Microsoft’s talks with newspaper publishers over paying them to de-list from Google so it can index their stories suggests a game changing moment in online news – but reports of the discussions have led to scepticism the move could be as radical as first assumed.
All Things D reported yesterday that any deal would not lead Microsoft being ‘the bank’for publishers.
Sources close to the situation caution that it is extremely unlikely that the software giant would pay giant sums for that pricey privilege, which many inside the company think will not help it gain much search share.
‘While there is a lot of mutual interest, it’s doubtful Microsoft is going to pay to ‘rent’ a corpus of content that it does not own,’said one source close to the situation. ‘The economics are not there for anyone.”
Another source close to the deal cautioned against assuming that ‘there would be vast sums of money in this.”
So if the cash isn’t there is it likely that Bing would be the sole destination for news indexing? The big question hanging over the deal: Is it likely that web users will stop using Google and hop over to Bing if it has better news listings?
The answer depends on the importance web users place on being able to access a wide variety of news sources. Unfortunately for newspaper publishers, the answer is probably that they don’t care if they have six or a dozen sources for the same news story.
So not a vast amount of cash and access to a much smaller audience (resulting in a vast reduction in ad revenue). Makes you think exclusivity on Bing wouldn’t be such a great idea. So what else could be on Microsoft’s table?
The Financial Times followed up yesterday’s story by reporting this morning publishers in Europe and the US saying Microsoft was open to discussing alternatives to payments for exclusivity, such as deals in which news would be provided to Bing earlier than it appeared on Google News.
Media industry executives also told the FT that Microsoft was offering different terms to different publishers. Others publishers welcomed the prospect of greater competition being injected into the search market.
“Microsoft are doing exactly the right thing and asking exactly the right questions,” said Richard Titus, chief executive of Associated Northcliffe Digital, part of Daily Mail & General Trust.
Philippe Jannet, chief executive of Le Monde Interactif, called News Corp’s move “crafty”.
Jannet said: “Murdoch is playing on competition between Bing and Google. What he is doing is remarkable because it is a commercial solution. The French media, on the other hand, instinctively turn towards the state [for help].”
Google dominates search, in the UK it is used for almost 90 per cent of search queries, so there can be little doubt that anything that lends publishers a firmer footing when they are trying to negotiate with Google -or force its hand – would be welcomed.
In the end what they may be looking for through any Bing deal is traction with its biggest competitor – but Microsoft could also benefit from the deal by attracting a certain number of new users/kudos/revenue stream.
There is just one other thought to throw into the mix. John Gapper, the FT’s chief business commentor, thinks Murdoch is willing to give up traffic volume in return for payment from Microsoft – essentially swapping an ad revenue for a fee from the search company for drawing visitors to Bing.
That suggests one of two things: either, as a lot of digital evangelists have suggested, he does not “get” the internet; or he has looked at the figures and decided Google traffic is not worth very much. I think the latter is more plausible.
Ryan Chittum of the Columbia Journalism Review did some calculations the other day and suggested that the Journal gets less than $12m a year in advertising to people who come to its site through Google, although it accounts for 23 per cent of the Journal’s traffic…
Traffic drawn to news sites through links and search engines is better regarded as a marketing device to attract subscribers than as a big revenue stream. The Journal’s policy of giving away some of its stories and charging for others is thus a ‘freemium’strategy.
Mr Murdoch appears to have decided he will not lose very much by ditching Google traffic and even a fairly small payment from Microsoft would compensate. He is attempting to get distributors to pay for content in the way that US cable operators pay cable networks for programming.
Amongst all this opinion and counter claim one thing is certain. Any deal to limit where and when news can be accessed will leave the consumer far worse off. The glory days of web news may be behind us.
NB: Channel 4 News carried a report (top video) then debated the potential impact this could have on the market last night with Krishnan Guru-Murphy talking to Paid Content UK editor, Robert Andrews, and head of social media at global media agency Mindshare, Ciarán Norris.
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