Big News Media vs. Aggregators

As traditional media continues to lose money and newsrooms across the country are shutting down, many fingers are being pointed at the Internet, particularly news aggregators.

According to the theory that news aggregators are destroying traditional news, services like Google News and The Huffington Post “are free-riding, reselling and profiting from the factual information gathered by traditional media organizations at great cost.” This is, as Rupert Murdoch described it, “theft”.

According to Murdoch “There are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production. They are feeding off the hard-earned efforts and investments of others. And their almost wholesale misappropriation of our stories is not ‘fair use.’ To be impolite, it’s theft,” (Kirby 2010).

Rupert Murdoch, owner of NewsCorp, is leading the fight against news aggregators. Murdoch was the first newspaper publisher to get into the business of online sixteen years ago when he bought Delphi Internet Services. The venture, however, never took off, and in the meantime, more and more newspapers crashed and burned. Now, Murdoch is proposing a full-fledged battle, and his first opponent is Google.

Murdoch’s main weapon is blocking Google’s search engine from indexing News Corp. sites. According to Kirby (2010) Google sends news outlets around 100,000 hits per minute, which translates to a lot of revenue, however, Google is making plenty of profit of its own. The search engine has been able to make billions in profits from free content on the web by selling advertising beside results. Content creators can fight Google and other news aggregators but what they get if they win is a 50% drop in traffic (Huffington 2009).

Murdoch’s next attack? Putting up pay walls on all content. For a long time, though, Google could even get users around pay walls to view content for free. Now if users access a paid site through Google, they will be limited to five free page views to subscribe.

Newspapers make about 80% of their profit from advertising and the rest from subscriptions. The theory, when print news went online, was that the addition of online ad revenue would make up for the cancellation of print subscriptions. However, content is quickly copied and reposted across the web, leaving online newspapers and their advertisers high and dry. In the third quarter this year, online newspapers were only able to generate $623 million in ad sales, while print versions earned $5.8 billion (Kirby 2010).

So what if News Corp. sites are blocked by a pay wall? With the smorgasbord of online news content, readers will happily go elsewhere. Unless the rest of news’ big business goes behind the pay wall, as well. News Corps other papers, including the New York Post, the Times of London and the Australian will be protected by this summer and MediaNews Group, Inc. plans to do so with its 56 daily papers this year. Bloomberg and the AP are both considering their options as well.

“People certainly won’t pay for information that’s easily available elsewhere for free, but I do think there’s a lot of evidence that they will pay for truly differentiated, distinct journalism,” says Gordon Crovitz, former publisher of the Wall Street Journal (Kirby 2010).

Barry Diller, CEO of InterActiveCorp concurs, pointing out ““I absolutely believe the Internet is passing from its free days into a paid system. Not every single thing, but anything of value,” (Kirby 2010).