Rupert Murdoch’s traffic jam

JOHN C ABELL

It hasn’t been a great year for Rupert Murdoch. There was the phone-hacking scandal; the Parliamentary committee declaration that he was “not a fit person to exercise the stewardship of a major international company;" The Daily, his iPad publication, laying off a third of its staff over the summer; and a confession that, when it came to MySpace, “we screwed up in every possible way.”

To his credit, Murdoch started making bold bets on the Internet back when other media barons were timid – starting with his purchase of MySpace. The Daily was, at least in theory, an effort to “completely re-imagine our craft,” as Murdoch claimed.

There was also Murdoch’s resistance to Google, a contrarian wager that he could succeed in the Web era without Google’s help. In many ways Google (for better or worse) is the Internet’s most potent market maker, connecting eyeballs with websites as a mighty driver of traffic. But to Murdoch “Don’t Be Evil” Google was evil incarnate. Even though Murdoch has other papers that are indexed (including his U.S. flagship, the Wall Street Journal), he put the Times of London stories completely behind a paywall, blocking them from Google’s spiders, and likened what Google argued was the fair (and mutually beneficial) use of teaser-like snippets as theft.

The strategy: If some have to pay to read the Times, all should have to pay – there should be no exception to the rule. If no one could get anything for free, then they’d be willing (forced) to pay.
Murdoch wanted to be on the Internet, but not of it. He wanted to have it both ways – that’s the Murdoch way.

Now, he’s changed his mind. With his news empire still buffeted by the phone-hacking scandal and online subscriptions to the Times weak, Murdoch has called a truce with Google. After a two-year refusal, he’ll allow the newspaper to be indexed by the search giant.

The change will open the Times up, but not entirely. It will provide only the first few lines of news stories, and its articles will still be behind a paywall, unlike big rivals the FT.com and NYT.com, which (along with even his own WSJ.com) allow limited access to a fixed number of stories. The revolutionary theory is that people may actually discover that there is a Times of London and click on a teaser and possibly be induced to buy some kind of subscription.

Two years ago Murdoch called Google a “parasite” and a “content kleptomaniac.” A somewhat more temperate Jonathan Miller, News Corp’s chief digital officer, said Google didn’t drive quality traffic anyway, delivering only the sort of person “who more often than not read one article and then leaves the site.”

No biggie not being on Google, Miller said at the time. “The economic impact is not as great as you might think. You can survive without it.”

This seems like the time to mention that Miller is leaving News Corp.

Murdoch’s flip-flop is the closest thing you’ll get to a confirmation that abstaining from the Internet’s link economy is just a non-starter in news. As illustrated by paidcontent.org, Google provides much more traffic to UK newspaper sites than they get directly – 45 percent compared with 31 percent. Customer acquisition hasn’t been gangbusters: 131,000 digital subscriptions since mid-2010.
Meanwhile the Financial Times reported in July that digital subscribers now exceed print ones, and that digital accounts for more than half of all (growing) sales in the FT Group.

Murdoch and the world’s remaining press barons are simply going to have to come to grips with the forces that have been unleashed, just like their counterparts in Hollywood and in the music industry, to name only two.

Newspaper publishers (and all the rest) may not have wanted to open the Pandora ’s Box of the Internet, which renders distribution and turf monopolies moot. Many privately may wish that it would close – or that the entire print world would just universally evaporate, taking with it the high costs of paper and delivery trucks. But there is no turning back, of course. Readers are migrating in droves to the Internet. The business model, including subsidies from expensive classifieds, is going, going, gone. Lean online competition – which, to give Murdoch his due, often relies on expensive reporting – is filling a void from one end as newspapers try to manage their way to the same spot from the opposite direction.

Publishers talk a lot, and glowingly, about the inevitable digital future. But media organizations that are still heavily invested in, and dependent on, old media principles need to be more Apple than Microsoft. They need to take chances on something new that just might work, rather than insist that this thing they have for a big box will fit just fine in that small box.

Ultimately, Murdoch may decide that being more fully on the Web is a valuable loss leader of some kind – much like his endlessly vain subsidy of the money pit that is the New York Post. But for today, this gentle surrender is a fine step in the right direction.

John C Abell is a Reuters columnist.