Who’s David and who’s Goliath?
Murdoch has been used to getting his own ways with governments and other corporations for decades
THE argument over whether news sites should offer subscription-based paid for content or continue giving away free news stories reached the point of no return earlier this month when Rupert Murdoch, head of News Corporation, took a public swing at Google, saying that his company will be removing its content from the search engine “within months”.
Murdoch has made his feelings regarding paid-for content clear for a while, believing that people get far too much for free. This time, however, is the first time he has made the argument so public and so personal. Referring to news aggregation websites as “plagiarists” and “content kleptomaniacs” that “steal our stories”, Murdoch threatened to sue websites, including the BBC, for the way they use News Corp content and believes that he can get the law courts to start issuing online gagging orders.
One prominent site in the News Corp family, The Wall Street Journal, already has a subscription model in place which allows non-subscribers to only read the first paragraph of an article. However, if web users access it through the Google search engine, they can read the story in its entirety.
Jonathan Miller, Chief Digital Officer at News Corp, said the Murdochs’ intentions were to block Google from accessing his websites and believed that other media websites would soon follow suit. “We believe that the value of high quality content is not recognised online,” said Mr Miller. “I don’t believe the media industry can continue to exist in this way.”
He also believes that British newspapers owned by News Corporation, including The Sun and The Times would be able to survive without the search engine driving traffic to their websites.
Murdoch must have a very robust revenue model planned for his sites as Google currently sends a tremendous amount of web users to them, something which could soon stop. According to a Google spokesperson: “Google News and web search are a tremendous source of promotion for news organisations, sending them about 100,000 clicks every minute”. Is this something that Murdoch has overlooked? It is highly unlikely, but he must think that the appeal of his news sites has the ability to survive and prosper without Google.
Shortly before the arguments started, a YouGov survey was commissioned and asked the general public and media experts alike who they consider more influential, Murdoch or Google. With nearly two thirds of the votes, the 78 year old media mogul enjoyed a landslide victory. There is no doubt in the public mind that Rupert Murdoch is a very powerful man, but are people wrong to write off Google as the underdog?
Behind the uber-cool offices and perception of a bunch of geeks having a very good time without hurting anybody (“You can make money without doing evil” is on the Google corporate policy list, as is “You can be serious without a suit”) lies a business that is very good at getting exactly what it wants.
Since it was started, just 11 years ago, the company now generates many billions of dollars a year and has expanded its reach from providing a simple internet search system to a near online monopoly. When Google wanted to offer advertising directly to businesses it launched the Adwords system, which is now one of the most popular ways to promote a website and brought the search engine $21bn in revenue last year. When the company wanted to take on the world of video it bought and nurtured YouTube, a site where hundreds of millions of videos are now watched every single day. And when it set its sights on offering people a free email service, it soon saw itself in the top three providers with tens of millions of users.
There is a pattern here. It is one of a business that has shown great imagination and flexibility and has enjoyed unprecedented success in almost everything it attempts – and that’s before you look at the monetary value of these projects. Speaking in the US at a search engine conference recently, Bob Brisco of Internet Brands Inc. stated that the worth of all publicly and privately traded internet companies is around $350 billion. This figure is important for two reasons. Firstly, it is greater than the value of all other media companies in the world, showing that internet property is now more valuable than offline business and secondly, of that $350 billion, Google owns half. As such, it’s hard to escape the conclusion that Murdoch may have met his match.
Another market that Google entered and soon started dominating is that of online news. With the popular Google News service, the search engine trawls through online newspapers and blogs from across the globe, taking stories and grouping them for searchers to view in one place. Even though Google does not create any news content itself, its site is now one of the most popular news brands in the world. Adverts are placed next to other peoples news content, bringing healthy revenue to the search engine, without it having to write a word. Murdoch has seen this and has his eyes set on bringing some of that money to News Corp.
Disallowing a search engine from viewing web pages is technically a simple process and one that Murdoch could have implemented a long time ago if he had wanted to. Making this argument public and using it as a rally cry to other media websites shows that there is a much larger objective in Murdoch’s mind. Is he planning to scare Google into paying for the right to index his news content? It makes sense. He previously got Google to pay for the right to exclusively index Myspace, a News Corp property. Many website owners are speculating that the goal may be to strike a deal with another search engine, most likely Bing, where it will instead have sole access to the articles.
