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?
- Is he an evil genius?
- Or a genial genie, remaking the news industry for the betterment of humankind?
- Perhaps you think he's a country bumpkin, ignorant of the ways of business?
