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Murdoch buys Skiff to strengthen mobile content play

Aims to create broad publishing platform to fight against the Google model

By CAROLINE GABRIEL

Published: 15 June, 2010

READ MORE: M&A | US | Mobile Content | eBook

News Corp CEO Rupert Murdoch has been leading the charge to preserve paid-for publications in the face of the Google-driven push for free, ad-funded content. He sees e-readers as an important weapon in this battle and last year hinted at creating a specific device for his publications. Instead, he has acquired Skiff, the as-yet unreleased content platform and e-reader business of another champion of paid content, Hearst Corporation.

News Corp is also investing an undisclosed sum in Journalism Online, a venture set up by Steve Brill and former Wall Street Journal publisher Gordon Crovitz. The publishing magnate has focused on e-readers and other emerging devices as the savior of premium content, because they can provide an optimized reading experience for which users will be willing to pay. So the theory goes, and future e-readers and tablets are expected to incorporate added value features like video, 'social reading' and embedded web links.

Murdoch has already thrown his weight behind many devices and initiatives that offer a more attractive reading experience than the web. News Corp and his HarperCollins book publisher have formed partnerships with Amazon and Apple iPad, and Murdoch properties The New York Times and The Wall Street Journal are the number one and two bestselling newspaper subscriptions on the Amazon Kindle.

It is not clear that News Corp will keep selling the Skiff e-reader itself, which despite some strong previews, looks unlikely to make an impact against the Kindle. The Skiff Reader has a Sprint 3G embedded connection and an 11.5-inch grayscale touchscreen - competing with the larger Kindle, the DX - which is optimized for newspapers and magazines, as is the associated store. But Murdoch sources hinted the purchase was mainly to acquire a readymade publishing and content distribution platform optimized for papers and magazines, which could then be targeted at many devices.

So why not just partner with the largest distributor, Amazon, which also targets many smartphones and tablets as well as offering its own Kindle products? Murdoch seems to want greater control of its brand and the presentation of its publications, and the flexibility to pursue new pricing and distribution strategies. He has hinted in the past at giving away e-readers to encourage subscriptions, mirroring cellcos' subsidizing of phones to lure data contracts, and one analyst estimated it would cost News Corp less to give all its subscriber base a free Kindle, with a two-year commitment to The New York Times, than to carry on printing the paper as paper sales decline.

Another model under consideration is a variation of the subscription/download model used by some music services. This would combine the Skiff platform and the investment in Journalism Online to create a combined content/platform strategy. Users could subscribe to Skiff and receive some content as part of that fee, and pay for other elements on a metered or per-use basis (like cable TV). Murdoch would hope to attract exclusive content partners, from his own companies round the world and other friendly entities.

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