Saturday, September 11, 2010

How Ruper Murdoch's charging strategy changed online.

When history reflected this much talked about saga, the result was unequivocal" Murdoch won.

He did so not by subtlety of persuasion, but by brute force - something those who have squared up to him in boardrooms and been on the sharp end of him in the unions e.g. Wapping, know all too well.

Taking on the world was a different matter, but Murdoch, extending Foucaults concept that power begets more power, had more to gain, than lose - rewriting history and the bloggersphere as the man who saved journalism and kicked those "petulant free-loading Net kids" back to their craggy bedrooms.

When the pecuniary seed was sown for paying to read online journalism, critics laughed, many waited to see what the grand ol' newspaper tycoon had as his deck. They waited, and waited. Some penned blogs ridiculing his approach - the non-strategy.

But they forgot the measure of the man. They forgot his radical and unheard of strategy to towards the British Premiership; its history reveals
The League decided to take the radical step of assigning television rights to Sky TV. At the time charging fans to watch televised sport was a relatively new concept...
They forgot his battles at Wapping or any number of thousands of deals he'd won and lost.

Quietly while net experts derided him, the industry held its collective breath wishing him to succeed. Murdoch's success would be theirs in a climate when mostly all newspapers were running on red.

If we can get the news elsewhere, particularly at the BBC, why bother with his newspapers, was the argument. Also unlike time-sensitive news ( financial) it carried no premium. Other than being written by experienced, expensive journalists.

It wasn't soon after until his populist News of the World went paywall, then the nation's populist red top, the Sun and across the pond the the New York Times followed. Then the damn broke and en masse they followed erecting walls.

Professional journalism had stayed an imminent execution, but more importantly forced the argument that it needs to be paid for. You want quality, you pay.

Murdoch's strategy was simple, no different from a General testing the defences of his opposing force with strikes and retreat, from the siege of Malta to the likes of Operation Just Cause when with loud music blaring from speakers, the instructions were simple: just wait.


Few media moguls could afford such a strategy. Here's the maths. Go paywall lose out on advertising, lose customers and dollars/pounds.

So how did he cushion the blow? By getting the more profitable wings of News corp to shore up his losses. But how many subscribers could the newspaper realistically have expected from potential registrants, having lost 2/3rds of its audience in 2010.

Dan Sabbagh, formerly the media editor of the Times, puts that figure at 150,000 user between free subscribers and online registrants of 15,000. This may have seemed paltry, compared to the Time's advertising income, measurably more, but at £2 a throw for a week, that works out at £120,000 a month, more than a million pounds a year.

1995, the web and newspapers

As this rare piece of footage shows way back in 1995, me presenting the news, a year after the Internet and web eased its way into newspapers, the fundamental mistake they made back then was, as with most new platforms e.g. CDRoms, kiosks, was to give their assets away.

But they had to. They Net was new and big news. It was free, and you'd be damned as a newspaper proprietor for not taking advantage of a free medium to sell you wares - which became the rub.

The Times online in 1995 attracted 30,000 online subscribers - a massive number for those times. It was a land grab. By 2000 newspapers, though off to a good start, would be playing catch up with the intelligent web.

But by 2000s the mystic of web journalism had disappeared. What the newspapers couldn't fathom, they could buy in and that's when the debate started to turn.

Profit margins of 15-30% were now under threat. The economy was on a bender. Murdoch had lost in his acquisition of MY Space and now someone needed to pay. The papers oomed and aarmed. The New York Times did and then retreated, but Murdoch had the bit between his teeth and as his spat with websites and google grew, it became obvious this was personal.

And so long as his pockets allowed, he'd bunker down. And the longer he bunkered down, the more others joined him. To the point, news or primary valued-news undertaken by all the major newspapers recognised its premium status and went paywall.

And that ladies and gentlemen in 2016 was how we came to pay for the web.

P.s Just so you know, I'm no Murdochite. This piece emerged from studies I'm doing independently for a Phd study around TV and supervening processes and trending.