Posts Tagged ‘Internet’

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Murdoch: get off my land!

November 10, 2009
Rupert Murdoch

Picture courtesy of Michael Albov http://www.flickr.com/people/44653897@N00

So that’s how it’s going to be, then.  Rupert Murdoch today hinted that his decision to charge for online content will be enabled by building walls and closing access by legal action.  Not very new media.

The decision to charge for content on News Corporation’s media sites around the world (which include The Times and The Sun in the UK, Wall Street Journal via Dow Jones and The Australian) seemed like the first step in a sensible direction for online media.

Coming just a week after he admitted his online payment plans are behind schedule, Murdoch’s interview on Sky News Australia reveals he is prepared to take a very heavy-handed approach to ensuring he creates a watertight system for monetising his online media assets.

Is this worth it?  While there is rock-solid logic to the argument for charging for media content when there is a cost associated with its creation and distribution, it’s not clear that issuing threats to sue the BBC will genuinely help the media industry move towards a sensible settlement with its customers.

What’s holding back online media is a lack of micropayment standards to allow them to make money from their work.  The focus should be on the establishment of a standard that allows users to pay for what they use, without onerous barriers to entry (so a mix of prepay and post-billed options would make sense).

Even if this is merely the opening parry in what could turn out to be a prolonged negotiation through lawyers and the media, its disappointing that News Corporation’s reputation with anyone other than shareholders seems to have passed the old dog by on this occasion.

I’m not suggesting Murdoch should be operating on behalf of anyone other than his own shareholders… but could you imagine Google looking after its own interests in such a blunt and one-dimensional way?

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Online media must not become a paid-for cartel

September 16, 2009

Rupert Murdoch once again gave a boost to media-by-subscription at yesterday’s Goldman Sachs Communacopia conference in New York.  In a speech where he reported a rebound in the advertising market, he reiterated that News Corp media had plans to increase non-advertising revenue.

The media is now lining up behind the idea that there is money to be made through subscriptions, via either a ‘freemium’ model, offering additional benefits to subscribers, or through micro-payments.

Their long reluctance to go down the paid-for route online suggests that their former view – that ad revenue lost through reduced reader/viewer figures could not be recouped by subscriptions – has changed.

So what makes the subscription model seem so appealing now?  Here are three suggestions:

  1. Ad revenue per media channel is projected to fall so far in the near future that the subscription model is now viable. This is quite conceivable, given the proliferation of media channels.
  2. New technologies such as mobile devices and electronic readers offer a point of difference worth paying for. With Spotify and the Wall Street Journal just two channels offering mobile content for a fee, it suggests mobile devices could boost subscriptions in a previously unachievable way.  As Murdoch said at Communacopia : I do certainly see the day when more people will be buying their newspapers on portable reading panels than on crushed trees.
  3. The mainstream media now believes it can corner the market for paid-for news/analysis.  Recent moves to centralise electronic media behind specific techologies, such as mydigitalnewspaper.com , Google Fast Flip and Journalism Online (which is specifically a payments system) mean the mainstream media may increasingly be able to behave like a cartel. Early moves towards paid-for models by the Financial Times and New York Times may be followed by a mass shift to paid-for online news.

Paid-for online services should theoretically be more customer-focused and financially sustainable than those that are ad-funded – but if pricing were to be set in an uncompetitive way, that would be an unfortunate outcome.

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Murdoch gives the order to charge

August 7, 2009

Rupert Murdoch has done it.  As suggested at News International’s last quarterly earnings call, he says his online newspaper portfolio will begin migrating towards a paid-for model within the next financial year.

The response has been electric, with no media title able to ignore the story.  As previously acknowledged here, at No Free Lunch, Murdoch is one of the few media moguls large enough to foment industry-wide change towards charging for online newspaper content, though in this instance, he is clearly being ably supported by the Financial Times’ Lionel Barber.

Commentary has varied in tone, from outright skepticism such as Larry Dignan’s analysis at ZDNet to praise from Andrew Keen at the Daily Telegraph.

