BBC Strategy Review promises more, not less, competition for newspapers

Posted by Peter Kirwan on 3 March 2010 at 14:59
Tags: BBC, Media

I love the BBC, but I tend to worry about it a lot.

On p70 of Mark Thompson’s Strategic Review, I found the kind of evidence that supports my fears. The paragraph that gripped me refers to the future of BBC Online. It goes like this:

There will be no specialist content for a specialist audience, such as business-critical information in specialist fields, legal, financial (including trading tools) or other professional content.

Whoa. Trading tools? Specialist legal and financial content? Business-critical information? The idea of the BBC becoming a large-scale B2B publisher is sufficiently bonkers that it should have been suppressed violently the minute it surfaced in conversation at Broadcasting House.

But no: here it is, incendiary to the last, disclosed in an apparently serious document about the future of the BBC.

This is the kind of thing that makes you wonder about how far the BBC’s ambitions ran at the high point of the Long Boom. It also makes you wonder about how the Strategy Review will change the balance of power between the BBC and commercial rivals who largely make a living from the written word.

Much remains to be clarified. But here is what Mark Thompson is promising:

• BBC Online’s budget will be cut by 25% by 2013, “with a corresponding reduction in staffing levels”

• BBC Online will cut “whole categories of online activity such as web search, communications and non-content related social networking”.

• The number of sections on BBC Online ( ‘top-level directories’, in the form of bbc.co.uk/sitename) will be halved by 2012, with many sites closed and others consolidated. There will be far fewer bespoke programme websites.

• “Removing generic content [from BBC Online] in areas such as the Recipe Finder and /film.

• BBC Online will feed more traffic to the nationals: “by 2012, an external link on every page and at least double the current rate of ‘click-throughs’ to external sites”

• Local BBC sites in England restricted to news, sport, weather, travel and local coverage of national projects like Coast and A History of the World in 100 Objects. The BBC “will not provide listings, local guides or similar feature material”.

• “Leaving room for local newspapers and others to develop in a digital world by keeping the BBC’s current pattern of local services, and not launching new services in England at any more local a level than today.”

Potentially, there’s some important stuff here. Yet Mark Thompson’s Strategy Review also contains what diplomats would describe as “red lines”. These are fundamental points of principle from which the Corporation will not budge.

News is non-negotiable. As the BBC’s own research demonstrates, taxpayers want the Corporation to generate news more than anything else. The graphic reproduced at the top of this post –- extracted from the Strategic Review — underlines that fact.

Although the researchers asked respondents what they wanted from the BBC on their television sets, the BBC regards online as an indivisible part of the whole. On p33 of the Strategy Review, directly beneath the graph I’ve reproduced here, Thompson’s document contains the following words: “Content delivered via digital platforms is a vital part of this story.”

Elsewhere, the language is stronger. Consider, for example, the Review’s (eminently sensible) suggestion that the web “may [become] the only platform and delivery system that the BBC needs to fulfil its public purposes”. When it comes to the clash of civilisations between TV, text and audio, the BBC intends to be a fully-committed combatant.

Indeed, if all goes according to plan, the BBC’s Great Reprioritisation should intensify competition with private sector news organisations. Take a look, for example, at these priorities, laid out for BBC news journalism across all media:

• Stronger specialist analysis of science, the environment and social affairs

• More business coverage (local and global)

• More international news

• More coverage of local UK politics (”multiplatform coverage of local government and politics through Democracy Live”)

Specifically, for BBC Online, the report promises:

• “More prominence” for audiovisual content, original journalism, expertise and analysis

• Better quality local news websites

• “Stronger” consolidated “knowledge” output in areas like Nature and Music

• BBC News Online to focus “on a generalist, not specialist, audience”

• Entertainment news to become “more serious and concise” with stronger coverage of the media industry, culture and the arts

That’s some shopping list. Consider, too, the hint (on p50) that many of the redundancies at BBC Online will affect technical staff, rather than journalists. (The job cuts, we’re told, will partly reflect “the growing maturity and commoditisation of web design and technology”).

