Nine Questions: Murdoch’s Lion in Winter, Alicia Calling, Junk Traffic and Negotiating Like It’s 1999
Publishers
seem to be saying, in not-quite-on-key unison: The next Internet decade is
going to be different than the last one.
They are all living with the
consequences of unintended Googling, as their own sites have become secondary
players to the search aggregators, Google, Yahoo, AOL and MSN.
saw the Tiger Woods Affair look like a Sopranos’ Episode Gone Mild and the
Sheila Dixon gift card conviction look like a David Simon outtake, we saw more
skirmishes between Rupert Murdoch and Google. Rupert led off the FTC save-journalism
workshop with a well-covered
anti-Google benediction, and Google followed with a couple of blog posts
tweaking its news search protocols. The conversation, as usual wasn’t in the
(FTC) room, but conducted on and through the web. That should tell us something.
It’s quite a
cat-and-mouse game. The cat is Rupert Murdoch, a lion in the winter of his
career. Astoundingly, he’s become the leading spokesman for American
journalism. The mouse is the crafty Google, adjusting its algorithms and its
tactics, faster than publishers can bemoan, “who moved my cheese!”
It's not just
the dollars and cents at stake here — though, of course, that's the
fundamental issue. It's the dollars and making sense of what is going on as
2009 closes.
It can seem like a simple toggle. Turn the news free or lock it up. There are, though, many sharp edges here. To that point, let me try Nine Questions about this confusing landscape of threats and promise:
1. If Rupert Murdoch is now the Really Bad
Cop, does that leave Tom Curley as just the Bad Cop?
Both have
called for a reordering of the news-search landscape, but now AP CEO Tom Curley
is starting to appear as the reasonable alternative to The Rupert, who keeps
raising the temp, especially, on Google.
The News
Corp/Microsoft dance and Murdoch’s cries of “Pirate!” have won headlines, but
AP’s re-negotiation of its licensing deals with the search aggregators have the potential to have
more impact. AP's license deal with Google is up at the end of the year. In the
throes of unprecedented change itself, AP's re-negotiation tries to put the new
Digital Coop at the center. The idea: rich, universally tagged,
delivered-on-the-fly indexes of news content add extra value to news content
itself. AP hopes its negotiation will both increase its own take from search
engine licensing — and provide a model for individual newspaper
companies. How much a “model” would
be adopted by an increasingly cantankerous, go-your-own-way industry is highly
problematic.
Still, AP, with its own voluminous content and newspaper relationships may be
more of trend-setter than the publisher of two American dailies, News Corp’s
Wall Street Journal and the New York Post.
2. If Alicia calls, will you pick up? Sure, in public, Rupert is throwing grenades. His complaints
about Amazon and Google, some valid, others just good theater, draw attention
and soften the battleground. Behind the scenes, though, he's moving forward
with project “Alicia.” News
Corp has apparently allocated several million dollars to starting up the news
portal, a Hulu-for-news site. Perhaps a free/paid hybrid portal, perhaps a paid
one, the notion is to divert traffic from the search engines to a news
company-controlled site. News Corp has pitched the idea of joining in to at
least a handful or two of publishers, in both the U.S. and U.K. Critical mass of news – compared to the
several thousand news sources indexed by Google – is, of course fundamental to
giving any such play a prayer at success. Big question: could Alicia ever gain
sufficient breadth to really compete — and charge? Is Alicia really a
bargaining chip with the search engines, or are the search engine wars a chip
for Alicia? Or both?
3. Isn't it better to “negotiate” with
Microsoft than against yourself? For several years now, publishers
have tried to get Google to negotiate better terms, the acceptance of a new
content handling protocol (ACAP) and, more recently, the adoption of an
Attributor-based anti-piracy system. They haven't gotten far. In essence,
newspaper companies have been negotiating against themselves.
Google has repeatedly said: If you don't want us to
index your content, just tell us, and we'll be happy to stop. Just use our
on/off switch. End of discussion. End of “negotiation.” In fact, its twin moves
this week – allowing publishers more
flexibility in news search rules and in its Five Clicks Free program – are the
latest expressions of that public pose. It knows that the publishers’ current
addiction to search traffic makes the on/off choice (even with this week’s
nuances) not much of a choice at all. So in part, Murdoch (and more quietly,
AP’s) move to bring the anti-Google, Microsoft, to the table creates a sense of
real negotiation, competition for perhaps
scarce assets.
4. What is Google's (and search engine traffic) worth)? Most
news publishers will tell you that about 25-35% of their traffic is driven by
Google and that more than 50% of it is driven by search engines generally.
They'll also say that about a quarter to a third comes directly to their sites
— and that these are the regular customers they care about. They'll tell you
that it is the number of monthly sessions and the number of these page views that
these customers generate that should
make the most sense in building a real, digital business.
We can look at
this view in a couple of ways.
It may be
simply old-fashioned, an outgrowth of the old way of looking at media
businesses in terms of stable, "owned" readerships. In this view, digital
news readers are happy free agents, flitting about the web, picking and
choosing what they want, without being tied down. The only thing that counts is
a single view — and what marketers can do with it, getting the reader to take
notice of a product, service or brand, or seducing them into an interactive
experience. There is lots of technology trying to make that match of reader and
product, watching readers' clickstreams and delivering appropriate ads. Consider
the marketer's mantra of the day: We buy audiences, not media. Through that
lens, publishers may be fighting an old war. The new atomized (content unit by
content unit; ad unit by ad unit) world gives considerably less value to the
reader's relationship with the publisher's brand.
