Rupert Murdoch Saves the World

Check your calendars, Fools. Note the date. On Sunday, Nov. 22, 2009, Rupert Murdoch saved journalism as we know it. And wouldn't you know it -- he saved it from Google (Nasdaq: GOOG  ) .

Rumors began circulating over the weekend that Murdoch's Times of London, Wall Street Journal, and other mainstream media outlets are in talks to boycott Google News and grant exclusive republishing rights to Microsoft's (Nasdaq: MSFT  ) Bing search engine. Pundits are already wondering whether a new Bing-Yahoo!-News Corp. alliance could disrupt Google's dominance in online search.

Newsflash: It's not going to happen
Not in my opinion, at least. Yesterday, my Foolish colleague Tim Beyers criticized the deal, arguing that:

  • Online readers don't want to use Bing to find their news stories.
  • Microsoft can't deliver the traffic volume that Google can.
  • And that basically, this is whole idea is dumb as a post, from Microsoft's perspective.

Now, Tim's a real smart feller, and if he says the deal doesn't make economic sense to Microsoft, I'm inclined to agree with him. After all, the combined Internet search market shares of Yahoo! and Microsoft add up to just 28% today, or less than half of Google's 65% share. Google accounts for 26% of Internet traffic flowing to WSJ.com, which tells me that a switch to Bing will be lucky if it can even replace the advertising revenues generated by traffic arriving by way of Google.

But that's not the point.

Rupert Murdoch saves the world!
The point is that News Corp. (Nasdaq: NWS  ) must do this. Failure is not an option, because unless newspapers find a new economic paradigm that permits them to profit from their product, the old format of journalism will die in America.

For far too long, newspapers have tacitly agreed with the concept that their product (i.e., "news") is worth nothing. They've endorsed the idea not in words, but actions: Because "nothing" is precisely what they charge for news these days. Want a copy of the New York Times (NYSE: NYT  ) delivered to your doorstep? That'll be $2 an issue (but subscribe now, and we'll give you 105% off!) Of course, if you've got an Internet connection, you can read the same story online for free. (And you don't have to wait 24 hours for it to get printed on wood pulp, tossed into your rose bushes by Little Tommy-with-the-bike-route.)

Between craigslist, eBay (Nasdaq: EBAY  ) , Google, and their online ilk swiping classified ad-revenue, and the difficulty of charging for newsprint when its online analog is mostly free, newspaper revenues are plunging. Can't charge for advertising. Can't even charge for news -- so how are newspapers supposed to remain in business?

Answer: By wising up ...
... and making their readers ante up. While details remain murkier than the text on a 'paper just brought in from the rain, all reports on the Microsoft-News Corp. deal agree on one thing: Microsoft is offering to pay for exclusive rights to distribute News Corp. content. Thus, Microsoft is affirming: "Yes, Virginia, your product is worth something," declaring this in the universal language of commerce: cold, hard cash.

The biggest problem for newspapers up until now has been getting someone, anyone, to take the first step in breaking the black-and-white line that "information must be free." Microsoft has now taken that step. It's put a tentative dollar value on the right to distribute news collected by professional journalists at the Journal and Times. Probably not a final dollar amount, but an opening bid.

Hopefully, what happens next is that we see other content distributors join in the bidding for News Corp. content. Over time, as the new paradigm takes shape, more and more newspapers should demand licensing fees. A vibrant marketplace will develop as Google and Microsoft -- and device makers like Amazon.com (Nasdaq: AMZN  ) and Apple (Nasdaq: AAPL  ) -- all vie for the right to distribute newspapers' essential content. Ultimately, this marketplace will come to a conclusion as to how much news content is really worth ...

And while I cannot say what that answer will be, I'll wager it's "something" more than "nothing."

Foolish takeaway
Up until now, Google has gotten rich off the concept that information is free -- that Google's actually doing newspapers a favor by shooing readers to their websites.

