Rupert Murdoch and Google Part 2

Im going to simplify this as much as possible. I probably should have just included this in the first post. Here are the best and worst cases of Newscorp opting out of the Google Index

1. Best Case: They opt out and see an increase in revenues and commitment to their sites because people choose to go directly to their sites. For those sites behind a paywall, they generate more revenue than when the site was free.   Other sites notice their success and copy Newscorp, choosing to opt out of the Google index. The opt out choice turns out to be the better business move for any and all sites looking to increase revenues. Google’s position as the leading search engine is called into question.  The Search business becomes competitive again. Content companies now understand how to best monetize their content efforts.

Far fetched ? Maybe. But not totally inconceivable.

2. Worst Case: They opt out of Google’s Index. Their traffic drops 99pct. No one buys their pay offerings. They all feel like idiots. Then the last idiot left in the office gets out the text editor and changes the robots.txt file or completely deletes it.  They turn off the paywalls. Make the content free again.  Life as they knew it before they opted out and started charging for content returns to normal as quickly as Google can reindex the Newscorp sites.

The upside of Option 1 is far more impactful than the downside is bad. There is no reason not to take the chance.

32 thoughts on “Rupert Murdoch and Google Part 2

  1. Happy New Year.

    http://www.normpompa.com.tr

    Comment by ekartall -

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  9. Illegal Internships

    Seeing how the comments on that post are conveniently closed I just had to comment here. I think its pretty ridiculous that you would try to say that the business venture that you proposed is not a money making one. Although it may not have a direct revenue stream it is an added value for he Mavericks which is a business and a big one at that.

    Its crazy that a billionaire wont come out of his pocket for his own business and would rather bitch about why he can’t use non paying labor. After all you are not asking for interns for a charity. There was a time when we didn’t have labor standards, It didn’t work conditions where horrible for the poor and working class, that’s why we set some (very low) standards.

    The idea that people can’t choose of they’re own free will is BS. Were trying to run a society here. Beleive it or not unpaid labor for money generating ventures has an adverse effect on everyone except those who climbed theyre way to the top. If companies could create a pool of enough poor people to the point where they could create forced opportunities for “experience” they would. unfortunately under those conditions there would only be opportunity for a tiny minority the economy in general would suffer. Big picture here people.

    this so called opportunity is mostly an opportunity for Mark. The concept of internships was for training benefits of the worker. If you want to create a legit internship set up employees on simulted tasks and see how they work out. If they come up with brilliant solution hire them.

    Comment by ignatz2000 -

  10. When Rupert talks about his approach, he comes off as a guy who’s pissed about Google “stealing content”. If he would state his case as clearly and sensibly as Mark Cuban states Rupert’s case, he would appear professional, knowledgeable, and that he understands the modern day methods for exchanging value for value. Instead, he appears as a whiner with no direction so he’s just picking a path w/o a lot of reasoning behind it.

    –Dave Charbonneau
    MyCrowEnterprise.com

    Comment by cerockstar -

  11. What if he says, “Google or Microsoft you need to pay us to be able to index our content.” Then if Bing is the only place to search for NewsCorp content (then more companies as other organizations follow suit), won’t one search engine become your defacto place for news search?

    I see this as the most likely scenario. Search engines do drive massive amounts of traffic to NewsCorp, so I can’t see them abandoning it. But I can see them telling Google that to better be able to serve your ads (as Google is no longer a search company, but primarily an advertising company) you have to pay to grab it.

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    Comment by delpi99 -

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  13. StinkyTeddy is on to something.

    The “historical accident” that Google gets to syndicate professional content without paying royalties or licensing fees is indeed the problem.

    Social Media isn’t making this mistake. Google is committed to pay Murdoch a $900 Million, 3 year deal to search all the personal, blah-blah content on MySpace. And both Bing and Google are paying for a twitter feed.

    Meanwhile journalists are jumping all over Murdoch and questioning his sanity for trying to reverse this “historical accident.”