But could this work?

Murdoch is in a unique position in the media – where he goes, he stands a very real chance that others will follow.  What this means is, while the skeptics are right that charging people for content will drive his audience to rival online sources, they are also missing a key dynamic: if the others start charging too, there will be nowhere to go.

The problem for online newspapers since they began giving away their content free has been the fragmented system online – news just leaks.  But if all – or even just a proportion – of the online newspaper community moves as one, this could work to everyone’s advantage.  As Andrew Keen says:

The holy grail of the digital economy is discovering how to get consumers to spend money on content. Nobody has figured this out yet.

So from now on, watch this space for other newspaper groups to announce ‘trials’, and in the longer term, a raft of lawsuits issued in response to plagiarism.

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Lionel Barber: Paid For Content The Future

August 5, 2009

Lionel Barber, editor of the FT, yesterday made the clearest case yet for paid-for online newspaper content.

In an interview with Benjamin Cohen at Channel 4, he made it clear the FT believes its subscription model is the future, although he also cited micropayments as an end-game for newspapers.

He said: “We use a registration model.  It’s a frequency model whereby people taste FT content, and after a certain number of articles, then they register.  After registration comes subscription and we’ve got 117,000 subscribers.”

Content, he said, has value – something that has been forgotten by newspapers over the past decade: “I think there is an inexorable momentum behind charging for content, for the simple reason that, one, the advertising that we once relied upon isn’t going to come back in the same way.  And two, that everybody has simply realised that, in this new internet age, they need to actually charge for content, and establish content as something valuable.”

On micropayments, Barber does not rule out a single system for all newspapers, saying he is looking at “the micropayments issue”.  There will be organisations, he said, that can help newspapers charge per article.  Indeed there are a number of different organisations that offer a wide variety of different electronic, mobile and micropayment platforms, and one of these could be adopted by newspapers en masse.

There is a good round-up of commentary on Barber’s interview at the Fee or Free blog.

If the alternative is content being paid for by the back door, either using an ad-funded model, or even worse, by special interest groups as the Washington Post was found to be doing, then Barber has to be nudging the newspaper industry in the right direction.  What do you think?

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The New York Times Will Keep Its Reporters

August 3, 2009

A lively debate has sprung up on the idea that the New York Times‘ top reporters and writers would be more successful if they were running their own paper.

On the face of it, these plans have much in their defence.  For example, they would create a far more dynamic institution than the monolithic New York Times currently is, allowing it to respond more swiftly to market demands.  But would they solve the problem of long-term financial sustainability?

Michael Arrington writes at Techcrunch that he believes the New York Times’ top 50 writers could write a paper delivering 50 per cent of the value achieved by today’s 9,300 staff.  So, half the New York Times, but at a fraction of the cost.

Meanwhile, on the Daily Telegraph’s blog, Andrew Keen suggests a similar plan, although his plan is to maintain the New York Times as the paper it is, just with far fewer staff – less drastic than Arrington’s plan, but with a similar outcome of slashed overheads leading to financial stability.

But these plans don’t solve the fundamental problem of earning a return from online content.  At present, venture capital backed aggregators, blogs and social media are competing on price for the delivery of news, and the price they have chosen is free.  Traditional newspapers cannot compete because their content costs more to create and they don’t have backers with deep pockets.  A great description of the ‘overheads’ underpinning traditional reporting is given by Ian Shapira in the Washington Post.

But how free is free?  Those investors supporting the technologies that have so ‘disrupted’ the newspaper industry will at some point seek a return on their investment, and it will be interesting to see how many of today’s ‘free’ services continue to be free at that point.

Nor can the ad-funded model support all the media that are currently fighting for survival.  The ad-funded model will self-select survivors largely on the basis of appropriateness to brand sponsors, who are notoriously cautious.  That is a very worrying outcome.

