Rupert Murdoch's News Corp: Still Failing To Understand The Internet After 20 Years Of Flops

from the profound-social-cost dept

Rupert Murdoch’s News Corp has a surprisingly long — and stunningly unsuccessful — history of trying to become a major force in the Internet world. This goes all the way back to 1993, when it rather presciently bought an online company called Delphi Internet Services. Unfortunately, after that smart early move, News Corp clearly had no idea how to build on the community that formed around the company, and Delphi was soon completely eclipsed by AOL.

In 2005, News Corp had an even bigger chance to establish itself as the leading Internet company when it bought MySpace. For a while, MySpace was the most popular social networking site in the world, and surpassed Google as the most-visited Web site. But again, News Corp managed to snatch defeat from the jaws of victory: MySpace was eclipsed by Facebook, and in 2011 News Corp sold the site for $35 million — rather less than the $580 million it had paid for it six years earlier.

It is against that background of an apparent inability to understand the basic dynamics of the online world, and how to make money there, that we have the following press release from News Corp:

Early last week, in a letter to European Commissioner for Competition Joaquín Almunia, News Corp Chief Executive Robert Thomson opposed Google’s settlement offer with the European Commission, saying the internet giant is “willing to exploit its dominant market position to stifle competition.”

Coming from a global media organization that has a dominant market position in several countries, that’s a little rich. But it gets better:

Citing Google’s “egregious aggregation” of content, Mr. Thomson said that, along with serious commercial damage, there is a “profound social cost” to Google’s actions. “The internet should be a canvas for freedom of expression and for high quality content of enduring value. Undermining the basic business model of professional content creators will lead to a less informed, more vexatious level of dialogue in our society.”

Google doesn’t “aggregate content”: its main search engine provides links to pages based on their popularity, while Google News uses snippets that link to the full article on the publisher’s site (with no advertising on the Google News page.) As for the “commercial damage”, Techdirt has written several times about the fact that publishers are at liberty to withdraw from Google’s index if they really don’t like it, as well as the fact that those who do so soon come back when they find their traffic falls dramatically.

But that misunderstanding about Google’s non-existent “aggregation” is nothing compared to the hypocrisy of claiming that there is a “profound social cost” to Google’s actions. Many would say that the social cost of News Corp’s large-scale phone hacking in the UK was rather more profound:

The News International phone-hacking scandal is a controversy involving the now defunct News of the World and other British newspapers published by News International, a subsidiary of the then News Corporation. Employees of the newspaper were accused of engaging in phone hacking, police bribery, and exercising improper influence in the pursuit of stories to publish. Whilst investigations conducted from 2005 to 2007 appeared to show that the paper’s phone hacking activities were limited to celebrities, politicians and members of the British Royal Family, in July 2011 it was revealed that the phones of murdered schoolgirl Milly Dowler, relatives of deceased British soldiers, and victims of the 7 July 2005 London bombings had also been hacked.

Completely indifferent to this kind of social cost, News Corp would have us focus instead on its key concern here: the claim that Google is “undermining the basic business model of professional content creators.” This framing helps explain why News Corp managed to destroy two thriving Internet communities all those years ago.

The key to understanding News Corp’s persistent online failure is its blinkered view that only “professional content creators” count, and its evident contempt for creators who are not “professional”. Central to both Delphi and MySpace were the contributions from the community of users — the posts, the comments, the chat sessions, the pictures etc. If its corporate culture regards these of little value, News Corp was almost guaranteed to mis-manage and undermine those early online investments.

If you want some amusement, it’s worth reading the News Corp CEO’s letter in full, to see how he rails against “the unlawful and unsavoury content that surfaces after the simplest of searches,” and the fact that “the value of serious content has been commodified by Google.” Ironically, the one area where the News Corp letter has some faint praise for the Internet giant — “Google has been remarkably successful in its ability to monetize its users” — is also arguably where Google’s immense power really is deeply problematic.

As many critics have pointed out, Google’s business model is based on obtaining as much information about its users as possible — what News Corp calls “impressively precise data about users and content usage” — and then selling that knowledge to advertisers in various ways. Had News Corp’s CEO warned about this “commoditization” of personal data, his case against Google would have been stronger, especially in a European context where online privacy is a key concern. But that would have required rather more understanding of the Internet world than News Corp has ever been able to muster.

Follow me @glynmoody on Twitter or, and +glynmoody on Google+

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Companies: google, news corp

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Comments on “Rupert Murdoch's News Corp: Still Failing To Understand The Internet After 20 Years Of Flops”

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jameshogg says:

There is a case to make that Google is a tyrannical monopoly over several business sectors, and that more needs to be done to compete with them.

