News Corp. shareholders, be afraid. The more Rupert Murdoch talks about his company's digital strategy, the clearer it becomes that he doesn't understand what he's talking about. For a chairman who remains notoriously hands-on at age 79 (Happy birthday, by the way!), that is not a good thing.
Murdoch's latest display of ignorance came Thursday during an interview on his own Fox Business Network. Host David Asman asked his über-boss what News Corp. (NWS) is doing to get paid for its digital news content. Murdoch's answer:
Well, Fox is now paid for. People when they pay their cable bills some of it comes to Fox. Cable television is paid television. But search on the Internet, whether it be Bing or Google, whatever, it's free, and they simply take all our expensive and, we think, very good content such as The Wall Street Journal or whatever, and what they call they scrape it and they use it for search. It gives them their raw material for nothing and then they have this very clever business model of charging for searching it. We don't get any of that. And they are technologically brilliant, they are a long way ahead, but they do not have the right to do it if we want to stop them.
It's worth taking this response bit-by-bit to show just how muddled Murdoch's thinking is on this subject.
"But search on the Internet, whether it be Bing or Google, whatever, it's free..." It's tempting to read some significance into Murdoch's decision to mention Bing here alongside Google, his favorite whipping boy. It wasn't long ago that Murdoch was cozying up to Microsoft (MSFT) with the idea of making Bing the exclusive search-indexer of News Corp. sites, in exchange for some kind of payment. Does this mean he's given up on that fantasy? Or is bashing Bing in public some sort of negotiating tactic?
"...and they simply take all our expensive and, we think, very good content such as The Wall Street Journalor whatever, and what they call they scrape it and they use it for search." It's unclear what Murdoch means when he says the Googles and Bings of the world "take all our content." Of course, Google News and other aggregators only "take" a headline and a short snippet of news stories. Presumably, Murdoch knows this. But maybe not; in the past he's made it clear he doesn't grasp the nuances of how the Journal makes its content available through Google.
"It gives them their raw material for nothing, and then they have this very clever business model of charging for searching it." Again, you'd like to think this is just an awkward way to characterize the search engine business model. Of course they don't charge for searching; they charge advertisers to have their ads appear alongside certain search results. You understand that, right, Rupert? Right?
"We don't get any of that." Well, except for the millions and millions of users that Google/Bing/Yahoo, et al., send to News Corp. websites, where News Corp. can then serve them ads it sells. This may not be a terribly profitable revenue stream compared to print advertising or cable TV carriage fees, but to say News Corp. gets nothing at all from aggregators is self-pitying and false.
"And they are technologically brilliant, they are a long way ahead, but they do not have the right to do it if we want to stop them." True. And it wouldn't matter if they did have the right, because the aggregators voluntarily make it quite easy to hide pages from their search crawlers. Yet News Corp. hasn't stopped them, only made vague noises about it, which suggests that there are people at the company who understand the Internet ecology better than its chairman does.