Dividing Up the Internet

In a move that goes completely against the conventional wisdom of online media—which Orion Jones discusses here—News Corp. chairman Rupert Murdoch is considering preventing Google from indexing his news sites, effectively removing properties like the Wall Street Journal from Google's search results. Instead, News Corp. has approached Microsoft and offered to give Bing—the Microsoft search engine that debuted this year—the exclusive right to index News properties.

Murdoch has said he would use legal means to prevent Google from "stealing stories" from his papers. Google responded by saying that "Google News and web search are a tremendous source of promotion for news organizations, sending them about 100,000 clicks every minute. Publishers put their content on the web because they want it to be found, so very few choose not to include their material in Google News and web search. But if they tell us not to include it, we don't."

Microsoft, of course, sees the deal as an opportunity to steal a share of the search business from Google, and has already begun to try to get other online publishers to make a similar agreement. Now Bloomberg reports that the publishers of the Denver Post and the Dallas Morning News may follow Murdoch's lead. On the face of it, this seems crazy, since Google Search conducts almost 2/3 of all web searches—Microsoft and Yahoo! together account for just around 30%—and inclusion in Google's search results generates an enormous amount of traffic for online media.

Many have been quick to accuse the 78 year-old Murdoch of not "getting" the Internet. But the truth is that the current revenue model isn't working for content producers like News Corp. According to the Newspaper Association of America, print and online ad revenue has fallen steadily since 2005 and is down 28% from a year earlier in the third quarter of this year. Already several major newspapers have had to shut down, and many more are laying off staff. The problem is that by selling ads next to its search results, Google is capturing almost all the ad revenue. And, as Murdoch pointed out in a recent interview, there's simply "not enough advertising in the world to go around to make all the Web sites profitable."

In fact, as John Gapper argues, it may be that the traffic that Google generates for newspapers isn't worth that much to them, particularly because people who are referred to sites from web searches typically don't spend much time on them. So Murdoch is gambling that he can make more from doing a deal with Microsoft—especially since the alternative may be watching his business slowly die. But there are reasons to worry that it may not be good deal for consumers. While The Economist argues that anything that weakens the stranglehold Google has on the online search business will be good for consumers, the division of the internet into separate fiefdoms seems likely to hurt consumers by making it impossible to get comprehensive search results using any one engine. Murdoch may have set off a virtual land-grab, in which search companies compete to control access to as much of the Internet as possible. Part of what makes the Internet such a useful tool is that so much content is easily available for free. But if newspaper companies can't find some way to make money soon, that may start to change.

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