Murdoch touched on everything from its relationship with Google and Apple, to paywalls for online newspapers, iPad applications and more.
These are my notes:
Q: When is The Daily going to launch?
So first, The Daily is going to be a very exciting digital publication, which I think should be launching in the next few weeks, I hope.
It’s going to be a brand new piece of journalism. We want to get out there quickly, at a good price, and I think it will surprise people. I also think it will succeed or fail on the journalism part, not the bells and whistles.
You already employ about 126 people on the journalistic side for The Daily, and the price will be 99 US cents. Is that sufficient?
Well, we wanted it to have a very good price, affordable for most people, at 99 cents a week.
It lowers the barrier for people to enjoy high quality journalism. We realize the pricing models for apps and paid journalism as a whole is still developing, whether it will be bundled or tiered, and so on.
What we’re focused on is making the experience super simple, at great value, without stopping us from investing in really unique journalism. You know, as opposed to taking your RSS feeds, cutting and pasting wires like other publications. We want to break out of that.
How many The Daily editions do you have to sell to call it a success?
We’re taking this milestone by milestone, and we don’t know what pace to expect, and how the dynamics with the weekly subscription will work.
We have high hopes for the US marketplace in particular, though.
You’re now a big part of management at News Corp. How does it feel to be the future of the company?
Not just me – I think a lot of people will be the future of News Corp, but it’s an exciting company, I believe we’re really unique. We’re a mix of media businesses, and we’re truly global.
If you look at our breadth of businesses, we’re clearly about storytelling. For digital, this is definitely the best and at the same time most challenging time for the news business.
You obviously still deliver news on paper, so what I’m wondering is whether you consider News Corp to be and old economy company or a new economy company?
I think the distinction between that ‘old’ and ‘new’ economy needs to be broken down. When we think about our business, storytelling, we don’t see it that way, and it shows in our investments in the space.
You’ve talked about apps, where it’s really a mixture of things – games, music, social networks, etcetera. It’s a frictionless environment, and as copyrighted content owners we’re in a really good position there.
Also, we see that the cost of distributing those ones and zeros continues to go down. We look at tablets, and for a journalistic product like The Daily, we acknowledge that it’s transformational. In the end, journalistic quality is key to everything.
How much of your revenues are digital as opposed to traditional?
We don’t break it out that way, but I can tell you that the vast majority comes from digital and paid television. On a combined basis, in Europe for example, over 70 percent comes from our digital TV business. These are new, 21st century businesses, with brand new technologies, in voice, broadband, with content at its heart.
The paper-based part of our business is about 15 percent, maybe less.
Would you still invest in paper?
Well, we are, and yes, I think we will in the future. The Sun just had a record Christmas, and we build on our relationship with our readers and our advertisers, who are still responding really well to paper products. Our books business is thriving as well.
Of course, we had the economic crisis, and there’s this perception of decline in the newspaper business. But Big franchises tend to still do really well. The scarcity of great brands is going up, which means the value increases along with it. This is a critical factor. The middleground I think is currently suffering, not the top players or the great niche players.
Which areas of this world are you investing in? What are your preferred marketplaces?
It depends largely on the business. We like to have thinks like the National Geographic channel in lots and lots of markets. But when we dig in, with big operations and lots of investments, we’re forced to pick and choose. We like market that a big of scale, transparency, little regulatory uncertainties, but also where there’s potential for real penetration.
We like India a lot from a profit perspective, but we also like being in Western Europe, and Germany, Italy and the UK in particular. It remains an enormous playing field.
In the end, we invest in giving people choice, quality, great storytelling, simple to use but solid technology at a fair price. We tend to choose carefully, but when we look at Europe and Asia, the transparency is the key filter.
How do you evaluate chances versus risks? What kind of risks would you not take when entering a new market?
What we’d like to do, is making success and failure our own making. If we mess it up, to be able to bet on ourselves to not mess up too badly. But when you depend on other parties, like politicians and regulations, it gets really hard. That part of the equation still remains a mystery for me.
What about Turkey?