Whatever his agenda, Murdoch needs to play this one carefully. If he starts making unreasonable demands or helps one of Google’s competitors to begin eating up market share, then it may decide to fight back by creating news content of its own. If this happens, and considering its record to date, Google will probably become one of the industry leaders within a very short time and Murdoch may have played a major part in helping to create his greatest rival.
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The conclusion glimpses a worrying consequence of this battle. Strange to side with Murdoch, but he may have something of a point here. By virtue of its size, Google is able to piggy-back other endeavours and deliver financial benefits for itself to the detriment of the organisations it is indexing.
It argues that it is delivering readers, but it isn’t, really. If those readers were asked to pay for this content, as they are at the newsstand, Google’s work would mean nothing to these organisations, yet they are the one providing the content to Google’s advertising. it does not follow that widened brand recognition brings financial benefits. I regularly read the New Zealand Herald online yet I have never given a penny to it. What Google is doing is rather like having a newspaper where all the journalists – who bring in the readers, lest we forget – work for free while the corporate end of the business reaps all the benefits (not that far from the truth, I suppose, but a little more extreme).
If Murdoch loses this one, it could potentially give a huge bite of online news to Google, perhaps monopolising other smaller but better organisations out of existence. While I have plenty of issues with Murdoch’s business practices – not least his ability to avoid corporate tax – his battle could be journalism’s battle. One to watch.
Since writing this piece it looks like one of the predictions has come true – Murdoch and Microsoft are in talks to give Bing the rights to News Corp content. I bet there’s some interesting meetings being held at Google today.
Also, the founder of Twitter has spoken out telling Murdoch that his plan will not work as the future of the internet “is open, not closed”.
This topic is heating up pretty quickly and whatever happens, it could shape the way the internet works.
Like millions of other web users, I use Google to find anything I’m looking for. If it isn’t on Google I won’t find it, I’ll find something else instead. And if it isn’t free then I’m just not interested. I suspect I’m in the majority.
And what will you do on the day after the media can no longer afford to supply you with news for free? Like any other business, news gathering costs money. If you take your point through to its logical conclusion, you’ll no longer be able to comment properly because your aggregation habits won’t allow you to draw down quality reporting.
By Google offering free content, it doesn’t make it right. Sticking your head in the sand won’t make it go away – no matter how little you may like NewsCorp.
And what will you do on the day after the media can no longer afford to supply you with news for free?
What the media can or cannot afford is no concern of mine.
As for “sticking your head in the sand”, that’s a false assumption. It’s simply not my problem.
It seems very likely to fail because there is so much content available for free and other aggregators will spring up. One need only look at the New York Times who about three years earlier tried to put ‘premium’ content on a paid basis. They lost 95% of their traffic and gained the enmity of their top Op-Ed contributors. It was a short lived venture and they instead now demand that one register to see content… but it is free.
Murdoch will make money where he always has, on streamed live sports but forcing one to read an article by subscription, most will just opt to find the news elsewhere and the blogosphere is not going anywhere.
That it has not as yet happened in Murdochville is an indication that they are running into difficulty figuring out how to make it work.
OK, people appear to be missing my point. I think it is hugely unreasonable for aggregators to expect their content for free when quality of content is dictated by home much time the original writer can devote to it. There is a separate argument to be had about writer’s remuneration – and I for one would far rather be putting money straight into the pockets of writers rather than the media organisations who employ them. But you can’t seriously expect those who spend time investigating and writing original content to do it for free.
Many people probably think that the vast array of resources on the internet means that aggregation is not a problem, and maybe it isn’t – yet. But it’s hardly planning for the future. Maybe it won’t happen in our lifetime, but there is another issue to consider here.
If writers cannot afford to devote their day to investigation, what does that mean for democracy? When a local newspaper closes, people bemoan an inability to call local politicians and authorities to account any more. But writers have to eat, too. It seems incredible that we are all so hung up about fair trade, about caring for our food producers, yet what is being suggested here is that those people who supply you with the material you use for comment should do it out of the goodness of their hearts.
This is not some kind of Robin Hood thing. Start looking past the greedy media organisations and think about the people they employ. It is my belief many of these news organisations will fall in time. Will you really expect news for free from local news co-operatives? Nobody can say for certain that advertising is the way forward – it’s proved to be as volatile as commodities in the past two years.
In fact, nobody knows how the media will look in five years’ time. Other revenue streams will come forward. And that isn’t a concern of aggregators, bloggers and others who can’t be bothered to generate their own original content, and would rather piggy-back off other people’s work. But we are already in a situation where writers can no longer be afforded, or won’t be afforded. It could become your problem sooner than you think.