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Summary:

The reports say Microsoft is offering to pay newspaper publishers for indexing their stories, if Google (NSDQ: GOOG) is blocked from doing t…

The reports say Microsoft is offering to pay newspaper publishers for indexing their stories, if Google (NSDQ: GOOG) is blocked from doing the same.

But how real are the talks? One source familiar with discussions advised us caution against “the idea that there would be vast sums of money in this”, suggesting some publishers are motivated in winning a Google-beating offer from Microsoft (NSDQ: MSFT). And at AllThingsD, multiple sources express similar skepticism, indicating big payments from Microsoft would be uneconomical. Even Rupert Murdoch has said the cost for such a plan is probably too high. [Ed. note: Robert was on Channel 4 tonight in the UK on this subject. Video here.]

If reports are right, and significant content payments do change hands, the outcome could be this: good for Bing, bad for audiences

As much traffic as news sites get from Google, most people use search engines to find static pages; news clickthroughs are often serendipitous.

It’s on this generic web search that Google is superdominant, taking 87.5 percent of UK searches against Yahoo’s 4.3 percent and Bing’s mere 3.6 percent (comScore: Sep ’09). Google pushes an awful lot of chance clicks to news stories (many of them actually to older articles that have had time to marinate in some SEO juice).

So yanking news from Google searches would pose this challenging question: do web users value news so highly that they would switch search providers? The answer, in sad truth, may turn out to be “no”.

Bing will undoubtedly see gains, even without a news deal (it’s an improvement on its predecessor, Windows Live Search) but using news to attract search users may be underestimating the fleeting esteem in which web searchers actually hold news.

So what’s happening? Several Microsoft execs do share some news publishers’ view that content should be re-used in formal partnership, rather than through some fair-use free-for-all. That doesn’t start and end with Bing. But it also may be no big deal — syndicated content changes hands for a price every day. Applying this principle to indexing, though, could severely dent Google’s mantra that it is crawling, rather than copying, newspapers’ stories.

Bottom line: if publishers can win some kind of support from Microsoft that they say they aren’t getting from Google, that could put them in a stronger position to force Google’s hand on payments after the paywalls go up.

One other footnote: if publishers opt to take a big payment from one search engine over another’s promise of income-from-eyeballs, it would be mark just how flat the once-booming online advertising market has become, and signify a retreat from the quest for uniques-without-returns.

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  1. I like the approach: news (and other forms of written content) is a product and the producer should be able to define the distribution of this product.

    It is similar to filmed entertainment: very fresh films are distributed through cinemas, pay tv, on board tv, on paid streaming services and when they are stale on free tv.

    Free TV means: you have to watch when the distribution partners are able to sell it to the advertisers, there are annoying interruptions with ads, the tv stations cut scenes etc.

    If Murdoch decides to push his contents through one channel more then through another or to give up one channel totally it is at his sole discretion.

    And you shouldn't underestimate the importance of content brands: if users learn that certain contents are only available for free through one search engine the right people (who know the brand) will go there.

    Today a lot of branded search goes through Google and all PR of offline media that they are online goes to Google. People don't type complicated URLs but just perform a search "media brand + topic" and use Google as an easy meta navigation.

    Microsoft totally understands this mechanism and wants to change it.

    Bing won't have to pay for all contents – they can decide which contents are worth the money and which are not.

    And publishers can decide if their model is working with a total free ride for everybody or if they need a mix in revenue streams or one very strong revenue stream.

    Content Producers now get a choice and Google will need to innovate on a much higher rate to compensate this loss of relevance.

    If Microsoft takes away Google's very high margins Google will be less able to compete in Microsoft's two core businesses (Windows for Consumers and Office for Businesses).

  2. @bingfan – it is an interesting idea, incentivising content providers to de-list from Google. at the moment I think people would be surprised at how low the bar actually would be in terms of the incentives publishers would need, given the appalling state of digital revenues.
    but i'm not sure if it's in long-term interests of publishers, as i think it's difficult to overestimate the value of content brands on the internet … surely if someone's interested in enough in News Corp content to change their default search, they'd be the ones with bookmarks. And if they de-list from Google, then the Mirror (for instance) could buy up search terms like 'Sun newspaper' and scoop the branded search you're talking about
    http://spongeist.wordpress.com

  3. @jonathan I agree with your points. But "delisting" from Google can mean a lot of things. A site owne can allow Search engines to scrape only summary pages with some content but not the full content of an article. The site owner can place there ads. Of course a search engine can define on their end how long an article has to be to be listed well. Additionally the big media companies have access to massive reach outside search engines to promote their brands. Think about joint advertising on air, on billboards, in cinemas, newspapers etc. with "You want business news ? Go to http://bing.com/wsj" or something similar.

    People would learn that they get access to all A-Brands in Media through a new short cut that is BING.

    Instead of advertising a "new" search engine (nobody is interested in such a thing as the "old" one works quite well) it is advertising for known and desired media brands that are available now through a new (and easy) distribution channel.

    I see this as a filter that should work for the content owners – branded search could be sold at much higher CPMs than non branded search as it doesn't compete with Google's CPC models any longer.

    I think it will be like Youtube versus Hulu:
    Youtube is for the short clips, the home made noise
    Hulu and other professional streaming services are for premium contents (with a business model behind)
    Google News will be excerpts and blogs, Bing News will be the premium news channel for the upper third of the Internet.

    I am not in love with Microsoft at all (or a certain technology like bing) but with the idea that there are different classes of Media, Consumers and platforms that connect them in an efficient way for marketers.

  4. @bingfan, i agree with a lot of this, but some inevitable issues that arise are …
    1. google surely wouldn't stand by and let bing do this. there's nothing stopping google doing deals with a whole lot of publishers too (they certainly have the cash), and if bing doesn't have exclusivity with all the A-list media brands, their proposition falls flat.
    2. in the uk at least, google is so embedded in users' experience of the internet that it's practically indistinguishable from the 'net itself. it would take the mother of all branding efforts to shift this perception in consumer's minds

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