Shock! Why Murdoch may be more right than wrong about Google

His main problem is calling them parasites. If he can’t see the benefit of Google and the likes’ services to society, then he is an idiot. But he’s not an idiot because he’s Rupert Murdoch. He could certainly handle himself better and stop making enemies where he doesn’t need to. If he wants to be off Google – fine. Why bitch about something that most of the internet-using world positively loves?

The disruptive nature of digital is not that anyone can be a journalist now (they can’t – there’s a reason journos spend 3 years at uni and countless more learning their trade), it is that now anyone can re-distribute others’ content.

Murdoch’s reasoning is sound. To be profitable he has to sell advertising (or services) and to do that effectively he has to know his audience. As mUmBRELLA points out, fly-by-night visitors are of little value. And a consistent audience brings other opportunities for commercial C2C interactions as each community will have unique properties.

Where Murdoch is being myopic is in treating the channel as an audience. Subscription should be to News Ltd; how you choose to consume the content (paper, downloadable PDF, RSS feed, online) should be irrelevant.

Murdoch’s been successfully aggregating audiences and delivering content for longer than most of us have been alive. Just because the channel is digital and he was born before 1980 doesn’t make him an idiot.

Incidentally, why do you use Google to navigate to the Media section of the Australian as against bookmarking or even consuming the specific RSS feed in iGoogle or a feed reader?

Just curious.

In the end, someone has to pay for news/content. News is like water – it may fall out of the sky for free, but collecting it, filtering it, getting it to the end consumer and dispensing it in a form the consumer wants and which will not cause him/her health or other problems costs – either money or time, usually both. Conveying is not a charity. Having it is it a want, but not a right.

Either the consumer pays, or – if there is market failure – the state pays. The trend with water and most other services is towards user pays. Without going into the Orwelliam realms of state-constructed and dispensed news (and having once lived in a dictatorial socialist state), I’d rather get most of mine from the free ‘press’ (such an antiquated term!).

However there is a demand for ‘high end’ news from the more benign end of State media organisations (eg the BBC, ABC) precisely because publishers like NewsCorp have generally followed the mass market, sometimes at the expense of what some call quality publishing.

In the past the mass market has been where the advertising $ were. This too is changing – ironically, largely thanks to the internet, where is is now possible to charge (and get) higher CPM rates for specialist/niche advertising due to the higher level of engagement of the audience (and often their higher propensity to spend or interact). At the same time the financial lifeblood of daily broadsheets, classified ads, have migrated online. (Simon Baker is certainly no fool).

Google is part of the conduit, not a creator/publisher itself (at least, not yet). It may transmit information largely free to the end user of the information (who pays instead for their ISP, another part of the conduit), but it’s certainly not free to the advertiser (or to the environment) – and whether it can continue to command high CPMs in the face of low conversions of the’casual’ traffic it generally brings remains to be seen.

Despite its name, NewsCorp do not own the news, they own conduits. But perhaps their pipes and filters are a rusty legacy of the past and need an overhaul, or replacing. Again, this is not cost-free. However, most of us want news reasonably regularly – some of us also desire accurate news – and history shows that we will pay for it. Knowledge is after all, power (whether simply self-detemination or power over your environment) – and many people will pay to have a knowledge edge. Likewise, you’ll certainly pay for clean water, and more if you live in a desert.

One thing we can be sure of – like water, news will ultimately find its own level. It will flow faster to its consumers via the conduits of least resistance, preferably where it won’t get tainted along the way.

Great article(s) on this issue Tim.

In any industry that’s unsustainable I think it’s great that such a large and innovative effort is being put to making it sustainable.

It may work or it may not, but wouldn’t it be great if they (or anyone else) could add value to something we perceive as free and it works?

I’m sure Murdoch wasn’t laying out the final strategy, it was a trial balloon and it looks like it’s served its purpose.

