Thursday, 26 November 2009

Rupert Murdoch vs Google

In the blue corner is Rupert Murdoch, the media tycoon – Chairman of Newscorp, owner of The Times and the Sun in the UK and New York Times in the US, and the TV Channels Sky, Star and Fox News. In the red corner is Google – the titan of the on line world. The bout has begun.

In question is the issue of on line news – who owns it, who pays whom for it, etc etc. Now we are perfectly willing to pay a few rupees, or cents or yuan for a newspaper, but are absolutely not prepared to pay a penny for the same newspaper on line. Confess it – you haven’t read the newspaper today. Instead you browsed on line. I did too – at least my excuse is that the single English newspaper, where I live, is not worth reading! What’s yours ?

Murdoch says Google and such other news aggregators are freely linking to news content that his newspapers create and then get advertising revenue for it and to rub salt into the wounds, charge the papers for sending readers to it. They have news pages which attract readers by aggregating content, but they don’t pay the content creators for it. Kleptomaniacs, thunders Murdoch.

Google says the old man just doesn’t get it (of course not in those words). They say the on line world is a new world, traditional newspapers are dinosaurs, their business models are broken and that the on line world is comprised of “free” information and that’s the way it will be.

Now Murdoch has a point. Credible content that newspapers create cost money. They have to have reporters in every corner of the world, they have to edit pieces, etc etc. Contrast that against the writings in this blog, which costs nothing to create, but is usually unadulterated twaddle. So Murdoch says, his news is intellectual property and cannot be stolen by content aggregators.

He is therefore going to Microsoft , trying to negotiate an exclusive arrangement with Bing and simply exclude Google.

The problem is that newspapers are declining all over the world. In a few years, newspapers may go the way of Readers Digest – a quaint oddity for the geriatrics. Newspapers went online but have made it free – only the FT and the Wall Street Journal have managed to charge for it. So their revenues are in serious decline.

Its easy to brand Murdoch as an old foggy and that he doesn’t understand the online world. I don’t think that’s true – he’s a shrewd businessman who understands it all too well and is picking up a real fight . After all remember they said the same thing, at the peak of the dot com boom, about an old geezer called Warren Buffet.

12 comments:

  1. he has a point! read Twitter charges Bing and Google for indexing rights.. so why not RM?

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  2. Nice treat after the starvation :-)

    Blogspot i understand pays some amount to the blogger depending on the number of viewership to the blog for the ads hosted on the blog. this is very similar.

    Google and Co.... first mover advantage always ends at some point in time!!

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  3. Very geniune thoughts!

    Murdoch definitely has a point here. Protection of intellectual property is not a subject matter of technological advancements or evolving business models.

    On a different note, as I write this comment, I wonder how the movies/ footage of TV vidoes etc. are accessible to general public at no cost, though I am not sure whether owners of copyrights of even the newest movies are being paid by youtube or other online video portals. On the flip side, free information may have contributed largely towards success of this "new world".

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  4. My excuse for online news is to keep the cockroaches at bay!! :D :D :D Seriously ... all those piles of paper and the number of trees cut ... Sigh!! Ok ok a typical homemaker's rant.

    But yes, I do agree with Mr Mudroch's point and lets hope the shrewd old man comes up with a brainwave! :)

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  5. Murdoch is shrewd and there is a possibility that he is starting a kind of revolution here by doing this. Google drives nearly 25% of traffic to Murdoch's news sites but that does not translate to any substantial money. Inventory for news websites is hardly sold more that 50% and people arriving via Google are 'one and done' types whom news sites do not want to target.
    Let us see how this drama unfolds.

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  6. savitha27/11/09

    //So Murdoch says, his news is intellectual property and cannot be stolen by content aggregators.//

    Completely stand by him, and second you!

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  7. @AJCL - Oh, does twitter do that ? Yes, why nor Murdoch indeed.

    @Sandhya - Google's advantage is still powerful. A completely superior technology has to come to dislodge Goopgle, I think.

    @VA - The same issue exists in videos and movies and a much more intese conflict in music. Its got to do with consumer behaviour - how many of us think abotu intellectual property when watching something posted in Youtube.

    @thoughtful train - Now that's a very novel reason !!]

    @Adesh - Somehow I don't think he'll win. The king is always the consumer and in this case, the consumer doesn't want to pay for anything on line.

    @Savitha - He has a point, but Google is saying, I am not stealing anything - IO am just linking to you !!!

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  8. I think the problem with the newspapers is bigger than Google linking to the newspaper websites. The newspapers are themselves making it available for free on their websites. I would be willing to pay for online access to say New York Times. I think they just need to take the bold step and charge readers something nominal. Another model that seems to work in the US is that of public radio and public television where you can enjoy the programming for free if you choose to or make a contribution of any amount if you so care. It seems to be working. I wonder if that model can be adapted to this context. I dont see what is so sacred about online stuff that it has to be free - it should definitely cost much less than the paper version.

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  9. @J - Yes, the problem is bigger than the Google fight. But very few people have been able to charge for news online - the consumer just doesn't seem to be prepared to pay. You are in a rare minority

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  10. Ramesh, I would suggest that you and anyone else interested in this debate should read a paper written by a former colleague at Bell Labs. His name is Andrei Odlyszko (I may have mangled the name), and he wrote a paper called "Content is Not King". He examined the number of content businesses starting with movies. He came to the conclusion that the real "king" in this content business is not the "content" i.e. the movie but the distribution. And this is a finding consistent across other media industries that he examined. His view - very unpopular with the new economy propeller-heads - was that in the digital age, building content and expecting people to pay for it without ensuring exclusivity of access is a big mistake. Very prescient observation.

    Now if Murdoch wins the battle with Google, I would be very happy. Information is free, but if you want any more than that, one needs to honour the labour performed by someone who bends his mind to the task. The decline of print journalism in the US is quite alarming. Will its place be taken by free content on the web? I dont think it is the same thing.

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  11. I think this is going the same way the encyclopedia v/s Wikipedia debate. Wiki wins due to the "free aspect". I am sure in the print media today a lot of money is still made on the advertising revenue that they generate. If RM can create a brand that will get users to put his website on a favourite list he can garner a lot of money via advertising and can help run his organisation.

    Google may be a medium to get users for the first few times but once readers get good quality they will come back. Point is to capitalise on your viewer database.

    Trying to exclude Google will get him no where as Bing will have to try really hard to topple Google...

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  12. @Dada - Thanks for the insight about Andrei's paper. Very interesting. I completely agree - free content cannot replace professionalism entirely, although a look at the front pages of British newspapers may make you feel, if this is professionalism, I would rather do with free content !

    @Mahesh - The parallels with Wiki is interesting. Not sure if the same model can work with news, but lets see.

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