The Insane and the Genius

A quote attributed to Albert Einstein argues that ‘insanity means doing the same thing over and over again and expecting different results’. Scriptwriter Bruce Feirstein, who wrote some of the James Bond movie scripts, asserted further that the distance between insanity and genius is measured only by success.  Armed with such heavyweights-uttered quotes, we can reflect on things billionaire media mogul Rupert Murdoch, Chairman and CEO of News Corp. said about the future of online news.  There’s no doubt about the fact that Murdoch is a business genius. The Australian born entrepreneur turned a humble collection of local publications into a world class media juggernaut. He is listed in Fortune Magazine as one of the 25 most powerful people in business. His company, News Corp, is described as “a global force across the board – film, television, print, and even online (it owns the social networking site MySpace).” Murdoch’s $5 billion acquisition of Dow Jones, a leading provider of global business news and information services, his ownership of the Wall Street Journal and the launch of the Fox Business Network position him at the epicentre of the world’s business news-and information hub. 

Murdoch’s powerful hegemony over world media was hardly dented by the ongoing financial crisis – but his finances took a massive beating. According to The Guardian, News Corporation‘s quarterly operating profits took an astounding 47% nosedive to $755m, the newspaper division quarterly profits plummeted from $216m to $7m year-on-year and TV profits plunged from $419m to $4m. News Corp had to sell assets and retrench 3000 employees in 2016. 

Does Feinstien’s maxim work both ways, in other words – will a less successful genius exhibit signs of insanity?  According to CNN’s Business site, Murdoch argued that “The current days of the Internet will soon be over” and that the existing Internet business model was “malfunctioning.” Murdoch then said that his company’s Web sites will charge for content within the year. Referring specifically to the Wall Street Journal, CNN reports that Murdoch said that soon users would pay “handsomely” for WSJ content. 

Let’s run this tape again, frame by frame. We have two intriguing facts: 

  • 1. “the newspaper division quarterly profits plummeted from $216m to $7m year-on-year”
  • 2. “CNN reports that Murdoch said that soon users would pay “handsomely” for WSJ content.” 

Having lost 96% in year-on-year profits on his media assets, Murdock is determined to turn his loss making assets around by charging online readers. Does he really believe that that those who did not buy, say, the printed version of The New York Post, will fall over themselves and each other for the privilege to pay for NYP content online? Why would any person pay for online content when it is available elsewhere for free? If Murdock hopes that forcing people to pay for content on his publications would pressurise other online content providers to follow suit (thus creating a change in people’s online information consuming habits) – he’s sorely mistaken.  The Internet is moving away from paid content – and that move is irreversible. All that would happen, if News Corp. follows their CEO’s folly, is that content seekers will move over to content-for-free publications.  It is insane for Murdoch to believe that revenue models that applied for over a century to print media would simply and naturally continue to apply to online publications. 

Murdock may be right in assuming that specialised content – the kind that cannot be bought elsewhere, for example – some of the WSJ’s content – can be sold to focused content-seekers, people who look for specific content. Murdock can also charge (and receive) fees for archived and searchable content. I doubt, however, if that is what he has in mind when he says cockily that soon users would pay “handsomely” for WSJ content.  Charging for focused content and archived material is definitely not going to turn around a $209m slide in profit.   

In a Wired article (Free! Why $0.00 is the Future of Business), Wired editor-in-chief Chris Anderson argues that “[o]nce a marketing gimmick, free has emerged as a full-fledged economy. Offering free music proved successful for Radiohead, Trent Reznor of Nine Inch Nails, and a swarm of other bands on MySpace that grasped the audience-building merits of zero. The fastest-growing parts of the gaming industry are ad-supported casual games online and free-to-try massively multiplayer online games. Virtually everything Google does is free to consumers, from Gmail to Picasa to GOOG-411.”  

Freeconomics, as Anderson calls it, is here to stay. 

What happens, then, if Murdock discovers that insanity brings little money and turfs all his media assets? It is reasonable to assume that other content providers will move in quickly to fill the void – they will operate with smaller profit margins, offer massive content selections for free and thrive on various cottage industries surrounding their content repositories.   

When Chris Anderson says that “a generation raised on the free Web is coming of age, and they will find entirely new ways to embrace waste, transforming the world in the process. Because free is what you want – and free, increasingly, is what you’re going to get” — is this genius or insanity?   

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