Hi Tim! *waves from California*

I find the same thing with StumbleUpon and my blog Roaming Tales (www.roamingtales.com). When my blog posts get submitted to StumbleUpon, I see a huge spike in traffic. However, when I look at the navigation path I see that 95% (or so) of the StumbleUpon visitors go to that page only and then go away again. I love StumbleUpon and I’m happy to have traffic from it, but it’s not as valuable to me as other traffic sources in the long term. For example, I get less direct traffic from Twitter but I have a much lower bounce rate and I’m more likely to pick up new subscribers from Twitter.

Of course, I’m not trying to charge so I’m happy to have visitors wherever they come from. But I think Murdoch is right that transient traffic is not the be all and end all.

I think a lot of people here don’t understand the problem Rupert has with Google. It’s not the search engine channel Rupert so much, but the Google News (http://news.google.com.au/) aggregation service. News Ltd misses out on both impressions and CPMs.

News is a commodity and there are a million was of getting the same content. If your content isn’t compelling, people will go elsewhere, because it’s so easy too. I can’t see how people will ever pay for it again. The advertising model must change.

It’s certainly true that when a single article goes viral, most of the visitors never stick around – I’ve had a few minor successes with stuff I’ve posted online, and traffic rapidly sinks back to previous levels.

But no matter what Murdoch chooses to do – and I wish he’d either put up or shut up – he’s still left with some big problems getting people to pay for his content. There’s only two audiences I can see who might be willing to pay:

1) People who enjoy the reactionary right-wing opinions expressed by the likes of Andrew Bolt, and who get a sense of community from commenting in a place with others who agree with them. I suppose these people could be persuaded to pay maybe $20-$100 a year to subscribe. It seems to work for Crikey (for a different audience, of course)

2) People who want to read about a genuine scoop broken by a News.com.au paper with information that can’t be found anywhere else. One example could be the scandal at Bundaberg Hospital in Queensland where it’s alleged that Dr Jayant Patel did great harm to many of the patients on whom he operated. I don’t know how this would work, but I would assume that one part of the price model would need to be charging a small amount to view one particular story – maybe $5. You could charge more if more background information, supporting documents and so on was included.

I can’t see any future in charging people money to read everyday “Early General News” online. Those millions of people who used to pay a dollar or so every day to buy a Murdoch newspaper can get their everyday news – police rounds, basic political stories, sports news, cats up trees, stories about the latest heavy rain, recycled PR media releases and so on – from the ABC for free. While plenty of those people might not be fond of the ABC’s rather smug, self-satisfied and complacent tone in current affairs, that can be ignored when they are reading routine news.

And when it comes to analysis – does anyone trust Newscorp columnists to write anything but propaganda anymore? Remember “We understand Newspoll because we own it”, or Glenn Milne’s constant agenda-pushing? Readers of the Courier-Mail’s property section might remember its spruiking of Jeays St in Bowen Hills as “the next Fortitude Valley”, while it forgot to mention that the Queensland Newspapers building right near there stood to increase in value if that part of Bowen Hills was developed. If most News columnists told me it was daytime, I’d look out the window to be sure – and I certainly wouldn’t pay for the privilege of being told.

So, going back to groups 1) and 2) above – how much money can be raised from them? How many eyeballs are there and how much can advertisers be charged for access to those eyeballs?

And, of course, there’s one other big thing people have been ignoring in all the fuss and bother of Murdoch attacking Google – what about the classified ads, the famed “Rivers of Gold”? Even if Google stole every single story News ever printed and republished it in full online without payment or attribution, that wouldn’t have much to do with the decline in classified revenue. According to this story from the Australian’s business section in September, all Australian newspapers’ classified ad revenue dropped by 38% in the six months to June this year. News’ group sales director spins this as being because of declining ad numbers rather than a shift to online sales, but we will see if this is the case when good times return.

Chris Knowles @3,

I agree with Tim – I think it’s getting more and more common for people to Google a site – even if they know the address – rather than type in “http://….” into the address bar. I know I do. Google’s Chrome browser takes advantage of that by using the exactly the same box for both typing in addresses and searching.

