Even with Microsoft pact, Murdoch can't go it alone
Murdoch is reportedly in talks with Microsoft (MSFT) about a pact whereby News Corp. (NWS) would de-index its news sites' content from Google (GOOG), making it invisible to the leading search engine, but visible to much smaller competitor Bing. To express its gratitude, Microsoft, which owns Bing, would pay News Corp. some unknown amount of money in return.
It's easy to see why this would look like a win-win proposition to Murdoch. First, it lets him strike a blow at Google, something he clearly has been wanting badly to do for some time, judging from his increasingly combative language. While doing so will cost him some lost ad revenue, it probably won't be a huge amount -- presumably less than whatever sum News Corp. wangles out of Microsoft. And the best part is: Articles from The Wall Street Journal, the New York Post and other Murdoch papers will still be searchable -- just not through Google.
My colleague Alex Salkever views this arrangement as "a great deal for newspapers" and "a marginal win for Microsoft." I think it's the other way around. For Microsoft, it would represent a huge upgrade over the thin offerings currently featured on Bing's news channel. But for News Corp., the ultimate success of this strategy depends on whether Murdoch can persuade other publishers to emulate him -- as Brad Cohen puts it, to "be the Pied Piper and lead the heavyweights of old newsprint into a revolt" -- even though the benefits of doing so are far from self-evident.
Why do I think Murdoch needs other publishers to boycott Google? Mostly because that's what he himself seems to think. While Murdoch exhorts everyone who will listen to join him in deploring "parasites," Murdoch's digital chief, Jon Miller, has been running around behind the scenes trying to organize a consortium of news organizations committed to charging for their content.
When it comes to business dealings, Murdoch is no altruist. He is, in fact, a ruthless competitor who delights in driving rivals out of business. If he had hit on an idea that he believed might give News Corp. a competitive advantage, you'd better believe he wouldn't be broadcasting it to the whole industry. (As Jack Shafer notes, "If it were in News Corp.'s economic interests to dig an Internet moat around its newspaper properties, Murdoch would have already done it rather than talk about it.")
In coming months, we'll find out how able a salesman Murdoch is. Can he convince his competitors to do something that's very clearly in his interest -- but not so obviously in their own?