Tuesday, 24 November 2009

Holding out for a hero - Microsoft?

Media owners are salivating over the idea that Microsoft is going to save them in a hugely expensive attempt to compete with Google. "Microsoft makes move to cut out Google" in the FT:
"Microsoft are doing exactly the right thing and asking exactly the right questions," Richard Titus, chief executive of Associated Northcliffe Digital.

"Any competition to Google is a good thing," one UK publisher said.

Tom Curley, chief executive of the Associated Press, said last month that Microsoft was willing to accept “principles” such as favouring AP stories in search results over others that regurgitate its news, or helping it track its content. “We are only going to work with those who use our principles,” he added. “We stand at an enviable moment where Microsoft and Google have decided to go to war,” he said.
You can smell the desperation of people whose business model has been overthrown - not by any underhand behaviour or cheating from Google, but by a world where information flows freely and the barriers to finding it are low. There simply is no way to turn back the clock. In the old model, we couldn't easily find out what was happening in the world and newspapers were the obvious way to lower information costs.

Media is a special category because it has immense economies of scale - you can make a fortune if you achieve high distribution, as most of your costs stay fixed while your revenues scale up with the number of readers. But it's also special because it relies on barriers to knowledge. In some places knowledge is unavailable by the nature of the environment; in others, media owners try to impose controls on it themselves.

The more that knowledge is freely available, the weaker the traditional business model becomes. Technology moves on, and the need for traditional media as a provider or facilitator of information is far less than it was. Knowledge can flow more easily in other ways - such as, of course, Google. Many people have their livelihood invested in those old, profitable economies of scale and it's natural that they would try to defend their position. And when white knight Microsoft appears to ride to the rescue - as they tried to do with the Zune in the music industry - it's immensely appealing to hang onto their stirrups. But it can't work.

All the wishful thinking is cut through by the one sensible comment, from industry analyst Alan Mutter:
"The problem with this bargaining tactic is that it appears newspapers need Google more than Google needs them."
Update: Paul Mason has another nice addition, in a longer and interesting article:
"Excluding your content from searchability AND at the same time erecting a paywall sounds a bit like taking yourself out of the phone directory and for good measure having your landline disconnected."

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