Murdoch’s Questionable Strategy November 30, 2009
Posted by gjchatalas in Reflections.add a comment
Rupert Murdoch has long expressed concern about the fate of his entities amid the free culture of the web. The media magnate condemns the economics of the internet, saying that giving away content isn’t a feasible business model. And he’s directed particular enmity toward Google, claiming it makes money by stealing the content created by his companies.
Murdoch’s recent mutterings, though, are escalating the rhetoric and speculation. First, he said he was on the verge of blocking Google from linking to any Murdoch content, and vowing to finally erect a pay-wall around his material. He even implied that he would fight fair use laws.
And next he announced that he was considering entering an agreement with Microsoft’s Bing, giving it exclusive search rights to all News Corporation content.
With Murdoch front and center in the discussion of digital media, it’s worthwhile to speculate on the repercussions of his plans if they actually were to take place.
Let’s begin with the subject hovering over all establishment media companies: charging for access to content. Murdoch’s News Corp. owns broadcast, film and print publications, but his initial volley is putting a price on his newspapers’ offerings. Of these papers, the reputable Wall Street Journal already is one of the online publications that charges for premium content, so this isn’t much of a deviation from business as usual. His New York Post, while a popular tabloid in the Big Apple, would likely lose readers to the free sites in that competitive market. And his Queens and Brooklyn community papers are the ones that need eyeballs to garner online advertising in the hyperlocal market; the amount he collects in small subscriptions would be negligible while leading to a decline in site visitors.
Similarly, precluding his content from appearing in Google search would be a questionable move. Google has the largest share of search by a long shot; people are already accustomed to using it on a daily basis. The moment Google is shut out is when the clicks to News Corp. material will dissipate. That is not a winning formula in these days when building market share is crucial to online success. It may make some money from Microsoft for the rights, but it’s debatable whether News Corp. has strong enough brand and quality to lead to a major behavioral shift in readers’ search habits.
Lastly, challenging the fair use laws. This is a most likely an idle threat. Few media corporations would risk going to court for fear that fair use might be made even stronger in the digital era. Fair use affirmation by judges would weaken the arguments of Murdoch and others seeking to limit access to their content.
At this quick glance, it doesn’t appear as if Murdoch’s latest rumblings are practical or realistic. Rather, they look like attempts to shake up existing practices and encourage other media companies to join his folly.
Week 7 Reflection… November 19, 2009
Posted by gjchatalas in Reflections.1 comment so far
The thrust of Benkler’s “The Wealth of Networks” is how the wired world is changing the way in which society communicates and creates. Another influential book about the Internet era is “The Cluetrain Manifesto” which laid out a series of statements challenging business status quo amid this tech revolution. Among the points put forth in that book is that people don’t want to be marketed to anymore; instead, they want to be part of the conversation.
“Cluetrain” came to mind while listening David Hanley of Banyan Branch talk about the many methods his company uses to interact with the public on behalf of clients. While he covered many cutting edge techniques for doing such, a casual comment resonated with me: referring to one of his employees, he said that she spent her time selling benefits rather than building relationships.
This reflected once again that a shift is truly taking place within the walls of business, not merely being expressed within the pages of books. The fact is that we are tired of being treated as targets of a message; we see through the marketing and cheerleading both as consumers and employees. We want to be leveled with, not patronized. And online tools make finding the facts easier than ever. We don’t glance at an advertisement and buy the product or visit the restaurant. We research it, looking for reviews, and turning to those whose opinions we trust. As a result, the approach of engaging a community is gradually becoming a business norm, not just a corporate buzzword.
The discussion of Comcast’s prospective purchase of a majority share of NBC was timely. I’ve subsequently read Nicholas Carr’s article in The New York Times Magazine about the topic, and was impressed that many his insights were included in our conversation the other evening. He points out that television was initially thought to be the medium that would suffer least in the Internet era, due mainly to the size of watching video online. But as bandwidth has increased, tv is now scrambling like news and music have previously. And Carr agrees with us that net neutrality is crucial to ensuring that overzealous owners of “programming and plumbing” won’t use their power to control or infringe upon the information we seek to access.
Book Review: The Wealth of Networks November 16, 2009
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The Internet is having a profound impact on society and culture. We are communicating in a more open and efficient manner thanks to this technology. And as a result we are on the precipice of revolutionizing the world’s economic and political systems.
This is the premise of Yochai Benkler’s classic and influential book, “The Wealth of Networks.” His tome, published in 2006, touts the emergence of a “networked information economy” that is shaping the way in which we create and share, and its far-reaching consequences.
