. “Wayne's(Treasurer Swan) beside himself" gushed the wonkish and delighted PM, always thinking about red lines that might disappear from the $53b budget black hole. The cartoon Scott is increasingly distraught as the PM "misunderstands" what he means about free content.

But misunderstandings or not, the ABC is an important part of the culture and not likely to disappear anytime soon. News Corp can try to undermine its authority but will also have to be creative in their pay offerings. In the same edition of today's paper as Freudenstein and Kudelka's barbs, The Australian's media analyst Mark Day inted how News might implement their paywall. It would not be an old newspaper-model, he said. “They'll be more akin to social networks, a hybrid of news, services, commerce, information and entertainment designed for like-minded people or communities,” Day said. They will not be providing old content for “like-minded people” but new content. Basic news will still be free.

Simons said paying will work for some things but people will not pay for general news in countries that have strong traditions of public broadcasters (eg Australia and the UK). James Murdoch calls this issue the “dumping” of free state-sponsored content which makes it difficult for journalism to flourish on the Internet. Murdoch notes that the distinction between broadcasters and newspapers is irrelevant on the Internet and what we have now is an “all media market” (Keating’s “Princes of Print and Queens of the Screen” looks very dated 15 years later).

And if commercial organisations need to charge people for content in this new converged environment, they should not face competitors who provide the same content free courtesy of the taxpayer. James Murdoch says it is fundamental for journalism and the creative industries that public media “exist on a far, far smaller scale”. Or as the Times put it to the BBC in Chinese-fashion, they should get its tanks off our lawn.

Mark Scott says the public pays the ABC to provide distinctive content to them which they are entitled to view “free of charge”. Free to the user but not to the taxpayer. The ABC has a guaranteed $844.6m budget (2007 figures) that insulates Scott's decisions from his audience’s actual wants. The private companies must however live or die by their paid content. Media Watch says the signs are we won’t be asked to pay for what we are currently getting for free, but for new content.

Scott says one of the reasons the ABC is required is because of the abdication of news in commercial companies citing Channels Seven and Nine’s attenuated coverage of current affairs. ABC should not be crippled just to make private concerns wealthier, he says and crucially, he adds “there is no political sentiment to make this happen". Media Watch cited the $14m ABC got over four years to provide websites for regional Australia.

It interviewed APN Media boss Brendan Hopkins which questioned this strategy. APN is in direct opposition to ABC Regional as it owns 14 regional newspapers in northern NSW and Queensland (disclosure: this journalist has worked for APN and is hoping to do so again) and Hopkins says he cannot see the government supporting a model of the ABC where the cost “keeps going up”.

He says if APN think ABC is getting unfair treatment they will talk to Graeme Samuels at the ACCC and “hold them to account”. When asked whether after 75 years the ABC should even exist, Hopkins said “now is a good time to have that debate". With Margaret Simons agreeing that the ABC is now in a serious position to hurt the commercials’ business model, this argument has a long way to go. Maybe it is, as Hopkins says, time to honestly re-evaluate what is meant by “your ABC”. The Anglosphere has tended to scoff at Sarkozy’s 600m euro press interventionism in France, but how is our public broadcasting funding much different?

When kleptomaniacs collide: Old media declares war on new media

The sheer onion-ness of President Obama’s Nobel win yesterday has deflected international attention from the fact that a conference of media Canutes had just declared war on the Interwebs. The announcement came at a three day “world media summit” between Western media elites and Communist cadres that Japanese Kyodo News dubbed “Beijing’s Media Olympics”. Among others, Associated Press’s CEO Tom Curley and News Corp boss Rupert Murdoch joined Chinese leader Hu Jintao on stage in the Great Hall of the People to denounce the people for the way they used media content. (photo of Internet pioneer Vinson Cerf by centralasian)

Today, that bastion of free media, the Chinese state press agency Xinhua, published the full text of the World Media Summit Joint Statement. The Forbidden City conference theme of “Cooperation, Action, Win-Win and Development” was a signal that management doublespeak lay ahead. Most of the sentences failed Bill Easterley’s not-test of summit outcomes. The not-test asks whether it is possible to negate it and create a sentence that a sane person would utter. Who, for instance, would NOT hope that “media organisations around the world will provide accurate, objective, impartial and fair coverage of the world's news events.” There was nothing in the bland communiqué that suggested war was on its way.

But many of the media leaders at the conference departed from the prepared script. The boss of AP passed Easterley’s not-test with flying colours by saying many sentences that sane people will disagree with. For Tom Curley the problem was nothing less than regaining control from “crowd-sourcing Web services” such as Wikipedia, YouTube and Facebook, search engines and blogs. They were all hurting his business model but he was not going to take it lying down. Curley said AP would “no longer tolerate the disconnect” between those who gather the news and those who “profit from it without supporting it."

78-year-old Rupert Murdoch was equally bellicose about the future. He described fellow conference invitee Google as “parasites” who make money off traditional media. He said the “philistine phase” of the digital age was almost over and “the aggregators and plagiarists” will soon be forced to pay for “the co-opting of our content." He saw the contest as a battle to the death between content creators “the people in this hall” and “content kleptomaniacs”.

But Murdoch needs to remember content kleptomania is a two-way sword. In August, his own Sky News weren’t initially keen to pay for using an eye-witness picture to a London police shooting a citizen journalist named Joe Neale had posted on Twitpic. It was not until Neale tweeted to the world “Newscorp use your photos without permission but have plans to charge for reading their content” that they came to the party and paid him £330.75.

New media won this particular battle but it will be harder to win the war. Murdoch biographer Michael Wolff said this week in Vanity Fair war is Murdoch’s natural state. The enemy is the Internet. When Wolff explained to Murdoch a news aggregator business he is involved with, the media mogul said “so you steal from me”. Wolff said Murdoch did not understand the Internet and his online investments were all failures (Delphi, iGuide, Myspace, Pagesix.com). Murdoch runs his business not on the basis of giving the consumer what he wants but through more old-fashioned methods of structural market domination. Wolff called him “a scold who can intimidate the market into doing what he wants it to do.”

Weston Kasova at Newsweek was unimpressed with the scolding Murdoch and Curley dished out at the Beijing conference. He called it “macho outrage” which was calculated to be quotable but is fake. Kasova said aggregators actually draw audiences towards traditional media sites and their advertisers. News Corp and AP could shut off this traffic with one small piece of code (User-agent: Googlebot. Disallow: /) but of course they don’t do it. “They'd rather blame someone else for their failure to compete in a changing marketplace,” says Kasova pointedly.

Link economy advocate Jeff Jarvis at Buzz Machine also condemned the “Proletariat of the Press”. He said the Beijing conference was a “suicidal attempt to protect outmoded models and fight the future”. Jarvis prefers a different template of the future based on “new efficiencies, specialization, targeting, [and] value that comes with the collaboration that the internet and its links enable.” It was the “irresponsible stewardship over journalism” that was killing newspapers not the Internet. “We are not kleptomaniacs,” said Jarvis. “We are the new (free) distribution.”

US media academic Robert McChesney puts the question more pointedly in a rare old media act of contrition from Le Monde Diplomatique. McChesney wondered when the debate took place which ratified large corporations as the guardians of American media. “When, exactly, did Americans approve of the idea that a handful of corporations selling advertising were the proper stewards of the media or that it was inappropriate to ever question their power?” he asked. “When had the American people ratified the corporate media system as the proper one for the United States?” The answer is, of course, “before the Internet arrived”.

Let the war commence.

Peering beyond the paywalls: Life after Murdoch

(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.