Anyone who is really, really interested in online paywalls can find my reply to Felix Salmon’s extensive critique of my column this week in the comments on his blog post.

My Thursday column in the FT is on the travails of newspapers.

The New York Times carried an interesting piece on Roger Ailes, the head of Fox News, this weekend but the article would probably be fading into the news cycle by now except for the astounding quote from Matthew Freud, the British public relations executive.

Mr Freud, who is married to Elisabeth Murdoch and is an adviser to James Murdoch, is extremely well-placed to reflect the Murdoch children’s view of Mr Ailes. Being head of a public relations firm, he also knows how to say what he means.

This is what he said:

“I am by no means alone within the family or the company in being ashamed and sickened by Roger Ailes’s horrendous and sustained disregard of the journalistic standards that News Corporation, its founder and every other global media business aspires to.”

That is a statement to be savoured indeed. Not only is Mr Freud contemptuous of Fox News and Mr Ailes but he is “by no means alone within the family” in those views.

Continue reading "The liberal forces within News Corp fight back"

The world before the internet used to be far more comfortable for companies caught doing embarrassing things, as both KFC and H&M have discovered.

Do something wrong - or even something that American internet users deem to be wrong - and you will be pushed on to the defensive extremely rapidly.

Wednesday’s examples were H&M, which was caught by the New York Times shredding unsold clothes from a Manhattan store, rather than donating them to the homeless; and a KFC television advertisement in Australia which provoked (in my view misplaced) accusations of racism in the US.

Whatever the rights and wrongs, the internet firestorm quickly raged out of control. The KFC ad was picked up by outlets including Gawker - which was particularly hostile - and the Huffington Post, while the H&M story is a trending topic on Twitter as well as being featured by HuffPo.

KFC appears to have reacted faster than H&M by pulling the advertisement - which showed an Australian cricket supporter offering West Indian supporters fried chicken. H&M’s Facebook page is still full of very hostile messages, with no clear corporate response.

Of course, before the broadband internet, it would have been impossible to watch an Australian television ad in the US shortly after it aired but that technological barrier has now gone.

As to H&M, it was embarrassed in the old-fashioned way, by a newspaper reporter, but the amplification of the outrage online is a new phenomenon.

The discomfiting lesson for companies is that they need to be able to react rapidly to PR crises that blow up on the internet - preferably instantaneously. Things can get out of control very fast.

James Cameron’s Avatar has opened strongly, despite the winter storm on the east coast of the US, and is said to have made $232m on its opening weekend around the world.

It is, however, not pleasing everyone. In particular, the story of how the Na’vi, a race living on the distant planet of Pandora, see off an attempt by a corporation to move them from their wooded idyll in order to exploit their mineral rights, is raising some hackles.

James Pinkerton, the Fox News reviewer, put it thus:

OK, so the politics of “Avatar” are left-wing, anti-corporate and anti-imperialist. There are even some even some indirect digs at George W. Bush and Operation Iraqi Freedom. A left-leaning Hollywood movie: no surprise there. So Third Worlders will eat it up. The Iranians, for example, should love “Avatar” - if, of course, their government would let them see it, which surely won’t happen.

So which is the left-leaning company that has produced this soft-minded bilge? Well, that would be 20th Century Fox, another arm of Rupert Murdoch’s News Corporation.

Avatar will probably be one of the biggest money-spinners for News Corp, as was Titanic, Mr Cameron’s 1997 epic. That, incidentally, also had a rather leftist tone, with the poor people stuck in steerage displaying more moral fibre than the rich folks above.

Mr Murdoch is known for his right-wing views, expressed through papers such as The Sun and now the Wall Street Journal. But the entertainment arm of Fox has a history of producing films and television programmes with a subversive edge - notably The Simpsons.

Hollywood loves nothing more than native tribes fighting back against oppressors, and people trying to save the environment, so Avatar fits well in that tradition.

Mr Murdoch, of course, has declared his own environmental sympathies. He is not known for being left-wing or anti-corporate, but he puts up with it at his own studio.

Book publishers are the latest media enterprises to be hit by the digital one-two punch - facing a revenue squeeze from their content moving to electronic distribution, while being berated for not embracing their fate.

The New York Times has a report on Stephen Covey, the business author, transferring e-book rights from his print publishers Simon & Schuster to Amazon for publication on its Kindle reader.

Mr Covey will reportedly gain more than half the net proceeds paid by Amazon in royalties to Rosetta Books, the e-book publisher through which he made the deal.

Meanwhile, in another corner of the NYT, Nick Bilton complains bitterly on its Bits blog about publishers, led by Simon & Schuster, deciding to delay electronic publication of books in order to preserve hardback sales, in the manner of the “windows” for release of Hollywood films to the box office, DVD etc.

Mr Bilton, a co-founder of a hacker collective in Brooklyn, argues:

“The publishers seem to be picking a fight with the wrong team: their customer. They are punishing the people who buy their content instead of making it simple for those customers to hand over their money, instantly, from any location in the world.”

This is painfully naive. It is not the consumer about whom Simon & Schuster and others are picking a fight but a distributor with market power in a nascent digital industry.

The idea that book publishers are failing to act in their own interests because they somehow do not want to serve their customers, or because they do not “get” electronic distribution ignores the business reality they face.

Publishers supply books to Amazon at the same wholesale price - about $12 per title - as to physical stores, so an e-book sale is currently worth the same as one on paper.

However, they are rightly afraid that Amazon will use its discounting strategy of charging $9.99 for popular titles to strengthen its grip on electronic distribution. Having gained market dominance, they fear, Amazon will force down the wholesale price to start making profits on book (as well as Kindle) sales.

This might turn out to be good news for the consumer in the long-run because books will be cheaper and authors will continue to be well-paid for popular content. That squeeze will affect intermediaries such as book publishers, just as the digital revolution severely hurt music publishers.

An alternative is outlined here by Rory Maher and Henry Blodget. The believe the wholesale price will fall but publishers will preserve their margins and the squeeze will instead fall on authors’ royalties.

In any case, why is it illogical for publishers to defend their own business interests against those of Amazon, which is a public company trying to extend leverage over them to benefit its own shareholders? I am afraid I plead guilty to not getting it.

(A disclosure: my employer Pearson owns not only the FT but also Penguin, which once published a book co-written by me and Nick Denton, the digital publisher).