Friday, November 13, 2009

NewsCorp v Google

Several news sources report that News Corp, run by media mogul Rupert Murdoch, may pull their stories from Google in a matter of months.

Most of those sources seem to be (or cite) articles published in News Corp properties.

I found those sources using a Google search.

For those of you who haven't been in touch with this issue, the general background goes something like this:

  1. Media sites are trying to make money on the web.
  2. Web revenue comes primarily from advertising.
  3. Google currently has the largest income from web advertising.
  4. Content providers (like News Corp), feel that Google (and other search engines) are unfairly using their content and want to them to pay for it.
  5. Google says, no, thanks, we don't want to pay.
So now News Corp is threatening to pull its news off of Google. They also have a self-imposed deadline to put all their sites behind paywalls by June 2010.

Ain't gonna happen.

The reason I am sure they won't pull their Google listings is because if they wanted to they could do it not in a few months, but today. Right now. In less time than it takes to read this article.

There is a convention used by all search engines to respect sites that don't want to be searched. You do it by adding a file (robots.txt) to your website. You want to stop all the search engines from searching your site? Put these two lines in robots.txt and it's done:

User-agent: *
Disallow: /

If it's so simple then why doesn't News Corp do it?

They don't do it because they need Google more than Google needs them.

News Corp has a tremendous number of print holdings around the world, including The Times (London), The Daily Telegraph (Sydney), The New York Post, and the Wall Street Journal. Of these four, all a completely free to read with the exception of the The Wall Street Journal.

Up to the 19th century, print media was a natural oligopoly on the news. If you lived somewhere most of your second-hand news came from the local papers. You didn't have a choice. You couldn't very well subscribe to the New York Times if you lived in Chicago. Because papers are regional by their very nature they are also limited in the number of potential subscribers. Subscriptions eventually topped out, but newspapers really turned into a business when they realized they could make more money by advertising than subscriptions. In fact, advertising revenue is the prime source of income for most newspapers today.

Don't agree? Do you get a local town or neighborhood weekly newspaper? Do you pay for it? I get one in delivered to my house every week for free. It's paid for by the advertising.

Even if you pay a fee for a daily paper it probably doesn't cover the cost of production and delivery.

Newspapers are not in the news business, they are in the advertising business. They make money by providing a service, and the service is providing eyeballs for advertising. News is what they use to attract the eyeballs.

When you look at newspapers as an advertising service you see why they feel threatened by Google (or any other search engine). Google provides the same type of service in that they connect eyeballs to advertising, and they do it at a far more massive scale than a print newspaper could ever achieve.

Newspapers are threatened by this and rationalize it by claiming it is unfair that Google makes money off of their news content.

They are wrong in two fundamental ways: first, the service Google provides is a service which is not provided by the newspapers, and second, individual news sites provide very little original content.

First, newspapers have gone online to attract more eyeballs, and Google's search engine increases those eyeballs.

Consider the dictionary. A dictionary has a phonetic pronunciation for the word which can be handy if you see a word written down but have never heard it spoken. However, if you need to know how to spell a word a dictionary is pretty useless. But what if someone created a dictionary sorted phonetically? Then you could take a spoken word and find the correct spelling (or spellings, when there are homonyms).

Google provides a service analogous for news sites analogous to the phonetically sorted dictionary. If someone just wants to see what the news is they can go directly to their news site of choice, but if they want news on a specific event then Google provides a mechanism to point their eyeballs at a relevant news site.

Google does not charge for providing this service. Google absorbs the technology costs for providing this service the same way newspapers absorb production and delivery costs, and both make their money back in advertising.

Now, some news sites do not need Google. They attract readers enough readers by reputation alone.

Of Alexa's top 100 global sites, only two are news sites: CNN and The New York Times. A search on "Fort Hood shootings", a fairly hot topic this week shows CNN at the top of the list, but the New York Times isn't even on the first page.

Though the NYT doesn't charge for an online subscription, it does require user registration. This means that if you're not registered you can't read the articles. Because not everyone is registered the links on the NYT are frustrating to pass around - a lot of people can't click through - so links to NYT articles don't get ranked as high on Google. The NYT has a strong reputation, they can get by without Google, but how many other news sites can do that?

The NYT is 97th on the list. CNN is 59th. I can't say how much larger the NYT audience would be if it's articles showed up on Google, but I don't see CNN rushing to put up a barrier between themselves and those eyeballs.

Google provides a service, and the market has deemed that service valuable enough that Google can support the costs of that service by advertising.

The second thing is content: news is, by its nature, a local event. An event may have worldwide implications, but the bottom line is that news is an event that occurred in some specific location. No newspaper can cover the entire world, so they take advantage of wire services like Reuters and the Associated Press as a source for non-local news stories. Many of these wire service news stories are replicated in newspapers around the world. Not just major stories, either.

Anyone who has read through my blog knows I like to pull up odd news stories, and I am amazed how difficult it is to find differing sources because so many of the stories are replicated word for word. While I often find out about a story from a source that uses the wire service, I also try to find the original story. The wire services almost never site the original source for the story (interesting double standard, but I digress), but Google often allows me to get back to the original sources.

(And before you go off on piracy and copyright tangents, note I am only talking about news sites that actually pay for the right to print the wire service articles, okay?)

Take a look at your local daily and see how many of the articles are wire service articles, especially in the front and sport sections. This does not mean that the newspaper is useless - far from it: using wire services is a cost-effective way to enhance news coverage. But the transition from print to online makes wire service stories significantly less valuable because you can find the same story in so many places. Local news makes a news site valuable. Interpreting the implications of a non-local event on the local area makes a news site valuable. Running a wire service story does not make a news site valuable; this is a fundamental difference between print and online news.

Running wire service articles doesn't hurt an online news site, but because the article is replicated all over the world, it doesn't make the site more valuable either. The valuable content is the original content, not the wire service articles.

Now, the internet has drastically changed the game over the last few years. A large portion of  newspaper advertising used to be for classified ads, but craigslist, ebay, and have (from the newspaper point of view) devastated that market. The eyeballs and the money associated with classified ads has left the newspaper coffers and will not be back.

The situation with Google is fundamentally different. Google does not remove money from online news sites. Online sites still have their own advertising. All Google does is drive more eyeballs to that advertising. And Google does it free of charge. And that is why News Corp will not pull themselves from Google.

What if News Corp does pull its sites from Google? Like I said, of Alexa's top 100 sites, none of them are News Corp properties. What do you think the impact on Google will be?

Murdoch understands all of this.

So I say it again: ain't gonna happen because if it were going to happen News Corp would already have done it.


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