*contains graphic material

Interesting, provocative analyst report picked up in the last couple of days in press surrounding Comic Con. From Susquehanna analyst Vasily Karasyov and called ‘The Death of Superheroes’ the note to investors argued:

“We are at the tail end of another IP re-monetization cycle,” Mr. Karasyov wrote, noting that 16 superhero films have been released since 2000. “Just like CDs enabled record companies to re-sell their catalogs once again and DVD did the same for film studios, computer generated imagery (CGI) technology helped IP holders monetize pre-existing properties, including comic book characters. As is usually the case, the highest quality properties such as ‘The Lord of the Rings’ tend to be monetized earlier in the cycle. The more properties are monetized, the more limited is the appeal of each new one coming to market.”

“As film studios dig deeper into catalogues for characters for new films, we think the chances of finding a break out property are diminishing fast”

This makes superficial sense, and has some big implications for companies like Disney (who bought Marvel for $4bn) and my employer Time Warner (owners of DC Comics). And especially so in a year like 2011 where you could argue we’re facing a glut, with Thor, X-Men First Class, Green Lantern and Captain America.

The first big superhero movie of modern times was Batman in 1989. Spiderman was in 2002, almost 10 years ago. And we only reached ‘Peak Superhero’ in 2008, with the release of The Dark Knight – at $500m US box office, the biggest superhero film of all time and the 3rd biggest US film ever behind Avatar and Titanic. If we are at the tail end of this cycle, it could potentially be a very long and lucrative tail, especially with The Dark Knight Rises already building buzz for a 2012 release (see the teaser here).

And I think the example of The Dark Knight shows what’s wrong with this analysis. The problem with the superhero genre is that a lot of them tend to be the same, so lose product differentiation. TDK broke the mold by standing out as darker, more realistic, more gritty than other superhero films, and despite being the 6th film iteration of Batman, was the best performer by some distance. In reality there’s nothing much in common between films like Watchmen and Spiderman – both are very rich, very different films, appealing to very different audiences. The Spiderman franchise is being given a redux next year, possibly along the lines of TDK, with Superman to follow in 2013.

By focusing on differentiating and developing the core genre elements, there’s no real reason the Superhero genre can’t have the longevity of, say, Horror, which has been around for as long as cinema. Continual creative revolution will always trump technological-determinism – they just need to keep the dollars rolling in in the meantime.

Enjoyed reading this great polemic from Andrew Elder’s blog about the News of the World, and it sparked some thoughts – this really is a watershed moment in the history of newspapers. Maybe the beginning of the end. Here was one paragraph I really liked:

This really is the point that denizens of the journosphere cannot face: the biggest-selling publication in the English-speaking world disappeared and nobody (except those who worked drew income from there) missed it. That is the difference between a genuinely popular and authentic piece of communal life, and the easy-come-easy-go approach to the withdrawal of any other sort of discontinued product line.

He’s right. Imagine if a shock decision was made to close a loved institution like Liverpool Football Club, or the Parramatta Eels, or the National Gallery, or Yellowstone National Park. Genuine rage; rioting in the streets would be a certainty (particularly for LFC). Imagine if a similar decision was made with regard to something genuinely useful to people, like Facebook, Twitter or Google? Mass frustration. People would be furious.

But as Elder notes, the biggest newspaper in the English speaking world shuts down, and while there’s a lot of talk about it, there’s no evidence that any consumers really care. Most of the talk is just other journalists lamenting the loss to the ‘free press’ (have they ever read the News of the World?!?).

From consumers’ perspective, it’s just a brand of chewing gum that’s disappeared, to be easily substituted for another brand. The News of the World disappeared, and the Sunday Mirror added +58% circulation, and the Mail on Sunday +30%. All up the non-NOTW tabloids added about 2.2m readers, accounting for almost all of the 2.67m the NOTW was enjoying prior to imploding. Oh well.

