I’m no big fan of Rupert Murdoch, but I think he’s right about Google and newspapers. Something has to be done about the fact that search engines get a completely free ride sourcing millions of articles on the Web…and then taking most of the advertising revenue.

Murdoch called Google’s actions “theft” at a Washington forum on the future of newspapers. That’s true, although it’s akin to leaving your trunk open and then bitching when your laptop is taken.

The question is how to fix the problem.

Murdoch’s own Wall Street Journal may have part of the solution, although it predated Murdoch’s acquisition of the newspaper.  The Journal is the only mass market newspaper I know of that gets away with charging for its product on the Web. If you want to read the full text of the newspaper online, you need to either have a subscription or pay $50 a year.

You can get away with that if you have a product so valuable people are willing to pay for it. But not if your competitors are willing to provide the same news when you start charging for it.

So one piece of the solution will undoubtedly be a consortium of publications willing to band together to charge — say, accessing all the articles from the L.A. Times, New York Times and San Francisco Chronicle for a set monthly fee.  That, and pressuring Google to give up a small piece of the billions of dollars it makes off newspapers’ backs.

Posted under Michael's Blog

Some of us still remember ten years ago, when then-Los Angeles Times publisher Mark Willes (aka “the cereal killer” ) had the Staples Center pay for the paper’s reporting about said center’s launch. Happily, Willes is no longer at the newspaper, and this time, the L.A. Times’ special section advertising writers penned articles about Staples’ 10 year anniversary. The L.A. Times is still suffering financially, but it’s no longer sacrificing journalistic ethics to survive.

Posted under Michael's Blog

Adult actress Savannah Stern eats crow, according to L.A. Times

The L.A. Times’ expose (sorry) of porn’s woes capsulizes the dilemma the Internet poses for all content: consumers are willing to settle for less-than-stellar products on the Internet rather than shell out money for higher production values in DVDs, CDs, etc.  The availability of free porn on sites like YouPorn, PornHub and RedTube is apparently eating deeply into the porn industry’s profits, providing a glimpse of the mainstream DVD market’s future. “Today, instead of leading the way up (in technology adoption), porn appears to be leading the way down,” the L.A. Times’ Ben Fritz writes.

The irony, of course, is that the L.A. Times is itself getting killed by free content on the Internet. Why subscribe when you can get everything you want from the paper for free on the Internet? And no one can pretend that all those banner ads on the Internet pay more than a fraction of what the paper’s display ads pay.

But porn may still have some upside lessons for media companies. Free porn video sites get huge traffic, and the marketing manager for PornoTube told the L.A. Times the site’s real value was in driving customers to paid video-on-demand. No reason why the L.A. Times can’t put up a story on porn, but charge for access to videos of their reporters interviewing porn stars, research reports on the DVD business or discounted movie tickets.  See, you can still learn something from porn.

Posted under Michael's Blog, Video

You know things are bad in the newspaper business when you wonder whether you should resubscribe to your favorite newspaper as a charity gesture.

Times are hard, and I’m still questioning whether I should renew my subscription, when I get everything I want online.

Then I read that my favorite newspaper’s revenue dropped 13.9% and, most worrisome, that its Internet revenue slid along with it. As Forbes notes, “those online revenues continued to account for a bigger and bigger piece of a smaller and smaller pie.”

I still remain convinced that the digital future of newspapers is strong. New technologies (successors to the Kindle and the iPhone) will bring serious readers back into the fold, even as paper dies. I just hope the New York Times and other newspapers can survive until then.

Posted under Michael's Blog

Print Media in Digital Age Discussed at Milken Global Conference

Former Wall Street Journal Publisher Gordon Crovitz  phrased the problem facing newspapers succinctly: "Print revenue has declined much faster than online can be built up," he told the audience at the Milken Global Conference. "We’re trading newspaper dollars for online nickels."

The newspaper business is a microcosm of the dilemma faced by all traditional media: How do you move to a new medium you know is your future, when the financial model isn’t worked out?

