Why News Corp’s gamble with Bing makes sense?

Posted by Kalyan Medapati Wednesday, November 25th, 2009

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It’s all speculation with no clarity yet. But if it is true that News Corp is in talks with Microsoft, to charge for its content to be indexed on Bing (and eventually others) then it does make sense.

There is a lot of hoopla about Microsoft paying News Corp for its content to be “de-indexed” from Google, but I think it is more useful to see it from News Corp’s perspective, which is thinking hard (and right) on monetizing its online content. The company is just trying to claim its share of the money that “news search” generates. And it should be good news for other media outlets. So far, they have either had the muscle and lacked the idea, or they were tiny voices looking for a lead. Either way this is good news for them.

If there is anyone in media industry who managed successfully to monetize online content, it definitely is The Wall Street Journal, one of News Corp’s hot properties. The New York Times tried and gave up (it is reportedly thinking again), and London’s Financial Times has a pay site, but its success unknown.

The reason why most news publishers kept online content free is because they hoped it would translate into a large online audience. This did turn out be true in some cases, with a substantial number of hits being originated by search engines (mainly Google). In Journal’s case, the site’s traffic coming from Google is said to be over 20%. It’s good if all that publishers needed are only more traffic, and more unique users. However, that’s not the whole story. They need more traffic and more unique users, and also be able to monetize them – via advertising on their sites.

On the other hand, the advertisers don’t seem to be that interested in the audience who end up on news sites via search engines. This translates into disappointing revenues coming from that segment of the audience. But search engines do make money on their news search pages (Google says not much, but…), which is made possible because news publishers allow for their content to be indexed. So, if the news people can’t make money out of ad revenue on their sites, they can ask for a cut in the money search engines make by indexing their content. Makes sense, if search engines buy into the idea. And Microsoft seems to be doing exactly that.

The reason why this might work out is because News Corp has the muscle to bring the search engines around, and Microsoft is likely giving the impetus (as much as I want to think it’s silly, the company probably likes to see Google’s margins cut, even if it is insignificant).

It’s a wonderful idea, I hope News Corp gets this deal through, but I hope they don’t keep this exclusive to Microsoft.