Some denial in the media biz

So it seems the Rupert Murdoch is in denial about his businesses:

"I recognize that we may never return to record levels, but we do believe [News Corp.] can recapture a large percentage of the advertising that does return," Mr. Murdoch said. "It's why we continue to believe in newspapers and their brand extensions and television and film as mass media."

News Corp believes that once this recession ends, their advertising dollars will come back, while others are forecasting a secular change. I am in the latter camp - and I also think that the web itself is playing a part in this global downturn. The web has created efficiencies that people don't even understand yet (read - less people to do the same amount of work) - and it democratizing advertising and commerce (affiliate programs, ad networks) in ways that many people don't fully grasp.

News Corp.'s Murdoch conceded that players in the Internet search advertising business, like Google, are "on to a very good thing," and he noted the difficulties facing News Corp.'s digital media business, comprised mostly of the social networking site, MySpace, which focuses on display advertising.

Emphasis mine - so - he thinks Google is on to something, huh? Here is the major point the old media types are never going to grasp: they are never going to get the CPMs and/or ad rates they got for TV and their prints ads on the web. They may have planned on a $15 to $40 CPM when they grossly overpaid for some of these web properties, but the reality is going to be lower and lower CPMs until the cost is roughly equal to the CPC of what Google is offering now with AdWords. That revenue loss will collapse a lot of these business models.

And then Murdoch throws this line in:

Mr. Murdoch said News Corp. has adopted an "underlying philosophy" that online media businesses will shift to subscription models, but outside of a few notable exceptions, like Apple Inc.'s iTunes, a culture that demands free access to information and entertainment dominates the Web, leaving advertising as the key revenue source.

That is a sheer pipe dream. Businesses need to react to business conditions - the public is not going to conform to any "underlying philosophy" for your sake Mr. Murdoch.

Read the whole article here.