Notably, too, many of the sub-domains earmarked for closure provide readers with entertainment, rather than news. Rival publishers will find it hard to get excited by the prospect of sites like /robinhood being “consolidated under larger audience-facing propositions”. (p49).

So the basic conflict, sharpened by recession, still exists. It’s unlikely to ever be resolved. On the one hand, commercial publishers argue that the BBC is crowding them out of the market. On the other, the BBC argues that taxpayers want it to provide news more than anything else.

At first, the BBC’s Strategy Review looked like a retreat under pressure. But a steely bureaucratic determination runs through the core of this document. Where it matters most, the BBC will not be moved and may even succeed in upping its game.

Manchester Evening News: Did GMG invest in “things that matter”?

Posted by Peter Kirwan on 11 February 2010 at 15:39
Tags: Guardian Media Group, Media, Trinity Mirror

Over at t’other place, newsquestslave casts a critical eye on yesterday’s post comparing GMG and Trinity Mirror as owners of the Manchester Evening News.

(S)he takes issue with my suggestion that GMG invested steadily in its regionals during the late noughties, even as revenues and profits declined.

1) Operating expenditure isn’t everything

I looked at GMG’s track record in terms of operating costs (wages, rent, print contracts etc). But newsquestslave suggests another dimension:

“There is no ‘investment’ as in new capital raised from shareholders - as there hasn’t been anywhere in the regional press for decades.”

The argument seems to be that GMG’s regionals were just as bad as everyone else in this respect.

But newspaper companies generate lots of cash: this is one of the reasons so few have gone bust during the recession. It’s very rare indeed for them to ask shareholders for additional capital. Johnston Press did it in extreme circumstances, to pay off debts. But elsewhere, even the huge investment in new printing presses that’s taken place in recent years has been financed out of cash flow and debt.

In any event, you’d be hard-pressed to locate shareholders who would hand over new capital to finance operating expenditure (in the form of money to hire more journalists, for example).

On this basis, criticising newspaper companies for not raising more capital from shareholders is a red herring.

By looking at operating costs, I was trying to narrow the focus to factors that affect the quality of journalism on a day-to-day basis. It still think this is a valid way of looking at GMG’s track record as a regional newspaper proprietor.

2) What did GMG’s regionals spend all that money on?

Here, newsquestslave offers two arguments:

Given that things like newsprint have gone up in price, and that GMG regional has squandered cash on the Channel M disaster and other ego projects the investment/spending in the things that matter to newspaper readers, ie newspaper editorial, have declined sharply.

On “disaster/ego projects”: yep, it’s certainly possible that GMG chose to spend money on the wrong things. Yesterday, I suggested that this might have been the case. Of course, lots of companies do this. It’s called risk-taking. The question is whether GMG took more risks, or worse risks, for longer than its rivals.

On paper costs, Newsquestslave has a point. Buying paper accounts for 15%-20% of costs at a typical newspaper. So even though GMG maintained operational expenditure between 2004-2009, the rising cost of newsprint probably did squeeze out some investment in journalism at GMG’s regionals. Yet rising paper costs were a common factor for everyone.

That said, Newsquestslave’s points did make me backtrack on the numbers I dug out yesterday. I wanted to see whether I could reinforce my argument.

So today, I’ve got two graphs for you. The first is identical to yesterday’s effort. It shows how operating costs remained fairly static at GMG’s regionals as profit (and revenues) declined between 2004 and 2009.

The second graph shows how Trinity Mirror’s managers responded to declining profitability in a very different way. Trinity Mirror squeezed operating costs in a way that GMG simply didn’t, or couldn’t. On this basis, I stand by the suggestion I made yesterday:

GMG’s exit from the market is worrying for anyone who believes that sustained investment by large companies with deep pockets is the only thing that will save local journalism. The numbers suggest that GMG has been there, done that — and met with little or no success. The notion isn’t yet dead: but it has sustained serious damage.

As I hinted earlier, there’s one proviso. Did GMG’s regionals take too many risks? If more had been invested in “newspaper editorial”, and less on peripheral projects, would things have turned out differently?

