Murdoch and Jobs – Frenemies of the Internet

November 22, 2010

Now we know why James Murdoch, heir apparent at NewsCorp, has been so messianic about the iPad recently. The Times/Sunday Times “apps” experiment is merely part of a bigger picture – perhaps a small one at that.

It has emerged – rather curiously via US fashion industry journal Women’s Wear Daily – that Murdoch Sr is working closely with Apple chief executive Steve Jobs on launching an entirely new, exclusively apps-driven newspaper (there will be no website or print ancillaries) that can be purchased on an iPad. Other tablet formats may follow (though Jobs’ views on this egalitarian gesture are unknown). What we can say is that the news vehicle will be called the Daily, that it will appear as early as the end of this month, that it has an upmarket skew, that it will cost 99 cents a week, and that it will probably be edited by NewsCorp’s blue-eyed boy Jesse Angelo, currently managing editor of The New York Post.

For the fuller implications of a personal alliance between these towering giants of the media and technology worlds, turn to Tim Berners-Lee. Spookily but – so far as I know – entirely independently, the founder of the internet has just published in Scientific American a searching critique of what he regards as internet abuse. Unwittingly, it provides considerable insight into why Murdoch and Jobs are batting in the same team.

Berners-Lee casts his net widely. He sees the internet – once a kind of communitarian brotherhood in virtual space – as increasingly under siege. The attack on its ‘inalienable’ freedoms comes from a number of sources, many of which are themselves firmly rooted in web culture. High on his list of targets, for example, are social networking sites such as Facebook and LinkedIn. To these he adds Google and US telecoms carrier Verizon, which earlier this year struck an agreement to exempt mobile access to the internet from web neutrality; that is, from the accepted principle that no web service may be prioritised over another by a pricing structure imposed on its delivery. And finally, he rounds on mobile and desktop applications – Apple’s in particular – which operate behind a walled garden of restricted access.

Berners-Lee’s wider point is that these forces have something in common. Each in its separate way is parcelling out the freedom to communicate on the internet by hiving off “silos of content”. Berners-Lee believes this development is a Bad Thing, because it will eventually choke off innovation by creating a more fragmented internet.

There is, however, another way of looking at Berners-Lee’s argument – and one likely to find far more favour with Messrs Murdoch and Jobs: turn it on its head.

While the internet remains a free, or “near-perfect” (in the economist’s jargon) market, no one can enjoy a lasting commercial advantage. Look no further than the record industry, or the media itself. This is good for internet joyriders, who want their news, views and music free, but unsustainable in the wider capitalist economy. Without a carefully managed investment programme and the principle of reasonable investor returns, innovation on the internet is just as likely to be stunted as it is by the dark forces of silo monopolies that Berners-Lee sees gathering on the virtual horizon.

Murdoch and Jobs have every reason to cooperate. The internet may, in the longer run, have much to lose if they do not.

James Murdoch’s faith in iPad ‘flagship products’ is misplaced

November 12, 2010

Here’s a sentence to savour. “Our flagship newspaper products are our iPad apps,” says James Murdoch, speaking at the Monaco Media Forum.

If that’s the case – I’m tempted to say – then we’re all in trouble; those of us in publishing at any rate. Certainly a recent study published by MediaVest, the global media buying outfit, doesn’t give room for much optimism. The 1500 people polled about their use of the iPad seemed to have a host of other preoccupations – such as reading books, managing personal calendars, watching video, accessing maps, listening to the radio – before they got round to reviewing a publication. Top of MediaVest’s Must Try Harder list were magazine publishers, but I suspect the news business was not all that far out front either.

In fairness, the survey was compiled back in July – practically a Pre-Cambrian era in terms of iPad experience; although that’s not exactly a reason for complacency. Have things moved on since then?

Murdoch Jnr clearly thinks they have. From what we now know of the Times/Sunday Times digital paywall experience, iPad users actually make up a fairly small proportion of the 105,000 paying online users: about 15,000 of them according to a Guardian analysis. Considering the newness of the Apple device and format (launched in April 2010), that’s not bad user penetration. But Murdoch’s point is a larger one.

The iPad app has certain similarities to a print product. Like a cover price, the access fee encourages people to pay for their content. Determining just how that payment should be made is a much more complex issue, and part of a broader online publishing strategy. But that’s less important for the Murdochs than the fact the iPad experience is helping them to surmount a huge psychological hurdle: the idea of parting people from their money for general news online.

Take this argument a little further, however, and we can see there is trouble ahead. The iPad news habit is attractive precisely because it so resembles the way we read a newspaper. It has a lean-back, browsing quality to it, wholly unlike the information-grubbing experience of assimilating information from a laptop or PC. As Murdoch himself says: “The problem with the apps is that they are much more directly cannibalistic of the print products than the website. People interact with them much more like they do with the traditional product.”

In other words, journalists and publishers beware – the news business is going to get a lot worse before it gets better. The iPad and its like may have the ability to supplant the “traditional product”, but – as I have pointed out before – the commercial terms under which media owners operate are not going to be nearly so favourable as they were in the print era. It is technology companies, like Apple and Google, who are the gatekeepers in this new era. They make the kit, devise or control the ad platform, license the apps and determine the profit margins.

