Rupert Murdoch Isn't Saving Anything

Is Rupert Murdoch saving the world or not? The numbers are confusing.

On one hand, 71% of Fools polled last week said it's too early for Microsoft (Nasdaq: MSFT  ) to pay News Corp. (Nasdaq: NWS  ) for the right to index stories from sources such as New York's Daily News, The Wall Street Journal, and Fox News on its Bing search engine.

On the other hand, many of you agree with my Foolish colleague Rich Smith: Murdoch has no choice but to threaten to pull News Corp. content from Google's (Nasdaq: GOOG  ) News portal, lest Big Goo ruin any chance Big Media might have to make digital news delivery pay.

What is content, anyway?
I'm still with the 71% who think it's too soon for Mr. Softy to start buying content. If Rich isn't 100% with me on this, it may be because he considers Murdoch's saber-rattling as a defense of the idea that content shouldn't be free:

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. [Emphasis added.]

I agree that original reporting shouldn't be free, digital or otherwise. But we absolutely should not be calling links content. They never were, they aren't today, and they never will be. Google News indexes links. So would Bing, were Microsoft and News Corp. to reach an accord.

To be fair, Google News does host some content. The Associated Press is one such partner. But the AP is a rarity. For News Corp., Gannett (NYSE: GCI  ) , and most other newspaper publishers, Google News is an opportunistic source of traffic -- and their digital profits are less certain as a result.

Say you search for "iPhone" at Google News, and a recent story from The Wall Street Journal appears in the results, along with links to dozens of other news sources. Google serves ads along with the links, directs the traffic, and then shares the resulting revenue via its AdSense program.

We're not exactly talking about loose change here. New York Times' (NYSE: NYT  ) Bill Keller told The New York Observer in May that he believed the Gray Lady's digital advertising revenue was "substantially more" than what the Journal was taking in from paid subscriptions. Thus, it should come as no surprise that Keller, while at times critical of Google News, has taken a different view of the business of linking.

"Google News generally runs a headline, maybe a first line of a story from The Times and a link," Keller told the Observer in a follow-up story. "On balance, they're driving a lot of traffic to us. I don't think most of what Google does in that regard could be described as parasitism or piracy."

In a world where Google and Microsoft are frenemies ...
Keller's position makes sense to me; Murdoch's doesn't. Yet Rich and Rupert are right about one thing: Newspaper companies need to be paid for their digital content. Their businesses depend on it. So do skilled journalists.

Let's just remember that links aren't content, and that indexing has value to both users and the publishers who reap revenue from the clicks.

Murdoch would be better off ending this feud, and instead starting a discussion about how to create more subscription-worthy content to link to. Surely Google, Bing, and every other search engine would be glad to serve as many high-value stories as newspapers have to offer.

But that's my take. Now it's your turn to weigh in. Is Murdoch baiting the industry by equating links with content? Or is he on a genuine quest to return profits to a flagging industry? Please take a moment to vote in the poll below. You can also sound off using the comments box at the bottom.

Apple and Amazon are Motley Fool Stock Advisor selections. Google is a Motley Fool Rule Breakers recommendation. Microsoft is a Motley Fool Inside Value pick. Motley Fool Options has recommended a diagonal call on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy would pay just about anything for a good corned beef sandwich right now.


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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 30, 2009, at 10:27 PM, sodapops wrote:

    I don't quite understand why newspaper companies are so hung up on getting paid for content. I worked for awhile in the industry and they never got paid for content in print. The cost of a subscription just covered the cost of delivery, ie. paying the newsboy. The cost of gathering and printing the news has always been born by the advertising revenue. The only reason I can think of that they are so insistent on creating a revenue stream directly from web content is that they blew their lead on the advertising revenue so badly thet they now do not believe that they can ever recover. In that case their best plan would be to merge with Google, Yahoo, Microsoft etc. There are too many free sources of news on the web and TV for them to ever be successful at charging for news content.

  • Report this Comment On December 01, 2009, at 11:27 AM, kristm wrote:

    When The New York Times and Wall Street Journal block Google from indexing their sites and then charge site visitors a fee to read their content, Joe Blow News or anyone else who doesn't charge those fees will eat their lunch. ESPECIALLY so if Joe Blow News is doing a better job journalistically than the big papers are.

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