Rupert Murdoch wants to apply Kindle model to newspapers

 

Amazon Kindle is the flagship for the emerging model of specialized devices with embedded wireless, and News Corp CEO Rupert Murdoch is seldom one to miss a major communications trend. He said last week that his firm is investing in a mobile device for reading newspapers, which like Kindle and many other examples, would create new revenue streams and channels to market for established businesses, with the wireless operator being invisible to the user.

Murdoch offered few details, but said the color device would have a larger screen than other handhelds. In return for an experience optimized for reading newspapers on the move, users would be expected to pay a subscription. "People are used to reading everything on the net for free, and that's going to have to change," Murdoch told a cable conference in Washington DC.

He threw down the gauntlet to Google, indicating how dedicated single-app devices, if sufficiently attractive and well priced, could be used to keep individual brands in power, and fragment the open internet experience. Murdoch questioned whether aggregators like Google should be allowed to offer newspaper content without paying fees for it.

Should we be allowing Google to steal all our copyrights? If you have a brand like The New York Times or The Wall Street Journal, you don't have to," he went on. "You can say thanks but no thanks." While the WSJ, which Murdoch’s company owns, has succeeded with a subscription model – and is also the second most requested newspaper on Amazon Kindle - the NYT has not, which the News Corp chief sees as a weakness. “The inventory of display advertising on the web is doubling every year. They're never going to make money on an advertising model to re-place what they're losing."

While Google has generally succeeded in taking the moral high ground in the internet wars, it will come under renewed fire from content owners as they see the chance to grab a significant role in the mobile web value chain, before that solidifies – and we can expect the same kind of battles over content ownership and profit shares that characterized the early PC internet.

Robert Thomson, editor of the WSJ, says Google profits unfairly from content producers and “shamelessly... encourages promiscuity”, so many users do not associate content with its creator. Murdoch pulled back from a plan to make the WSJ’s content free when he took over the pa-per in 2007.

Of course, Murdoch’s next decision after launching the newspaper reader would be how to get it onto suitable networks – through encouraging carriers to offer it, or more likely, creating a News Corp MVNO, retaining full control of the brand and experience and embedding the wireless fees in the overall subscription cost. This trend could finally move the world towards Nokia’s dream of everyone carrying multiple mobile devices, each optimized for a different activity or hobby – provided users prove willing to lug about a whole briefcase full of gadgets.

Yesterday saw Google CEO Eric Schmidt responding to Murdoch’s attach in a speech at the Newspaper Association of America's annual meeting in San Diego. He said internet players should not be blamed for the decline of newspaper readership, but a failure of publishers to keep up with the pace of change and listen to their readers. "I would encourage everybody: think in terms of what your reader wants," he said. "These are ultimately consumer businesses and if you piss off enough of them, you will not have any more."

He pointed out that Google has a multimillion dollar deal to distributed Associated Press content and host it on Google servers, and said he believed most newspaper circulation should be online and/or mobile, not printed. “There should be five times, 10 times more circulation because there's no distribution cost," he said.