Murdoch: Regulators, Freeloaders Obstacles to Media Future

Rupert Murdoch sees a future in journalism. With newspaper circulation at post-war lows and major dailies shutting down in a number of cities, he may be one of the few optimists left. But first, Murdoch claims, the American government must change its obsolete and destructive regulatory policies that, he says, are preventing major news outlets from competing.

"Good journalism is an expensive commodity," Murdoch told an audience at a Federal Trade Commission workshop on the future of journalism today. "Critics say people won’t pay, but I say they will. But only if you give them something good." Murdoch has announced plans to institute paywalls for all online content offered by his giant news conglomerate, News Corp.

Though Murdoch is confident that paywalls would more than make up for revenue lost by shortfalls in advertising dollars, other newspapers' experiences with the system have failed to do so. The New York Times in 2005 began charging for many of its columns, but eliminated the paywall after revenues failed to outweigh advertising dollars. Still, there are a number of unexplored options for online news payment schemes, and Murdoch is no rookie in the news business.

In order for News Corp. and other media companies to charge for their content and remain competitive in a digitally-dominated news environment, he believes, two things must happen: news aggregators such as Google News must stop disseminating content for free, and the United States must change its arcane media ownership rules.

Murdoch has attempted to address the former most recently in talks with Microsoft about eliminating News Corp. content form Google's aggregator and making it available only on Bing, Microsoft's competitor to the search engine giant. Google and other aggregators claim that their services help media companies by directing traffic to their sites. Murdoch disagrees. "To be impolite, that is theft," he said.

While some media commentators have floated the idea of "newspaper bailouts," Murdoch said such a plan "ought to be chilling for anyone interested in public speech." NewsBusters has argued on numerous occasions that such a plan would restrict free speech and politicize the news business.

Rather, argued Murdoch, the FTC must reconsider some of its outdated media ownership rules that unduly restrict companies such as News Corp. Many FTC media regulations were created long before the advent of the Internet, and hence did not take into account the vast potential of the Web to provide robust competition in the news business.

Rules such as a ban on single-company ownership of a newspaper and a television station in the same town have been rendered meaningless, argued Murdoch, in an age when a digitally broadcasted video program aired from the opposite end of the globe provides a competitive counterbalance to television programming.

The advertising-based model on which the news industry has relied for decades for profit is gone, never to return. But Murdoch believes that media companies can still make money by offering quality content. But without a change in media ownership rules, the business simply will not be able to compete with outlets that offer content for free. If those rules are changed, media companies can streamline their operations and stay competitive through cooperation.

Murdoch's sentiment is sure to draw fire from critics who worry about media monopolies. But the question he raises--and it is a valid one--is whether there can be such thing as a media monopoly in the digital news age. If a lack of competition defines a monopoly, than even the immense News Corp. cannot fit that definition.

The paywall idea may seem very appealing to Murdoch due to his success with the model for the Wall Street Journal. But the Journal has a pre-defined readership due to its business-centric content. Readers may be more reluctant to pay for the general news offered by News Corp. outlets such as the UK Guardian and the Australian, or more tabloid-esque publications like Murdoch's UK Sun and News of the World.