google vs murdoch and microsoft

Posted on November 24, 2009


You could make a movie from this! Now Microsoft is apparently offering to pay Murdoch to stop google from indexing his site and only allow Bing to search his site. So far, Murdoch’s crazy plan is definately paying off (for him) as somebody is going to give him some money.

The  stats however show that 74% of adults are still reading newspapers and that 71 million americans read them online (a huge growth from previous readership of 40Million).  So the slump in newspaper advertising cannot be attributed to a demise in readership (though it has reduced without a doubt) but rather to the shift in advertising spend. Here is my take on what is happening and why charging for news is quaint, but wont solve the problem:

1. advertising is about ROI. print is hard to measure, internet is easy to measure and thus perceived to be cheaper

2. the average marketing person is youngish, that makes them internet generation people who feel comfortable spending online versus older generation marketing people who felt more comfortable with newspapers

3. the classified category, traditionally 30% of newspaper revenue – has moved online primarily and dramatically fallen

4. consumers want news, not newspapers.

5. newspapers generally print yesterday’s news and havent innovated at all in the last 5 years. google has invested heavily in new products – (google has launched gmail, webmaster tools, google docs, orkut etc). based on R&D spend targetting the same advertiser dollar, who do you think will win

This seems like a bad deal for Microsoft, but they are trying something different. The question is – can they spend their way into beating google, or will this just be wasted cash?