Advertisers Bailing On Murdoch's Paywalls As The Company Won't Reveal How Many People See Ads

from the not-looking-good dept

A few weeks back, we pointed to reports suggesting that Rupert Murdoch’s paywall experiments with The Times and Sunday Times in London were a disaster, as nearly everyone — readers, journalists, advertisers and publicists — were bailing on the publications. Soon after that, however, Murdoch’s News Corp. announced plans to also put the big UK tabloid News of the World behind a paywall, with some suggesting that James Murdoch (Rupert’s son, who is leading this effort) was seeing success with the other paywalls. However, the evidence on that is still lacking. Instead, we’re hearing more and more reports that suggest serious trouble for the Murdochs, father and son, as they double down on an economically dangerous strategy.

Simon Dumenco points us to a recent Bloomberg piece that quotes a guy from ad firm Starcom MediaVest, saying that they’ve cut their ad spend on the Times and Sunday Times by more than 50% because News Corp. won’t share with them traffic numbers:

“We wouldn’t put our money where we don’t know the numbers, just as you wouldn’t invest in a stock,” [Starcom’s Chris] Bailes said.

Separately, Bailes notes that, thanks to competition, there are better places to spend their money:

“I can go to the Guardian or CNN and get an audience… No one is indispensable.”

Of course, we were among the many, many voices that suggested James Murdoch brush up on his economics before pursuing this strategy. Now that he’s doubling down, I’d have to, once again, suggest that he update his economic analysis.

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Comments on “Advertisers Bailing On Murdoch's Paywalls As The Company Won't Reveal How Many People See Ads”

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out_of_the_blue says:

Sorry: Murdoch can probably sustain losses indefinitely.

One of the points about being super-rich not well grasped by those who aren’t is the sheer scale of the numbers, frequently so large that only full-time insanity could spend it down. Let’s say that Murdoch arbitrarily picked that he’ll risk $1 billion on this experiment. Picking 5 years as the period, he can lose $548,000 dollars EVERY DAY of those five years. — And of course never miss it, won’t go hungry.

And he has accountants to figure out how to write it off to least loss, if not advantage (The Rich used to buy failing business as tax shelters). This is only a small part of the empire, perhaps a deliberate money sink for tax advantage. So don’t rule this out just yet. My guess is Murdoch has decided on a long slog. He may have to yield here and there to keep advertisers, but if he chooses not to, he won’t have to give in while it’s current enough for you to crow about.

out_of_the_blue says:

Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.

In brief, yes. But we don’t *know* that it’s even a bad business plan, because of possible tax advantages.

Overall, billionaires aren’t subject to the constraints that you’re used to, of limited income for instance. Murdoch still has *tons* of money rolling in. Whether he’s fixated on this — and mollifies shareholders by putting money in — is unknown. He may be literally crazy, it’s frequent among the rich, or have goals unknown to us that he values more than money.

But it’s definitely annoying arrogance to think that Murdoch doesn’t know what he’s doing, nor does his army of accountants, and began this apparent folly without a clue. Pretty near certain you’re going to be disappointed if you look for him to be on relief anytime soon.

Crosbie Fitch (profile) says:

Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.

Of course he knows what he’s doing.

He’s seen what the recording industry is up to (lobbying for an ISP levy), so he’s doing the same: demonstrating that:
1) News-sharing scum are ruining his business
2) There is no possible solution viz ‘paywalls don’t work’
3) He’ll quietly poo-poo any idea of a free market in news
4) He needs an ISP levy to compensate for loss of monopoly
5) Profit!

You can’t ask for a levy unless you’ve been able to kid the public (& their politicians) that it’s their fault your business has failed.

Effectively shuttering online newspapers, that weren’t earning much anyway, is not expensive if you’re going to end up with a levy at the end of it. Remember, a levy is just a cash handout. You don’t even have to do any work for it. You just have to show that people are copying your news (or olds) stories contrary to an 18th century privilege called copyright that granted a reproduction monopoly to the press*.

* No-one ever says “Er, hang on? Why did anyone think it was a good idea to sacrifice the public’s liberty to share news with each other in order to enrich the press?”. The answer is it fitted the desires of the state to suppress sedition (which a beholden press would do). ACTA is a reprise.

Crosbie Fitch (profile) says:

Re: Re: Re:4 Sorry: Murdoch can probably sustain losses indefinitely.

Quite, this is why the recording industry wants to charge radios for playing their music, whilst at the same time wanting them played.

If you get to charge a fee, you get to reduce or waive it. You also get to own the channel, i.e. no-one else can afford the fees apart from radio stations owned by those who get to charge it.

Same thing works for Media moguls and the ISPs they own. They may well end up being the only ones who own ISPs able to afford the compulsory license fees.

Draconian copyright enforcement is simply softening the public up so they’ll beg for an ISP levy.

The state lets it happen because they fancy augmenting the levy with a tax (and enjoying the ability to censor/exclude anyone from the Internet they don’t like).

pancakes_to_the_blue says:

Re: Sorry: Murdoch can probably sustain losses indefinitely.

A. hua?

B. It’s a public company, Murdoch has to answer to the shareholders and board of trustees. It’s not really his company.

C. There is no such things as “fixed cost” when talking about enduring sustained loss as a company. As in, the advertisers leave, they goto Google or wherever and the property becomes that much less relevant to the industry. You cant put a price on mind share. If you try, it’s usually staggering. Just ask Microsoft.

Michael Bazelewick (profile) says:

Best Paywall Is Subscriber Base

Provide “subscribers” easy access to additional online information, information that can only be accessed with the hard copy in hand … enter a keyword link that appears in print and the related information is opened instantly. A simple example would be to tag a baseball story with a keyword link to a free Red Sox screen saver … no online links, you need the printed keyword to get to it. Or, a link to coupon for deal of the day … additional pictures, video links, backgrounders … tons of other examples that could give readers a RTB.

Derek Kerton (profile) says:

Wow. Nailed it?

Mike, in your Sept 7 post on Murdoch, one Anon Coward said we just want “content for free” but that we’re fools because news will die: “Take a seriously look at what’s being provided [news] and how much it would cost to produce it.”

I commented back that his cost-based accounting view of news could also be applied by a fictional advertiser, ACME who says:

At ACME, we bring tremendous value to your newspapers, Murdoch. We give you the money that keeps the journalists paid, and keeps the lights on. All I ask of you is that you deliver me an audience, and I’ll keep giving you the money.

But now, you want my money for free? You want to cut the audience by 90% and you expect me to continue paying your bills? [and paraphrasing anon coward] “Take a serious look at the money I’m providing, and how much of an audience it would take to make it worth it.”

Did I get that right?

Hans says:

News Pirates

The news pirates have killed the news business. They’ve killed it I tell you. Murdoch was forced to put up a paywall to protect his property that was being stolen. Now his advertisers are leaving, and his revenue will plummet. Someone needs to do something to save the news business. The government should step in and protect all those jobs. Think of the children growing up without a free and open press. Think of them never knowing the feeling of a real newspaper in their hands. Oh the humanity.

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