Advertisers Bailing On Murdoch's Paywalls As The Company Won't Reveal How Many People See Ads

from the not-looking-good dept

Tue, Oct 5th 2010 3:08pm — Mike Masnick

A few weeks back, we pointed to reports suggesting that Rupert Murdoch's paywall experiments with The Times and Sunday Times in London were a disaster, as nearly everyone -- readers, journalists, advertisers and publicists -- were bailing on the publications. Soon after that, however, Murdoch's News Corp. announced plans to also put the big UK tabloid News of the World behind a paywall, with some suggesting that James Murdoch (Rupert's son, who is leading this effort) was seeing success with the other paywalls. However, the evidence on that is still lacking. Instead, we're hearing more and more reports that suggest serious trouble for the Murdochs, father and son, as they double down on an economically dangerous strategy.

Simon Dumenco points us to a recent Bloomberg piece that quotes a guy from ad firm Starcom MediaVest, saying that they've cut their ad spend on the Times and Sunday Times by more than 50% because News Corp. won't share with them traffic numbers:

"We wouldn't put our money where we don't know the numbers, just as you wouldn't invest in a stock," [Starcom's Chris] Bailes said.

Separately, Bailes notes that, thanks to competition, there are better places to spend their money:

"I can go to the Guardian or CNN and get an audience... No one is indispensable."

Of course, we were among the many, many voices that suggested James Murdoch brush up on his economics before pursuing this strategy. Now that he's doubling down, I'd have to, once again, suggest that he update his economic analysis.

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Filed Under: advertisers, james murdoch, news of the world, paywalls
Companies: news corp.

28 Comments

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Crosbie Fitch (profile), 5 Oct 2010 @ 3:23pm

We could give him some advice
He could always bung some dosh our way...
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Daniel, 5 Oct 2010 @ 3:34pm

vast fortunes?
Apparently being that rich means that you can ignore reality.
Give it time. Soon enough, he won't be that rich anymore and reality will seep in of it's own accord.
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cc (profile), 5 Oct 2010 @ 3:52pm

"suggested James Murdoch brush up on his economics"

Economics? Hardly. All that's needed is a reality check and a bit of common sense. I don't think the Murdochs have spent enough time looking at lolcats and know nothing about the internet.
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GeneralEmergency (profile), 5 Oct 2010 @ 4:05pm

In the words of that...
...great orator, Nelson Muntz:

"Haaaa-haaaa"

Mike is so gracious and sweet. He never posts overt "I Told You So" articles.

He lets us carry the "Neener, neener, neener" load.
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GeneralEmergency (profile), 5 Oct 2010 @ 4:13pm

Re:
"i cAn haz paawal"?
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trilobug, 5 Oct 2010 @ 4:22pm

Say Whaaa?
I'm sorry but that is just ridiculous. You want advertisers to pay X amount but won't give them any numbers to justify what you are charging?
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Tom Landry (profile), 5 Oct 2010 @ 4:58pm

wow, how arrogant. Why would anyone in their right mind, who wants to spend money on advertising, do so without knowing exactly how many people are viewing your ads?
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Anonymous Coward, 5 Oct 2010 @ 5:00pm

Put "advertisers and murdoch in the same line in a URL using privoxy and it gets blocked LoL
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Randomguy, 5 Oct 2010 @ 5:00pm

I really feel for them. Poor Murdochs. If only someone had advised them that a paywall was a bad idea.
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out_of_the_blue, 5 Oct 2010 @ 5:20pm

Sorry: Murdoch can probably sustain losses indefinitely.
One of the points about being super-rich not well grasped by those who aren't is the sheer scale of the numbers, frequently so large that only full-time insanity could spend it down. Let's say that Murdoch arbitrarily picked that he'll risk $1 billion on this experiment. Picking 5 years as the period, he can lose $548,000 dollars EVERY DAY of those five years. -- And of course never miss it, won't go hungry.

And he has accountants to figure out how to write it off to least loss, if not advantage (The Rich used to buy failing business as tax shelters). This is only a small part of the empire, perhaps a deliberate money sink for tax advantage. So don't rule this out just yet. My guess is Murdoch has decided on a long slog. He may have to yield here and there to keep advertisers, but if he chooses not to, he won't have to give in while it's current enough for you to crow about.
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Robert Ring (profile), 5 Oct 2010 @ 6:17pm

Re: Sorry: Murdoch can probably sustain losses indefinitely.
So, are you just saying that he can adopt a poor business plan and it will be a long time before his money runs out?
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pancakes_to_the_blue, 5 Oct 2010 @ 6:25pm

Re: Sorry: Murdoch can probably sustain losses indefinitely.
A. hua?

B. It's a public company, Murdoch has to answer to the shareholders and board of trustees. It's not really his company.

C. There is no such things as "fixed cost" when talking about enduring sustained loss as a company. As in, the advertisers leave, they goto Google or wherever and the property becomes that much less relevant to the industry. You cant put a price on mind share. If you try, it's usually staggering. Just ask Microsoft.
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out_of_the_blue, 5 Oct 2010 @ 7:39pm

Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
In brief, yes. But we don't *know* that it's even a bad business plan, because of possible tax advantages.

Overall, billionaires aren't subject to the constraints that you're used to, of limited income for instance. Murdoch still has *tons* of money rolling in. Whether he's fixated on this -- and mollifies shareholders by putting money in -- is unknown. He may be literally crazy, it's frequent among the rich, or have goals unknown to us that he values more than money.

But it's definitely annoying arrogance to think that Murdoch doesn't know what he's doing, nor does his army of accountants, and began this apparent folly without a clue. Pretty near certain you're going to be disappointed if you look for him to be on relief anytime soon.
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Crosbie Fitch (profile), 5 Oct 2010 @ 11:52pm

Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
Of course he knows what he's doing.

