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Friday, May 08, 2009

Rupert Murdoch: "The current days of the internet will soon be over"

Rupert Murdoch has problems. The man has built one of the most successful global media behemoths ever known to mankind. Its businesses span motion pictures, television, print, book publishing, and the internet. By any historical measure, the company has been a blockbuster success. The problem is that the inertia of the past is irrelevant—only the future matters, and the future of media, content, and where people spend their time, is on the web. And the web is a platform that is more casual about intellectual property rights, generally has lower advertising rates compared to print, and has much lower barriers to entry, all of which are big issues for a traditional media company. By many measures, the company most successful on the web is Google, a company that, unlike NewsCorp, doesn’t create content, but merely catalogs and organizes information. NewsCorp, however, earns revenue from the creation of high-quality original content. Given the state of the newspaper industry I took the time to listen to the NewsCorp conference call on Wednesday and decided to share some particularly thoughtful and foreboding comments Murdoch offered.
Monetizing Content on the Web
  • Charging for Access: “That it is possible to charge for content on the web is obvious from the Journal’s experience.”
  • Changing the Current Model: “We are now in the midst of the epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning. We have been at the forefront of that debate and you can confidently presume that we are leading the way in finding a model that maximizes revenues and returns. The very bright people we have…are devising clever ways to monetize the content of some of our long established print properties. “ Regarding the WSJ’s iPhone App, Murdoch commented, “As you can imagine we will soon be making them pay handsomely for the privilege of accessing the world’s best business news source.”
Content is King and Intellectual Property
  • IP and Devices: “To assure you, we will not be feeding our content rights to the fine people who created the Kindle. We will control the prices for our content and we will control the relationship with our customers. Any device that does not meet this criteria will not be doing business with NewsCorp.”
  • Future Litigation and IP: “Too many content creators have been passive in the face of obvious violations of intellectual property rights. The violation of these rights is rampant on the web. Our content is extremely valuable and the violators will recognize that value.”
  • What might be most threatening or perhaps na├»ve comment Murdoch made: “The current days of the internet will soon be over.”
The Recession
  • Good News: “I’m not an economist, but as we all know, economists were created to make weather forecasters look good…it is increasingly clear that the worst is over.”