    I don’t know why journalists are not knocking on Google’s doors.

    Katherine Warman Kern
    @comradity

    Comment by comradity -

  14. Mark, maybe I’m missing something but don’t you think that Murdoch is looking for a way to make search pay-to-play?

    What if he says, “Google or Microsoft you need to pay us to be able to index our content.” Then if Bing is the only place to search for NewsCorp content (then more companies as other organizations follow suit), won’t one search engine become your defacto place for news search?

    I see this as the most likely scenario. Search engines do drive massive amounts of traffic to NewsCorp, so I can’t see them abandoning it. But I can see them telling Google that to better be able to serve your ads (as Google is no longer a search company, but primarily an advertising company) you have to pay to grab it.

    Comment by Trae -

  15. Of course, the WSJ will continue to be profitable, or even more so, no matter what antics Murdoch tries, because of its unique status. The rest of his papers will see a big drop in revenue (except maybe in the UK), but people will herald the WSJ as a benchmark, and others will try (U.S. News, anyone?) and fail miserably, then wonder why it didn’t work for them.

    The thing most of the media is missing is that there are plenty of sites out there which block Google right now. It’s a very, very simple process, and Google is happy to explain how to do it to anyone who doesn’t already know.

    The catch? Most of these sites are meant for a limited audience — corporate pages, meant for employees only, etc. These sites do this for one reason: to keep their content private and keep the public from seeing it.

    That just doesn’t seem like a winning idea for a general audience newspaper to me.

    Comment by markcaseyonline -

  16. Um, Mark?

    By this logic we should all rush out and buy lottery tickets. Best case, we win $10,000,000. Worst case? We’re out $5 or whatever.

    Surely you’re enough of a business guy to appreciate expected payoffs and to know that looking at best case/worst case without looking at either probabilities or most-likely-case is just weird.

    C’mon now. You actually see this and you’re hoping Murdoch sees you as a super smart guy and that your but of PR here encourages him to drill holes in the bottom of his own boat. Right? That has to be it. You’re way to smart to miss not only the substance of the issue but also the analysis this badly.

    Comment by Brooks Talley -

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  18. option 3 …
    they make a good iphone app and charge for it.

    If the app is really good ill surely pay for it.. again i use
    the AP iphone app for all my news nowdays… (they have local and national news in their app)..

    dallas,tx.

    Comment by mverinder -

  19. Quick question…what will their paywall look like?

    Micropayment services are abysmal, entering in a credit card to access the news? Never…how do they handle this? It has to be simple and very quick, like a Facebook login tied to a yet as non-existant payment system.

    Thoughts?

    Comment by Scott -

  20. Murdoch surely understands the traffic hit the WSJ would take by blocking Google but you have to wonder if NewsCorp might be seeing something in their logs trending away from that. (Equally I wouldn’t underestimate Murdoch’s desire to extract payment from anyone he perceived as benefiting from his properties – even if there is a large degree of reciprocity involved.) Certainly if any of the on-line news providers could survive it and thrive they could. So I’m not so sure that option one is far-fetched at all.

    Most of the large news sites have been making similar noises about moving bigger and bigger chunks of content behind pay walls and several companies (ViewPass & Online Journalism to name two) are developing products that might push things even further in the direction of pay-per-news. And with Jeff Zucker (NBC), Bob Iger (Disney), and particularly Barry Diller, making more than passing comments about moving to paid content it would not surprise me if Murdoch quickly has company.

    Some time back Jason Calacanis (who I don’t always agree with but he nailed this one) suggested that Murdoch might try something like this and then hold the search rights out to the highest bidder. I can easily see that happening. Google won’t bite but might not Bing or Yahoo?

