BEIJING – The following is a speech from Rupert Murdoch:
Thank you Mr Li for your generous introduction.
I am delighted to come to Beijing and share thoughts with my colleagues in the media and my friends from around the globe. Confucius noted that those who seek constant happiness must often change – now, I’m no sage but it is fair to say that we are today confronted by unprecedented change and challenge, and if we don’t adapt and adopt, Confucius will be proved prescient again, and there will be much unhappiness. That is true of all in this room, whether you be Chinese or British, Indian or Russian.
It is fitting that we meet in Beijing. China’s success in lifting itself out of poverty to become a global economic powerhouse holds out hope for millions of impoverished people around the world.
On my last visit to this country, I and many others experienced this new China at the Beijing Olympics. On TV screens from New York to New Caledonia, people witnessed an opening ceremony that successfully fused the traditional with the contemporary.
The challenge of fusing past and present is real for media companies, and for China. Our aim must be to enhance the lives of our customers and citizens, and yet we find ourselves in the midst of an information revolution that is both exciting and unsettling. It is a digital revolution turning traditional business models upside down … traversing geographic, industrial, and media boundaries … and creating a new source of wealth, material and social, around the world.
But the digital is a means, not an end. It is a mechanism by which people can transform their lives; to improve the education of their children; to reform health care; and, as we all know, to access news and information and entertainment on an unprecedented scale.
Modern China has a tremendous stake in a shared digital future, because its own wealth and success will depend on how well it responds to the challenges, nationally and internationally. These changes are touching almost every part of society. Even the simplest products and services are being radically transformed. The novel can easily become the normal and the modern can quickly seem merely mediocre. All of our readers and customers have never had so much choice – and they are rightly exercising that choice every day.
Online banking means you never have to trudge down to the bank and stand in a queue to pay a bill or transfer money – the only issue is whether your bank managed to survive the financial crisis. Every month we are seeing the introduction of increasingly sophisticated mobile phones, which can now download a movie and project it on to your wall at home.
This is not some starry-eyed, half-glimpsed future. This is how we are living today – and is just a taste of how we will live tomorrow.
Media companies know that if you do not respond intelligently and creatively to the digital challenge, your future will be bleak indeed. The presses are now silent at some of the world’s most famous newspapers – they were supposed to report on their societies, but somehow failed to notice that those societies were changing fundamentally. But that very same threat is a remarkable opportunity for others – The Wall Street Journal now has a monthly digital audience of 25 million, plus another two or so million in the Chinese language. Now, we all know that internet statistics are not precisely precise, but they definitely give a sense of the scale of change and opportunity.
What is true for a company is also true for a nation.
The digital renaissance offers China an opportunity to exercise leadership, especially as it continues to transform one of the world’s oldest cultures into a dynamic and competitive economy.
But, as I said earlier, the digital platform is a mere mechanism, a canvas for the talents and aspirations and potential of a person and a place.
The world wants China to succeed. We understand that none of the big global challenges we face – climate change, nuclear proliferation, terrorism, humiliating poverty – can be solved without the active engagement of a prosperous and successful China. And the embrace of the digital is as vital to China today as its decision thirty years ago to take its place in the global economy.
The policy then was called “the open door” – China now has a chance to open its digital door.
Today I wish to divide this digital world into three parts: How media is being transformed… how the Chinese media can take advantage of that transformation…and some steps necessary to ensure that the Chinese people are in a position to realize their potential.
Let me start with the media. I speak as the chief executive of a corporation that has operations on every continent – and whose companies include print, radio, television, filmed entertainment, sports, books, social networking, and more.
In the not-so-distant past, these sectors were discrete – and that was how they competed. A television station, for example, generally competed with other television stations. A newspaper fought with other newspapers. Those boundaries are now permanently blurred. The modern newspaper has long had a video editor and now equips its correspondents with cameras. And the commercial lessons of one sector are now salient elsewhere. Our satellite television networks have been remarkably successful in offering viewers a wide choice, on their terms – so why can’t the world’s greatest newspapers offer a suite of services digitally for which many millions of readers will pay?
Too often the conventional media response to the internet has been inchoate. A medium once thought too powerful has often seemed impotent in the past few years. Of course there should be a price paid for quality content, and yet large media organizations have been submissive in the face of the flat-earthers who insisted that all content should be free all the time. The sun does not orbit the earth, and yet this was precisely the premise that the press passively accepted, even though there have been obvious signs that readers recognize the reality that they should pay a price.
There are many readers who believe that they are paying for content when they sign up with an internet service provider, presuming that they have bought a ticket to a content buffet. That misconception thrived on the silence of inarticulate institutions which were unable to challenge the fallacies and humbug of the e-establishment.
The value of content has been volatile in the past decade but we are entering another decisive phase in which device makers are again courting the creators of content. I have sensed that shift in recent days during my travels in Japan and South Korea where I met some of the world’s leading electronics manufacturers. These companies don’t want their customers to be served a diet of digital dross, and yet that will be the inevitable consequence if the worth of content and creativity are not appreciated.
The Philistine phase of the digital age is almost over. The aggregators and the plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid-for content, it will be the content creators, the people in this hall, who will pay the ultimate price and the content kleptomaniacs will triumph.
My second point is that Chinese media and entertainment companies have a remarkable opportunity to expand their international influence and revenues. That possibility was recognized in recent days by the Chinese Government, which envisions the development of media champions able to compete on the world stage. I genuinely look forward to that competition, but I fear the ability of creative companies to prosper globally could be undermined by a lack of intellectual property protection domestically.
