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.
