Rupert Murdoch’s Anti-Competitive Internet News Cartel

http://www.newscorpse.com/ncWP/?p=1373

Rupert Murdoch’s Anti-Competitive Internet News Cartel
Filed under: Big Media, General — Mark @ 11:54 am


The newspaper industry’s woes are nothing new. They have been suffering declining revenues in both subscriptions and advertising for a couple of years. Some portion of that decline is attributable to the economy, but there is no question that the Internet has had an impact as well.

Rupert Murdoch, Chairman of news behemoth News Corporation, has been grumbling about what he regards as theft of his content for some time. Earlier this month he addressed a shareholder’s meeting and announced that News Corp would soon be charging for all of its Internet news properties. That, in my opinion, would fail to produce the results Murdoch desires. There is an abundance of news available online for free and there is little evidence that people would pay for access to Fox News or the New York Post.

Nevertheless, the Los Angeles Times is reporting that Murdoch is seeking to assemble the most powerful families in the news business to create a syndicate that would extort money from the news consuming public:



The participating companies include the New York Times, Washington Post, Hearst Corp. and Tribune Co. With a roster like that it is difficult to imagine that they could get very far without being questioned by the Justice Department. The appearance of collusion and anti-trust activity could not be more conspicuous. There is no plausible justification for these enterprises to collectively plot a pay scheme for their individual services. It is blatantly anti-competitive and disadvantageous to consumers.

In the end, Murdoch’s proposals would not even resolve the problems the industry is facing. Any revenue that would be generated in this fashion would be a tiny percentage of the earnings these companies produce. And if they are presently losing customers who are willing to pay for subscriptions, what makes them think that these same customers would pay for the same product online?

The prospective members of Murdoch’s cartel should think long and hard about whether his counsel has any value. His own business just reported a loss of $3.4 billion. He personally was forced to take a 28% pay cut. His stewardship of MySpace is notable for his having turned it into a has-been, anti-social network that has been eclipsed by Facebook and Twitter. The New York Post has lost about $50 million annually for the past ten years. His track record on the Internet is abysmal. He is yesterday’s baron of dead-tree media whose only success has been with a cable “news” network that traffics in sensationalism and propaganda. Is this really someone whose advice should be taken seriously?

To sum up, Murdoch has a record of incompetence with regard to new media. The online pay model has failed spectacularly in all but a few non-representative cases. There is little money to be made by charging online news consumers. The availability of free news online is not only not receding, it is advancing. When the residue of the old world media is cleared from the landscape, and the economy regains some stability and vibrancy, then advertising will resume its customary place for funding news services online just like it has on every other platform it has ever employed.

The last thing the industry needs is to listen to a washed up, ink stained, relic who advocates strong-arming newspapers and consumers into an unlawful strategy that is bound to fail.