Murdoch, MailOnline and other accelerating disruptions

A significant marker in the rapid evolution of news media has just been passed – and it wasn’t the resignation of Rupert Murdoch from the boards of his UK newspaper companies or the charging of News of the World journalists.

The Daily Mail’s online edition, MailOnline, is reported to have just made its first operating profit. The site, driven by carefully-judged global celebrity coverage and a little sprinkling of soft porn, overtook the New York times some months ago to log the world’s largest user numbers for a news site. The NYT, for once sniffy for understandable reasons, said that they didn’t consider it competition.

So we have these developments to interpret:

Each of these developments is part of a big picture vastly more important than anything which will be recommended by the Leveson Inquiry now reaching its very last days of hearings in London. Important as that report will be in the UK in the autumn, it will have little long-term importance if it does not take into account the rapidly changing context in which media law and regulation operate. (My own evidence to Leveson on law and regulation is here for the record, the statement dated July 18th).

So what do the five developments I’ve picked out mean when put together?

1. Rupert Murdoch may be sore about the phone-hacking inquiries in London (you can tell from the tweets), but I doubt that he is abandoning Britain or newspapers generally by planning to sell soon. As Roy Greenslade points out here, Murdoch has also been resigning from boards elsewhere in the world. As Andrew Neil says, surrendering an entire chunk of the company is not the man’s style. News International said that the resignations were “house-cleaning”. But even housework is done for a purpose and the purpose of the recent moves has been to protect the News Corp share price from damage by either phone-hacking or the decline of some – but not all – print properties. The publishing company does not look as if it was designed to be merely a shop window for selling businesses, not least because it will contain Dow Jones and the Wall St Journal. As this Atlantic writer observes, this company appears to have been constructed to be profitable.

2. But cross-subsidy of loss-making papers will be harder in the new structure and Murdoch has been forced to say that loss-makers won’t be tolerated. Given the deterioration of the the business model for some general, daily papers over a couple of decades he could say no less. That puts The Times (of London) and the New York Post at particular risk.

3. We can now isolate what puts a newspaper at greatest risk. It will be a daily; weeklies and magazines are under pressure but not dying at the same rate. It will be of general interest and appeal; niche products do better and news for a business readership (especially if paid for by an employer) can do quite well. An unusually high cost base (or borrowings) is liable to be fatal under these stresses. But it is equally true that you can spot a paper in unstoppable decline if it has hollowed out its editorial operation beyond a certain point: readers often sense when the news is flimsily constructed and sloppily edited, when syndicated or bought-in material is an ever-larger proportion of the whole, when no one writing for the paper feels they’re doing anything important or urgent. The title at high risk may also be spread thin among its target population with no local roots or demographic segment that it can call its own. The national papers of Britain, who enjoyed for many years income from a rich and active advertising market, are at particular risk. To attract the colossal number of online readers (fickle and fly-by as they mostly are) to interest advertisers on a global scale requires a rich diet of pictures of celebs flashing their underwear as they get out of limos.

4. The global reach needed to create an audience that large decouples “national” papers from the nations in which they started. Others factors may affect that: a senior Daily Mail executive told the legal committee of the Society of Editors recently that if the Leveson Inquiry helped to create a regulation system which covered MailOnline, the site’s headquarters would be moved to the US.

5. These trends bring the next stage of the great experiment much closer. I’m just guessing, but I think we’re within a year or two of seeing a renowned title somewhere in the world drop its print edition. You hear editors and publishers say they’re going “digital first”. When I hear that phrase, I translate it as: “In my back pocket I have the plans for going digital only.”

6. So far so tough. But I’m also seeing signs that experiments are bringing better news. People aren’t yet making money from digital, but they are beginning to mine the seams of engagement with journalism of depth and quality which are rich enough to provide some return. A random scatter of examples. The flagship Fairfax papers in Sydney and Melbourne came to digital late but, in Melbourne at least, were making respectable and growing online advertising income without a paywall (which they will now build). Their strong local reputation and allegiance helped. Closer reader engagement and high levels of social trust in Scandinavia are boosting efforts to try different kinds of pricing, particularly on mobile devices. The Israeli paper Ha’aretz struggles as a print business, but its digital editor was telling me the other day that they see promise in the unusually long times people stay reading their material online, and particularly in Facebook. Engagement and attention do exist online; they just aren’t easy to find.

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5 comments

  1. Insightful article, but not at all correct that Melbourne Age came to digital late! The Age’s website was one of the first. Experimentation began in the mid 90s with plain text, and the Age Online followed a couple of years later. Within a few years, there was intense contest between online and newsroom editors at the Age over which of them should be allowed to publish exclusives first.

    • Misha Ketchell

      Sybil, I still thin the Age came to digital late. It took a long time to realise the threat to its advertising business. It failed to buy online businesses in real estate, cars, jobs etc and failed to translate its classified revenue into online revenue. And the editor of The Age never had control of digital. Having a website doesn’t mean you’ve come to digital. I worked there from 1999 to 2004 and no one really got digital then.

      • Misha, your view re online advertising may be correct. I am simply pointing out that what George said will probably leave many readers not familiar with the Age or its history with the impression that the Age’s journalists have only relatively recently turned their hand to quality journalism online. Not so!

  2. Also worth noting that Fairfax media’s online success in Australia is largely driven by Murdoch dominating 70% of print newspapers (plus TV etc). Govt ABC has been largely gutted and neutered. So intelligent readers have little other choice for local content. Here on Queenland’s Gold Coast I cannot buy a local, state or national newspaper that is not owned by Murdoch. Even the free weekly in my letterbox is Rupert’s!

  3. I think the ‘digital first’ to ‘digital only’ trend is just the beginning. Print publications are now looking at alternatives as online ad revenues just aren’t enough (Look how long it took the Mail Online to reach profit and at the numbers it needed).

    The trend for free publications, Time Out et al. may grow but surely there will eventually be a divide between what can still work in print and what doesn’t need print in the digital age?