Monday, October 19, 2009

Murdoch's Push to Put The Genie Back in The Bottle

It appears Rupert Murdoch is on a mission to put the genie back in the bottle. Two recent articles caught my attention on how Mr. Murdoch is determined to make media outlets profitable again and that is by reinforcing what many believe to be a contrary Internet business model: charging for content. 

Michael Wolff, founder of the news aggregator Newser, wrote an article in Vanity Fair this month highlighting Murdoch's push to monetize content for some of News Corp's  most prestigious outlets, starting with London's The Sunday Times. Wolff points out that Murdoch's efforts to monetize the news aren't new (he references Time Warner who has tried more online media business models than any other traditional company), and points out that Murdoch seems steadfast and determined to turn the media business model around and MAKE people pay for content.

On the heels of Wolff's article, I noticed a MediaPost Media Daily News article that reports Murdoch announced at a company shareholder meeting that cable and satellite operators should pay News Corp. "a small portion of the profits" they gain from offering the Fox Network. The article points out that CBS and some other station groups have pursued this path, however what may be different here is a structured revenue sharing of profits vs. a straight carriage payment. Murdoch is quoted, "Clearly, the broadcast model is challenged, he said. "Good programming is expensive and can no longer be supported solely by advertising revenue."  The article also states Murdoch believes that successful newspapers in the future will charge for their content and aggregators will largely be excluded.

In the age of diminished ad revenues, shrinking news rooms, and the increased cost of producing some of the more successful entertainment shows, Murdoch's content battle is not new. However, citizen journalism, news aggregators and user content (generated outside a traditional news room) are here to stay. By charging for content, News Corp. seems to be running the risk that so many other media organizations have faced when implementing similar business models: consumers seem to flock to free and in some cases more frequently updated information sources for news and entertainment. Murdoch's ambition to promote news credibility and the long-established "culture of traditional media" seems to be an outdated vision of what the new news business has become: an opportunity for individuals to become, partake, promote and produce their own content. Maybe Chris Anderson, editor-in-chief of Wired magazine has it right: maybe the media will be a hobby instead of a job.

I will be watching with great interest if Mr. Murdoch is successful in his efforts to monetize the content of his leading newspapers and to charge fees for the Fox Network. Mr. Murdoch seems to be undertaking a high-risk, high-reward approach to reasserting the traditional media business model in the age of established new media.  The degree to which he will be successful remains to be seen.

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