Why Rupert Murdoch Says Google, Facebook Should Pay For Content Like Cable Companies Do

The battle over data ownership just got a lot more interesting.

As the owner of businesses that generate loads of content like The Wall Street Journal and Fox News, his economic interest is in monetizing that value creation process. The big internet companies like Facebook and Google, the advertising industry and the other media companies have, to date, all been allied - some might say complicit - because their 'raw material' costs: consumers' data - is effectively free.

What Murdoch is now saying is that their various financial and strategic interests are diverging, meaning that public policy and return on investment may now be up for grabs. JL


Kurt Wagner reports in Re/code:

“The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists. Recognition of a problem is one step on the pathway to cure, but the remedial measures that both companies have so far proposed are inadequate, commercially, socially and journalistically.”

Rupert Murdoch has an idea for fixing Facebook’s relationship with publishers: The social giant should just pay them.

Murdoch, the media mogul who’s chairman of both News Corp and 21st Century Fox, issued a statement Monday saying he thought Facebook and Google’s efforts to work with publishers that post on its platform has been “inadequate commercially, socially and journalistically.”

Instead, Murdoch suggested these tech giants start paying publishers the same way cable companies pay for content: With carriage fees.

“The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services,” Murdoch wrote. “Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists.”

Murdoch controls Fox News as part of 21st Century Fox as well as the Wall Street Journal and the New York Post through News Corp. All his major news organizations have pushed President Trump’s agenda through its widely watched commentary shows and op-ed pages.

He’s also attacked tech companies in the past — notably both Google and Twitter. More recently, he claimed Google had cleverly avoided paying U.K. taxes by aggressively lobbying its government.

Murdoch’s concerns are not new within the industry, though he is one of the most high-profile media executives to voice them out loud. While he mentioned Google, Murdoch’s comments appeared to focus more on Facebook, whose relationship with publishers is in a particularly tough stretch — the social giant just updated its News Feed algorithm two weeks ago in a move that will show users more content from their friends and family, and less content from news publishers.

In a separate move, Facebook announced that it will instead prioritize posts from “trustworthy” news publishers and will rely on user surveys to determine who is trustworthy and who is not.

It’s a combination of updates that has publishers concerned about their future on Facebook. Murdoch’s businesses own many of these news publishers, so it’s easy to see why he’s speaking out.

Facebook doesn’t pay publishers for simply posting their news stories to the service, though it has paid publishers for creating live video for Facebook and creating mini TV-style shows for the app’s new Watch tab. Facebook has tried other ways to get publishers more money, like hosting news articles on the site and sharing revenue with publishers from ads run alongside those articles. That plan wasn’t a big hit.

We’ve asked Facebook for comment and will update if we hear back.

Here’s Murdoch’s statement in its entirety.

“Facebook and Google have popularized scurrilous news sources through algorithms that are profitable for these platforms but inherently unreliable. Recognition of a problem is one step on the pathway to cure, but the remedial measures that both companies have so far proposed are inadequate, commercially, socially and journalistically.

There has been much discussion about subscription models but I have yet to see a proposal that truly recognizes the investment in and the social value of professional journalism. We will closely follow the latest shift in Facebook’s strategy, and I have no doubt that Mark Zuckerberg is a sincere person, but there is still a serious lack of transparency that should concern publishers and those wary of political bias at these powerful platforms.

The time has come to consider a different route. If Facebook wants to recognize ‘trusted’ publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies. The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists.”