Craig @8,

I don’t get what you mean. Even Google News only publishes short extracts from the stories – headlines and lead paragraphs, unless I’m wrong? If all people wanted was the headline, they weren’t going to pay much attention to any ads that a News site published.

I still don’t think the penny’s dropped. Online the ‘information wants to be free, and also expensive’ thing really is the fundamental rule I reckon. Hardcopy media barons must struggle with this, and will continue to, until they stop trying to relate everything back to that model for making their dough.

Also, do you (or the Murdochs of the world) really think that someone is going to read one story on your site, and suddenly become a loyal reader? These days I feel like I’m an information scavengers. I’ll take it from wherever I can find it, whenever I want it. If you want my loyalty you’re going to have to be of consistently high quality, and relevant to me. Plus, I’m not going to pay anywhere near as much for online content as I would for hardcopy – don’t ask we why, I haven’t figured it out yet, but I know it to be true.

Speers: How would you like to be remembered?

Murdoch: as someone who used the media to good effect…..particularly to give the public choice.

And to think he was going so well with the first part of that answer!

Tim, I think you make a great point when you say “It then becomes a conversation about engagement – and persuading advertisers of the value of that.”

Why can’t online media that is advertising-supported (ie free to readers) develop better methods to engage it’s readers with sponsored content? Have Rupert and all other traditional media owners simply decided that charging for all their content is the ONLY solution. Surely more thinking and head-scratching can come up with a smarter approach.

Examples I can dream up: 1. buy a soft drink can/bottle, get a code that gives access to view specialised content on a newspaper web site. 2. Complete a short a survey that’s relevant to an advertiser and then you gain access to the content. 3. Use QR codes to display content (that feeds back customer data to an advertiser).

The functionality of the Internet provides myriad ways to engage with an audience and that is what the publishers should be trying to do before putting all content behind a payment ‘wall’. Maybe Virtual Currency or micro-payments provide some answers?

The bottom line is that ‘paid for’ news has to be appreciably different/better than what readers can get from a free news site. But the ‘cost’ need not always be monetary.

Tim – Speaking for Fairfax Digital here, I couldn’t agree more. This is a very different argument to the paid content issue – clearly transitory Google traffic is worth far less than deeply engaged traffic. That, of course, doesn’t automatically translate into a “Google traffic is bad traffic” argument though. Exposing folks to your content isn’t really such a bad thing… Many of us have been saying for a while now that engagement is an (maybe the) important metric for online sites. I believe it is the key to achieving the kinds of ad yields that will be required to continue to invest in quality content.

The Leader newspapers have introduced a very good online version that looks like the paper version and can be read similarly, my preferred reading experience. The paper copy is free as is the online. I won’t drop $2 or $3 a day for the Fin Review, which I enjoy, but would drop $5 a week for an online version that I could flip the electronic pages of rather than deal with the often very messy websites, I’m thinking The Age site as I write, it shits me!

The idea you seem to completely miss is one of discovery: sure, Digg (which is well known for bad engagement btw) visitors might not stick around, but if 10 or 100 people out of the 20,000 or so they sent you do, be it via subscribing to your feed, bookmarking your site or following you on Twitter, that is still a net gain vs no traffic at all.

The cumulative effect of search or social traffic is there, and is well proven elsewhere.

Do the front page of Digg once a week or one a day, and watch your overall non-direct traffic rise because every time you get that hit, more and more have discovered your site, and you always end up with more regular readers, even if it’s 1% of each spike, it all adds up.

As for making money from it, I fail to see your point there: US traffic is the EASIEST to make money off, and your point only shows that you should learn from the spike, not that it’s bad traffic you don’t want or can’t use. Try Google Ad Manager and geotarget your direct ad spots targeted at Australians, and then use CPM or CPC advertising for everyone else (anything from Adsense upwards.)