So unless the Newsies find a solution to their profit-poor problem, the entire industry will most likely fail. If that happens, investors like you and me will have no independent fact checkers out there to help de-spin the corporate spin machine. We'll be reduced to playing Press Release Bingo, trusting in the kindness of corporate strangers, and hoping to find accuracy in puffery.

That's why today, we should all be rooting for Murdoch. Strange as it sounds to hear myself saying this: This time, Rupert Murdoch fights on the side of the angels, and Google is the devil.

Who is Rupert Murdoch, really?

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

Google is a Motley Fool Rule Breakers pick. Apple, Amazon.com, and eBay are Motley Fool Stock Advisor recommendations. Microsoft is a Motley Fool Inside Value recommendation. Microsoft is a Motley Fool Options selection.


Read/Post Comments (13) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 25, 2009, at 11:54 AM, Patricia013 wrote:

    Is it just my opinion or is Rupert Murdock out to manipulate the whole world. During the day I am a radio listener and I know his vast chain of right wing radio stations openly manipulates listeners to the point of revulsion! Heaven forbid you find a progressive station - those are so weak you can barely hear them above the static, PBS stations will put you in a coma and stations who are not affiliated with either right or left wing interests are rare as hens teeth. When will this country do something about moguls like this one. He's been throwing his weight around in the media for years! The sad part is some people fall for the nonsense. I have no opinion on Google - whatever...but Murdock needs to be stopped somehow!

  • Report this Comment On November 25, 2009, at 12:42 PM, ChandraC wrote:

    To even suggest that Murdoch might be a benign influence in the world is a sad, bitter joke. The only words that should appear on his tombstone are FoxNews, The Sun and The News of the World. Enough said.

  • Report this Comment On November 25, 2009, at 2:46 PM, TacDerGib wrote:

    Patricia/Chanda

    What is it you would like this "someone" to do to Murdoch? Regardless of what you think about the opinions on talk radio - the rest of the media is on hiatus from critical review of our current administration. You are convinced that your side is benign - or even benevolent - but many are not and guess what - that's ok and normal. Never should a society blindly, and without scrutiny, follow a powerful leader. The last time the media shirked their responsibilities our president started a war. If you think that the current administration is immune to corruption or making huge mistakes, you are as bad as those you obviously loathe. Are you honestly suggesting that a small minority of people (who wish to censor/approve political speech so that it only aligns with their views) destroy every underpinning principle this country stands for and create a monolithic one party system with a state censored and controlled media? That may sound great to you when the perception is that the party in control aligns with your views. However, since we still have elections in this country, we need be careful the powers we bestow to government just because we support the current regime. Regardless of your political persuasion, the opposition will gain power again and all the tools you have handed the government will be turned against you in force.

  • Report this Comment On November 25, 2009, at 4:43 PM, eddietheinvestor wrote:

    I think the criticism of Murdoch and Fox News is unfounded and biased. Why do some people think that all media must be politically liberal? Yes, Fox is conservative, but it is no more conservative than NBC, CNN, MSNBC, ABC, and CBS are liberal. It's interesting that many people can readily see the bias in conservative media but put on blinders concerning the liberal bias of other stations. If it weren't for Fox News, all television stations would be politically liberal and incidents, such as the illegal activities of ACORN, would never have been mentioned. Charles Gibson even said after the ACORN tapes that he had never heard of them. It's a shame that some people think that all political coverage has to be liberal and that other points of view should not be allowed on TV. It's also a shame that many people consider conservative biases to be manipulative but liberal biases to be "the truth." Americans should be allowed to hear different viewpoints instead of relying solely on people like Keith Olbermann for political coverage.

  • Report this Comment On November 25, 2009, at 4:59 PM, djkumquat wrote:

    fox is as conservative as msnbc is liberal. nbc, cnn, abc, and cbs are somewhere close to the middle, but closer to middling. and only those without an attention span are put into a coma by pbs. or they were already comatose.

