Monday, November 23, 2009

Free No More?

Rupert Murdoch has long been looking for a way to drive a stake through the heart of the information-wants-to-be-free vampire. Is Microsoft now offering him that stake? According to a team of Financial Times reporters tracking a common story from bases in Los Angeles, San Francisco, and New York, this may turn out to be the case. Here are the opening paragraphs of that story as it was filed last night:

Microsoft has had discussions with News Corp over a plan that would involve the media company being paid to “de-index” its news websites from Google, setting the scene for a search engine battle that could offer a ray of light to the newspaper industry.

The impetus for the discussions came from News Corp, owner of newspapers ranging from the Wall Street Journal of the US to The Sun of the UK, said a person familiar with the situation, who warned that talks were at an early stage.

However, the Financial Times has learnt that Microsoft has also approached other big online publishers to persuade them to remove their sites from Google’s search engine.

News Corp and Microsoft, which owns the rival Bing search engine, declined to comment.

One website publisher approached by Microsoft said that the plan “puts enormous value on content if search engines are prepared to pay us to index with them”.

This may well upend one of the major apple carts of conventional Internet wisdom. Treated as an abstract array of bits, information may not have any "inherent" value. However, that does not preclude information assuming value because others are willing to pay for it. Conventional wisdom has always assumed that no one would be willing to pay for something that can be obtained for free, but the rules of the game may be changing. Rupert Murdoch has already begun his campaign to block his content from appearing in Google search results. Now he has a strategy for the flip side of that coin: He may have found another search business willing to pay to make sure that their search engine is not blocked.

This could well change the rules of the game for the Internet economy. It would be yet another move in which providers of Internet content may think about interactions with real money. The more interesting question, however, is whether there is substance to the claim in the Financial Times story that the biggest beneficiary could be the newspaper industry, which may finally be able to identify a revenue stream around which to build a sound business model. It is easy to see how Murdoch can drive a hard bargain and come away with a tidy sum from Microsoft. For that matter, even if the current Google "party line" is that news content is "not a big part of how we generate revenue" (at least as Matt Brittin was quoted in the Financial Times story), Google may decide that it is worth paying out the same amount for the sake of maintaining their competitive position. However, the more interesting question is how Murdoch will put his own new revenue stream to use. Would he ultimately decided to revive the newspaper business as we used to know it; or would he be more interested in mining even more gold from his new source of "them thar hills?"

My guess is that at least some of his gains will trickle down to his payrolls. I would even guess that one will have a better chance of making a living by working at News Corp than by trying to live off of making money from AdSense. (This is certainly the case right now, but how long is it likely to stay that way?) On the other hand Murdoch has never had much of a track record when it comes to putting the needs of journalism practice before the demands of business. So any predictions of benefit by the Financial Times are probably premature. Perhaps the layoff rate will subside a bit; but any sound reasons for declaring the profession of journalism to be a "beneficiary" of the new rules of the game have yet to surface.

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