A Young Murdoch Takes the Defensive Road

By: Steve Outing In Kobe, Japan, earlier this week, Lachlan Murdoch, son of Rupert and young chairman and CEO of News Limited (Australia), gave an impressive speech before the World Association of Newspapers. Entitled "Building the newspaper of the future," Murdoch's speech dealt largely with how the Internet might affect prospects for the newspaper industry, and what newspaper companies need to do to prosper in the age of new media.

This younger Murdoch professes to love newspapers, and he can't imagine them being undone by new media. Yet I wonder whether his upbringing in the world of newspapers hasn't blinded him to opportunities afforded to his company by the Internet. His views about the staying power of newspapers surprised me, coming from a representative of the young-adult population. I might have expected his stated views from the mouth of his father, but not a media executive in his 20s.

We're OK

Murdoch told the conference that's he's optimistic about the future of newspapers. (Well, what else could he say?) "I don't think the Internet or other yet unimagined forms of new media will kill the daily newspaper," he said, although he acknowledged that the increasingly crowded media landscape will make life more difficult for newspaper publishers. (I can agree to that.)

"Now I'm certainly not arguing we should ignore the Internet," Murdoch said. "But to see our papers evolving onto the Net as a main consumer platform is silly."

Here's where I start to become uncomfortable with his speech. If we look far enough ahead -- 10, 20, 30 years? -- we start to see in industrialized countries like the U.S. and Murdoch's Australia a media consumption pattern that is evenly split between news being presented on paper and on some form of digital display device (driven by the Internet or its successor technologies). The newspaper of the future, in my view, will be offered in digital or print form, and consumers will increasingly choose the digital option, because of its cheaper cost and wider capabilities for presentation. Newspapers will still be around, but in a different form, and probably producing news and information in a different form to take best advantage of the digital delivery channel. Murdoch in his speech acknowledged this trend. But where he and I disagree is the degree to which digital news consumption will replace paper.

Here's Murdoch again: "Somehow the Internet has become magical and many publishers have thrown resources at it like there is no tomorrow. I would argue that we should act rationally and exercise some common business sense."

OK, that's fine. Don't bankrupt your company while chasing unproven business models.

Murdoch: "At News, we have taken a largely defensive position, identifying parts of our business that are at risk from smaller, flexible, new media operators, or indeed organizations that see the Web as an alternative advertising medium to newspapers. Our strategy has been to commit sufficient resources to protect our franchises, with specialized, targeted, low-cost sites. ... I'm sure our newspapers are doing less on the Internet -- by design -- than many of you are."

Here's where I think Murdoch is dead wrong. Taking a mostly defensive posture is silly when faced with a medium that is evolving rapidly to become the equal in influence on our society as the television and the telephone. No, it is not that powerful of a medium today, but it doesn't take a lot of foresight to recognize that its meteoric growth in the industrialized world is rocketing the Internet to such mass-market status.

Playing defense?

What Murdoch said in that speech deserves criticism, for he suggests that his company is interested primarily in protecting what it's got, rather than acting aggressively and pro-actively in creating new businesses for the new media. Why put the smart minds employed at News Limited at work on defensive projects, when the Internet is rife with new opportunities and (eventually) profit centers? Why doesn't Murdoch put his executive braintrust to work on creating brand new businesses -- still leveraging the company's core -- that can grow in the future to equal his largest newspaper properties of today? As his newspapers' print-related revenues fall flat or slowly decrease over the years, Murdoch's defensive cyberspace businesses might make up for print's shortcomings. Building new, as yet unimagined digital-sector media businesses could keep the company growing and make its stockholders happier.

News Limited is Murdoch's company, and obviously he can treat the Internet as he pleases. Yet it and parent News Corp. are global leaders in the newspaper industry. Murdoch, in my humble view, is setting a bad example for the industry, since he runs a company that can ample afford to be a pioneer in forging new businesses in the new media landscape that is evolving -- yet he chooses to play defense. Is it possible to win a game playing defense?

About News International

News Limited operates more than 120 newspapers across Australia, including the national daily, The Australian; in aggregate, they reach more than half the population of the country. In early 1996, the company launched its Newsclassifieds site, which aggregates classified advertising from those newspapers into a national brand and was designed to compete with an aggressive group of Australian entrepreneurs plying the online classifieds space. Last October, the company launched The Australian News Network, which aggregates news coverage from the Murdoch newspaper properties.

The company also has entered into a joint venture with the Australian Rules football league and a television station to produce a football Web service, and next month plans to launch a real estate Web site.

Earlier this week, News Limited introduced its Newspix venture, which is a global photo syndication service on the Web aimed at media organizations. According to News Interactive editorial director Alan Farrelly, "We believe (Newspix) will grow into a service rivaling that of the main agencies." It's conveniently ready to take advantage of the Olympic Games scheduled for Sydney, Australia, in the year 2000.