This is not the way newspapers like to think about themselves or their readers. They like to talk about their readers as fiercely loyal, sharing their values, a ‘family’. They don’t like to face the reality: people buy tabloids for football results and TV guide, maybe they like one or two columnists, but everything else they’re just as happy to get elsewhere.

(And it’s not only consumers who don’t seem to care. After all, Murdoch shut down the biggest paper in his empire overnight, purely to improve his chances of the BSkyB bid, which ended up failing anyway. A pawn in a bigger strategy.)

Here’s a couple of my favourite pieces on the phone hacking scandal/saga/clusterfuck. I’ve been a little disturbed by the enthusiasm by commentators in the Australian media and politics for introducing new regulation and oversight to the media. It’s totally unnecessary, uncalled for, and motivated largely by animosity towards Murdoch.

The best piece I’ve read so far is Cory Doctorow in the Guardian: The Phone-hacking scandal must not be used to rein in the press

But it seems that whenever I turn on the radio or read the papers, I’m confronted with politicians who begin by criticising NoW and NewsCorp, move on to other tabloids and press outlets whose bad deeds might come to light in the weeks to come, and then finish up with a general condemnation of “the press” who are said to be “too powerful.”

And this is where you can count me right out.

“The press is too powerful” should be read as nothing less than a prelude to a proposal to regulate the press, specifically to increase liability for investigative journalists. We’ve already seen how this plays out: harsh libel laws intended to curb the tabloid press became a mere cost of business for enormous media empires. These empires grew even larger as they occupied the niches formerly occupied by smaller, more diverse, less wealthy media outlets that shrivelled up the first time they offended someone with the power to use a libel suit to silence them.

[...]

Increased liability for expression always favors the rich and powerful.

They’re the ones who can hire sophisticated experts to help them come right up to the law’s edge without slipping over it. They’re the ones who can take risks and paper over their failures with cash settlements.

They’re the ones who own their own infrastructure and don’t have to convince a risk-averse cheap web host or high-street printer to make their material available.

Britain’s punishing libel laws only incidentally affected the online world, but any press regulation that was crafted today would put the web straight in its crosshairs. Following from the litigation pattern of recent years, it would take aim at anonymous commentary, seeking to hold publishers and online service providers to account for comments left by their users. It would look for the deepest pockets in the system – say, Google (YouTube, Blogger), Facebook or Twitter – and seek to put them in the position of pre-emptively filtering out potentially risky speech.

[...]

We don’t need press regulation. We need vigorous enforcement of existing laws against phone hacking. We need thorough investigations into the machinations that caused Scotland Yard to declare the issue a non-issue and a closed case. We need rules about privacy invasion that are aimed not merely at “journalists” (whatever that means in this day and age) but at everyone who is collecting information on you, from the neighbour who installs a CCTV that captures your every coming and going, to the government itself — and the Murdochs and their private investigators, too.

Jonathan Holmes in The Drum (No Regulation Please, we’re not British), arguing against an inquiry into further media regulation in Australia:

What kind of inquiry can seriously measure whether The Australian, or any other News Ltd newspaper, has ‘abused its power’ because it takes a particular editorial line, or pursues a particular campaign? Are we seriously suggesting that such matters are proper matters for judicial or semi-judicial inquiry, or should be subject to regulation? Who is to do the inquiring and the regulating? The Government? A state-appointed QUANGO like ACMA?

[...]

As for bringing in a statutory body to regulate our newspapers, for the first time in the history of this supposedly free country, because phone hacking ‘might’ be happening, I’m astonished that people like Leslie Cannold, and Peter Faris, and Bob Brown – all people who would, I’m sure, consider they were on the side of democracy and liberty – should be calling for such a drastic measure, just because of what’s happened on the other side of the world.

Australia’s best business commentator, Alan Kohler: Regulating the most powerful media

Should Twitter and blogs be caught by such rules? Obviously any print licensing system could not just apply to those who publish on paper but defining the regulated universe would be nightmare, and probably impossible.