Could the Manchester Evening News have remained a viable part of Guardian Media Group? Was Channel M responsible for that not happening? Some, including AndrewT23at Media Guardian, have suggested that this was the case:

As for GMG having to support a regional title, the MEN is still very capable of making money, even for a cash sieve like the Guardian, but saddling it with the basketcase TV channel that is Channel M was just too much.

If you look around the MEN newsroom at present you can see the damage caused by making a profitable regional newspaper prop up a vanity project TV station and, indeed, The (non Manchester or Northern) Guardian.

If you’ve got a view, leave a comment below, or send me a suitably anonymous email here:mediamonied@googlemail.com

Footnote: On the Trinity Mirror graphs, you’ll note a few asterisks. For the detail-oriented among you, here’s what they mean:

* = adjusted retained businesses

** = operating costs assumption for 2009 = 2 x 1H09 operating costs (reality will be lower).

GMG & The Manchester Evening News: “C’est magnifique, mais ce n’est pas la guerre”

Posted by Peter Kirwan on 10 February 2010 at 13:19
Tags: Guardian Media Group, Media, Trinity Mirror

A few kind souls at Hold The Front Page are predicting what awaits employees of Guardian Media Group who will soon start working for Trinity Mirror:

“For those who thought [GMG Regional Media chief executive Mark] Dodson was a ruthless hatchet man, you ain’t seen nothing yet…”

“God help them….If they think they’ve been squeezed in the past, wait til TM get their mitts on them, then they will understand that it is possible to get blood out of a stone.”

Among other things, the perception that GMG’s regionals have already been “squeezed” by a “hatchet man” feeds into the suggestion that the Manchester Evening News and its stablemates have been plundered relentlessly to sustain outsized losses at the Guardian and the Observer.

Ratcheting up the rhetoric a notch or two, Ian King, at the Times, even suggests that “for many MEN staffers, the new owners could scarcely be worse than the old ones”.

The news coverage certainly suggests that cost cutting became endemic at GMG’s regionals during the late noughties. Disputes over job losses flared up repeatedly as revenues declined: in 2006, 2007 and again in 2009.

Yet the numbers in GMG’s annual reports suggest a different picture. Remarkably, GMG held operating costs at its regional newspapers static between 2004 and 2009. Year after year, as revenues and profits declined, GMG carried on ploughing the same amount — more than £100m a year — into reporting, presenting and distributing the news at its regionals.

The contrast between steady investment and the downward trajectory of operating profits during the same period is painful. (In the graph accompanying this piece, I’ve rebased both sets of numbers to 100 as of 2004 to make comparison easier).

GMG’s exit from the market is worrying for anyone who believes that sustained investment by large companies with deep pockets is the only thing that will save local journalism. The numbers suggest that GMG has been there, done that — and met with little or no success. The notion isn’t yet dead: but it has sustained serious damage.

Did GMG simply invest in the wrong stuff? Or were GMG’s regional journalists living in a relative paradise? I suspect that the commenters at HTFP are probably closer to the truth than the deputy business editor of the Times. Working for Trinity Mirror will be a whole lot different.

Bosquet, the French general, famously described the charge of the Light Brigade at the Battle of Balaclava in 1854 in the following terms: “C’est magnifique, mais ce n’est pas la guerre”.

No doubt Sly Bailey, the chief executive of Trinity Mirror, thinks similarly about GMG’s recent track record as regional newspaper proprietor.

Online ad recovery will make life tricky for paid content publishers

Posted by Peter Kirwan on 8 February 2010 at 14:52
Tags: Media

As inevitably as night follows day, the debate about paywalls started in earnest during early 2009, a few months after the collapse of Lehmann Brothers, and several months after online display advertising stopped growing.

Publishers have spent the past year obsessing about paid content. Yet in the meantime, something wholly inevitable and largely unnoticed has happened to online advertising. In the UK, the market entered recovery mode in Q309. During Q409, combined search and display revenues surged by 10.4%.

Double-digit growth (or something close to it) may even prove sustainable. In the US, eMarketer forecasts that online display will grow at 8.2% this year — faster than search.

