Murdoch madness

I’ve had a fair number of press calls on the Murdoch/Bing sillliness and here are the points I’ve been making:

Were Bing to pay News Corp. to drop Google, 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 percent 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. Unnotice 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 would be, 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?

: Here‘s audio and a transcript of my interview on ABC (Australia).

And on NPR’s All Things Considered.

Reuters’ report here.

More from the BBC and Canada’s Financial Post.

  • Marc

    Before I go off topic let me say i agree… Its all BS and posturing.

    I understand the value of google, but i’m having trouble finding the value in these “aggregator sites” like fwix, outside.in, etc.. just to name a few.

    The seem to be popping up all over the place lately and some are now stealing our google juice.

    The bigger aggregators are often overtaking us in google even though we are the source of original content.

    Should I be honored to be in an aggregator or upset that our content is almost being re-branded and spit out, adding another unnecessary step for users to find the original content.

    Is the link economy still the value content providers should take from these sites or am i missing a bigger picture somewhere?

  • http://almightylink.ksablan.com/ Kevin Sablan

    Good points as always. Also, Google simply does not make money for every page of search results that they serve:

    Google only gets paid when people actually click on the AdWords advertisements that appear on search engine result pages.
    Advertisers choose the search words or phrases by which they want their ads to appear. For example, a bottled water company might want to appear when Googlers look for the word “thirsty.”
    Few or no ads appear for searches for many “newsy” words, especially those related to crimes. What advertiser wants to be associated with stabbings, murder or molestation?

  • http://www.feedly.com Edwin Khodabakchian

    Posts like these are the reason why I am a huge fan!

  • http://noelbellen.blogspot.com Noel Bellen

    Murdoch is making the same mistake the music industry made… trying to hold on to a business model that has proven not to work.
    Nor does Mr. Murdoch understand the business model of a search engine, he should pay them money to drive traffic to his website.

    History will prove whether Murdoch was a visionair or just someone trying to protect an old business model.

  • Des

    I used to read the online content of a newspaper in the Highlands of Scotland for their Gaelic articles. They’ve been behind a pay wall for about a year now. I don’t know if they are making any money out of this but I suspect not. I still read some of the Gaelic articles, someone who subscribes copies and pastes them in a forum for Gaelic activists :-)

  • http://www.charlesfrith.com Charles Frith

    I guess the question is does Rupert Murdoch have a robust plan or not.

    In the absence of one, he’s getting some reasonably interesting crowd sourced strategy. My first thought about the Bing option was I had to think it through.

    I came to a similar conclusion as Mr Jarvis. But for a few minutes I thought not bad. Not bad at all.

    As an aside, I’m sure I heard you on the World Service just now in Hong Kong Mr Jarvis.

    But maybe it was being syndicated by ABC. A small irony there ;)

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  • Maarten

    Agree. Actually, why not just ignore the whole Murdoch-saga. Forget the guy, and let’s get on improving online journalism.
    Or is he too influential to sidestep?

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  • Aaron

    I disagree with the premise that News Corp will lose doing a deal with Bing. Don’t forget Microsoft has very deep pockets and if News Corp buys additional content (news, etc..) then Google will have to rely on other providers and if those providers see Bing as an effective way to isolate google from capturing eyeballs then they will copy them. Google has a mid term oligopoly on search aggregation.

    The real issue is that you still need reporters, individuals covering stories to have news. Not just press releases.

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  • Londoner

    Spot on again Jeff. Thank you for saying what I’ve been thinking for two weeks or so now. Only you put it far more eloquently! Keep it up.

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  • http://www.creditys.com Jaylen Klingler

    Another good article you post here.I m waiting for others to share it with my friends.

  • http://www.myhometownadvice.com Randy

    Murdoch is like me old but he has money and he does not like it when people move his cheese. He also is very smart and this could be his way of getting more press (goole juice) for his vast empire?

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  • http://blog.gandalf-lab.com Niraj

    Jeff – it seems to me that you are so strongly convinced that google is the only company that can do it – that you are willing to discard any positive impact of other forces like MSFT and murdoch.