I bookmark websites that I find interesting / useful (including mUmBRELLA).
I also find it frustrating finding links to articles on News Ltd sites, and am reluctant to use Newstext unless I really need a copy of a particular article.
I currently reluctantly subscribe to the local rag Adelaide Advertiser / Sunday for local news, but seriously contemplating dropping this $456 pa cost in favour of selective purchase of on-line content.

I have no problem paying for something if it has a value, although I am not going to forfeit my mortgage payments to pay for media online. Print is certainly not dead and I will often buy the papers on the weekend and head to my favourite cafe on a Saturday morning and have a good read.

Daily though I will always be online browsing, learning and resourcing.

I love the discovery process online:
– I might read a news article about lets say an unkown country town in NSW.
– I will then ‘Google’ that town name and learn all about it on Wikipedia.
– I then go to Google maps and look at a satellite image and learn exactly where the town is, how to get there etc
– I might even find the local news website for the town and find out what else is happening there, or see what weather they are experiencing or find out via a realestate site what the houses prices are…
– An advert on the side of the content I am viewing might offer a weekend away package to this town and you know what? I might take up the offer (it might be a Google ad…)
– I click on the ad and the publisher of this website gets paid…

Currently I pay $80 a month for the above access to the internet and all sites I use, find and frequent require no further payment.

I access information online: Maps, History, News, Services; heaps and heaps and of knowledge that 20 years ago would be found in a library, an atlas, a print service directory… The news might have been listened to for free however on the radio or on the tv… I might have bought a paper – might of…

Monetizing this online utility has already happened and $80 a month is what I pay for my broadband connection.

For my cable tv package, with access to the channels I want to engage with I pay a similar amount as above.

If individual publishers charge seperately for their content online this could create complication, confusion and costs to the user that spiral out of control.

A quick swerve here to another area:

TV publishers v the Print publishers. Lets take the ABC, BBC, CNN sites online. These guys do not publish newspapers and are now reaching far bigger audiences than they have ever done before. They are not losing money from their print businesses. Some of these guys sell adverts on their sites and make money as a result.

If News wants us to pay and closes down their content online could these TV / Online behemoths clean up..?

Could an online only news publisher go after the Murdoch readers and launch a news site and make money from advertising, without any print overheads?

Questions questions…

Adam, I like that idea. A free online only offering going after Murdoch’s readers, without the print overheads or old fashioned business model holding it back. It could make revenue from selling……..wait for it……advertising!!!!!!!!!!

Speaking of adverts you can pay The Guardian website (UK) a one off payment and view their site without adverts on it…

Look at the success of Mumbrella – an excellent example of a business launched online without any print offering gobbling up money… Allowing the freedom to innovate and grow.

Tim, I can honestly say that it will not surprise me if I see Mumbrella pop up with a quirky, informative TV show on SBS within the next 12 months. ABC have the Gruen Transfer SBS can have their media show with Mumbrella…

Keep going strong you are doing a great job!

Come on Jack. Tell us the AFR story. Or if he won’t come on Tim. Write the story about possibly the planet’s second longest running newspaper paywall – our very own http://www.afr.com.au.

In this whole discussion the silence is deafening.

don’t think jack can help you jerrys…afr,com isn’t part of fairfax digital. it’s managed by the good people at the financial review. everything i’ve read from fd suggests they don’t believe in pay walls.

it’s weird of murdoch to say this when in 2007 and 2008 news digital were one of the most active users of SEM to drive traffic to their mastheads in AU and as a company would have easily been one of Google’s biggest clients across news and classifieds and sites like taste etc.

fairfax too do the same thing – buying terms like ‘Big Day Out’ and ‘music festivals’ and driving traffic to The Vine – I guess “clearly transitory Google traffic” will do if you can’t organically generate “deeply engaged traffic”

the whole debate is getting so confusing. tim – it appears honourable that you acknowledge that this search driven audience isn’t great for your advertisers … I would hazard a guess no large website/publisher in AU really gives a toss about where their traffic comes from or how long they stay. A page view is a page view.

