Rupert Murdoch was never exactly poor, but he really owes
his immense power and reputation to his visionary grasp of the significance of
new technology – most notably as a pioneer first of new computer print setting,
then of satellite and cable television. All credit to him, he held true to his
vision in the face of strong opposition and even mockery.
So it is ironic – even bizarre – that his latest decision
seems based on the assumption that the last ten years did not happen.
Sick of people not buying his London Times newspapers, he proposes charging people who
read their content online. This ignores the fact that a growing market segment
prefers the convenience of online news to buying a physical paper.
There is still money to be made from these people so long as
the news provider understands that a different business model applies. The best
way to exploit them is to maximise readership in order to maximise advertising
revenue. Charging, of course, has the opposite effect.
Those from a new media background understand this: they live
and die by the hit rate.
However, many of those with a print media background miss
having two streams of income, from the reader as well as the advertiser.
Yet any reduction in the income from sales to readers should
be balanced by a reduction in costs, as the printing and distribution of
physical newspapers is an expensive business.
This is why we have a new generation of online content
providers with no connection to the old media. They have made the online market
very competitive indeed.
Nevertheless the old media have a huge competitive advantage
in the online news market in the form of their established brand names. CNN and
BBC News are now major players online as well as on television.
You would think that there was no more prestigious brand
than the Times, but it now seems that
it is too greedy, or too precious, to rely solely on competition for advertising
against the vulgar masses of online providers.
This is very short-sighted – and leaves a gap in the market
for the next Rupert Murdoch, the Murdoch of the online.