    Comment by kloeprich -

  21. wanted to clarify my earlier post… I GET the YouTube portion of this. That’s copywrighted content… “they’re kleptos” in Murdoch’s eyes and if I spent all of that money to generate content and Brin/Page took the adrevenue… I’d be pissed. But, links… no-one owns a link. Links = traffic. Traffic = eyeballs, eyeballs = a monetizable opportunity for Murdoch. Personally, I’m glad to see him try it… because he’s a rich enough guy that he can “take a flier” here and see what happens. But… if I were him, I’d wonder why his braintrust can’t figure out a way to generate $$$ from the eyeballs’ he’s getting… rather than complain about the traffic source. There are methods to segment and focus the advertising once they’re on site… This is an interesting debate though.

    Nielsen actually came out with a study about search and retailers last week… that’s caused a bit of a stir as well. Backhandedly, it is saying that search marketing and SEO might not be as valued as one would thing. It was featured in adAge (http://www.adage.com) and is worth reading… not as gospel but certainly worth the discussion.

    Comment by billbledsoe -

  22. I just don’t see how this benefits readers. Sure, someone might make more money but we’ll be poorer for it. Naive but there you go.

    Comment by paulmwatson -

  23. Mark, google only shows more content on stuff that they have LICENSED. They don’t violate copyright and post full articles to content they don’t have licenses for.

    Comment by mateo2 -

  24. billbledsoe: Thank you. I have the same question. What is the difference between a link posted on google news and on twitter. Obviously Mark hates google, that is well documented.

    I think what’s being missed here is that Murdoch doesn’t like twitter either. He doesn’t want to be linked to BY ANYONE. He wants his customers to come directly to his site from the address bar. Agree with it or not, that’s what he wants. So he won’t be happy about people tweeting his articles either. He would likely seek litigation measures.

    Comment by mateo2 -

  25. I think you make some good points, and I think you’re right about the points that you make for Newscorp.

    However, I’m not sure they would hold true for news organizations like CNN, NYT, CNBC, etc. The main difference that their organization have from Newscorp is that Newscorp has very little competition for the specific products they produce, namely the WSJ and FoxNews.

    There are very few conservative news organization and none of the size of FoxNews that could potentially pick up the readers unwilling to pay for their news. Therefore the readership must choose between paying to read their news from an organization that has their same leanings, as they are accustom, or switching to a more liberal news source. Similarly, the WSJ provides information that is provided by very few other news organizations and none on the same scale or with the same reputation.

    As a result, Newscorp has a leg to stand on, while other news organizations currently would not. I’m not sure if it works for Newscorps, other news organizations would quickly follow the same model. Other organizations would need to restructure the product they offer first.

    That being said, it simply points out that the same news is being reported in the same manner by too many news organizations. Therefore, if the Newscorp model does work, it would encourage news organizations to provide a unique and valuable product before they can follow suit. Speaking idealistically, if Newscorp’s model works it could help the journalism industry recover some of its credibility with the general public in the long term. It would force news organizations to move away from wire services and produce original content.

    Hopefully this model can lead to more meaningful and valuable news coverage, instead of 15 news organization showing the same live feed of an empty hot air balloon.

    Comment by zbut -

  26. Ironically, NewsCorp owns the biggest movie review aggregator site, RottenTomatoes. How does Murdoch sleep at night knowing that he steals the content of others?

    Comment by mateo2 -

  27. I think too much emphasis is put on the medium. People will find good content. If MC printed his posts and handed them out in downtown Dallas, they would find their way to everyone who wanted them.

    Comment by joshuakarp -

  28. I do think item #1 is inconceivable, because there is a lot of historical evidence that it doesn’t work. The first time traditional media companies tried to do this stuff – paywalls, etc., it failed miserably. Unfortunately, the bad idea still kind of hangs around like a weed, because even though the sites are now free, the NY Times, as an example, still wants you to “register” before seeing their content. If it is free, what do you need my information for? It’s like going to the Radio Shack to buy a pack of batteries and they ask for your home address. WTF?

    I also think there are some case studies out there where people were giving stuff away for free, decided to charge for it, and never recovered once they realized they couldn’t. This may not be applicable to what you are talking about, but I remember Ricky Gervais had a podcast that was getting massive downloads. He decided to charge for it, and the downloads went, almost overnight, to like 0. He made it free again, but the traffic didn’t come back, and so he shut it down.

