I’ve had a fair number of press calls on the Murdoch/Bing sillliness and here are the points I’ve been making:
Were Microsoft (MSFT) to pay News Corp. (NWS) to drop Google (GOOG), it would be a double-play in Google’s favor: Microsoft would lose money and gain little. News Corp. would lose traffic, shifting away from the search engine with more than 60% penetration in the U.S. and more than 80% in the U.K. to one that has 10% here – and that’s just the search engine; it doesn’t account for the disparate popularity of Google and Bing News.
See this post: WSJ.com would lose 25% of its inbound web traffic, according to Hitwise, which also says that 15% of the people who come to WSJ.com on the web come from Google immediately prior and 12% come from Google News.
Would Google be hurt? Note in that same post the German consultancy’s calculation that all the top publishers in Germany, representing more than 1,000 brands, account for only 4.1% of top search results vs. 13.6% for Wikipedia. Let me repeat that: Wikipedia comes up in the most valuable position in search three times more than all the top publishers of Germany combined.
News Corp. leaving Google would be a mosquito bite on an elephant’s ass, unnoticed by Google or by the audience. For there will always be – as Murdoch laments – free competitors: the BBC and Australian Broadcasting Corp, which he and his son complain about, not to mention the Guardian, the Telegraph, NPR, CBC and any sensible news organization worldwide.
This silliness is emblematic of the end of the Gutenberg age, the industrial age, the age of control, the age of centralization, Murdoch’s age. The problem here is that Google-virgin Murdoch simply does not understand the dynamics of the link economy. He roars against them. Google et al do not take his content, they send it audience and value. It is up to him to exploit that. The business failure here is Murdoch’s, not Google’s.
I also emphasize that we’re talking too much about just revenue. A key dynamic to the new economics of news is cost: getting rid of not only printing and distribution infrastructure but also the resource devoted to commodity news, which can now be eliminated thanks to the link economy (do what you do best, link to the rest).
But let’s not forget that this all may be so much macho strategizing: business chest-thumping. News Corp. must renegotiate its reported $300 million guarantee for MySpace from Google, in which MySpace reported underperformed badly. Much of media is falling for the spectator delight of watching Murdoch, Microsoft and Google in Tokyo Bay. But I think it’s bullshit. It’s not going to happen. If it does, few will notice or care…. except media reporters forced to write this up.
Also… Murdoch himself says that Bing and even Google couldn’t afford to pay all content providers. And for what? For linking to them and giving them value? If anyone were paid – which, as Google CEO Eric Schmidt says, would only be another form of subsidy (read: charity or blackmail) – who’s to say that Rupert Murdoch should be paid more than Josh Marshall? Or Wikipedia?