There is no doubt that the Chinese Government recognizes this problem but has difficulty ensuring that regulations are observed across the nation. I recall that when Deng Xiaoping was encouraging a pragmatic economic policy he noted that it does not matter whether the cat is black or white, as long as it catches mice.
I’ve heard that a modern variation of that saying is that it doesn’t matter whether the mouse is white or black as long as it manages to avoid the cat.
There are impressive media companies emerging in China, but piracy will make it difficult for them to generate the profits at home that would fuel growth abroad.
There is a second problem for these potentially influential Chinese companies. They operate in a market that is sheltered and so they are not exposed to the competition that would prepare them for the rigors of the global marketplace. The Chinese market is certainly large, as the number of cell phones far exceeds the entire population of the U.S. and reflects how markets can work to the benefit of a country’s citizens.
Two decades ago, there was a long wait for a fixed line in China and it was the well-connected who got connected. Now, a phone is not a perk for the privileged few but a necessity for the lao-bai-xing, the old one hundred names – that is, the common man and woman.
The more affluent these new customers become, the more they will demand from all of their media. The majority of that content will be domestically driven, but its quality will, in part, be determined by whether Chinese companies are prompted, through competition, to improve their products. Japan and India provide interesting and contrasting examples in media.
The Japanese entertainment market has remained relatively closed and so most of its media companies have struggled to make an impact beyond the country’s borders. The international success stories in media have been relatively rare, even though Japan has the world’s second largest economy and has produced some of the best known consumer brands.
Many years ago, I made a small investment in a Japanese television company, but that move was met with horror by the establishment and it was clear that we were not welcome. Earlier this week, I was urged by some of the most senior members of that very same establishment to try again and assured that the welcome would be much warmer this time.
India, which is far, far earlier in the economic development cycle, has been more welcoming of competition and so Bollywood has come to influence Hollywood, financially and creatively.
Meanwhile, a willingness to allow international companies into the domestic television market has prompted local companies to improve their production quality. And pioneers like STAR have made a significant contribution to a diverse and growing industry. The great winners are the people of India, who have much pride in their global success and a choice of programs unimaginable a decade ago.
The same applies to financial information, which China has recognized. Xinhua’s own status has recently changed, moving from the regulator and to the regulated. The lesson of last year’s financial collapse is that we all have to take responsibility for our finances by reading about the subject. The more competition to provide Chinese individuals and institutions with financial news, the more informed their investment decisions will be.
China will ultimately decide its own fate, but unless the digital door is opened, opportunities will be lost and potential will not be realized.
There is real reason for confidence in the ability of Chinese companies to compete if that door is opened. Everywhere I go in China, I talk to someone starting up a new enterprise … going to school to gain the advanced knowledge he or she needs to succeed … or building a better life for his or her family. The optimism I see is striking – especially in contrast to the pessimism echoing around other parts of the world.
My industry depends on that creativity to thrive. And this new generation of highly educated and talented Chinese will change the media market in two ways: as demanding consumers, and as talented producers, both of which will blossom, given the chance and given choice.
My final and most contentions point is to discuss China’s emergence as a global power. This is a media summit, a contest of ideas, and my thoughts should be taken in the spirit of that contest.
China is both a developing country and a reluctant superpower. Even with the extraordinary success of economic reform, there are areas of great poverty in rural China and a striking disparity with the increasing wealth of the east. And yet China is already the world’s third largest economy and will become the second largest in the not-too-distant future.
With that status comes a global responsibility. Within China, a theme in recent years has been to emphasise the “harmonious rise”, to have more influence without causing offence. That is a valid idea but almost conveys the impression that someone is hoping that China’s arrival on the world scene will somehow not be noticed. The reality that its words will be interpreted and over-interpreted, and that it must reconcile domestic pressures with international responsibility.
That growing influence could be efficacious for global trade. The world trade talks known as the Doha round have ground to an embarrassing halt. In too many languages, Doha is a four-letter word.
Obviously, freer trade is of great interest to media companies, both Chinese and foreign, but it is of particular interest to developing and less developed countries aiming to export their way out of impoverishment. It is a moral failing of the rich world that our agricultural markets are subsidized and protected. For all the laudable talk about aid to Africa, the greatest assistance that we can give to talented Africans is to allow them access to western markets.
Now, China has a real opportunity to show leadership in trade. In the past, the world has generally relied on the US and Europe to lead these discussions, whether they be about tariffs or intellectual property rights. There is an awareness about the importance of trade in Washington but I’m not sure there is the passion necessary to make policy.
I have noticed a positive change in attitudes in India, which had previously placed significant obstacles in the path of trade negotiations. Wouldn’t it be an auspicious sign of our times if the contemporary catalysts for freer trade, traditional and digital, were China and India? It would show definitively that the world was no longer run by a rich man’s club.
Now, a consequence of a higher profile is criticism. I’ve had some personal experience of that phenomenon. A cursory search of the internet will throw up some rather vigorous and vitriolic criticism of this curious character called Rupert Murdoch. But myth is, in the end, not material. A preconception is not a personality. That is as true of nations as it is of individuals.
As China emerges, it will be the subject of more criticism, in the true sense of the word. The people in this hall will sometimes be doing the critiquing. My personal advice is not to take it personally.
It is now beyond passé to observe that the digital world is borderless, but I think we are yet to properly appreciate how borderless our planet can and should be. We have distinct cultural differences, and they must be cherished, our national identities nurtured. But these are but parts of our global character. We all, including the great people of China, are both inheritors and custodians. We have inherited our planet and purpose from our ancestors, and we are custodians of that planet and purpose for our children and grandchildren. I wish you all the very, very best in our common cause.
Thank you.
