News Corp/Bing: News Corporation is searching for revenue. Rupert Murdoch has made it clear he wants internet search engines to pay for online content produced by his company’s outlets, including the Wall Street Journal and Fox News. It seems Microsoft’s Bing, which recently also agreed to pay Twitter for updates produced by its users, might be willing to oblige. But to succeed long-term, Murdoch needs other publishers on board. And with Google’s traffic still alluring, that won’t be easy.
The woes of traditional media are well rehearsed. A deal between News Corp and Microsoft wouldn’t directly address industry-wide problems like declining readership and advertising. But it would start the process of transferring some value from search itself to the content for which users search, which hasn’t got much of a look-in since the start of the internet age.
The trouble is, even a market share-hungry Microsoft probably wouldn’t pay News Corp much. Murdoch’s media giant would only gain pricing power if rivals were also willing to ditch Google for Bing. The more content producers offering their wares exclusively to Microsoft, the greater their negotiating leverage.
But it’s worth a try for News Corp — and for Microsoft, too. It could be a chance to turn one of Google’s tactics against it. The search giant regularly introduces new online applications that threaten Microsoft’s software revenues. It already distributes free office productivity software and an operating system for mobile phones, and it is working on one for computers as well.
If Microsoft gets exclusive distribution deals with publishers then, at best, Bing would gain traffic at Google’s expense.
Since margins in the search business depend heavily on market share this could shift some profits from Google to Bing. Even at worst, more of the available revenue from search would go to content owners, at the expense of search companies. That’s an unpleasant prospect for Google. Unfortunately for Murdoch, getting many other content companies on board may be difficult. Google dominates search with more than two-thirds of the market, delivering lots of hits - if not much revenue — to content providers. So switching over to Bing isn't cost free. Moreover, Google could easily end up offering incentives to stop publishers going to Microsoft. Murdoch is right to be testing ways to collect on his content — but with search, any success will depend on herding quite a few rival cats.