Indiantelevision.com Team

(2 December 2009 6:50 pm)

MUMBAI: Media companies must deliver the news media consumers want – and do it in the ways that best fit their lifestyles. That means innovating like never before.

Media companies also need to do a better job of persuading consumers that high-quality, reliable news and information does not come free. Good journalism is, after all, an expensive commodity.

Finally, the government needs to clear the path for companies to invest and innovate – by reducing unnecessary regulation and eliminating obstacles to growth and investment.

These remarks were made by News Corp chairman Rupert Murdoch at the Federal Trade Commission’s Workshop. His speech was called From Town Crier to Bloggers: How Will Journalism Survive the Internet Age?.

Murdoch says, "First, media companies need to give people the news they want. I can’t tell you how many papers I have visited where they have a wall of journalism prizes – and a rapidly declining circulation.

"This tells me the editors are producing news for themselves – instead of news that is relevant to their customers. A news organisation’s most important asset is the trust it has with its readers – a bond that reflects the readers’ confidence that editors are looking out for their needs and interests."

Murdoch notes that News Corporation provides news, sports, and entertainment to audiences across borders and continents, via newspapers, magazines and books, broadcast, satellite, cable and telco- provided television, mobile devices and the Internet. In the future, the company will provide content to devices that today are still just a glimmer in the eyes of their inventors.

" And we are always looking for ways – whether better content or delivery – to meet our customers’ needs and interests," he says.

In television, Fox succeeded in taking on the “Big Three” networks when everyone said it could not be done. "We also compete with both news channel CNN and the sports channel ESPN. And we continue to produce groundbreaking programming, including the first all-digital broadcast of the Super Bowl," Murdoch said.

News Corp has been working for two years on a project that would use a portion of our broadcast spectrum to bring its TV offerings – and maybe even the newspaper content – to mobile devices. For newspapers, the spectrum could well prove an economic vehicle.

"For our customers, it would allow them to get national and local news, weather, sports – and even their favorite TV shows – whether on a train or bus, as a passenger in a car, during their lunch hour at work, or while watching their daughter’s soccer practice. Today’s news consumers do not want to be chained to a box in their homes or offices to get their favorite news and entertainment – and our plan is to meet the needs of the next wave of TV viewing by going mobile," Murdoch said.

At a difficult time in the economy, News Corporation is increasing its investment in journalism. The aim is to be the news leader in each of its markets. For example, over the years it has been continuously expanding the number of hours of local news on Fox-owned television stations. This year more than 50 hours of news have been added. "Today we are airing more than 700 hours per week of local news. That’s more than any other TV station group in the country. And it should tell us that even amid challenging economic times there are opportunities to improve and expand journalism," Murdoch said.

News Corp is doing similar things for its papers. The Wall Street Journal now offers more national and international news to complement its outstanding business journalism.

"I have often made the point about newspapers this way: by reminding people that we are in the news business, not the dead tree business. In other words, what makes a newspaper is its content and brand – not necessarily the form in which it is delivered. Soon we will launch The Wall Street Journal Professional Edition, which will bring together the Wall Street Journal Online and Dow Jones Factiva. By giving our readers instantaneous access to breaking news as well as to vast archives, the Journal intends to revolutionize the way business subscribers get valuable information about industries, companies, and people affecting their business," Murdoch added.

The fierce belief is that of the company the key to competing during difficult times is to invest more in journalistic content, not less.

Murdoch went to reiterate the fact that quality content is not free. In the future, good journalism will depend on the ability of a news organisation to attract customers by providing news and information they are willing to pay for.

The News Corp. chairman warns that the old business model based on advertising-only is dead. "Let’s face it: a business model that relies primarily on online advertising cannot sustain newspapers over the long term. The reason is simple arithmetic. Though online advertising is increasing, that increase is only a fraction of what is being lost with print advertising. That’s not going to change, even in a boom.

" The reason is that the old model was founded on quasi-monopolies such as classified advertising – which has been decimated by new and cheaper competitors such as Craigslist, Monster.com, CareerBuilder.com, and so on. Even online display advertising is in such huge supply that its price is under constant pressure.

"In the new business model, we will be charging consumers for the news we provide on our Internet sites. We are already charging – and successfully so – for the Wall Street Journal online. WSJ.com boasts more than one million subscribers. Barrons.com has another 150,000 subscribers. We intend to expand this pay model to all our newspapers in the News Corporation stable, such as the Times of London, The Australian, and the rest."

While critics say that people won’t pay, Murdoch believes that they will – but only if the readers are given something of good and useful value. "Our customers are smart enough to know that you don’t get something for nothing. That goes for some of our friends online too. And yet there are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production.

"Some rewrite – at times without attribution, the news stories of expensive and distinguished journalists who invested days, weeks, or even months in their stories – all under the tattered veil of “fair use.” These people are not investing in journalism. They are feeding off the hard-earned efforts and investments of others. And their almost wholesale misappropriation of our stories is not “fair use.” To be impolite, it’s theft.

"Right now there is a huge gap in costs. Technology makes it cheap and easy to distribute news for anyone with Internet access. But producing journalism is expensive."

Currently, there is a situation where content creators bear all the costs, while aggregators enjoy many of the benefits. In the long term, this is untenable.

"We are open to different pay models. But the principle is clear: To paraphrase a famous economist – there’s no such thing as a free news story, and we are going to ensure that we get a fair but modest price for the value we provide.

"Finally, let me say a few words about government. In the last two or three decades, we have seen the emergence of new platforms and new opportunities that no one could have predicted – from social networking sites and iPhones and blackberries, to Internet sites for newspapers, radio and television. And we are only at the beginning. In a few years, we will look back at cutting edge technology today the same way we smile when we watch a TV show from the 1980s or 90s featuring cordless phones the size of bricks."

He says that the government has a role here. Unfortunately, too many of the mechanisms government uses to regulate the news and information business in this new century are based on 20th century assumptions and business models.

"If we are really concerned about the survival of newspapers and other journalistic enterprises, the best thing government can do is to get rid of the arbitrary and contradictory regulations that actually prevent people from investing in these businesses.

"One example of outdated thinking is the FCC’s cross-ownership rule that prevents people from owning, say, a television station and a newspaper in the same market. Many of these rules were written at a time when competition was limited because of the huge up-front costs. Unfortunately, in practice these restrictions stifled competitive newspaper markets.

"If you are a newspaper today, your competition is not necessarily the TV station in the same city. It can be a website on the other side of the world, or even an icon on someone’s cell phone.

"These developments mean increased competition for people like me, and that is good for consumers. But just as businesses are adapting to new realities, the government needs to adapt too. In this new and more globally competitive news world, restricting cross ownership between television and newspapers makes as little sense as would banning newspapers from having web sites," Murdoch said.

Murdoch warned that the prospect of the U.S. government becoming directly involved in commercial journalism ought to be chilling for anyone who cares about freedom of speech. The Founding Fathers put the First Amendment first for a reason: they knew that a free and independent press was vital to any self-governing people.

They also knew that the key to independence was to allow enterprises to prosper and serve as a counterweight to government power. It is precisely because newspapers make profits and do not depend on the government for their livelihood that they have the resources and wherewithal to hold the government accountable. This is also what builds the readers’ trust and confidence.

Over the long run, it’s true, politicians, bureaucrats, and corporate executives can be sacked because of an angry electorate or board. But in the day to day of ordinary life, the press is perhaps the only institution that can truly hold them accountable – and they know it, and they fear it.