    What makes you think that MSFT paying Murdoch is a losing proposition for MSFT.

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  • http://cpsrenewal.ca Nick Charney

    Jeff – Having just finished reading WWGD and stumbling across the NYT coverage of the Murdoch Madness as you put it I couldn’t help but immediately having the exact same thoughts as you articulated above. Even with deep Murdochian pockets the investment will never pay dividends the web.

  • Paul

    Anyone with any sense would serve dynamic content so that any search engine’s spider would get full content but customers would see the paywall. You’d probably need to negotiate with Google for them to not display the page as cached content.

    Or you might cut a deal with Google so they could cache your pages but they’d have to pay you for that privilege – and Google could then try to make money from placing advertising on it. Hell, cut down on your on-line bandwidth costs by allowing Google to mirror the whole site and monetize it.

    • Andy Freeman

      > Anyone with any sense would serve dynamic content so that any search engine’s spider would get full content but customers would see the paywall.

      That’s called “cloaking” and search engines tend to penalize sites that do it. (And yes, they can find out. More to the point, they want to find out.)

      Note that the typical user response to a paywall, namely hitting the back button and going to the next search result, will also hurt the ranking of sites that do that. (For some reason, search engines think that sites that readers like should be more highly ranked than sites that readers don’t like.) Yes, Google can see that kind of user behavior.

      > Or you might cut a deal with Google so they could cache your pages but they’d have to pay you for that privilege

      Or, Google may decide that you’re more trouble than you’re worth.

  • Sauron

    I am afraid i totally disagree with you. People criticize Murdoch based on principle: news should be free. And argue from that as a starting point. But principle is never a good starting point. Facts and money are.
    The point Murdoch is making is that news should NOT be free. Murdoch must be paid for his content, and in fact, i am willing to pay for it, just as i am willing to pay for anything that adds value. As he himself recently argued, he does not WANT visitors who search on Google, just click around on his sites and don’t pay. He wants viewers that pay. So Google needs him a lot more than he needs Google. News is becoming a commodity, but Murdoch needs to protect the brands of his newspapers from being polluted by all this commotidized news out there. He wants to be “premium” so people pay for it. So Google is hindering his premium strategy.

    • http://www.buzzmachine.com Jeff Jarvis

      I am not arguing from the principle that news should be free. I am arguing that it is better business – except Murdoch is unable – or unwilling – to meet the demands of the new online economy (though entrepreneurs will).

    • Free news is bad.

      Your right having free news is a terrible situation it’s like how climate change pot smoking hippy activists and their buddies from NASA talk about how climate change is bad. How could we all survive without Fox News’s great insights about why Obama is the new communist Stalin, free healthcare is bad, climate change is fake, moon landing was fake, low taxes are good and Sweden and Norway are communist countries. But you know what Murdoch, the Fox News Team, You or I or anybody else cannot deny? Sweden and Norway have really sexy ladies and women find Sergy Bryn and Larry Page from Google more sexy than Steve Ballmer and Rupert Murdoch from Microsoft and News Corporation! ALL FOR FREE NEWS!

      • Free news is sexy

        And when Sergy and Larry’s Google Lunar XPrize Winner finds evidence of Moon 1.0 it won’t be hard to choose between partying with Swedish and Norwegian babes or sitting at home watching repeats of Bill O’Reilly on my Tivo.

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  • Dermitt

    More addollars means more unique visitors to a site. Then you have to give stuff away to satisfy them. It’s tough because ads only keep getting less valuable. Ads cannot support deep reporting. They are supporting opinion or BS because there is more of it.

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  • http://doublejoggingstrollers.me Double Jogging Strollers

    I have a funny feeling that Murdoch is just somehow too proud to admit he made a mistake. He’s causing all this hype about Google, blaming it on them and here and there but not himself. He’s just like a bratty little boy, refusing to admit that he screwed up but instead blamed it on his toys.