He's seen what the recording industry is up to (lobbying for an ISP levy), so he's doing the same: demonstrating that:
1) News-sharing scum are ruining his business
2) There is no possible solution viz 'paywalls don't work'
3) He'll quietly poo-poo any idea of a free market in news
4) He needs an ISP levy to compensate for loss of monopoly
5) Profit!

You can't ask for a levy unless you've been able to kid the public (& their politicians) that it's their fault your business has failed.

Effectively shuttering online newspapers, that weren't earning much anyway, is not expensive if you're going to end up with a levy at the end of it. Remember, a levy is just a cash handout. You don't even have to do any work for it. You just have to show that people are copying your news (or olds) stories contrary to an 18th century privilege called copyright that granted a reproduction monopoly to the press*.

* No-one ever says "Er, hang on? Why did anyone think it was a good idea to sacrifice the public's liberty to share news with each other in order to enrich the press?". The answer is it fitted the desires of the state to suppress sedition (which a beholden press would do). ACTA is a reprise.
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Richard (profile), 6 Oct 2010 @ 5:07am

Re: Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
Why does murdoch want a levy on ISPs whilst at the same time he is trying to increase his investement in Sky television - which is an ISP...

left hand, right hand....
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abc gum, 6 Oct 2010 @ 5:19am

Re: Re: Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
"left hand, right hand...."

Ceiling cat sees what Murdock is doing
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Chronno S. Trigger (profile), 6 Oct 2010 @ 5:24am

Re: Re: Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
While you seem to miss that Sky Television is Sky Television, I don't think Murdoch has a problem forcing himself to pay himself if it also forces several others to pay himself at the same time.
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Comboman (profile), 6 Oct 2010 @ 5:38am

Don't knock it
I wish all Murdoch news outlets were behind paywalls. Any kind of wall for that matter.
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Crosbie Fitch (profile), 6 Oct 2010 @ 5:45am

Re: Re: Re: Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
Quite, this is why the recording industry wants to charge radios for playing their music, whilst at the same time wanting them played.

If you get to charge a fee, you get to reduce or waive it. You also get to own the channel, i.e. no-one else can afford the fees apart from radio stations owned by those who get to charge it.

Same thing works for Media moguls and the ISPs they own. They may well end up being the only ones who own ISPs able to afford the compulsory license fees.

Draconian copyright enforcement is simply softening the public up so they'll beg for an ISP levy.

The state lets it happen because they fancy augmenting the levy with a tax (and enjoying the ability to censor/exclude anyone from the Internet they don't like).
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Robert Ring (profile), 6 Oct 2010 @ 6:44am

Re: Re: Re: Sorry: Murdoch can probably sustain losses indefinitely.
Uhhh, if you're basing your business plan on accounting-oriented profits -- rather than pleasing customers and generating real, sustainable profit -- you're doing it wrong.
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NAMELESS.ONE, 6 Oct 2010 @ 7:16am

real reason
people are setting up NON paywalls and hte advertisrs go, um hey they gotz morz traffics letz advertz therez and makz morez moneies
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Michael Bazelewick (profile), 6 Oct 2010 @ 8:26am

Best Paywall Is Subscriber Base
Provide "subscribers" easy access to additional online information, information that can only be accessed with the hard copy in hand ... enter a keyword link that appears in print and the related information is opened instantly. A simple example would be to tag a baseball story with a keyword link to a free Red Sox screen saver ... no online links, you need the printed keyword to get to it. Or, a link to coupon for deal of the day ... additional pictures, video links, backgrounders ... tons of other examples that could give readers a RTB.
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Anonymous Coward, 6 Oct 2010 @ 10:50am

Re:
exactly? Nobody knows exactly how many people look at ads anywhere, under any advertising model.
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Derek Kerton (profile), 6 Oct 2010 @ 1:46pm

Wow. Nailed it.
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Derek Kerton (profile), 6 Oct 2010 @ 1:55pm

Wow. Nailed it?
Mike, in your Sept 7 post on Murdoch, one Anon Coward said we just want "content for free" but that we're fools because news will die: "Take a seriously look at what's being provided [news] and how much it would cost to produce it."

I commented back that his cost-based accounting view of news could also be applied by a fictional advertiser, ACME who says:

At ACME, we bring tremendous value to your newspapers, Murdoch. We give you the money that keeps the journalists paid, and keeps the lights on. All I ask of you is that you deliver me an audience, and I'll keep giving you the money.

But now, you want my money for free? You want to cut the audience by 90% and you expect me to continue paying your bills? [and paraphrasing anon coward] "Take a serious look at the money I'm providing, and how much of an audience it would take to make it worth it."
Did I get that right?
http://www.techdirt.com/articles/20100903/16545310903.shtml#c226
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Hephaestus (profile), 7 Oct 2010 @ 6:43am

Re: Say Whaaa?
It is an attempt to prevent people from finding out just how badly the paywall is going. They can state publicly that they have gotten 40 times as many subscribers than they actually have in order to hype their "success". But if they actually give false numbers to the advertisers, it becomes fraud.
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Hans, 9 Oct 2010 @ 8:14am

News Pirates
The news pirates have killed the news business. They've killed it I tell you. Murdoch was forced to put up a paywall to protect his property that was being stolen. Now his advertisers are leaving, and his revenue will plummet. Someone needs to do something to save the news business. The government should step in and protect all those jobs. Think of the children growing up without a free and open press. Think of them never knowing the feeling of a real newspaper in their hands. Oh the humanity.
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Yeebok (profile), 12 Oct 2010 @ 2:07am

Re: News Pirates
You forgot to include file sharing and terrorists in there, but otherwise I think you've nailed it.
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