Pressure building on big digital to take responsibility

Increasing pressure on the tech ­giants to take responsibility for their platforms is serving as a major turning point for journalism.

News Corp chief executive Robert Thomson. Picture: Tony Gough

Increasing pressure on the tech ­giants to take responsibility for their platforms and the prospect of legislation by governments around the world are serving as a major turning point for journalism, according to the chief executive of News Corp.

Robert Thomson was speaking after the EU last week proposed imposing huge fines on tech firms that weren’t fast enough in ­removing terrorist content.

“Over the last decade, really, and even before the reincarnation of News Corp, myself, Rupert (Murdoch, News Corp executive chairman) and Lachlan (Murdoch, co-chairman) were ­really sort of digital Don Quix­otes in that we were tilting at tech windmills and trying to hold big digital to account,” Mr Thomson said.

“And for much of that time it was a soliloquy. A Silicon Valley soliloquy. And now, clearly, there’s a huge chorus. Today you’ve seen the vote in the European Parliament about the ­responsibilities of big digital.

“And our fundamental argument was around provenance — that there is a hierarchy of journalism, a hierarchy of content, that we have the best journalism in the world.

“Independent studies show that the most trusted masthead in the UK is The Times of London, the most trusted masthead in the US, by some margin, is The Wall Street Journal, and that’s despite my best efforts of having been editor of both.”

A former managing editor of The Wall Street Journal and editor of The Times, Mr Thomson said a global debate about the effect of “big digital” on publishers had boosted the newspaper industry’s shift to subscription models.

For beleaguered news organisations, Mr Thomson said the end of Google’s “first click free” program, which allowed users to read news articles without paying, was a crucial step in furthering efforts to build viable long-term business models to support journalism.

“The clarity that is now surrounding this digital debate has transformed not only the social interaction but the subscription potential, to put it crudely. And there really has been a fundamental change, clearly in the political environment but the economic potential now for subscription,” said Mr Thomson, who was speaking at Goldman Sachs’s 27th annual Communacopia Conference.

“We thought there was a social point, clearly. We’re a socially purposeful company, and always have been through its foundation back in Australia. But there was also an important commercial imperative around the ability to charge a premium for premium content. And that really has been transformed, and particularly over the past year, with the end of social first click free at Google, and thanks to Sundar Pichai (the Google chief executive) for that.”

The search giant’s decision to stop the first click free practice followed a sustained lone campaign by News Corp’s senior leadership team.

“There’s no doubt, frankly, that News Corp, under Rupert and Lachlan’s guidance, has been the most influential company in the world on this issue. And frankly every other media company with an emerging subscription model should pay us a commission for services rendered, and they can send their cheque to Mike Florin, our head of IR (investor relations); we’ll start a new income line.

“But the net effect for our companies is that, for example, digital subscription growth at the Journal last quarter was 27 per cent, around 25 per cent for The Times of London, around 13, 14 per cent for our Australian masthead, so there’s a lot of growth there that wouldn’t have taken place, frankly, if we hadn’t been so forceful.”

Silicon Valley is facing legislative scrutiny in the US, Europe and locally amid a world-first inquiry by the Australian competition regulator.

Last month the European Commission fined Google a ­record €4.3 billion ($7bn) over its ­Android operating system. The record penalty exceeded last year’s €2.4bn fine, also against Google, following an inquiry into its shopping-search ­service.

This month, US Attorney-General Jeff Sessions said he planned to gather the country’s state officials to examine the ­intentional “stifling” of voices on social media.

Another important area is book publishing, said Mr Thomson. Amazon became a retail wrecking ball when it began undercutting booksellers on price. Now book publishers are worried by the ascent of Amazon’s audiobook service, Audible.

“The landscape has changed, and big digital is in the vortex now. It’s in a political vortex and some of the criticisms of big digital are valid, like the ones we make, and some of them are vapid. And they’re finding it difficult to tell the difference.

“And we’re still working with Google and Facebook and Amazon to varying degrees, and we’re open to helping them frankly when it helps our investors. But those fundamental changes are of themselves creating opportunities for our newspaper businesses here, in Australia and in the UK.”