Laugh now, pay later if Murdoch gets his hands on the rest of BSkyB

November 2, 2010

At last, hard news from the impenetrable walled garden girdling The Times and Sunday Times these last four months. The Murdochs’s paywall strategy has harvested an astonishing 105,000 online subscribers – says News International, owner of the titles.

Well, not “subscribers” exactly, because that 105,000 includes quite a few birds of passage who have paid a couple of quid to visit the sites and then come no more. Lots of them, in fact. So the true number of subscribers? About 50,000 according to the Guardian – admittedly not the most objective of sources on the subject of paywall strategy, but probably near the truth on this occasion. Did I mention the iPad and Kindle subscribers? No, I thought not. They’re about 15,000 of this 50,000 figure. Which sounds heartening for Apple and Amazon, but less so for News International when you realise that they got an introductory two months of online access free.

I could go on, but I won’t. The figures are pretty meaningless in themselves, and muddied still further by the fact that there are another 100,000 print subscribers who receive the online version free. Even on the most optimistic viewing – that is to say 205,000 dedicated online visitors – the revenue would not amount to much by comparison with advertising lost after shutting down free access.

So what though? Never let it be said Rupert Murdoch bought The Times to make money – if he did, he’s been sadly disillusioned these past 30 years. In truth it has always been a loss leader in experimentation under his stewardship. First he tried dumbing it down, to take on The Telegraph. Now he is, perforce, reverting to a still loss-making but more elitist publication that happens to serve as an invaluable guinea pig in the post-print era.

Whatever the present cost of these lessons, it will be amply repaid should NewsCorp ever get its hands on the 61% of BSkyB it does not already own. BSkyB has total revenues of about £6bn a year; News International, the European subsidiary of NewsCorp, about £2.7bn. Forget enhanced earnings. The torrent of cash surging through the organisation alone would give the Murdochs all the flexibility they need  to experiment much more boldly with an online newspaper bundling programme for 10 million Sky subscribers. And the beauty of it would be that these self-same subscribers would have underwritten the experiment as well.

No wonder the competition are desperate to stop Murdoch’s bid in its tracks. In any forthcoming price war, he would be able to outspend the lot of them combined.

iPad – the newspaper industry’s false messiah

May 26, 2010

Personally, I blame the iPad. Its imminent launch here seems to have stimulated a bout of weltschmerz among newspaper proprietors, who are now outdoing each other in the gloominess of their predictions about the end of the Gutenberg era (c1453-2015, RIP).

Latest to join the swelling chorus is Pearson, owner of the Financial Times. Pearson’s director of global content standards Madi Solomon has come up with the rather snappy phrase “the sunset of print”, which FT executives expect to happen in about 5 years’ time. If anything, the 5-year estimate is a tad on the optimistic side. It could have been sooner but the financial crisis, and people’s avid interest in it, has artificially prolonged the time horizon.

Rusbridger: Prophet of gloom

Put it this way, the FT won’t be investing in any more printing presses. And nor will the Guardian or Times Newspapers (as it is still quaintly called). Guardian editor Alan Rusbridger has long claimed he felt “in his bones” that new printing presses installed at the time of the Berliner relaunch (2005) would be the last. But he originally scoped in 20 more years of production. Now he reckons that was vastly optimistic. John Witherow, editor of The Sunday Times, also predicts that his presses, installed in 2008, will be the newspaper’s last. For a fuller litany of pessimism, consult this page in PaidContent.

I hesitate to voice dissent, particularly when the consensus is so eminent, but isn’t all this pessimism a little overdone? An old adage about “cart” and “horse” comes to mind. The cart I have in mind is the so-called electronic reader, of which Kindle, the Sony Reader and iPad are the most successful examples to date.

First though, let’s go back to a fundamental issue: why do people read newspapers, as opposed to glean their information from the internet? Granted age and social conditioning may have something to do with it. But is not also true that newspapers, and for that matter most magazines, are a more enjoyable, tactile medium? The internet is excellent for any kind of search-based activity, but it can scarcely be described as a “great read”. Ah, you say, but that’s where this new, reader-friendly technology provided by iPad and its like comes in. It will make electronic browsing fun – once little glitches like flicker, eye-strain and inadequate battery life have been ironed out (as they inevitably will be in a few years’ time). No one, it seems, is subscribing more enthusiastically to this techno-salvation than newspaper proprietors themselves. In it they discern a form of commercial lifeline – a means of making internet joyriders pay for the colossal, but legitimately-engendered, costs of newsgathering – via licensed apps. A means, in short, of ditching the enormous financial burden of print and building a new and more viable commercial model.

I’d like to believe them right, but can’t bring myself to do so. There have been many annunciations over the past few years of the Coming One – the technical application that will enable us to transfer our loyalties effortlessly from paper to the electronic screen. Of those so far, the iPad holds the most promise. But, though ingenious and popular, it is likely to prove a false messiah – so far as the newspaper industry is concerned. For a start, the revenue stream from licensed products cannot possibly compete with those extracted from traditional newspapers (especially after Apple has taken its 30% cut), even if we allow for a reduced industry overhead. More importantly, what is the iPad for? Newspaper proprietors may read into it a form of salvation, but that matters little if punters don’t see it the same way. And the early indications from America are that they don’t.

