The event that turned a story about a few hacked phones into a scandal that came close to bringing down one branch of the world’s most powerful media empire was a piece of mistaken reporting. For two years a handful of people – Nick Davies at the Guardian, the MP Tom Watson – kept insisting that the problem was bigger than a couple of ‘rogue’ journalists misbehaving at the News of the World. But whatever they said, and however often they said it, the world went on much as it had before. A few people got sacked, some others got arrested, but nobody really seemed to care. As Watson and Martin Hickman make plain in Dial M for Murdoch (Allen Lane, £20), the news that News International was involved in systemic corruption wasn’t news to everyone: not to the police, not to many politicians, not to much of the press. It’s just that the people who knew about it didn’t want to talk about it, and they certainly didn’t want to do a lot to change it.

But then, on 4 July last year, Davies and his colleague Amelia Hill reported that the News of the World had hacked into the phone of a dead 13-year-old girl. Milly Dowler went missing in 2002 and it was six months before her body was found. In the interim the NoW’s investigators retrieved a message from her voicemail that led them to conclude she was still alive: she had recently been offered a job in an ink-cartridge factory near Telford. So they sent eight people to stake the place out. Mistake number one: the message was meant for someone else. But what got to Milly’s parents was the fact that three days after her disappearance her voicemail, previously full, had started accepting recordings again. Relatives who called her number now heard Milly’s ‘disembodied voice’ inviting them to leave a message. The Guardian asserted that the News of the World, ‘thirsty for more information from more voicemails’, had deleted messages to make room for new ones. Mistake number two: the deletions were automatic. But the suggestion that the NoW’s grubby hacks had manipulated Milly’s voice to make her speak from beyond the grave was enough to do what two years of dogged reporting and parliamentary cross-examinations hadn’t. Three days later, after all its major advertisers pulled out, James Murdoch announced that that Sunday’s edition of the News of the World would be its last. Next stop, the Leveson Inquiry.

The Guardian had hit on the particular magic of sound recording: its power to conjure up a voice that wasn’t there. The first machine to record and play back sound, the phonograph, was invented by Thomas Edison in 1877, the product of his experiments with recording the noises emitted by the telephone, invented the previous year. Edison knew it would be big – he set up the Edison Speaking Phonograph Company to exploit its commercial possibilities – and in an effort to drum up interest he wrote an article for the North American Review, America’s oldest literary magazine, listing its potential applications. Most compellingly, the machine could be used for ‘preserving the sayings, the voices and the last words of the dying member of the family’: how ghoulish, but how necessary, to have the speech of family ghosts preserved, perpetually, on little wax cylinders. The phonographs, once manufacturing began, were mostly used as office dictating machines, upsetting stenographers. But the Edison factory knew about magic too, and they also made tiny prerecorded cylinders for insertion into talking dolls.

After the Milly Dowler affair came to light, other papers started airing suspicions that the NoW might have eavesdropped on the phone calls of relatives of soldiers killed in Iraq and Afghanistan, victims of the 7/7 bombings and the parents of Holly Wells and Jessica Chapman, the two ten-year-old girls murdered in Soham not long after Milly Dowler disappeared in Surrey. As editor of the News of the World at the time, Rebekah Brooks had found that news of dead little girls made waves. And as the editors of the Guardian found, news about news about dead little girls – even if it wasn’t true – made waves too. The non-tabloid and tabloid press distinguish themselves from each other by pointing out the predictability of their rivals’ obsessions. The Guardian and the Daily Mail need each other in order to define what it is they emphatically are not. But like the tabloids, the broadsheets’ most effective tactic is shock. They’re in the same business – the revealing of secrets – and they have no choice but to go about it the same way.

It’s the nature of journalistic investigation to assume that something is being hidden from the investigator. The News of the World was founded in 1843 as a cheap and popular broadsheet weekly, specialising in covering (or uncovering) vice and crime. Police transcripts were mined for material and despite an abiding interest in the seamy side of life it saw its job as being primarily to find out what others wouldn’t. In its opening address to readers it contrasted itself with ‘the paper for the wealthy classes’, which ‘helps to lull them in the security of their prejudices’. A year later, in Philadelphia, Edgar Allan Poe published ‘The Purloined Letter’. It wasn’t the first detective story – that was ‘The Murders in the Rue Morgue’, in which an escaped orangutan turns out to have decapitated an old lady and shoved her daughter up a chimney – but it was the first directly to address the phenomenon that became known as phone hacking. A message has been intercepted. Its contents, if disclosed, would do great damage to an illustrious person. The police know who was responsible: the minister. But despite their best efforts – a bit of rough-house of the minister’s person, some high-tech probing with microscopes and needles – the incriminating document can’t be found. (Perhaps the police weren’t really trying, but that’s another story.)

Everyone knows what happens next: the purloined letter was hidden in plain sight. The detectives were so insistent that so great a secret demanded an equally large degree of subterfuge that they didn’t think to look for it in the minister’s letter-rack. The super-detective, Dupin, knows exactly where to look, and performs a little trickery of his own. It’s a simple story, but it inspired a whole body of interpretation, most notably the seminar that opens Jacques Lacan’s Ecrits. One of Lacan’s many brilliances was to identify the ways in which everyone in the story repeats the others’ roles: one person intercepts a message, another observes the interception but doesn’t act, a third is blind to it. Everyone who appears before the Leveson Inquiry is playing one of the three roles: the trick is to disguise which role it is. Curiously, most witnesses claim to be blind.

Some people find it satisfying to notice that those hauled before Lord Justice Leveson are forced to disclose vast numbers of their text messages and emails, with all their schoolboy errors (Cameron to Brooks: ‘LOL’) and cringeworthy phrasing (J. Murdoch to Hunt: ‘Well played’), in much the same way that the victims of hacking never got a choice about whatever intercepted indiscretions of theirs got presented to millions of readers. If it weren’t for this weird symmetry, it would be hard to explain what the hacked phones have to do with the relationship between Britain’s media and its politicians, or why it took the revelation of the one thing finally to bring about the examination of the other.

Poe has an answer for this too. In ‘The Purloined Letter’, the power granted by the interception depends on ‘the robber’s knowledge of the loser’s knowledge of the robber’. Lacan took issue with the French translation of this line – Baudelaire used ‘connaître’ rather than ‘savoir’, to imply that the hacked knew the person who’d hacked her – but it strikes me that the translation is an improvement on Poe’s ambiguous original. The story’s real twist, it turns out, is that everybody knew everyone else. The buffoon chief of police, when presenting the saga, spends a lot of time trying to disguise the identities of the various eminent personages involved, but everyone knows who he’s talking about: the people who rule the country. After he takes his revenge, even the super-detective turns out to be a ‘partisan of the lady’. The secret hidden in plain sight is that there’s nobody who isn’t compromised.