News Corp rendered asunder

Si fractus illabatur orbis, impavidum ferient ruinae

‘Should the world break and fall about him, its ruins will strike him unafraid’. Rupert Murdoch’s world can, without a great deal of exaggeration, surely be said to breaking and falling about him right now. After months of very public airing of dirty laundry, ranging from phone hacking to bribes at the highest levels of society and government, News Corporation could no longer survive in its current form. Though hidden away, nestled in the hills of the South of France for a short time, the news did not escape Zeitgeist’s notice. The empire, which The New York Times reports as being valued at $54bn, will be split into (increasingly unprofitable) newspapers on one hand, entertainment (movies, TV, cable and publishing) on the other. Murdoch said the split would “simplify operations”, though usually that phrase tends to be used as reasoning for when companies merge, rather than disintegrate.

On a personal note, when working a short stint at 20th Century Fox Film several years ago, it was interesting to see the News Corp dynamic at work. Publications like The Sun were a great place for the company to have articles generated concerning subject matter of the upcoming summer blockbuster we were trying to market. At the same time, emphasising the symbiotic relationship of the corporation, a message came down from up high that one of the team’s proximate objectives in the short-term was to shore up and direct eyeballs to The Sun, even at the expense of our own goals. Such a quid pro quo will no longer be necessary in the future.

Movie Moves

From industry paradigm shifts to Paramount trailers and viral websites…

Zeitgeist has had it’s eye on the UK production company Shine for some time, watching it grow into the powerhouse it is today, all under the stewardship of Elisabeth Murdoch. Elisabeth, married to Matthew Freud of Freud Communications, has seemed to want to keep her distance from the Murdoch dynasty since leaving the fold ten years ago, unlike her brother James, who worked for News Corporation in Asia before taking the helm at Sky in the UK. Indeed, Elisabeth’s husband has – strangely for a man whose career is public relations – made little to no attempt to keep his barbed views of News Corp.’s Fox News to himself, saying he was “shocked and sickened” by the content and bias of the cable network. So it thus came as some surprise to Zeitgeist to learn that a deal was recently completed for Shine to become part of the Murdoch empire for £415m. What this will mean to the independence and creativity of the group remains to be seen. But I suppose if the sustainability-themed Avatar can make it out of the notoriously arch-conservative News Corp leviathan, anything’s possible.

In other news, Netflix has been in the papers again. After announcing it would be partnering with several consumer electronic devices, (Mashable made the analogy of having a Netflix button on your remote control), this week the company announced it was trying to develop a remake of the classic UK TV show House of Cards, with Kevin Spacey starring and David Fincher directing, committing to 26 episodes, “taking it into uncharted territory that would put it in direct competition with HBO and other premium cable channels”, writes Mashable. This will be the first time that the company has commissioned and created its own content, further disrupting models of distribution, which itself is a bit of a house of cards. While Netflix pushes into other companies’ territory, Amazon encroached on Netflix‘s by announcing at the end of last month that they would be offering premium customers access to 5,000 TV shows and movies. Though Reuters points out that moves like these are attempts to “woo” companies like Time Warner and the afore-mentioned News Corp., the reality is more tricky, as the same article points out in the very next paragraph,

Media companies so far are cautious about allowing their content to be used on these types of services because they compete with cable operators that pay a premium to carry TV programs and movies. The fear is that people will drop pricey cable subscriptions — known in the industry as “cord cutting” — in exchange for streaming video offered by Netflix or Amazon for instance.

Yesterday it was reported that Paramount will release a film on DVD and on the peer-to-peer service BitTorrent at the same time, with the latter platform supposedly functioning to incentivise people to then buy the DVD. Might a ten-minute teaser have been better than releasing the entire film? Such a teaser is being provided at the moment by Warner Bros., which recently developed iPad apps for both Dark Knight and Inception, providing the first five minutes of the film for free.

Ten days ago, Facebook announced that it would be getting into the film-rental game, as reported by the FT. This is a broader stroke for Facebook in an effort to create a benevolent ‘walled garden’; an area for users to navigate the web, communicate with who they want and angage in the services they want, without ever having to leave the Facebook environment. Zeitgeist never thought they’d be mentioning the recently-released Chalet Girl on this blog, but Variety reports the film has made an interesting marketing move of releasing an interactive trailer on Facebook, where users have the option of “like”ing the trailer at various points. Peter Buckingham, head of distribution and exhibition at the UK Film Council, sagely points out the novelty of such an exercise for film marketers; “The film industry really has not woken up to how important metadata is”.