Is something similar happening to online display CPMs? Last year, conventional wisdom insisted that the price publishers could charge advertisers for reaching 1,000 users had collapsed on a permanent basis, thanks to a vast influx of cheap display inventory. In a pro-paywall column written last month, the FT’s John Gapper laid out the contours of disaster:

Rates for online display ads have been falling steadily as competition has proliferated, with most sites now finding it hard to get more than $4 per 1,000 impressions on their pages (or $14m for the 3.5bn hits on all US newspaper sites monthly).

Yet other sources contradict this view, suggesting a recovery in pricing power. It’s particularly interesting that this evidence comes from the ad networks, who were blamed so aggressively in the first place for bringing vast amounts of new inventory on to the market.

Forrester offers a similarly surprising forecast for US online display advertising. Between 2009 and 2014, the analyst firm suggests, expenditure on online display will more than double, to $16.9bn.

Forrester forecasts that online display expenditure will grow by annualised average of 17% during the same period. Once again, that’s faster than the growth expected of search (15%).

Of course, these are just forecasts. There are plenty of publishers who still dismiss the long-term potential of online display (including, for example, Meredith Corporation, the US magazine publisher).

Yet there’s something more than rebound psychology behind these optimistic forecasts. There’s a widespread faith that Google will succeed in becoming a powerhouse in online display.

Notably, Google’s advertising exchange — a trading platform for advertisers and media owners — appears to be gaining traction. There’s even a suggestion that real-time bidding for inventory on ad exchanges forces up the price of impressions. Google — and its rivals — have always claimed that this would be the case. Perhaps soon, we’ll start to see hard evidence.

This apparent revival of online display comes at an awkward moment for those who are devoting all, or most, of their energy to erecting paywalls.

A trade-off exists between selling online advertising and building up paid content revenues. You can choose to do both. But you cannot hope to maximise revenues from both.

Perhaps paywall publishers will soon find themselves grappling with more than the challenge of getting readers to open their wallets. Soon enough, they may also have to fend off criticism that the recovery in online advertising revenues has passed them by.

Times Online: Supporting the big profits of pay TV

Posted by Peter Kirwan on 2 February 2010 at 23:49
Tags: BSkyB, Media, News International

So Times Newspapers has just hired Paul Gilshan from BSkyB as marketing director. Gilshan was previously head of marketing for Sky Movies and Sky Box Office. At Wapping, Media Week notes, Gilshan will be reunited with his former boss Alex Lewis, who was a director of marketing at BSkyB before moving across to Times Newspapers last year.

Another significant (and much-noted) arrival at Wapping: Gurtej Sandhu, who is joining as director of Times Digital from News Corp-owned Star TV.

Down under, the trends seem similar: Richard Freudenstein, whose CV includes a seven year stint at BSkyB, has just been made chief executive of The Australian.

The influx of pay-TV types is striking. Of course, there’s an existing line of thought which suggests that paywalls around the Times and the Sunday Times will be engineered to boost print sales as much as anything else. (Buy a newsprint subscription and get access on t’internet for free.)

But what if the cordon was thrown wider? Peter Preston may have a point when he suggests that BSkyB could be brought into equation.

Now watch closely as 12 million Sky subscribers get an offer they can’t reasonably refuse. How about beyond-the-wall access to four big British papers (plus an array of tempting other goodies) for as little as 50p extra a month? £6m a month for that is £72m – in a trice the losses on Wapping’s more upmarket offerings are turned to profit. . .

This is an interesting idea. It would certainly enhance the attractiveness of Sky for subscribers who might be lured away soon by cheaper footie elsewhere. In addition, News Corp could bolt on newspaper subscriptions for a triple-play subscription offer (Sky/newspapers/online access).

Sky has been selling consumers a triple-play of its own (broadband/telephony/pay TV) for quite a while: the executives making the switch to Wapping know all about the fiddly mechanics of maximising profits in this kind of environment.

But if News International goes down this route, what price the coalition of national newspapers that Murdoch wanted to assemble last year?

That plan is dead in the water. It’s no coincidence that Murdoch’s thinly-veiled appeals for a concerted uprising against the free web have died away.

The Guardian can’t see how the economics stack up (no surprises there, if the missing ingredient is 12m viewers). The Telegraph has all but ruled itself out. DMGT has maintained a studied silence. Trinity Mirror might follow News International, but only if convinced by results on the ground.