But of course, if more search engines had a position of power of the same position as Google and could compete, the fight against piracy would be exponentially harder for copyright believers as now they would have several corrupt corporations to keep in line. A pirate downloader would have more alternatives to seek out what he wants.

Don’t copyright believers know that there are legions of black-marketeers who cannot WAIT for the day that the Pirate Bay finally gets shut down by the authorities? That they cannot wait for that vacuum? And all the profit that comes from the advertising? Illegal downloaders do not exist because there are pirate webstes: pirate websites exist because there are illegal downloaders. And as long as that remains true, you will always have those willing to fill that market whether out in the open or behind TOR.

And just as you have the police always willing to point to the temporary statistics whenever they do a drug bust about drug use going down, so too will you have legions of copyright believers pointing to temporary studies of piracy reduction after MegaUpload gets shut down. Those markets, without exception, will keep on being filled as long as the market exists. Why else are advertisers so bold to show themselves out on the open on these sites?

How do you really stop it from happening? You end the prohibition, of course.

Anonymous Coward says:

Re: Re:

Google has some very troubling dynamics going in being a leading provider in advertising, which is making their way of being leading provider of search, leading provider of audio-visual content and a leading provider of web-mail uncomfortable. Breaking up the pieces to make Google less of “everything on the internet”, may be a positive thing for particularly online advertising since that part of the business is what is causing the other parts of the empire to work in problematic ways.

Anonymous Coward says:

Re: Re: Re:

Any consideration for Google’s competitors that doesn’t get balanced out with consideration for Google’s users shouldn’t be entertained. If you split up Google into its disparate services, you ruin a lot if the reasons why its users like it. Google is nearly a monopoly because they’re good at what they do. There are plenty of other competing services available and plenty of guides on how to avoid Google altogether. Typing in a URL for a search engine is a choice. It’s not like the fact that Comcast is the only high speed ISP that serves my neighborhood. Google’s “monopoly” could end in a day if everyone just switched to a different search engine. A true and damaging monopoly is one in which there isn’t a choice. Unlike the governments that are looking to regulate it, Google actually derives its power from the will of its users.

Anonymous Coward says:

I don’t really get it at all. Google found a successful way to make money while giving the “real” news sites more customers and more money… What is it exactly they are so angry about? That google is making butloads of money? Are News Corp speculating about making a competitor to Google News? because there would not be a single person (except for the web designer) that would gain anything from that…. Not a single one!
I am no business genius so can someone tell me how anyone could think that this would be a win in any way?
It seems so surreal that you almost think that someone is trying to sabotage News Corp.

bob (profile) says:

But GOOG is still a pirate haven dedicated to taking from content producers

Just how does Google pay for all of the hard work done by the content creators? You make it seem like tossing them a click-through is a wonderful gift. Wrongo. In an advertising-dominated world, Google takes all of the gravy and tosses a few drops to the people below them.

If the newspapers commanded higher ad rates, it all might work but they don’t. So Google gets 90% of the ad revenue and 10% slips through the cracks to the people who do the work. The robots at Google rake in the billions for the few who work there and the people who create the content that drives Google get pennies.

Quit shilling for billionaires. Start caring about the people who create the content that forms the backbone of the web.

That One Guy (profile) says:

Re: But GOOG is still a pirate haven dedicated to taking from content producers

Easy enough to solve: if someone believes that Google is taking too much of the pie, and that those ‘click-throughs’ are so worthless, then modify things so that you don’t show up on Google search results, and use another ad service.

Problem solved, enjoy your obscurity.

bob (profile) says:

Re: Re: But GOOG is still a pirate haven dedicated to taking from content producers

That is happening slowly but surely. Some newspapers are going out of business. All of the good ones are putting up paywalls. I never look to any more. Alas, others do and that’s the problem.

But Google refuses to negotiate. They think they have a right to take everyone’s content and give back a click or three. That’s just not sustainable. Murdoch’s pain should be a warning to Google that Google is about to become irrelevant.

Gwiz (profile) says:

Re: Re: Re: But GOOG is still a pirate haven dedicated to taking from content producers

But Google refuses to negotiate.

Negotiate what? There are no ads on Google News and it drives page views to the original articles. What is there to negotiate exactly?

Not too long ago a business had to pay thousands of dollars a year to be listed in the Yellow Pages. Now you seem to think the Yellow Pages should have pay you to be listed. That sounds a bit crazy to me.

That One Guy (profile) says:

Re: Re: Re: But GOOG is still a pirate haven dedicated to taking from content producers

Unless we’re thinking of different things, the ‘taking everyone’s content’ is nothing more than listing excerpts from a news story, with a link to the original. If someone can get a feel for an entire story with nothing more than an excerpt, then that sounds like the fault of those writing it, not google.

