Over the past number of months a consensus has formed among media companies trying to do business on the Internet that advertising alone
cannot support their efforts: It must be advertising
plus subscriptions. This view has been most vociferously propounded by
Rupert Murdoch, who, to my knowledge, has never been on the Internet, and by Barry Diller, who hosted a conference at the headquarters of his company, IAC, in New York, last week and
forcefully declared that someone had to pay.
This new view—pretty much the opposite of what advertising-obsessed traditional media used to believe—comes about partly because Internet advertising turns out to be worth much less than traditional advertising. (On the Internet advertising is accurately measurable, and in traditional media it is mostly not—meaning old media could wildly cheat its advertisers.)
Then, too, there is the recession, which means that even cheap Internet advertising is shrinking rather than growing. Also, there is the new and alarming view that advertising itself is an increasingly challenged idea (i.e., advertisers have become smarter than media people). And, finally, and most important, there's the realization that if traditional media companies don’t find a way to make more money online, which is undermining their offline businesses, well, then, traditional media people won’t have jobs (or empires).
In other words, there is no alternative but to charge
somebody.
The only problem is that nobody knows how to get somebody to pay. For one thing, there’s no simple mechanism for online payments. And for another, there’s an entire Internet culture that includes consumers who are unaccustomed to paying, and competitors to traditional media companies who have no interest in charging.
The vast and probably insurmountable difficulties of getting anybody to ante up are clear to the traditional companies, but many, if not most, of the executives in those enterprises are taking the view that, while they may not know how to get people to charge, they will find a way—just because they have to find a way.
This is a Hail Mary pass. They’re looking otherwise at the end of a way of life—so why not hope against hope.
And partly it’s classic old-media thinking: Traditional media forms a tight monopoly, so if everyone in traditional media comes to want the same thing, well, then, it comes to pass. Of course, that monopoly has long since been broken—something Rupert Murdoch, not using the Internet, does not quite understand.
And finally, it is a process for so many of these guys of trying to run out the clock. Many people will keep their jobs through the next phase, failed though it will ultimately be, of making shareholders and partners and content makers believe that there might actually be a strategy and a way out of this intractable mess. Indeed, many will be retired before everybody concludes the traditional media game is done and the Internet people take over.
More of Newser founder Michael Wolff's articles and commentary can be found at VanityFair.com, where he writes a regular column. He can be emailed at michael@newser.com.