Philadelphia Inquirer Publisher Brian Tierney, for example, told how he traded a $700 two-day ad in the newspaper ad for a $300 online spread for a week — and explained that it was the right decision because the client and readers were better served.

So how will he stay in business?

First, "focus like a laser beam" on costs. He’s cut 40 or 50 journalists from the staff as well as a number of ill-defined positions, eliminating about $40 million in costs along the way. (I wonder, though, if that’s an example of curing the problem and killing the patient).

Second, know his market and push it aggressively online. "When you read about Philly, we want to dominate that market," he said.

By being that kind of local resource, he estimated, the Los Angeles Times has generated more than $100 million in ad revenue. It’s "not a pipe dream" to push the Inquirer’s online ad revenue from $25 million to $75 million.

See Also

• The Future of Print Media: How to Adapt to the Digital Age

Posted under Uncategorized

As global stocks skid today over fears of a U.S. recession increase, I’m noticing an interesting interrupt between companies and the people who work for them.

Among our customers, companies are still investing in new technologies and marketing. But the individuals who work for them are nervous about the future, and, in some cases, worried about their jobs.

Venture capitalists still appear excited, especially about "next-big-thing" technologies like green. Newspapers are in the doldrums and laying people off in droves. So are the studios, still mired in a post-writer’s strike hangover.

So the $100 billion question is: how much worse does it get?

See Also

• European Markets Fall Sharply
• US Stocks Drop, Led by Financials; JPMorgan, Citigroup Fall

Posted under Uncategorized

On a day when financial woes caused the Los Angeles Times to fire its editor and the Orange County Register to can its business section, I found myself thinking about Amazon’s Kindle.

The Kindle, you’ll recall, is an ebook that allows you to wirelessly download any of 90,000 books over a 3G cellular network — as well as news and views from the New York Times, Time, the Huffington Post and dozens of other outlets.

It’s essentially a computer that downloads stuff from the Internet, the same type of gadget journalists are always complaining is stealing away their business.

The main difference is form factor and readability. The Kindle is about the size of a paperbook book and uses a technology called electronic ink that gives a reader the sensation of reading words on a page.

It exemplifies the best of both worlds: the accessibility of the Internet; and a comfortable reading experience that no computer or PDA can match.

Admittedly, there are plenty of flaws in the first Kindle: monochrome, inability to surf the Internet, no video and a rather ugly design. But those flaws will surely be addressed in future versions of Kindles — and its soon-to-be numerous competitors.

For newspapers, the implications are huge. Their biggest threat, the Internet, is now their delivery boy. They can reach an infinite audience and they eliminate their huge newsprint costs. They can update stories instantly and add video.

Most importantly, the readability of an ebook (or perhaps better, a connected book) mean that the over-30 set, who could never imagine sipping a latte and watching their computer screen, will feel perfectly at home once they’ve gotten used to the novelty.

And even my kids would surely prefer connected books to booting up their computers or squinting at their PDAs every time they want to read something.

We’re talking about a 10 to 20 year span, I’d think, before connected books replace the printed page. But the writing, as they say, is on the wall.

See Also

• O.C. Register to Drop Its Business Section
• Why Los Angeles Times Can’t Keep an Editor

Posted under Uncategorized

The hoary Financial Times is belatedly responding to Murdoch’s plans to make the Wall Street Journal’s copy free online.

Later this month, the FT will start making up to 30 pages available for free to non-subscribers — a retreat from its steep $180+ online charges, about twice the WSJ’s charges.

The two newspapers are virtually alone among major papers in their ability to get millions of customers to pay for their product — a fact directly correlated to their ability to instantly move markets.

The fact that even the FT and the Journal are going free speaks volumes about the growing clout of online advertising and the growing expectation among consumers that they deserve information for free. 

I’ll be especially interested to see how all this impacts my former employer, Bloomberg, which still manages to charge $1,500-plus a month for the right to access its news and financial data stream.

