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Free News vs Paid News (Microsoft, Google, News Corp)

November 23, 2009 1 comment

Question: What happens when an industry is losing revenue and two giant companies are trying to outdo each other?

Answer: The consumer suffers and ends up paying for it.

The digital news landscape is changing fast, with Rupert Murdoch now deciding to charge for online news content. The media mogul’s News Corporation, the firm behind papers from the Wall Street Journal to the Sun (UK), is planning to stop Google from indexing its news websites.

You may ask, “What’s the problem?”  After all, the newspaper industry is suffering from declining print and advertising revenues as increasing media consumption is taking place over the Web, so certainly it makes sense for newspapers to charge for their content.

The problem is, as with everything else in life, nothing is ever so cut and dried. Throw Microsoft in the equation and things become interesting. The software giant’s search engine Bing has been playing catch up to Google ever since… god knows when.

Microsoft has been having discussions with News Corp, where the software firm will pay the news company to stop Google searching and indexing its news website. The desired outcome would be that Microsoft’s search engine Bing would be the place users will turn to for news – and if Google wanted to retain that kind of news content, it would have to start paying. It seems clear that Microsoft’s interest will also hurt Google’s margin.

This suspicion was confirmed when the Financial Times reported that Microsoft has also approached other big online publishers to persuade them to remove their sites from Google’s search engine.

What is clear is that Microsoft and News Corp are united against the idea that Internet news should be free. Microsoft is willing to offer money to publishers to switch allegiance and News Corp is prepared to use legal means to prevent Google ‘stealing’ news.

However, if Internet users decide that Microsoft Bing’s results are biased because of alliance with news providers, they will be more reluctant to switch from Google and the plan could backfire.

In the words of James Harding, editor of the Financial Times, “We are setting out to rewrite the economics of gathering and delivering news…”

Harding likens the culture of free (news) to that of the music industry, which (according to him) has been all but destroyed (by P2P/piracy). Well, if the music industry is any indication of where the news industry is heading, then I am sure Harding himself would realise the concept of ‘free’ will never be completely stamped out. Just take a look at the amount of Internet traffic that is generated from P2P downloading. The ‘culture of free’ is still rife and there is nothing the media companies can do about it.

Nevertheless, I have always subscribed to the notion that whatever has value is worth paying for (this includes good quality news and information). But I cannot help but feel we, as consumers/users, are being seriously short-changed here.

Before: We had good ‘unbiased’ search results from Google and we had free news
After: We have ‘biased’ search results from Microsoft, and we pay for the news.

Go figure!

DWTC says: Competitive advantage is never sustainable. Rival companies will always find ways to chip away at your success. Google’s USP of being able to deliver accurate unbiased search results will be undermined if Microsoft was to have its ways. Do not be surprised if we one day see ‘pay per search’ on Google. DWTC is hoping Google will one day foray into news industry so he can cancel his Wall Street Journal subscription.

 

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