Murdoch charges for content; Gannett closes my first paper

Rupert Murdoch is apparently tired of all the talk about how to save newspapers; now he’s taking action. According to a report in Media Buyer Planner, Murdoch is going to begin charging for content in 54 daily newspapers that he owns.

tucson_citizenIt’s an action few publishers have been willing to take, but Murdoch must be tired of watching profits simply fall out of the bottom of this bottomless boat. At some point, and I guess he’s there, a publisher has to say, “The risk of doing nothing is greater than the risk of doing the wrong thing.”

The big fear has been that people don’t want to pay for online content, and that if newspapers start charging online, readers will simply evaporate. I think all of that’s true, as I’ve written before.

But if dozens of newspapers make the switch in a short period of time, it might also simply change the expectation of users who have been getting their news for free.

This very well could be the watershed moment that gives newspapers a chance at a future. And while I am generally pretty sparing in words of praise for Rupert Murdoch, it’s a credit to him that he has the courage to do this.

Meanwhile, on a note of personal disappointment for me, Gannet has folded the Tucson Citizen. It was an improbable product — an afternoon newspaper in a small city with two newspapers. The survivor, The Arizona Daily Star, is the morning paper. It’s owned by Lee Enterprises (when I was in town there, it was owned by Pulitzer) and has operated under an unusual joint operating agreement for at least the last 25 years, in which the two competitors share circulation, printing and a building.

I’m not surprised, but certainly sad to see it go. It’s the first newspaper where I worked, in 1983 as an intern in the Teaching Newspaper program of Northwestern University’s Medill School of Journalism. It’s like watching them tear down your childhood home and replacing it with a fenced-in, overgrown and rocky lot.

I suddenly miss my editor, Mike Chihak, and my friend Don Rodriguez — niegher of whom I’ve talked with in years, but who taught me a lot while I was there.

Nobody who ever worked for the Citizen could feel right about this. We were always the White Hat, the Star was the opposite. The feeling was confirmed for me the one time I had reason to step into the Star’s newsroom, on the opposite side of the building, with separate doors and an independent security system.

I don’t remember why I needed to go there, but while the Citizen newsroom was bright and cheerful with white linoleum floors, the Star newsroom looked to me like the White House War Room — with indirect lighting and a black tiled floor.

Very mature of me. I know. But it’s a vivid memory, as was my entire time at the Citizen. R.I.P.

Facebook: eyeballs, China and deja vu

Is it possible to have two deja vus at the same time? Or is that simply schizophrenia?

According to Venturebeat, Facebook is raising money to buy back stock from its employees. It hopes to borrow $150 million to buy back 15 million shares at $10 each. These shares have been given to employees of the private company xiaonei-blueover the past few years, and those employees have the right to sell up to 20% of their holdings, according to the article.

And now that the market for IPOs is so rotten, this is apparently the only way the company can help them cash in anytime soon.

That’s where the first case of deja vu comes in. Just 10 years ago, during the first Internet boom, people couldn’t cash in quickly enough on their foundation-free stock. Yes, Facebook has an astounding number of users, but I’m not so sure about its business plan. The company will undoubtedly go public some day, but I simply don’t believe it’s monetizable to the same extent as Amazon, eBay and Google.

Facebook really has only one asset: a bigazillion eyeballs. Which is impressive in itself, and there ought to be a way to make money from it. But with ad markets drying up and Facebook’s genuine incompetence when it comes to figuring out how to let businesses participate in a way justifies their spending money,  I don’t know what the company is going to do to pay back this next $150 million that it borrows — let alone the previous $460 million it’s raised, according to PaidContent.org.

Facebook is undoubtedly an 800-pound gorilla in the white-hot social networking arena. But there were  scores of 800-pound gorillas a decade ago, whose names I can no longer recall, that went bust because they couldn’t figure out how to turn eyeballs into cash.

I’m not predicting Facebook is going to go under anytime soon. In fact, I’m sure it will be around to cash in on an improved IPO market sometime next year. But if I were an employee and could get $10 a share for stock that I hadn’t paid for, I would sell as much as I was allowed at the first possible moment.

Here’s another deja vu-inducing part of the story: Facebook can’t get the money from its usual investors, so according to the reports already cited above, some portion of the money is coming from Asia. I remember when Japanese investors bought (and overpaid for) Rockefeller Center in the late ’80s. At the time, it was assumed to be a disheartening sign that U.S. economic dominance was ending.

It’s clear to me that, no matter how strong and innovative the U.S. may be, the world is becoming a more competitive place; any perception that we are falling probably has more to do with the fact that others are rising. Still, do we need to make it easy for them?

It’s always bothered me when people complain that we’re losing our mojo as a world power, but they don’t seem to make a conneciton between that observation and our willingness to let Asia — China in particular — lend us the money to finance our foreign wars and deficit spending.

If China comes to own a third or more of Facebook, do you think these people will notice? Do you think they’ll care?