Could the status quo of the commercial internet be shaken as a result of an old man’s misinterpretation of a question?
Earlier this month, Rupert Murdoch sat down for an interview with Sky News Australia (a company that Murdoch’s News Corporation partially owns). A little way into the interview, the following exchange took place:
Interviewer: The other argument from Google is that you could choose not to be on their search engine … so that when someone does do a search, your web sites don’t come up. Why haven’t you done that?
Murdoch: Well, I think we will. Uh, but that’s when we start charging. We do it already, with the Wall Street Journal. We have a wall, but it’s not right to the ceiling. You can get usually the first paragraph of any story, but if you’re not a paying subscriber to wsj.com, there’s immediately – you get a paragraph and a subscription form.
Murdoch seemed to be saying – and was widely reported to have said – that News Corp is planning to block Google from indexing its content. But when you listen to his full answer, in which he confuses opting out of Google’s search engine with raising pay walls on sites, it’s hard to know what he was actually intending to say.
But inadvertent or not, Murdoch’s suggestion that he’ll pull News Corp content out of Google’s database could turn out to be a brilliant signaling strategy, one that, as Mike Arrington has written, could ultimately alter the balance of power on the Net.
Last spring, in my post Google in the Middle, I described the dilemma in which newspapers find themselves when it comes to to Google’s search engine. On the one hand, Google is an important source of traffic for their sites. On the other hand, Google prevents them from making decent money online – by massively fragmenting traffic, by undermining brand power, and by turning news stories into fungible commodities. Individual newspapers can’t live with Google, but they can’t live without it either:
When it comes to Google and other aggregators, newspapers face a sort of prisoners’ dilemma. If one of them escapes, their competitors will pick up the traffic they lose. But if all of them stay, none of them will ever get enough traffic to make sufficient money. So they all stay in the prison, occasionally yelling insults at their jailer through the bars on the door.
Of course, there has always been a way to break out of the prison: If a critical mass of newspapers were to opt out of Google’s search engine simultaneously, they would suddenly gain substantial market power. Newspapers are struggling, but they remain, by far, the world’s dominant producers of hard news. That gives them, as a group, a great deal of leverage over companies like Google who depend on a steady stream of good, fresh online content. Google needs newspapers at least as much as newspapers need Google – a fact that’s been largely hidden up to now.
What Murdoch effectively did in his interview with Sky News was to send a signal to other newspaper companies: We’ll opt out if you’ll opt out. Murdoch positioned himself as the would-be ringleader of a massive jailbreak, without actually risking a jailbreak himself.
There are signs that the signal is working. Bloomberg reports today that the publishers of the Denver Post and the Dallas Morning News are now considering blocking Google in one way or another. More ominously (if you’re Google), Microsoft has apparently responded to the signal by offering to pay News Corp to make Bing the exclusive search engine for its content. Microsoft doesn’t have a lot of weapons to use against Google in the search business, but getting prominent news organizations to block Google would be a very powerful weapon. (Steve Ballmer would be more than happy to reduce the basic profitability of the search business, as that would inflict far more damage on Google than on Microsoft.)
Faced with a large-scale loss of professional news stories from its search engine, Google would likely have little choice but to begin paying sites to index their content. That would be a nightmare scenario for Google – and a dream come true for newspapers and other big content producers.
Of course, for now this is all just speculation. The odds are that none of it will come to pass. The idea that newspapers might come together to pursue a radical and risky strategy seems far-fetched. Then again, maybe the time has finally come for newspapers to take a deep collective breath and apply the leverage they still hold. They don’t have a whole lot left to lose.