Rupert's Spaghetti Junction: News Corp now boasts four ways to sell paid digital content

If you needed an indication of where News Corporation is going, yesterday brought it: a £7bn+ bid for 60% of BSkyB, coupled with two smaller deals designed to make newspapers palatable to the company’s shareholders.

A spoonful of sugar makes the medicine go down; or as the Americans would say: offense and defense. It’s all very reminiscent of James Murdoch’s speech in Barcelona last year — the one in which he argued that TV is a ‘big opportunity’and newspapers will play a smaller role in the company’s future.

Rumours about News Corp and BSkyB have been swirling around for a long time. Buying Skiff and taking a minority holding in Journalism Online are far more obscure deals, but just as intriguing in their way.

Five or six weeks ago, after listening to Murdoch talking about ‘final discussions with a number of publishers”, I suggested that he might still be planning a consortium-based approach to paywall publishing.

Alliances remain possible, but yesterday’s news suggests a go-it-alone approach. In any coalition of the willing, News Corporation will be first among equals. That’s because News Corporation now owns a significant slug of the relevant technology. Indeed, Murdoch now has at least four different approaches to paid content from which to choose:

1) Skiff

Bankrolled by Hearst but now owned by News Corp, Skiff is a hugely ambitious effort to build a shared end-to-end software platform for digital publishers.

You name it, Skiff has a solution for it. This company has spent four years (and $35m of Hearst’s cash) developing industrial-strength software for publishing paid content in digital formats. Its specialities include digital content production, wireless delivery, advertising platforms and revenue collection (which is where it might be able to help with paywalls).

Those who have witnessed Skiff’s demos speak positively. When I interviewed him last year, Gil Fuchsberg, the company’s chief executive, argued that the company stood to benefit as the world’s ‘enormous base of print media consumption’shifts toward digital outlets.

2) Next Issue Media

A low-profile coalition of US newspaper and magazine publishers including Conde Nast, Hearst, Meredith, News Corp and Time. Occasionally described as ‘Hulu for magazines'(on the iPad).

Next Issue Media was formed late last year to ensure that the technology industry doesn’t dominate the transition to tablet-style devices. The consortium’s job is to select the technology that publishers will use to publish content, sell advertising and generate reader revenues on tablet-style devices and smartphones. Paywall technology is part of its remit: the consortium plans to open a “shopfront” selling apps and subscriptions that will rival iTunes.

Has News Corp become frustrated by the slow pace of development at Next Issue Media? It’s possible. Last week, Paid Content disclosed that the consortium is still looking for a boss six months after its launch. As Rafat Ali put it: ‘Now, who needs a third-party company, and for what?”

3) The Wall Street Journal’s digital commerce platform

Running the world’s largest subscription-based news site implies a legacy of clever software. But the Journal hasn’t been directly involved in what Rupert Murdoch recently described as his effort to rope rival publishers into “an innovative subscription model that will deliver digital content to consumers”.

Les Hinton, chief executive of Dow Jones, recently suggested that News Corp’s digital guru Jonathan Miller — who orchestrated the deals with Skiff and Journalism Online — is firmly running his own operation. ‘That’s a News Corp project which Robert [Thomson] and I aren’t directly involved in,” Hinton told Paid Content. “We look after our little operation with the Journal.”

Little? Hinton’s modesty is unnecessary. What the Wall Street Journal doesn’t know about paywalls, it can find out very quickly. Whether or not its technology suits other News Corporation publications, its expertise should prove valuable.

4) Journalism Online

Founded by the US magazine entrepreneur Steve Brill and former Wall Street Journal publisher Gordon Crovitz, Journalism Online is a subscriptions platform designed to be used by a vast number of paywalled publications. Customers sign up for ‘a single protected account’with one username and password.

Journalism Online says it will help publishers — 1,500 have signed letters of intent — to offer micropayments, time-based ‘micro-subscriptions”, bulk subscriptions and combined print/online subscriptions.

Here’s how the company describes its own efforts: ’16 targeted strategies — such as metering, segmented content, and topic-based packages for readers — that will convert publishers’ engaged readers into paid subscribers without turning away casual visitors.”

What will News Corporation do with all of these different approaches? The executive who has been given the job of rationalising this Spaghetti Junction of software and relationships is Jon Housman, one of Jonathan Miller’s apparatchiks at News Corp’s Digital Media Group.

Housman already has fingers in a couple of relevant pies. On News Corp’s behalf, he sits on the board of Next Issue Media. In addition, Housman has strong ties with the Wall Street Journal. (He became managing director of the Wall Street Journal Europe in 2005, before Murdoch acquired it).

No doubt News Corporation will let a thousand flowers bloom (for a while at least). As Rupert The Dealmaker knows, it’s important to have options.

Yet News Corp is now deeply involved in the software business, where acquiring — and trying to merge – competing platforms usually turns out to be a nightmare. Early decisions about what to keep and what to axe can help, but even this doesn’t guarantee success. Getting all of these assets to work in concert won’t be easy.

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