October 26th, 2009
News Corp. prepares to destroy more online value
One thing I like about News Corp. is their utter online cluelessness.
One word. Myspace. When News Corp. paid $580 million for MySpace’s parent in 2005 it was the undisputed leader in social networking. Now it’s an also ran.
News Corp.’s Photobucket once ruled online photo sharing. Now Flickr is catching up. Its Scout.com and Foxsports are being pushed hard by Rivals.Com and ESPN.
The main reason? News Corp. is impatient, it tries to monetize everything quickly, and thinks its unique content is worth paying for. No one’s unique content is worth paying for when there are ample alternatives.
So now News Corp. is pushing to ruin another potential online gold mine, Hulu. News Corp. owns 45% of Hulu, and is now screaming that it will make users pay for access, just as it will make them pay for access to everything else it owns.
The problem is this idea of make them. You can’t make people wear underpants online. When you charge people for something — anything — you cut your potential traffic by 90% or more. You become invisible to search engines, except for your main page, so you have to flog your own stuff.
Most of News Corp. is very bad at the whole competition thing anyway. Its whole schtick is to push a specific sensibility, to have a monopoly on that sensibility, but its online efforts don’t have that sensibility. They could monetize that sensibility if they wanted to play the niche, but instead they try to monetize what everyone else gives away.
If people really love Glenn Beck, in other words, you can make them pay for Glenn Beck. But you can’t make them pay for something they can get free down the street. Like news. Or sports. Or TV clips.
You can’t force the market. If you’re selling something others are giving away they won’t buy from you. The price you charge must be related to what everyone else charges. And if you try to make everyone else charge it’s called collusion.
What News Corp. is trying to do is like buying OpenOffice and sticking a $495 price tag on the box. Won’t work.
Why is News Corp. obsessed with charging people? Probably because their cost structure is out of line. YouTube, thanks to Google, has its costs under control. Until News Corp. can deliver costs close to that Hulu can’t compete.
So they blame you instead. Yes, you, greedy online consumer who expects something for nothing and chicks for free. It’s all your fault they can’t make money. But they’ll take it from you, force it out of you, make you pay.
Like I said, clueless.
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
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| 10/26/09
