Monday 2 July 2012

Murdoch splits his business's in two giving new media a new focus. This is a structure which traditional publishers should heed. He knows what he's doing.



(Jack Kennedy gets to meet Rupert Murdoch).


The split last week, of what is affectionately known as "the Murdoch empire" when in fact, Rupert Murdoch is a large but 40% minority shareholder, a business he inherited from his father, has really got attention. Sure, because of the recent phone hacking controversy but also because there's a sense that a sleeping giant has awoken. And when they do, run.


Last week he split News Corp into two - entertainment/media (includes 20th century Fox, Fox news) and print/publishing (includes The Sun, The Times, WSJ, New York post, HarperCollins etc). The entertainment business is valued at circa 50 billion usd alone.


In other words, splitting the businesses along the lines of old media and new but including in it a distinction between a published brand and an online one. In other words, two versions of the same title behaving differently if they're online and if they're offline. It's a simple idea that's just genius.


He knows what every publisher knows - there's life in traditional media but massive potential growth in their online brands. By separating out the two (indeed, exactly as the Irish Times have done here) gives new focus. He also knows that he can get it wrong and owned up to his "massive mistake" in the myspace investment, selling at 94% off his 6bn usd valuation and losing a small fortune. 


Separate offices, separate management, separate businesses means that the hacks of old can keep doing their thing, whilst the new turks can find a new way.


It is, the perfect thing for a publisher to do and does not spell a lack of confidence by Murdoch in his traditional business. Just a new focus.


According to Techcrunch he said clearly, "People will pay for news. It is the most valuable commodity in the world" and he pointed out that the charging models for newspapers and apps are working, “And we are going to push them even harder.”


In a similar vein of The Wall Street Journal/Pulse announcement earlier in the week and in contrast to the Flipboard/New York Times debacle the same week, what it all means is that there's new impetus to sort this all out.


The UK Times dropped its online paywall for the Queen’s Jubilee anniversary, the first time it’s done this since charges came into effect in 2010.


Those charges initially caused a 90 percent decline, a drop of 4 million users, but numbers have been steadily increasing since March 2011 and are now at 265,740 subscribers. So Murdoch might be right.


Talking to Charles Blandford of The Financial Times dublin, he reckons that 50% of the overall group revenue comes now from digital. 50%. Mind you, when it comes to live streaming, FT Digital were the first over the fence to become a separate business unit. And the first that we admired as being innovative live streamers.


On the Murdoch split, Sarah Gordon in the FT this Saturday reported, "the business's long-term growth prospects are cloudy...grappling with the challenge to make money in the digital world". And of course she's right. One way to grapple with it though is to do exactly as he's done, run both separately.


I've blogged before about the decline of TV Advertising and the movement of ad dollars online http://streamabout.blogspot.ie/2012/05/new-nielsen-data-finds-trust-in-tv.html


And I've also blogged about BBC Research recently that shows that online publishing is more popular than real world http://streamabout.blogspot.ie/2012/06/online-newspapers-more-popular-now-than.html. 


Indeed in a week where most large Irish publishers suffered annual research which showed massive declines in circulation, none of this will come as any surprise. All this is, is further evidence of the switch to digital versions, so let's not panic. And as the Irish publishers continue to wrestle with the problem, they're making great strides in getting there. Trust me.


One way to deal with it is the Murdoch way.
Leave the boys who know what they've been doing for years, alone to get on with it.


But get people who understand the space to look at your web assets and get on with that. Keeping them both apart.


And in doing that, you protect what you have before someone comes along and steals your lunch. And you have traditional media mouthpieces to get it all out there.


It's a threat. Turned into an opportunity.
Murdoch gets it.

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