Google and Murdoch - a divorce made in heaven?
It's about money, but not bribes from Bing
Analysis Microsoft is known for its robust methods, but the widespread belief that it is attempting to 'buy' the news, offering to pay Rupert Murdoch's News Corp to de-index its news sites from Google speaks of extreme brutality, even by the Borg's standards. And think, people - if Microsoft really is offering to bribe major publishers to dump Google, might not the regulatory authorities have something to say?
Photo: New York Public Library
So let's all just calm down, and try to figure out what might really be happening. First of all, consider what Murdoch himself has been saying. Earlier this month he said it was likely that News Corp would pull its titles out of Google search once it started charging for them, and: "We'd rather have fewer people coming to our website, but paying."
Now consider what Google has been saying - that it doesn't make money from news, and that Google does not need news content to survive. Google doesn't need News Corp, and News Corp reckons it could get along just fine without Google.
It's not like anybody involved cares...
So it's a divorce made in heaven? The financials back Murdoch to an extent. The Wall Street Journal, News Corp's paywall poster child, gets around 25 per cent of its traffic from Google, but obviously gets no subscription revenue from that, and it's not traffic that can be easily monetised. Silicon Alley Insider, using a methodology which we suspect may have included eye of newt, estimated that the WSJ only made $10-$15 million from its Google-derived traffic. We suspect that estimate might be on the high side, and it's likely that traffic coming from Google News (estimated by Hitwise at around 12 per cent) is worth a tad more than general search traffic.
Hitwise also reckons that Google search traffic (as a perentage of total WSJ readership) to the WSJ has doubled since 2006, while Google News traffic has tripled. In the world where Google is the gift that keeps giving, this is A Good Thing - but there are reasons why Murdoch might disagree here.
As Rupe says, the traffic isn't worth much. For subscribers, the WSJ is able to deploy demographic data in support of its ad sales operations, while for Google blow-ins it isn't. So from the WSJ's perspective unidentified one page clicks from Google aren't going to be worth a lot, and insofar as they mean that the sale isn't 100 per cent subscriber, they may even cost money.
Murdoch's pitch is all perfectly logical - almost. It fits the WSJ pretty well, but trying to apply that to The Times or the Sun falls into the 'rather you than me, Rupe' category. The other obvious question is, if you wall off Google - or even all search - traffic entirely, how much is that going to impact reader recruitment? News Corp may well have some internal data on that, we don't. It's possible, however, that the answer is not a lot.
Google's impact on the traffic of publishers is not as great as people tend to believe. If you cut off Google you'd take a hit (around 25 per cent for the WSJ, according to the Hitwise numbers), certainly, but people would still hear about you even if you started blocking all link traffic without even bothering to redirect it to the front page. It's by no means certain that circulation would collapse, or go into a steady decline as readers died, if Murdoch just dropped out of Google.
But why bother de-indexing?
But it's not clear what Murdoch would gain by de-indexing from Google, either. Aside from any hypothetical costs associated with dilution of the subscriber base, it's not likely to be a whole lot more expensive for him to be present in Google than not. So is it just that he's pissed off with Google?
Well, if you'd spent a lifetime building a global publishing empire you'd have some reason to be ticked off with this bunch of smartarse parvenue space cadets too, but there are other possible reasons. Below you see a typical front page from the business section of Google News.
The WSJ forming the lead is by no means unusual, and WSJ stories account for a reasonable amount of the population of Google News' business section, along with Reuters, AP and Bloomberg. It's been pointed out that removing News Corp stories in general from Google wouldn't have a great impact, because there'd still be plenty of other sources, but maybe business is a little different. Losing the WSJ would make an impact, and if Bloomberg started to wonder what benefit it was getting too, it would possibly hurt.
Not that hurting Google is or should be anybody's objective here - the objectives, surely, are to stop Google hurting you, and to make some money from your readership. So think of that growth curve for Google News as a percentage of WSJ readership, and think about what Google's trying to do with Google News.
Yes yes, it doesn't make any money from it, but in that case why is it doing it? Google has not said that it has no intention of making money from it, ever, and it's reasonable to speculate that just as soon as it reaches sufficient mass as a news homepage (for other people's stuff), Google will be starting making money from it. Build your own newspaper from multiple sources? You can surely see that when Murdoch looks at the growth curve he doesn't think 'good', he thinks 'competitor.'
By now I expect you're wondering where the Borg fits in. What does Microsoft want, to kill Google? Well yes, but as we all know, under current circumstances that is an unrealistic ambition. And the Borg, while capable of many klutz-like actions, is not altogether stupid, and surely knows this.
So a more realistic ambition, then? Microsoft is spending shedloads of money on Bing, and is prepared to spend shedloads more. But it's not just going to throw it away (not deliberately, anyway) - the company needs to develop areas where Bing is better, easier to use, more appropriate, than Google, and it needs to start seeing some returns from these. It might be starting to get there with retail, and just maybe there's something it could start to do with news. But what?
Just giving publishers money to come to dump Google and come to Bing doesn't cut it here, because news isn't a huge draw for search, and the revenues publishers currently derive from search traffic are nothing worth writing home about. As Google and News Corp both tell us, in the world as it is currently constituted, nobody makes enough money from news and search to make it worth caring about.
What about actually helping publishers sell?
So here's the deal that News Corp and Microsoft should be talking about, and that Microsoft should be pitching to other publishers. At the moment, most publishers don't know much about the demographics of the traffic they're getting from search, so the revenues from it aren't worth spit. But if they did know a bit more, then the economics would start to change - search-derived traffic would start to have more value to them, and stop looking to them like an irrelevance, money hole, dangerous vampire.
Google and Microsoft both know a fair bit about the users of their search pages, but Google's primary advertising model, keyword and pay-per-click, is pretty much alien to the conventional publishing industry, which is much more about demographics, subject (not the same as keyword), and branding. Google has been learning a lot more about 'normal' advertising in recent years, but it's got a way to go still. And besides - is this a company likely to offer you some kind of joint venture networked advertising play, or is it more likely to come over all sanctimonious about not sharing data?
It will share data when it wants to, and struck a deal with TiVo to this effect earlier this week. But the point of that one is that TiVo gives its data to Google, which does seem to be the way the Chocolate Factory prefers it.
Microsoft, incidentally, has a great deal of experience in the advertising business, and as the underdog is a lot more likely to cut a deal that publishers would find acceptable, even attractive. But it wouldn't be money upfront for scalping Google. It would be revenue-based, aimed at starting to monetise search traffic for publishers (Google has already monetised this for itself, so has no reason to regard the system as broken). This wouldn't hurt Google's traffic, or help Bing's greatly, but that shouldn't be the point.
Basically, it's about money, not eyeballs. Landgrabs are so Web 1.0. ®