Posted by Shar VanBoskirk and Sarah Rotman Epps]
Media outlets report that Microsoft and News Corp are in talks about an exclusive relationship, where Microsoft would pay News Corp to remove its content from Google and allow it to be indexed only through Microsoft's Bing.
My colleague Sarah Rotman Epps and I put our heads together on the potential deal. Here is our take:
News Corp’s short-term desperation will sabotage its long-term interests. Everyone is watching newspaper companies lose more ad revenues as subscriptions fall even lower in 2009 than the declining trajectory they have been on since 2000. Getting consumers to pay for content is a hard sell; media companies may have an easier time generating revenue by licensing their content to other companies, like portals, device makers, and non-media companies like Fidelity who need content for their Web sites. Murdoch wants a deal like this to get MS to pay him for the opportunity to index his companies' content. But the tradeoff for short-term revenue could be long-term irrelevance: If consumers don’t find Newscorp results in Google searches, they’ll just click on another content source. “If a tree falls in the woods…” could be rephrased as “If a site isn’t indexed by Google, does it really exist?” For the 65% of searches relying on Google, the answer is no.
Microsoft wins publisher goodwill, but probably not much search traffic. Bing has enjoyed growth in its share of searches since its launch in summer 2009, but it still accounts for only about 10% of searches compared to Google's 65%. So Microsoft needs to do everything it can to try to gain search traffic. I see this as another way to try to drive searchers to use Bing instead of other possible search engines. But stealing one content source from Google won’t be enough to change consumers’ search habits.
Consumers don't care about a deal like this. Consumers do not expect search engines to be exclusive. In their minds, search engines are gateways to answers, and if they can’t find something through search, it may as well not exist. So, while News Corp and MS might enjoy scratching each others backs in a deal like this, consumers won't know and won't care that Bing is the only place they can find Wall Street Journal articles and other News Corp content.
Most content doesn't have enough value for exclusivity to matter. A number of reporters have asked me if this is the beginning of something big in terms of media/search engine deal. My take is no way. Because frankly content is plentiful and cheap and consumers are very good at finding what they need without having to pay for it or be inconvenienced to get it. So while News Corp may have some content that still qualifies as "exclusive," I don't see many other media firms having any leverage to create similar deals with search engines.
See Forrester's blog for Consumer Product Strategy Professionals for additional take on this deal and others affecting the media industries.
