Rupert Murdoch, the smartest man in newspapers?

November 24, 2009

I wrote an analysis on Monday about the possibility that News Corp might take its news search results away from Google and list them on Microsoft’s Bing search engine instead. My conclusion: This one isn’t such a hot idea. Then I read John Gapper’s Financial Times item about how it *could* be a hot idea.

To recap, here’s how it would work.

  • Microsoft would pay News Corp for the privilege of being the only search engine to carry results from papers including the New York Post, Wall Street Journal and Times of London.
  • Microsoft thinks it can get more people to use its search engine, drawing them away from Google.
  • News Corp could punish Google, in essence, for making tons of money from the ads it serves alongside news search results. Why, the thinking goes, should Google make a bunch of money off the news that we produce and our newsrooms go starving and our ad sales tank?
  • Other newspaper publishers, if they see Murdoch making it work, might think the same thing and abandon Google en masse.

I and many others wrote that it would be a gamble at best. What if people don’t care that much about news? If the 70 percent of the search market that uses Google discovers  the news is absent, will they switch search engines? Scientists of misanthropy like me say it’s unlikely. If they don’t find it, they won’t seek it.

Gapper at the FT has another way of looking at it:

In effect, (Murdoch) would be swapping his revenue stream from online advertising with a payment from Microsoft for drawing visitors to Bing. That suggests one of two things: either, as a lot of digital evangelists have suggested, he is getting old and does not “get” the internet, or he has looked at the figures and decided that Google traffic is not worth very much. Personally, I think the latter is more plausible. …

Mr Murdoch appears to have decided he will not lose very much by ditching Google traffic and even a fairly small payment from Microsoft would compensate. He is attempting to get distributors to pay for content in the way that US cable operators pay cable networks for programming. …  If the revenue from search traffic is low, why not swap it for something else?

In other words: You, Mr. or Ms. Newspaper Publisher, hate Google because you’re in a co-dependent relationship. You need Google, but Google hurts you too, so you want to escape from Google, but you can’t… But think about it this way: How much worse can it be? You’re shedding hundreds, if not thousands of jobs, and you call 25 percent ad revenue declines an improvement over how they were a few months ago. What’s NOT to lose? And if someone’s paying you more than you’re making now?

Not to add too many question marks to one blog post, but does this make Rupert Murdoch the smartest man in newspapers?

12 comments

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I’ve never understood how the web is making money except as a vehicle for advertising and paying and internet provider.It’s been this socialistic, everything’s free to everybody who can access the net. For those producing real content by the sweat of their labor, it has to break down somewhere economically. Much as I disagree with Fox News and Mr. Murdoch about many things, I think he’s right to pull the plug on his content from someone not paying for it.Those who put content on the web professionally need a paying outlet and portal. I think Microsoft and Murdoch might be right… otherwise professional news and content will fail. Not that some of us wouldn’t say good riddance to the likes of FN, but in general these are for profit companies and can’t give away their product and pay the bills.

Posted by jonwh | Report as abusive

We are fighting one media with another. Google has given meaning to the chaos on the internet. They have a smart business model and it can only be fought by smarter business model. What is News Corp strategy, introduce Bing in place of Google?

Murdock understands something Google, with all its brilliance, seems not to know: Reporters and editors enjoy being paid for their work.A retired newspaper person, I set Google-news as my home page and attend it daily following my morning newspaper read.What has long been clear to me through that experience is that without newspaper content, Google-news will be a pathetic mash-up of infotainment. Many of us will be happy to pay a bit to get that content. Might even return to the WSJ, knowing it serves Murdock’s bottom line more than the reader.ckpat

Posted by C.K. Patterson | Report as abusive

The majority of actual print newspapers comes from the classifieds and ad revenue. your subscription pays for paper, ink, delivery, etc. Online papers dont need to pay printers, delivery, or any of the real world infrastructure. Because of this simple fact the ad revenue SHOULD be enough. not to mention the ability to get a scoop (which they lost when tv came out) and get hits from that. The internet should’ve evened the playing field for papers who embraced the opportunity, unfortunately many only saw it as a place to paste their articles. Not going to feel bad for them. And good journalists have learned to hybrid-work for Frontline, freelance and blog (while getting paid for ads). Let the slow die off and the smart will find a way

Posted by Pat | Report as abusive

Gapper wonders in print “Why, the thinking goes, should Google make a bunch of money off the news that we produce and our newsrooms go starving and our ad sales tank?”Fair question, but I can’t help but wonder if Mr. Murdoch shares that pain.

Let him try I say. Coming from the man who owns Fox news I find it laughable that anyone would want to pay for their news. And with the constant rise of alternate news sources like was seen during the elections in Iran with Twitter and video from phones, pda’s etc streaming directly to the net. And in many cases it’s the people at the scene of the news gathering the footage not the ‘journos’ who arrive after the fact. Then it just gets regurgitated to us via a ‘news provider’ so really what would we be paying them for?

Posted by Justin D | Report as abusive

Generally speaking, Mr Murdoch has tended to make money by using new technologies early. But not always. For instance, in 1995 or thereabouts he stopped work on interactive/internet developments at HarperCollins, and actually he came very late to the Internet. His huge contempt for working journalists makes him an unlikely defendant of their rights in this case, too. I doubt very much that content from the News Corp newspapers would even be missed by users of Google News.

Posted by Rod | Report as abusive

Murdoch has recognized several problems with a Google partnership. First, there is the Google “split”, in which the lion’s share of online advertising revenue goes to Google, not the content provider. Second, the only party which can audit Google is Google; that is, if Google tells a content provider that an advert has 10 hits, the content provider must believe (and cannot verify) that the advert had only 10 hits… even if Google charged the advertiser for 100 hits. Third, Google caches content; that is, Google can (and does) supply content from a single “hit” of the provider’s system. Fourth, neither a Google partner nor any credible editor cannot specify positioning in Google search results, often making “good” content drift beneath salacious content.As evidenced during the proceedings of the case of Authors Guild v. Google, Google intends to become the sole publisher of Internet-accessible content. From both a financial and a patriotic standpoint, it seems wise to try to kill the tyrant before it grows too powerful to be subdued.

Posted by Rob | Report as abusive

sky/murdoch/fox etc isn’t the only news producer around, and outside of the US it’s not the best regarded content anyway… so google will still show bbc, cnn et al – people will stick with that and they will benefit from Google giving them better ‘share of voice’. work away murdoch….

Posted by mark | Report as abusive

I really hope Rupert does this so I won’t have to see any of his “news” on Google ever again. It will only improve Google’s signal-to-noise ratio. Please do it Rupert, we won’t miss you at all.

Posted by W Smith | Report as abusive

Actually, mentioning Rupert Murdoch in the same paragraphy as “news” and “professional” is naivete of breathtaking proportions. There is “Yellow Journalism” and then there is Rupert Murdoch and all he owns, something not even of the caliber of infotainment, but something more like infoganda. That “professional content” should not be included on any search engine actually searching for news items.

I hope News Ltd do this. It will clean up a lot of the so called “news” provided via Google and hurt their hits/ad revenue in the process. It’s naive to think his competitors won’t take advantage of this. Doesn’t Murdoch realise that he has devalued his own product over the years and now most of his tabloid news comes from the people and the internet – so he is the one getting content “free”. People don’t care where they get general celebrity news these days. If they want good analysis of stories they’ll go direct to specialised sites and more often than not these days they are independant web sites set up by journalists sick of the big media players. The paradigm has changed and Murdoch doesn’t still doesn’t get it. Let him cut of his own nose…

Posted by James | Report as abusive