See Also

• INTERVIEW: New FT.com Model To Boost Ads, Subscription

Posted under Uncategorized

As a young reporter, I was slipped a copy of the Wall Street Journal’s stylebook by a friend and former Journal employee.  I spent weeks studying how to build their famous "A-head" articles (those daffy articles in the middle of the front page), ledes for stories (yes, it is spelled that way), nut graphs and, most important, its rules for attribution and fairness.

If Rupert Murdoch succeeds in his bid for the Wall Street Journal, the Journal as we know it could disappear. In its place, we may find the biggest blogging platform ever launched for one man’s right-wing views.

Now, I’ll be the first to admit I’m liberal. (Don’t get me started on Iraq). And yes, this blog is biased. But I’m not telling you it’s news. It’s commentary.

Fox News is supposedly news. But anyone who’s spent any significant time watching it knows it has a significant right-wing bias.

Puh-lease don’t talk to me about the liberal media bias. Let’s say it exists. But any self-respecting newspaper or news source doesn’t present opinion as fact, doesn’t leave out the other point of view, doesn’t launch diatribes in the middle of a news program.

Those are all offenses I’ve seen committed on Fox News in the happily few times I’ve viewed it. I’ve only in the rarest instances seen blatant disregard for commonly accepted journalistic practices in the New York Times, the Los Angeles Times and the Wall Street Journal, which I read every day (Plagiarism aside, of course. That’s not as important, right? Just kidding).

Pardon me? You say the Wall Street Journal is well-known for its conservative views? Well, yes. The Journal’s editorials are somewhere to the right of the late Barry Goldwater. In fact, when you Google "Rupert Murdoch Wall Street Journal”, one of the first things you come up with is a 2004 article by Murdoch in the Wall Street Journal praising our dear President.

But Murdoch’s article appeared in the Opinion section, where it belongs.  Until now, the Wall Street Journal has  known the difference between opinion pieces (those are blogs on paper, youngsters) and objective reporting.

I’m not sure Murdoch does.

See Also

• Murdoch’s 2004 Wall Street Journal opinion piece
• Rupert Murdoch Built Global Media Empire with Bold Moves
• My recent blogs about media

Posted under Uncategorized

Chicago real estate tycoon Sam Zell — flush from buying Tribune Co. — made a fascinating hint yesterday in a Bay Area speech.

"If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do, and how profitable would Google be?" he’s quoted by the Tribune-owned L.A. Times as saying.

Now remove the word "newspapers" from his statement and insert "record companies" or "TV programmers". See why it’s fascinating?

Google, of course, would never outright steal music or TV programs from their august owners. But if pirated music videos end up on YouTube, hey, that’s showbiz.

Now, on to newspapers. So far, the Fourth Estate has made nary a peep about Google getting all that good news copy for free. Nor has it filed suit, like Viacom did last month against YouTube to punish it for letting users upload clips from The Colbert Report, South Park and other Viacom-owned material.

Could Zell, the consummate dealmaker, be considering a middle course? One that let’s him have his cake and eat some of Google’s, too?

Let’s suppose Zell went to Google and said, "Look, guys. It’s been a good run. But we’re being eaten alive. You need to cough up some of the revenue you’re taking from all those little ads on the side of the L.A. Times stories in Google searches.”

And he might just cough politely and mutter "Viacom" under his breath. They’re smart in Silicon Valley. They know a veiled threat when they hear one.

Google, in its own way, is a content pipe –just as T-Mobile and Vodafone are content pipes for the dozens of so-called "off deck” companies who use mobile operators’ air waves to sell everything from sex to silk slippers.

Except T-Mobile and Vodafone are smart enough to recognize a paradigm shift when they see one. They make those off-deck companies pay freight. And they make a fortune in the process.

So I’ll be fascinated to find out if Zell was indeed hinting at  a middle path for reinvigorating newspapers. Google him in a few months and check it out. That’s what I did.

See Also

• Papers, Web firms need ‘a new deal,’ Zell says
• Can rich Americans save newspapers?
• Is Google Too Powerful?

Posted under Uncategorized