There are exceptions, however. This past week saw the release of a trailer for an eagerly-anticipated (by nerds) summer film, directed by JJ Abrams of Star Trek and Lost fame and exec-produced by Steven Spielberg – Super 8. And what is the best way to reach said nerds? Why, firstly by providing a super-nerdy website that doles out microscopic kernels of plot information on the film under the guise of hacking into a computer from the late 1970s, and secondly by releasing said trailer on Twitter (see top image). As Zeitgeist has said before, know your audience.

The Times, they are a-charging – Rupert plans a paywall

The still controversial theory of evolution doesn’t just apply to living things. In any environment, failure to adapt to new circumstances can lead to extinction in an unsettlingly quick manner. A teenaged Zeitgeist’s former weekend employer Woolworths provides a recent example of how quickly a large organisation can crumble to nothing if they don’t change with the times.

Just as the printing press began a process of democratising knowledge and ultimately power, new digital platforms have upset the established forms of distributing media.

Zeitgeist has previously commented on how the film and music industries have attempted to adapt to new consumption habits, the threat of piracy and distribution.

Another industry that has become old fashioned very quickly is print media. Not so long ago, if you wanted to read a book, magazine or newspaper you had to buy one – and the public had no problem with that model.

The growth of the internet and other digital media has not only moved the goalposts, but also drawn new lines on the pitch and introduced video technology.

Why buy a copy of the news as it was at 3am when you can get up to date news for free? Why buy a month-old magazine when there are many blogs and sites offering free opinion?

The old kingdoms are being forced to do battle in a new arena. Their problem in a nutshell is that as consumers move from print to online, revenues drop and barely cover operational costs – if at all. For many, the huge presses and infrastructures that previously provided an effective barrier to entry now hang around their necks like an albatross-shaped noose.

Newspapers simply need to generate more income from their online offering, as The New Yorker wrote in 2008.

One tactic that has been attempted by certain publications is the introduction of a paywall. In short this means users have to pay in order to be able to access content online. If your content is unique and special, people will pay – Zeitgeist parts with hard cash to access resources such as Mintel and Datamonitor and individuals pay to access Which? and Parkers.

The latest titles to erect a paywall are Rupert Murdoch‘s The Times and Sunday Times, which will charge £1 per day or £2 per week for access from June 1st, with The Sun and News of the World to follow soon.

Catch ’em while you can!

The theory behind paywalls is partly ideological – people should pay to access content – why should it be given away for nothing? Compared to the £1 price for the print edition, £2 for a weeks access looks like a good deal to the subscriber. Unfortunately economic models built on ideal rather than actual behaviour rarely thrive. Disappointingly for Murdoch, consumers, even those who favour The Times, will compare the £2 subscription fee with the free online access provided by the BBC, CNN, The Guardian, The Independent, The Mail, The Mirror et al or alternative news sources such as Twitter, Facebook and Google.

Times assistant editor Tom Whitwell accepts that “drive-by traffic will fall significantly”, adding that “The focus is preparing to serve a small, paying audience.”

Quite how small remains to be seen. The recent experiment by Johnston Press to build a paywall around their regional based content is rumoured to have attracted fewer than ten subscribers. The wall was quickly dismantled and no comments have been forthcoming on the failure of the project.

Recent research in the UK by KPMG doesn’t bode well either – only 10% of the people they spoke to said that they were likely to become paid subscibers to ANY media products in the next year.

Worse still, a PCI/Harris Interactive poll conducted in 2009 found that only 5% of people would pay to read their favourite newspaper online.

Even former PM Gordon Brown spoke out against paywalls stating vaguely, “People have got used to getting content without having to pay. I don’t think you are going to be able to put things behind paywalls in the way that people think.”

Nor is this a British idiosyncrasy, with a US study revealing that only 7% of Americans would continue to visit their favourite news site if they put up a paywall.

None of this has deterred Murdoch, who has enjoyed great success with his SkyTV network in the UK, which introduced Britons to the idea of paying to watch a previously free (licence fee notwithstanding) service. Arguably, the main difference is that Sky has unique content and subscribers are paying for all the channels, not for each channel individually. Replicating the model with online news is going to be very difficult to do.

So, will the future of news content provision echo the scenes of 65 million years ago as smaller agile providers succeed while the old, previously dominant organisations struggle to survive? And will paywalls delay or accelerate the decline? Let’s wait and see, there’s bound to be a free site somewhere that will report the result.