Rupert Murdoch’s Misunderstood Plan to Institute Paywalls Might Just Work
If he were still alive today, the legendary and unconventional San Francisco ad man Howard Gossage might be the only person around voicing support of Rupert Murdoch’s plans to turn his content into a walled garden. While I don’t agree with Murdoch’s political views, I am an ardent disciple of Gossage, and so to me this application of his principles is worth exploring.
In August 1965, Gossage published an essay entitled “Our Fictitious Freedom of the Press.” This piece expressed one of many seemingly contradictory perspectives held by “The Socrates of San Francisco,” given his position as the head of an ad agency: it took issue with the very fact that publications relied so heavily on advertisers.
In this century we have seen effective control of our press shift from the public, for whom it presumably exists, to the advertiser, who merely uses it to sell his wares to the public. It has shifted so much that the life or death of a publication no longer depends on whether its readers like it but whether advertisers like it.
If you doubt this, consider that well within our lifetime over half of the daily newspapers in this country have folded and that most of them have done so with their circulations more or less intact; that magazines with circulations into the millions have gone under not because their readers didn’t love them, but because advertisers didn’t.
Gossage goes on to explain how we got into this mess in the first place:
Originally, a publication was almost wholly dependent upon its readers for financial support and therefore charged them accordingly; if a magazine was worth five cents, they paid five cents for it. However, with the growth of advertising the publication enjoyed more and more income from paid space. Now this was a very pleasant situation indeed: the advertising revenue was, in effect, found money. Moreover, it provided yet another reason for getting new readers: more could be charged for the advertising as more people bought the publication — still at a profitable five cents. Now here was an incentive plan. My God, how the money rolled in.
But not for long. At some point two opposing economic spoilsports — rising production costs and competition — started to ruin the whole lovely thing. On one hand it was necessary to raise the price to the reader; on the other hand it was desirable to keep the price down so as to attract more circulation and more advertising dollars.
Well, the publication couldn’t do both, so it made a decision, a fateful one as it turned out, for it thereby committed itself to an increasingly irreversible course, which it still pursues. It probably didn’t seem like much of a decision at the time, however. Why antagonize the customers and help the competition by raising the price from a nickel to a clumsy figure like six cents? No, what we’ll do is give the reader a break so we can keep up the circulation and get more advertising.
Some break. On the day the reader first bought a publication for less than it cost to produce he lost his economic significance and became circulation. Moreover, he traded off his end of freedom of the press. It was a forced sale; the publisher had already traded off the other end. Of course the editor was still free to write anything he wished without government censorship, but there are other freedoms upon which this freedom depends — the freedom to publish, for instance. Is freedom to publish really significant if the power to kill it has been assigned to outsiders? … None of it means a damn if the rug can be jerked out from under it by a third party.
Gossage offers a solution: forgo the allure of advertising revenue, and return to a sustainable model of subscription pricing.
Do you know what I’d do if I had a magazine that was in trouble? I think I’d change it back more or less to what it was before…. At least I’d try to give them the same feel. And then I’d let the readers in on the act: I’d write them all letters and explain to them what I was doing and why I was doing it. I think I’d level with them about some of the economic facts I’ve talked about here: of how effective control had slipped from their hands into the hands of advertisers, and that to readjust this imbalance we were going to cancel all trick subscription deals and raise the price from, say, twenty-five cents to forty cents or fifty cents, whatever it took to do it. And I’d tell them that the net result might be that the circulation would go down to perhaps three million, but they’d be the three million subscribers who really wanted the magazine; it would be their magazine, not something put out to cadge advertising revenue. If advertisers liked it, fine, but that was incidental to the purpose of putting out a magazine in the first place.
This story is eerily familiar (once you account for inflation). It’s been a big year for magazines closing their doors, and everyone is struggling to figure out how to save journalism.
One man has announce a bold, reactionary approach. Rupert Murdoch wants to stop giving away his content for free, and even go so far as to shut Google’s crawlers out of News Corp media properties. In an interview with Sky News, Murdoch discussed these two key elements of his plan.
In the age of transparency, of “new media,” this is heresy. Some even find this idea laughable. Mashable, a leading voice in the social media echo chamber, provided their analysis in a post titled “Rupert Murdoch Plans To Hide His Sites From Google, The World Yawns” back in November:
I honestly can’t understand what’s his plan here. If he plans to charge for websites, why hide them from the search engines? If you can’t actually read the content without paying, then making the content at least partly accessible to Google and other search engines can’t hurt? In fact, the WSJ that he mentions as an example isn’t hidden from Google’s indexes, you can easily find Wall Street Journal articles via Google.
This is just one part of the quite lengthy interview, but it all boils down to this: Mr. Murdoch is not ready to accept any of the changes brought forth by the Internet and the social media movement. Moreover, he doesn’t seem to understand how some parts of it work.
[Does anyone ever step back and reflect on how much "the social media movement" sounds like a cult? Just calling it a movement makes me shudder.]
I don’t mean to imply that Mashable is alone in laughing (or yawning) off Murdoch’s plan. It’s an easy position to take because his approach seems so counter to what we think we know about successfully producing content on the web; it’s just so un-Cluetrain Manifesto. But that alone is not enough reason to discredit it just yet.
News Corp’s chief digital officer, Jonathan Miller, later provided some additional context on the plan.
There is real tension surrounding the free versus pay debate. It will play out in the next two years. We believe that the value of high quality content is not recognised online [by giving its away for free] so something needs to happen.
He also went on to explain why News Corp is willing to give up all of the traffic coming from Google:
The traffic which comes in from Google brings a consumer who more often than not reads one article and then leaves the site. That is the least valuable of traffic to us… the economic impact [of not having content indexed by Google] is not as great as you might think. You can survive without it.
An interesting observation. Sure, Google is driving millions of visits a month to News Corp properties, but maybe those visitors aren’t really worth all that much — a visitor is not a visitor is not a visitor. They apparently don’t contribute to time on site. It’s not hard to imagine (although I’m just speculating) that they’re significantly less likely to support News Corp’s advertisers (i.e. click on banners). And they certainly aren’t the folks who are going to be willing to pay a subscription fee for News Corp’s content.
So in fact, it seems Murdoch might not have all that much to lose by closing his doors to freeloaders.
In the end, of course, it will come down to Murdoch’s ability to convince his most loyal readers of the value of a paid subscription to what will necessarily have to be content of the highest quality. His pitch to them is simple: you will receive a superior editorial product as the result of the increased independence from advertisers and search engines. If he can deliver on that, he might just discover a sustainable model for journalism — in fact, the original model. Stay tuned.
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