I don’t think it’s appropriate to compare mumbrella with Murdoch’s sites. As you said Tim, this is a industry specific, specialist site with a very clearly targeted audience. The reason your short-term audience didn’t last was because the rest of the content on the site wasn’t relevant to them. I don’t think you can say the same for your average news viewer and theaustralian.com.au.

That said, I agree that most Google-directed traffic to mainstream news sites probably doesn’t become loyal overnight either. But you don’t NEED most of it. You only need a little bit; it adds up.

If he follows up on his “threat,” all Murdoch is going to do is subtract the web visitors he otherwise would’ve gotten daily via Google et al. No one – and I mean not one – is going to say “Oh crap, I can’t see Rupert’s news items for free anymore, so I better surf over there and buy a subscription.” They will simply read news of interest to them from publications available via Google et al.

And Rupert’s publications will lose influence in proportion to the number of people who used to read them before the building of his mighty pay wall.

Meanwhile, it’s a farce that media members constantly point to the Wall Street Journal as one of the new supposedly successful web pay walls in existence. In truth, the publication has far less paid subscribers than they claim. I know people in nearby Houston (Texas) who were laid off from a particular financial services company four years ago. At the time, each employee there was given a WSJ online account (for which you can bet the company did not pay anything approaching “full price”). Today, all those people still can access their accounts.

No one is paying for them, and the WSJ knows that full well (or if they don’t, their accountants are idiots). Yet they don’t remove anyone from the roles, because it’s worth more to them to charge their advertisers based on fluffed up and fictional paid-subscriber numbers.

Finally, while I don’t know about his other holdings, Mr. Murdoch has seriously weakened the WSJ’s standing as a trusted source of business news. If you’re going to start charging for web content, I would think the proper formula would be to improve the content first, then charge for it. But he’s going at it the other way around.

Good luck with that.

I do not think it make a difference for Google as they have many other sources of news they have access to.

I have 20 employees and they are welcome to use the internet to read the news pre 9am and at lunchtime (most of them do.) I will not allow them to pay to read news. They will have to read it on the ABC etc…

Mr Murdoch: When do people go online to read news and where? You need to engage the bosses. have you thought this through?

I also thought the paid content idea would be a real challenge to get up. Then this research from the Boston Consulting Group: http://ow.ly/DfNT 48% of Americans would pay and nearly 60% of people in some European countries.

I still think it will be a challenge and require some real differentiation and improvement on current offerings. But still, very interesting findings.

A colleague forwarded me a link to your original story on the 9th. On that day I was a bounce. I had no idea who you were or what your site was about.

Today I dug up my IM history to re-read the story. Then I saw this followup. That’s the beginning of a relationship.

I’m in Seattle, so I’m still probably not your target audience, and might even be considered a waste of bandwidth. But if I weren’t, or if you had a different audience, that original link might have been the start of a commercial relationship.

That’s what Rupert’s sites need to do: build a relationship with people who might not have otherwise known about your site. It doesn’t happen with the first click. It might happen with the 3rd, or the 10th, or the 100th.

I could not disagree more with the daft notion that traffic spikes do not bring extra revenue. We reguarly experience traffic spikes and revenues go up right along with the traffic.

Saying the opposite simply signals the paucity of your ad serving/repping. The problem you have is that your ad delivery package is not targeting ads to your visitor’s profile/interests. Consider signing up Google Adsense for an effective TARGETED ad serving solution. Lol.

Google has attained extraordinary success with their brand. Whether they achieve long lasting iconic status remains to be seen in the long run. But they’re off to a great start.

Rupert isn’t dumb but will need his smartest people around him now. His ability to make a turn around with News lies in truly understanding his audience and making an offer they consider to be unique and differentiating.

It’s as simple and difficult as that!