‘WERE’S the money coming from?” is the theme of the mammal v dinosaur stoush between ABC managing director Mark Scott and News Ltd’s Rupert Murdoch. It is a battle of survival because without money there is no survival.
The stoush illustrates what a difficult position newspapers are in.
The ABC asserts it will continue to provide content free on-line. Murdoch has asserted News Ltd will begin to charge for content before long.
Sundry commentators in the Murdoch press have said that Scott’s assertion that the ABC on-line content is “free” is absurd given that taxpayers are paying 20 cents a day each for it.
But so what? All that proves is that the ABC has a much more secure business plan than News Ltd. One might equally argue that we are all paying for cheap newspapers and free news websites through the $5 billion in print and internet advertising costs that get loaded on to consumer prices.
Murdoch argues that the free lunch of internet news and commentary cannot go on. He and his son James are fed up with two things.
The first is public broadcasters. James has attacked the BBC, saying its dominance is threatening independent journalism. Well, whose independence would you prefer on, say, a story on China or US broadcasting law – the BBC or News Ltd?
But his real concern was less with the independence of journalism and more to do with the fact that free public internet news made it “incredibly difficult” for private organisations (like News Ltd) to charge for online content.
Meanwhile, Rupert has attacked the ABC. Scott has replied he has a duty not to charge again for content the public has already paid, but with an exception for TV shows which the ABC wants to sell in DVD format.
But DVDs are entertainment. The main issue is journalism. The internet is bringing change, some unforeseen.
At first we thought newspapers would survive because everyone likes to read paper. Then we saw inroads into classified revenues because newspaper companies were too slow to develop their own job, car and real estate sites. Then we saw newspaper websites make better use of video and audio and get more internet ad revenue.
Now comes another threat to private-sector news organisations. The public broadcasters are swallowing the function of online newspapers as they provide more text.
The BBC runs many articles of 400 to 1000 words every day and it produces an edited essential bit of video or audio to support them. This is a powerful use of the new platform. A news reader or journalist to camera speaks at about 100 words a minute. Good readers absorb words at four times that rate.
A public broadcaster can get a lot of information and commentary across using just essential vision and more text, while stripping away all the voice-over meaningless vision of people walking along corridors, opening doors, sitting at desks, turning pages getting into cars and the like which fill TV bulletins.
The BBC has a budget of about $300 million for just the website which also gets access to other BBC content for nothing. It delivers up to 40,000 pages a second at peak times. And it carries some advertising. This is overwhelming competition for provision of online news — even for News Ltd.
The ABC is travelling in the same direction. Its total budget is about $800 million.
Small wonder the Murdochs are railing like cold-blooded dinosaurs as the busy warm-bloodied mammalian public broadcasters scurry about gathering and propagating.
The second thing agitating News Ltd is Google and other search engines. Rupert says they are stealing News Ltd content and breaching copyright. Google says its excerpts are legal fair dealing and send a huge number of viewers to newspaper website giving them traffic and therefore ad revenue.
It does not matter who is right. The fact remains that many people are coming to news websites via search engines, and revenue is leaching to those search engines whose advertisers’ ads pop up every time someone retrieves results comprising content provided by the newspaper websites, which get little or none of the revenue.
You do not make money because you produce something; you make money because you sell it. News Ltd and other newspaper websites would dearly love to see the back of the public-broadcaster websites and of the search engines so they can make more money by selling direct access to the site and access to content via search engines.
But the public broadcasters and search engines will not be seen off that easily. New Ltd and the other newspaper companies are going to find business models that work in the new environment. Otherwise there will be less money overall for journalism.
But I don’t think charging for content is the answer, particularly for The Australian which has only national and international coverage which is readily available free elsewhere. If News Ltd charges for access to, say, Paul Kelly or Dennis Shanahan, any number of other free prolific pontificators will take their place.
Rather the answer is in changing the printed version. City-based newspapers should do less daily national and international news in print and use print for local material which is not available elsewhere online and for longer reads which people prefer on paper.
I think print has a fair way to go and it still attracts $4 billion of Australia’s $13 billion revenue. But its portion is falling and internet advertising is rising.
A surefire way of making newspaper companies’ revenues fall further is to charge for online content. That will reduce traffic; reduce word-of-mouth promotion and reduce the effectiveness of advertising on the site. Reducing profits and cutting costs might be more effective.
It is important that newspaper companies in print and online remain viable to produce the journalism essential for democracy. It would be a pity if short term pique and greed result in long-term extinction.
The article first appeared in The Canberra Times on 24 August 2009