You would know more about that than I do. I think Turkey is a great marketplace, and we’re proud of what we’ve done there so far. Turkey is an exciting marketplace, but the question is which opportunities at which price. The country is reasonably transparent, but you have to layer on top of that: value.
Last year at the Monaco Media Forum, you were quoted on your ‘first rule of monetization': you said “if you’re going to monetize something online, don’t give it away for free”. The Times, and The Sunday Times, now have a paywall.
What are your experiences so far?
The experience has been pretty good. The point that I was trying to make when I said that, was that you can sell quality content to customers. Today, in europe, 70 percent of our revenue comes directly from the customer.
That’s a durable and powerful business, that lets you avoid cycles. Online, this is particularly true, because with all that inventory you lose the pricing power, because it’s impossible to create scarcity. Selling something at a fair price to fewer customers is a better place to be in.
The reaction from our readers has been very positive. Obviously, we have the experience with the Wall Street Journal in the US, which has been very successful in selling bundled subscriptions.
The Times and Sunday Times come from a different place, as they were free before, so our audience has undeniably contracted, but our readers are happy and advertisers are positive.
The numbers are looking very good, we’ll release some of them in a month and a half. The iPad app part of the publication is drawing a frequency of reading that has surprised us a lot. With the app, we’re seeing dedicated readers spending 30-40 minutes, downloading content on a daily basis.
Of course, these are the people that stop buying the newspaper, so that’s somewhat of a problem. The substitution is much more stark than website vs. newspaper.
Are you going to put The Sun behind a paywall at some point?
I think it’s a real question for the big popular papers, on how to tackle this. The customer for that publication is of course very different, so I think we have to be very cautious there. We have another tabloid behind a paywall, and we’re looking at the metrics very closely.
You will see the online strategy of The Sun develop very quickly, and I think there will be a strong paid component in it. But we have to take care.
How do you see Google? Is it a thief, or a reliable partner for the perfect news kiosk?
Look, there are a lot of questions on what Google’s relationship is with copyright owners, and what it will be like in the future. But the company is very engaged, there’s a dialogue – we don’t have any answers yet but negotiations are underway.
The question we ask is: how do you get compensated for copyrighted content. That notion of getting paid either a wholesale price relative to how much Google gets paid, or other payment options, these are now on the table. Not too long ago, they weren’t.
Today, I think the conversation with Google is much more constructive. Whether it comes to a good conclusion, we’ll see. We’re very happy to work through different structures to see what will work. Maybe it won’t work at all, so then we’ll need to evaluate what we do. But every party at the table wants to get good results, in good faith.
The good news is that there’s enough out there to create a good dynamic. The fundamental thing is we need publishers to start asserting the value of copyrighted content much more, in general. Because if publishers end up no longer investing in quality journalism, the media will be up for grabs for governments and oligarchs, and who wants that?
Eric Schmidt will soon be on stage here. Anything you wish from him?
Wait, don’t I have to talk to Larry now?
Let’s move on to Apple, with whom you’ve been working together. Is it a good partner for you?
We partner with them in a variety of areas, from iBooks to iTunes for our movie and TV shows business, so we have constant discussions about pricing and distribution methods. The interesting thing is that we create copyrighted content across the board, so we’re all learning our way through in different areas.
With Apple, there’s positive engagement, we get a huge amount of support from them on The Daily for example. Obviously, we’ll have arguments with them in the future, on pricing, rules, and so on. But I would call it a positive relationship.
When is News Corp going to launch its own tablet?
Not right now.
What’s the most frightening thing you’ve witnessed in the last six months?
I think the most frightening thing for me was press freedom being eroded in the Western world. We see rules getting introduced in places like Eastern Europe, in some regions a system of regulation around libel labs, etcetera. This is encroaching on investigative journalism, with state media taking over in some parts of the world. That needs to be rolled back.
How many journalists do you think you will need in the future?
Hopefully more. There needs to be an incentive to invest in journalism – I would say professional journalism is more important than ever.
It’s really the only way that you can have a true dialog in a democracy.