Murdoch, Microsoft and mad men

While I sit near the TV refusing to watch myself on Media7 (I’m sure co-panelist Julie Starr was excellent), here are some notes that I wrote in preparation for the recording of the show last night. The wider topic of how news media will make money and survive online and offline is wide and deep – and fundamentally we are all clueless experimenters.

Russell Brown, who had the good grace to not be mad about my post on Public Address usability issues was an excellent host. A gentle introduction to TV-land.

Me and not so madman

Russell wanted to cover Rupert Murdoch’s talks with Microsoft to remove News Limited content from Google and place it exclusively on Bing. Researcher Sarah, who was excellent, and part of an awesome team, specifically asked:

What does it all mean? Is this indeed a kind of madness or is there a weird genius at play?

My notes in response, tidied up a bit but still with no links to supporting evidence – it was TV after all:

From what I see it’s still just discussions,  with talks at a very early stage and in my opinion it’s very unlikely that Bing will get exclusive on the content. It’s just too hard to ignore the 80%+ of search traffic that Google commands, and we all want to use only unbiased search engines.

Murdoch is an old campaigner, and smart. But then so is Gadaffi.  There is lots going on here, and while Murdoch is certainly not mad, he is angry. He is trying to get anything, anything out of Google et. al. and while he has plenty of power he is dwarfed in scale of the internet.

Why Murdoch is angry

1. The newspaper industry still makes much more revenue from good old ads in newspapers than online. It’s a bit less than 4 times online spend from the papers, that’s more than TV, three times  radio in New Zealand (ASA))
2. However subscriptions and advertising spend in newspapers are falling and fast. Trade Me and their overseas brethren took the cream away from them a while ago, and they have no response to the gradual shift of ad spend to online, and to the overall decline due to tough times.
3. Meanwhile legacy costs of producing a newspaper are very  high, with convoluted processes and archaic systems that beg to be restructured
4. While new players like HuffPo and interest.co.nz have taken the costs out and prove that online-only is an option, online ad spend is still nowhere near where it should be considering where we spend the media time.
5. Only a handful of sites have the right to charge subscriptions, and those are the ones that own tight industry niches, that command premium audiences and produce original, high quality and timely content. Even then the price has to be low – the WSJ only charges $151 a year, and we would pay a lot less for less exclusive content

What needs to happen for the news industry to survive?

1. Adland and advertisers need to keep waking up to the rapid changes in how we spend our media time and adjust their spending
2. If they don’t then advertisers will continue their increasing trend to remove the advertising agencies from the equation, and go direct. AirNZ engages with us individually through a variety of channels such as Twitter, and I cannot recall seeing an AirNZ TVC recently.  (Not that I watch TV – even when I am on it.)
3. Old media needs to dramatically reduce  the Writer –> Reader costs and increase the velocity of the process at the same time. (Allaboutthestory.com, which Julie founded and I am part of) is part of that we hope.
4. The industry will probably see a lower number of major providers (e.g. NZ there are 2 major websites and that will probably be it) and an increasing number of sites focussed on specific audiences, be they geographically, industry or attitude based.
5. Mixed up in all of this is the mix between slow and fast news. Slow news can be more thoughtful, more local, more durable. Fast news is more for the masses and needs to be constantly replenished. e.g. The Economist is slow news, Stuff.co.nz is fast.

What will happen if subscription walls go up?

1. Readers will simply migrate away to free and easy sites.
2. To remotely work the prices will have to be very low
3. The Slashdot model could work – pay or ads
4. If it persists then firms like Demand Media will get into news. They can hire a bunnch of people for next to nothing to read the key sites like the WSJ, paraphrase each article, then publish for free and surround with Google ads.
5. And eventually the walls will come down