A subscription link between Sky and News International would be designed to limit the risks of a go-it-alone policy. Harnessing the huge popularity of Sky might well make the unpalatable idea of paid content acceptable to the general public. (And for rivals, doing deals with Virgin Media or BT Vision really wouldn’t be the same).

But 50p a month: surely that’s too little? Selling online access to the Times and the Sunday Times at something like that price would cannibalize print copy sales just as rapidly as free access on the web.

Perhaps the low price point owes something to Preston’s inspiration: Newsday, owned by the same company that sells cable TV and broadband to 75% of Long Island’s subscribers. Late last year, Newsday erected a $5-a-week paywall. But it offered free access to customers of the parent company’s cable and broadband operations.

The parallel isn’t straightforward, though. Newsday’s paywall might as well have been accompanied by a suicide note declaring that the paper had no value other than as a gimmick intended to sell something else. Times Newspapers Ltd may be losing north of £1m a week, but its position is slightly different.

Still, leveraging what you’ve got makes sense. Cross-selling TV and news subscriptions would involve giving Murdoch’s newspapers – unloved by investors – a new purpose in life: to support the profitability of pay TV.

Circle the wagons and find some new and unexpected synergy: it’s a classic media conglomerate tactic. If successful, It might even help to convince News Corp’s investors that owning both newspapers and a pay TV platform remains a sensible idea.

Steve Jobs unveils his palace of Big Media dreams

Posted by Peter Kirwan on 27 January 2010 at 23:54
Tags: Media

And lo, the Jesus tablet came among us.

Predictably, the fan boy sites are focusing on the form factor and tech specs. It’s a 1GHz computer with a touchscreen interface. Apple will be making its own CPU (the technology involved is challenging, to say the least). Physically, it looks like an outsized iPhone, or an iPhone on steroids, as Mike Harvey suggests at the Times.

All of which (especially the latter) is somewhat beside the point.

The fascinating thing about the iPad, I suspect, is that it’s a completely new thing. (Bear with me while I explain this, and do try to try to ignore depressing precedents like the Newton and Bill Gates’ misadventures in tabletland.)

The iPod redefined an existing market that no-one had quite gotten right. The iPhone did the same for smartphones.

And the iPad? For Apple, it represents an attempt to carve out an entirely new market. . . for devices whose primary purpose is the consumption of content produced by Big Media.

Yes, you can prop it up on a stand and attach a keyboard, but no-one is pretending that the iPod is really a PC-style workhorse for tapping out emails and text documents.

Look at it, with its rather big 9.5” screen, and envisage its uses: gaming (without Flash as yet), watching streamed and downloaded films, surfing the web, reading e-books, playing music, reading the newspaper, reading beautifully-produced interactive magazines. . . Oh, and if we can get the iPlayer or Hulu or Project Canvas going inside it, and we’ve got TV, too.

The iPad isn’t a computer. It isn’t a mingy single-purpose mono-screen e-reader that looks like it was designed by a team of visionaries from British Leyland circa 1974. It’s a personal media centre, networked.

The iPad is built for immersive use while sitting on a sofa or lying in bed, rather than the hurly-burly of commuting. Apple will sell fewer of the expensive 3G models and more of the cheaper wi-fi efforts. Bad news, I suspect, for the mobile operators.

Oddly, Apple seems to be hiding its intentions, at least in part, when it describes the iPad – rather boringly — as “the best way to experience email, photos and video.” Better, perhaps, to downplay expectations.

Remember when cinemas were palaces of dreams? The iPad, I fancy, represents Steve Jobs’ effort to build something similar for media consumption in the 21st century.

Think of it that way, and it becomes obvious why Big Media so loves the prospect of this device succeeding. Display content inside a palace of dreams, and the content itself takes on the air of a dream. And dreams, as any fule no, are valuable things.

Steve Jobs has set himself up as proprietor of the cinema at the end of the digital rainbow. Happily, when Big Media looks at the iPad, it sees the opposite of the brutal commoditization and disaggregation that occurs on the web.

