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The Pen Is Mightier Than The Sword, But Social Media Is Mightier Than Both

Updated on August 29, 2012

Competitive Threat

Google is a threat in Rupert Murdoch's eyes
Google is a threat in Rupert Murdoch's eyes

Rupert Murdoch declares war on Google

In 2009, as the global economy was struggling with excess capacity and weak demand, Rupert Murdoch declared war on Google. Informed opinion at the time, assumed that the casus belli was commerically driven. Murdoch initially appeared to have embraced Social Media, with his purchase of MySpace. As a creator of Content with his portfolio of journalism companies, including the Sun, Wall Street Journal and the Times, it was believed that he was simply bolting on a social media delivery mechanism with the acquisition.

The death of traditional journalism at the hand of social media has been opined for a long time. The growth of companies such as Facebook and Linkedin; and the commensurate decline in newspaper circulation and advertising revenue, are continually sited as signals from this battlefield. The growth in mobile telecommunications is believed to be the catalyst that will accelerate the digital victory over traditional journalism.

For Rupert Murdoch therefore, digital media was a disruptive technological challenge to his oligopoly position in the media. MySpace would be his tool, to first study the challenge; and then to neutralize or monopolize it. His strategy was based on the belief that Content is more valuable than delivery system; and that a monopoly of Content Creation would ensure victory. Murdoch believed that cheap delivery, via the digital medium, would allow him to cut costs in his traditional journalism delivery business; whilst still being able to charge premium rates for content and advertising. Far from being a disruptive margin threat, Murdoch saw digital media as a productivity tool.

His attack on Google News, under the cover of piracy, was therefore an attempt to defend the pricing power of his highly expensive fixed cost empire.

Shooting the Messenger not the real threat

Murdoch's strategy was based on disabling search engines' ability to offer access to news from traditional journalist sources for free. What this ignored however was the fundamental disengagement of readers from traditional journalism. The proliferation of social media and mobile information capture and dissemination devices, such as smartphones, has had a tremendous democratising impact on the news. The news is now instant and does not require a journalist and crew on site; nor does it require an editor or production team. News is spontaneously created in the moment and posted immediately by filesharing sites.

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Emerging Digital Advertising Threat

The game-changer came when the advertisers started to embrace social media. Social media allows advertisers to target specific audiences and affinity groups; in addition these targets then re-broadcast the advert to their own network. The economics of digital advertising are also compelling, because it is exponentially cheaper than traditional methods. In the new economic landscape of austerity, after the Credit Crunch, consumer and advertising budgets are constrained. In this environment, social media and digital advertising are the great enablers of commerce. Digital advertising took an almost five per cent bite out of the cake during the recession; it is now poised to eat traditional media's lunch.

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Content Management and the Death of Journalism

The macroeconomic fundamentals in the global economy, combined with the evolution in telecommunications and the social media revolution are the Unholy Trinity for traditional journalism. Journalism has become a sub-sector of the emerging sector of Content Management.

The Empire Strikes Back

Rupert Murdoch is a fighter; and appears to be going down fighting. Having drawn the battle lines along the issue of Content Management, the Murdoch journalism empire set out to "manage" news Content in a manner that competed with the challenge of social media. Privacy was invaded to generate the salacious points of interest; that would drive readers back to Murdoch Content. The strategy ultimately backfired when its legality was challenged by the courts.

At the end of the day, the consumer of Content will decide who the winner is; by clicking and following what and whom they want, rather than being forced to pay for many stories that they will never read.

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