Benkler explains that the world has moved to an economy based on the production of information (software, science, financial, services) and culture (music, writing, film). And it is our use of the Internet (which Benkler describes as a “communications environment built on cheap processors with high computation capabilities”) that allows us to produce information in an interconnected and decentralized manner.
These changes have fueled what Benkler describes as “commons-based peer production,” which features collaboration and creativity that is easily disseminated. Benkler claims this will replace the industrial production methods that dominated the 19th and 20th centuries. No longer will we rely upon monopolies to supply us information goods; instead we will do it ourselves. Printing presses, cable and satellite systems, and proprietary rights will give way to non-market social production, practiced and shared by millions worldwide via the power of the Internet.
Where all this is leading, Benkler posits, is toward making “the 21st century one that offers individuals greater autonomy, political communities greater democracy, and societies greater opportunities for cultural self-reflection and human connection.”
It’s quite an ambitious blueprint.
Certainly much of what Benkler writes rings true. The economic traits of information apply seamlessly to peer production, including low marginal costs, large-scale consumption, and widespread availability. Benkler is also correct about our transformation from an industrial economy that is centralized and mass-market-based to a networked version that is interconnected and distributed. This sea-change is threatening entrenched business models and corporations.
Media companies, in particular, are suffering. We no longer just consume media, but now we also create and share it, and that has caught the old-guard off-guard. For decades these companies relied upon wealth, political influence, consolidation, and copyright law to stave off competition and solidify profits. But these techniques aren’t as effective any more due to the sheer scale and democratizing power of the Internet.
Examples of how social production is altering the media landscape are in abundance: the CraigsList marketplace has obliterated newspaper classified advertising revenues; blogs have given everyone the opportunity to have a voice; cheap video cameras and platforms let everybody be a film-maker or talking head; and collaborative efforts have led to open-source software creation and a community-based encyclopedia.
Subsequently we’ve seen media companies buying up tech firms and products, supporting Benkler’s inference that monopolies will typically act in self-serving fashion rather than for the common good. As their business models are failing, newspaper giants such as Gannett, Hearst and others have purchased or invested in digital properties like E-Ink, Adify and CareerBuilder.com hoping to alter their dire prognosis.
Benkler champions an open marketplace that isn’t driven by monetary considerations, but he also acknowledges that the infrastructure can be costly. Social production may be free, but not the cables, switches, and microprocessors that are necessary to a networked economy.
For all of Benkler’s forceful and enlightening insights, though, his over-arching view is utopian. And herein lies a problem: idealism is admirable, but usually unattainable.
Benkler envisions a world where the masses come together and create for free in a new economy based on decentralization and distribution. In turn, he believes this will revolutionize the way business is conducted, how society communicates, and how government works. While some of this may seem plausible, societal and economic realities would seem to make the dream elusive.
Specifically, his assumptions about non-monetary rewards give pause. Benkler feels that community members will be guided by altruism. But it is ingrained in society that we will be paid for our work and expertise. I don’t see desire for money disappearing in a networked economy. That which we produce will eventually be driven by a profit motive.
Benkler contends that a decentralized approach to production will succeed outside a price system. However, this is more likely because the market has yet to fully evolve. YouTube, Facebook and other social production sites are wildly popular, but they are still desperately seeking ways to make money. Creators seem to be biding their time until monetization occurs.
Going further, amateur production will gradually lead to specialization and commercialization. Radio played this song before; it began as an amateur endeavor, but eventually gave way to a set of radio stations that could better serve a growing audience. Similarly in this era we’ve already seen bloggers create successful business ventures and networks.
Even in Benkler’s writings we see examples of monetary motivation. Among his strategies for the production of information, Benkler describes the Scholarly Lawyer who gives speeches or writes articles for free, but mainly to enhance reputation and thus opportunity for financial gain.
Another of Benkler’s claims, that production will proliferate without managerial structure, invites scrutiny, too. As entities grow, structure will necessarily become part of the equation. Look no farther than some of the darlings of social production: Wikipedia has implemented some hierarchy to improve its quality, and open-source software production utilizes a management framework. Autonomy may be a hallmark of social production, but there’s nothing wrong with being well organized.
At times Benkler’s overly pedantic prose can obscure his message. But his 515-page treatise nonetheless provides tremendous observation and analysis.
“The Wealth of Networks” is a groundbreaking book covering the repercussions of the Internet on society at large. While Benkler may overestimate the influence that social production will have in transforming the world, he still builds a convincing case by connecting current trends to larger ideals. In that regard, the book remains required reading for understanding the relevant issues of today’s networked economy.
