“The current days of the Internet will soon be over”

Traditional media icon Rupert Murdoch is waging war on the internet as we know it – but someone forgot to tell him that the war is mostly over and the old media models lost the fight.

The Old Media Death Rattle

In a conference call today, Rupert informed investors of major profit declines – quarterly profits fell almost 50% from the prior quarterly period.  While this makes the Fox media empire still profitable to the tune of hundreds of millions of dollars a month, this isn’t enough for Mr. Murdoch.

He plans to take the entire Newscorp brand where the WSJ and AOL have gone before:  into the realm of paid content.  Rupert infamously claims “The current days of the Internet will soon be over” as he somehow expects other content providers to follow his lead into a business model largely discredited in the ’90s.

It isn’t uncommon for established business interests to remain inflexible in the face of technological and social change, but what is rare is for those stubborn reactionaries to achieve their goals of turning back the clock to a simpler time.  Of course, it isn’t impossible for the internet to de-volve into a media distribution network that resembles cable TV more than the internet we’re used to, but it would take quite a few heavy handed actions from the government in the form of regulations & subsidies – and the campaign cash such a sell-out would raise would probably not buy back the votes of such unpopular legislative thinking.  Its called “counter-revolution,” a last grasp of a fading aristocracy.  You may not have heard it in your history books because it usually doesn’t work – it typically drums up opposition to said authority.

Closing Pandora’s Box

Murdoch’s central argument is that the price of content has been diminished below sustainable levels.  In most economic models, the way to increase price is to increase demand or lower supply.  With finite resources like oil, this works wonders.  If OPEC wants to make more money per barrel, they just pump fewer barrels and watch the price rise (of course, there are other factors like currency exchange rates, industrial & consumer demand, etc.. but for the most part, lower supplies lead to higher prices.)

However – putting digital, informational content behind a ticket counter won’t decrease the supply of it.  In a world of instant digital piracy, good content will be immediately approrpriated and distributed around the world before an IP enforcer can even open up his browser.   Legitimate sales of content would never make enough cash to fully enforce this “illegal” distribution.

Democracy and Knowledge Monopoly

Information about the politicians and businesses that influence our lives can’t be kept in the dark – while the originator of the information deserves attribution & recognition, they can’t hoarde the knowledge that keeps society from making stupid decisions.  Monopolizing or hoarding the news is an epitome of self-serving and anti-social behavior.

Yet as Mr. Murdoch flies around the world in his private jet, he’s sure to be grumbling about how the little people have ripped him off.  We’ll see how this plays out as a business strategy, but I’m not gonna be the one jumping to invest in it…

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