Alistair Fairweather

Rupert the angry Billionaire

2009-11-13 09:20

"We're going to block Google". To any internet user those don't sound like the words of a savvy businessman. But that's (effectively) what Rupert Murdoch said in an interview with Sky News Australia on November 5.

And while his stubbornness and temper may be legendary, no one has ever accused the 78-year-old self-made billionaire of being bad at business. You may not have heard of his company - News Corporation - but you've definitely heard of their brands.

They control everything from movie studios (20th Century Fox) to satellite and cable TV (the Sky and Fox networks), to dozens of magazines and literally hundreds of newspapers around the globe including The Times of London and the Wall Street Journal.

So what's his beef with Google? Well, newspapers are dying and that makes Murdoch, who started his empire with a single Adelaide newspaper, very angry. He blames the internet and claims that sites like Google have been "stealing" his precious content.

But this isn't some crusade to preserve journalism, this is about cash. In 2001 (according to Forbes magazine) Murdoch was the 39th richest person in the world - now he is the 132nd richest. Ouch.

A large chunk of this pain came from a $5bn bet Murdoch made on the Wall Street Journal in 2007. Its value has since shrunk by 70%. Double ouch.

So Murdoch is angry. He's been a billionaire for over 30 years, so he's pretty used to getting his way. And since he's not getting it anymore, he's having the media mogul equivalent of a temper tantrum, taking his ball home and refusing to play with the other kids.

In practical terms this means one thing: all of Murdoch's hundreds of papers will begin charging readers for access. This makes complete sense to him: "They're very happy to pay for it when they read a newspaper, and if they read it elsewhere they'll have to pay."

Leaving aside the fact that people are increasingly unwilling to pay for newspapers (few people younger than 40 read daily papers with any regularity), this whole argument reveals how little Murdoch understands about the internet as a medium.

It infuriates him that the internet is so brand agnostic. He sneers at what he calls "search people" who flit between websites depending on what headlines catch their eye. But that is, in a nutshell, how most people use the internet.

Sure, we all have favourite sites that we visit daily, but usually we were introduced to these sites via Google (or other search engines), and only bookmarked them once they won our trust.

By charging upfront, Murdoch will destroy this vital bonding period. His argument is "we'd rather have fewer people coming to our websites, but paying". However, are people really willing to pay for online news? Ask yourself, would you be reading this page if you had to pay?

Like it or not, news is now a commodity and Murdoch, with his cut-price papers, helped to make it so. Advertising has been supporting news since virtually the first newspaper.

What is really annoying Murdoch is that his business model is broken. The internet isn't killing newspapers directly. It just increased the supply of advertising space in the market, which drove down the price.

Murdoch understands this: "there's not enough advertising in the world to go round to make all the websites profitable". But the way to solve that is by being better. He built his empire on being better, crasser, hungrier, louder - so why can't he do it now?

Maybe the old man is jealous. The media empire that took him nearly 50 years to build is currently worth around $14bn, and Google (a snot nosed 11-year-old) is worth nearly 10 times that. If I were him, I'd want revenge too.

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