As for Google’s ‘refusal to negotiate’, why should they?

As has been demonstrated, Google drives traffic towards the sites they take the excerpts from, such that those that have decided to make it so they don’t show up on Google searches almost inevitably come back shortly afterwards asking to be re-listed. As such, if Google owes the sites for ‘taking’ their content, it seems to me that in turn those sites owe Google for the traffic they send them, a service they are currently getting for free.

Now, they could set up a complex system where Google pays for the excerpts, and the news sites in turn pay Google for the traffic they are sent, or they could do the sensible thing and consider both sides even, and decide that neither ‘owes’ the other anything. The traffic pays for the excerpts, and the excerpts pay for the traffic.

Anonymous Coward says:

Re: Re: Re: But GOOG is still a pirate haven dedicated to taking from content producers

When you say “quit shilling for billionaires,” you’re actually saying, “quit shilling for the billionaires who got rich giving the news-reading public what it wants, rather than shilling for the (some former, but not all) billionaires who own(ed) newspapers that did a terrible job of giving the news-reading public what it wants.”

I go to Google News to get news because I don’t want to have to browse 50+ websites of news sites (not all of which are currently or previously printed newspapers). If I haven’t heard of them and/or if 90% of what they report on isn’t interesting to me, I will never read their content and give them my eyeballs on their ads – except for when they do write an interesting article on a topic I’m curious about and it shows up in Google News. I will never find news elsewhere except by total accident. This is my choice. If the newspapers want my eyes, this is how, the consumer, and plenty of other consumers, choose to discover the news. If Google has the intelligence to make that happen, they get my eyeballs. If the newspapers don’t, they don’t get my eyeballs. It’s pure and simple.

You’re ultimately arguing that readers should choose to experience the news differently than they want to all to save ethically-compromised, billionaire-owned, dying print newspapers and their terrible online counterparts, and if they don’t, they should be forced to.

Kronomex (profile) says:

Rupert stuffed up badly with Delphi and MySpace and lost millions while Facebook and Google powered ahead. Rupert holds grudges forever. Rupert “likes” competition except when he’s not in control of everything. When things go arse up because Rupert can’t keep his verminous fingers out of the pie Rupert always blames everyone else. He’s a blight!

Anonymous Coward says:

Not quite

“”Google has been remarkably successful in its ability to monetize its users”

No. Google has been remarkably successful in its ability to monetize its products, e.g., the people who use Gmail. Those people may mistakenly and foolishly believe that they’re users, but they’re not: they’re the product.

Anonymous Coward says:

Re: Not quite

If I have to trade anonymized data collection that’s used to generate ads that I never see in exchange for free services that other megacorporations would like to provide for a fee and with an inferior product that I’m less able to customize, so be it.

Microsoft does the same, yet hypocritically attacks Google for it. Microsoft wants to charge for everything its customers use, whereas Google has a novel method of charging advertisers to pay for the free services it offers to users.

Hint: All consumers are some corporation’s product. Unless you’re gonna go all unibomber and live in a cabin in the woods, you can’t except at least some aspect of that. If you deny that reality, you’re either ignorant or a shill for a different corporate master.

Whatever (profile) says:

Re: Re: Not quite

Simple rule: If it’s free, it probably isn’t.

Google is all about “free”. If you think not seeing ads means you are getting off free, I have bad news for you. Your information, your preferences, your site visits, your searches, and your demand are used as part of the big data that Google uses in order to charge people for ads.

Also, if you use google search, then you see ads, like it or not. Search results have paid listings. You may click them. Boom, Google gets paid.

Google is the ultimate middle man, and everyone is too busy praising them to realize what they did.

Anonymous Coward says:

Re: Re: Re: Not quite

I think the point was that, as an example, hotmail (or whatever its called now) is free for the user but you are blasted with ads, spam, and your data is sold (similar business model to google). From a users point of view hotmail is an inferior product because of the amount of spam and the large adverts. M$ are one of the key players having a pop at google in the EU saying that they should be sanctioned as they are a monopoly when the truth of the matter is that google just do it better than M$ ever could and M$ cannot compete.

I use gmail and have done for years, its an excellent product that is funded through advertising (its unobtrusive advertising which in my mind is fine). They do not hide this fact (you seem to imply that they hide their actions and that makes them evil).

At no point am I forced to use gmail, I run my own mail servers and have lots of addresses and domains at my disposal but prefer to use gmail because it is a good product.

Murdoch is sore because he has no idea about this new fangled interthingy and cannot compete with online news sources as his news outlets have repeatedly been shown to be shady places that only get readers due to the boobs on page 3.

