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net.wars: Suicidal economics

Toxic sludge is GOOD for you, observed John Stauber and Sheldon Rampton in their 1995 book by the same name (or, more completely, Toxic Sludge is Good For You!: Lies, Damn Lies, and the Public Relations Industry). In that brilliantly researched, carefully reasoned, and humorous tome they laid out for inspection the inner workings of the PR industry. After reading it, you never look at the news the same way again.

Including, as we are not the first to say, this week's news that Rupert Murdoch's News International sees extracting subscription money from 105,000 readers of the online versions of the Times and Sunday Times as a success. Nieman Labs' round-up shows how much this particular characterization was greeted by skepticism elsewhere in the media. (My personal favorite is the analogy to >Spinal Tap's manager's defense of the band when it's suggested that its popularity is waning: "I just think…their appeal is becoming more selective.") If any of a few million blogs had 105,000 paying readers they'd be in fabulous shape; but given the uncertainty surrounding the numbers, for an organization the size of the Times it seems like pocket change.

I'm not sure that the huge drop in readership online is the worst news.

Everyone predicted that, even Murdoch's own people (although it is interesting that the guy who is thought to have launched this scheme has left before the long-term results are in). The really bad news is that the paper's print circulation has declined in line with everyone else's since the paywall went up. It might have turned out, for example, that faced with paying £1 for a day's access a number of people might decide they'd just as soon have the nicely printed version that is, after all, still easier to read.

Instead, what seems likely from these (unclear and incomplete) numbers is that online readers don't care nearly as much as offline ones about news sources. And in many cases they're right not to: it hardly matters which news site or RSS feed supplies you with the day's Reuters stories or which journalist dutifully copies down the quotes at the press briefing.

Today's younger generation also has – again, rightfully – a much deeper cynicism about "MSM" (mainstream media) than previous ones, who had less choice. They trust Jon Stewart and Stephen Colbert far more than CNN (or the Onion more than the Times).

They don't have to have read Stauber's and Rampton's detailed analysis to have absorbed the message: PR distortion is everywhere. If that's the case, why bother with the middleman? Why not just read the transparently biased source – a company's own spin – rather than the obscurely biased one? Or pick the opinion-former whose take on things is the most fun?

As Michael Wolff (who himself famously burned through many of someone else's millions in the dot-com boom) correctly points out, Murdoch's history online has been a persistent effort to recreate the traditional one-to-many publishing model. He likes satellite television and print newspapers – things where you control what's published and have to deal only with a handful of competitors and a back channel composed only of the great and the good.

That desire is I think a fundamental mismatch with the Internet as we currently know it and it's not about free! information but about the two-way, many-to-many nature of the medium.

Not so long ago – 2002 – Murdoch's then COO insisted that you can't make money from content on the Internet; more recently, Times editor James Harding called giving away journalism for free a quite suicidal form of economics In a similar vein, this week Bruce Eisen, the US's Dish Network vice-president o fonline content development and strategy complainedthat the online streaming service Hulu is killing the TV industry

Back in 2002, I argued that you can make money from online content but it needs to be some combination of a) low overheads, b) necessary, c) unusual if not unique, d) timely, and e) correctly priced. From what Slate is saying, it appears that Netflix is getting c, d, and e right and that the mix is giving the company enough of an advantage to let it compete successfully with free-as-in-file-sharing. But is the Times getting enough of those things right? And does it need to?

As Emily Bell points out, Murdoch's interest in the newspapers was more for their influence than their profitability, and that this influence and therefore their importance has largely waned. "Internationally, it has no voice," she writes. But therein lies a key difference between the Times and, say, the Guardian or the BBC: enlarging the international audience for and importance of the Times means competing with his own overseas titles. The Guardian has no such internal conflict of interest, and is therefore free to pursue its mission to become the world's leading liberal voice

Of course, who knows? In a year's time maybe we'll all be writing the astonishing story of rising paid subscriber numbers and lauding Murdoch's prescience. But if we are, I'll bet that the big winner won't be the Times but Apple.