Price of admission? In 1937, it cost 10d to get into the average Odeon. The iPad’s palace of dreams will cost you $599. And don’t forget the additional cash you’ll be spending on the side to read journalism – like popcorn and ice cream — during the intermission. Everything you consume in the palace of dreams has a price tag, and the mark-up is usually significant.

The big question surrounding the iPad isn’t whether people will buy it. They will, by the millions. Apple’s costs are already covered.

The really big question is whether, in three years’ time, when the price of an iPad falls to $250/£250, Big Media will have a high-volume audience for paid content on its hands.

PS: It was inevitable, but it’s still astonishing to watch: the coverage is exploding. In the hour or so it took to write this, the iPad story count on Google News has gone from 25 to 5,993. What are the chances, I wonder, of Private Eye running a cover story with Steve Jobs as Jesus feeding 5,000 media executives?

Which newspaper bosses will oppose safe harbour for search engines?

Posted by Peter Kirwan on 12 January 2010 at 16:13
Tags: Media, News International, Telegraph Media Group

Our unelected upper chamber is going to work on Lord Mandelson’s Digital Economy Bill, which resumed its second reading in the House of Lords today.

Ralph Palmer, the 12th Baron Lucas and 8th Lord Dingwall (a.k.a. Lord Lucas) has tabled a string of amendments to the Bill. Cumulatively, they suggest ambitions that stretch beyond this peer’s day job as editor and proprietor of The Good Schools Guide.

Most of Lord Lucas’s amendments (and there are a few of them) sound like sensible attempts to blunt the more extreme impulses of the music business.

Lord Lucas has described the major labels as a “powerful, monopolistic” industry that “seeks to punish [consumers] before thinking of how to serve them better”.

Interestingly, the Tory peer is also proposing what sounds like a British equivalent of the “safe harbour” rules that protect search engines from news organisations launching copyright lawsuits in the US.

Specifically, Lucas proposes “a standing and non-exclusive license” that would protect search engines when they “copy of some or all of the content” on web sites and display them in search results.

Here, too, Lucas seems to be siding with the independent little man (in the shape of Google and the web surfing public) against “powerful” (if not quite monopolistic) media barons like Rupert Murdoch and Gavin O’Reilly.

On this basis, we were intrigued to see that the Lords’ Register of Interests lists Lord Lucas as a “significant shareholder” in Archant.

Can we therefore expect that Adrian Jeakings, the recently-appointed chief executive of Archant, will become the first British newspaper boss to state publicly that Google’s use of extracts in search results really isn’t a problem, after all?

Perhaps Murdoch MacLennan, the chief executive of Telegraph Media Group, will emerge to support him.

Certainly, Lucas’s amendment seems to have gone down well at the Telegraph Media Group, which remains famously friendly with Google.

Ian Douglas, the paper’s head of digital production, calls Lucas’s amendment “brilliant”, arguing that it will save “ill-advised newspapers” from spending millions of pounds on suing Messrs Brin, Page and Schmidt.

Equally, if Lucas’s amendment is approved, it remains unlikely that Google-hating newspaper bosses will remain above the fray. The chances of a lawsuit materialising has always been small: but the threat of launching one remains useful.

No doubt this thought has already occurred to lobbyists who ply their trade on behalf of Rupert Murdoch in and around the Palace of Westminster.

Google + publishers: Push me, pull you

Posted by Peter Kirwan on 10 December 2009 at 19:59
Tags: Google, Media, News Corp

Alternatives to Murdoch’s Google strategy are emerging. The New York Times reports that Christoph Keese, head of public affairs and “architect of online strategy” at Springer wants to work with “Internet companies” to build a “one-click marketplace solution” for paid content.

Google or other Internet gateways would display links to newspaper articles, videos and other content from a variety of providers, as search engines do now. But some of the items would include something new: a price tag.

Meh: not terribly exciting at first glance. But this seems slightly more interesting:

Josh Cohen, senior business product manager at Google, said an online marketplace like the one envisioned by Mr. Keese was an “obvious extension” of the company’s previously announced plans to create an Internet store for digital books.

Google Books? Springer books? Google News? Paid content? Are we talking about content hosted and sold by Google on behalf of publishers? Google as a retail channel?

