Monday, November 23, 2009

Bing not likely to outbid Google for news

In the latest wild idea to save newspapers, the Financial Times is reporting that Microsoft would pay publishers to prevent Google from linking to their stories, so as to drive more traffic to its Bing search site.

The idea, which merits high marks for creativity, seems most unlikely to get off the ground. Here are the relevant facts:

:: Approximately half of the traffic to newspaper websites comes from search-engine referrals, according to Greg Harmon of Belden Interactive, the most authoritative researcher on the behavior of online news consumers.

:: Fully 71% of the searches on the web are handled by Google, while fewer than 7% of the searches are handled by Bing, according to the latest industry statistics.

:: If a newspaper were generating revenues as low as $1 per thousand for banner advertising on the traffic steered to it by search engines, then Microsoft would have to pay the paper more than $10 per thousand to make it worthwhile for the paper to forsake traffic from Google.

Now, ask yourself this:

:: Could Microsoft be that desperate? Perhaps.

:: Assuming Microsoft were that desperate, could newspaper traffic be all that valuable to Microsoft when so much other news traffic would remain widely and freely available at Google? I think not.

:: Would newspapers risk slipping further into irrelevance among readers and advertisers by denying their articles to 71% of the world’s search traffic? I hope not.

So, what’s it all about?

The threat of selling out to Microsoft is aimed at getting Google to pay for linking to newspaper stories, something that, for the most part, it does not do. (There are a few notable exceptions to this rule, such as the payment Google makes to the Associated Press and a few other international news agencies for using their content.)

The problem with this bargaining tactic is that it appears newspapers need Google more than Google needs them. Publishers are well within their rights to try to squeeze some money out of the search gorilla but they had best remember who’s running the jungle.


Blogger Timothy said...

Not true about search-driven visits as a percentage of traffic, at least not below the nytimes/wp/usa today level.

Having seen a fair amount of internals all search referrals are never more than 30% of visits, and the depth of those visits is very poor. Meaning the percentage of traffic volume is much lower than 30%.

A lot of the search traffic comes from brand name searches like "newspaper name" or "" That's traffic that the paper's site would have had anyway.

I'm not saying this is a great tactic. I don't think it is. But the numbers I've seen point to the fact that news organizations still don't produce a lot of content that gets picked up in the search stream. It's either under-optimized or it's not what people are looking for.

And that's a different problem...

9:24 AM  
Anonymous Anonymous said...

I wouldn't discount Microsoft's seriousness about this. Here is a company with some $40 billion in free cash floating around. They realize they made a huge mistake not taking Google more seriously. So paying newspapers a few billion a year for exclusive content might be a good investment if it undercuts Google and improves Bing's miserable market penetration.

9:29 AM  
Anonymous Quentin Hardy said...

Also remember that Microsoft is picking up Yahoo search, which should give it closer to a 20% share. If this were a multi-year deal it would take that into account. Still seems far-fetched to get so much of the industry to line up this way -- room for a collusion charge in there someplace? -- but stranger has happened.

10:05 AM  
Anonymous Anonymous said...

The only way this works is if the entire newspaper industry jumps on Murdoch's bandwagon and shifts to MS. It might happen. I see Billy Dean is on board and others are making favorable noises.
Can it work? I would not be so quick to dismiss it. I think it can. It provides publishers with a new stream of cash in addition to the ads revenues they would continue to get through Bing. Plus I think Google will not take this laying down, and will respond in kind in order to preserve its virtual monopoly.
It has been repeatedly said on this board that paywalls, etc., won't work because there are too many alternatives already on the Web. Really? We may soon see. I don't think Google is particularly comfortable losing this content, particularly to MS. Frankly, what's left if the checked-out and edited quality copy disappears?
(Not of direct interest to this blog, I love the prospect of a battle between Google and MS. Watch Google respond to MS by accelerating "cloud" computing ideas, which threaten to erode MS's lucrative software base.).

6:19 AM  
Blogger The Hypervigilant Observer said...

Murdoch is a world class bully, I'll give him that.

Doubtful if Google buckles under to payments. Very doubtful.

As for the WSJ...I go to Bloomberg, IMO a superior site. A bit flashy, yes. But well organized. I link my blog's viewers to Bloomberg, as well, not the WSJ. And rarely FOX News.

The WSJ's half-hearted paywall keeps me guessing whether a news item is available or not.

So, Bloomberg is where I go first.

Lex Wadelski

8:53 AM  
Anonymous Anonymous said...

It doesn't sound that unlikely to me. Newspapers get a better deal from MS than from Google. MS gets a chance to switch momentum and habits from Google. What news orgs need is a world where Google doesn't dictate terms. It sounds possibly worth it to try. As a game-changer at least.

4:29 AM  
Anonymous Dan Meadows said...

It still doesn't really achieve anything. Maybe it helps Bing, but that will only work if the publishers in question don't lock everything up behind a paywall. I hear a lot of talk about how this plan "puts major value on content" or some such thing, but the reality is that the news content we're talking about here simply isn't that valuable. But apparently, convincing Microsoft to pay for news content might well be easier than convincing regular people to pay for it.

7:14 AM  
Anonymous Anonymous said...

The trouble I have with this as a viable business idea for MS is that Google can respond easily by hiking the ad fees it gives newspapers for using their content in order to keep them loyal to Google. Since Google is rolling in $21 billion a year in ad fees from searches, this is hardly a big problem for Google. Newspapers could benefit from a good and very expensive fight between MS and Google.

10:12 AM  
Anonymous Anonymous said...

This fixes nothing - infact it just means I have to search twice (once on Google then on Bing).

When with the industry (and I am part of it) wake up and understand that you have to rethink your business. Is Walmart a threat to Amazon or Amazon to Walmart?

At the end of the day the consumer rules a capital market. They will find alternative solutions (think napster/bit torrents) if they are not prepared to change.

Stop trying to plug holes in a leaky bucket and get a new bucket.

If microsoft and google war over content the only one who will lose is the consumer and somebody will find a fix for that as well.

the only thing that will survive is unique content and that makes sense - when 300 people write basically the same story about Tiger Woods why should they all get paid? Would you play two independent accountants to do your tax return to see if they are the same?

Business is changing - lets hope somebody wakes up before its too late.

2:31 PM  
Anonymous Alex said...

sure, a huge chunk of visitors make it to newspaper sites through Google, but how much are those visitors worth?* the answer is: not much. content that answers questions people type into search -- like "how do i make papier mache" -- is disposable. moreover, people looking for the answer to such questions aren't looking for newspapers.

the bottom line is that search and news serve two very different purposes. having them on the same platform devalues what news actually offers, because the click is the only unit of value that can be measured. i vote for newspapers ditching Google...and all search engines. back to the directory for news sources. then again, if there were a search engine, like bing, that aimed to upend the "click value" system and pay content creators, i'd use it simply for that fact.

* to get an idea, read dan roth's Wired piece about demand media (if you haven't already)

3:30 PM  

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