How to Monetize the Internet While Protecting News Corporation – Rupert Murdoch’s Dilemma

Following a much publicized recent interview of Rupert Murdoch – CEO of News Corp. the question of setting up pay walls around the web is back as Mr. Murdoch says he’s likely to set up a pay model and pull all News Corp. content off of the Google Index (what that means is that if you use Google to search on the internet all News Corp. content will not show up). Mr. Murdoch sees the internet very clearly – those who will pay for News Corp. content and those who will not – and he at least right now views those who “find” News Corp. content as simply “Just Search People.” It is nearly impossible for someone of Mr. Murdoch’s experience to not be able to recognize that by a simple review of mortality rates he will be able to determine the exact date in the future when the world will consist on only “Just Search People” which is at this point consists of everyone under 40, most people under 50 who use a computer on a daily basis and even a good handful of the rest of the population so something else is likely motivating Murdoch to speak out.

Following the purchase and subsequent failure to keep mindshare with the MySpace acquisition, along with the continued rise of Facebook and now Twitter, News Corp. is attempting to leverage their content not so much so that the consumer will pay for it but rather so that Google will pay for it, much in the same way the Associated Press is attempting to restructure the data table. Google has been very public in saying that if anyone, News Corp. included, does not want to be indexed by them the procedure for opting out is very easy.

Of course there is also the possibility that News Corp. purchased MySpace with the intention of always trying to focus the social network into a News Corp. promotional vehicle and barring a successful reinvention of MySpace under those terms News Corp. was always willing to allow MySpace to slowly wither away, particularly already having put the lucrative Google search deal in place. This scenario seems unlikely although it would serve two goals; killing a potential competitor for eyeballs and also allowing News Corp. to further the claim that pay walls need to be enabled throughout the web as a strictly ad based model does not work.

Another view might be that those like Murdoch art too comfortable controlling what you as a media consumer are allowed to consume and that they simply do not want to let go. In fact a great deal of their stock value is likely hinged on this simple fact – they might not control the pipes but they certainly have dominated the message. The internet of course offers an alternative view on who controls the message – simply anyone willing to publish is allowed the opportunity to do so.

But in this case, I think the truth is a little easier – News Corp. is late in coming to terms on where the value is heading and they unfortunately like many in the mainstream media have too much capital invested in their own infrastructure to adequately support a model other than the one which they’ve built. The traditional model of mass media is in conflict with the new user based one-to-one media model that is being realized on the web today and as Murdoch correctly pointed out in this same interview – there is no possible advertising model that can support the new publisher appetite to produce content – at least certainly not at the price point where Murdoch lives and not at the margins that News Corp. and it’s investors have come to expect. The realization that the mass media model is facing a severe challenge has led Murdoch to make an attempt at playing offense although likely it is less a case of too little too late, but rather a case simply of technology moving to reinvent the consumer experience. Or maybe it’s simply that Murdoch is spending too much on content relative to what it is actually worth, at least in web terms?

What it means for you, me and the rest of us is hard to say but as I look at the universe as it exists today, there seems to be a considerably greater premium being placed on technology over content – possibly as this wave of technology begins to mature we might see the pendulum swing back towards content, although I have a deep seeded suspicion that while that may be the case, likely the advertising dollars will begin to move away from the mass media only model and we’ll begin to see a much greater reallocation of money pouring into the individual publisher which in turn will create a great content revolution. There will certainly be a place for the big media companies, but likely with some ad money being placed elsewhere there is a big question mark on whether they’ll all survive, Murdoch’s empire included.

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