  • Report this Comment On November 25, 2009, at 5:04 PM, djkumquat wrote:

    fox is as conservative as msnbc is liberal. nbc, cnn, abc, and cbs are somewhere close to the middle, but closer to middling. and only those without an attention span are put into a coma by pbs. or they were already comatose.

  • Report this Comment On November 25, 2009, at 5:34 PM, mattack2 wrote:

    That'll be $2 an issue (but subscribe now, and we'll give you 105% off!) Of course, if you've got an Internet connection, you can read the same story online for free.

    ....except that you can't get the whole *paper* for free. Even the Kindle versions of some papers (according to reviews on Amazon) aren't the entire paper, and are often missing.

  • Report this Comment On November 25, 2009, at 7:02 PM, Patricia013 wrote:

    TacDerGib - I'm just a poor soul who is sick to death of every single radio talk show host saying they are "independent" and then showing how seriously far right he is. Its painfully obvious that they are adhering to "talking points" they are probably fed on a daily basis. At first I thought it was a joke - now I think its dangerous and its pathetic! You can barely find one that will get off politics long enough to do some interesting segments on what else is happening in the world! Incidentally all who are looking to bash me....I have voted republican more than democrat but I'm not "sewn" into either party!

  • Report this Comment On November 25, 2009, at 7:05 PM, Patricia013 wrote:

    Oh - here they come banging pot and pan lids...the dems on one side and repubs on the other and absolutely nothing worthwhile accomplished! LOL

  • Report this Comment On November 26, 2009, at 12:22 AM, Natez wrote:

    Conservatives accuse liberals of what they are guilty of, quite a pre-emptive Machavellian form of double-speak.

    Rupert Murdoch is pure evil, and the FCC does the bidding of monied interests such as Mr. Murdoch.

    The "liberal media" is actually right to center-right, and the conservatives in Western Europe are more left than the Democrats.

    It's just a shame that half of America doesn't know or care what is actually going on.

  • Report this Comment On November 26, 2009, at 8:58 AM, sallremo wrote:

    So Google will become a filter for poor quality news. Perfect!

    What I find incredible is how the great 'unwashed' (or should that be 'brainwashed') still try and defend these two scummy little companies. Funny ;o))

  • Report this Comment On December 03, 2009, at 2:14 AM, chaz572 wrote:

    Murdoch is not saving the world, nor journalism in general, nor even his own business. By segmenting the Internet into "that which can see his properties" and "that which can't", he can only reduce his audience, his value, and his relevance. He may get a short-term payout from it, but it's a self-imposed long-term death sentence. And by choosing the larger slice of the pie to be "that which can't", he's only speeding the Reaper's arrival. To which I will say, good riddance.

  • Report this Comment On December 13, 2009, at 2:50 PM, Patricia013 wrote:

    "Patricia/Chanda

    What is it you would like this "someone" to do to Murdoch? Regardless of what you think about the opinions on talk radio - the rest of the media is on hiatus from critical review of our current administration. You are convinced that your side is benign - or even benevolent - but many are not and guess what - that's ok and normal. Never should a society blindly, and without scrutiny, follow a powerful leader. "

    Hope you come back to read this TacDerGib . What should happen is that Mr. Murdoch retire and enjoy his billions. His empire should be broken up and indivdual companies or even groups of people should buy up the TV stations the newspapers, magazines and the radio stations, etc....and we should, once again, have a vast variety of media to listen to and enjoy - one that has as many topics as stations and one that does not rely on the talking points of one very very wealthy old man! This is how it was when I was growing up and media was actually responsible for the news it put out. They weren't bought and paid for by one man with one point of view!!! There is no this side or that - left wingers, right wingers, repubs, dems, conservatives its all baloney....something to keep the throngs of us engaged in and out of the hair of the real leaders of the world. People like Rupert Murdoch! If you can't see that - then you are truly blind my friend. Not to get off topic but just look how many times abortion is thrown into the mix in order to stop us, once again, in our tracks. They've just done it with healthcare...they do it whenever something gets dicey and they need to avert our attention! Wake up!!!!

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