Rupert Murdoch's News Corp: Still Failing To Understand The Internet After 20 Years Of Flops

from the profound-social-cost dept

Rupert Murdoch's News Corp has a surprisingly long -- and stunningly unsuccessful -- history of trying to become a major force in the Internet world. This goes all the way back to 1993, when it rather presciently bought an online company called Delphi Internet Services. Unfortunately, after that smart early move, News Corp clearly had no idea how to build on the community that formed around the company, and Delphi was soon completely eclipsed by AOL.

In 2005, News Corp had an even bigger chance to establish itself as the leading Internet company when it bought MySpace. For a while, MySpace was the most popular social networking site in the world, and surpassed Google as the most-visited Web site. But again, News Corp managed to snatch defeat from the jaws of victory: MySpace was eclipsed by Facebook, and in 2011 News Corp sold the site for $35 million -- rather less than the $580 million it had paid for it six years earlier.

It is against that background of an apparent inability to understand the basic dynamics of the online world, and how to make money there, that we have the following press release from News Corp: Early last week, in a letter to European Commissioner for Competition Joaquín Almunia, News Corp Chief Executive Robert Thomson opposed Google's settlement offer with the European Commission, saying the internet giant is "willing to exploit its dominant market position to stifle competition." Coming from a global media organization that has a dominant market position in several countries, that's a little rich. But it gets better: Citing Google's "egregious aggregation" of content, Mr. Thomson said that, along with serious commercial damage, there is a "profound social cost" to Google's actions. "The internet should be a canvas for freedom of expression and for high quality content of enduring value. Undermining the basic business model of professional content creators will lead to a less informed, more vexatious level of dialogue in our society." Google doesn't "aggregate content": its main search engine provides links to pages based on their popularity, while Google News uses snippets that link to the full article on the publisher's site (with no advertising on the Google News page.) As for the "commercial damage", Techdirt has written several times about the fact that publishers are at liberty to withdraw from Google's index if they really don't like it, as well as the fact that those who do so soon come back when they find their traffic falls dramatically.

But that misunderstanding about Google's non-existent "aggregation" is nothing compared to the hypocrisy of claiming that there is a "profound social cost" to Google's actions. Many would say that the social cost of News Corp's large-scale phone hacking in the UK was rather more profound: The News International phone-hacking scandal is a controversy involving the now defunct News of the World and other British newspapers published by News International, a subsidiary of the then News Corporation. Employees of the newspaper were accused of engaging in phone hacking, police bribery, and exercising improper influence in the pursuit of stories to publish. Whilst investigations conducted from 2005 to 2007 appeared to show that the paper's phone hacking activities were limited to celebrities, politicians and members of the British Royal Family, in July 2011 it was revealed that the phones of murdered schoolgirl Milly Dowler, relatives of deceased British soldiers, and victims of the 7 July 2005 London bombings had also been hacked. Completely indifferent to this kind of social cost, News Corp would have us focus instead on its key concern here: the claim that Google is "undermining the basic business model of professional content creators." This framing helps explain why News Corp managed to destroy two thriving Internet communities all those years ago.

The key to understanding News Corp's persistent online failure is its blinkered view that only "professional content creators" count, and its evident contempt for creators who are not "professional". Central to both Delphi and MySpace were the contributions from the community of users -- the posts, the comments, the chat sessions, the pictures etc. If its corporate culture regards these of little value, News Corp was almost guaranteed to mis-manage and undermine those early online investments.

If you want some amusement, it's worth reading the News Corp CEO's letter in full, to see how he rails against "the unlawful and unsavoury content that surfaces after the simplest of searches," and the fact that "the value of serious content has been commodified by Google." Ironically, the one area where the News Corp letter has some faint praise for the Internet giant -- "Google has been remarkably successful in its ability to monetize its users" -- is also arguably where Google's immense power really is deeply problematic.

As many critics have pointed out, Google's business model is based on obtaining as much information about its users as possible -- what News Corp calls "impressively precise data about users and content usage" -- and then selling that knowledge to advertisers in various ways. Had News Corp's CEO warned about this "commoditization" of personal data, his case against Google would have been stronger, especially in a European context where online privacy is a key concern. But that would have required rather more understanding of the Internet world than News Corp has ever been able to muster.

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Filed Under: aggregation, blame, internet, robert thomson, rupert murdoch

Companies: google, news corp.