PaulT (profile) says:

Re: Re: Re: Not quite

“everyone is too busy praising them to realize what they did.”

I love the fact you state blindingly obvious facts then pretend you’re the only one clever enough to work them out. In fact, every sentence you just wrote is a simple rewording or expansion of the points the 2 comments you were replying to said.

Why are you afraid to debate honestly? Congrats on finally making a comment that’s not based on lies, distortion and point only vaguely tangential to the issue at hand, though. You might be improving.

Anonymous Coward says:

Re: Re: Re: Not quite

If you want to get into a semantic debate, I’m using the term “free” as in “free from direct monetary cost.” I don’t pay for Google services with credit or hard currency.

Yes, there’s a trade-off for non-monetary goods, i.e. the anonymized data to which I already referred, and to me, that is an acceptable and unavoidable exchange. If you want Microsoft to collect your data instead, use Bing and Hotmail. If you don’t want the NSA to collect your data, live off the grid.

And you’re wrong about seeing ads if you use Google search. There are a ton of adblockers and browsers plugins to strip out ads you don’t want to see. I haven’t seen an ad on a Google search page when using my own devices in years.

There’s also the ability of the human brain to get tunnel vision. Even if I’m not using a browser with an ad blocker, I’m experienced enough using Google search to ignore the sponsored results that show up at the top of the page. My eyes immediately zoom in on the first actual results and ignore anything above it.

You keep acting like if people would just see what Google is doing, they’d wake up and revolt, but people know what Google is doing and many are fine with it. I’ve never found anything about myself in a Google search that I didn’t choose to put out on the web. I’ve never had some advertiser call my cellphone number or email me and say, “hey, Google told me you’re into x, y, and z, let me sell you something!” because Google anonymizes the personal data doesn’t give away my contact info.

Where is the evidence of the personal data apocalypse that you’re claiming is happening? Oh yeah, the NSA is doing that, not Google…

John Fenderson (profile) says:

Re: Re: Re:2 Not quite

“If you want to get into a semantic debate, I’m using the term “free” as in “free from direct monetary cost.””

That’s more than just a semantic difference, and your clarification is welcome. When I use the word “free”, I usually mean one of two things: either “without cost” (not just monetary cost), which means that Google offers nothing that I consider “free”, or “free” as in “freedom” (e.g., the use of “free” in “free software” — which has nothing to do with cost.)

“Yes, there’s a trade-off for non-monetary goods, i.e. the anonymized data to which I already referred, and to me, that is an acceptable and unavoidable exchange.”

Whether or not it’s acceptable is a matter of personal opinion. To a lot of people, it is. To a lot of other people, it’s not. However, it’s usually avoidable.

Mr. Oizo says:

They do aggregate content. Only looking at the search engine is naive

They do aggregate some stuff. which is of course somewhat of a joke.

However, their blog platform often plainly rips articles from other people. As original copyright holder I often have to let content be removed from googles’ blog sites. And I am seriously fed up with that.

PaulT (profile) says:

Re: They do aggregate content. Only looking at the search engine is naive

“However, their blog platform often plainly rips articles from other people.”

No, it doesn’t. Some of the people who use their platform to host their blogs do that, but it’s the authors to blame, not the platform they use to publish. their blog platform does nothing except provide a place to write & host blogs.

“As original copyright holder”

What is it about self-proclaimed “copyright holders” that prevents them from blaming the people actually infringing, rather than the nearest cash-rich target?

Anonymous Coward says:

Re: Re: They do aggregate content. Only looking at the search engine is naive

Anyone who asserts that they are a copyright holder is immediately identifying themselves as a person who believes they have more rights than other people. Under current US copyright law, every citizen of a Berne Convention-signing country who “publishes” anything in a tangible medium is a “copyright holder.” These self-proclaimed copyright holders are just saying that their content is more important and deserves more protection than your content.

Anonymous Coward says:

having screwed up what attempts it has had at delving into the internet, perhaps Murdoch’s mob will be more successful slagging off another company, one that has done the exact opposite? it seems to be a favorite tack of theirs that when another has the upper hand, try to pull them down. when things are round the other way, that’s a different story. i recently read where Murdoch had given Google a good scolding for not doing enough to prevent copyright infringement. not bad from a member of the entertainment industry that is itself doing NOTHING!!

Anonymous Coward (user link) says:

Good analysis, old school managers who do not understand the crowd (crowdsourcing) will struggle as we enter the internet economy. Crowdsourcing is as significant as Henry Ford’s invention of the moving assembly lines which created the modern factory then. The latter gave rise to consumerism, the former, the consumer economy, quite different. Maybe I now understand how News Corp messed up the opportunity with Myspace. But I don’t think News Corp is alone in this.

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