Surely not. But in the end, there’s no clarity: Josh Cohen, the overlord of Google News, brings down the shutters quickly, offering up the usual boilerplate: “It’s safe to say it’s a global discussion going on with a number of publishers. Publishers are still in the exploratory stages of this.”

We don’t know what News Corporation is up to behind the scenes. Yet Springer appears to be both collaborating with Google and kicking its ass.

For one thing, German publishers seem unafraid of playing the anti-competition card (something that News Corporation has chosen not to emphasise in its campaign against Google):

Publishers say pulling their contents out of Google News, or the search engine, is not a fair choice because of the company’s powerful position on the Internet, leaving them with nowhere else to go; in Germany, Google accounts for roughly 80 percent of Internet searches.

In addition, Angela Merkel’s government has promised an extension of copyright law that would prevent search engines from using text snippets in search results without paying royalties. According to the Times, the proposal has “broad support” among German publishers. No wonder.

In the end, we’re looking at the music royalties model. The Times reports that aggregators and search engines “might be required to buy licenses, much as restaurants, nightclubs or hair salons now need licenses to play recorded music”. A new rights body — much like Performing Rights Society — would carve up the euros and dollars.

Unworkable? Who knows? Deliverable? Probably not. Techdirt is deeply sceptical, suggesting that the proposal was “really designed to gain the current ruling party a bit of support from the mainstream press in Germany”.

Which seems to me to be the point. Google excels at flattering politicians. But newspaper publishers excel at frightening them. The latter technique is far superior.

In all of this, the level of emerging collaboration between rival media organisations is intriguing. The Wall Street Journal reports that Springer is going it alone, but the FT suggests that many others are working together:

Some of the nation’s largest print houses - such as Axel Springer, M. DuMont Schauberg, Verlagsgruppe Georg Von Holtzbrinck and WAZ Mediengruppe - are in initial talks about how to sell content on the web.

For English-speakers, there’s the (still somewhat mysterious) JV involving Conde Nast, Hearst, News Corp, Time Inc and Meredith.

Interesting times. Is the lay of the land shifting beneath Google’s feet? On certain days, it almost feels that way. . .

News Corp vs. Google: What is Murdoch’s endgame?

Posted by Peter Kirwan on 3 December 2009 at 12:43
Tags: Media, News Corp

As News Corporation’s public campaign against Google rolls on, the newspaper executives I’ve encountered find themselves rooting for Murdoch from the sidelines. Like 16^th century ambassadors trying to anticipate the motives of a warrior king, they remain intensely curious about where all of this might lead.

What seems certain is that News Corporation didn’t start out down this route nine months ago without specific objectives in mind.

Murdoch’s logic seems obvious enough. Anti-trust authorities in Europe and the US aren’t willing to take on Google. The alternative of a frontal assault involving copyright law seems to have limited chances of success (although that’s not to say that lawsuits won’t emerge next year as part of a long term effort to build a case).

Accordingly, News Corporation has attacked the only remaining target: something extremely significant, which is prized by Google’s shareholders: the company’s reputation. By trashing Google in public, News Corporation aims to force its adversary to come to the negotiating table.

In speech after interview after speech, News Corporation has lined up a fearsome series of either/or propositions, none of which flatters Google. Roughly speaking, these alternatives have emerged as follows:

Creators vs exploiters

Value vs. free

Payment vs theft

Quality vs quantity

Culture vs. philistines

Brand loyalty vs, promiscuity

Humans vs. vampires

Real business vs. shady dot.com ad sales folk

Baghdad bureau vs. The Blogosphere

Early on, some of this felt like slapstick. But the tone has grown more serious. Murdoch and his henchmen know how to run a campaign in print. They know how to do it in real time, too. Repetition establishes a world view that becomes more and more credible with each iteration. This is corporate realpolitik, delivered with brute force on the public stage.

So what does Google make of all this?

One of Google’s biggest difficulties is that News Corporation has yet to articulate what it wants (at least in public). Instead, Murdoch has devoted his energies to changing the balance of debate. He is bent on making it progressively more difficult for Google to live in its comfort zone.