Too much news? Reader feedback

My column of last Monday suggesting that many news Web sites -- especially those of regional and local newspapers -- rely too much on news content, which doesn't bring them repeat Web visitors, attracted a fair amount of feedback from readers. Online news consultant Mark Potts wrote in support of my argument:

"Because many, if not most, of us who got into this newspaper Web business started out as journalists, we see newspapers as repositories of news, and created our Web sites in that image. But newspapers are successful in their traditional form for reasons that go FAR beyond news: comics, TV listings, classifieds, Dear Abby, recipes, ads, little league scores, etc. We've generally ignored that in our rush to paste this morning's stories, maybe with some enhancements, onto the Web. I think that's a big reason why newspaper Web sites have generally not been successful.

"The need to transform newspaper Web sites into breaking news vehicles to fit the medium's needs aside, we also need to think about capturing more of the classic ethos of the newspaper. I don't just mean putting the comics, TV listings, classifieds, etc. online, too -- I mean going back to thinking of the newspaper as a center for community information, and then applying that metaphor to the Web. By that reasoning, the newspaper Web site should help its readers navigate the Web (locally and nationally) just as the print edition helps them pick a movie to see, find out what time Seinfeld reruns are on, buy or sell a car, etc. That's a far greater mission than news. ...

"Newspapers, I believe, need to rethink what they are on the Web. They need to act more as full-service Web gateways, to local information and national Web surfing. They really should be a one-stop shop for Web users in their communities, and not only for news -- just as the printed newspaper is the primary vehicle for local information.

"That's a VERY different model than most of us are working with, but what we're doing now generally ain't working. At the rate we're going, Excite, Yahoo! and Infoseek will be the major media companies of the 21st Century. And newspaper companies will be left behind."

Offering a contrary view was Pat Roche of Alberta, Canada, who offers some suggestions for drawing more people to newspaper Web sites by doing a better job of presenting news:

"1) Carry better news. Instead of the safe, cheap, predictable stories, carry more news people can use. Carry more stories they will talk about in the office or coffee shop. Surprise the reader occasionally. Serve the needs of your reader, your newspaper and your advertisers. Take back your agenda from interest groups clamoring for self-serving coverage. Link to other (non-competing) news sites.
"2) Use the new technology to help reconnect to your readers. Solicit e-mail input at every opportunity. Respond promptly, courteously and meaningfully. Treat this as an important part of your job rather than an added chore. If writers at high-traffic sites like Wired News and Salon can respond to all reader e-mail, so can the editorial staff of a local newspaper. Connecting with the reader should be a priority.
"3) Break out of the daily box. Offer full access to your electronic archives. This is something the reader can get nowhere else. He may have skipped past every story about a development going into a particular neighborhood because it meant nothing to him at the time. But now he's thinking of buying a house there and wants to read every story before making a decision. The newspaper can fill this consumer's unique needs. The Internet makes delivery as easy as reading the daily newspaper. Why not do business?
"4) Offer other services such as classifieds, weather, horoscopes, up-to-the-moment sports scores, etc. Include tips for home buyers, complete with charted statistics on median prices, sales volume, etc. Don't give an inch to potential competitors on anything that might generate revenue.
"5) Take advantage of the technology by soliciting reader questions on subjects such as gardening. Have an expert reply to the best questions on line. Again, the expert's advice must be compelling enough to bring people back to the site."

And Howard Owens, proprietor of the RV Club Web site and a former online newspaper editor, wrote:

"If I had the opportunity to remake an online news site, this is what I would do:

"1) Bring discussion forums front and center and make participation possible through both e-mail and the Web. Build the discussions (and probably polls, too) around current events.
"2) Identify regular users and give them a chance to become 'community leaders.'
"3) Create a registration database -- register 'community' members, gather profiles on them, give them chances to win stuff, make the profiles searchable so people can find other people of similar interests (and only members can have access). I would want to make being a 'member' a fee-based thing, but I don't know if that would work for a newspaper site as well as it has worked for me with RVClub, but requiring people to pay encourages a greater commitment to the community.
"4) Increase resources for creating and maintaining non-news resources, such as classified ads, school lunch menus, police blotters, street repairs -- all of the stuff that in of themselves don't amount to much, but in aggregate become a valuable community resource.
"5) Create a search engine and directory of local-focused Web sites so that the site becomes a logical and first-thought-of resource for finding anything local.
"6) Develop partnerships with local community organizations to provide them Web space or help drive traffic to their existing sites in exchange for links back.
"7) Identify some opinion makers in the community and get them writing columns for contributing to discussion forums on a regular basis.
"8) Hire one or two outgoing, Net-savvy people to represent the site online -- turn them into celebrities in order to give the site personality. Have them interact with users as the official voice of the site on a daily, hourly, basis."

"If you want repeat visitors, you've got to create a site that is important to people's lives. Simply slapping some news stories up isn't going to cut it. News is too easy to get. Its value as a commodity is almost nil. But giving people the ability to make connections with other people and feel like they are a part of and a contributor to something bigger than themselves is still priceless. It will never go out of fashion or be undervalued."

Steve

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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company