FTW Media

Thoughts about New/Social Media

Rupert shows his true colours

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They say you can’t teach an old dogs new tricks, and for several years now Rupert Murdoch has been seen — rightly or wrongly — as  a forward thinking media maven with a bag o’ tricks, especially after the $580 million dollar purchase of MySpace in 2006. If there was someone with a New Media plan, it had to be Murdoch, so went the thinking.

As it turns out, however, the truism about dogs and tricks still holds true. His plan to save newspapers going online has been revealed, and the answer has turned out to be as anti-climactic as it gets: “Micropayments“. Not the innovative, ground-breaking, industry-shattering solution most were hoping for at a time when newspapers are at a loss of where to go next. So Murdoch decided to turn back the clock to a time when the New York Times was thinking, “Hmm. Pay walls. Now that’s an idea!”.

Point and Counterpoint

PC Mag came up with two contradicting columns both for and against the micropayment system. On the “for” side was its Editor-in-Chief Lance Ulanoff, who argues that users will have to accept the inevitable: The web isn’t free — it never was, and it was folly to think that “eyeballs” would sustain the online news industry. Someone needs to pay for the production of news content, and hey, guess what — it’s not the advertisers.

Also, he adds, in the past, “free” news sites would pop up and steal the audience of a “paid” news site — think the Malaysian Insider vs Malaysiakini — but the current economic crisis has changed that game.

The safety nets provided by companies with deep pockets and the patience to let a platform build its revenue base are no more. Instead, many smaller sites are struggling to monetize their own little businesses before it’s too late. Even major sites, with networks of blogs, are reporting huge losses. What incentive do any of them have to create free news content to fill the vacancy left by traditional news media?

This could be the old-school news media’s chance.

So with no young and free upstarts, old media would be in a monopolistic position to dictate the rules of the Internet, essentially saying: “You want news? Micropayments, please.” The problem here is that it would take a massive effort to synchronise every news organisation to get on the same paid content model. All it takes is just a handful of party poopers to offer news for free — I’m sure those few sites would be immensely popular — and the game would be up within a months.

“Long Live the Free Web”

Dan Costa then wrote a rebuttal to Ulanoff’s piece (I just love the contradictory opinions in PC Mag–that’s what makes it so great), dismissing the micropayment strategy as something doomed to fail, pointing out 5 reasons why. The one that caught my eye was the point that news is a commodity that people won’t be willing to pay for. Why? News would be stale in a matter of minutes. And who wants to pay for old news?

Once a story gets broken online, the facts will be repeated across the Web within minutes. Stories that aren’t referenced are simply repeated. Putting your story behind a pay wall means it will be late, read by fewer people, and left out of the global discussion.

Costa’s solution is an unfortunately simplistic one that won’t convince many news editors: concentrate on developing targeted ads. On further rumination, however, I can see how Costa’s line of thinking would be a reason to take down the pay walls once the advertising dollars have returned following the economic crisis.

You can’t charge for a commodity that is freely available on the Web, but you can charge for attention, which is scarce—and getting scarcer every day. People spend more time reading, browsing, watching, and using media than ever before. When you have people’s attention, you can monetize it. This is what publishers have been doing for years in print, but in the digital world the scale is much wider. And when you target users based on their specific interests and intentions, the potential for monetization is much larger. Free content is the price you pay for reader’s time and attention.

The bottom line is this: Micropayments won’t work. The Pandora box of “free” news has been opened, and to return back to an old strategy like pay walls would only fail, especially where news is a commodity. Pay walls could be applied to more specialised content, for sure, but not where news, stale within moments, is concerned.  This move by Murdoch is a reaction to the crashing ad market and I don’t expect it to last beyond the next two years.

The hunt for newspaper conundrum, however, remains frustratingly on.

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Written by John Lim

May 22, 2009 at 8:22 pm

Posted in New Media

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