The
alternative view is that news publishers have been hopelessly seduced by
first-generation web measures. Those metrics all said: more is more. Those
counts first focused on uniques and page views. Then time-on- site followed,
but, of course, that's an averaged number, of all uniques. Now Nielsen has introduced average
number of sessions per month, but of course, that's an average of sessions for all those uniques as well.
Publishers are
telling me they are increasingly focusing on those uniques visiting for two or
more sessions within a month, essentially those that are their ongoing
customers. These are the people that Journalism Online is targeting as it works
with publishers, trying to figure which of these more loyal customers will pay
for content. These are the users that sites as small as MinnPost talk about
when they sell non-CPM-based sponsorships.
So in this
view, it's a matter of establishing a new, fairly loyal digital readership
(online + mobile) and then figuring out how best to monetize it widely —
through ad and subscription products.
It's an
alluring argument, but it looks like though it may be swimming against the currents of
modern marketing. Still, if publishers believe it, it leads them to discount
much of that traffic they get from search engines, and that's informing the new
round of aggregator angst.
5. So are we into the age of Junk Traffic? In 2009, news publishers figured out that the Internet is
indeed infinite. It's not the scarce world of print publishing or broadcasting;
it's an expanding universe that by its nature has no bounds. Did anyone ever
try to measure human conversation itself — or more to the point, monetize it?
So in this infinity — treasured by readers and abhorred by people who make
their money selling space or time in a finite world — more is no longer more.
Don't tell me
more page views are better, they say. Don't tell me more unique visitors are
better. Tell me why 50% or more of my ad inventory goes unsold (and how do I
get a decent chunk of that every-page-is-useful paid search business, anyhow?). If, in fact, these
visits and odd once-in-a-month, once-in-a-year page views happen on my site,
does it really matter? If a one-page reader falls on my site, can my finance
department hear even a peep?
At least,
that's one evolving viewpoint explaining search engine angina.
It’s based on the growing assumption that some of the search
engine traffic isn't, at this point, valuable. It's akin to newspaper
publishers cutting "junk circulation" — outstate circ, free State
Fair copies and the like — similarly disdained by advertisers.
Yes, it’s easy to say news publishers should better convert
some of those odd visitors to real customers (and they should), but the sense
of Junk Traffic is getting more pervasive.
6. What kind of match would Microsoft and News
Corp really make? As Michael Wolff points out,
we've been there before, as the two have tried the mating game before. So, post
approval of joint Microsoft/Yahoo search business, Microsoft would be the
smaller half of the Google/Microsoft duopoly, with about 30% of search. News
Corp's got a diverse bag of the New York Post, Fox News and the Wall Street
Journal to bring to the game. A deal is the start of some kind, but not a game
changer for either.
7. What would a Bing/News Corp deal do to the Journal's freemium
model? Freemium has been a
core principle of Journalism Online, as it makes its case to publishers. Have
your cake — keep 90% or more of your traffic — and eat the icing (new online
subscription revenue), too. The math for the Journal goes something like this:
get about one million customers (and uniques) to pay a subscription price.
Capture another 19 million uniques or so via various free web openings, opening
and closing gates, moats, and bridges into the paywall and make money off those
via advertising.
We don't know
how any Microsoft/News Corp deal might affect that balance. Would more Journal
content be able for free through Bing?; what might that do to subscription business?
Would a Bing deal focus a spotlight on just how much WSJ content you can get
to, without a subscription? Alternatively, if WSJ content wouldn't be
prominently free on Bing, then what kind of advantage might that really give
Bing, left with just New York Post, Fox News and, maybe, Murdoch's
international paper content (though he's busy erecting pay walls there, as
well.) New wild card: how might Google’s new Five Clicks Free program affect the Journal’s strategy?
8. If Microsoft really wants to amp up its newspaper
partnership, how much sense might an investment in or acquisition of Journalism
Online make? We'll see some tests
in the first or second quarter next year, as JO figures tests markets with
publishers. The freemium notion will get a real test — does it have legs
beyond the WSJ and FT models? — and Microsoft, as it newly befriends
publishers as the anti-Google, might be able to use JO's relationships.
9. Can the newspaper industry negotiate in 2009, as if it
were 1999? As newspaper
publishers debate various schemes, they are valuing their news output as if it
were 1999. Back in 1999, they were quite dominant, largely daily print
monopolies across the USA. In addition, they produced great quantities of news
content —with at least 12,000 more newsroom staff — and had little
competition in their marketplaces.
Today, the new local/regional startups —
think Politico's DC operation, Texas Tribune, Chicago News Cooperative, Warren
Hellman's Bay Area site — join a rich group of smaller sites from New Haven to
the Twin Cities to Dallas to Seattle to San Diego. Public radio's jumping into
the game. Local TV broadcasters are trying to find their way. In short,
dailies' daily output is no longer as dominating as it was — and their threats
to withhold it may a bluff that Google can call. Curiously, in this call to
have news content better compensated by the search engines, daily publishers
usually leave out the rest of the developing and developed press. That's a mistake,
I think, for them, and their own negotiating clout.