Why An Exclusive Wall Street Journal (or News Corp) Deal Wouldn’t Help Bing

With Rupert Murdoch talking about blocking Google, Jason Calacanis suggests that Murdoch should cut an exclusive deal with Bing. If that doesn’t kill Google, it might at least win Bing a 10% search share or more within 6 months, he argues. I suggest Jason needs a reality check. Here’s one for him.

From his post today, Jason writes:

I put forth a simple strategy for Microsoft to pursue with Bing in which they would go to content providers like the New York Times or Wall Street Journal and offer them 50% more revenue then they are currently getting from Google search referrals to be exclusively indexed in Bing….

So, for a moment, imagine a world where Bing could say in their TV commercials:

“Want to search the New York Times, Wall Street Journal, USA Today and 3,894 other newspapers and magazine?”

“Well, then don’t go to Google because they don’t have them!”

“Go to Bing, home of quality content you can trust!”

OK, it’s a busy day for me, so I’m going to ramble a lot of off-the-cuff stuff that still ought to toss a big bucket of cold water on Jason’s high hopes. And I look forward to comments from anyone who wants to pull harder numbers together for some of the stuff I’m mentioning.

First, the AP has already dropped hints recently it wants to do the same thing, at least give one of the major search players an advance on stories. Maybe it can sell Bing on that idea. We’ll see. Google’s not blinking so far. If anything, Google CEO Eric Schmidt suggested last month that the AP has an inflated view of how valuable it is. From my live-blogging of his remarks in a meeting with reporters:

I want to distinguish betwen what you think your content is worth and what it’s worth [laughs all around]. We’re not going to use the price you think as a signal in the results.

Now let’s take your 50% more on search referrals idea. So Bing will offer to pay the Wall Street Journal 50% more than the ZERO Google currently pays for millions of referrals it sends the Wall Street Journal and other newspapers each day right now?

These newspapers don’t pay to be in Google’s editorial listings. They get tons of traffic from Google for free. What you really mean is that perhaps they could hope to convince Bing to pay them if they block Google from having their stories (and really, a headline link and short summary of their stories, not the stories themselves) in return for a gamble that Bing will send them either as much traffic or less traffic but more revenue.

OK, Jason, what’s that check that Bing needs to write to the WSJ? I don’t know how much traffic the WSJ gets per day from Google — for free. But we can take Compete for a starting point. It says the WSJ gets 12 million visitors per month, with 11% of those coming from Google —  about 1 million visitors per month. That feels low to me, but it’s in line with what some UK papers get.

Bing’s got about 10% of the search share; Google 70%. That’s from usage stats, by the way, not from stats based on actual traffic sent to sites. In that, Google’s much higher. Mahalo has stats — bet you’re in the 80% of all search traffic range from Google, aren’t you?

So right now, Bing’s about 1/7th the size of Google, if I’m doing my math right. Murdoch could do his deal with Bing as you suggest and thus lose his 1 million visitors in exchange for just over 150,000.

OK, so what’s the value of those remaining 850,000 million visitors? Remember, Murdoch’s also talking that he doesn’t mind a smaller audience if it’s one that pays. But those 150,000 million from Bing aren’t going to be paying. They’ll be just like people who come from Google now, needing to get free access to the Wall Street Journal at least for the first story they click through from or otherwise becoming very annoyed at Bing for sending them smack into a paywall.

Also, it’s not really an 850,000 visitor difference we’re talking about. I mean, Bing exists right now. It should already be sending 150,000 people to the Wall Street Journal, if we work off a direct proportion to what we guess Google already sends now (and that’s very rough work). Really, doing the Bing deal as you suggest doesn’t give the WSJ a net gain. It just potentially cuts off those 1 million people from Google.

So what are those people worth? What’s the amount Bing needs to pay to make up for all that lost traffic? Are they worth $0.50 per day – (or $15 per month; $180 per year)? That’s about $180 million per year Bing needs to pay just to the WSJ alone to guarantee they’re not losing that $0.50 per day, per person, that they might be earning. Maybe they earn a lot less; quite possibly, they earn more.

And that’s just to pay the WSJ, right? What about all the other papers that want to put their hands out? Does the New York Times get the same deal? It’s not hard to get up to 1/2 billion in money to license the right to link people to content on the news providers web sites, all in the hopes that this will make your search engine overall THAT much more compelling that Google overall.

No, I don’t think that makes sense for Bing todo. Keep in mind that most people at Google do NOT go to Google News. Stats from last year from Hitwise put Google News at 1% of Google’s overall traffic. Also go back and look again at those Compete stats for the WSJ. Bing’s portal partner MSN and Yahoo both send the WSJ more traffic already than Google. There’s almost certainly a licensing deal in place, and it clearly doesn’t seem to be generating enough revenue to make Murdoch declare that the war for payment in online is over.

Maybe Bing would see some growth, which would send it more traffic, which would mean the minimum revenues it needs to pay the member papers would be less. But I doubt it would be much.

