It’s time to use the past tense. Rupert Murdoch was the original international media mogul. Before him, there were (quite distinctly) press barons, television tycoons, book publishers, and film studio moguls; separate industries, mainly in separate countries, with their own distinct traditions and leaders. But that was until Rupert Murdoch stormed across national and industry frontiers as if they didn’t exist.
Indeed, the word ‘media’ started only to be ultra-commonly used (in preference to ‘the press’ or the quaintly British ‘fourth estate’) once the buccaneering Aussie had daringly launched Sky TV in Britain in 1989, bought into Twentieth Century Fox (in 1984), launched the Fox News Channel (in 1996), and bought what became Harper Collins (in 1989). These diverse businesses were all added to the power-pack of newspapers he had acquired in Australia, the UK, and the US. The result was News Corporation, with its sprawling satellite TV networks across Europe and Asia – the very picture of a modern media business. And it’s been like that for 25 money-spinning years.
For all the clouds of infamy round the head of News Corp’s pioneering chairman, the creation of that revolutionary international media business remains a remarkable tribute to the vision, abilities and energy of Rupert Murdoch.
But, like a reputation sullied by malpractice, criminality and bullying, the achievements of News Corp also now risk being reduced by the changing times. ‘Modern’, breakthrough developments in one decade, quite naturally, risk becoming antiquated in the next. And so it will be for Citizen Murdoch. Most of his businesses will survive and thrive in some way, of course. But the integrated ‘whole’ that made News Corp so powerful and influential across the the globe, simply will not survive him.
The signs are clear to see. News Corp was effectively forced to close the News of the World, one of its most profitable newspapers largely in order to clinch (as it believed) the takeover of a much more desirable business, BSkyB. Newspapers had been Murdoch’s route into ‘multimedia’ markets – and (as we can see so clearly in the UK) gave him huge influence. But, now, those same newspapers are in the way. News Corp’s best assets are in film and pay TV, so the sooner that Murdoch steps back from day-to-day control, the sooner that the company’s shaken shareholders will be able to unlock their hidden value and back today’s growth businesses and not yesterday’s. (And Murdoch is not the only publisher of newspapers, magazines and books to support endlessly-lossmaking titles through sentiment, false optimism or something else. So News Corp is very far from being the only media organisation to face some tough long-postponed choices.)
What the process of change at News Corp will show ( over the next 12-18 months) is just how dizzyingly fast the media industry is changing. And how anachronistic is the ‘integrated’ media company that Murdoch built in quite different times.
The major changes will scour the surface of media everywhere:
1. General news will increasingly need to be free of charge. Mass audiences will not pay for it. Selective, relatively upscale audiences may pay for in-depth and ‘contextual’ news commentary but the century-long paid-for popular newspaper market is dying fast. In the UK, the willingness and ability of Murdoch and others to support unprofitable newspapers has seemingly slowed the inevitable decline – and has similarly helped support the search (in vain) for a profitable online news market. Almost whatever happens to the News Corp national newspapers, this decline in paid-for news will now start to accelerate, pushed also by changes in advertising. It’s time to get real.
2. Advertisers will get ever more choosy about where they spend their money. Product placement will grow as will TV productions funded directly (and controlled) by advertisers. More advertisers will expect to pay only for the audience their ads actually get – like the online deals. Advertisers will increasingly be wary of media with two conflicting revenue streams – ie magazines and newspapers whose copy sales are used and engineered to maintain advertising rates. Advertisers will want guaranteed audience levels. Many magazines and newspapers will find it increasingly difficult to compete for advertising revenue and will, therefore, not be viable – unless readers themselves are prepared to pay more. Conversely, picky advertisers will be prepared to advertise in free magazines and newspapers that can guarantee the required levels of readership. The distinction between advertiser-funded and consumer-funded media will become more pronounced in hard copy, broadcast and online. So, consumers will be offered TV channels and mobile entertainment and information either free with ads OR by subscription without ads. That will pose a real challenge to newspapers and magazines which have already lost to online sites most of their once-lucrative classified advertising.
3. Online retailers are becoming publishers and publishers need to become retailers. Online sales of products and services will increasingly include newspaper and magazine-like content and vice versa. The strongest and most progressive magazine brands will be able to secure their profitable futures (in spite of the drop off in advertising revenues) by becoming fully-fledged ‘mediatailers’. But, if they don’t, major retailers will do it instead. This is a retail race in which major magazine publishers must compete to survive. It is decades since the US-owned Hearst (now the world’s largest publisher of women’s magazines) started making ‘ancillary’ profits from, for example, Cosmopolitan-branded merchandise. Now, they must turn such product retailing into major profits and mainstream activity. It’s the same for TV, newspapers and, perhaps, mobile phone operators too. Traditional media needs to become, well, much less traditional.
4. These trends, coupled with the shortening life-cycle of electronic media ‘kit’, mean that ‘content’ companies (like current TV, newspaper, and magazine operators) will have to maximise their use of ‘clubs’, subscribers, and user groups to maintain longterm relationships – and profitability, whatever the media platform. The casual availability of newspapers and magazines on news-stands will become an increasingly unattractive (and unprofitable) marketing method for retailers and publishers alike. Consistent profitability will, increasingly, be available only to those media companies with direct relationships with customers through which they are able to ‘leverage’ sales of additional products and services. So expect the “new” post-Murdoch News Corp to turn its back not just on newspapers, but also on its huge books business and even some online and TV production. Big changes are ahead.
Media companies routinely say that the future is all about ‘content’ and ‘brands’. But it is more complex than that. Owning a direct relationship to customers is crucial and can be as valuable as ownership of the content itself. The ‘internet mindset’ shows that media customers may compromise on content in return for convenience and easy access. That is what a “relationship” with consumers can really mean.
Nobody can predict the pace of these changes or expect them to be consistent or wholly comprehensive. And many good, old-fashioned media businesses will survive and thrive, no matter what. And some advertisers will carry on doing what they have been doing for years. But, we can be sure that the general shape of the media industry will increasingly be driven by:
- Content which either customers or advertisers will pay for. Seldom both.
- Brands with which the customer can be widely engaged (ie reading, buying, and ‘belonging’).
- Serial readers/ users/ viewers and sharply-reduced dependance on the occasional or casual consumption of media.
If Rupert Murdoch were 37 years of age (as he was when he acquired the News of the World), he would be across all of this. But he’s not, so study it carefully: News Corp 2011-style is ready for the Museum of Media, along with a slew of other publishing businesses across the world. Stand by for the loss of some treasured media brands – and of the mogul who defined the world’s first ‘media age’.