    But, you make a great point in that it would be awesome if the search market could be more competitive again. I dislike any company that has monopoly power, even if they don’t appear to be using it, and even if their slogan is “Do No Evil” like Google’s claim is.

    I think a Twitter-like service would be an interesting game changer. Bing is not a game-changer, it is trying to play the same game better, and that’s a hard thing to do. Unfortunately, Twitter as it is structured now is really just a way for person A to connect with person’s B-Z. If person B “follows” A, they get every meandering thought A happens to write into 140 characters.

    I go back to my example of Amazon. I’ve signed up for their lightning deals twitter feed. I only want it for deals on computer related products, because every now and then they have some AWESOME deals. Unfortunately, I also end up getting tweets for Diamond Broaches and, just a few minutes ago, “SmartCat Bootsie’s Bunk Bend and Playroom for Cats”.

    And then, there’s the fact that Twitter is now allowing Google and MS to search their tweet database, so in some sense we are back to “traditional” search being the top dog, which defeats the point.

    Comment by bojennett -

  29. I’ve been thinking about a third possibility for the past few months — Performance Royalties for Online Journalism. Here’s the abstract:

    When you hear your favorite song on the radio, what are the underlying economic forces at work? Radio stations choose songs that will attract listeners. In exchange for hearing their favorite songs, the listeners are subject to advertisements. The radio station offers a free product (songs) that attracts an audience and enables the radio to serve as an intermediary between advertisers and consumers. Nobody listens to the station primarily to hear the ads. Search engines function with a nearly identical intermediary-advertiser-consumer relationship. Consumers go to search engines (the intermediary) constantly for multiple reasons (information, shopping, entertainment, etc.). The links, snippets, and other information on search engine results page are free material that attracts the consumer (similar to the songs on the radio). Advertisers pay to be displayed prominently for commerce related queries — nobody goes to the search engine to see the ads. This proposal aims to rectify one glaring difference between these two economic systems. Songwriters are paid performance royalties by radio stations whenever their creations are played. Journalists are not paid by the search engine. This is a historical accident and need not be the case. I propose to create non-profit, voluntary consortium of journalism providers that will monitor the display of copyrighted content created by its members. Online publishers linking to this content will agree to pay performance royalties. The consortium will distribute these royalties to the content creators. This is ASCAP for journalism.

    Search engines will be free to ignore this content just as radio stations are free to play non-copyrighted material without paying performance royalties. Market forces, however, dictate that commercial radio stations must play songs that are controlled by ASCAP or another organization. By combining forces and negotiating a collective performance royalty agreement, news organizations and individual journalists can utilize market forces to get a fair revenue sharing agreement.

    Comment by stinkyteddy -

  30. “Google’s position as the leading search engine is called into question.”

    I’d have to disagree with this statement as the logic behind them cutting Google out is to drive the user directly to the news website instead of having Google as a summary middle man. Well wouldn’t that be the default action of any search engine? If Murdoch felt that all of their traffic was coming from Yahoo or Bing once Google was blocked, wouldn’t they just block them as well?

    Comment by bearflash -

  31. this is an interesting discussion for sure. Honest question. question for you MC: As a “content producer” what do you see different from what the search experiences (Bing, Google, Yahoo, etc.) present in their “news” presentation… that isn’t done by a Twitter link? The YouTube portion of this aside for a moment… making money off of their video… I get that as infringement. But if the search experience is just posting a headline… with a link through to a News Corp property… is that REALLY a problem, or free traffic that Murdoch can monetize when someone lands on one of his properties?

    Comment by billbledsoe -

    • big difference is the presentation. Google tries to be a destination. Twitter is a broadcaster. Google can and does show varying amounts of content , sometimes just a headline, sometimes more. Twitter is 140 characters or less

      Comment by markcuban -

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