Google could choose to remain silent, hoping that News Corporation’s bombardment cannot continue indefinitely. But this seems unlikely. If Murdoch starts to turn the tide, a significant, and public, response will be required.

Statements from the PR department aren’t enough. And Google can only depend on third-party defences from the likes of Ariana Huffington for so long.

Yet the territory is uncertain: the corporate PR rulebook doesn’t say much about how Google should react to a global jihad proclaimed by a competitor on this scale. Potentially, the picture is complicated by discussions that may be taking place in the background.

Perhaps Rachel Whetstone, Google’s vice-president for public policy and communications, will draw upon lessons learned during her time as a spin doctor in Westminster. But there’s a problem here, too. The lesson of the Blair years (and the Kinnock era) is that you don’t mess with News Corporation.

Increasingly, Rupert Murdoch’s attack on Google feels like a defining moment for Big Media. News Corporation’s rhetoric implies lofty ambitions. But sheer volume of abuse carries risks, too. If the results generated by Murdoch’s rhetoric fall short of the intensity with which that rhetoric has been delivered, News Corporation will find itself in difficulties.

News Corp vs. Google: Another day, another bombshell

Posted by Peter Kirwan on 3 December 2009 at 12:43
Tags: Google, Media, News Corp

News Corporation’s offensive against Google keeps growing in scale and intensity. Already, the aggro feels much more significant than anything Murdoch has doled out to the BBC in the past.

This week, the sabre-rattling reached new heights, with Murdoch himself, Les Hinton and Robert Thomson all participating in assaults.

So far, News Corporation executives have delivered coruscating anti-Google diatribes in the UK, the US, China, India and Australia. This is a global effort.

In an accompanying post, I try to work out some of implications. For now, here’s a quick summary of how News Corporation’s campaign has developed:

1 December: Rupert Murdoch in Washington D.C.:

“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.” More here.

1 December: Les Hinton in Hyderabad:

“We are allowing our journalism – billions of dollars worth of it every year – to leak onto the internet. We are surrendering our hard-earned rights to the search engines and aggregators, and the out and out thieves of the digital age.” More here.

1 December: Robert Thomson in Washington D.C.:

According to Paid Content, Thomson describes Eric Schmidt, the chief executive of Google as the man who put the “dis” into “disintermediation”. (The problem, it seems, is Schmidt’s alleged criticism of media executives.) More here.

18 November: James Harding, editor of the Times, in London:

“We are going to confront those people who we think represent a serious threat to the future of independent journalism. This means having a conversation with the likes of Google, which extracts far more value from content sites than they give in return.” More here.

9 November: Rupert Murdoch, interviewed by Sky News Australia:

“The people who just simply pick up everything and run with it - steal our stories … without payment.” More here.

1 November: Robert Thomson in San Francisco:

“Marissa unintentionally encourages promiscuity. . . The whole Google model is based on digital disloyalty. It’s about disloyalty to creators.” More here.

12th October: Rupert Murdoch in Beijing:

“The Philistine phase of the digital age is almost over. The aggregators and the plagiarists will soon have to pay a price for the co-opting of our content.” More here.

24 June 2009: Les Hinton in New York

“There is a charitable view of the history of Google. [It] didn’t actually begin life in a cave as a digital vampire per se. The charitable view of Google is that the news business itself fed Google’s taste for this kind of blood.” More here.

6 April 2009: Robert Thomson, interviewed by The Australian

“Google argues they drive traffic to sites, but the whole Google sensibility is inimical to traditional brand loyalty.

“Google encourages promiscuity - and shamelessly so - and therefore a significant proportion of their users don’t necessarily associate that content with the creator.

“There is no doubt that certain websites are best described as parasites or tech tapeworms in the intestines of the internet.” More here.

12 February 2009: Robert Thomson in New York:

“Google — I mean, the harsh way of just defining it, Google devalues everything it touches. Google is great for Google, but it’s terrible for content providers, because it divides that content quantitatively rather than qualitatively.” More here.

Where is all of this leading? What does News Corporation want? How can Google stop the pain? In an accompanying post, I try to tease out the implications.