Moreover, there are paid subscription services that you can tap into right now that give you the ability to search and read content from a variety of newspapers and magazines. They clearly aren’t that compelling to the majority of searchers out there.

Also, how much of the WSJ is vital information that absolutely cannot be found in other sources? Even the WSJ knows that much of what it has isn’t unique. They do have great content — I know, I actually take the print version and read it usually each day. But on a day I skip it, I’m hardly out of the loop newswise.

So you ask in your post, What’s the percentage chance I think Bing will do as you suggest? About 1%.

The reality is that the Wall Street Journal execs seem to be leading a charge against Google without really knowing where they are going or what they want. They already get lots of traffic plus get to have a paywall, thanks to First Click Free at Google. And yet, Murdoch doesn’t seem to know exactly how that operates or how Google indexes his paper. His managing editor Robert Thomson gets confused about font sizes and how Google News works. I get the impression both of them are good at talking but don’t know the actual realities of their traffic situation in relation to Google. Or they know it well but are happy to ignore it.

So why are they talking so much? At best I can tell, they seem to want a licensing deal similar to what the AP, the AFP and a few other services get. Perhaps they’ll even get it, and if so, I imagine it would be on the order of 10s of millions, not hundreds of millions. And the smaller papers out there won’t get it, as I’ve written before (see Garlic For The Google Vampire). They’re not “must carry” publications. Murdoch may sound like he’s speaking for the industry but really, he seems to be speaking to strike his own particular deal.

But hey, let’s assume they do a deal in the end. Let’s say the AP does one, too, where they withhold information from Google completely or for a set period of time. Are both publications going to stop using Google? No. And if they’re not, who’s going to start talking about how hypocritical they are? It’s fine for them both to have literally hundreds of reporters each day using Google to mine information for their web sources, something that’s free for them to do? (See Do Newspapers Owe Google “Fair Share” Fees For Researching Stories for more on this). Or are they going to start paying research fees to Google, so it can in turn redistribute those fees out to the millions of resources it currently carries — upon which they currently depend?

Finally, let me end on that trust thing. I know that lots of people who post and blog on the web have a growing mistrust of Google. But ordinary people still seem to trust it, a lot. Survey after survey shows it as a top brand. And in a time when search results between the major search engines aren’t that different, what’s the key element Google has over its rivals?

It’s trusted. It is a trusted friend that diligently serves millions who use it each day. Your ad campaign of how Bing could say it’s the home of “quality content?” People already think they’ve got that at Google. I don’t see it flying.

Postscript: From Hitwise, some statistics. According to them, both Google overall and Google News send more traffic to the Wall Street Journal than any other site, 25% combined.

Postscript 2 (Nov. 22, 2009): Since this was written, we’ve had more news that News Corp is being enticed by Bing. See:

• Badda Bing! Microsoft woos newspapers by funding their stick to beat Google
• Microsoft and News Corp eye web pact

The first is from TechCrunch about a week ago; the second from the Financial Times today. And before things get spinning that this was all Jason Calacanis’s idea — while I like Jason, he used to work for Jonathan Miller, who heads digital for the Wall Street Journal. Suffice to say, I think News Corp is putting out a lot of trial balloons — I suspect Miller mentioned this idea to Jason, who in turn put it out there. I highly doubt in the space of two weeks that News Corp said “get me Microsoft; this sounds like a plan. Or vice-versa.

I suspect that News Corp’s most valuable content of all its properties remains the Wall Street Journal. Google operated just fine for years when the WSJ wasn’t included. I highly doubt this would hurt them. That’s especially so because, as even the WSJ has acknowledged in the past, people can locate other sources for the news they report.

Also, it’s noteworthy that virtually all major news publications in Belgium a few years ago opted-out of Google (absurdly suing to get out, rather than using voluntary systems). The lawsuit was more about hopes to blackmail Google into paying the papers to be included. Instead, Google conceded and dropped them. And down the line, the papers effectively came crawling back asking to be reincluded. Belgian Papers Back In Google; Begin Using Standards For Blocking has more. Whether News Corp’s content is more valuable to Google than that of an entire country’s remains to be seen.

Finally, it’s an extremely odd move to me for Microsoft to be trying to strike exclusive deals like this. It’s one thing to license content. It’s another to try and suggest that a competitor be locked out. Microsoft has a terrible anti-competitive reputation. It’s also trying to convince regulators in the US and Europe that it should be allowed to acquire Yahoo’s search technology, because that will — it argues — make a better competitor to Google. You can expect that Google will use an anti-competitive partnership with News Corp as a sign of arguing that Microsoft is “back to its old tricks” to pressure against such a deal.

See also these past posts, that provide more background and perspective:

• Would Someone Please Explain To News Corp How Google Works?
• Josh Cohen Of Google News On Paywalls, Partnerships & Working With Publishers
• Google’s News Experiments & The Quest To Solve The “Read State” Issue

Postscript 3: See Assorted Thoughts On A “Killer” Bing-News Corp Deal, which incorporates some of my previous postscript with additional comments.