microsoft-murdoch-talk-team-up-to-freeze-google-out-of-online-nCan Microsoft (MSFT) gain much needed market share for its Bing search engine by signing a deal with News Corp. (NWS) and other news publishers to remove their web pages from the Google (GOOG) search index and give Bing an exclusive on links to The Wall Street Journal? That's the kernel of an argument which has been gaining traction online in the past month.

Certainly, such an arrangement is legal and possible. Google allows sites to opt-out of the index and even explains how to do this on its website. Whether the maneuver would actually work is a far trickier question. Sentiments remain mixed, with some observers saying freezing out Google would have zero effect on the search giant, but might harm the newspapers by reducing their traffic. After all, WSJ.com has remained behind a paid subscription wall since its inception.
Further, actually enforcing such an exclusive deal would be difficult. Most publishers have syndication deals of some sort. And bloggers quickly disseminate news even if they can only link back to a story hidden behind a pay-wall. In reality, I think this will be a great deal for newspapers, a marginal win for Microsoft, and a non-issue to Google.

First, the backstory. The idea was first proposed online by Mahalo.com CEO Jason Calacanis (to my knowledge, at least), TechCrunch later picked it up and now the Financial Times is reporting that Microsoft and news publishers have had partnership discussions around news content. Specifically, those discussions have centered on Microsoft paying publishers to remove their content from the Google index, with an eye toward richer revenue-sharing and traffic-sharing deals.

The idea certainly appears to be gathering steam as newspaper and news organization layoffs continue apace. Just last week, the Associated Press and BusinessWeek both announced significant layoffs, (as did AOL, which operates DailyFinance, although AOL's layoffs were focused on non-content generating positions). Third-quarter advertising revenues fell by 28%, according to the Newspaper Association of America. The fall marked the 13th straight quarter of declining advertising revenues for the death-spiraling news biz as fewer people renewed their subscriptions to the more-lucrative paper editions and classified ads continued to lose ground to free online classified options such as Craigslist.org.

A Deal Like This is Inevitable

At the same time, newspapers online have never been more powerful. According to the NAA, 74 million unique visitors landed on newspaper websites in September, 2009. The average for the quarter was also 74 million, or about one quarter of the U.S. population. In September alone, those visitors accounted for 3.5 billion page views. Remember, this only includes newspapers. There are dozens of other popular news outlets online, such as CBS Interactive's CNET.com and Time.com, that would not show up in these tallies. So it's safe to say that total traffic to news sites is between 50% and 100% higher than the 3.5 billion monthly figure. Clearly, news sites are powerful forces online and outstanding traffic drivers.

For its part, Google remains a key source of traffic for many news organizations, either through its main search bar or through its Google News vertical search engine, which focuses on vetted news sites. And, as search engine expert Danny Sullivan points out, its possible that newspapers owe Google a fair bit due to the free search tools that Google supplies, which have, as Sullivan correctly says, revolutionized the news business and it much easier for reporters to quickly locate information, sources and clips.

All of this being said, I think that an arrangement such as Microsoft and News Corp. are discussing is nearly inevitable, and it will happen on a mass scale. The news industry has never felt comfortable with the Google arrangement, and with many publications facing bankruptcy, they have nothing to lose and will try just about anything to enhance online revenues. The numbers for Microsoft are also not terribly daunting. Newspapers bring in about $24 billion per year in advertising. Microsoft could easily give them $3 billion per year in revenue-sharing in order to boost Bing, a move that could quite literally put a floor under the industry and save it from extinction.

For Microsoft, at worst, this deal could help Bing pick up a bit of market share at Google's expense; at best, the deal could prove a serious blow to Google. There's a good reason why Google lists news results in a separate column at the top of the page for many queries: News articles have high click-through rates in organic search results, and therefore add significant value to a search stream. Such a freeze-out won't kill Google, but it could help turn the search game into more of a horse race.

Alex Salkever is Senior Writer at AOL Daily Finance covering technology and greentech. Follow him on twitter @alexsalkever, read his articles, or email him at alex@dailyfinance.com.

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