Murdoch bets on survival without Google

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Rupert Murdoch has long complained that Google Inc. is getting a free ride off his newspapers, comparing the Internet search giant to a common criminal and a "plagiarist" when it links his publications such as The Wall Street Journal to Google News.

The media mogul in charge of News Corp. Ltd. is now escalating his war against the Internet monolith in a way that no other executive has - by preparing to pull papers such as the Journal, the New York Post and The Times of London off the search engine.

While Mr. Murdoch wants his content to command a premium online, it is a move analysts say is fraught with financial risk. The question may not be whether Google can live without Mr. Murdoch, but whether he can live without Google.

By his own estimation, some of the most successful news websites in the world only make a few million dollars by selling ads. Tired of allowing his headlines to be spread about the Internet by others, Mr. Murdoch's goal is to block out the likes of Google and Microsoft Inc. and charge users for exclusive content.

"The fact is there's not enough advertising in the world to go around to make all the websites profitable. We'd rather have fewer people coming to our website - but paying," Mr. Murdoch said.

When he makes this move, though, News Corp. will likely see the sudden evaporation of millions of Internet users who are directed to his News Corp. sites every day by Google News. (That service, devised in 2001 by a Google engineer who wanted to track global news about the terrorist attacks on New York, gathers headlines from across the Net and arranges them by subject.)

"Turning off Google basically means that you become invisible to everybody except your core audience," said Kaan Yigit, a new media analyst with Solutions Research Group Inc. in Toronto. "And that's an incredible risk for any major media enterprise to take."

Google is the dominant entry point into the Internet for most users, Mr. Yigit said. His company's studies indicate 72 per cent of Canadians use Google on a regular basis.

In Google's eyes, the Google News function benefits news organizations by driving traffic to those sites, which boosts advertising rates. But the proliferation of free information on the Web has meant online ads are worth pennies compared with the subscription dollars Mr. Murdoch believes news organizations should be able to charge online.

This could merely be a negotiating ploy by the famously outspoken Mr. Murdoch, hoping to call out Google by using terms such as "content kleptomaniac" and force the deep-pocketed tech company into talks on compensation.

So far, Google hasn't taken the bait. In a response to Mr. Murdoch, the company issued a public statement on Tuesday saying how easy it would be for News Corp. to remove itself from the Google News tool and from the search engine itself.

By simply filing out an online form with his name and e-mail address, along with the details of the websites he wants blocked, Mr. Murdoch can opt out of Google. The company said it would be more than happy to accommodate the request: "If publishers want their content to be removed from Google News specifically all they need to do is tell us."

By Google's estimation, Google News directs 100,000 readers every minute to news websites around the world. A third-party analysis by the Web tracker Hitwise.com estimates between 2 per cent and 9 per cent of the traffic The Wall Street Journal gets comes from Google News, and between 5 per cent and 14 per cent comes from Google searches.

For all his railing against Google this year, Mr. Murdoch will have to determine whether he can make up the lost online advertising dollars from lower traffic figures through subscription revenues. He believes he can.

Google said its policies to gather headlines from across the Web and organize them on Google News complies with copyright laws. Mr. Murdoch, who made the Google comments while appearing on News Corp.'s Sky News television network on Tuesday, has not reserved his vitriol for the search giant. He has also taken aim at the British Broadcasting Corp., which he said gleans stories from his newspapers. In that case, Mr. Murdoch has threatened legal action.

"If you look at them, most of their stuff is stolen from the newspapers now, and we'll be suing them for copyright," he said. "They'll have to spend a lot more money on a lot more reporters to cover the world when they can't steal from newspapers."

His stance marks a significant turnabout for Mr. Murdoch, who two years ago was an advocate of tearing down pay walls when he was buying Dow Jones & Co., owner of The Wall Street Journal. The iconic financial daily operates what is believed to be one of the more profitable subscription-based newspaper websites, with readers willing to pay for the Journal's specialized content.

In 2007, Mr. Murdoch wanted to scrap that model in favour of selling more ads and attracting larger numbers of online readers to the online Journal. Two things changed his mind. First, after buying Dow Jones, he took a closer look at the numbers and realized the value of those subscription dollars; and second, the recession has reminded the media industry just how fickle advertisers can be. In the downturn, media companies have faced some of the steepest drops in advertising dollars the industry has ever seen.

"I can tell you there are no news websites or blog websites anywhere in the world making any serious money. Some may be breaking even or making a couple of million," he told Sky News.