You may have seen that Murdoch is talking about how Google and others are stealing from the newspaper industry:
The people who just simply pick up everything and run with it, and steal our stories. We say they steal our stories — they just take them without payment. There’s Google, there’s Microsoft, Ask.com … there’s a whole lot of people.
This led to Jason Calacanis yesterday suggesting that Bing should go to the top news sites and offer them a sweet deal to be their exclusive search partner and block Google:
I put forth a simple strategy for Microsoft to pursue with Bing in which they would go to content providers like the New York Times or Wall Street Journal and offer them 50% more revenue then they are currently getting from Google search referrals to be exclusively indexed in Bing….
I can’t see that happening. As Bill Tancer at Hitwise points out Google drives more traffic to them, and as Danny Sullivan at Search Engine Land argues it is hard to see the maths justifying large enough amounts of cash flowing to make this worthwhile for both sides.
I think that what we are seeing here is another example of the internet forcing price transparency on the different components of a previously integrated product/service bundle.
We are witnessing something similar here in the UK where Dixons are running an amusing set of poster ads advising customers to go to high end retail to get human advice on product before buying it cheaply at dixons.co.uk (see inset, for those that don’t know London the yellow colouring tells you they are talking about Selfridges). This is an attempt to make explicit the cost of the advice as distinct from the product – two things that Selfridges (and others) have traditionally not wanted to price separately.
In the case of news the bundle has traditionally been headline/short summary and detailed story. What we are learning is that from a consumer perspective most of the value is in the headline. Unfortunately this is the part of the bundle that is most commoditised and now that headlines are widely available separately from the more detailed stories most of us are choosing not to read the detail very often. This is unfortunate for the revenues of the news industry which has previously succeeded in getting us to pay for the detail and the headline together in a single bundle.
The result will be that as a result of the internet the news industry shrinks significantly.
AND – this trend will be exacerbated by the economics of free.
Supporting evidence for this view comes from the fact that news aggregators like Techmeme report that 50%+ of their visitors only read the headlines/summaries and don’t click through to the underlying story.