So any media inquiry in Australia will almost certainly be a waste of time: extending the regulation of ethics to include print is now probably impossible, and there is no legal mechanism to force more diversity of ownership, even if it was agreed that this would be a good thing.

But what can and will be inquired into is the governance and behaviour of News Corporation and in particular its ruling family, the Murdochs. The British parliament is doing it, and the independent directors of the company should do it as well.

Lastly, Jon Stewart & John Oliver tackle the topic (link)

The tweet this was referring to was as follows:

@NBNCoLimited Ding dong the witch has gone!!! Brooks resigns #notw

Not an appropriate use of government resources, obviously, but it was clearly sent from the wrong account. However, the reaction was more interesting than the original tweet. From News Ltd columnist Miranda Devine:

From SA Liberal Senator Simon Birmingham, and self-described ”uncompromising social commentator who is prepared to tell it like it is” and News Ltd contributor Rita Panahi:

To Devine’s point, as far as I know, the public service is not obligated to remain unbiased towards private media companies (although it’s not good practice). Unless she is suggesting that News International is politically affiliated…?

And to Birmingham and Panahi’s points, there was nothing political in the tweet*. In fact the guy responsible for the tweet worked as a journalist under Rebekah Brooks at The Sun. By most accounts many at News Int strongly resent Brooks for the catastrophe currently destroying the business and costing jobs and shareholder value, so it wouldn’t be unusual for an ex-employee to express these sentiments.

*Unless they are suggesting News Int is politically affiliated? Surely not!

A couple of years ago I worked for the Mirror Group in London, on the group’s three national red-top tabloids: The Daily Mirror, Sunday Mirror and The People. I worked in the commercial side of things and had barely any interaction with the editorial staff, except for the staff gym changing room (more on that shortly). Some scattered recollections on the atmosphere in this market:

• In the commercial team we used to spend a large slice of our day simply monitoring what The Sun, NOTW and Daily Star was up to. Our performance vs the News International titles was literally our most important KPI – every morning I’d get in early to literally count how many ads News Int got compared to the Mirror.
• The Sun’s cover price went from 35p to 30p, then down to 20p in London, then 20p all over the country. The Daily Star went to 15p. There was serious talk that one of the papers would go all the way and just give away copies for free. If you can think of another consumer goods category that slashes price to that degree in order to compete I’d love to hear about it.
• When I was in the staff gym changing room with one of the senior reporters I witnessed him swearing loudly on his mobile phone because he’d just been scooped on a story by News International. I now understand how this may have occurred.
• Later, when talking with the same reporter I asked him whether or not he’d seen any phone hacking, of the type that was beginning to make the news back then, going on at the Mirror. He actually did the ‘tap side of nose’ gesture.

In recent days there’s been lots of commentary in Australia asking if phone hacking could happen here. Senator Bob Brown couldn’t resist, absurdly, calling for a government inquiry into News Limited in Australia, despite there being no credible suggestion that such a thing has ever taken place. Margaret Simons of Crikey has waged a downright baffling campaign to have News Limited in Australia publicly reveal their Professional Code of Conduct, presumably to check it doesn’t enforce mandatory phone hacking behaviour. ABC’s 7:30 ran a piece asking ‘could it happen here?’, centering on News Corp and concluding that Australia has all the vital ingredients: journalists and telephones. Leslie Cannold has written a piece on News Corp, arguing that:

The abuse of media power that lies at the heart of the phone hacking scandal can be seen in News Corp media in other parts of the world, including Murdoch’s Australian tabloids and the national broadsheet, The Australian.

The narrative that is emerging is that this scandal is all about the unchecked influence of one company – News Corp – and it’s rotten culture. Links are drawn between News Int’s appalling behaviour in London, to News Ltd’s recent sketchy track record in Australia, to Fox News’ alternate reality in the USA. And given the character of those – quite separate – organisations, it’s an appealing story. I’ve realised there’s nothing I enjoy more than watching Rupert Murdoch grimace as he’s doorstepped by proper journos from the Guardian, Independent, Channel 4 and BBC. Long may it continue.

