Of Murdoch & Google

I have in recent weeks observed the apoplectic fits rippling through the blogosphere and the new media community over Rupert Murdoch’s recent suggestions that News Corp could pull its content from Google’s search directory. Through the chorus of guffaws emanating from all corner I hear a faint whisper, “methinks thou dost protest too much.” If all of Murdoch’s competitors, opponents and enemies think this would be such a devastating move for him, why complain?

A gamble? Sure. But over the past few years this is what I’ve observed: About 2 years ago when Murdoch went after Dow Jones in order to acquire The Wall Street Journal, the chattering class said he was mad. He was a dinosaur chasing a dying medium. Today the Journal has the largest circulation of any daily paper in the US, even outselling that cat-box liner, USA Today (and the only major US paper who’s subscriber base is growing). When he paid $5 billion for it, they mocked that he had outrageously overpaid. Today, as papers across the country mothball their presses and shutter their doors, the Journal is worth even more. When Murdoch decided to put the Journal behind a pay-wall, it was derided as foolish. Today their model is the envy of the industry, and quickly being emulated by other top tier news brands of premium content. Now he is toying with pulling out of Google search results.

I can think of three exceptionally good reasons for him to do so.

Firstly, the visitors Google delivers are “low value” — They occasional read the non-premium content, and rarely convert to subscribers. The ad revenue from these visitors is lower than even their volume would suggest because they are far less targeted, so advertisers pay less to reach them. Certainly not negligible, but something they say they can survive without.

Secondly, regular readers of the Wall Street Journal come there as a destination. They have done an exceptionally good job of providing premium editorial content and analysis of financial news to an audience that respects and trusts their brand, and frankly can afford it. If, however, the Journal remains in Google’s news results page, they dilute their brand, to become just one more news sub-brand among many under Google’s search umbrella. So delisting from Google would also be an exceptional move to protect the Journal’s brand equity.

Thirdly, if Google is delivering non-converting traffic, and Bing is also delivering non-converting traffic, but Bing (having deep pockets but smaller market share) is willing to pay a generous amount for exclusivity, then there is a serious monetary reward for News Corp to drop Google.

On this point, Seth Godin (whom I rarely disagree with) is wrong. In reference to Murdoch, he writes, “Charging money for attention gets you neither money nor attention.” A clever turn of phrase, but he’s speaking of marketing messages, and applying it to content. In short, he’s mixing his metaphors. In marketing, the message is a means to an end. With content producers, the content is the end unto itself. If one were to take Godin’s statement to its logical end, then bands should pay people to come to their concerts and Godin should pay people to read his books.

Another criticism is that if the Journal really is going to pull out of Google, they could do so at anytime. Therefore implying that Murdoch is bluffing. It’s as if these people are unfamiliar with earned media coverage. Why switch unsuspectingly in the dead of night when you can milk it in the press — among the talking heads, the blogs, the morning shows, and on and on — for a couple of months. As the saying goes, you can’t buy this kind of coverage.

What I see when I scratch a modern day new-media pundit is fear of change. It is not Murdoch that is afraid of change (he has taken huge gambles throughout his career), but the internet darlings that have grown comfortable with a single search engine and all free content. Murdoch is rocking the boat in their pond. He could potentially be a very disruptive game changer. If Bing got exclusive indexing of the Journal, how would that effect the market share in the search industry? 2 or 3 percentage points? More? Less? In the world of search, a couple percentage points translates into a lot of money. The real fear is that Murdoch could change the whole game — not for his own actions alone, but by those who follow his lead. If it works for the Journal, then why not other papers? The New York Times and The Economist are now experimenting with pay-wall models. What we’re talking about is Freemium. The Journal does have free content. You just can’t see the best stuff unless you pay (It’s a classic Freemium model that Web 2.0-ers should embrace.). And what if it works well for the Journal? What if others followed suit? This is what they really fear (And what Google should fear most).

Murdoch has both the money and the testicular fortitude to give it a gamble. I say, ‘More power to him.’ And if he can get a few other major publishers to do the same, I think it will be a very smart move.

Additionally, I have my own selfish reasons to cheer on such a move — I would like to see the search industry shaken up a bit. I’ve watched Google’s move into SaaS with free bundling to it’s search monopoly in one software category after another, and I wonder why nobody else draws parallels to the Microsoft/Netscape wars of the late 90s. I’d personally like to see at least 3 major players in search (Apple?). Competition is good, and a big-risk play against Google by News Corp could be very disruptive. A game changer that could create real opportunities. And to those (so-called) new media outlets that have grown use to the status-quo, well they’ll just have to learn to cope with change.