Put another way, reading a newspaper via iPad is near the bottom of their user priorities. Printers, don’t despair: the press will be stuck with chopped-down trees for a good few years yet. Certainly more than five.

POSTSCRIPT. Such has been the momentum of Apple, which has just overtaken Microsoft as the world’s biggest technology company by market capitalisation, and such the success of its latest ‘tablet’ product, the iPad, that some experts are now writing the obituary of Google.

One such is Richard Holway who, in a recent presentation, claimed that a combination of Apple-sponsored apps and Facebook will “block out” Google’s sponsored search model by allowing consumers to go directly to brands and media owners.

Not so fast, says one reader of the article in which this vaulting claim appears. Sam Rothstein points out that a) nearly every phone will soon be a type of smartphone – most probably powered by a Google product, Android; b) Apple’s domination of its latest niche, the tablet, will face a similar challenge. A number of netbooks/tablets running Android are launching imminently.

Jenkins and Murdoch prepare for Dunkirk

August 14, 2009

Simon JenkinsI liked the piece by columnist Simon Jenkins, former editor of The Times, on the future of the newspaper industry. Jenkins has wide-ranging interests, but he’s particularly strong on newspapers. I remember being impressed by one of his earlier publications, Newspapers: The Power and the Money, when I started as a journalist.

Among the salient points in the column:

  • Rupert Murdoch’s determined initiative to stall internet joy-riders by erecting subscription barriers around all his newspaper and TV station online content will be as significant as his stand against the print unions at Wapping in 1985. And for the same reason. Murdoch is the only one who can provide the media industry leadership to carry the day. His rivals, out of fear of the consequences or loathing for Murdoch, will equivocate. But, as at Wapping, they will be quick enough to mimick his action once early signs of success become evident.
  • Paywalls are not a solution. They are a palliative which will slow the inevitable extinction of print. Newspapers, as we know them, are facing their “Dunkirk”; the best that can be hoped for is enough time to draw up the boats.
  • Newspapers must reinvent themselves as “affinity” clubs. Look how the seemingly moribund pop industry has cast off the shackles of the record industry and  transformed itself into a “mass movement for live audiences”.
  • Newspapers have great brands which can act as umbrellas for all sorts of other commercial activities of interest to their readers, such as courses, seminars, conferences, music events. News is a core, but by no means definitive, attribute of what these brands stand for. Once this truth has been thoroughly absorbed by media owners they will find it much easier to persuade like-minded people to pay for the privilege of joining a club.

The Battle of  France is over, but the Battle of Britain is about to begin, I seem to remember someone saying of Dunkirk.

Bernie: Why Hitler was on the right track

July 4, 2009

EcclestoneIf you’d asked me – up to now – which of the Domineering Duo at Formula One is a Germanophile, I would have answered unhesitatingly, “Max Mosley”. It stood to reason, didn’t it? Both parents Teuton-crazy, went to school in Germany long enough to be fluent; even carries out his sexual perversions in the language.

But it turns out I’m wrong: they both are. Mosley’s long-term collaborator Bernie Ecclestone is evidently a passionate student of German history, if a frank interview with The Times is anything to go by. Bernie takes a pride in not being seen as politically correct, and refreshes our memory every now and then with his unconventional views on women, colour and naughty racing teamsters who tell lies and steal. But he has so far kept his views on the course of German history carefully under wraps. No doubt because he fears his findings are so explosive that if they got into the wrong hands they would cause appalling mayhem.

And they are? Apparently, Adolf Hitler has been badly misunderstood. During the Thirties (I paraphrase, but only a little) he was a great guy, building motorways and bringing full employment back to Germany after the Slump. All right, things got a little out of hand every now and then – like on The Night of The Long Knives and during Kristallnacht – but basically Adolf was just giving the Germans what they needed, the smack of firm government. Come to think of it, that’s precisely what we need now, a bit of firm dictatorship, instead of these mealy-mouthed democrats like Brown and Blair, who lie instead of lead; and Max would be just the man to provide such leadership…

But, I digress on his behalf. Things went a bit haywire after 1939. Inexplicably, Hitler became a hopeless victim of invasion complex, causing him to trample roughshod all over Europe. And then there was this holocaust thing. That was a bit of a mistake, wasn’t it?

Why Ecclestone, 78, chose to privilege us with his views on political governance only now is a matter of speculation, but there are several possibilities. One is that The Times reporters are highly persuasive and Ecclestone has been very gullible. I don’t think so. More likely, this is a two-fingered salute to the establishment. A reminder that Formula One cannot do without him, in case any of us is deluded into thinking he might follow Max off-track.

Ecclestone says he is no great planner of events. But he is a consummate bluffer. Let’s see if anyone – from the Formula One holding company majority shareholders CVC to the sponsors and constructors – has the guts to do anything about what, by any standards, is an act of extreme provocation.

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