MS kills 'Bing buys the news' furore, but Google could still lose it

Microsoft has firmly ruled out the notion of paying news publishers to de-index their content from Google. But you knew that already. Speaking at the unveiling of new Bing features in San Francisco yesterday, senior online services VP Satya Nadella said that Microsoft was not focused on getting exclusive content, and that "there is no real intent here that is focused on getting a whole bunch of content that is de-indexed from Google".

Until yesterday Microsoft had declined to comment on the matter, but that about wraps up the "Bing buys the news" furore. It doesn't necessarily wrap the whole matter up, though. Microsoft has been talking to publishers, and publishers - with Rupert Murdoch leading the charge - have been getting increasingly restive about their inability to make money from the traffic they get from Google. Some publishers may well still withdraw from Google, but they'll do it for business reasons, rather than because Microsoft has paid them to do so.

Amusingly the Financial Times, which was one of those responsible for the original story, is now telling us that Microsoft has dropped the idea. But as that particular idea made no sense in the first place, it seems far more probable that Microsoft was talking about something else - a revenue sharing deal that gave publishers a better chance to monetise search traffic than they're currently getting from Google, as we speculated here or, as Michael Liedtke of the Associated Press writes, deals that "wouldn't necessarily require News Corp. or other publishers to shun Google".

Google is quite possibly vulnerable to something of this sort, if Microsoft can make search traffic from Bing significantly more valuable than search traffic from Google. Google's vulnerability here is in its business model - Google makes its own money from search advertising, and drives clicks to you, at which point it is entirely your responsibility to figure out how you make money from them. As Josh Cohen puts it: "Each of those clicks is an opportunity for publishers, allowing them to show ads, sell subscriptions and introduce readers to the great content they produce every day."

Or as Eric Schmidt puts it today - cheekily, in the Wall Street Journal: "Google is a great source of promotion. We send online news publishers a billion clicks a month from Google News and more than three billion extra visits from our other services, such as Web Search and iGoogle. That is 100,000 opportunities a minute to win loyal readers and generate revenue—for free."

Google is giving you all this free opportunity, Rupert, so if you can't make money out of it you must be some kind of klutz, right? That's effectively what Cohen and Schmidt are saying. This is not the kind of flexibility that publishers would like from Google, and it's not the kind of flexibility they might well get from Microsoft. What, after all, does the Borg have to lose?

Take a closer look at what Eric's saying in the Journal, though (go in through Google News if you haven't got a sub…). Leading off with one of his crazed signature Jetsons visions, Schmidt imagines a future where you access the world's information from a tablet, mixing sources from monthly subscription packages, micropayments, and free sources supported by advertising. There you go, all of the different publishing models playing nice together in Eric's future vision.

"But," he continues, "these ads are not static pitches for products I'd never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting… This is a long way from where we are today."

Well no Eric, it isn't. The advertising side of it is a few steps down the line from where we are today, but publishers already use behavioural targeting to serve the kinds of ads they think individuals might be interested in, and they can already command higher advertising rates if they have an audience of subscribers and/or registered users. Generally, the advertising industry views tying this down to specific, named individuals as a bridge too far and a privacy headache it'd rather do without, so maybe they'd rather not take quite as many steps as you personally propose to.

The point, though, is that Eric Schmidt is of the opinion that larger piles of money can be made from advertising that is tailored/targeted based on what is known about the reader. This is most certainly true, but it's Google that knows about the readers going from Google to publishers' sites, and the publishers that don't. Google makes no secret of its desire to make your life easier by learning everything about you, but it's not about to share that data.

That's the vulnerability, and that's Microsoft's opportunity. You don't buy the news, you work together to develop the advertising, and share the rewards. ®