Both Arrington and Keen are right about one thing – newspapers need to embrace digital delivery of news and take this opportunity to reduce the overheads required by a clunky, paper-based delivery mechanism.  And then they need to support a move towards a world where people can pay for what they use, meaning the sources of media funding remain as diverse and wide-ranging as the tastes of the readers themselves.

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5 Reasons to Pay for Spotify

July 28, 2009

SpotifyI was recently singled out at a music industry event for being the only person of over 100 attendees to pay for Spotify Premium.

“So you’re the one” was called out. There were suppressed sniggers. One or two people actually booed me – which I still don’t quite get.

But what really hit home was the general consensus that I was naive for paying for something that is available for free elsewhere.

So why do I pay? Here are my five reasons for paying for Spotify:

  1. It’s excellent value.  This may not be true for everyone, but through buying CDs, second-hand vinyl and digital music on iTunes, I have spent between £10 and £30 per month on music since I was 18.  Spotify is, to a slightly above-average music user, a bargain.  And as the library grows, it gets better value every week.
  2. Adverts lead to censorship.  I don’t argue against adverts because of the quality of their content (though people tell me Spotify ads are particularly special in this regard).  Rather, I am opposed to the censorial impact advertisers can have.  It is something that has been well-documented, brilliantly summed up by Naomi Klein in No Logo.  For example, if a brand does not like swearing, and Spotify wants to carry that brand’s adverts, it will have to ban songs containing swearing.  Censorship is always just a dollar payment away.
  3. You can’t lose it.  Contrary to some people’s views, music you don’t own is more secure than music sitting on a shelf in your home.  I’ve lost a least 100 songs that I purchased on iTunes in the past two years – once through a computer failure, once through a relationship failure (the songs went with the laptop, TV and sofa).  It’s nothing new – think of all the fights there have ever been over who owned which bits of the vinyl collection.
  4. It’s going mobile.  It is likely that it will be available shortly on the iPhone and other 3G devices, for Premium users only.  If the user interface on the mobile devices is as good as it is on the computer (with the caveat that content discovery could be improved), it will be a huge winner.
  5. The economic sustainability argument.  The music ecosystem requires people to pay for it.  If everyone pays, the music industry and writers profit and there is downward pressure on the price for the service.  If nobody pays, the market fails.  In between, there is an equilibrium.

So, on the grounds that I really like the service, and I would like to pay as little as possible for it, I have to declare a big and blatant self-interest in urging others to join me and enjoy Spotify ad-free.

Update | 13.45 | 28 July  Official UK music industry figures suggest that I am actually quite a heavy music buyer.  According to a story in The Times today:

…Spotify [asks] customers to pay £120 a year for the service, when, on average, music buyers spent half that amount on music purchases last year, according to research for the BPI, the record industry trade association.

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Apple Tablet and Higher Music Margins

July 27, 2009

Very interesting story in today’s FT about Apple working with the four major record labels and launching a tablet computer.  It’s interesting because it suggests Apple’s famously tight-lipped new product development process may have sprung a leak.  But it’s far more interesting because it is another reminder that Apple is operating on a level above most others when it comes to making money from information – in this case, music.

Newspapers are struggling with the concept of charging for content, with a few good exceptions, such as the FT and New York Times.  By contrast, Apple – having already cracked the making money part – is struggling with the far more noble challenge of driving up margins for online content.

The music industry appears to have struck a good working relationship with Apple, whereby they collectively work to improve their money-making potential.  Even if Apple were to take a larger slice of the fee for delivering higher-value interactive music packages (including album art and sleeve notes), everyone wins because the pie itself is getting bigger.

And to turn that on its head – since Apple is investing in new hardware, surely it has earned the right to a greater slice of the income for its efforts.  This sort of relationship between a technology developer and the music industry highlights what could be achieved in newspapers – if only the papers themselves would start collaborating over paid-for (or even ad-funded) delivery of portable e-news.

Watch out Kindle, or Apple may use its experience in the music trade to beat you to the punch with its new 10-inch tablet, which would be perfect for catching up with the latest news.