On Tuesday and Wednesday, the FTC hosted an open workshop in order to explore the effects of the internet on the news industry and come up with various ways in which these corporations could transition to the digital age. Some ideas that came up include news corporations receiving special tax exemptions, not being subject to antitrust laws, and modification of copyright law so news aggregators would be forced to pay the news sites for their content.
Rupert Murdoch, CEO and Chairman of News Corp., is extremely angry at companies like Google, who allow users to click on a link and be directed to a full WSJ article for free and bypass the normally required subscription. In his words, “To be impolite, it’s theft.” Murdoch believes that the news aggregators are unfairly profiting off of him, taking his articles and using those articles to help create content for their own sites. Managing editor of the Wall Street Journal Robert Thomson recently said, “There is a collective consciousness among content creators that they are bearing the costs and that others are reaping some of the revenues -- inevitably that profound contradiction will be a catalyst for action and the moment is nigh.”
That moment is definitely very close, as Murdoch is reportedly considering delisting all News Corp. articles from Google’s search engine and is in talks with Microsoft to have the articles listed solely in Microsoft’s Bing search engine, presumably at a cost. Murdoch’s action appears to be attempting to deny the news aggregators a free source of articles, and forcing them to pay for it if they want it. The question here is how much revenue would such a partnership between news provider and news aggregator bring? Would it be sufficient to make up for the amount of advertising revenue lost by no longer being accessible through Google News? Keep in mind that decreasing subscription and paper ad revenues have to be made up for somehow as well. Also, in the case of the Wall Street Journal, he is attempting to avoid the mass market advertising based revenue model and instead focus on a niche audience that is willing to pay a subscription fee. Would enough people find enough value in the articles to be willing to pay a subscription fee? Even if it did work for the WSJ, how effective would that model be for other news providers?
Arianna Huffington also spoke at the workshop, and criticizes what Murdoch has planned for News Corp. in a blog post. According to her, delisting all News Corp. articles from Google would be a terrible idea. She argues that if News Corp. were to limit access to their articles, it would not result in people being pushed into paying the subscription fee in order to gain access to those articles, but rather those people would completely ignore the existence of News Corp. and read about the news they’re looking for elsewhere. News Corp. would be trying to shift from one source of revenue to the other, but end up losing revenue on both fronts.
Arianna Huffington’s proposed model is the link economy. The Huffington Post would write some article about some interesting tidbit of news and then some other site would link to the article and all the viewers of that site that follow the link would then land on the Huffington Post website, where they can then contribute to the Huffington Post’s ad revenue. The Huffington Post would similarly have links to articles from other websites, directing viewers there and fueling their ad revenue.
The idea of the link economy revolves around the idea of advertising-based revenue streams, which Murdoch obviously opposes. But does he have a choice? New media proponents argue that news corporations must drop any kind of subscription requirements or limitations to site access in order to survive, the theory being that if a company makes money off of advertising, it is going to make more money by increasing site traffic, and forcing subscriptions and delisting itself from search engines will definitely harm site traffic and possibly lead to it being unable to turn a profit. After all, there’s no incentive to pay a subscription to get news from one site if a person can get the same news from other places for free. Somebody who uses Google News to find out about the world’s events is probably not going to suddenly notice that they never come upon any WSJ articles anymore and suddenly want to purchase a subscription so they can keep reading its content. They’ll just read what they already have and be satisfied.
6 comments:
Wow that was a long post...
Anyway, though Rupert Murdoch is complaining that the internet is making information too easily accessible, there isn't much he can do to stop it. Copyright infringement and illegal distribution of information and materials has been an issue with the internet for a long time now...
I gotta go, I'll finish later...
TL; DR...
Francis, do you mind re-hyperlinking those links..? It'd be nice if it didn't take me to a 404 error page..=]
Hasn't it already been proven that ad based revenue/ traffic based revenue works? Look at Google. Why can't the media just settle for that? It looks like it's still turning a profit so why not?
(Sorry, Victor, I cut off your post..)
Just because it works for Google doesn't mean it'll work for everybody else. Google's market share is unlikely to be matched by any individual news site.
Aww, /sadface...
To finish off what I was saying before, the whole issue with copyright infringement doesn't just deal with news information, or other articles. Record companies, movie production firms and other forms of media have been complaining about the widespread access to their materials online. As the web continues to grow, these problems will only continue to grow. As file sharing sites such as rapidshare and megaupload appear, these companies will have a harder time earning a profit.
I would put good money on the government stepping in some time in the not too distant future. The whole political system rests too much on the media for the government to let such an important cornerstone(the printed press)fall. However I would disagree with you franklin. I do not think that news sites would receive enough traffic to be able to survive solely on ads. The cost of producing a newspaper is high and the portion of the population that reads it small.
I get where the article is going with the respect to journalism but I disagree to a certain extent. Internet=making life easier because information is so easy to find online. Clicking on a button and directing that to the WJ is an easier way to access journalism. In government, we learned how the public is moving away from newspapers and going toward the internet and the t.v. That's because it is easier and more efficient. Like Mr. Silton said in class yesterday, you can get a lot of information from CNN or an online article than a newspaper in 30 minutes.
America is all about making life easier and that's what it is doing. It allows users to click on a link on google rather than fish in the newspaper for the sports highlights for football. Flipping pages is more difficult than we thought.
Post a Comment