But this isn’t just a story about News International, any more than the MP expenses scandal was about only Labour, or only the Tories. Literally every other UK tabloid, and quite a few of the broadsheets, was involved in the practice. Even the Guardian Media Group, whose brilliant journalist Nick Davies single-handedly drove the phone-hacking story, recorded 103 confirmed instances of trafficking in unlawful confidential information through its Sunday paper, the Observer. According to the UK Information Commissioner’s Office report, the company I worked for recorded 1,676 instances – 6.5 times as many as News International.

Almost every newspaper in the UK, tabloid and broadsheet, progressive and conservative, big and small, has been involved in phone hacking, with some – such as the Daily Mirror and Daily Mail – doing so to an apparently much greater degree than the News of the World. That other papers have largely avoided scrutiny to date is incredible luck, but it is also surely just a matter of time until that luck runs out. Quite why the focus to date has been centered on Murdoch alone is something that hasn’t been adequately explained. There’s a distinct possibility that many of the stories we’re reading on the NotW have actually been leaked by factions (Brooks, Coulson, Myler) within News Int itself, in order to deflect attention from their own roles, given the real risk they could be sent to prison.

With the exception of The Independent and the Daily Telegraph, all are implicated. The Daily Mail, for instance, recorded 952 separate instances of obtaining unlawful information, more than 4x as many as the NotW. The Mail is widely recognised as the most politically influential newspaper in the UK, with an unmatched level of political access, and editor Paul Dacre is the highest paid person on Fleet Street. When actor and comedian Steve Coogan asked why the Daily Mail had not figured prominently in the hacking scandal coverage, the newspaper immediately ran this astonishing hatchet job on him. Draw your own conclusions.

The emerging narrative in Australia about ‘toxic’ News Corp straddling the market is erroneous. The fact is, phone hacking did not emerge because of the concentration of media ownership under Murdoch – although that clearly played a central role in how long it took for police and government to seriously pursue the matter. The UK newspaper market is actually very diverse in its ownership, and highly competitive. News International is just one of many robust, powerful newspaper owners, and Associated Newspapers (Daily Mail) and Mirror Group both lay claim to being the biggest newspaper publishers in the UK due to their dominance of local press. In broadcasting Murdoch’s BSkyB is utterly dwarfed in terms of reach and influence by both ITV and the BBC.

The real truth is the phone hacking story is not about the market power of News Corp, but in a strange way is actually about its lack of power in the highly competitive UK national newspaper market, which I described above. The intense competition between The Sun, Mirror, Star, Mail and Express for essentially the same group of readers is what drove these journalists to try and scoop each other by any means necessary. This is the key difference with the Australian situation. Our tabloids like the Herald Sun are virtual monopolies, within their respective segments and geographies.

The Hun doesn’t need to scrap and fight for stories in this way, since it has no real competition – its readers are hardly going to start buying The Age, and vice versa. Have a look at the brilliant site Flashboard Wars if you need a graphic illustration of how divergent those two brands are: one covers asylum seekers and climate change, the other covers footy and Masterchef. And in Brisbane, Adelaide and Hobart, there isn’t even a Fairfax alternative to News Ltd’s tabloids.

This erroneous focus on News Corp has given News Ltd’s Australian opponents a golden opportunity to sling mud, which they have done with relish. A clearly annoyed News Ltd CEO John Hartigan has made a statement to all News Ltd staff, announcing the company will audit recent editorial expenditure for any malpractice, and even backed down on the frankly baffling demand to publish News Ltd’s staff Code of Conduct publicly (as if that proves anything – no doubt the NotW has a robust Code of Conduct also).

But, while a few instances may well be unearthed, the prospect of finding systematic lawbreaking in Australia is remote. This is true because of, not in spite of, News Ltd’s market power in Australia. News Ltd journalists, or those of Fairfax, just do not need to resort to this. They are too comfortable and too sluggish to go to those lengths. Which is a story in itself.